The Dividend Cafe

Happy Independence Day weekend to you and yours. Or for those without much historical interest, Happy Fourth of July. Today’s Dividend Cafe is not going to dive into the state of the market, though I can promise you that Tuesday’s DC Today will have plenty to say about the first half of 2022 and our expectations for the second half. But for today, I want to look at this Independence Day holiday that we celebrate in our country, and analyze what the Fourth of July has to do with markets and economics. I make no bones out of the fact that I love my country, and much have that has to do with understanding what this country is – an idea, and an exceptional idea, at that. How the exceptional idea of America ties into markets, economics, and investing, is where we are going in today’s Dividend Cafe. Jump on in – there will be time enough for BBQ and sun this weekend. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I’ll be very honest with you – I prefer single-topic Dividend Café issues. I wrote a multi-topic weekly commentary for many years before moving to a “mostly” single-topic orientation, and I have never loved writing Dividend Café more. I feel that the weekly information quality and value is higher with a singular focus each week, and I think the “variety” style works better in our daily market bulletin that is Dividend Café’s cousin, The DC Today. But today’s Dividend Cafe is a bit different. There are a few “big” issues that people are bringing up daily, and I want to do a little multi-question fireside chat with you. So jump on in to the Dividend Cafe … I promise you’ll find something of interest, and maybe even intellectually transformative! Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Volatility continues and certain market sectors are reeling, along with investors. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Once again we find ourselves in the midst of a tumultuous week in the markets, and yet with bigger fish to fry in the Dividend Cafe? What could be bigger than a 1,400 point drop in the market on the week, and a 3,000 point drop in the last two weeks (note: I am hitting “send” on this before the market opens on Friday, and pre-market action Friday does appear to be to the upside right now, but you know how that goes)? Well, for one thing, I think most of the commentary I have to offer on the specific things taking place this week in markets was well-covered in each edition of The DC Today this week. If day-to-day market distress is distressing you, I hope you will turn to The DC Today as a resource. Reading it cannot make the market go up any more than my act of writing it can, but hopefully, it can provide clarity around where this volatility fits into expectations for investors who have real financial goals in their lives. So the bigger fish to fry I refer to are not about the specific Fed meeting of this week, or this most recent interest rate hike, or even my broader theme about the carnage in “shiny object” investing … It has to do with discussions around a potential deeper level of concern in financial markets, and what they may look like. I hope after reading this week’s Dividend Cafe you will feel a bit smarter, a bit more informed, and a bit more at peace. Let’s jump into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I purposely wrote this week’s Dividend Cafe before the CPI number posted this morning at 8:30 am ET. Lots of traders were getting in front of this late Thursday, and a market that had rallied up +2,000 points in the last two weeks was down -1,000 points in the last five days and is now down a lot as markets open Friday. We are in a period of short-term traders trying to front-run the Fed, but more particularly, trying to front-run those who they think are trying to front-run the Fed. What I mean is not as complicated as it sounds: The basic belief is that if inflation data looks worse, for longer, the Fed becomes more Volcker-like in their hawkish tightening, and that hurts risk assets; therefore, if we see a whisker of “more inflationary than expected” some will start selling, and we should sell before they sell. Well, good luck with all that. Today I am going to look at what could make this market get worse, not in a “traders are going to do this” kind of way, but in a real systemic, significant, macro kind of way. It will turn into a two-parter, no doubt. But let’s look behind the headlines of the day, the CPI print of the moment, and the Fed actions of next week. Let’s dive into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I am doing three things in the Dividend Cafe today that I pretty much never do. For one thing, I am blatantly ripping someone off (you’ll see; it’s not as bad as it sounds). Secondly, I am getting pretty biographical (though I guess I do that every once in a while; last week being the most recent example). And then finally, I am really focusing on one pretty specific and even granular investment topic. Now that, I do every now and then – but not like this. You’ll see. So jump on into the Dividend Cafe to see me rip off someone else’s work, talk about a very personal and biographical aspect of my life, and apply it all to a really specific investment lesson and principle – one that should not be missed. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I really do not know how today’s Dividend Cafe is going to be received. I obviously believe in every word of what I have typed or I wouldn’t have typed them, yet I have found two things to be the case in my efforts at thought leadership in matters of markets and economics: (1) People sometimes do not like it when I veer off of a stock market focus, and (2) People do not like hearing what they do not want to hear The first one is more problematic when it comes to things like the bond market or public policy or monetary policy or alternative investing – the excitement of the stock market sometimes has to take a backseat to other matters that are absolutely integrally connected to it! But the second one is what I am worried about today. In over 20 years of professionally stewarding client assets, I have never seen investors be as emotional about any “asset class” as they are about housing. And if all that meant was “people are nostalgic and protective about where they live” – that would be one thing. But that is not what I mean. Opinions about the residential real estate market are, shall we say, sometimes laced with emotion, sometimes perhaps delusion, and often with various presuppositions that are hard for me to make sense of at times. Housing is back front and center in financial discussions, and all I want to do today in the Dividend Cafe is make sense of it, and give you some wisdom and insights that I believe will be useful in a holistic commentary of the day. So to that end, I work. We’ll still be friends if anything I say bothers you. Let’s jump into the Dividend Cafe for a special Housing edition … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I have done something really fun with today’s Dividend Cafe – at least fun for me. I have taken the most common questions I receive these days from clients, in emails, in meetings, in interviews, etc., and compiled a set of answers that walk through the big issues of today. I think you will find it valuable. I doubt I cover everything on your mind here, so by all means fire away with new questions ([email protected]). You may just see it covered in The DC Today, and you will certainly hear from me personally. In the meantime, let’s jump into the Dividend Cafe. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I had fun writing today’s Dividend Cafe and I think you may very well have fun hearing (and reading) it. I also think some of you may be mad at me for it. I hope I am wrong. I believe there are a multitude of messages in the Dividend Cafe this week that are vital for investors in this current era, and the one that is to come. I also feel these messages are timely. Jump on in … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Market volatility is on a roll, with the VIX now double the level it started the year at. This week saw the biggest up day we have had all year, followed the very next day by the biggest down day of the year. A lot is happening, and we can and will unpack it in today’s Dividend Cafe, but we will not leave it there. The takeaway today will be what to do about it (or not do about it), and that is why you should enter the Dividend Cafe. Knowledge followed by action. To that end we work. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Recession. The dreaded word, “recession.” For those who have lost their job in one, it can feel like a depression. For those who kept their own job in one but saw their portfolios drop, or saw neighbors or loved ones lose their jobs, or experienced a decline in income or business revenue, it may not have had the existential punch that it did for others, but it generates unpleasant memories of unpleasant times. There is a lot of talk about a recession right now, some of it imbecilic, some of it overtly political, and some of it, quite substantive and important. But if the Dividend Cafe exists to bring simplicity and honesty to topics that are often spoken of with too much complexity and/or abundant dishonesty, the task at hand is readily apparent. And so we will look at recession reality in current times, when, what, and why, and unpack the investment implications on all of it. I will always do my best at the simplicity part (I know I miss the mark there sometimes). I will be unrelenting in the honesty part. But as far as the pleasant part of it all, well, let’s just say my focus is on the honesty part. Jump on into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Volatility, Rate Hikes, Inflation, and so much more on this Dividend Cafe Special Edition Podcast Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

