The Long Term Investor

Here is a little article of interest to collectors........of STUFF. Weekend....fodder.

What DAOs are and what they might buy next

https://finance.yahoo.com/news/what-da-os-are-and-what-they-might-buy-next-103821642.html

(BOLD is my opinion OR what I consider important content)

"The scene: Sotheby’s auction house in Manhattan. Auctioneer Quig Bruning is poised at the lectern before a packed house. Bidding is set to commence at $20 million.

The object in question: A rare, first printing of the U.S. Constitution, one of 13 surviving copies, made for delegates to the Constitutional Convention and Continental Congress.

After a brief introduction the bearded auctioneer commences, and what happens next is straight out of Hollywood: Escalating million-dollar bids phoned in from unseen buyers (on old school landlines presumably to guard against dropped calls), last second raises and high anxiety.

The bidding immediately soars $10 million to $30 million and is pared to two buyers. After that the action slows a bit, though the tension mounts as Bruning congenially elicits $1 million increments. “Quite the drama,” he remarks at one point. (No kidding.) The gavel finally comes down at $43.2 million, a record sale for a historical document according to Sotheby's, with the winner being billionaire financier Ken Griffin, founder of the Chicago hedge fund and financial services firm Citadel.

(You can watch it all unfold here.)

What Bruning, (or even the participants themselves) may not have realized, is that there was even more here than meets the eye.

What this auction reflected was a smackdown between elite, status-quo finance versus the encroaching world of populist crypto. Because bidding against Griffin and ultimately losing was a crypto-backed entity, ConstitutionDAO, which represents that very new world of non-money, money.

What the heck is ConstitutionDAO? A group of crypto investors who banded together specifically to buy the Constitution using a digitally based organizational structure called a decentralized autonomous organization (or DAO). (Pronounced “Dow.”) Sort of like a decentralized Kickstarter, GoFundMe, or Indiegogo campaign done on crypto. Or maybe even better “a group chat with a bank account,” as one participant describes it.

Ken Griffin may not be J.P. Morgan, and has done some disrupting of his own, but relative to these cats, he’s 100% legacy. That Griffin — who’s been a crypto skeptic, though he’s come around a bit recently —intends to exhibit his copy of the Constitution at Crystal Bridges Museum in Bentonville, Arkansas, which is funded by Alice Walton, daughter of Walmart founder, Sam Walton, is perhaps icing on the old economy cake.

I’ll get back to Grif and the auction in a bit, but first some more on DAOs, which for starters have an ill-defined legal status as of now. So far only Wyoming has legally recognized DAOs. (Hey, here’s an FAQ sheet on how to form a DAO from the Wyoming Secretary of State for ya!) The SEC has taken note and seems not to be amused. To wit: “SEC Stops Wyoming-Based DAO From Registering 2 Digital Tokens."

“The reality of DAOs is they’re not currently legal structures at all,” says Alex Taub, co-founder of Upstream, a platform that streamlines and simplifies the process of creating a DAO, who says he invested a few hundred dollars in ConstitutionDAO. “I don’t care what Wyoming says, that’s flimsy. They’re potential legal structures. The concept of the LLC has only been around since the 1970s, who’s to say DAO is not the LLC of the future?”

On the other hand the federal government hasn’t completely dismissed DAOs. For instance, in a recent bizarro, rabbit hole of a story (even by crypto standards), the Feds sold (through intermediaries) Wu-Tang Clan’s one-of-a-kind album “Once Upon a Time in Shaolin,” which it had confiscated from “Martin Shkreli, (the price-gouging young pharmaceutical speculator who was later convicted of securities fraud)” to PleasrDAO for $4 million, according to The New York Times. Believe me when I tell you this stuff is wild.

Even wilder perhaps (it's difficult to imagine using the superlative adjective in crypto) is Olympus DAO, “a "staking" scheme with an annual percentage yield of 7,000% via new OHM token mints,” according to CoinDesk. (What could possibly go wrong?) In the mood for a tamer, warmer DAO? Check out Kimbal Musk’s (yes, Elon’s bro) Big Green DAO, the first nonprofit-led philanthropic DAO, which focuses on food justice.

For all their revolutionary potential, it’s early days yet for DAOs, with the concept only going back to 2015 or so. One infamous project, “The DAO” launched in 2016 using Ethereum (ETH-USD) and was hacked shortly thereafter. (That hack resulted in what’s known as “hard fork” of Ethereum from Ethereum Classic for those of you versed in this kind of thing.)

Some say DAOs are having their moment — or maybe getting ready for prime time is more like it. “We believe that this past month with the ConstitutionDAO will be the NBA Top Shot moment for DAOs,” says Taub, referring to the basketball NFT (a non fungible token, I wrote about them here) which jump-started that realm.

I should also note that DAOs are connected to the broader trend of what’s known as DeFi (or decentralized finance), a blockchain-based financial parallel universe that uses no (or little) traditional intermediaries like banks, exchanges or broker dealers. It remains to be seen how viable DeFi and DAOs, as well as NFTs and indeed the whole world of crypto is. Suffice it to say that activity in this new world is ramping up, and to a degree at the expense of the legacy world. Will the new world come crashing down? Who knows.

But let’s return to that auction of the Constitution, because there’s a slew of fascinating detail. The Verge, fyi, just did a nice longform interview with Jonah Erlich, a software engineer, who was one of 30 ConstitutionDAO’s core contributors (don’t say organizer).

Turns out the project had 17,437 donors with a median donation size of $206.26, who ponied up Ethereum through a platform called Juicebox.money. According to the Verge interview, the whole thing started as a joke on Twitter and came together in a week. (If that seems capricious, note that Griffin just revealed that buying the Constitution was whimsy for him too. From Bloomberg: “I was sitting at home in New York and my son calls me to say, ‘Dad, you have to buy the Constitution'” (Insists the billionaire’s son.)

As for Erlich, he ended up actually going to Sotheby's for the auction. This from The Verge: “It was exhilarating. … During the auction, when the number was creeping up, I felt like I was going to puke. If we won, I might have cried. It was a very intense experience, especially after this crazy week.”

And what if in fact his group had won? What were their intentions?

“...At that point, the DAO would have voted on what to do with it. For example, we had museums lined up that were going to give proposals on how their museum should be the one to store and display this document. The DAO would also be able to vote on what text should be displayed alongside this copy of the Constitution. What message do we want to share with the world? We probably would have funds left over to give to a community that is really excited about doing things. The token holders would set the future direction.”

