The Dividend Cafe

Where to begin, indeed. It may have been exactly the kind of week investors wanted to start off 2021, but it certainly wasn’t the kind of week anyone wanted to start off 2021 from the vantage point of our country, her peace, her well-being, and her example to the world. The concept of a city on a hill is not working well, and this patriot feels total exasperation and desperation. But I do know the readers of Dividend Cafe do not come to this publication for perspective on national conscience or psyche, especially not my clients. I believe there is a lot in this week’s Dividend Cafe that you will want to read, that matters to investors, that can better inform your beliefs and understandings in financial markets. So I am going to do what I normally do, and welcome any questions and comments any of you may have – as always. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

In-depth discussion of the Year Ahead, predictions made last year, and the impact of the Senate race. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Our very special annual white paper is here, wherein we exhaustively recap 2020 and the year that just was (yes, even beyond the obvious stuff), and provide our key themes and perspectives for the year ahead. Reach out with any questions, and feel free to share/forward as you wish! Contact us at www.thebahnsengroup.com for your copy. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Last Friday, December 11, marked year number 25 since December 11, 1995, when my father passed away. His name was Greg Bahnsen, he was 47 years old (the age I will be next year), and he was my hero and my best friend. I have to imagine many of you have experienced things (including losses) that do not feel like they were as long ago as they actually were. I know those cliches are tired, but it just simply does not feel like it has been 25 years since my dad died. Yet it has been, and I imagine when another 25 years go by, I will be saying and feeling the same thing. Time becomes a weirder thing as we get older, I suppose (some of you will have more expertise in this than I do), and I am sure that time dynamics get even muddier when we are talking about a loss. Last weekend as I was isolated away working on a project, I spent abundant amounts of time reflecting on this and many other things. Regardless of what it feels like, 25 years has gone by since dad died, and my entire life being upended and forever changed. Over these last 25 years, not just in my own personal life, but across society, the news, the world, the culture, and yes, the economy and markets, there are a whole lot of things that have barely changed or haven’t changed at all. But, there also are certain things that reflect substantial change. Not just “evolutionary” change, but real paradigmatic change. And the biggest of those changes is the subject of this week’s Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

National Call with David L. Bahnsen and Scott Gamm Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

• Over the last 42 days, the market is up very close to 4,000 points • Over the last 42 days, Joe Biden has won the Presidency • Over the last 42 days, reported COVID cases have grown • Over the last 42 days, weekly jobless claims have picked back up • And once again, over the last 42 days, the market is up very close to 4,000 points Now, I could write you a Dividend Cafe today reiterating a couple of things I have already written 100+ times in 2020 (and they would be no less valid now than they were then) – that the Fed has implemented monetary policies that have indisputably served to boost the valuations of risk assets … that the COVID doom & gloom in the press has unimpressed markets as markets learned the more detailed nature of the virus’s risk and specific vulnerabilities about seven months ago … that markets are forward-looking and with a vaccine on the horizon see a better 2021 looming … that economic damage has been limited in this painful year to a rather vulnerable but less systemically impactful part of the economy … and so forth and so on. And if I wrote that Dividend Cafe, I would hope it would be useful, fruitful, and informative in some of the market lessons it would contain. However, it would very likely miss the most important thing one could say about this market, and frankly, one of the most important lessons one can learn about the nature of capital, period. So that is the ambition of Dividend Cafe today. To explain why the market has been behaving as it has been, not just in the context of the four or five things uttered a couple of paragraphs ago, but in light of a huge lesson for all. And to do this, I will share a story with you that I hope somehow, someway, delivers the message with clarity. Jump on into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Early December is a tough time of year for my writing inspiration. I have soooooo much I want to say about 2020, but we really aren’t done yet, and this year as much as any other, affirms the reality that a lot can happen in a few days, let alone a few weeks. I also have a lot I want to say about 2021, but my “forecast” and “positioning” perspectives for the year ahead are also better served later in the month or early next month. Patience is a virtue, and as much as I am excited to delve into a yearly review and yearly projection, we are a few weeks off still. But it isn’t like there is nothing else to write about. Markets ended November and kicked off December this week with a move higher (as of press time, which is pre-market Friday, the Dow is up +330 points on the week, and futures are pointing to a +125 move higher. Congressional leaders in both chambers and from both parties are in heavy discussions about a new stimulus/relief bill. The incoming administration is announcing more and more of their incoming policy team. World energy markets are re-calibrating around clearer (and more improved) supply/demand dynamics. And, of course, the reality of a highly contagious respiratory virus continues to work its way through society, with various policy and economic ramifications coming in its wake. Every year the first couple of weeks of December have a few things in common – we are too far away from recapping the year we are in, we are too far away to start making the year ahead predictions, tax-loss harvesting needs to be executed, various holiday and seasonal events and tasks take center stage, and yes, regular market and news “stuff” takes place. This week’s Dividend Cafe will jump around a bit but offer a bit of history, a bit of present market tension, and of course, a bit of looking into the future. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

David L. Bahnsen with Scott Gamm - Market Outlook National Video Call Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I have to say there's nothing more important than the basic conversation of optimism vs. pessimism. Not only is the topic of extreme importance to me personally, existentially, emotionally, and spiritually, but I was convinced then, as I am now, that there is lasting investment significance to the topic – one that matters to the financial results of real people with real goals and real objectives. If you fast forward from the levels of uncertainty that existed in markets (and in the society) 6-8 months ago, some may conclude, “okay, well now I am an optimist, because we see a couple vaccines coming and a lower mortality rate than we feared then, but then we saw no such thing, and pessimism was in order.” And if pessimism vs. optimism is to be determined by circumstantial conditions at a moment in time, it is fair enough. If optimism is to be recovered as a hindsight tool for use after conditions have improved, I can understand that assessment (i.e. pessimism when one doesn’t know what is going on; optimism once they see things having gotten better). But of course, that is not what it means to be an optimist or a pessimist – to form a viewpoint or personality impulse (dare I say, a character impulse) as a backward looking response to then-known conditions. In today’s Dividend Cafe, we are going to unpack this more, and seek to understand why this topic is not just relevant to investors, but perhaps at the very heart of what it will mean to be a successful investor. I am optimistic that you will find it rewarding. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Bahnsen Group, CIO and Founder David L. Bahnsen has a lively discussion of the markets and the economy with Scott Gamm from Strategy Associates. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com