If there is one thing that animates me it is the application of real-life economics to investing. I have always been obsessed with economics – both theory and application – but it is in more recent years that I have really found it a calling to synthesize the foundational truths of economics to financial markets. And truth be told, that calling transcends the applications of economic theory to financial markets. I believe properly understood economics has profound implications for all aspects of human living. My extra-curricular endeavors in economics (the book I wrote last year, the class I teach at the high school I co-founded) are all extensions of this passion I have for a free and virtuous society. But yes, applying these things to financial markets is my real passion, and the inability and disinterest the financial advice community has for applying economic principles to markets is a constant source of irritation. Today’s Dividend Cafe is about the labor market – the state of jobs in America. For 99% of the media and even economic analysts these days this is an econometric subject. In other words, it is a data point that provides an input to a spreadsheet, and from there carries some numerical relevance to another input (i.e. if wages are here or unemployment is here, then consumer spending is possibly going to be here, etc.). Worse, it is often just a mere political data point, perhaps an even more imbecilic understanding of work than even reducing it to an economic data point. But economics is the study of human action around the allocation of scarce resources. Our understanding of what is happening and not happening in the world of work will be improved to see it through the lens of the human person. Political and econometric reductions will tell us almost nothing, and in fact, may tell us things that aren’t true at all. Investors and actors in financial markets need a fuller understanding of current realities in American labor. To that end, we work … (see what I did there). So jump on into the Dividend Cafe. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