Sounds reasonable enough. On the other hand, when Kevin Roose of The New York Times in this comprehensive piece took “a spin through” this community he also found that someone raised this slightly more disturbing line of questioning: “Is there a safeguard to make sure the DAO doesn’t vote to eat the constitution? Or other method of destruction?” Yikes!

In any event it’s all moot because ConstitutionDAO lost — at least in part perhaps because Griffin could see the DAO’s bid was capped at $42 million (Sotheby’s required the DAO to keep millions in reserve) and simply exceeded it by $200,000. “They should’ve obfuscated how much they had,” says Taub. "You’re playing poker with the richest people in the world. They’re no dummies.”

Cullen Roche, the founder and chief investment officer at financial advisory firm Discipline Funds and a former advisor at Merrill Lynch, has a similar take. “I think the lesson with the Constitution DAO is building an entity that publicly reports its bidding value is obviously pretty naive,” he says. “Everybody knows Griffin has bottomless pockets, he wouldn't go to bid and say I’m worth $40 billion and here’s all $40 billion —come play ball. He would never put up a bid like that. In this case transparency was counterproductive and a weakness.”

And there was Griffin’s state of mind. “I told myself, ‘I am going to own this. I don’t do that very often,” he said at an interview on Thursday after a luncheon hosted by the Palm Beach Civic Association at the Florida city’s Four Seasons hotel, according to Bloomberg.

Bloomberg also reported that Griffin said he was in touch with the DAO the night of the auction, and after he won looking to “arrange a joint governance for the document.” A Citadel spokesman said that Griffin “also proposed allowing each of the roughly 17,000 participants in the ConstitutionDAO group the right to generate a non-fungible token tied to the copy.” None of this came to fruition however.

The group is now in the process of endeavoring refunds (which will be net of expenses, called "gas fees"), which some have suggested could be onerous, especially relatively speaking for those who put in small amounts.

Meanwhile, and just to give you another reminder (as if you need one) of how wild and wooly this world is, ConstitutionDAO tokens (named People — like “we the People”) have become a "meme coin" a la Shiba Inu and dogecoin and were still trading as of yesterday morning. As CoinDesk reports: “PEOPLE has no utility and offers no governance rights to holders. But this hasn’t stopped crypto natives from trading up the token to a fully diluted market cap of $839 million as per CoinMarketCap. And the trading frenzy is leading to losses.” (Gee.)

Still, the people of ConstitutionDAO have proudly declared on Twitter (59,700 followers) this to be a victory of sorts and they’re right about that.


ConstitutionDAO Tweet
In other words, you best believe that Sotheby’s and the rest of the art world knows all about DAOs now. And that this won’t be the last DAO formed to try to buy a document or a piece of art.

And what about beyond that? What about buying a building, a company or even an NFL team (see below)? Why not? If this merry band could pull together $47 million in a few days on whim, imagine what one of these babies could do with say a Greta Thunberg or Amanda Gorman super-charging it?

At some point a DAO will likely make an even bigger splash. KrauseHouseDAO — an homage of sorts to the late Chicago Bulls’ general manager Jerry Krause — recently tried to raise money to buy the Chicago Bulls. Or maybe, as Yahoo Finance’s Zack Guzman tweeted, a DAO might buy the Broncos. (Legendary Bronco quarterback John Elway, who missed out on a chance to buy a stake in 1998 and is reportedly interested in buying in today, may want to bone up on DAOs.)


Zack Guzman Tweet on the Broncos
DAOs may end up doing a million small things too. “The future of the concept of the DAO ends up becoming a group-chat of a few people who pull money together to do stuff,” says Taub. “[It’s] Web3 with an iMessage wallet attached to it. iMessage meets Venmo.”

For now at least, reverberations from the great Constitution auction of 2021 are still being felt. Bloomberg reports that “Michael Novogratz, billionaire founder of Galaxy Digital Holdings, said Thursday during the Goldman Sachs U.S. Financial Services Conference that Griffin’s bid spoiled the party."

“ConstitutionDAO might have been the coolest thing that happened all year long in crypto, because it’s the pure essence of, ‘Here we are, we are doing it for the people, buying one of the founding documents, one of 13 Constitutions, and we’re gonna give it back to the people.’ Unfortunately, Ken Griffin played the Grinch — rich billionaire coming in to kind of spoil the party, in what I would call a tone-deaf move.”

Note that Novogratz playing the Everyman may strike some as ironic, given that one could argue the Princeton wrestling champ, cum National Guard helicopter pilot, cum Goldman Sachs’ partner, cum hedge fund honcho, cum Federal Reserve advisor is of the old elite world. But note too that Novo has been whole-hog into crypto for more than half a decade now.

So what about this idea generally that DAOs and crypto are disrupting Wall Street?

“It’s weird for me to see things like bitcoin and crypto being touted as an inequality breaker,” says Cullen Roche. "When you look at ownership of bitcoin it’s way more massively unequal even than stocks and bonds are at present. There’s also a lot of hype and narrative of some of these things that exaggerate the benefits of the existing system. Is this really going to overthrow the financial system? Do you think Ken Griffin will go away without a fight?”

There are problems aplenty to be worked out with DAOs. For example, here’s what Alexis Goldstein, the director of financial policy for the Open Markets Institute, says when asked if DAOs can serve as an alternative financial structure that decentralizes control: “In theory, but what I’ve seen in practice it more closely resembles what is seen in shareholder votes: The biggest shareholders have the biggest say.”

Then there are the risks that accompany DAOs as Roche notes: “You could have DAOs being run by Russian bots that are buying, who knows, public companies, doing weird things that could have a big impact on U.S. economic outcomes.”

Roche, Goldstein and others agree that what DAOs desperately need is regulation and governmental oversight. Problem is the politicians never seem to agree on anything — which disruptors love. Caveat Emptor."

MY COMMENT

Once the legalities of this "stuff" is worked out these forms of fractional ownership and purchasing.....might.....come to dominate certain assets in the art or auction world. This could be a first step to prices taking off on some assets....way beyond where they are now. Or......this could just be a flash in the pan event and go nowhere. It will be interesting to watch this stuff evolve and happen going forward.

 

I like this little article as a very nice summary of the issues that will be out there over the next week for investors.

Federal Reserve's decision, Retail sales: What to know this week

https://finance.yahoo.com/news/fede...ecision-what-to-know-this-week-154344711.html

(BOLD is my opinion OR what I consider important content)

"Investors this week are set to focus on the Federal Reserve's final monetary policy decision of 2021, which may include more signaling of a monetary policy adjustment amid elevated inflation and a strengthening economic backdrop.

