May 29, 2020
By Steve Blumenthal
Wisdom (noun): The quality or state of being wise; knowledge of what is
true or right coupled with just judgment as to action; sagacity, discernment, or insight.
This week you’ll find my summary notes and thoughts from Dr. Lacy Hunt’s SIC 2020 presentation. He says the primary risk is deflation—not inflation—and remains bullish on long-term U.S. Treasury bonds. He laid out his case, which I have summarized in bullet-point format below.
You’ll also find the link to the latest Trade Signals, which highlights the impact of just four stocks: FANG Stocks Up 400%, S&P 500 Index ex-FANGs up 35%, S&P 500 Index up 45% (2015-Present). Think about that for a second, and then think back to #1999. Sell (or hedge) the big rallies; buy the big dips. High valuation levels limit the upside, the Fed supports the downside. Maybe.
I have a great Ned Davis quote I wrote on a sticky note years ago and I keep it on my desk. “Listen to the cold bloodless verdict of the market. That’s what priced-based indicators accomplish.” It’s been a bloodless verdict for the short sellers. What a squeeze.
Lastly, you’ll find Dr. Michael Roizen’s comments on data from his home state: Ohio. Dr. Roizen founded the Wellness Institute at the Cleveland Clinic. At SIC 2020, he presented on what we do and don’t understand about the novel coronavirus. There is some good news in the data.
Grab that coffee and find your favorite chair. If you are reading this week’s missive via your email inbox, click on the orange On My Radar link to access the full post. And thanks for reading.
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Included in this week’s On My Radar:
- Dr. Lacy Hunt: The Risk is Deflation, Not Inflation
- My Summary Thoughts on Dr. Lacy Hunt’s Presentation
- Trade Signals – FANG Stocks Up 400% , S&P 500 Index ex-FANGs up 35%, S&P 500 Index up 45% (2015-Present)
- Personal Note – Covid-19 Update
If you haven’t yet experienced a Mauldin Strategic Investment Conference in person, do put it on your list of things to do. The sessions alone are stimulating, but it is the networking that is the most enjoyable. When Lacy began his virtual presentation two weeks ago, he said, “I must say that I’m a little sad today. I’ve greatly enjoyed the SIC conferences over the years. I’ve met a lot of interesting people and I was looking forward to continuing the discussions from bygone years.”
Nothing can compare to spending time together in person, but thankfully Lacy and other presenters engaged our minds and advanced our understanding virtually, helping us figure out the probability of certain events and the opportunities they present in the period ahead.
As you may know, I’m in the process of organizing my notes. The objective is to use them to get the odds in our favor. If you’ve signed up to receive my summary notes, I’ll be sending them to you periodically, along with my concluding thoughts. If you haven’t done so yet, you can sign up to receive them here.
Further, Mauldin Economics is offering access to the video replays of more than 40 world-class presenters from this year’s SIC for 50% off the conference rate—$200 for invaluable insight into the present and future of our economy, health, and more. The panel discussions alone are fantastic. It’s fun to watch Lacy press Woody Brock and Woody press back. I don’t earn a penny for promoting this opportunity—I’m just a big fan and happy customer. Click on the image below if you’d like to learn more.
Let’s dive right into my bullet-point summary of Dr. Lacy Hunt’s presentation:
- The reopening of America will produce a recovery that will look impressive initially, but only because we will be improving from disastrously low levels.
- Recovery will fall far short of recouping the output spending and jobs we have lost, leaving us with vastly underutilized resources while measures are taken to address the miserable circumstances.
- Those measures are essential, and yet they will increase the level of federal government debt tremendously.
The even more burdensome debt overhang will have deleterious consequences for economic growth in the years to come.
- The risk is deflation, not inflation.
Recessions have a well-defined pattern of reducing inflation, but the fall is quite sharp when recessions are severe—as shown in my first chart.
