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

The U.S. economy needs a recession

David MoonBlog

To reduce inflation, this economy needs a recession. Every economist knows this, although few will publicly say so. To reduce consumer prices, we need an increase in the supply of consumer goods or a reduction in the demand for them. Increasing the supply of goods is a time and capital consuming process that would result in lingering and persistent inflation. The only relatively quick way to reduce prices is for people to quit buying so much – and the simplest (and most painful) way to do that is with a recession. Consumer expectations about inflation are somewhat self-fulfilling, which is … Read More

Electric vehicles not a new idea

David MoonBlog

According to the website InsideEVs.com, all-electric vehicles now comprise 3.4 percent of all U.S. vehicle sales – a record high. I have no reason to question InsideEVs’ figures, but I do question its knowledge of history. The peak of the battery-powered automobile wasn’t 2020 or 2021; nor will it be 2022. It won’t even be within the next five years – and maybe not within ten years. No, the peak of the all-electric car market was more than 120 years ago, when in 1910 38 percent of automobiles in the U.S. were battery powered, compared to a 22 percent market … Read More

Some unofficial World’s Fair history

David MoonBlog

Having lived in Knoxville during the duration of the 1982 World’s Fair, I have enjoyed recent news reports about the world’s six-month visit to East Tennessee. Curiously, however, despite visiting the Fair at least 50 times, I don’t recognize most of the official events described in the pieces. As a 19-year-old college student with an employee’s pass and a girlfriend working at gift shop on the Clinch Avenue bridge, the unofficial experience was a bit different. I never saw any of the heads of state and other dignitaries who apparently visited the Fair, although the Secret Service did occupy the … Read More

Is the crypto Emperor naked?

David MoonBlog

If you don’t understand something, don’t put your money in it. Period. Full stop. Since last fall, the collective value of major cryptocurrencies has declined at least $2 trillion – when measured in quaint, old fashioned U.S. dollars. Multiple cryptocurrencies designed to peg their values to the dollar failed at that mission, with one (the UST stablecoin) declining more than 90 percent. Another, something called a LUNA token, dropped from $100 to $0.0001. These collapses may prove to be temporary, offering investors a chance to buy digital currencies at a significant discount to their underlying values. Or not. Perhaps I’m … Read More