Members of the Federal Open Market Committee are set to hold their two-day policy-setting meeting on Tuesday and Wednesday, after which they will release their monetary policy statement and hold a press conference with Federal Reserve Chair Jerome Powell. The December statement will also be accompanied by an updated Summary of Economic Projections — the first since September — outlining members' expectations for economic conditions and interest rates over the next few years.

Many economists now expect that this month's meeting will serve as the platform for Fed officials to increase the rate of tapering of their asset-purchase program. For more than a year-and-a-half during the pandemic, the Fed bought Treasuries and agency mortgage-backed securities (MBS) at a clip of $120 billion per month, with this program comprising a key tool in supporting the virus-stricken economy. Last month, the Fed began winding down this program, slowing its purchases by $15 billion per month in each of November and December as the economy showed signs that it could continue to recover from the pandemic without the added monetary policy support.

"We expect the Fed to announce a doubling in the pace of tapering at the December FOMC meeting, bringing the monthly drawdown to $20 billion and $10 billion per month for Treasuries and MBS, respectively. This would conclude the tapering process in March and open up greater optionality for an earlier liftoff," wrote Deutsche Bank economists led by Matthew Luzzetti in a note late last week.

Heading into next week's meeting, Fed officials have already struck a more hawkish tone and suggested a near-term acceleration to tapering could be coming. Powell told Congress late last month that the central bank would discuss at the December meeting "whether it would be appropriate to wrap up our purchases a few months early," given the backdrop of "an economy that is very strong and inflationary pressures that are very high." Other officials have echoed these sentiments.

And in the weeks since Powell delivered those remarks, inflationary pressures have only come in hotter. The November Consumer Price Index showed a 6.8% year-over-year rise in consumer prices last month — the fastest since 1982. And other data have underscored the tightness of the present labor market, suggesting employers might need to further raise wages — and in doing so contribute further to inflationary pressures — in order to compete for talent. Weekly jobless claims came in at the lowest since 1969 last week, while job openings came in above 11 million in the U.S. for only the second time ever recorded in October.

"Strong economic growth, labor market recovery and elevated inflation has clearly moved the Fed toward an accelerated focus on shifting policy and particularly in getting quantitative easing over with," Rick Rieder, BlackRock’s chief investment officer of global fixed income and head of the BlackRock Global Allocation Investment Team, wrote in an email Friday. "That said, the Fed will also have to balance these factors alongside potential Omicron risks, its supply and demand influences, potentially moderately slowing demand for goods and services and the possibility of rising geopolitical risks."

Still, other pundits pointed out that the Fed will need to be cautious about not coming off so hawkish at their next meeting that it spooks the markets, which have already been on edge about risks around inflation.

"The Fed wants to jawbone this inflation a little bit lower here over the coming months," Christopher Vecchio, DailyFX.com senior strategist, told Yahoo Finance Live on Thursday. "They also are cognizant of the fact that raising interest rates will not unclog the ports, it will not lead to any fixed capital investment increase to fix the infrastructure problems, if you will, that have been creating these supply chain problems. And so this is a tight walk here."

"They really have to be careful about potentially tipping markets over by appearing too hawkish at the onset," he added. "So I do think we're going to see strong forecasts on inflation, strong forecasts for growth. But ultimately, by the end of 2022, particularly 2023, those forecasts for inflation should be getting closer to the trend."

Retail sales
One key piece of economic data out this week will be November retail sales, offering a look at the strength of the consumer in the midst of the holiday shopping season.

Consensus economists are expecting to see retail sales rise by 0.8% in November compared to October, according to Bloomberg data. This would slow compared to October's 1.7% monthly increase, but still represent a fourth straight monthly increase.

"The gain should be supported by holiday sales with clothing showing the biggest sequential gain among major sectors," Bank of America economist Michelle Meyer estimated in a note on Friday. "That said, we do think the risks are skewed to the downside given the sizable upside surprise in October's sales."

The bigger-than-expected rise in retail sales in October stemmed from strength in a variety of categories. Non-store retailers, or e-commerce platforms, posted a 4% sales increase, while gasoline station sales and electronics and appliance stores saw sales grow 3.9% and 3.8%, respectively. Some economists suggested the monthly jump likely stemmed from consumers doing their holiday shopping earlier this year to try and get ahead of supply chain disruptions and shipping delays.

Other private data on consumption for November came in strong, further suggesting another solid monthly rise in retail sales. Adobe Analytics said in an update published Nov. 30 that consumers had already spent $109.8 billion online between Nov. 1 to Nov. 29, with this figure growing 11.9%, compared to last year. "

MY COMMENT

I really like the last sentence above. The retail numbers for online sale are really BIG with an increase of 11.9% compared to last year. We need to see some really good holiday retail data this year to spread some economic cheer.

As usual.....the big media circus event of the week......will be the FED meeting and especially the press conference. NONE Of this tapering news is going to be unanticipated. It is all very well baked in at this point.....but....that will not prevent some good old fashioned media fear mongering. I dont see any impact on stock investors at all from tapering. Once it starts and picks up steam it will simply be invisible and background noise.

Of course........the press conference will probably have some little comment taken out of context and emphasized by the ........generally negative.....media.

There is really NOTHING that the FED can do about inflation since it is being caused by the supply chain issues and the distortion of the labor markets. Resolution is simply going to be a function of time and the normalization of those issues.

 

OK.....TWO weeks till CHRISTMAS.

We should be nearing MAXIMUM holiday shopping and spending over the next 12 days. My little neighborhood is fully decorated at the moment with at least 80-90% of the homes having some sort of display or decor. It is nice to see EVERYONE participating.

I did a show last night.......outside..... in the 45 to 50 degree weather. There was a surprisingly big crowd. So people are out and about and spending money.....at least here in Texas.

 

The markets today are......trying.....to work themselves into a little TIZZY about the FED meeting. Irrational....but.....typical.

As usual this......short term action......is simply traders, AI programs, and......the WORST of the irrationals......the Wall Street professionals. Look back at any negative market and you will see that the BIG silent majority of stock owners.....the little retail investors.....just sit and do nothing. Meanwhile the.....so called professionals......the ultimate conformists running around like a herd of lemmings.....are the ones that ALWAYS PANIC.

This is why the FINANCIAL MEDIA is just about always on the negative side of the story line.......and, often the wrong side of the story line.....because they operate in conjunction with and depend on their sources of information and money......the wall street professionals.

 

I LIKE Peter Lynch. As a long term holder of his Magellan Fund he made me a lot of money during some of my earlier investing years. For 13 years he was as good as it gets. BUT....after he left the fund......I ALSO left since it was not the same without his hot hand.

