Last week, Minjung Son sent the Investment Committee some information showing that the total market value of all emerging market stocks was about $10 trillion. Ryan Craft chuckled and said that was about equal to the three largest stocks in the US. Although I’ve written about how concentrated the US market is and how emerging markets haven’t done all that well in recent years, I was amazed that three stocks… Read More
One of my favorite long-time readers and clients asked me a good question last week, which was: As I recall, David, you said that eventually, higher interest rates would be a benefit. If my recollection is correct, when will that be? It’s such a great question, and I thought I would answer it for everyone, but unfortunately, my answer is a little mealy-mouthed: it depends. It depends on how high… Read More
I was having breakfast the other day, and someone said they missed not having the 3,000 percent gain on Nvidia (NVDA) over the past five years. Of course, I agreed, but then I returned to the office thinking that the return couldn’t have been that high. In fact, over the five years ending on June 28th, the cumulative return for NVDA was 2,926 percent, so I’ll give that to them…. Read More
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
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
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
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
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
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
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
