Texas
According to the Texas A&M Real Estate Research Center (I recently used one of their reports in a home value appraisal protest hearing), home values in Texas, despite the rise in mortgage interest rates, are faring much better than those in many other states in the US. According to the Census Bureau, eight out of the top ten cities that grew the fastest in the US in recent years were in Texas. It is estimated that 200,000 to 250,000 people have left other states for Texas in the last year alone. Who’d a thunk that Fort Worth, Texas would be the third fastest-growing city in America? It makes sense. If you've ever been to Fort Worth (Cowtown, as it has been nicknamed), it's a city steeped in the traditions of Texas cattle drives and southern hospitality. Without the overcrowding seen in Austin and other cities along the I35 corridor, Ft. Worth is a quiet peaceful place to live. It is so quiet and peaceful that while there for a convention a few years ago, the music coming from a local nightclub downtown mysteriously went silent at 10:00 PM. When the people in my group looked at one of our hosts, he said, “music ordinance, 10:00”.
In addition to Ft. Worth, San Antonio, Frisco (Dallas area), New Braunfels, and Georgetown round out the top five fastest-growing cities in Texas. While growth is always good a good thing for municipal budgets, it's usually not such a good thing for transportation or green spaces.
World
Emerging markets and other international stock markets have been outperforming the US stock market for the past few months. Could it be that there is a negative perception with regard to US political posturing on the world stage and, if so, has this posturing put a negative taste in the mouth of investors?
It appears that the current administration has no intention of keeping our military state of readiness as a major priority. As we diminish our ability to defend against potential foreign aggressors by depleting our strategic oil reserves and by shipping billions of dollars of military arms and supplies in addition to placing the Ukrainian civil service pension liability on the backs of US taxpayers, it appears that Mr. Biden has pledged his allegiance to the Ukrainian flag. This, on top of the $80 billion of arms and munitions we just walked away from in Afghanistan. Remember, the national debt already stands at roughly $ 400,000 per US taxpayer household. These factors coupled with the fact that military recruitment is roughly 35% lower than anticipated suggest that we are quickly moving in a counter-intuitive direction if you care about American sovereignty and security. While we don't attempt to predict how the markets will respond to all the geopolitical conflicts in the world, we do consider that there may be a cause-and-effect relationship to such behavior. We shall keep an eye on these developments and how they are impacting client investment portfolios going forward.
USA
One of the most brilliant people whose works have appeared intermittently throughout my life is Michael Crighton. My first encounter with his work was in 1974 when I read a book called Five Patients. I was a pre-med student at the time. He had written this as a medical student and focused on the culture and politics of the medical establishment and patient hospital experience. In the book, he projected his vision for positive change needed in the practice of medicine. He, himself, never practiced medicine, however he did go on to write 26 novels, 13 of which were made into movies. Some of these you may be familiar with: Andromeda Strain; Jurassic Park; Congo; The Lost World; Timeline; State of Fear, the television series ER and so on.
Given the genius of this man, I thought it quite interesting when, just the other day, I heard a reference to a speech he gave at the Commonwealth Club in San Francisco in 2003. What caught my attention was the quote of his cited by the news commentator. The quote was this, “Environmentalism seems to be the religion of choice for urban atheists”. “Wow,” I said to myself. Here is a Harvard medical graduate (undergraduate degree in Anthropology) with about as much scientific credibility as anyone I am familiar with stating such a profound position. Of course, I pulled the speech content immediately and read it. It is indeed profound and in it, he explains that because the environmentalism (climate change) movement is about good vs. evil in the eyes of the believer, that facts, science, and objectivity have no place in the discussion. It is, in fact, a religion. Once I began to understand this, it began to make a lot more sense. Faith is the belief in things unseen (and not tangibly provable) so, therefore, once you believe, it is very unlikely that you are going to listen to any contrarian points of view. In fact, it’s now their job to either proselytize you or write you off as an uncaring infidel. And, as usual, with any “religion”, there are hucksters ready to cash in on the zeal of the believers. “Climate Change” = Power (wealth) change and if the government is behind it, you can bet there will be a lot of politicians getting very rich promoting it, with or without substantive scientific basis. (VL).
Financial Ideas
Of all the catchphrases we hear about the stock market, the one that sticks out to me right now is “cash is king”. Others are “the market climbs a wall of worry” and “buy the rumor, sell the news”. If you're willing to “ride out the storm”, good luck with that. With the massive swings in market values experienced from early 2020 through the present, you must surely know by now that volatility (the range from high to low in the stock market) is increasing. With the speed of digital information accelerating every year, the correlation coefficients of formerly divergent asset classes has narrowed. In English, that means, things (asset classes) which used to provide “diversification” in a portfolio, no longer serve to improve it by much. That means that among the best “risk-reducer“ strategies available to most people is to raise the level of cash in your portfolio. If you have a problem selling stocks or funds because you're worried about paying taxes on the gains, well, that thought brings up another of my favorite market quotes “don't let the tax tail wag the dog”. We would be happy to review your current investment allocations and give you our thoughts. Just reach out to us today!