Conservatory Chat

Buying a home in America is just too darned expensive, what with today’s rapidly rising home prices. Right? You might be surprised to know that, according to a somewhat complicated calculation, U.S. homes, on average, are among the most affordable in the world. To come to that conclusion, the Best Brokers organization calculated how many months of average income, in each country, it would take to...

What’s up with these huge swings in the markets? Well, (obviously) it’s currently the tariffs. Lately, traders approved of the temporary lifting of the most onerous tariffs on everybody but China. Then, they disliked the tariffs on the delicate chips and the computer assembly sector of the Chinese economy. Next, they applauded when those were lifted. In direct and nearly immediate response, they d...

After two years of stellar returns, the U.S. investment markets have decided to give back some of their recent gains. The risk of a slowdown in consumer spending and the uncertainty over trade wars and tariffs have created some market jitters that are raining on the bull market parade. What's going on? To begin with, it's fair to question whether U.S. companies, in aggregate, were truly...

With the unprecedented restructuring wave going on across the federal government, unorthodox personnel management, appointment of candidates with controversial backgrounds in the departments they’re running and a wave of tariffs the like of which the world hasn’t seen since the 1930s, it’s easy to imagine that something might go wrong with the U.S. economy in the fairly near future. People are cal...

The catastrophic wildfires in Los Angeles represent a terrible human tragedy, and for many homeowners, it will become an awful financial tragedy too, as thousands will discover that there’s a big gap between what their homes are worth and what they’ll get from insurance companies to rebuild on top of the ash. It’s also worth noting that they’re not alone. A recent article in Bloomberg News says th...

The U.S. investment scene, in aggregate, churned out another unusually positive investment experience this past year, with 20+ percent gains heaped on top of 2023's historically unusual gains. The experts who follow these matters say that ebullient investor expectations rest on the idea that artificial intelligence will improve the economy, help companies achieve unusual productivity gains, a...

Legendary investor Warren Buffet, chairman of Berkshire Hathaway, was asked about investing in gold, and he was perplexed by the question. His response was that gold (unlike investments in stocks and bonds) doesn’t build value in the economy, doesn’t generate annual dividends or interest, and generally relies on finicky investor sentiment to move its price (and value) up or down. He wondered what...

When it comes to the economy, the Fed Funds Rate is one of its most closely watched and talked about factors driving the conversation. Pundits endlessly opine, while economists pour over the tea leaves that are the Federal Reserve’s minutes and press conferences. From all this, it would be natural to assume that this is the only lever that the Fed is pulling when it wants to raise or lower the tem...

We’ve been hearing about how America has underinvested in its infrastructure for decades, and how the new Infrastructure Investment & Jobs Act is supposed to turn that around. Some of us have looked with envy at the amazing rapid-rail system that connects every part of the Chinese countryside, and Los Angeles residents are (or should be) envious of New York City’s subway system.   But many tax...

The rarest of economic events is the so-called “soft landing,” where a robust economy (and long-time bullish markets) are gradually cooled without triggering a recession and bear market. We might be witnessing such a phenomenon today, though nobody will quite say we're out of the woods yet. As has been the case for most of 2024, the U.S. markets seem to be testing new highs every week or so,...

Against all odds and expectations, the number of women who either choose not to have children or, for other reasons, do not, has become a major political issue. This raises the question – are more women today choosing to go childless versus their parents’ or grandparents’ generations? The answer appears to be yes. A survey found that the number of women of prime child-bearing age who were not havi...

Quick – name the world’s greatest market timer in all history. This is a question I often raise with investors who want to act on their impulse to get out of the market at the first sign of a hiccup or put all their money into AI stocks for fear of missing out. The typical reaction is a blank stare. Now we can debate the greatest tennis players or the pantheon of great chess players throughout his...