Column: Legendary investment guru Peter Lynch says the move to index funds is a ‘mistake.’ He’s wrong

https://www.latimes.com/business/story/2021-12-08/peter-lynch-index-fund-investing

(BOLD is my opinion OR what I consider important content)

"The least surprising financial news nugget in recent days may have been this one from a Bloomberg interview with Peter Lynch, one of the most venerated stock market gurus of our time.

Lynch, 77, told Bloomberg that the wholesale move of investors in recent decades from actively managed mutual funds to passive investing — that is, index funds — is “a mistake.”

He said, “Our active guys have beat the market for 10, 20, 30 years, and I think they’ll keep on doing it.”

The index fund was at first ridiculed, then tolerated, then grudgingly accepted, then reluctantly endorsed, and finally copied en masse.

Jack Bogle, inventor of the index fund at Vanguard

On Wall Street, this is known as talking one’s book. Lynch, of course, was the quintessential active investment manager, renowned for his stock-picking skills. Fidelity Magellan Fund, the mutual fund he ran from 1977 to 1990, was the quintessential actively managed mutual fund.

By giving Magellan investors an annualized return of more than 29% — compared with an annualized gain in the Standard & Poor’s 500 index of about 15% during the same period — Lynch grew Magellan’s assets under management from $18 million to $14 billion, making it the largest mutual fund in the world.

Magellan lost that crown in 2000 to Vanguard’s S&P Index Fund, the quintessential passively managed mutual fund.

Lynch’s remarks play into the enduring debate about which is better for investors, active management or passive, and under what circumstances.

If his remarks are taken as advice at face value, then they’re a disservice to the average retail investor.

That’s because the debate has long since been resolved by reality: Active investment managers consistently fail to match or exceed the benchmark indices of their funds. Passively managed index funds, by definition, always hit their benchmarks.

More than 57% of all U.S. domestic stock funds underperformed their benchmarks in 2020, according to the latest S&P Indices Versus Active scorecard, known as SPIVA.

In some categories, the record was even worse: About 60% of all large-capitalization mutual funds failed to match the S&P 500 index, and more than 80% of midsized core mutual funds fell short of the S&P MidCap 400 index.

The record isn’t any less dismal over longer periods. More than 67% of actively managed U.S. equity funds underperformed the S&P Composite 1500 index, which comprises 90% of all U.S. publicly traded companies, over three years; 72.8% of funds fell short over five years, 83.2% fell short over 10 years and 86% over 20 years.

It’s proper to note that Lynch probably didn’t set out to offer investment advice. His remarks to Bloomberg came chiefly in connection with the announcement of a donation of $20 million in artworks to his alma mater, Boston College. Pressed to comment further on the record of active vs. passive management, he said, “I don’t keep score. I’ve got 10 grandchildren. ... That’s what I keep score on.”

But he also pointed to the performance of three Fidelity fund managers to validate his general claim that active beats passive.

It’s true that his three exemplars have done well, but many of Fidelity’s actively managed funds have not met their benchmarks. That includes Magellan, on an after-tax basis — an annualized gain of 15.3% over 10 years, after taxes on distributions, versus the S&P 500’s average gain of 16.63% per year.

So it’s proper to take a closer look at Lynch’s viewpoint and its context.

First, some fundamentals. Traditionally, stock mutual funds were operated by investment managers who aimed to find the best values in the equity markets, traded actively to capture gains and dump their dogs, and collected healthy fees for their efforts.

That model was upended in 1976 by John C. Bogle, who introduced the first index fund at Vanguard, which he founded. Bogle felt that the best way to serve small investors was to offer them low-cost funds tied to broad market indices.

Because they had to match the indices’ baskets, which seldom change, they would do relatively little trading and thus would incur few tax liabilities, which only get passed on to investors. They required “no management whatsoever,” at least in terms of stock-picking, Bogle recounted years later.

That first fund, keyed to the S&P 500 index, was denigrated as “Bogle’s Folly.” As he recollected, “the index fund was at first ridiculed, then tolerated, then grudgingly accepted, then reluctantly endorsed, and finally copied en masse. It has changed how we think about investing.”

Today there’s scarcely a mutual fund firm that doesn’t include a galaxy of index funds among its offerings. (To be sure, while mostly identified as an index fund family, Vanguard also offers actively managed funds.) Passive management comprises about 43% of U.S.-based mutual fund and exchange traded funds, or $10 trillion, today, compared with about 31.6%, or $4.1 trillion, in 2015.

Several factors contribute to the superior performance of index funds. One is the sheer difficulty of consistently beating an average return year after year. From time to time, managers will emerge who do so for a stretch of time, but like baseball players on a tear, eventually almost all go cold.

Index funds tend to be tax-efficient. By trading relatively rarely, they minimize the realizing of capital gains; these are distributed to their investors, who must pay taxes on them every year.

The taxable distributions of Vanguard’s S&P 500 index fund in the first two quarters of this year came to about .65% per share; Magellan’s last capital gain distribution in May was the equivalent of 4.75% of its share price.

Index funds’ management fees are also generally minimal compared with those of actively managed funds. The expanse ratio of the Vanguard 500 stock fund is 0.04%; Fidelity Magellan’s is .79%.

Lynch brought a sober rationality to stock selection. He abjured the hunt for home runs, but his on-base percentage was high. He looked for companies likely to experience steady growth yet underpriced by the market. He scrapped losers and held on to winners, and set little store by market or economic forecasting, since such predictions were inevitably based on a heavy helping of guesswork.

Lynch is one of the very few investment managers to notch a superior performance over more than a decade, which earned him the label of stock-picking greatest of all time from financial commentator and manager Barry Ritholtz, whose judgment counts for a lot. (Lynch told Ritholtz he would award that crown to Warren Buffett.)

But even Magellan failed to match the S&P 500 in two of Lynch’s 13 years at the helm, though he never had a down year; the S&P 500 had two negative years during his tenure.

After Lynch’s departure, Magellan came well back down to Earth, underperforming the S&P 500 in 15 years from 1980 through 2020. It’s destined to fall short again this year, with a one-year gain of 22.8% through Sept. 30, against a 30% gain in the S&P 500. From a peak of about $110 billion in assets around the turn of this century, Magellan is now down to about $31 billion.

Indexing isn’t without its critics. Many focus on its overall effect on the market and the broader economy, as it has taken over the investment landscape.

One concern is with the sheer size of the passive category. One fund alone, the Vanguard Total Stock Market Index Fund, has nearly $1.3 trillion under management, accounting for 10% of all assets in U.S. stock funds and ETFs. (Disclosure: I own shares in the index fund and in its related ETF.)