In this market-shortened week I thought a shorter Dividend Cafe may be appropriate, especially as we prepare for a long weekend and the Easter holiday. More on that below … And not only do I think I controlled the length of this week’s Dividend Cafe (within reason), I also took advantage of the week to dive into a topic that is almost entirely avoided by the media and investing public. I can’t really explain why we mostly ignore private equity and private credit when we discuss financial markets. I understand public stock markets have a certain sensationalism to them, not to mention clear pricing visibility that facilitates a lot of noise. But the private markets are just as much the real economy as public markets, and if the heart of free enterprise is where there is human action, I assure you private markets are deep into the capture of human activity (for good or for bad). But it is not enough to “talk” about private equity and private debt as if they are either “good” or “bad” investments. There is a complexity here that requires a bit of unpacking, and the unpacking of complexity is the business of the Dividend Cafe. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

From the seat of a person who dispenses financial advice for a living, one could be forgiven for believing there must have been a time in the recent past that was quite idyllic. Why? The constant chorus of those concerned about “new instability” or “these difficult times” or “all this uncertainty” all implies one thing: That there must have been a time where stability and certainty ruled the roost. Today we are going to do a little history lesson, and by the end we’ll draw a few conclusions. The point will not to be wrap current economic or political circumstances in a pretty bow – but rather, to contrast the present to the past with history and logic. The conclusions will either concern you or encourage you. But the information will be informative. So jump on in to the Dividend Cafe. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I love the topic of this week’s Dividend Cafe. I believe one of the most powerful people in global finance gave me the chance to address a topic today that desperately needs to be addressed. And through this topic we have profound takeaways to inform our understanding of economics, and to apply such understanding to the emphases we put in our portfolios. I will leave the introduction there, and hopefully with enough suspense to push you into the Dividend Cafe. This is important stuff. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

