Memorandum #155
In this issue of the Memorandum, Jeff and Ron Muhlenkamp recognize that even with dramatic policy headlines around DOGE, tariffs, and immigration through the first half of 2025, the primary investment impact has been a notable 25% year-to-date increase in gold prices, prompting the firm to maintain cash reserves for potential recession opportunities while continuing a disciplined approach of selling disappointing holdings and capitalizing on promising investments.. Read more of their insights in their current Quarterly Letter. In "What Makes Muhlenkamp Different," Tony Muhlenkamp highlights what really sets Muhlenkamp apart from other money managers is something that can’t be easily [...]
Your Picky Purchasing Agent in a World of Games
Every day, you're bombarded with investment advice. Financial news channels flash stock tickers and breaking market updates. Social media influencers tout the latest "can't miss" opportunities. Your inbox fills with newsletters promising to reveal the next big winner. Everyone seems to have an opinion about where you should put your money. Here's the problem: most of these people aren't paid to make you money. They're paid to sell newspapers, generate clicks, entertain audiences, or move financial products. The only group that publishes the actual results of their advice? Professional money managers who are paid to manage other people's money. We've [...]
What Makes Muhlenkamp Different
I periodically get this question from people interested in our firm. (I never get this question from existing clients—they already know.) And it's a hard question to answer because it begs a return question: "Different from whom?" We're not very different from the active value firms with good long-term track records and a consistent investment discipline. I can name half a dozen of them, and the only difference tends to be in how we determine "value." We're not very different from client-focused advisors. We are fiduciaries and have adopted "Know Your Client" policies to ensure a good client/manager fit. We [...]
Financial Freedom After Graduation
Essential Money Advice for New Graduates Parents and grandparents: Share this with your graduate—these early financial decisions can be worth hundreds of thousands of dollars over their lifetime. Congratulations, graduate! Your first "real" job is more than a paycheck—it's your chance to build lifelong wealth. The financial habits you establish now will determine your future financial freedom. Start with Your Safety Net Before investing or making major purchases, build an emergency fund. Save $1,000 immediately, then work toward three to six months’ worth of expenses. Open a high-yield savings account (online banks usually offer better rates) and keep this money [...]
Letter to My Daughters: On Financial Health and Wellness
Financial Health and Wellness have a LOT in common with Physical Health and Wellness; especially in the sense that everyone knows it’s important, and they even know how to do it (make more, spend less, invest the difference), but very few people actually do what it takes to achieve it. John Templeton once told a reporter his secret for becoming wealthy: for the first 20 years out of college, he saved half of everything he earned. Period. Now, John Templeton is a LEGENDARY investor and has earned good returns for his clients by investing. But his SECRET to wealth was [...]
WEALTH vs. INCOME: They are not the same thing.
Income is the money you earn. It can come from your job, a business, rental property, or even investments. It’s what comes in each week, month, or year — like your paycheck or dividends. Wealth is what you own. It’s the value of your assets — your home, savings, retirement accounts, investments, and any other things of value — minus what you owe (your debts). Why They’re Not the Same A family can have a high income and still not have wealth, especially if that family spends everything they earn or carries a lot of debt. On the flip side, [...]
Thoughts On: Uses of Cash in the Portfolio
Should we go to cash? Why cash? Periodically, clients ask if we should “go to cash” with their portfolios. They never ask this question while stock prices are going up, but only when prices have been coming down. This is due to the human tendency to buy at the top and sell at the bottom, which is a bad tendency. To combat this tendency, I want to look closer at the role of cash in an investment portfolio. An investment portfolio has at least a five-year time horizon; it is NOT short-term spending money. Short-term spending money belongs in cash [...]
Navigating Today’s Market Realities
Investors face a complex landscape: cash and short-term bonds offer modest returns that, after taxes and inflation, do not currently keep pace with rising living costs. For example, a 4.2% Treasury Bill, when taxed at 35% and adjusted for 3% inflation, loses 0.3% per year[1]. 10-Year and 30-Year Treasuries yield 4.3% and 4.4%, so they are in the same boat. The S&P 500 has a YTD Loss of 5.45%[2] after seeing a steep drop and an equally steep bounce in early April. Investors can look overseas, but that’s not a sure thing at all. It seems like there is nowhere [...]
Memorandum #154
Jeff and Ron Muhlenkamp discuss the first quarter of 2025, which saw stable economic indicators like CPI. But significant government policy shifts, particularly in tariffs and regulatory restructuring, have created uncertainty and market volatility. While we are monitoring potential risks like inflation and recession, we remain focused on identifying profitable investment opportunities amidst these changes. Read more of their insights in their current Quarterly Letter. In "Managing Your Portfolio in Uncertain Times," Tony Muhlenkamp discusses how uncertainty in the stock market is constant, making it essential to focus on what you can control rather than attempting to predict the unpredictable. [...]
Letter to My Daughters: On Inflation as a Benchmark
In my last letter,[1] I talked about the various risks you have to contend with as an investor, and that different risks become more or less critical depending on what you are trying to do and the time frame you have for doing it. Now I want to discuss inflation, which I think is the paramount risk you face when trying to accomplish long-term financial goals. There are various definitions of inflation, and different theories about what causes inflation, all of which are interesting and can be useful depending on the situation, the discussion, and the problem you are trying [...]