This leads to concerns that passive investors and their managers have no incentive — indeed, little ability — to leverage their shareholdings to influence corporate behavior.

As it happens, the rise of passive investing has given the passive mutual fund companies dramatically more power, if they were to choose to exercise it. The top three index fund firms, BlackRock, Vanguard and State Street, hold a combined 22% of the shares of the average S&P 500 company.

If the three firms voted as a bloc, they could change corporate behavior in significant ways. Thus far, they haven’t done much jawboning, either together or individually.

The big index funds have been too passive on issues such as global warming, for example. Former Vice President Al Gore raised that issue in a 2019 interview with the Financial Times. “The large passive managers have a real difficult decision to make,” he said. “Do they want to continue to finance the destruction of human civilization, or not? Their model makes it difficult for them to execute some of the strategies that active managers have available to them.”

BlackRock Chairman Laurence D. Fink has been outspoken about the responsibility of corporate managements to act in socially beneficial ways, but his prescriptions may not entirely sit well with social and economic activists. Earlier this year, for instance, he came out against the movement to divest fossil fuel companies from investment portfolios. Better, he said, to try to influence those companies from the inside.

It’s certainly true that broad indexing saps investors of their ability to be as discerning as they may wish about what companies they want to own. Object to tobacco companies? As an S&P 500 index holder, tough: five tobacco companies are in the index. Want to shun oil and gas? An S&P 500 index fund has to own 25 fossil fuel companies.

Investment firms have responded by offering index funds sliced and diced to appeal to more discriminating investors. The concept is “direct indexing,” which allows customers to pick and choose among the stocks in an index to create, essentially, their own index. Yet this tends to defeat the purpose of index investing by returning to active stock-picking.

Lynch, in his comments this week, didn’t seem to be alluding to any of these tangential issues with passive investing; his claim was that active stock-picking beats the market, which simply isn’t true. For much of the nearly half-century in which index funds have been an option for the average investor, they’ve been the way to go.

It’s commonly said on Wall Street that past performance is no guarantee of future results. But that applies most accurately to individual investments. As a class, the record of index investing in the past is indisputable."

MY COMMENT

The SUPERIORITY of passive Index Funds.....is a given at this point. For my money ANYONE that is not interested in the mental challenge of picking stocks and......"trying".....to do better than the unmanaged averages......should simply invest in and hold for the long term......the SP500 Index.

For those that do like the mental exercise of stock picking.....the VAST majority WILL NOT beat the SP500.

NOW........lest talk about INSANITY. This little article at the end wanders into the desert of shareholders trying to impact and change corporate behavior. This is the ULTIMATE return killer. It is EXTREMELY foolish to impose the SOCIAL FADS of the moment on businesses. Leave business alone.....let business be simply business.

 

I saw some of this first hand on a trip a few months ago. We went into a used Lego store. the place was packed with younger....mostly males.....shopping for used sets and individual figures. Business was BOOMING......and....I have to admit some of the vintage LARGE sets that were put together were pretty impressive.......and tempting.

Forget About Gold: Study Says Investing in Lego Sets Will Earn You More Money
Economists have found that prices of retired Lego sets grow by 11% annually, which is higher than the average returns provided by gold and large stocks.

https://gizmodo.com/forget-about-gold-study-says-investing-in-lego-sets-wi-1848198385

(BOLD is my opinion OR what I consider important content)

"While some people may consider gold, jewelry, art, wine, or antiques good investments in the long-term, a new study challenges that notion and presents a unique and more lucrative alternative: Lego sets.

Economists from the Higher School of Economics in Russia have found that the market prices of retired Lego sets sold on the secondary market grow by at least 11% annually, which is higher than the average returns provided by gold, large stocks, bonds, and alternative investments. For their study, the authors analyzed the prices of 2,322 unopened Lego sets from 1987 to 2015 and information about primary sales and online auction transactions.

The study will be published in the January issue of Research in International Business and Finance.

“We are used to thinking that people buy such items as jewellery, antiques or artworks as an investment,” Victoria Dobrynskaya, an economics and finance professor at HSE and a co-author of the study, said in a university news article. “However, there are other options, such as collectible toys. Tens of thousands of deals are made on the secondary LEGO market. Even taking into account the small prices of most sets, this is a huge market that is not well-known by traditional investors.”

The researchers offer some reasons to explain why people pay big bucks for Legos. A significant one may be the small number of sets produced and the limited number of people who want to sell their Legos after they buy them. In addition, LEGO has been making Legos since the 1960s and has amassed a legion of nostalgic adult fans who value older sets.

Before you start wondering whether you have any Lego sets laying around your house that could be secret treasures, there are some things you should know. First off, prices for Lego sets on the secondary market, which vary greatly and range in returns from between -50% to +600% on an annual basis, typically start to increase two or three years after a set has been retired. This means you have to factor in high costs like delivery and storage into your investment.

Secondly, the prices of small or very big sets will grow faster than medium-sized sets, the researchers found. The sets that see the biggest growth in value on the secondary market are those related to famous buildings, movies, or holidays. As such, it shouldn’t be a surprise that some of the most expensive Lego sets include the Millennium Falcon, the Death Star II, and the Imperial Star Destroyer. Other highly valued Lego sets include limited edition sets and those given out at promotional events.

And finally, the secondary Lego market is not something you can jump into easily if you’re not a fan, Dobrynskaya said. There are a lot of Lego sets out there, and it takes a true fan to analyze the market and make a bet on a set that might be worth a lot more someday."

MY COMMENT

I post this for fun....but....there is definitely truth in this little article. Any person or investor can have some fun with some category of collecting that they are interested in.......and.....at the same time might make a little gain or at least stay even.

The KEY is to buy the ABSOLUTE BEST quality sought after item you can.......and.....to do your research and know the market.

I am too old to have had Legos as a kid....but....I have to admit some of the very large Lego Star Wars kits that were assembled in the Lego store we went into were very tempting. The level of detail and the art of staging them was amazing.

I will probably be sued by my kids some day for getting rid of their larger Lego sets.

 

YES......we appear to be under the FED WATCH spell today in the markets.

 

I like this little article. No surprise there since I happen to own ALL five of the stocks in the article.

5 giant stocks are driving the S&P 500 to records: Goldman Sachs

https://finance.yahoo.com/news/5-gi...-the-sp-500-to-records-goldman-144836651.html

(BOLD is my opinion OR what I consider important content)

"Rally on despite markets being powered to records by a handful of very large stocks, says David Kostin, Goldman Sachs chief U.S. equity strategist.

