The Dividend Cafe

I first want to thank everyone for the extremely positive feedback last week on the somewhat unique Dividend Cafe juxtaposing USC football and markets. It was fun to write and, at least for some of you, appears to have been fun to read. But for those who prefer the serious stuff, we are back to normal this week, and I think it is time I cover a topic that comes up a lot anecdotally, but I don’t think has ever received headline treatment in the Dividend Cafe. And yet, it is one of the single most important topics in the field of economics and finance … I refer to currencies, the U.S. dollar in particular, but really the overall global dynamics of currency and what it all means to investors. Currency ramifications impact all investors all the time, yet we rarely contemplate why or how. Today I want to play around a bit with some aspects of this critical topic in the present reality. Jump on into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Why in the world would I waste the precious soundwaves of Dividend Cafe to recap day-by-day market action when this hallowed ground is supposed to be reserved for what actually matters in markets (and life)?  Because we are entering football season, of course, and how this all connects is about to be readily apparent to you. DividendCafe.com TheBahnsenGroup.com

Long-time readers of Dividend Cafe know that the real intent of this weekly commentary is to delve into the macroeconomic – the big picture – the high-level stuff that impacts investor decisions and behavior. Today in honor of the obsession over Jerome Powell’s speech at Jackson Hole (being delivered shortly after I hit “submit” on this commentary), I want to talk not an iota about the Fed, monetary policy, or really any aspect of macroeconomics. Rather, I want to actually dive into a question that is hyper-practical – more micro than macro – and that is when to sell a stock. I was in the process of answering a question about this topic for the Ask David section of The DC Today when I realized it really warranted the full Dividend Cafe treatment. So here we are – a Fed-free Dividend Cafe dedicated to the ever-practical issue of sell discipline. We’ll discuss Jackson Hole in Monday’s DC Today (only because I have to), but for today let’s talk about how dividend growth equity investors like ourselves think about the right time to sell a stock. Let’s jump into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

We have a fun Dividend Cafe for you this week, with by far the most important things on my mind in the summer of 2022 getting all of the attention. This is a short, easy read, and easily digestible for anyone looking to make heads or tails of the current market conditions. I will spare you further introduction and jump right into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I kind of like this week's Dividend Cafe.  We are going to do a very quick look into how the Fed fuels Japanification, but more specifically, how low-interest rates hurt growth.  It is one thing (and a more severe one at that) that monetary policymakers generally view artificially low rates as a really good thing to fuel economic growth, but at this stage in my life and career, there is little I can do about that.  It is another thing altogether that so many investors think is a great thing.  Today I want to do a quick lesson on why it is not just wrong but a dangerous fallacy, that is, wait for it, undermining economic growth. Speaking of growth, many want to know when the Emerging Markets will deliver it.  I think you will benefit from that lesson today as well.  Unfortunately, the EM gain is likely to be Europe's pain, so get ready for a case of hot-cold. And finally, I want to add to last week's talk about "gross domestic product" in how we think about economic growth.  You may find it illuminating. Jump on into the Dividend Cafe. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

One of the hardest things about being an economic commentator in this day and age is that economic commentary requires nuance, and this day and age requires narratives.  There is to be a single narrative about X, and any variation around, above, beneath, or of the exact X narrative is heretical or at least unappreciated. It is a tough way for society to function, but it is an especially tough way to do economic analysis. I do not merely refer to the inevitable complexity involved in topics like these that are, well, complex.  You are smart readers, and I do my very best (sometimes better than others) to make complex topics a bit more comprehensible in my writing and speaking.  Readers and listeners can judge how effective I am there, but I do try.  No, this is not about complexity, but nuance, which basically can be quite simple at times; it is just that it doesn't fit into the script of a narrative.  It isn't binary.  The nuances of proper economic analysis aren't always fit for a forced narrative. Such is the moment we are in, and today I want to answer your questions about the state of the economy.  If I do my job right, everyone will be mad at me when all is said and done (I should fail at landing in either of the primary narratives of the day).  Such is the plight of an economic truth-teller in 2022 ... Jump on into the Dividend Cafe! Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I really did mean to write this entire piece last week but simply ran out of time and space. I will give you a recap today of last week’s takeaways but then make sure this week’s wraps a bow around our updated point of view on inflation. This is not merely a philosophical exercise. There is an abundance of empirical support provided for my position, and I think you will find a lot of the information about the present state of affairs surprising. You may draw a different conclusion on the matter than I do, but my conclusions on what this means for the decade ahead have profound implications for citizens and investors alike. Again, this can’t be armchair stuff for a real asset allocator; this is what we call fiduciary responsibility. So grab a cup of coffee and get comfortable. This is one of those truly Dividend Cafe editions. Jump on in… Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

It has been a year and a half since I first took up the inflation/deflation debate as a matter of contemporary debate (a part 1 and a part 2). As much as I wished then (and now) that the great economic fight we would have for the next thirty years was inflation, I believed then (and now) that the great economic fight we will have for the next thirty years is better referred to as deflation (a term that itself will require more precise explanation. Some more in-depth updates on the subject have also been produced with a deep desire to really explain and contextualize the state of affairs. Nevertheless, the responsibility of clarity in messaging is with the writer, not the reader, and while there is only so much I can do to make sure those reading it understand it, I have a pretty strong desire to keep doing more. Let me just leave the introduction there and dive into this topic. I suppose I do hope some clarification comes out of this, but truth be told, I am more passionate about just reiterating the great economic message of our time. My agenda is not academic, and it is not political. I am responsible for actual client capital, which is to say, the instrumentation by which actual human goals and needs are met. I take it very, very seriously. And this subject sits at the center of what I believe is a generational economic challenge. Let’s jump into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I send this week’s Dividend Cafe at the end of a 24-hour trip to Las Vegas, where I spoke at a conference yesterday. 2,600 people have come to the 110-degree city of sin for the purpose of hearing various economic and political musings, and one such forum of musings was a panel with myself, Steve Forbes, George Gilder, and Mark Skousen discussing, of all things, my book! It was a surreal experience to be next to Gilder, whose Wealth and Poverty was a transformative book in my intellectual development as a pretty darn young guy (you would actually think less of me if you knew how young I was when I read it). Anyways, by the time you read this, I will be on a plane back to New York City Friday afternoon, where I will be working all of next week before returning to Newport Beach next weekend. We are living in a time where there have been more bad ideas than money to invest in (or at least bad prices at which to buy those ideas). Soon we will see more money than people acting on bad ideas. But right now, a little parsing out of what the laws of contrarian investing mean is in order, and I think you will find it fascinating. Jump on into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The fundamental tension in the economy today, and less directly so, in markets themselves, is really simple: Is a recession coming that slows down price inflation? That question is simple to identify as the economic tension point of the moment, but it is not simple to answer. One reason for this complexity is that some of the premises brought to the question are not to be taken for granted. And this is the subject of today’s Dividend Cafe – what do we know about current economic conditions, potential economic developments, and eventual economic results? What do some think they know that could be wrong? And what is an investor to do through all of this? I have some thoughts to share that can hopefully bring clarity to much of this, and some of those thoughts are merely clarifying, while others may be non-consensus views. Either way, convictions run deep at The Bahnsen Group, as does humility. That is another “tension” that we hold gladly. Let’s jump into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com