Your house is not an investment

David MoonBlog

In last week’s column, I noted that the official Bureau of Labor Statistics method of measuring housing costs was so convoluted that it results in a gross understatement of the true rate of inflation in the U.S. Implicit in my comments was the assumption that few people are fans of record high inflation. Apparently, I was wrong. Several readers, most of whom appear to be related to the residential real estate industry, wrote me, arguing that inflation is good for asset owners, especially homeowners. In one email a title company employee wrote that home ownership was the best way for … Read More

Official inflation figures misleading

David MoonBlog

If you are looking for a house and are shocked at the prices, you are obviously misinformed.  While it might appear that home prices in Knoxville increased 15 percent in the past year, the federal government’s crackerjack statisticians tell us that national home prices increased only 4.7 percent. Both the National Association of Realtors and online broker Redfin report a 16-17 percent increase last year. Who are you going to believe: a bunch of PhDs on the government payroll or your lying eyes? The most recent U.S. Bureau of Labor Statistics (BLS) inflation report tells us that consumer prices increased … Read More

Punish judges who break the law

David MoonBlog

The U.S. Attorney General Merrick Garland recently offered a warning to white collar criminals who might have historically used the shield of a corporation to avoid personal criminal prosecution for their misdeeds. “The essence of the rule of law is that like cases are treated alike,” Garland said. “[There is not] one rule for the powerful and another for the powerless; one rule for the rich and another for the poor.” It’s a shame Garland can’t start his equal justice efforts by putting lawbreaking federal judges in prison – or, at least tossing them from the bench. A recent Wall … Read More

Fed inaction limits war options

David MoonBlog

Wall Street fears higher interest rates more than it fears war. That’s at least one interpretation of recent stock market moves. In the first three trading days following Russia’s invasion into Ukraine, the U.S. stock market increased more than three percent – including overcoming an initial 700-point Dow Jones Industrial Average drop in the opening minutes following the start of the invasion. The market’s reaction isn’t based on speculation that Russia will fail in its attempt to overthrow the Ukrainian government or that the assault will be short-lived. No, investors breathed a collective sigh of relief when they realized that … Read More

Market decline tempts panic

David MoonBlog

The U.S. stock market hasn’t exactly been in a free-fall since the beginning of the year, but it has certainly racked up some notable losses. The tech-heavy NASDAQ Composite is down almost 15 percent. The S&P 500 has declined ten percent. Recent Wall Street darlings such as Facebook (renamed Meta Platforms), PayPal, Netflix, and vaccine-maker Moderna have all dropped 35 percent or more this year. What action, if any, should an investor consider now? If you are one of those rare individuals who can predict when the stock market is about to change directions and for how long, you don’t … Read More

Crypto ads reminiscent of 2000 Super Bowl

David MoonBlog

One of this year’s new Super Bowl advertisers was Coinbase, operator of the world’s largest cryptocurrency exchange platform. The company provides its users access to what some people describe as the most technologically sophisticated financial products in the history of mankind. The Coinbase website crashed during the commercial. Coinbase was one of four cryptocurrency advertisers in this year’s Super Bowl. These companies want to solidify your financial future by enabling you to easily buy and sell Bitcoin, Ethereum, Litecoin and any other of the more than 10,000 different digital currencies that have been created so far. It was impossible not … Read More

Supply chain not quickly fixable

David MoonBlog

Because of supply chain problems, it’s been weeks since I’ve had Sweet P’s spicy fried pickles or a delivery of lemon-lime Gatorade Zero. The supply chain is seemingly responsible for anything that doesn’t go well, including consumer inflation, skyrocketing house prices, Adele cancelling her Las Vegas show and Tennessee’s basketball loss to Texas. Okay; I made up that last one. But if something bad happens these days, you can almost guarantee that someone will blame it on this quasi-nebulous, ominous-sounding, all-encompassing thing: The Supply Chain. An academic definition of supply chain includes about everything a company does. A supply chain … Read More

Market swings are like football cheers

David MoonBlog

In the first three weeks of this year, the Dow Jones Industrial Average (DJIA) declined 2,200 points, or six percent. Technology shares fared much worse, with the Nasdaq Composite Index falling more than twice that amount. This past weekend investment bank Jeffries sent clients a note saying there were signs the U.S. stock market was nearing a bottom. By noon the next day, the DJIA had dropped another thousand points. The highest-paid analysts on Wall Street can’t predict what the stock market is going to do in the short-term. Neither can you. Here in dependably Republican East Tennessee, few observers … Read More

Focused action needed from Fed

David MoonBlog

One afternoon following a recent 200-point decline in the Dow Jones Industrial Average, Fox Business News host Charles Payne remarked, “The market had a tough week; the big nemesis is the Federal Reserve.” I hate to break the news to Mr. Payne, but the role of the Federal Reserve is not to support or prop up stock prices. Nor is the purpose of the Federal Reserve to combat climate change – something the newest Fed Board of Governors nominee has suggested is a proper function of the U.S. central bank. It is intriguing that an entity with more than $9 … Read More

2021 Q4 client and investor letter

David MoonUncategorized

January 2022 Dear clients and fellow shareholders: By almost every broad measure, 2021 was a great year for investors. All major U.S. stock indices increased more than 20 percent, finishing the year at all-time highs. Our stock portfolio performed even better (up approximately 30 percent, excluding cash and bonds), despite not owning the ridiculously priced tech stocks that always seem to grab headlines. We enjoy those types of returns at least as much as anyone else, but not to the point of ignoring the components that generated those returns. Not all price increases are created equal – and some are … Read More