We all know that the Russian invasion of Ukraine has been the biggest story of 2022 thus far, not just for markets but for the entire news cycle. Ten minutes do not go by on the news without hearing the word “Russia” or “Ukraine” – for good reason (there is a war going on, you know). And there are other countries that do not exactly hide in the background, either. China is never far from our dialogue, both because of their role in the COVID pandemic that swept the globe in 2020 and because of their sheer size as an economic powerhouse. In fact, U.S.-China relations may be the most talked about geopolitical story of the last ten years (also for good reason). But there is another country that is rarely discussed these days, and perhaps offers as many economic implications as Russia, Ukraine, and China. And when I say economic implications, I mean the full portfolio of categories – geopolitical, financial markets, and macroeconomic. And that country is the subject of this week’s Dividend Cafe. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I hope you will find this to be a special Dividend Cafe. No, this week’s Dividend Cafe doesn’t dare to bring the vast military sophistication of people who tweet all day long to you, but maybe we do one better. We don’t talk about Russia/Ukraine at all. Actually there is some true connectivity between much of what I discuss today and how it interacts with current events, but at the core of the present market story is the challenge of growth. Military conflicts, elevated uncertainty, spikes in commodity prices, and other undesirables do not help the growth story. But they are peripheral pieces to the story, not the story itself. And today in the Dividend Cafe we are going to talk about growth, and all we are doing to make sure we never get enough of exactly what we need. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The fog of war continues in Ukraine with the entire world watching. The path to some immediate resolution has mostly closed, and expectations are for a complicated and extended process. Prayers are for minimal bloodshed and certainly for a limited scope to where the conflict goes. But few analysts are able to formulate a scenario where this ends well. The dollar is rallying. The Euro is collapsing. Oil is skyrocketing. U.S. equity markets are experiencing significant gyrations up and down day by day. I believe those five sentences summarize the five most important themes in financial markets right now (the collapse of the ruble and the Russian equity markets does not make the list, because who cares). I could certainly provide commentary today on the history of how markets have responded to various geopolitical distresses over the years, and maybe that will be needed in the weeks to come. But I believe longtime readers of Dividend Cafe know that I believe a properly constructed asset allocation is supposed to account for the inevitability of, well, distress. It could be geopolitical, or medical, or monetary, or economic, but distress is not new – only the specific reasons for the various particular distresses that come at different times. Today we are going to look at the reality of addressing distress in one’s portfolio through asset allocation – what it means in the current moment, how some elements of this have changed, and why it hasn’t stopped mattering. I wouldn’t say this is a specifically Ukraine-focused Dividend Cafe, but I would say that it may feel like it if it is understood correctly. We hold principles for the purpose of applying them during times of distress. The Ukraine event is a time of distress. Today’s Dividend Cafe is about the principles that exist before, during, and after such. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I have pretty much written each Friday’s Dividend Cafe on the Friday morning of the day you receive it every single week for over a year now. If there is an exception to that over the last 12+ months I do not remember it. I used to write the Dividend Cafe in bits and pieces throughout the week and then “pull it all together” on Friday mornings, but a little over a year ago I changed my approach and I have been happy with the results. Well, this week taking advantage of the Monday holiday and some extra peace and quiet in the very early morning hours of a day that the market was closed, I wrote what would maybe be half of a Dividend Cafe on the subject of capital, liquidity, and interest rates. I loved where it was going and felt it was a good base for a needed Dividend Cafe on a crucial subject at this point in time. And yet, here I am on a Friday morning, with images of Russian rockets striking all over the Ukrainian capital of Kyiv on my television set, and I am not even opening the draft of that work from Monday morning. Yes, I will be able to use it next week (or at some future date), but this is certainly one of those rare weeks where Dividend Cafe warrants a nod to current events. Markets have experienced volatility in the build-up to events of this week and in the events themselves, though I would argue it has been much less volatile than I would have expected. The mere presence of market volatility is not the reason to devote a Dividend Cafe to this week’s subject. I don’t much care about market volatility other than the frustration I feel when we don’t get enough of it. So welcome to a Dividend Cafe devoted to Russia/Ukraine, and may your investor knowledge and appreciation of global affairs grow as a result. To that end we work. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

There was plenty of talk about Russia/Ukraine in DC Today this week as well in the unreliable news cycle, and there really isn’t any “new news” to report. I am not sure we will be talking about Russia/Ukraine in six months, but I am very sure we will be talking about inflation, the Fed, and interest rates in six months. I want to do my best to make those six months (and more) of conversations be as worthwhile as possible. The Dividend Cafe is here to help that effort. We are going to look at what some of the right questions are to ask today and let it go from there. I believe this discussion will give you some better information then you might find elsewhere, but it also puts me out on a limb with some actual forecasts. The very concept of forecasting bothers me, usually because those who do it are charlatans and grifters. But I have nothing to gain in these forecasts; rather I am trying to point us towards a context and understanding that will likely not prove exactly right in the details, but I think more helpful than thinking about 2021’s battles during 2023’s war. Jump on in to the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Long-time readers know that I have strong opinions about the Fed, about monetary policy, about its relevance to economic conditions, and of course about its implications for investment decision-making. Today we have enough misinformation out there about the Fed that it may be a chance to actually use that word appropriately. And this misinformation comes in a period of elevated interest. The stakes are high. This week in the Dividend Cafe we are going to see if we can’t make more sense of what the risks are and are not around current Fed actions. And in so doing it will allow us (force us?) to touch on a handful of peripheral subjects that matter. It’s an easy read, digestible, and actionable. So jump on in to the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