- In this chart, we’ve looked at the peak-to-trough drop in the Fed’s core inflation rate associated with the three worst recession since the end of World War II. (SB here: yellow highlights are mine.)
- Also notable is the drop in oil price, which is the dominant item and not included in core prices. I draw your attention to line number 4 in these 3 serious recessions. The inflation rate fell approximately 400 basis points. But in these cases, the oil price on average was unchanged.
- In the current case, oil declined 70%. Evidence suggests a deflation rate of 200 basis points at minimum. (SB here: I had a discussion with Lacy prior to the conference. He believes we may move from just under 2% inflation to -2%—a drop of 400 bps.)
The Fisher Equation says Treasury bond yield equals the real rate + inflationary expectations. Check out the next chart. The red line is inflation and black line is the Treasury bond yield.
- If inflation moves to deflation, inflationary expectations will drop, which means the Treasury bond yield will drop.
- Expect the black line to move lower.
- The drop in inflation came at a time when the economy was already vulnerable to deflation.
From 1790 to 1999 in all the major economies of the world, real GDP grew at an average annual rate of 1.90% per year (“real” means after inflation is factored in). From 2000-19, real GDP grew at 1.20%.
- The difference is that the period from 2000-19 is a period of extreme over-indebtedness.
- We’re talking about 200+ years of data vs. just the last 20 years.
- A significant decline in growth. One of the lessons of economic history is that when GDP growth declines, real yields decline.
Lacy next looked at U.S. private and public debt as a percentage of GDP.
- It reflects the most serious difficulty that the US economy is going to face over the next several years.
- The dashed line in the upper right-hand corner of this chart indicates that in 2020, we will establish a new debt-to-GDP peak of greater than 400%, which will eclipse the peak reached during the Great Financial Crisis. The surge in this ratio has something in common with 3 other episodes (2008, 1929, and 1873).
Lacy noted the difference between now and those prior peaks. After the 1929 and 1873 peaks, debt-to-GDP was reduced significantly (within 12 to 15 years, the ratio was quite low).
- This time the debt-to-GDP is headed toward a new high.
- After the Great Financial Crisis, we were simply not able to deleverage to any significant degree.
- There’s a great deal of academic research that when the debt levels move above 250 to 275% of GDP (red shaded area on the graph), there is a draining effect on economic growth, which has the effect of reducing the inflation rate.
Lacy pointed to one bright spot:
- The United States managed some de-leveraging.
- However, that’s not the case for the balance of the global economy. China, Europe, Japan and the emerging markets all took on considerably more debt to achieve the paltry gains in growth that were registered over the past decade.
Next: Net saving by sector is net negative
Savings have been declining for years. One of the consequences of large indebtedness and large budget deficits is a very weak national saving rate.
- This chart shows the data before the coronavirus hit. The net national saving was just 2% of net national income (green line). The private sector saving rate is the gray shaded area in the chart. The government was dissaving to the tune of approximately -6%, and net negative for years.
- The difference between the red and green lines was fairly steady at about 8%.
- As a result of the events that have occurred this year, the federal dissaving is going to drop somewhere in the range of -14 to -16% and the private saving rate will go up somewhat. We’ve already seen the household sector increase savings to 13%. Unfortunately, we will see a drop in the corporate saving rate.
Bottom line: We will have net negative national saving for the first time since the 1930s. Now, to understand why this is so critical, check out the equation at the top of the graph.
- The physical investment must equal saving. Saving has three components: private, government, and foreign. Without saving, we cannot have a physical investment.
- And without physical investment, we cannot grow over time and raise the standard of living.
The level of “Gross Federal Debt” should raise a lot of questions from a lot of folks. We constantly hear the argument that increases in government debt will stimulate economic activity, boost economic growth, accelerate the rate of inflation, and lower the value of the dollar.
- Unfortunately, that’s not what’s happening. This next chart shows the current reality:
- Notice that there is a stark inverse relationship between government debt-to-GDP and the long bond.