Do you have any leftover euros from your last vacation in Europe? You might want to hold onto them. The U.S. dollar is declining in value compared with a basket of international currencies. The greenback has fallen 5% in the last two months and now sits at a 13-month low. Should we be alarmed? Probably not. Other nations go to economic war over trying to devalue their currencies compared with the...

There are two kinds of car owners in this world: the people who buy a new car every few years, and the people who continue driving their older cars until the transmission drops out onto the pavement. A recent study shows that a growing number of people are shifting from the former to the latter, and the trend has been going on for a while. In 1977, only 16.9% of cars on the road were at least 10 y...

The U.S. is experiencing a new epidemic: bankruptcies. Filings are up 28% from this time last year, for a total of 45,592 over the past 12 months. Commercial Chapter 11 filings, meanwhile, increased 40% to 542 – meaning the contagion is not just confined to individuals who have maxed out their credit cards. Small businesses have seen their total filings increase by 60%. The main cause of the bankr...

Yes, folks, our government just keeps making our lives simpler and simpler by the day. There was a time, back before 2020, when the rules covering people who inherited traditional IRA accounts were simple. Before the SECURE Act was passed, people could spread out their distributions from these inherited retirement accounts over their lifetime, using a simple mortality table. (No, not completely si...

We’re starting to see private equity firms make short-term investments in companies across the business landscape. At best, they’re looking to make a quick buck; but at worst, they’re looting the companies they “invest” in and leaving others holding the bag. One recent example is the Red Lobster bankruptcy, which closed locations nationwide and laid off 36,000 workers. A private equity firm called...

The markets seem to be testing new highs every week or so. But the first thing you’ll notice, if you look closely at the numbers, are the more modest returns experienced in the second quarter compared with the first. The commentators and pundits interpret that as the markets “running out of steam.” However, the early part of the year might be more accurately described as a period of over-enthusias...

Several U.S. states have become attractive destinations for retirees since they don’t charge state income taxes. Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming fall into this thrifty category. New Hampshire would but the state does charge a flat 4% tax on interest and dividend income. So those states are the cheapest places to live, from a tax standpoint, right? When you...

It seems like every news cycle includes an article about how the Social Security trust fund is about to run out of money. “About” may be somewhat of a misnomer.  Estimates vary, and change as the economy goes through its ups and downs, but the latest estimate suggests that the trust fund will run out of money by 2035, in 11 years. That doesn’t mean that a decade or so down the road we will witness...

Let’s talk about opportunities in a downturn. While we can’t predict a market downturn in advance, we certainly can be prepared for one. With the market recently in the doldrums, now may be a good time to review the opportunities we can exploit when others rush for the door.   The first one to come to mind is tax-loss harvesting; that is, selling positions that have gone down below one’s cost, boo...

A dinner guest at my home last evening inquired as to whether I invested clients’ money in hedge funds. Their thinking was that institutions like large endowments invest in them, so that must be where the really big money is made. I explained that large endowment funds invest only a tiny fraction of their money in things like hedge funds; and that the bulk of their money is invested in safe invest...

Did you miss the latest market gold rush? In the 1967 movie The Graduate, the one word was “plastics.” Today it’s two words: “artificial intelligence.”   Where is this latest El Dorado of the equities market? Well, in the stock of firms like Upstart Holdings (up 393% this year alone), C3.ai (255%), Nvidia (220%), Palantir Technologies (177%), and Meta Platforms (170%). How could anyone have missed...

The U.S. Federal Reserve Board once again last month raised the so-called Fed Funds Rate that our central bank charges lending institutions on overnight loans. Who cares? What we hear in the press centers on speculation as to how the Fed economists and governors are thinking in terms of further rate hikes, and what the impact will be (or not be) on inflation and the prospects of a recession.     B...

You may have heard of the 4% rule in retirement. Basically, it means that you should be able to safely take out and spend 4% of your retirement portfolio in the first year of retirement, then increase that dollar amount by the inflation rate for the next 30 years, and you should be able to count on that income no matter what the markets do. Notice all the “shoulds” here. This “rule” was formulated...