Cancelling debt, Spam and other pestering questions

David MoonBlog

If William Devane and Rosland Capital are so convinced the price of gold and silver are going to increase, why are they selling precious metals instead of buying them? And why does Tom Selleck need a reverse mortgage? Why don’t all investment advisors own the same securities they recommend or sell to their clients? When CNBC says investors sold stocks and there is now a record amount of cash “sitting on the sidelines,” to whom did they sell their shares? How does a lifetime elected official amass a multimillion-dollar net worth? Why are there 7,000 pages in the US tax … Read More

Old Apple ad offers timeless lesson

David MoonBlog

Last week I read a 1987 Sports Illustrated article about John Madden and two things stood out to me. The articles were much longer and some of the ads were comically naive. The article length probably shouldn’t have surprised me. Attention spans are almost certainly shorter today than 35 years ago, despite a doubling of US prescriptions for ADHD in the past decade. Images on television shows (or whatever they’re now called) change about every 5-to-7 seconds, even on news programs. I think Walter Cronkite and Bill Williams would sometimes be the primary or only image during a newscast for … Read More

Unintentional confusion or intentional misdirection?

David MoonBlog

The last time I remember anyone of even moderate significance trying to redefine the word “recession” was then-president George H. W. Bush in the spring of 1991. His efforts to ignore the universally accepted (until a month ago) definition of recession was evidence to voters that he was out of touch with the plight of normal, non-millionaire Americans. Little more than a year later, voters made Bush 41 a one-term president, replacing him with Bill “it’s the economy, stupid” Clinton. The current effort to redefine the word recession is similarly futile, but it isn’t the only economic silliness coming out … Read More

Falling gas prices don’t signal end of inflation woes

David MoonBlog

When gasoline prices dipped about 50 cents a gallon in mid-July, observers speculated (hoped?) that June’s 9.1 percent inflation might signal the peak of rising prices. Possibly. But a reduction in inflation is significantly different than a reduction in prices. Even if inflation falls by half, the annual rate of consumer price increases would still be twice the average annual increase over the past 30 years. Anyone who is looking forward to a consumer market that returns to anything like that of 2019 is going to be disappointed. The government’s response to Covid resulted in the single largest yearly growth … Read More

Can money buy happiness?

David MoonBlog

We’ve all been told that “money can’t buy happiness,” but a group of European researchers have concluded that millionaires tend to become more extraverted, conscientious, and emotionally stable than others – especially self-made millionaires, implying that money can buy happiness. Researchers from the German Institute for Economic Research found that millionaires who inherited their wealth tend to exhibit less pronounced signs of emotional stability than millionaires who were born into modest economic circumstances and had to earn their wealth. Curiously, the relationship between earned wealth and emotional health also holds true among non-millionaires. People who earned their way into higher … Read More

Q2 2022 letter

David MoonUncategorized

July 2022 Dear clients and fellow shareholders: Sir John Templeton once famously said that the most dangerous words in investing are “this time it’s different.” In the past 100 years, U.S. stocks have experienced 22 bear markets, the most recent of which began two weeks ago. The market eventually recovered from all 21 previous bear markets – and we expect this one to be no different. (We sent you an email on June 14 with historical bear market statistics and a white paper about bear market severity and duration. If you missed the email and would like us to resend … Read More

Crypto exposes common investment mistakes

David MoonBlog

An estimated 20 percent of Americans own any form of cryptocurrency, suggesting that it is unlikely that many readers of this column own any Bitcoin, Ethereum or Dogecoin. That’s great news, since those three supposed saviors of the U.S. economy have declined 60 percent this year, wiping out $1 trillion in investor capital. But the collapse of the crypto market reminds me that if investors could just avoid a few basic and common mistakes, they could avoid a lot of unprofitable moves. Never invest in something you can’t simply explain, ideally to a child. This one rule would prevent a … Read More

A look ahead, by looking back

David MoonBlog

In 1987, I had been working in the investment business less than two years when the Dow Jones Industrial Average collapsed almost 23 percent in a single day. My wife and I had just closed on what we thought was our forever dream home: a newly built, three-bedroom house with vinyl siding in a brand-new Gordon Enger neighborhood off Cedar Bluff. Our purchase price was $76,000, most of which we financed at 9.29 percent. Current mortgage rates and a 20 percent decline in the U.S. stock market have me a bit nostalgic lately. So does almost nine percent inflation, although … Read More

Explaining high gas prices

David MoonBlog

A popular narrative is that corporate greed is to blame for higher gas prices. That ExxonMobil earned twice as much in the first quarter of 2022 than in 2021 is offered as “memeconomic proof” of the argument. You will get no disagreement from me that oil company executives are greedy. But blaming higher gas prices on some sudden increase in corporate greed is naïve, illogical and wrong. ExxonMobil’s first quarter 2022 earnings of $5.48 billion were twice that of Q1 2021. But its first quarter 2022 earnings were 38 percent lower than the in the fourth quarter of 2021, despite … Read More

A look at the next recession

David MoonBlog

If the U.S. economy will require a recession to combat inflation in a timely manner (which I personally believe), what might the next recession look like? The accepted definition of a recession is two consecutive quarters of declining Gross Domestic Product (GDP). Since GDP declined 1.5 percent in the first quarter of this year, a decline in the June 30 quarter would mean that we entered a recession in January of this year. The second quarter figure will be released on July 28. The consensus estimate is that second quarter GDP will increase about two percent, meaning that the two-quarter … Read More