Labor Productivity in the U.S. Economy
Maintaining a Growth Mindset: Labor Productivity in the U.S. Economy Is the United States economy on the cusp of a labor productivity boom? Labor productivity is the key to a healthier, wealthier society. In essence, real wages (wages adjusted for inflation) can increase when labor productivity is on the rise without stoking inflation. After nearly…
Taking Stock of Market Returns
Taking Stock of Market Returns What do annual returns normally look like in the stock market? If the S&P 500 were to hold its current levels through year-end, we’ll have just experienced two back-to-back years of greater than 25% gains in the stock market. Calendar year returns like this must be exceedingly rare, right? Going…
The Housing Market and Rate Sensitivity: What Happens Next?
The Housing Market and Rate Sensitivity: What Happens Next? On Wednesday, September 18th, the Federal Reserve is expected to cut interest rates by 25 to 50 basis points (bps). In anticipation of rate cuts and a shift in Fed policy, longer-term Treasury Yields and mortgage rates have already moved lower in the bond market. On…
The Earnings Bar is High for Corporate America
The Earnings Bar is High for Corporate America Stocks entered a cyclical bear market in 2022, and perhaps for good reason. Yes, interest rates were on the rise. Yes, valuations in 2021 were extended and needed to cool off. Yes, geopolitical turmoil and inflation weighed on the market’s collective mind. Yes, economists were practically unanimous…
Hardware is Eating the World
Hardware is Eating the World “While the hardware and software layers in technology are mutually dependent, the location of talent and resources across their respective ecosystems is not static.” In 2011, Marc Andreesen famously wrote that “software is eating the world”. It’s a fun article to read 13 years on. Consider just how voracious software’s…
Stock Review: Fortinet (FTNT)
Stock Review: Fortinet (FTNT) We recently added Fortinet (FTNT) to our model stock portfolio*. FTNT is a leading cybersecurity company based in the U.S. with over 700,000 customers worldwide. In 2023, they generated $1.7 billion of free cash flow on revenues of $5.3 billion. FTNT is characteristic of the businesses that we like to own: They have an incredible…
What Is Money For?
What Is Money For? Shelby Cullom Davis got his start in the stock market in the early 1940’s on the heels of the Great Depression. He bought equities on the cheap at a time when other investors had given up on the stock market and just as the United States emerged as the world’s most…
Quarterly Client Letter: Q4 2023
“I think that a life properly lived is just learn, learn, learn all the time.” Charlie Munger, 2017 Berkshire Hathaway Annual Meeting Investing in financial markets is a constant education. A year ago, a Bloomberg survey of economists forecasted a 65% probability of recession for 2023. As the year progressed, there were plenty of reasons…
Obsessing Over Interest Rates
Obsessing Over Interest Rates “The theory of interest bears a close resemblance to the theory of prices, of which, in fact, it is a special aspect. The rate of interest expresses a price in the exchange between present and future goods. Just as, in the ordinary theory of prices, the ratio of exchange of any…