April 14, 2022 – Stocks' Resilience, Beautiful World, Where Are You & Severance

  • Headlines are relentlessly shocking of late. A lot of really bad stuff is happening right now, most notably a war in Europe that grows more gruesome by the day. There is also the worst inflation in over 40 years and growing fears of recession. Given our world’s current state of affairs, a reasonable person - with better things to do than closely follow financial markets – might assume stock markets to be deeply in the red. Yet stocks remain unexpectedly buoyant. The S&P500, for example, is only 8% below its all-time high reached at the beginning of the year. Why have stocks proven to be so resilient? A couple reasons. First, even with the Federal Reserve’s recent interest rate increase, bonds still do not offer an attractive yield (rate of return). In fact, with inflation running so high, real yields on bonds are still negative. Stocks, on the other hand, have historically offered more protection against inflation since corporations can increase the price off their goods or services to help provide a positive return. In other words, stocks have outperformed over the long-term. Second, many investors doubt that the Federal Reserve will follow through with its plan to hike interest rates as aggressively as it has indicated. The Federal Reserve, the thinking goes, simply lacks the stomach to risk tipping the economy into recession just to control prices. People who adhere to this view – myself included – are struggling to understand why the Federal Reserve would want to raise interest rates aggressively now, cause a recession and then be forced to lower rates when the economy tanks. One hope is that inflation begins to come down on its own, thereby reducing the need for future interest rate hikes. This could occur; if the last two years has taught us anything it’s that change happens fast. The world could look very different in six months. All the more reason investors need to stay the course and avoid making sudden changes to their investment portfolios. The recent downturn could turn out to be a minor bump in the road before there is a major rebound and stocks are off to the races once again.
  • There aren’t many writers whose work elicits a reaction as much as Sally Rooney’s. Readers have feelings about her writing – both good and bad - that other writers just can’t seem to stir up. Perhaps folks are jealous of her success, or it could be that her writing is not worth the hype. If anything, her latest novel, Beautiful World, Where Are You, will only deepen the polarization. The novel revolves around four characters – Eileen, Alice, Simon and Felix – whose lives are catching up with them. Long gone are the carefree days of their twenties. They’ve entered their thirties and find themselves face-to-face with life’s tougher problems (i.e. staying in a flawed relationship or cutting bait; ambivalence about getting married and having children; leaving a stable career you hate for something potentially more fulfilling even if it means turning your life upside-down). The characters’ conversations touch upon these themes but also look at issues affecting our society more broadly – climate change and our current pandemic to name a couple. This was my favorite Rooney book. I found it captivating and it brought back a flood of emotions from pivotal decisions made in my past. Give it a read. It might do the same for you.


  • My wife and I recently finished watching Severance on Apple TV+. This show takes creepy to a whole new level, but in a very good way. The show starts off slowly, focusing on Mark (played by Adam Scott), a seemingly normal office worker toiling away at Lumon Industries. What’s different about Mark, however, is that he has undergone a procedure called, fittingly, severance, which has split his brain into two completely separate selves. The work self (referred to in the show as an “innie”) and the outside the office self (known as the “outie”) have no knowledge of one another. The moment Mark takes the elevator down to his office, his memories outside Lumon are forgotten and he can only recall what has happened as an “innie”. When Mark leaves the office, his life memories outside of Lumon are brought back but he has no recollection of what he did while at work, ever. You quickly come to realize that Mark is suffering through tremendous grief in his “outie” life, the cause of which he is trying to avoid for a least some of the day as he labors alongside three other employees – Dylan (played by Zach Cherry), Helly (played by Britt Lower) and Irving (played by John Torturo) – in the cryptically-named “Department of Macrodata Refinement”. Although no one knows what their job actually is, they are reassured it is important even though it mostly involves finding the right combination of numbers on an incomprehensible screen all day. The show picks up the pace in the middle episodes, throwing curveballs that are sometimes explained but mostly leave you with more questions than answers. And perhaps that is the entire point of the show. Like many modern-day megacorporations, Lumon is shrouded in mystery, its inner workings kept deliberately secret. Severance takes this one step further, positing what happens in the future when a corporation has complete control over your memories so that you no longer even know what you do for a living outside of work. It’s a bone-chilling portrait of how companies think about and treat their employees. Prepare yourself before watching this show, it’s a nerve-wracking ride.