We are living in interesting times for equity investors, and I have no reason to believe those times will get any less interesting any time soon. But one thing I would love for clients of The Bahnsen Group, and to a lesser extent, all readers of the Dividend Cafe is for there to be an understanding of what equity investors are really after. We all know “buy low, sell high” – and I even wrote a book once on how I think investors ultimately best monetize their participation in the stock market. But I think a little more understanding of what one is paying for when one buys a stock may be useful (which of course, also implies a definition for what they are selling when they sell one). And if I do this right, maybe, just maybe, we will gain a better understanding of how to navigate the next phase of markets. To that end, we work. Jump on into the Dividend Cafe. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I understand it may seem odd to devote a Dividend Cafe to the particular subject of the Energy sector in a week of surreal market volatility and media obsession over the Fed. But in fairness, I write about the Fed almost every week, plus four days a week in The DC Today, and the entire subject of monetary theory underlies all that we do in capital allocation at The Bahnsen Group. Our nuanced views on the role the Fed currently has in financial markets are known, and to co-opt my planned Dividend Cafe subject yet again to cover the thrilling story of the Fed moving interest rates exactly how we knew they would, is not going to happen. But the Fed was not the only story (non-story) this week. Markets are in a pattern of daily incoherence as traders, algorithms, novice investors, speculators, and other such inconveniences work through the challenges of a paradigm shift. What the futures say at night has nothing to do with what they will say in the morning which has nothing to do with what they will say at the open which is fully disconnected from intra-day activity which then leads to a totally unpredictable market close. Then, rinse and repeat. So I’ve written about our low opinion of “shiny object” investing, and the avoidance of such has a lot to do with the way our January has (thus far!!??) gone. But the energy sector is up +18% this month as of press time in a YTD market that has a Nasdaq down -15% and S&P 500 down -10%. We need to look at that. Is Energy becoming a new “shiny object”? Is the sector a trade or a long-term opportunity? What aspects of energy investing appeal to us right now? Where do environmental, political, and macroeconomic concerns fit in? These subjects all deserve their own Dividend Cafe, and that day is today. So jump on into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I telegraphed last week a special Dividend Cafe on energy today, and I reiterated that plan several times in DC Today this last week. But as I began pulling it all together in my hotel room here in Washington D.C. at 4:00 this morning, it occurred to me that we appear to be living through a market doing much of what I have been talking about for a very long time, and that I have an obligation to make Dividend Cafe as current and relevant as possible. The treatment on the Energy sector I want to present must be written, but it can wait one more week. That topic is no less significant, but from a timeliness standpoint, the market events of the week (and really of all 2022 thus far) provide a golden opportunity to reinforce some more practical investment lessons right now. As a general rule I do not like the idea of making Dividend Cafe a weekly response to headlines or market circumstances, and have mostly avoided doing so for quite some time now. But this week’s Dividend Cafe is not a mere “this week in markets” play. Rather, I want to use the obviously predominant story in financial markets to illuminate a few key elements of our thinking at The Bahnsen Group. In other words, the inspiration is some current market action, but the lesson is far, far more evergreen. And I think it is going to really surprise you. So jump on in to the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

2022 is just two weeks underway, other people are joining me in no longer saying Happy New Year, the NFL playoffs are finally starting (a week later than ever before), and the college football champion has been declared. Coming into the new year was the time to forecast what we expected for the year – but now, we are actually in it. And speaking of those forecasts, I will keep the white paper in front of you here. But I think we are due for a little update on a few big macro issues, so update you we will. From the glorious spot of the 2022 TBG offsite where our entire team has spent the last day and a half meticulously working on improving our business (in some really significant ways, I will add), today’s Dividend Cafe covers a lot of bases. I have written ad nauseum about the fact that much of what we discuss when we discuss macroeconomic outlook is really about the state of debt in our economy. Much of what we think and ponder about the Fed comes down to debt considerations. There is much to evaluate on the periphery, but debt levels sit at the middle of a lot of these peripheral concerns, and I will tell you that I am seeing more and more people make truly faulty assumptions that I believe are headed to a bad place. This is a topic that will illuminate and inform your understanding of many things, and the only place I know to do it is in the Dividend Cafe. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Topics discussed: Tech Reckoning Sector Positioning for 2022 (Tech, Energy) Tax implications for 2022 Inflation in 2022 Dividend growth investing in 2022 Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

