The Dividend Cafe

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