Too good to be true?
“The problem is that the massive government ‘stimulus’ checks have put the economy in a strange position, where retail sales are far above where they would be if COVID had never happened, even as the production side of the economy remains relatively weak.”
– From a May 17, 2021, report from economists at First Trust Advisors. They said that as the government’s efforts to inject life into the economy taper off, retail sales will as well. Read more at bit.ly/2RzEabm.
“When the stock market next plunges, it won’t be the same as 2000-02, or 2007-09, or early 2020. But it’ll have similarities: the panicked investors, the widespread fear that the decline will only get worse, the declarations that this market crash is somehow different from all earlier market crashes, and that stocks won’t recover any time soon. Which, needless to say, is about the time when stocks do indeed defy the naysayers and head higher.”
– Jonathan Clements, in a 5/8/21 post on his Humble Dollar blog. He said the market’s rapid recovery from last year’s dramatic decline shows just how resilient the market is. To survive the next downturn, he said investors need tenacity and some knowledge of market history. Read more at bit.ly/2T0XZZv.
The only free lunch
“Diversification is ultimately an exercise in humility and risk management. For at its core it’s an admission that you cannot predict the future and is employed to withstand the many possible outcomes that lie ahead. One of those possible outcomes is that the high valuations in US equities today portend a more difficult road ahead. If that’s indeed the case, a little diversification can go a long way in helping you navigate that road and stay the course.”
– Charlie Bilello, in a 5/10/21 post on his Compound Advisors blog. He suggested that investors consider multiple forms of diversification, from asset classes to investment strategies. Read more at bit.ly/3u5lrlk.
The wisdom to wait
“We are sort of the polar opposites of a lot of investors. We do a lot of thinking and not a lot of acting.” – Lou Simpson, quoted in a 5/19/21 post on the Novel Investor blog. In 1979, Warren Buffett picked Simpson to manage GEICO’s investment portfolio, which went on to generate an average annual return of more than 20% over the next 25 years. Upon Simpson’s retirement in 2010, Buffet called him “one of the investment greats.” Read more at bit.ly/3vel9Kg.
What money can’t buy
“In 2018, 65 percent of respondents felt that wealth gave them peace of mind, but that number had fallen to 53 percent by this spring. Half of the respondents equated wealth with happiness, four percentage points lower than in 2018.”
– New York Times writer Paul Sullivan in a 5/21/21 article about two recent surveys that suggest the pandemic has changed people’s views of wealth. Read more at nyti.ms/3wmzpRk.
“If there is one thing that the story of the rich young ruler teaches us it’s this: to truly have the peace you need and the peace that Jesus provides, you must love him more than anything else in this world. He is the anchor that can bring stability to your soul in the midst of unstable times. He is the only one who can bring purpose out of your every pain, even if the breakthrough you’ve been praying for hasn’t happened yet, or may not happen at all.”
– Costi Hinn, in a 5/13/21 post on his blog, For the Gospel. Read more at bit.ly/3f9S6Sk.