July 1, 2022 – Recession, The Abstinence Teacher & The Staircase


  • It seems like everybody is predicting a recession in the U.S. these days. An economic downturn – at least among bankers, economists, and anyone else who manages to get some screen time on CNBC – seems unavoidable. But if everyone believes a recession is forthcoming, does that make it inevitable? We all know that the main culprit for today’s economic uncertainty is inflation. It’s running white-hot, and the Federal Reserve is increasing interest rates to make things like car loans and mortgages more expensive, which should, in theory, dampen demand. The fear, however, is that the Federal Reserve will be too aggressive in its battle to tame inflation, jacking up interest rates far above what consumers can handle. This, in turn, will slam the brakes on economic growth – people will stop spending money, companies will sell less stuff, layoffs will ensue – leading to a recession. My view is that when everyone sees storm clouds gathering on the economic horizon, things won’t turn out that badly. It gets ugly when there’s an exogenous shock (i.e., a BIG surprise), such as the dot-com bubble burst, subprime mortgage crisis, and Covid-19 pandemic, that very few people see coming and the masses therefore can’t prepare for. In other words, expect a recession, if it happens at all, to be mild and not terribly long. Households are wealthier than they’ve ever been, supply chain snafus are easing, technology is still driving down costs, and our population is aging. The last point is of particular importance, since old people need less stuff, not more, lending credence to the idea that we’ll soon be back to an era of low interest rates to stoke demand. Admittedly, a lot of this is pure optimism and conjecture. But have you ever known the Weekend Warm-Up to be short on either?


  • Tom Perrotta’s latest novel, Tracy Flick Can’t Win, was released earlier this month and I couldn’t wait to get my hands on it. Finding out what Tracy – immortalized by Reese Witherspoon in Alexander Payne’s 1999 film adaptation of its predecessor, Election – has done since high school gave me goosebumps. Alas, the novel was unavailable at my local library and my wife took out one of Perrotta’s earlier works, The Abstinence Teacher, instead. And it’s been an absolute joy to read since the first page. I love Perrotta’s work, particularly how he finds so much depth in characters that might otherwise come across as stereotypes. He always manages to make my small world feel so much larger through his characters’ prosaic entanglements. The novel centers around Ruth Ramsey, a divorcée teaching human sexuality at a New Jersey suburban high school who believes fervently that “pleasure is good, shame is bad, and knowledge is power.” She’s been at her job for ten years and has become, at least in her mind, “a beloved figure…for the unflappable, matter-of-fact candor with which she discussed the most sensitive of subjects.” Her pedagogy, however, is not approved by all in the community. And after an off-hand remark one day during class, Ruth finds herself the poster child of the local evangelical Christian church’s very public crusade to change the way sexual education is taught. Who Ruth encounters – most notably Tim Mason, a former drug addict who found God after hitting rock bottom and is now Ruth’s daughter’s soccer coach – in her small town while trying to reclaim her reputation provides a thought-provoking narrative of just how complex the spiritual and sexual lives of ordinary people can be. This book came out over 15 years ago, but it’s aged well. Give it a try if you can’t find anything recent to read that interests you.
  • “Happiness,” George Burns one quipped, “is having a large, loving, caring, close-knit family in another city.” I was reminded of this quote after finishing HBO Max’s The Staircase recently. I know most families have issues, but this show takes household drama to an entirely new level. To recap, the show - a true crime series - revolves around Michael Peterson (played by Colin Firth), a novelist and newspaper columnist, who in the first episode is accused of murdering his wife Kathleen (played by Toni Collette) when she is found dead at the bottom of their home’s staircase covered in blood. The case is far from open and shut, however, and the mystery surrounding Kathleen’s death creates a divide between extended family members, including children from Michael’s past marriages. Suffice it to say that things get messy as you watch a family’s deepest, darkest secrets come to light as the show weaves back and forth through time to show Michael’s and Kathleen’s lives before the murder and what then transpires in subsequent years as everyone deals with the fallout from the trial’s verdict. There are a lot of characters to keep track of – not to mention a French documentary film crew that plays an important role in the show’s plot – but you somehow feel like you know each of them. This show is a dark, cryptic drama that will demand your attention. If that sounds up your alley, watch it immediately.