Goldman's research shows that five stocks have accounted for 51% of the S&P 500’s return since the end of April. Those five stocks — Microsoft, Google, Apple, Nvidia and Tesla — account for more than one-third of the S&P 500s 26% return this year.

While this has unfolded among these household name tech giants, Kostin points to narrowing market breadth (or fewer stocks participating in the rally) underneath the surface as a key near-term risk to markets.

"Following periods of sharply narrowing market breadth – similar to the recent experience – equities have historically exhibited weaker-than-average returns and deeper drawdowns," Kostin says.

Since 1980, there have been 11 times in which market breadth has narrowed by as much during a six-month period as it did from April to October of this year. Following most of these episodes, Kostin finds the S&P 500 has generated below average returns over the following one, three, six and 12 months.

"Our previous analysis shows that changes in market breadth can be a useful signal for near-term equity market returns," Kostin adds.

That said, Kostin believes stocks are poised to break from this historical trend due to several factors.

"While 'unknown unknowns' cause the largest drawdowns and by their nature are impossible to assess in advance, the macro environment does not suggest drawdown risk is elevated in the coming months. While difficult to predict, the risk of a recession appears low. Earnings and margins continue to surpass expectations. Meanwhile nominal and real rates are expected to rise but remain low over the coming months, supporting the backdrop for both valuation and equity demand," Kostin explains on his upbeat outlook for the markets.

The strategist is bullish on high growth stocks.

Adds Kostin, "These stocks have performed well in recent months and this should continue provided narrowing breadth persists. Such firms trade at only a small premium to similarly high growth companies with low or negative margins. High margins are a signal of quality and indicate these stocks are likely to outperform their low margin counterparts amid an uncertain macro backdrop and tightening financial conditions.""

MY COMMENT

These five companies are some of the most successful BIG CAP investments in the world. They are the MOST successful BIG CAP companies in the world......or.....are those with the most promising futures.

Over the long term past......and......looking to the long term future....these companies have been and will be the guts of the SP500 and world business. Owning these companies is just about a necessity for any investor.

Of course.....probably one of the best ways to own these companies is to simply own the SP500 Index.

 

Same old short term DRAMA today impacting the markets.......the OMI variation first.......OMG......one person has died in England. This is a perfect example of short term IRRATIONAL human behavior. We see a LOT of irrational human behavior going on lately. ALL of the scientific data and experiences to date are STILL INTACT......this variation is extremely MILD.

The other short term DRAMA......of course.....the FED. There is NOTHING going to happen at the FED meeting that is not fully known to EVERYONE. They are going to increase and speed up tapering some. They will start to raise interest rates some time in early 2023. One of the most obvious reason why they will wait till early 2023 or December of 2022 to raise rates a TINY BIT....is the fact that 2022 will be an election year. Tapering will be a NON ISSUE for stocks and funds once it actually starts to happen.

For investors such as myself.....long term people......this next few days will just be IRRITATING but irrelevant.

 

Speaking of the five companies in the post above. One of them.....APPLE....is very close to a new milestone for the company and BIG CAP growth stocks in general. It is about to hit the THREE TRILLION market cap milestone. It is probable that ALL FIVE of the companies above will ALSO hit this milestone at some point over the near term future. BUT....Apple will have the historical honor of being the first.

The price target for Apple in this little event is about $183 per share. The stock is currently at $179.34 today. It was closer earlier when it was in the green. There is a GREAT probability that we will see this historic business event happen by year end.

 

AMAZINGLY.......the yield on the Ten Year Treasury......is close to the 1.3% range. The current yield is at 1.419%.

Since I like to play with statistics and data on this sort of topic. If this rate holds or drops till January 1, of 2023. It wold be the LOWEST Ten Year Treasury yield in the past ONE HUNDRED AND FIFTY YEARS. THE LOWEST IS IN.......2021.....so far.

https://www.multpl.com/10-year-treasury-rate/table/by-year

 

Today....was just one of those days that is a waste. One of those days when I say.....whatever. Needless worry about topics that have been known for a long time.....the virus and the FED.

So I was not shocked to see lots of RED in my account today. Every stock position was down for the day. Plus....the SP500 got beat me by 1.09%.

Hopefully the markets got their FED skittishness over with ahead of time.

 

REMEMBER earlier....about a year or so ago when the markets and ALL the commentators were FREAKING OUT that the Ten Year Yield had gotten up to about 1.7%. Total insanity....yet the markets were jumping around day to day on that situation.

Look at the chart above. For 118 of the past ONE HUNDRED AND FIFTY years the yield on the Ten Year Treasury on January 1 of each year has been above 3%. For 137 of the past ONE HUNDRED AND FIFTY years the Ten Year Yield has been above 2.4% on January 1 of the year.

Here we are today STUCK down at 1.412%. A perfect example of the IRRATIONAL and DELUSIONAL thinking of the modern investor. Remember this as the FED starts to do 0.25% raises to the rates in a year or so. EVERYONE will be freaking out. The NORMAL range for the Ten Year Yield should be in about the 3-5% range. Some day we might get back there.......and.....in my opinion it will be a good thing.

 

This is the....short term.....a few days.....story of the markets.

Stock market news live updates: S&P pulls back from record, Nasdaq sheds 1.4%

https://finance.yahoo.com/news/stock-market-news-live-updates-december-13-2021-124506412.html

(BOLD is my opinion OR what I consider important content)

"Stocks traded lower on Monday, with the S&P 500 dipping below last week's record level as traders awaited a Federal Reserve monetary policy decision later this week.

The three major indexes declined. U.S. crude oil prices steadied trade near $71 per barrel. Treasury yields fell across the long end of the curve, and the benchmark 10-year yield held below 1.5%. Bitcoin prices declined to trade below $47,000.

Investors' focus this week will be on the Federal Reserve's December policy-setting meeting, which will take place between Tuesday and Wednesday. A new monetary policy statement and press conference with Fed Chair Jerome Powell are due mid-week, alongside the Fed's updated Summary of Economic Projections charting out individual members' outlooks for economic conditions and interest rates. Policymakers for other central banks are also set to meet this week, including those from the Bank of England and European Central Bank.

The Fed's decision has taken on additional significance as the market attempts to predict how policymakers will weigh persistently elevated inflation against the specter of a fresh wave of the coronavirus with the newly discovered Omicron variant. U.S. inflation rose at its fastest pace since 1982 in November, last week's Consumer Price Index (CPI) showed, pointing to the ongoing mismatch between supply and demand in the recovering economy.