- The debt is on the right-hand axis, and the bond yield is on the left-hand axis, and now we’re going up to 125% or 130%.
Let’s go to the next chart…
- This shows that there’s an inverse relationship between government debt-to-GDP and the bond yields of our major foreign competitors.
Let’s move on to the next chart. It shows that we’re taking on more and more debt and it is becoming increasingly less sufficient. This is a result of the law of diminishing returns.
- One of the most important concepts in economics is the production function, which says that economic output is determined by technology interacting with the three factors of production: land, labor, and capital.
- If one of those factors of production is overused, output initially rises, but if the overuse continues, eventually the output will fall. In other words, there’s a nonlinear relationship. More does not beget more. It produces less.
On to the next chart.
- Look at the first column. Notice what has happened in the United States over the last 20 years: The productivity of our debt has dropped from 50 cents to 40 cents.
- In other words, we’re generating only 40 cents of GDP growth per dollar of debt.
- And the situation is worse for every major competitor. In Japan, it’s only 26 cents. Europe and China are in the 30-cent range. Lacy did some preliminary calculations based upon where the United States is likely to be at the end of the year. It’s somewhere around 25 cents, maybe a little higher.
- But all of the rest of the world will be substantially lower, and in relative terms, the Chinese are taking on even more debt than we are and the Europeans about the same amount. In other words, we’re trying to solve an indebtedness problem by taking on more debt, and that simply does not work.
Another element in the production function that is quite worrisome is the demographics.
- Last year, population growth in the United States was at its lowest point since 1918: less than half of 1%. By the way, that’s rather ironic, since 1918 was the year of the Spanish flu pandemic. But compare the US figures to Europe’s, at only 0.2%; China, which was unchanged; and Japan at negative.
Now, this has important implications for how growth will rank among the leading economies of the world going forward. We turn to the next chart.
So, we’re going to work with the production function, which says, again, that output is determined by technology interacting with land, labor, and capital concerning technology.
- We can assume that the technology that we will experience is, first of all, transmitted very rapidly across the world, and that it is rather unimportant as to whether technology is developed in one country or another. It’s transmitted quickly to everyone. So, there are no lasting benefits to being the one to develop it.
- I’m also going to assume, following the great work of Robert Gordon of Northwestern University, that the technology we’re experiencing today is of an evolutionary nature, not a transformative nature. Thus, technology does not enhance the demand for labor and raw materials.
It’s not like the combustion engine or the transmission of electricity or modern sanitation. So, we also know that natural resource factors have not been an important element to its progress.
- What this means is that we can make an assessment of relative economic growth based upon the marginal revenue product of debt and the demographics.
And as you can see, all of the four countries that we’re looking at here (in the above chart) are producing numbers that add up to less than 1 in real per capita terms.
- This means that economic growth will stagger for a long time, well into the future.
- However, on a relative basis, the performance of the U.S. is better than the rest of the world. Although we’re not in good shape compared to where we have been, we’re still in better shape than our major competitive partners, which means the dollar should hold its relative value.
Let’s go on to the next chart, which shows the world economy was not in a favorable position to handle the coronavirus.
- World trade volume declined last year.
- It was only the third time since 1980. The two other periods were the recession of 1982 and 2009. And the only numbers are deteriorating.
- Further, historically, world trade volume has been about 5%, and world GDP growth has been 2.5%.
- And so even before the events of this year, the deteriorating global picture was negative for US economic growth going forward.
Let’s look at the next chart and talk about monetary policy. There is a great deal of confusion about what’s going on here.
The monetary base (the orange line) and the total reserves of the banking system have surged to record levels, and many people believe that this is tantamount to printing money.
- When the Fed buys government securities, they issue deposits at the Federal Reserve. So, when the funds move through the banking system, there is an initial increase in the money supply, but the deposits of the Fed do not circulate.
- They do not constitute legal tender for there to be second-round increases in the money supply.
- The banks must be willing and able to utilize the excess reserves that they have, and that requires them to put their capital at risk. Borrowers must do the same.
