Another day, another dollar for the top dog with the gold flea collar - that's the S&P & Nasdaq which both set yet another all-time high. Bet you can't guess what sector led the way. Speaking of markets and high levels of stock concentration, etc. in reference to a CFA study showing that Gen Z has portfolios dominated by crypto and single stock holdings, economist Allison Schrager stated in her recent blog post, "Keep calm and diversify":
"Maybe markets have changed from when I learned that good investing involved going to a mall and buying stock in the stores that were crowded. I suppose financial education has never been great.
The last 20 years of markets were weird. If the market will be dominated by a few big, fast-growing stocks, maybe stock picking is a good idea and diversification is for suckers and fools. If the world is crazy, maybe a currency with no discernible value is a smart investment.But I doubt it. A decade or two is a short time in finance, and no one market condition lasts forever. This is why good investing, not speculation, involves diversifying as much as you can. It is just efficient. As markets likely enter a more volatile phase from increased concentration, diversification will be more important than ever.....
I suppose a bear market will teach that hard lesson. Gen X and Millennials each came of financial age during bear markets—they are more risk-averse, maybe too much so. But I think we need to take a hard look at financial education, which often fails to include basic risk principles, rather than rely on people losing money and learning the hard way."
Powell stressed data, not political dependence on rate cuts. I talked about the political risk to the FOMC in my January 31st FOMC recap sharing Paul Volcker's 1984 election season story. When it comes to data, economist Brad DeLong asked: "Ok, Jay Powell: Precisely Which Inflation Numbers Do You Wish to See "More of"? in which he posits that the only reason the FOMC is not willing to cut rates yet has to be a view that we don't know where the neutral rate (r-star) is, an argument he doesn't find compelling.
Yields were again little changed ahead of CPI data today. The 10Y auction was a solid bp through where when-issued was trading and seemed to have solid stats overall.
In politics, now that George Clooney has called on Biden to step down from the Presidential race, all is likely settled. I think he holds that kind of sway and after a few shots of Casamigos most problems can be solved.
CPI dominates the day ahead.
XTOD: Few celebrities are closer with Obama than George Clooney - You can bet he ran this statement about Biden by Barack before it went public
XTOD: Are 70% discounts on office buildings enough? Oaktree’s Howard Marks isn’t sure.
XTOD: Wallgreens stock did 20% CAGR for 41 YEARS And then... It fell almost 85% in just a few years.
XTOD: No amount of money can buy you integrity.
XTOD: Ergodicity might be the most underappreciated concept to truly comprehend success, risk and longevity. It is not performance that is the most important factor for long-term performance but survival. True champions aren't just the fastest, but the fastest among those who endure. https://pbs.twimg.com/media/GSGDiaqawAAbhJQ?format=png&name=900x900
https://x.com/charliespiering/status/1811068467220795499
https://x.com/danjmcnamara/status/1811058756408479748
https://x.com/LibertyRPF/status/1811029871641923720
https://x.com/lukeburgis/status/1810876878929986047
https://x.com/Kpaxs/status/1810873266778583152
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