On the virus front, the Omicron variant has so far been detected in 30 states, according to data compiled by the New York Times. Early data so far have suggested the variant is more transmissible than the earlier Delta variant, but may cause less severe disease and be able to be neutralized by a booster dose of the COVID-19 vaccine, according to Pfizer. On Monday, the World Health Organization said the Omicron variant remains a "very high" global risk, while underscoring that data on the severity of the disease is still limited.

But against the backdrop of inflation and a firming economic recovery, the Fed is expected to announce an acceleration of its asset purchase tapering process at the close of this week's meeting, dialing back one of the central bank's key tools that had helped support the economy during the pandemic.

"Both equity and fixed-income markets appear to be pricing the coming Fed tightening," David Kostin, Goldman Sachs chief U.S. equity strategist, wrote in a note.

The firm expects the Fed to double the pace of tapering at this week's meeting, bringing the Fed's monthly drawdown of Treasuries and agency mortgage-backed securities purchases to $30 billion per month versus the current rate of $15 billion.

"Historical experience suggest equity valuations are typically flat around the first Fed hike," Kostin added. "Moreover, some of the longest duration and highest valuation stocks plunged during the past month, suggesting that equity market pricing of Fed tightening is also under way."

11:17 a.m. ET: USPS expects 2.3 billion pieces of mail to be delivered this week in busiest of the season
The U.S. Postal Service announced Monday that it expects 2.3 billion pieces of mail to be delivered during the week of Dec. 13, underscoring the heightened demand for shopping and shipping this holiday season. The USPS estimate includes both greeting cards and packages.

"Since Dec. 6, customer traffic at all Post Office locations has been steadily increasing," the USPS said in a press statement. "But this week is expected to be the busiest week of the holiday mailing and shipping season."

Between Thanksgiving and New Year's Day, an estimated 850 million to 950 million packages are expected to be delivered in total, USPS said.


10:03 a.m. ET: Apple hits intraday record, closes in on $3 trillion market capitalization
Shares of Apple gained in intraday trading, bucking the downward trend of the broader market to come within striking distance of a $3 trillion market capitalization. At session highs, shares of Apple were trading at $181.80, or about 0.6% from the share price that would bring its market cap to the $3 trillion milestone.

The iPhone-maker had become the first U.S. company ever to reach a $2 trillion market cap in August 2020. Peer technology giant Microsoft has also since rocketed to a more than $2 trillion valuation.

Shares of Apple have gained more than 36% so far for the year-to-date, outperforming the S&P 500's about 24.9% gain over that period. This comes on top of Apple's 81% gain in 2020. "

MY COMMENT

AMAZING back to back years for Apple as it approaches THREE TRILLION in market cap. Over the past two years the stock is UP by 117%.

I can see that over the past week or so the media has.....subtly.....been starting to push the Omicron FEAR MONGERING again. they are starting to use more and more WEASEL words on the severity of the variation which from all that I am seeing is STILL extremely MILD and still has great potential to actually be a POSITIVE as we head to the end of the pandemic. UNFORTUNATELY.....local and state government and bureaucrats.......as expected.....are very resistant to give up their new POWER over people and society in many states. They continue to HAMMER small business with their policies that from what I can see......seem to have NO IMPACT when it comes to stopping the virus or protecting people. We continue to push the re-opening forward.....it is STILL 12-18 months.

My continued view....the BIG DANGERS.......first, the FED driving the country into recession with more extreme focus on inflation. I dont think they are going to have any impact on inflation at all....since it is being caused by supply chain issues, shortages, and labor market disruption. The second big danger......that I see out there......continues to be DEFLATION. In spite of ALL the money PUMPED over the past two years much of the world....probably the majority.....including the USA.....is still at risk for a deflationary environment over the longer term.

 

Wait till mortgage rates get back to the usual.......5-7% range. The media and everyone will be freaking out about housing affordability.

 

As we get closer to 2022......here is a little primer for what "might" happen.

What Could Possibly Go Wrong? These Are the Biggest Economic Risks for 2022

https://finance.yahoo.com/news/could-possibly-wrong-biggest-economic-050119817.html

(BOLD is my opinion OR what I consider important content)

"The Covid years are littered with predictions that didn’t work out. For anyone looking ahead into 2022, that should be enough to give pause.

Most forecasters, including Bloomberg Economics, have as their base case a robust recovery with cooling prices and a shift away from emergency monetary-policy settings. What could go wrong? Plenty.

Omicron, sticky inflation, Fed lift-off, China’s Evergrande slump, Taiwan, a run on emerging markets, hard Brexit, a fresh euro crisis, and rising food prices in a tinder-box Middle East — all these feature in a rogues’ gallery of risks.

Some things might go better than expected too, of course. Governments may decide to keep fiscal support in place. China’s latest Five Year Plan could catalyze stronger investment. Pandemic savings might fund a global spending splurge.

Omicron and More Lockdowns

It’s early for a definite verdict on the omicron variant of Covid-19. Apparently more contagious than its predecessors, it may prove less deadly too. That would help the world get back to something like pre-pandemic normal -- which means spending more money on services. Lockdowns and Covid caution have kept people out of gyms or restaurants, for example, and encouraged them to buy more stuff instead. A rebalancing of spending could boost global growth to 5.1% from the Bloomberg Economics base forecast of 4.7%.

But we may not get that lucky. A more contagious and deadly variant would drag on economies. Even a three-month return to the toughest 2021 restrictions — countries like the U.K. have already moved in that direction — could see 2022 growth slow to 4.2%.

In that scenario, demand would be weaker and the world’s supply problems would likely persist, with workers kept out of labor markets and further logistics snarl-ups. Already this month, the Chinese city of Ningbo — home to one of the world’s busiest ports— has seen fresh lockdowns.

The Threat of Inflation

At the start of 2021, the U.S. was forecast to end the year with 2% inflation. Instead it’s close to 7%. In 2022, once again, the consensus expects inflation to end the year close to target levels. Another major miss is possible.

Omicron is just one potential cause. Wages, already rising at a rapid clip in the U.S., could climb higher. Tensions between Russia and Ukraine could send gas prices surging. With climate change bringing more disruptive weather events, food prices may continue to rise.

Not all the risks are in the same direction. A new wave of the virus could hit travel for example — dragging down oil prices. Even so, the combined impact could still be a stagflationary shock that leaves the Fed and other central banks with no easy answers.

Terminal users can see that scenario in SHOK

Powell-ing Toward Fed Rate Hikes

Recent history, from the taper tantrum of 2013 to 2018’s stocks selloff, shows how a tightening Fed spells trouble for markets.

Adding to risks this time around are already-elevated asset prices. The S&P 500 Index is near bubble territory, and home prices accelerating away from rents suggest housing-market risks are bigger than at any time since the sub-prime crisis back in 2007.