- We’ve now seen a substantial amount of excess reserves for more than 10 years yet lending never got out of control and neither did money (supply growth).
And even though the balance sheet expansion by the Fed is unprecedented, the ultimate results will be the same.
Let’s go to the next chart. The money supply has surged very dramatically.
- It’s up by more than 15% year over year.
- The three-month growth rate is approaching 50% and that seems worrisome.
- However, notice that during quantitative easing the three-month growth rate surged as well, but there was no inflation then.
And the reason is the same then as it is today, which is shown in the next chart.
- The Federal Reserve does not control the decision of the banks and their customers to utilize excess reserves and they do not control the velocity of money, which has been in a major secular downturn since 1997. This is no accident.
- The velocity of money is influenced by many factors, but the most dominant is the marginal revenue product of the debt. (SB here: Eventually we must repay the debt. When you owe too much, you won’t desire to and/or be able to borrow more. Your velocity goes down. Your spending is someone else’s income.)
Money goes to repay principal and interest; thus, velocity declines, as indicated in the next chart.
- We fell to the lowest level since 1946 in the first quarter of this year.
- And there will be further declines as we move forward because the debt that we’ve taken on is merely for survival, not for productive uses.
Let’s move on to the next chart. We see, not surprisingly, that since the marginal revenue product of debt is weaker outside the United States, the velocity of money is even weaker in Europe.
- Money turned over less than one time per year in 2019 and only about a halftime per year in Japan and China.
Let’s go to the next chart. Another major vulnerability that the economy faced coming into this year was that corporate profits have been disappointing for more than eight years.
- In real terms, corporate profits late last year were unchanged from 12 years ago, and profits were about 4% lower than they were at their peak in 2014 (and these are after-tax profits).
- Without the tax cut, the numbers would look even worse. And as a result of the weakness in profits and the general insufficiency of net national saving, capital spending, which is shown in the upper left-hand corner of the chart, had been decelerating for eight years.
On to the next chart. A vibrant stock market does not mean that profits are good, nor does it mean that capital spending is strong.
- The fundamentals were not there, and
- capital spending was weakening, and
- this is one of the elements that held back economic growth and contributed to the very poor performance in the prior expansion.
Let’s go to the next chart. Another vulnerability that we had is that the corporate balance sheet was more over-leveraged than at any other time. Now, the apologist of the corporate debt makes the argument, “Well, interest rates are low, and the good times were assured. Therefore, we knew we had a good source of cash flow to pay off the debt obligations.”
- But this is a fallacy…It’s wrongheaded thinking in my view.
- The income stream was not solid. As the coronavirus demonstrated and as we will find out once again in deflationary periods, the private interest rates do not fall in line with the Treasury. They will rise.
- Firms and individuals who borrow in deflationary times will have to pay off debt in harder dollars, and this will cause a rise in the risk premium lenders will charge.
- Therefore, there will become a gap between the Treasury yields and private yields. (SB here: Treasury yields are held down by coming Fed yield curve control, also known as printing money and buying outstanding government bonds to suppress yields.)
- And so, in essence, the cost of corporate debt will go up at a time when corporate earnings are declining.
This next chart looks at real per capita GDP since 1870. Over this period, economic growth was 2.2% per annum. At the end of this year, we will have a decline of somewhere of around 7 to 8% as we close, compared to 2019 levels.
- This means we’ll have the worst recession since the one immediately after World War II, and that will bring the trend rate of growth in economic activity down to just 0.9%.
As a result, the output gap, which is captured in the next chart, will deteriorate very substantially into the shaded areas (shown in the lower right-hand corner of the page).
Lacy recognized four past economists that have been particularly important to him: Ergon Bombay, Irving Fisher, Charles Kindleberger, and Hyman Minsky.
- They explained the double-edged nature of debt is an increase in current spending in exchange for a decline in future spending, unless the debt generates an income string to repay principal and interest…
- The ever-increasing use of debt further impales economic potentiality, resulting in increasingly persistent output gaps.