CIO and Managing Partner - David L. Bahnsen Deputy Managing Partner - Brian Szytel Deputy CIO and COO - Deiya Pernas Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Markets followed up their monstrous week by dropping a bit to start this week, then rallying back to even mid-week, to sit somewhere between flat on the week and down ~100 points or so as I prepare to go to press. The Nasdaq, though, didn’t fare so well on the week, dropping -600 points (-4%) as of press time and warranting a distinction in this week’s Dividend Cafe on how one may want to think about their assets in the Fed regime ahead. This one week aside, and the never-ending obsession with the Federal Reserve well-baked into our societal financial fabric, there is a lot to say about a changing of the guard at the Fed, and this week’s Dividend Cafe is devoted to just that. Some things are, no doubt, changing, but other things, as you will soon see, are not changing at all. Understanding all this may be the best Christmas gift I can offer you this glorious holiday season. Slide down the chimney into this week’s Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

As I type on Friday morning well before the market will open for the day, the Dow is up ~1,200 points on the week, basically right back to where it was the day before the Omicron news and market sell-off, and the futures are pointing upwards for today as well (of course, anything can happen on that front). A week ago, I devoted the Dividend Cafe to discussing why I felt the Omicron story was a bad joke of a market mover, and we walked through a little COVID Market history. But I didn’t end on a sanguine note – I reminded you that there are vulnerabilities in the markets and that chief among them was the anti-fragilities created by excessive monetary interventions, and of course, basic valuation concerns where some euphoria may be overflowing. Today we’ll leave Omicron in the rearview mirror where it belongs and where the media has conveniently left it just 10 days or so after dramatically different assertions. But we’ll dig deeper into a couple of things that warrant our understanding – an understanding that is not the same as concern or worry. Come on into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Topics discussed: Volatility The Fed Energy Omicron Variant Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

It has been a wild week in the markets, with the -900 point drop of last Friday (Thanksgiving weekend) followed by a +235 point gain Monday, a -650 point drop on Tuesday, a -460 point drop Wednesday (after being up +500 points earlier in the day), and then a +620 point increase Thursday. As I type Friday, we are down -120 points, having been up +160 points earlier, so currently (at press time) reflecting a -330 point drop on the week. Now that’s a lot of ups and downs for -330 points, don’t you think? But market ups and downs are not a problem for real investors, so why do I mention this volatility at all? Don’t people invested in the stock market (and more specifically, in the earnings streams of the great companies that make up the market) know that markets do this, and in fact, normally experience much more volatility than we have seen this year? I would hope so. I know our clients do (how could they not?). But the subject of today’s Dividend Cafe is not the mere reality of market volatility, especially when such volatility is a mere 3% or so off of market highs. I mean, really. No, the subject of today’s Dividend Cafe is those who may be unfazed by market valuations and euphoric concerns, but go hysterical over the omicron variant. In other words, we want to look at that which does not play into our thinking, and that which does, and why we think the media and so much general investor consciousness have their fears and non-fears exactly backward. So jump on in to the Dividend Cafe. It will be worth your time. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I know it is not the edition some of you look forward to most each year, devoid of such enticing topics as monetary policy and market valuations, but it is one I genuinely enjoy writing each year. Today’s Dividend Cafe captures some Thanksgiving reflections from yours truly, the author of each week’s Dividend Cafe but also the Founder and Managing Partner of this firm. I remain in a daily state of overwhelming gratitude for so, so much, that this Dividend Cafe Thanksgiving reflection is just a cake walk to write. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

This week I did something a little unique. I dedicate the Dividend Cafe to the topics du jour in the space of prices, labor, production, and the Fed – basically, all the stuff everyone is talking about (and should be talking about). But rather than it seeming like a single, monolithic essay on it all, I think I have it broken up into bite-sized pieces that will be easier to understand and take in. We live in interesting times, and if this week’s Dividend Cafe helps you to understand these times better than you did before reading it, I will be a happy man. Let’s dive in and see if that happens. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Market movers and shakers discussed in today's episode. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