September 2, 2022 - Overconfident Fed, Crypto Reckoning & A Long Way Down


  • The Federal Reserve is serious about bringing down inflation from its current level of around 8.5%. During his eight-minute speech last Friday in Jackson Hole, Wyoming, the chair, Jerome Powell, said the word “inflation” 45 times. But can we believe him? Are Powell and the other members of the federal reserve so hell-bent on taming inflation that they are willing to cause a recession? I get why the Fed can talk tough right now. There are millions of jobs available, the labor market remains strong, and inflation – while coming down – is still way too high. I wonder, though, what will happen next year if the unemployment rate rises above 6% and millions of people lose their jobs. Will the Fed still be so cocksure? Last year, Powell was telling anyone who would listen that inflation would be transitory and thus chose to not raise interest rates until March of this year. With inflation reaching its highest levels in 40 years, it’s clear that he misunderstood what was happening and waited too long. Given his record, it’s fair to wonder whether Powell’s now ardent commitment to bring down inflation through substantial interest rates increases will last. If the housing market continues to cool and hiring slows significantly, we just might find out


  • The crypto reckoning is in full swing as a major slump in the largest currencies – Bitcoin and Ether – has taken place of late. Both are down an eye-watering 58% this year, signaling that the digital gold rush seems to have come to an end. Cryptocurrencies were meant to protect against inflation but have instead moved in lockstep with stock markets, which are also in a downturn. The stellar years of 2020 and 2021 – when Bitcoin ended up nearly 300% and 70%, respectively – are long gone and the firms that hired movie stars as their pitchmen keep making one head-scratching decision after another, leading one to believe that cryptocurrencies need a lot more work before they are ready for prime-time (i.e. mass adoption in financial markets). My point in regurgitating what you probably already know is not to malign cryptocurrencies. This is not the first time that they have suffered large losses and they easily could bounce back as they have in years past. Rather, it is to remind you of the importance, as with any speculative endeavor, of not betting the farm when making an investment. Setting aside 5% of your net worth is a good rule of thumb if you want to pursue a risky venture. If your money goes to zero, you’ll live to fight another day. The last thing you want is to become part of a cautionary investing tale and lose your life’s savings.


  • If you’ve ever gone through a rough patch, you know how hard it can be to get out of a rut. Problems seem insurmountable, solutions impossible, and the effort involved in moving even the slightest bit forward exhausting. One wouldn’t think that a novel that begins with four complete strangers meeting on New Year’s Eve on top of London building, each contemplating jumping off to end their seemingly miserable lives, could provide hope in such a context. But it does. I picked up A Long Way Down in a used bookstore about a month ago and wanted to see how the author, Nick Hornby, would be able to weave a compelling narrative out of such a fraught topic. Through the novel’s four main characters – a disgraced celebrity, a single mother raising a chronically-disabled son, a foul-mouthed teenager, and a has-been American musician – Hornby made me laugh in the most unlikely circumstances. He also does a masterful job expressing the conflicting emotions each of his characters experience while trying to come to terms with the fact that life is sad, complicated, and full of regrets. But he never lets us forget that it is also filled with hundreds small pleasures that make it worth all the trouble. I highly recommend this book if you enjoy dark humor and admire a writer who has the courage to explore such a difficult theme.


