Thoughts On: Stewardship
Money is a private thing, it’s nobody else’s business, and it has sundered a number of families. That’s all true. But lack of planning about money has bankrupted and ruptured a lot of families as well. So, it is a topic worth discussing but needs to be thought through first. I start by discussing hopes and dreams and plans for achieving them. I don’t like the phrases “estate planning” or “financial planning” or “retirement planning,” because it is too easy to put off conversations and decisions to “tomorrow,” only tomorrow never comes. Make and execute plans today and discuss them [...]
Memorandum #152
In their Quarterly Letter, Jeff and Ron Muhlenkamp discuss what changes in economic data prompted the Federal Reserve to adjust the federal funds target range and how various policy choices of the presidential candidates may affect the economy and our investors’ wealth. In Tony Muhlenkamp's, “Letter to My Daughters: On Politics and Markets,” he refers to the women in the movie “She Rises Up.” These women learned that their countries are NOT dysfunctional because they are poor; they are poor because they are dysfunctional. What does that have to do with politics? It turns out—everything. Link to full PDF: Memorandum [...]
How to Sleep at Night During TEOTWAWKI
It doesn’t matter to what political party you belong—everybody’s worried about the election. It doesn’t matter what your ideology is; it doesn’t matter who you like or what you want. Everybody’s anxious and worried to the point of saying, “It’s the end of the world.” It’s the end of the world unless we vote a certain way, buy a certain product, or … (you fill in the blank…). While it might be “TEOTWAWKI” (The End Of The World As We Know It), it’s not the end of the world. The end of the world as we know it is different [...]
Letter to My Daughters: On Politics and Markets
Your mother asked me to write about "The Impact of Political Uncertainty on the Markets,” which is pretty simple. The markets hate uncertainty; they hate not knowing what the rules of the game are or are going to be; and the more uncertain things are the worse the markets behave (meaning they go down and you lose money). However, there are more nuanced, subtle, and complicated impacts that politics have on markets, economies, and prosperity for individuals and nations. Over the last several months (or has it been years?), I’ve been writing to you about the importance of work, the [...]
Five Key Moves for Generation X Before Retiring
As Generation X (born between 1965 and 1980) approaches retirement, planning is more critical than ever. Sandwiched between baby boomers and millennials, Gen Xers have faced unique economic challenges, including the dot-com bubble, the 2008 financial crisis, job changes, and, most recently, the pandemic. These experiences have reshaped retirement realities, making it essential for them to adopt proactive financial strategies. Here are five key moves to consider before hanging up the proverbial work boots: Maximize Catch-Up Contributions At age 50, Gen Xers can make “catch-up” contributions to their retirement accounts, such as 401(k)s or IRAs. These higher contribution limits are [...]
Thoughts On: The Yo-Yo Problem with Investing
The job of a professional money manager is to make people money. As difficult as that is, the job of the client service manager can be even harder. Client Service has to make people happy. I used to think that if we made people money, then they would be happy. I have learned we have to help people be happy long enough for us to make them money. Out of necessity, I have formulated some ideas about helping people be happy about their investments. The most critical (and some might think the most obvious) lesson I have learned is that [...]
Thoughts On: Corrections, Crashes, Recessions, and Inflation
On Tuesday, August 6, I had two separate conversations with two very different people: a client with a million-dollar portfolio and a friend who has some Bitcoin. And they asked the same question, “What should I do?” I had not been paying attention to the world since Thursday, so my first question was “About what?” They replied, “The Market!” and caught me up on all the terrifying things that were happening. Once I was up to date my immediate (and terse) response was “Nothing, don’t worry about it.” They found that less than satisfactory and asked me to elaborate just [...]
Memorandum #151
Jeff and Ron discuss the state of the economy, inflation, the bond and stock markets, and they outline, in broad terms, their current investments. Read their insights and outlook in their Quarterly Letter. Tony Muhlenkamp writes “Letter to My Daughters: On Financial Freedom” where he offers his fundamental principles that point you in the direction towards financial independence. Link to full PDF: Memorandum #151, April 2024
Letter to My Daughters: On Financial Freedom
Your Grandpa and your Uncle Jeff have written a LOT about how to work, save, and invest. So you should read Grandpa’s book[1] and Uncle Jeff’s article because I’m not going to repeat what they have already written. Instead, I want to talk about some fundamental principles that I think are the core for being free financially. If you really own these ideas everything else will fall into place. 1. Be a profit center. Before you can save a nickel (or a dime, or better yet a quarter) you have to make a dollar. And at your age, that’s probably [...]
The Language of Investing
So much of our conversation assumes that each word has only one meaning, no matter who uses it. But my experience is that different people have different definitions for the same words–which is one reason I think there is so much confusion surrounding investing today, and why I think it is useful to look at the multiple definitions that exist for some common investment terms. I want to start with what most people might think are statements of investment fact, but that I think are statements of investment opinion: Statement 1: Stocks are riskier than bonds. Statement 2: You [...]