There is a lot of anxiety in the economy right now even though the unemployment rate is incredibly low, and nearly every metric on the planet is looking good (besides elevated price indexes). We went month after month last year with people telling us (and many of them seemed to really, really enjoy saying so, mostly because they are awful human beings) that no one would ever shop again, fly again, or “demand” again. The consumption side of the economy was dead behind a brutal pandemic, they said. And we would all be wise to stop paying our office leases, buy some comfortable couch clothes, order food delivery, get an exercise bike delivered, and sit around the house binge-watching TV and just waiting for it all to end. But now the tune has changed, a lot. Not that drama and intensity – that is the exact same. It’s just the culprit is now the opposite. Now things are too hot, too much activity, too much demand, and prices are too high. That we are supposed to take advice now from the people who zealously told us the opposite 12-18 months ago is odd to me. But I digress. Pricing pressures exist in the economy and when folks are not talking about Congressional legislation or Fed policy, they are rightly focused on that. Today I want to explain why they are focused on the right thing (price inflation), but for the wrong reason, and more importantly, with the wrong solution. And yes, with an eye towards the right conclusion in your portfolio. Off we go … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Most of the attention in the markets this week was on the Fed’s announcements Wednesday – (a) That interest rates aren’t being changed any time soon, and (b) the quantitative easing program launched 20 months ago will start to be slowly eased back later this month with a goal of no additional bond purchases in roughly nine months). But very little attention is ever paid to why these policies exist, and what their impact is to the various things we investors care about. In the Dividend Cafe today, we will look at the state of monetary policy, the fiscal policy that has necessitated it (yes, those two things are married right now), and what investment lessons we can extract. Earnings season is preparing to wrap and it was a solid one. Congress is continuing to bat around legislative things that have not gone the way most people anticipated (or even close). There was huge election news this week that speak to the current political landscape. And yet through it all, the major investment story of the week may be the one least discussed. Come on in to the Dividend Cafe. DividendCafe.com TheBahnsenGroup.com

Today's call focuses on the latest in financial markets and the reconciliation bill. DividendCafe.com TheBahnsenGroup.com

I wrote last week about a small amount of rather large economic principles that are too often forgotten in contemporary thought, and in many cases were never learned in today’s financial advisory community. I promised a part II this week where we focused more on the application of these principles, and there is no way I would disappoint you after that powerful cliffhanger. I will point out before we dive into the Dividend Cafe that I hosted a fireside chat with Bahnsen Group economic and policy advisor, Larry Kudlow, this week. You can find that whole video replay on our website if you are so inclined. Today’s Dividend Cafe is short and sweet but does focus entirely on the promised mission – putting into practice for investors what the theories of economic wisdom look like. Off we go … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today's Dividend Cafe dives into some of the great economic principles one has to learn if they are to ever learn anything about economics and finds a comparison with the great investing principle of all time. I hope I will connect the dots well for you. DividendCafe.com TheBahnsenGroup.com

I loved writing the Dividend Cafe for many years with a “jump around” approach, basically covering a wide array of topics that would enter my orbit of interest each week. I made a decision late last year to start writing “single topic” and to write the entire thing in “one sitting” – basically Friday mornings – so as to make it a more coherent and cohesive read. I do like it better that way, and the feedback I have gotten suggests you do too. Today is a little old school, which happens every once in a while when no singular topic is inspiring me. There are a number of things I want to look at today, from the Value/Growth discussion to the impact of debt on the economy to so much more. I did write it all in “one sitting” (yes, Friday morning – I am a serious creature of habit), but it covers a handful of different topics that entered my world this morning from a plethora of inspirations. So off we go into the Dividend Cafe, a read that will be well worth your while. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The effort to meet face to face with leading money managers, hedge funds, macroeconomic analysts, and other such “life of the party” luminaries began in 2006. Of course, back then I was overseeing just $100 million of client assets and busily deciding if I was going to move my business at UBS to either Bear Stearns or to Morgan Stanley (yes, that was a real dilemma I once faced; I’d say the angels aided me in my decision). But I had very limited access, basically no clout, and asset management firms that were perplexed by an advisor’s desire to do such intense due diligence. “Your firm has told you these managers are good. Isn’t that good enough?” “Your firm likes our fund. Why do you need to meet the managers?” My stubborn insistence on actually creating my own process, on doing much deeper dives than the average advisor does, paid off in big ways for me. But I quickly found out that the “payoff” was not merely in how I was able to better vet products and solutions used on behalf of my clients. These meetings became a source of transformative learning for me in my career as an investment professional. This week’s Dividend Cafe is not about the trip down memory lane, unless by memory lane you mean the last five days. But Brian Szytel and Deiya Pernas have once again joined me for over a dozen face-to-face meetings with stellar investment professionals, and we do so in a time where great questions exist about the current market cycle. About geopolitics. About China. About the Fed. About risk asset valuations. About societal stability. So jump on into this week’s Dividend Cafe, and get a glimpse into what we learned this week. The results may or may not shock you, but they will not bore you. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