May 13, 2022 – Stock Market Swoon, Just Keep Buying & Life & Beth

  • Stock markets are having a horrendous 2022. In fact, the S&P 500 is off to its worst start since the 1930s. There’s a lot to be worried about right now, with sky-high inflation, Russia’s war in Ukraine and mounting concerns about a potential recession. These are hard times for investors, and it’s completely normal if you feel spooked. Losing money hurts, even if the losses are only on paper (assuming you haven’t sold). Nevertheless, there are reasons to be optimistic. For starters, inflation is showing signs of easing and is likely to fall by half in the next 12 months. Supply chain disruptions, which have caused so much of the rise in inflation, are improving. What’s more, first quarter earnings for many companies were good, despite some prominent stumbles (see: Netflix), illustrating that Corporate America is in really good shape and that profits should continue to grow as the economy remains strong with record low unemployment. Given this information, what’s an investor to do? Three things. First, you may want to keep contributing on a regular basis to your retirement/investment accounts. Second, consider taking losses in your taxable investment accounts and see if you can offset them with gains. This strategy, known as tax/loss harvesting, can help reduce the amount of investment and income taxes you’ll have to pay not just this year, but in future years, depending upon how big a loss you book. Third, don’t look at your portfolio balance. The more you do, the more it hurts when markets are falling. Save yourself some unnecessary anguish and try and be confident in the fact that in 20 years there is a strong chance you will see gains.


  • One of my favorite finance bloggers, Nick Maggiulli, recently released his first book, Just Keep Buying. Mr. Maggiulli is a data scientist by training, which gave me pause before deciding to read it. I was worried that it was going to be filled with dull spreadsheets and mind-numbing statistics. And while there are certainly a lot of graphs, it is also full of heartfelt anecdotes and easy-to-understand advice that you can start using right away to improve your finances. My favorite chapters explained why you shouldn’t fear volatility in the stock market, why cutting spending isn’t a reliable way to build wealth, and whether or not you should rent or buy your own home. I really liked this book because it’s about more than just money. Yes, its goal is to help you invest more wisely and increase your wealth over time, but it also recognizes that you need to enjoy your life in the present. This book doesn’t judge you for buying an overpriced latte every morning or splurging on a nice handbag every once in a while. In fact, Mr. Maggiulli celebrates those purchases and offers great advice about how to undertake them without feeling any guilt whatsoever. Give this book a try if you are interested in learning how to save and invest in a simplified and practical manner.


  • Alright, now to something more fun. My wife and I recently finished watching Life & Beth on Hulu and I am going to give this show a tepid thumbs-up. Beth (played by Amy Schumer) is an unhappy wine saleswoman living in Manhattan who is going through the motions. She’s got a good job and an apparently successful, if not man-child, boyfriend (who also happens to be her co-worker) but something is, well, missing. What that something is we don’t have time to pinpoint, as Beth experiences a personal loss that sets in a motion the change she ultimately needs. Change, however necessary, is hard, and Beth goes through a series of cringe-worthy moments as she transforms her life while reconciling herself to her past. During Beth’s journey of self-discovery, there are some really funny, engaging scenes that keep the show entertaining. And the motley array of guest stars also helps keep things interesting (Jonathan Groff’s role as a Long Island Lothario is absolutely hilarious). But the show stumbles when it tries to mix in too much sentimentality and solemn family drama. I want Beth to make me laugh, not try and make me cry. It’s as if the show can’t decide whether or not it wants to be a rom-com or a heartrending tale of personal transformation. If you’re a true fan of Schumer, this show is worth the relatively small binge of 10 half-hour episodes. If she doesn’t do it for you, don’t feel bad passing on it.


