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Last Friday, U.S. stocks ended their worst week in 18 months. How will that affect us, and is it even relevant? On Friday alone, markets dropped 1.7 percent, closing out a one-week loss of more than 4 percent. Large tech stocks were hit particularly hard. The NASDAQ fell almost 6 percent, which underscores the fragility of a market heavily dependent on just a few tech giants. Since 2022, non-AI tech firms have underperformed quite badly. One factor from last week was a lackluster jobs report—not terrible, but below expectations. Markets tend to react to surprises like that. On the positive side, the yield curve is no longer inverted, and the Fed has managed to execute a remarkable soft landing, which has eased fears of a looming recession. Today, Monday, we've seen a bit of a market rebound. So, as investors, what should we be doing with this information? First, we've...

Jerome Powell has pretty much declared victory on inflation. How's that going to affect you and your portfolio? With the beautiful backdrop of the Teton Mountains in Wyoming, every year there's an annual gathering of central bank leaders from all over the world, and everybody's listening with bated breath to what these people are going to say. This year Jerome Powell, the Fed Chairman, pretty much declared victory on the three-year fight against inflation. It's clearly going to drop down as low as 2%, which is great news, but the Fed has a dual mandate. Its mandate is not just to control inflation, it's also to seek full employment. Some would say that those are conflicting mandates, but yet somehow the Fed's done a pretty good job targeting both. Now that Jerome has pretty much indicated that we can expect interest rates to drop as much as two percentage points...

As Wall Street’s volatility spikes, what opportunities exist for you? For months we’ve been discussing the risks of the Magnificent Seven (Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA, and Tesla) and how a market so tightly aligned with those Magnificent Seven is also at risk. Since Friday, we’ve seen the Magnificent Seven shed $1 trillion in market value. Why is that? We’re seeing the hype of AI fail to match the reality, economically. There are real risks facing the chip-making industry. Most notably, we have TSMC out in Taiwan. The risk against Taiwan from China is significant, and risk to the global chip-making capacity is even greater. Just last week, it was reported that Warren Buffett pared his exposure to Apple by 50%. He believes in it in the long run, but he clearly feels that this run-up has gone as far as it should. Apple is down 6%, Nvidia...

  Yesterday, tech stocks dropped almost 3% and the route appears to be continuing today. Are we flirting with the beginning of a painful correction? Frequently, we have discussed how the Magnificent Seven has really been driving the S&P 500 to new heights, and yet many pundits, including Goldman Sachs' top analysts are warning us of an AI/tech bubble. One thing that a lot of pundits feel is weighing on markets and the ability of markets to go ever higher is what's called the "Trump Trade". We have mentioned many times that historically elections don't matter, but the markets are beginning to price in the assumption that Trump is going to win the election this year. Another item I'd like to talk about is stock valuations. Stocks have gone up since 2022 by an astonishing 70%. The market is up 28 of the last 37 weeks. It's the best run...

  The market is up 14% in the first half of 2024. What's driving these returns, and are they sustainable? We've had a very strong first half in the market, but it's also very concentrated.  60% of the gains come from five stocks, NVIDIA, Microsoft, Amazon, Meta, which is Facebook, and Apple. Notably missing is Tesla. Tesla is actually down 15% as strains of reality are finally beginning to impose their weight on the stock, and that's despite the recent Tesla rally. In the second quarter of this year, NVIDIA, Apple, and Microsoft made up 90% of the rally. In the same six month period, an equal weighted S&P 500 index. By equal weighted, we mean the same dollar value of each stock, not cap weighted. And an equal weighted S&P 500 index showed just a four percent gain. We need diversification to protect returns, to protect the portfolio. But...

Last week, the Standard and Poor's 500 hit new highs. I'm in Vegas taking care of some business. Of course, Vegas is a great place to think about something that economists call the gambler's fallacy. NVIDIA is a chip maker, originally known for video games, and its valuation last week actually surpassed Apple to be the number two most valuable company in the world after Microsoft, which is its own behemoth. As I'm sure you're aware, artificial intelligence has swept both the tech industry and the markets by storm. In fact, now they're talking about selling PCs with AI built into them. No wonder NVIDIA has such a great future. NVIDIA and the other tech stocks have really pulled the S&P 500 to stratospheric highs. Whenever the markets are at highs, I think it's time to consider the concept of the gambler's fallacy. Simply put, the gambler's fallacy means a...

I am on my way for a short vacation. I'm really excited about it, and as I was getting ready for this vacation, I learned a new risk facing smartphone owners and I think everybody needs to know about it. I'm in Doha, Qatar, the number one airport in the entire world. It's a fantastic experience if you're transiting. There are crowds here. Everybody's got an expensive phone and there's a risk. When you look around anywhere in public today, it can be in the city streets, it can be at stadiums, it can be at an airport, people are walking around and they're looking at their phone, they're looking for directions, they're reading texts. It doesn't matter. Those phones are all unlocked and they are now targets for the newest theft - unlocked phones. A locked phone on the street's worth about a hundred dollars, but an unlocked phone...

When I was reading the paper last night, I saw an interesting article about how Elon Musk is trying to de-annex Tesla's factory from the city of Austin. This is something that's been permissible since about September last year when a very controversial state bill was passed. How's that going to affect Tesla? How's it going to affect Austin? And how's it going to affect Texas in the future? So last September State Bill 2038 was passed and already over 191 companies have submitted proposal to de-annex from their local cities, and this really is a bit of a stealth nuclear weapon in the balance of power between companies and municipal agencies. They need each other. The municipalities need the jobs and the taxes and the property taxes that come with the workers. But the companies need the resources, they need access, they need utilities, electricity, water, things like that....

  Today I am at SMU, up here in Dallas. I was invited to a Texas Business Hall of Fame event. It's a good time to reflect on the chronic need for young college kids coming out of school today. When we talk about college grads, there's a lot of people who are coming out with underwater basket weaving degrees. But far more important to the economy at large are people coming out with real hard skills, real hard degrees. There are many jobs for every single one of these candidates, and it's just a microcosm of a bigger challenge within the economy. This is important, because in 2024, we're hitting what demographers called Peak65 for the baby boomers. In 2024, at least half of the baby boomers will be 65 years or older. They are leaving the workforce at greater and greater numbers. There aren't enough young people coming...

Sometimes there are seismic shifts in fundamental financial and economic policy that go completely unnoticed by the media. We might just have had one of those. The question of the day is: "has the Fed given up on the 2% inflation target?" It looks like the Fed is gently backpedaling away from that 2% target. I've talked about this probably for the last two years, that I wouldn't be surprised that all of this happened. And finally, we're getting something that's going to look more like 2 to 3%. That's a big difference. In fact, the most recent numbers show an upward revision of inflation expectations, and yet the Fed is talking about possibly lowering interest rates two to three times this year. So what's going on? Why the dovish tilt in the face of rising expectations? Now, we've talked about a Goldilocks economy a number of times in the...