Conflicting conclusions on housing affordability

David MoonBlog

According to the Federal Reserve, Americans only spend 4% of their disposable income on mortgage debt service. However, real estate brokerage Redfin has determined that the typical American household would require 35% more income to afford the median-priced U.S. home. A third source, the National Association of Realtors (NAR), produces a Housing Affordability Index, which measures “the degree to which a typical family can afford mortgage payments on a typical home.” Based on the current index level of 101.1, the NAR data signifies that the typical American family has slightly more than enough income to qualify for a mortgage on … Read More

Finding wisdom in dreadlocks

David MoonBlog

There are a few things I learned for certain growing up in rural 1960s and 70s Alabama, one of which was that anyone with dreadlocks was a thug. A hoodlum, not to be trusted and, ideally, to be avoided. I knew this was true, because it was the opinion of most adults in my daily life – and they certainly would never lead me astray. But they never knew Deanthonie Summerhill. I’m not sure when or how Deanthonie and I met, although we had a couple of things in common. We both grew up in Alabama and came to Tennessee … Read More

Is artificial intelligence a threat or a tool?

David MoonBlog

Elon Musk recently said that artificial intelligence will probably take all of our jobs, prompting observers to debate whether that is a good or bad thing. Comparing the 19th century workday to today, I wonder if a middle-class worker from 150 years ago might argue that technology has already done it? While long days of hard physical labor haven’t entirely vanished, they have for most Americans. Back in 1850, the most predominant middle-class profession was farming, where the average American worked 6 days a week, for a total of 69 hours. Today, the average American work week has fallen by … Read More

A letter to the class of 2024

David MoonBlog

Focus. Make a list of the ten most important things you want to achieve in the next decade, ranked by importance. Now, delete all of them except the top two. Most people can’t fully commit to even two primary life purposes, but no one can effectively commit to ten. Making a bunch of money isn’t the best goal in the world, but it’s not the absolute worst, either. The most reliable way to increase your income is to do more work than you are currently being paid to do. The most lasting and fulfilling ways to make money all involve … Read More

Chief economic advisor struggles with economics

David MoonBlog

The debt of the U.S. federal government topped $34 trillion this week, a number so large that it is easily boggles the mind. This may explain why in a new documentary titled “Finding the Money,” Jared Bernstein, Chair of the U.S. Council of Economic Advisors, sounded like a third grader who didn’t do his homework when trying to explain the differences between monetary policy, fiscal policy and printing currency. Here is Mr. Bernstein’s answer, which I think I have transcribed verbatim, except for removing 13 “ums” and “uhs.” “Well, I mean, again, some of this stuff gets … some of … Read More

Thoughts following Berkshire Hathaway meeting

David MoonBlog

Last weekend, more than 40,000 people gathered in an arena in Omaha, Nebraska for the Berkshire Hathaway annual shareholders’ meeting, the most unique such meeting among public companies. The official business portion of the meeting lasted 5 minutes, followed by 5 hours of Berkshire CEO Warren Buffett fielding questions from shareholders from around the world. Buffett addressed questions about some of the company’s investments. He sold 13% of the company’s Apple stock at a massive gain. He sold all of the company’s Paramount shares at a massive loss. At the end of its first quarter, Berkshire had uninvested cash on … Read More

TikTok ban is political theater

David MoonBlog

Listening to politicians justify their support for the new TikTok ban, it is difficult to determine if the true purpose of the “Protecting Americans from Foreign Adversaries Act” is to protect our national security from China or our children from mindless videos. It doesn’t matter, however, because the law won’t accomplish either. For members of the fax machine generation, TikTok is a file hosting platform on which users share short videos, most of which likely reduce a viewer’s IQ a small percentage that increases with each day a person spends on the platform. Imagine a cross between Facebook and The … Read More

Protestors confused on investments demands

David MoonBlog

If any of the protesters occupying the campus at New York’s Columbia University are students in the school’s renowned investing program, they should be expelled – if for no other reason, because they lack the most basic understanding of investing and business. (As homage to fellow protestor Arlo Guthrie and Alice’s Restaurant, they should also be required to pick up the garbage.) In addition to the pro-Palestinian protestors more extreme demands, the campus protestors want Columbia’s endowment to divest of companies that do business in Israel. These offending companies include Microsoft, Google and other big tech firms that have contracts … Read More

President is poor stock market predictor

David MoonBlog

I seldom make predictions, but late last year I made one that was as close to a sure thing as is possible: the closer we get to November 5, the percentage of public economic-political comments that are stupid would approach 100. We still have six months until the election, but my prediction has already proven accurate. Here are a few more predictions, in each of which I have similarly high confidence. At least 50% of Americans and 40% of voters will believe that the winner of the presidential election will prove disastrous for our country. I also predict that the … Read More

Q1 2024 client letter

David MoonUncategorized

April 2024 Dear clients and fellow shareholders: Over a period as short as a few months – or even a year – stock prices can be influenced by almost anything, including factors that are completely unrelated to the actual values of the underlying businesses. The 5-to-10% rise in the U.S. stock market during the first quarter was a pleasant reminder of that fact. (Our stock portfolio increased approximately 13% during the first quarter. Your actual equity portfolio returns in each year likely differed somewhat from our model, due to your specific asset allocation, possible legacy positions in your account and/or … Read More