- The US now faces a record deflationary gap (which you can see in the checkered shaded box on the lower right-hand side in the above chart) that will take us years to close, all while putting downward pressure on prices and wages—an eventuality that will be difficult for people to deal with since they do not have experience with either in their daily lives.
This will force the Treasury yield curve into the zero bound and hold it there, which is shown in the last chart. Compare the current yield level with the last 4 recessions.
- After each of the last four recessions, long-term Treasury bond yields were 300 basis points (or 3%) higher than three-month Treasury bill yields.
- A steep yield curve (long-term yields higher than short-term yields) was needed indefinitely and was provided to deal with significant economic decline.
- The flat yield curve (long-term yields about the same as short-term yields) will serve to reinforce the decline and the marginal productivity of the debt, while also making it a very difficult environment for the financial institutions to operate.
To conclude, think back for a moment over the vast expanse of history.
- The pandemic is a shock that no one could have predicted, but that is irrelevant as shocks have always occurred. To operate on the assumption that a rainy day will never come again is a serious fallacy.
- That is why such greats as David Hume and Adam Smith advised that the best course for fiscal policy is to run surpluses so that when emergencies occur, society is prepared.
- Treasury yields will move lower and stay low for a number of years.
- Corporate bond yields will move higher. Defaults will rise.
- Debt is a drag on growth and adding more debt is problematic. Corporate earnings have been flat for a number of years.
- Future earnings will be lower: Earnings per share have been engineered higher due to corporate share buybacks. Fewer shares in float means that earnings per share goes up. That game is over.
Employment will not fully recover from the Covid-19 shock. There remains too much excess capacity in the system. Thirty-eight million people are now unemployed. Many will get back to work, but not everyone.
- Corporations will look to reduce costs and shore up their balance sheets. That means layoffs. Individual behaviors will change.
- Consumer spending represents about 70% of US GDP. In 2019, it was 90%.
- More savings, less spending.
- Where there is less spending, there is a slowing economy. Your spending is someone else’s income.
- Too much debt and loss of income leads to economic slowdown, and for those too leveraged it leads to bankruptcy.
- The bankruptcy wave remains in front of us.
If earnings are lower, then prices relative to earnings will adjust.
- Our May 2020 valuations starting condition finds us at the second most expensively priced market in history.
- That’s before the earnings challenges are factored in.
- The “this time is different” argument for stocks is “There is no other alternative and the Fed has our back.” Yes but…
- Like periods past, the market is far larger than the Fed. The Fed will be strategic with their fire power. They’ll come in during periods of distress and they’ll ease off the trigger to provide the opportunity for the market to stand on its own.
- Rallies and declines: A more volatile period. Sell the big rallies (greed and optimism), buy the big dips (fear and pessimism).
- The period ahead favors exceptional stock selection and active management/trading strategies.
- Traditional cap-weight index-based buy-and-hold is overvalued and thus will deliver low returns over the coming 10 years.
Deflation is the problem, not inflation.
- This favors investing in long US Treasury securities.
The U.S. is the best-looking horse in the glue factory.
- This favors the US dollar.
Next week, we’ll take a look at Felix Zulauf’s outstanding presentation and update May month-end valuations.
Trade Signals – FANG Stocks Up 400% , S&P 500 Index ex-FANGs up 35%, S&P 500 Index up 45% (2015-Present)
May 27, 2020
S&P 500 Index — 2,865 (open)
Notable this week:
FANG Stocks Up 400% Since 12-31-2014, S&P 500 Index ex-FANGs up 35%, S&P 500 Index up 45%
Take that in for a minute. $100 invested in the FANG stocks (Facebook, Amazon, Netflix and Alphabet (i.e., Google)) is worth $403.90 through yesterday (May 26, 2020). In comparison, $100 invested in the S&P 500 ex FANG is worth $135.12 and $100 invested in the S&P 500 is worth $145.31. Five years and nearly five months.
