24 Jun 2024

How Much Do You Trust the Government?

It’s hard not to love the Roth IRA because once money gets into the account, all withdrawals should stay tax-free forever. That’s in contrast to a traditional IRA, which incentivizes savings by offering a tax deduction at the time of the contribution and allows the assets to grow without taxation. The downside is that withdrawals are taxed as ordinary income. We call those tax-deferred accounts because you put off the… Read More

17 Jun 2024

Is the S&P 500 a Growth Index?

In addition to working with private clients, Acropolis has an incredible team of professionals who manage retirement plans, principally 401k plans (click here for more information). I meet with some of the retirement plan trustees to discuss the plan’s investments. When we manage a plan, we want enough choices so participants can build a diversified portfolio but not so many choices that they are overwhelmed by the options and don’t… Read More

10 Jun 2024

Stocks Look Cheap!

Since the beginning of 2023, the S&P 500 index has grown a staggering 40% through the end of May. While some of this performance has been driven by earnings growth, a lot of it has been good old-fashioned speculation as prices have outrun earnings. This is evident when looking at prices through the lens of company fundamentals. Consider the price-to-earnings (P/E) ratio. This ratio shows the value investors pay for… Read More

3 Jun 2024

Is the Yield Curve Broken?

As regular readers of this letter know, we are not big believers in forecasts. We believe that forecasting future economic and market conditions is about as reliable as a long-term weather forecast in St Louis. However, many relationships have a history of moving together. When one changes, it can often be wise to take notice. The strongest of these indicators has been the Yield Curve. The Yield Curve refers to… Read More

28 May 2024

The Anxiety of Private Markets

I’m writing about private markets again, which may seem odd to long-time readers because we don’t invest in private markets. I routinely think about private investments for two reasons. First, they’re the hottest topic in our industry—what are you doing about privates? Have you heard of this private or that private? Second, as I’ve said many times, I’ve invested in some to learn more about them and see if they… Read More

20 May 2024

Dow Jones Rocks 40,000

When I entered the investment industry upon graduating from college in 1995, the market was hitting all-new highs. The Dow Jones Industrial Average (DJIA), which everyone seemed to pay attention to, had just broken through 4,000 and would hit 5,000 by the end of the year. When the DJIA crossed 10,000 for the first time in 1999, there were tons of photos of traders on the floor of the NYSE… Read More

6 May 2024

The Best Industries to Invest

I was listening to a finance-related podcast last week (as one does), and they said they thought that the best-performing industries in the US were beer and tobacco. The podcasters chuckled because they pointed out that market returns reflect what society wants, and companies respond by providing those goods and services. Beer and smokes – that’s what America has valued the most, as the story went. I thought it was… Read More

29 Apr 2024

Concentrated Risks Rising

We’ve all heard that the S&P 500 is more concentrated than it has been in decades. Indeed, the top 10 holdings in the S&P 500 now account for a whopping 33.8 percent of the index. That’s right, ten of the 500 stocks in the index equal more than one-third of the value of the index. I’m a fan of global diversification, but it’s been a frustrating decade, given how well… Read More

22 Apr 2024

What Happens if Current Tax Laws Expire

The Tax Cuts & Jobs Act (TCJA) was passed by Congress and signed into law by President Trump in 2017. The TCJA expires in 2025, which means one of three things: Congress and the President could work together to develop a new law, act to extend the current law, or let it expire, meaning the tax laws would revert to their 2017 levels. With tax day behind us, I thought… Read More

15 Apr 2024

Why Are Markets Unhappy Right Now?

As noted above, the March Consumer Price Index (CPI) inflation data exceeded expectations. The year-over-year headline rate was expected to be 3.4 percent but was actually 3.5 percent. The core rate, which excludes food and energy, was expected to be 3.7 percent but was 3.8 percent. Those might not sound like big misses at one-tenth of one percent, but the chart below helps tell the story. The chart shows the… Read More