DividendCafe.com TheBahnsenGroup.com

This week’s Dividend Cafe does cover a lot of topics, but all through the prism of looking at the recent past as well as the pending future. I think you’ll find it an interesting historical journey and, even more so, a good analysis of so many investment and market realities. The market enjoyed a little roller coaster this week, and I also dive into some lessons from that. I think a lot of stuff that gets covered in Dividend Cafe may mean nothing to some readers. It all means something to me, but different readers may find different topics with varying levels of application and interest. But the one universal – the one thing I constantly pray will come through in the pages of Dividend Cafe – is the primacy of behavior. My unpacking of matters monetary policy, valuations, economic growth, profit trajectories, market history, alternative investments, and all those things – none of them – not a single one – will ever trump the underlying thing I most care about for investors: Their own behavior. Some bad things happened this week – for those who behaved badly. Nothing terrible happened this week – for those who behaved well. That is more or less a dual truism that I could repeat every single week. In the meantime, let’s jump into the Dividend Cafe! Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

DividendCafe.com TheBahnsenGroup.com

As I have teed up all week, I am devoting today’s Dividend Cafe to the takeaways from this week’s SALT Conference here in New York City. The quick qualifier I will offer is that this is not going to be a boring recap of all the speakers, all the events, and all the things that you don’t care about. I did not attend the Chainsmokers concert on Tuesday night, and I did not attend the luncheon address from Paris Hilton on Wednesday, either. In the ten years I have attended the event in Las Vegas I don’t think I ever got a concert either, despite such names as Lenny Kravitz, Duran Duran, Train, One Republic, and The Killers performing. I did attend past luncheons with Dennis Miller, Magic Johnson, Coach K, and the now late Kobe Bryant. In fact, that lunch event with Kobe Bryant started a domino train that led to me doing a real estate transaction with Kobe – but I will save that story for another day. But as much as they have always done to make this a pretty fun event with a powerful complement of entertainment to the symposium of content, whether in Las Vegas or now this year in New York City, there is nothing that they can do to make me a fun person. I absolutely love the speakers, and for the last two events, I have been honored to be a speaker myself. But whether or not you care about this conference, I believe there are some takeaways from the event this year that are going to make this a meaty and substantive Dividend Cafe. So read on, and I promise I won’t let you down. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I am typing this week’s Dividend Cafe from 30,000 feet very late at night on Thursday night/Friday morning, after spending four and a half hours on the plane, on the runway, alongside 100+ other planes that were unable to take off as airspace was closed for Kamala Harris' visit to the LA area (campaigning with Gavin Newsom against the recall). My wife and I will land in Nashville in the middle of the night, and we will forget this experience soon (I hope). Anyone who travels a lot has had bad experiences. I travel 50x a year and have been through everything, but as a percentage of the times I fly, I have had it easy over the last 25 years. It’s never fun, but it happens. But twenty years ago Joleen and I were also flying together, this time departing LAX for a Tahitian honeymoon. As I mentioned the other day Joleen and I celebrated twenty years of marriage this week. On September 10, 2001, we left LAX on a redeye with a planned landing in Tahiti in the early morning. One hour before we landed the most horrific act in American history took place. It is that event that is the subject of today’s Dividend Cafe. Sure, there are some personal reflections and musings. But there really is a market lesson in all of this, and I hope you will find this to be meaty enough for your normal Dividend Cafe longings. Truth be told, the rather basic message I have to share for investors on this 20th anniversary of 9/11 is more significant in practical terms than any commentary I have ever written about monetary policy or capital allocation. I will forget the wait of today, but I will never forget 9/11. Let’s jump in. DividendCafe.com TheBahnsenGroup.com