If you were to equal weight your exposure to the four FANG stocks, your gains would be even better. $100 grew to $522.43 over the same period. However, equal weight reduced the weighting to FANG stocks in the S&P 500 equal weight index resulting in the lower performance since 12-31-2020 (4.07% per annum vs. cap weight 7.16% per annum).
The point here is that just four stocks are driving returns of the major indices – especially the cap weighted indices. At the end of April 2020, FANG stocks represented 16.38% of the S&P 500 Index (cap weighted index). Add in Microsoft and Apple and together the FANMAG stocks represent 21.38% of the index. It is the large over-concentration in just a few names that is cause for concern.
Ed Yardeni put out a research piece on the FANG stocks. You can find it here. He looks at forward price-to-earnings (P/E) ratios (which factors in Wall Street’s forward earnings estimates). I don’t like using forward estimates because they are usually revised lower as we get closer to actual real numbers. Anyway, let’s take a look. As of 5-22-2020, forward P/E on FANG stocks is 62.8. That’s a high number.
Here is a look at the fabulous four FANG forward P/E:
No changes in the Trade Signals since last week’s post. You’ll find the indicator dashboard and charts next.
Not a recommendation for you to buy or sell any security. For information purposes only. Please talk with your advisor about needs, goals, time horizon and risk tolerances.
Click here for this week’s Trade Signals.
“Hold fast to dreams, For if dreams die, Life is a broken-winged bird, That cannot fly.”
― Langston Hughes
An internist, anesthesiologist, author, and entrepreneur, Dr. Michael Roizen is Chief Wellness Officer of Cleveland Clinic and served as founding chair of its Wellness Institute for 10 years. He is also Chief Medical Officer of Health & Wellness Research, his latest venture, and sat on Food and Drug Administration advisory boards for 16 years. His insight matters a great deal—particularly as we attempt to manage the current COVID-19 crisis.
Participants were fortunate enough to hear from him at SIC 2020. With the coronavirus and its implications on not only our financial well-being, but also our physical health, I’m sharing my notes from his presentation below:
Dr. Roizen dug into data from his home state of Ohio. This data is particularly important, as Ohio tracks medical transportation and death differently than many other states. Elsewhere, if someone is moved from a long-term care facility to the hospital and dies, it is listed as a hospital death. Ohio notes the fact that they arrived from a long-term care facility, providing the opportunity for better tracking. With this in mind, he drilled down into what scientists and physicians don’t understand—and what they do—in Ohio and beyond.
What we don’t understand:
- New York has many more deaths than Florida and Texas. We don’t understand why New York’s numbers are so different, particularly when Florida and Texas did essentially nothing to protect themselves, while New York instituted strict measures for containment.
- Meanwhile, California did protect itself. It has very few deaths, but we don’t fully understand why.
- We don’t know much about the impact of antibody testing. We’re not sure what immunity means and what the risk of recurrence is.
- We don’t know about successful treatments or vaccines.
What we do understand:
- There are 12 different COVID-19 tests that work.
- We know the Ohio data. We know the factors influencing death.
- We know that most people under age 50 don’t die from the disease.
- We know that the worst comorbidities for those between the ages of 50 and 70 are a body mass index greater than 40 (very overweight) and high blood pressure.
- Other risks include: Diabetes, heart disease, lung disease, and immune suppression. But they are much smaller in terms of risk vs. high BMI and high blood pressure.
- We know that 45% of deaths were from long-term care facilities (“LTCF”), and that 78% of deaths are people who were 70 years of age and older, making these populations at greatest risk for death.
- We know how to protect each other, and how individuals can protect themselves.
- We think we know that we need a treatment or vaccine breakthrough, to avoid further economic fallout.
- Ohio data through May 13, 2020 showed 26% of deaths were among those aged 7079. Fifty-two percent were from those aged 80 and older. The total of deaths among those aged 70 and older is 78%. 87 percent of those who died were 65 or older.