May 26, 2022– Financial Fearmongering, Failing Up & Sophomore Slump


  • “The last time Todd Jones heard this kind of panic in his clients’ voices, it was 2008 and the global financial system was on the brink of collapse.” So begins an article I came across this weekend which typifies the financial scaremongering that has spread like wildfire since the beginning of the year. And it’s beginning to get on my nerves. Not only because these articles prey upon our worst emotions, but also because they rarely offer any guidance on what you should do to get through this difficult period of time. It’s great that Craig Bartels, a real estate broker from Indiana profiled in the article, went to all cash in his 401(k) and IRA in October. It’s really thoughtful of him to rub his sage decision-making in our collective face. He saved himself a lot of heartache, not to mention money. Good for him and the other people mentioned in this piece who through skill – or more likely dumb luck – avoided the recent downturn. But, I wonder, when will Mr. Bartels and his ilk get back in the stock market? How will they know when it is “safe” to start investing in stocks anew? I am willing to wager that they haven’t a clue and will miss a large portion of the gains when stocks eventually rebound. Look, there’s no denying that the stock market has had a really bad year so far. But just as the stock market is prone to unbridled optimism, it can also become overly pessimistic. It’s therefore important to think about how the U.S. stock market, as measured by the S&P500, has fared in the years after its worst annual performances. In that vein, here’s an article that digs into those numbers, illustrating that the longer-term returns after the worst years have been really good. For example, the average 3-year return was +35%, while the average 5-year return was a gain of almost +80%. What does this tell us? That it’s imperative you stick with your plan and keep investing on a regular basis. Better days are ahead. You have to be patient. Don’t attempt to time the market like Mr. Bartels. Often, the best time to buy stocks is when it feels terrible to do so.



  • We all know this person. It’s the mediocre co-worker who fails his/her way up the corporate ladder. Whether they’re good at schmoozing, always available to knock back a few, project swagger, or use charisma to cover their vapidity, these so-so colleagues seem to have found a magic formula that turns their miscues into advancement. What’s their secret? In an interesting article that I came across, their success seems to stem in large part from framing their failures as opportunities for growth. More likely than not, your colleagues are going to see when you botch a presentation or blow past your budget on a project. They probably won’t, however, witness you justify the blunders to your boss through a sincere story of personal growth and mistakes learned. No matter how great you are at your job, a screw-up is inevitable. No one is perfect. Learning how to minimize mistakes is an important skill that we will all need at one point or another. Use this piece to brush up on how to turn failures into success.


  • Finally, this is normally the section where I give a review of a movie or show that I’ve recently finished. But I’m in the midst of a sophomore slump on a couple shows that I was really looking forward to but found unwatchable. I was excited for Season 2 of Russian Dolls, but the show completely lost me from the very start. I heard that the ending was good (I only made it to the third episode) but the plot got so complicated that getting to the end didn’t feel worth the bother. Yes, life is undoubtedly complex, but developing a coherent narrative doesn’t have to be. Next came Season 2 of The Wilds. My wife and I didn’t last long on this one, either, only getting through the first episode before calling it quits. The introduction of a group of boys to experience a nightmarish existence on a deserted island didn’t seem necessary. We already went through all of this drama with the girls in Season 1. I felt like I was just getting to know the young women in all their complexity at the end of the first season. I wish Season 2 would have delved even deeper into the girls’ pasts and not spent time on the boys, who come across as way less interesting from my brief viewing. If you’ve read up to this point, send me a recommendation if you’ve watched something good recently. I’m in desperate need of a binge.