Bloomberg Economics modeled what happens if the Fed delivered three hikes in 2022 and signaled it would keep going until rates reach 2.5%, pushing Treasury yields up and credit spreads wider. The result: a recession at the start of 2023.

Fed Liftoff and Emerging Markets

Fed liftoff could mean a crash landing for emerging markets. Higher U.S. rates typically boost the dollar and trigger capital outflows — and sometimes currency crises — in developing economies.

Some are more vulnerable than others. In 2013 and 2018 it was Argentina, South Africa and Turkey that suffered most. Add on Brazil and Egypt — call them the BEASTs — to get the list of five at-risk economies in 2022, based on a range of measures compiled by Bloomberg Economics.

Saudi Arabia, Russia and Taiwan, with little debt and strong current-account balances, appear least exposed to capital flight in the emerging world.

China Could Hit a Great Wall

In the third quarter of 2021, China’s economy ground to a halt. The accumulated weight of the Evergrande real estate slump, repeated Covid lockdowns and energy shortages dragged annualized economic growth down to 0.8% — way below the 6% pace to which the world has become accustomed.

While the energy crunch should ease in 2022, the other two problems may not. Beijing’s zero-Covid strategy could mean omicron lockdowns. And with demand weak and financing constrained, property construction — which drives about 25% of China’s economy — may have further to fall.

Bloomberg Economics’ base case is for China to grow 5.7% in 2022. A slowdown to 3% would send ripples around the world, leaving commodity exporters short of buyers and potentially derailing the Fed’s plans, just like the Chinese stocks crash did in 2015.

Political Turmoil in Europe

Solidarity among leaders who back the European project, and European Central Bank activism to keep government borrowing costs under control, helped Europe weather the Covid crisis. In the year ahead, both could fade.

A fight over the Italian presidency in January could upend the fragile coalition in Rome. France heads to the polls in April with President Emmanuel Macron facing challenges from the right. If euro-skeptics gain power in the bloc’s key economies, it could shatter the calm on European bond markets and deprive the ECB of the political support required to respond.

Say that sovereign spreads widen by 300 basis points, like they did in last decade’s debt crisis. Bloomberg Economics model shows that could chop more than 4 percent from economic output by the end of 2022, sending the euro area into recession and reviving concerns about its viability.

Terminal users can see that scenario in SHOK

Feeling the Brexit Impact

Negotiations between the U.K. and EU over the Northern Ireland Protocol — a doomed attempt to square the circle of an open land border and closed customs union — are set to rumble on into 2022. Getting to yes will be tough.

What happens if negotiations break down? Based on past Brexit flare-ups, the uncertainty would hit business investment and undermine the pound, boosting inflation and eroding real incomes.

In a full-on trade war, tariffs and transportation logjams could push prices even higher.

The Future of Fiscal Policy

Governments spent heavily to support workers and businesses in the pandemic. Many now want to tighten their belts. The pull-back of public spending in 2022 will amount to some 2.5% of global GDP, about five times bigger than austerity measures that slowed recoveries after the 2008 crisis, according to UBS estimates.

There are exceptions. Japan’s new government has announced another record stimulus and China’s authorities have signaled a shift to supporting the economy after a long stretch of holding the purse strings tight.

In the U.S., fiscal policy swung from boosting the economy to slowing it in the second quarter of 2021, according to the Brookings Institution. That’s set to continue next year, though President Joe Biden’s child-care and clean-energy investment plans will limit the drag if they make it through Congress.

Food Prices and Unrest

Hunger is a historic driver of social unrest. A combination of Covid effects and bad weather has pushed world food prices near record highs, and could keep them elevated next year.

The last food-price shock in 2011 triggered a wave of popular protests, especially in the Middle East. Many countries in the region remain exposed.

Sudan, Yemen, and Lebanon — already under stress — all look at least as vulnerable today as they did in 2011, and some are more so. Egypt is only marginally better-off.

Popular uprisings are rarely localized events. The risk of broader regional instability is real.

Politics, Geo- or Local

Any escalation between mainland China and Taiwan, from blockade to outright invasion, could draw in other world powers — including the U.S.A superpower war is the worst case, but scenarios short of that include sanctions that would freeze ties between the world’s two biggest economies, and a collapse in Taiwan’s production of the semiconductors that are crucial to global output of everything from smartphones to cars.

Elsewhere, Brazil is scheduled to hold elections in October — against a backdrop of pandemic turbulence and a still-depressed economy. A lot could go wrong, though a win for a candidate promising tighter control of the public purse could bring some relief to the real.

In Turkey, the opposition is pushing to bring forward 2023 elections into next year amid a currency slump widely blamed on President Recep Tayyip Erdogan’s unorthodox economic policies.

What Could Go Right in 2022?

Not every risk is to the downside. U.S. budget policy, for example, could remain more expansionary than appears likely right now — keeping the economy away from the brink of the fiscal cliff, and boosting growth.

Globally, households are sitting on trillions of dollars of excess savings, thanks to pandemic stimulus and enforced frugality during lockdown. If that gets spent faster than expected, growth would accelerate.

In China, investments in green energy and affordable housing, already slated in the country’s 14th Five Year Plan, could amp up investment. Asia’s new trade deal, the Regional Comprehensive Economic Partnership — which encompasses 2.3 billion people and 30% of global GDP — could boost exports.

In 2020, pandemic economies were worse than pretty much any economist had forecast. But that wasn’t true in 2021: in many countries, recoveries were surprisingly rapid. That’s a useful reminder that some things could go right next year, too."

MY COMMENT

Much of this is simply the usual fear mongering. Seems like we did pretty well in 2020 and this year also in spite of everything. My take on key issues above.....Covid...heading to the end of the pandemic as the virus follows the usual path of decreasing severity and the general population has ALL been exposed regardless of the vaccines. Inflation.....not a long term issue....perhaps a year or so than we are back to world wide deflation. Powell and tapering and rates......a media fear mongering topic...but over the longer term 1-2 years.....a non issue for investors. Food price unrest....not going to happen. Emerging markets, the EU, China....who cares. The emerging markets are always a poor joke, the EU is worthless as an institution....it is a semi-socialist bureaucracy on steroids.

Investors are SPOILED....they will bitch and moan when they are only getting a MEASLY 10-12% total return......but...that is the stock market average.....get used to it. We are way past due for a down year and it will just represent a NORMAL part of the process in light of the HUGE gains we have seen lately.

I am actually looking forward to the new year and......I will continue to be fully invested for the long term as usual....in spite of all the above....most of which.....will NOT happen anyway.