Roizen later shared updated data through this past Wednesday, May 27, 2020:
- 74% of those who died from COVID in Ohio were in confined spaces: Prisons accounted for 3.8% of deaths and LTCFs accounted for 70.5% of deaths.
- We do not know the ages of the people who died in prisons, but presume they are under age 70.
- This means that 25.9% of deaths were among those not in prison or in LTCFs. So, outside of those in confined spaces, the risk of dying for the rest of the Ohio population was approximately 0.047 per thousand, or 47 per million people.
What you can do to lower your risk:
- Roizen pointed to the importance of lifestyle choices in avoiding chronic disease.
- Immediately lose 5 lbs if you are overweight.
- Focus on reducing stress to lower blood pressure—meditation is a good tool.
- THESE EFFORTS WILL BETTER PROTECT YOU FOR THIS COMING FALL, WHEN COVID IS LIKELY TO—LIKE THE FLU—SPIKE AGAIN.
What you can to do protect yourself:
- Practice physical distancing and isolation if you are high risk.
- Wash your hands, especially before touching your face and eating.
- Heat or reheat food to 140 degrees for 15 minutes.
- Wear gloves, a hat, and N-95 masks.
- The virus seems to love to live in hair, at least in the ICU folks they’ve tested, so keep your hair clean and cover it when you go out.
Dr. Roizen noted researchers filmed 17 hours in fast food restaurants and found that not one mother, father, or grandparent washed their hands before feeding their children/grandchildren and themselves. Not one! He stressed, “Wash, wash, wash before eating!”
What you can do to protect others:
- Physical distancing of 6 feet or more.
- Cloth or N-95 masks (N-95 are the best).
- The people who should absolutely be tested are those who work with people over the age of 70 who are ill and who work in LTCFs. Test them daily! That’s were testing is most effective.
- Quarantine if showing symptoms: cough, fever, diarrhea, etc.
I found that information helpful. Given what we’ve all been going through, I’m not sure about you but I do find myself holding on to my dreams. My family is well and there is a great deal of peace in the house. I think we all realize just how important we are to each other.
One dream of course is to get back to normal. We humans are social beings. On a recent soccer team Zoom call, my wife Susan asked her players to tell her two things they miss the most. At that particular age, they expressed that they missed their grandparents, school, friends, and playing soccer. And they missed going to the mall… a resounding number 2. Makes sense for teenage girls. Interesting…
Eventually, it was clear that all roads led to “lack of freedom.” We don’t have the same freedoms we are accustomed to having…
I asked Susan what she missed most. She didn’t blink, “I miss handshakes and hugs.”
As the world begins to reopen, there is good news on the Covid-19 front. Well, good news for the majority of the population and challenges for our elderly and those with existing health concerns. A good friend gave me a big scare this week. It really shook me. (Tom, glad you are doing well!) I’m worried about grandma and some of my dearest friends. Yet, I’m glad freedom is returning and I’m hopeful for sunnier days.
I hope you found Dr. Roizen’s highlights helpful. Really consider his primary suggestions for better health:
- Lose 5 lbs
- Meditate to reduce your stress level: The Cleveland Clinic has the data: It improves our health.
Feeling some heaviness, I went searching for an inspirational quote or two for a needed lift. The second one reminds me of my mom, who would have turned 84 a few days ago. Thanks, Mom!
“Count your age by friends, not years. Count your life by smiles, not tears.”
– John Lennon
“The best index to a person’s character is how he treats people who can’t do him any good, and how he treats people who can’t fight back.”
– Abigail Van Buren
I can’t say I miss a good IPA, fine red wine, or golf. That’s definitely happening.
Hold fast to your dreams and fly!
Here is a toast to future days that include handshakes and hugs.
Wishing you and your family a safe, healthy, and happy weekend.
Stephen B. Blumenthal
Executive Chairman & CIO
CMG Capital Management Group, Inc.