August 12, 2022 – Dead Cat Bounce, $400,000 Assistant & The Heart's Invisible Furies


  • If you are like many investors, you’ve probably shied away from looking at your investment portfolio too often this year. And who can blame you? Until mid-June, stock market returns this year were abysmal. But since that late spring nadir, markets have come back with a vengeance. The Nasdaq Composite, in fact, is now in a bull market, having gained 21% since its low on June 16th. And if you look at the performance of the S&P 500, you’ll see that it has now made back more than half its losses since cratering from its all-time peak in January. In other words, things – at least from an investment standpoint – have started to improve. But are the good times here to stay? The argument for continual improvement in the stock market is solid: earning numbers for the biggest companies remain strong; inflation has already peaked, which will likely allow the Federal Reserve to slow the pace of interest rate hikes; and the labor market remains solid. On the other hand, those who view the recent surge in stocks as a “dead cat bounce” (i.e., a temporary recovery during a period of sharp decline in stock markets) can make a compelling argument as well: the Federal Reserve, hell-bent on taming inflation, might overdo it with interest rate hikes and cause more economic pain than intended; the housing market, which constitutes one-fifth of the U.S.’s gross domestic product, might suffer substantially from higher interest rates; and the labor market will surely lose steam in the coming months. The bad news is that I have no idea which side is correct. The good news is that the success of your investment plan doesn’t rely on winning a wonky policy debate about the future. What matters is that you continue to invest in a well-diversified manner that considers a wide range of economic outcomes. Know what you need to sock away each month to reach your goals and stick with it no matter what’s happening in the world. Investing is a risky endeavor – this year has borne out that fact more so than any other since the Great Recession - but I do believe over the long-run you will make money if you stay invested and save consistently.


  • While it’s true that disagreements about our nation’s economic health seem to be particularly heated these days, conflicting narratives about the state of the economy are nothing new. And while the economy might not feel great at the moment for many people, there is no recession yet. How could there be when the penthouse of society is having as much difficulty finding and retaining workers as other businesses? In a recent article that I came across, the trials and travails the uber-wealthy are confronting while trying to find a do-it-all assistant are reported in detail. Just like everyone else, the rich are having to pay more to keep talent, with some assistants fetching an annual salary of $400,000. I admit that I scoffed at that figure when I first glanced at the article in my newsfeed. But after having read the piece in its entirety, I came to realize how difficult a job it must be. These right-hand helpers are pulled in every direction, oftentimes serving as a therapist, business confidante, and marriage counselor. There are 3 am phone calls, verbal lashings for the slightest mistake, and “hands-and-knees attempts to fix leaky faucets in vacation homes.” The assistants interviewed in the article have given their entire existence over to the families they serve. Their lives are lonely, filled with endless to-do lists and unpredictable schedules. It’s not all bad, though. As one assistant says, “the salary is great, you get to travel the world, and you learn a lot.”


  • “The desire to fall in love and to share one’s life with someone is neither a homosexual nor a heterosexual conceit. It’s human. We’re all suckers for a pretty face or a kind heart. What else can we do but keep hoping that the right person will show up.” I found this quote by John Boyne after I recently finished reading his 2017 novel, The Heart’s Invisible Furies. The quote, more so than any other review I’ve read of the work, captures the essence of the novel, which to me is the redemptive power of the human spirit. And I don’t mean that in a corny, pollyannish sort of way; rather, it is intended to convey just how masterfully Boyne depicts – through the novel’s protagonist, Cyril Avery – the desire to be loved, to love freely, and to simply belong. Born out of wedlock to a teenage girl from a rural Irish community in the 1940s, Cyril’s life starts off without much promise and he suffers tremendous loneliness, lust and bigotry as a gay teenager and then man living in Catholic Ireland in the 1950s and 60s. Cyril’s life is one of struggling to fit in as the novel takes you on his life’s journey from a heartless Dublin to a more tolerant Amsterdam, to New York in the 1980s during the AIDS epidemic and then finally back to a transformed, kinder Dublin in the mid-2010s. At nearly 600 pages, this book is a commitment. But the pages turn quickly, and the characters are memorable, genuine and have great senses of humor that really help to lighten the novel’s tone. My only criticism is that there are way too many coincidences to make the narrative entirely believable. But you will be more than willing to suspend disbelief as you laugh and cry your way through this work.