It’s increasingly looking like a soft-landing for the U.S. economy. While most people have been hesitant to give the Fed credit, I went a different direction and have been singing their praise for months. If you’ve been following my posts, you’ll remember that at the end of September and in mid-November, I dove into the data to explain why I felt a soft-landing seemed likely. Fast forward to today and a soft-landing has arguably become the market consensus thanks in part to the recent data. Let’s look at the inflation data from earlier this week: The chart below shows that the annual CPI infla ..read more

The CPI inflation report released this week showed that it’s going to be difficult to close out the final mile in the fight against inflation. However, thanks to that report, it seems like investors are finally coming to grips with the Fed’s message of higher rates for longer. I feel comfortable saying there will continue to be volatility, both up and down, as the markets react to the monthly inflation data reports. If the inflation data supports rate cuts, markets will likely go up. If the inflation data supports leaving rates alone, markets are likely to go down. For example, this Tuesday (2 ..read more

I came across the transcript of a conversation between Monish Pabrai and Warren Buffett highlighting the risk of impatience…AKA the risk of trying to get rich quick. Pabrai asked Buffet about this old partner, Rick Guerin (yes, he had another partner besides Charlie Munger). Buffett highlighted Guerin’s superb investment record but told Pabrai that Guerin used margin loans to leverage his investments because he was “in a hurry to get rich.” As Buffett tells it, Guerin was slammed with margin calls after suffering devastating losses in the crash of 1973-74. As a result, and as you can imagine ..read more

Every morning, I get a tear sheet of stocks making big pre-market moves, alongside a one sentence explanation of the movement. For obvious reasons, my eyes go immediately to our current model holdings. If we have a ticker that’s gapping up or down, I want to know so I can get a sense of how it might affect our trend and relative strength readings in the coming days or weeks, and how to best communicate that information to our clients in future model updates. But every now and then, I’ll see a former model constituent make the morning rundown, which will also pique my interest. Not so dissimila ..read more

Last week, the SEC (finally) gave its stamp of approval to spot bitcoin ETFs, with nearly a dozen fund managers launching funds in the wake of the ruling. This brings up a few questions: What is a “spot” ETF? Wait, I thought there were already bitcoin ETFs? Why is this a big deal? Is Monument using bitcoin or bitcoin ETFs in my portfolio? Where else can I read about this? What is a “spot” ETF? “Spot” simply means that a fund owns the underlying asset, versus ownership in futures contracts or through some other synthetic means. For example, S&P 500 ETFs own the underlying S&P 500 stoc ..read more

Well, looks like no one at the big Wall Street firms got their 2023 predictions correct, in fact (below) most predicted that the S&P 500 would end up lower in 2023 than 2022. And no, these are not cartoons.     Turns out, the S&P 500 ended up at 4770 and posted a blockbuster 26% total return for the year (rounded). Consider this yet another reminder that forecasts are nothing more than guesses and in the context of portfolio strategy, meaningless. Fun? Sure! We did them at the beginning of 2023 for fun and spoke about them on our market recap podcast. (Speaking of: Our 2023 ..read more

Earlier this year I constantly heard CNBC pundits say, “The Federal Reserve has never gotten it right before, so why should we think they are right now?” When discussing the Fed’s rate hiking agenda, what I rarely heard from the talking heads on TV were references to current economic data that truly supported this claim. Instead, they seemed governed by stories and their emotions. Near the end of September, I wrote about how inflation data supported the Fed’s actions, and why I thought they deserved some praise for navigating us towards what increasingly appears to be a soft-landing. Almost se ..read more

A casino has a 0.5% edge on the Blackjack table and rakes in, like, bazillions of dollars a year, yet an 89% historical positive market outcome will still cause investors to scoff or even walk away. No one likes it when the markets are down for a month…let alone three. But as long-time readers know, I like to look at the probabilities of things happening rather than the possibility. So, let’s do that for a moment. Is it POSSIBLE we could see a deepening correction from the last three months? Yes. Totally possible. But that’s a guess, there are no facts about the future and a gut feeling is not ..read more

I received a great follow-up question to my piece last week about not stressing over paper losses on your individual bond positions: What about investors who have bond ETFs? How should they approach their paper losses?  I felt the answer deserved to be shared because many people use ETFs for their bond exposure. In short, my advice of “stick to the plan” still holds for bond ETF owners, but with a caveat. It depends on why you want to own them. Is it for income generation or for portfolio diversification? Income Generation If you’ve been using bond ETFs to produce income, now is a good ti ..read more

I grew up in Wichita, KS and Tulsa, OK. Smack dab in the middle of Tornado Alley. When I was a kid, every Friday at noon, both cities would run tests on their tornado alarms. Which were just repurposed Cold War nuclear bomb sirens. If you were from out of town, it was a little disconcerting. But if you were a local and it was sunny or December, you went about your day. Although the fact it was winter was not a guarantee that tornadic activity wouldn’t materialize. Strangely enough, in all my time in Kansas, Oklahoma, and now Texas, I have NEVER seen a tornado. This is akin to someone who grew ..read more