Stephen Blumenthal founded CMG Capital Management Group in 1992 and serves today as its Executive Chairman and CIO. Steve authors a free weekly e-letter entitled, “On My Radar.” Steve shares his views on macroeconomic research, valuations, portfolio construction, asset allocation and risk management.
Click here to receive his free weekly e-letter.
Follow Steve on Twitter @SBlumenthalCMG and LinkedIn.
IMPORTANT DISCLOSURE INFORMATION
Investing involves risk. Past performance does not guarantee or indicate future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended and/or undertaken by CMG Capital Management Group, Inc. or any of its related entities (collectively “CMG”) will be profitable, equal any historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. No portion of the content should be construed as an offer or solicitation for the purchase or sale of any security. References to specific securities, investment programs or funds are for illustrative purposes only and are not intended to be, and should not be interpreted as recommendations to purchase or sell such securities.
Certain portions of the content may contain a discussion of, and/or provide access to, opinions and/or recommendations of CMG (and those of other investment and non-investment professionals) as of a specific prior date. Due to various factors, including changing market conditions, such discussion may no longer be reflective of current recommendations or opinions. Derivatives and options strategies are not suitable for every investor, may involve a high degree of risk, and may be appropriate investments only for sophisticated investors who are capable of understanding and assuming the risks involved. Moreover, you should not assume that any discussion or information contained herein serves as the receipt of, or as a substitute for, personalized investment advice from CMG or the professional advisors of your choosing. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisors of his/her choosing. CMG is neither a law firm nor a certified public accounting firm and no portion of the newsletter content should be construed as legal or accounting advice.
This presentation does not discuss, directly or indirectly, the amount of the profits or losses, realized or unrealized, by any CMG client from any specific funds or securities. Please note: In the event that CMG references performance results for an actual CMG portfolio, the results are reported net of advisory fees and inclusive of dividends. The performance referenced is that as determined and/or provided directly by the referenced funds and/or publishers, have not been independently verified, and do not reflect the performance of any specific CMG client. CMG clients may have experienced materially different performance based upon various factors during the corresponding time periods. See in links provided citing limitations of hypothetical back-tested information. Past performance cannot predict or guarantee future performance. Not a recommendation to buy or sell. Please talk to your advisor.
Information herein has been obtained from sources believed to be reliable, but we do not warrant its accuracy. This document is a general communication and is provided for informational and/or educational purposes only. None of the content should be viewed as a suggestion that you take or refrain from taking any action nor as a recommendation for any specific investment product, strategy, or other such purpose.
In a rising interest rate environment, the value of fixed income securities generally declines and conversely, in a falling interest rate environment, the value of fixed income securities generally increases. High-yield securities may be subject to heightened market, interest rate or credit risk and should not be purchased solely because of the stated yield. Ratings are measured on a scale that ranges from AAA or Aaa (highest) to D or C (lowest). Investment-grade investments are those rated from highest down to BBB- or Baa3.
NOT FDIC INSURED. MAY LOSE VALUE. NO BANK GUARANTEE.
Certain information contained herein has been obtained from third-party sources believed to be reliable, but we cannot guarantee its accuracy or completeness.
In the event that there has been a change in an individual’s investment objective or financial situation, he/she is encouraged to consult with his/her investment professional.
Written Disclosure Statement. CMG is an SEC-registered investment adviser located in Malvern, Pennsylvania. Stephen B. Blumenthal is CMG’s founder and CEO. Please note: The above views are those of CMG and its CEO, Stephen Blumenthal, and do not reflect those of any sub-advisor that CMG may engage to manage any CMG strategy, or exclusively determines any internal strategy employed by CMG. A copy of CMG’s current written disclosure statement discussing advisory services and fees is available upon request or via CMG’s internet web site at www.cmgwealth.com/disclosures. CMG is committed to protecting your personal information. Click here to review CMG’s privacy policies.