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Damir Tokic calls the current market the “Mother of All Bubbles.” This is due to what he describes as a “bubble in earnings”, with a historically high 42x Shiller Price/Earnings (P/E) ratio applied to these peak earnings.
After a solid start to the year, stocks swooned in March, with the Vanguard Total Stock Maret Index fund (a good proxy for the entire US stock market) going from a positive year-to-date return of 2.4% in late January to -6.7% in late March. While a 9% negative return is common historically, in recent years such things are not supposed to happen. Not to worry, investors quickly got used to $100 oil, or decided that it just didn’t matter or wouldn’t last, and stock prices rallied again. From the end of the quarter to the date of this writing (June 4), the S&P 500 has returned about 15%.
This classic personal effectiveness book is one of my all-time favorites. I just read it for the third time, and believe everyone should read it at least once per decade. The book examines seven essential habits for personal effectiveness, giving detailed explanations and using real-life stories to illustrate. Dr. Covey did an extensive review of the American literature of self-improvement and found that the earlier literature (the Puritans through the 19th Century) focused more on character, while the twentieth century literature focused more on techniques. There is nothing wrong with learning techniques for success, but only if we start with the foundation of the proper character.
Alternative Investments, or “Alt’s” for short, have being gaining popularity for the last decade or so, and now have been in the headlines for some potential problems, particularly in Private Credit. Let’s take a look at what Alt’s are, and why investors may, or may not want to include them in their portfolio.
Economist and investor John Hussman stated it well, “The defining feature of every bubble is the same: a growing inconsistency between the long-term returns that investors expect in their heads – based on extrapolation of the past, and the long-term returns that properly relate prices to likely future cash flows – based on valuations.