I recall how several years ago, someone who found out I was a financial journalist asked me to explain why he kept hearing the economy was getting better, yet his own business and those of others he knew showed no signs of improvement. There does seem to be profound disconnect these days between official statistics and elite opinion on the one hand, and the experience of folks on Main Street on the other. We see the results of this discord in the cash hoarding of businesses and households, and certainly in the political upheaval of the current electoral season.
Kevin Wilson wrote a superb piece about these increasing tensions, and the lack of trust and lack of confidence underlying them. I quote at length:
"We hear that the headline number, U-3, has dropped to only 4.9% this year, but everyone knows that the participation rate is the lowest in over 35 years (Chart 9). Many people know there are over 13 million workers who are not counted in the headline numbers, but are still actually unemployed (Chart 10). Likewise, about 45.8 million people are on food stamps - almost double the number that was recorded in 1982 during a severe recession (Chart 11), and almost triple the number seen in the 2001 recession - yet, the government claims the recovery is progressing well. And of course, if the job story is as good as the government claims, why did student loan debt at least quintuple (to almost $1 trillion; Chart 12) during the recovery after 2009, and why are about 8% of these relatively new loans already in arrears?"
Let us know your thoughts on Wilson's article, or others linked below:
- Mark Hebner: Fort Lauderdale, Fla., mandates low-cost indexing for one of its pension trusts.
- Columbia Threadneedle Investments: 8 things to know about smart beta investing.
- David Merkel, CFA: Don't get worked up over Brexit, regardless of the vote's outcome.
- Gary Gordon pans buy-and-hold, argues "minimizing monstrous losses" is of greater value than capturing its great days.
- But J. David Stein argues moving out of the market is likely to cause problems, and offers advice on how to get back in.
- Jesse Felder cites an analytical tool used by Warren Buffett suggesting your mattress might be better than stocks and bonds over the coming decade.
- NYU Prof: Country selection is not an investment strategy; don't do "stupid things" in your portfolio.
- Still, Kevin H. Li, says growth and diversification both suggest a shift to foreign markets.
- Though maybe not China: The Heisenberg sees currency devaluation as the likely outcome of China's faltering economy.