Memorandum #153
Jeff and Ron Muhlenkamp discuss ongoing inflation and modest but steady GDP growth. In 2024 stock markets mirrored 2023, with AI-related tech companies driving growth, while long-term bonds yielded little. Read more of their insights and look ahead to 2025 in their Quarterly Letter. In the article "The 6 Ps of Financial Happiness," Tony Muhlenkamp explores the relationship between financial success and client happiness in investment management. Making clients happy is crucial for retaining them long enough to generate financial returns. The key lesson is that financial happiness, like life happiness, is the investor’s own responsibility—it requires discipline, planning, and [...]
Five Tax-Smart Investing Strategies for 2025
Tax-smart investing is a dynamic and ongoing process. You can keep more of your hard-earned money by leveraging tax-advantaged accounts, prioritizing tax-efficient investments, and staying proactive about ever-changing tax laws. As 2025 unfolds, make it the year you take your tax strategy to the next level—because it’s not just about what you earn; it’s about what you keep after tax. Here are five strategies that help to maximize what you keep when it’s time to pay Uncle Sam. 1. Maximize Tax-Advantaged Accounts Tax-advantaged accounts remain a cornerstone of intelligent investing. These include: 401(k)s, IRAs, and Roth IRAs: Contribute the maximum [...]
Thoughts On: The 6 Ps of Financial Happiness
We all know that the job of a money manager is to make people money. As difficult as that can be, the job of the client service manager is even harder. Client service has to make people happy. You might think that if you make people money, then they will be happy; but, I have learned you have to make people happy first so they can stick around long enough for you to make them money. It is a classic “which comes first, the chicken or the egg” dilemma. If I don’t make them happy, then I can’t make them [...]
Looking Toward 2025
Here’s a quick update on what we’re paying attention to as we come to the end of 2024: Markets Stocks: The market overall is expensive on almost all common metrics: market cap to GDP, price to sales, etc. We are very wary of the most popular, most expensive stocks that have done so well lately. A handful of VERY pricey tech stocks are driving the DOW, S&P500, and NASDAQ, Bond: The bond bull market ended in 2020 after almost 40 years. Long rates have risen for almost 4 years now, and bond prices have been DOWN for 4 years in [...]
Letter to My Daughters: On Making Investment Decisions
I’ve written to you about Passive Investing and Financial Freedom, and now I want to give you some tangible things you can do to realize that dream of Financial Freedom. The process is to: List what you are trying to do and assign dates and dollars (if possible) to those goals. Here’s a link to an example of how that looks. Create a balance sheet and an income statement. The balance sheet is a list of what you own and what you owe. The income statement lists what you make, what you spend, and what you save. Here's a link [...]
Five Strategies to Maintain Your Investment Focus After Election Day
Five Strategies to Maintain Your Investment Focus After Election Day Whether your preferred candidate won or lost on election day, the 2024 election results have alleviated a degree of market uncertainties, prompting a positive market reaction. We recommend approaching this post-election moment with measured optimism while staying true to sound investment principles. Here are five strategies to help you navigate this new political and economic environment: Markets React to Uncertainty: The post-election rally reflects the removal of ambiguity rather than a guaranteed economic windfall. Stick to your long-term goals and resist chasing short-term gains driven by political news. Rebalance If [...]
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 [...]
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 [...]
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 [...]