Radio Show #2021-8, Podcast #

DISCLAIMER:  This broadcast is intended for educational

purposes only and does not constitute investment advice or an offer to buy or

sell any security or insurance product. All information provided here is for educational

purposes only and does not constitute investment, legal or tax advice, an offer

to buy or sell any security or insurance product; or an endorsement of any

third party or such third party's views.  All examples are hypothetical

and for illustrative purposes only.  Please contact us for an assessment

of your personal financial circumstances and to obtain personal investment

advice

Note: For purposes of time, not all material here made it into the

podcast. It has been left in this script because it’s interesting. Thank you

Russ and PJ 

S&P 500 IN SEPTEMBER:

I reported to you kind folks out there in radioland at the

beginning of the month that September is historically the worst month in the

stock markets, w/ the S&P 500 typically losing 0.70%.  WHOOPS! 

As I wrote this on Wednesday morning, the S&P 500 was down

4.3% for the month.  So, expect to see lower account values when your

statements arrive next week.  No big deal; in the average year we

generally see a pullback of 13%, according to Fox Bus News.

This is from Robert Almeida, the Global Inv Strategist for MFS:

“The markets are awash in crosscurrents, so it’s critical to focus

on what’s material and filter out market noise. 

Profits are a function of revenues versus costs, and we think that

revenue growth is vulnerable and costs are likely to rise. 

We expect high-priced financial assets that deliver underwhelming

fundamental performance to be repriced while stocks and bonds of companies that

meet expectations may be in short supply, earning them a scarcity premium.”

“When things get complicated, I find it helpful to try to simplify

them. In its simplest form, investing is an exchange of capital for a stream of

future cash flows. The cost of capital is set by its providers based on the

riskiness of the investment and the probability of realizing promised cash

flows. What makes investing difficult, of course, is that the future is

unknowable. Investors can only theorize about a project’s potential for success

or failure in terms of a range of potential outcomes.

Technology has democratized information, and society is more

informed than ever before. We have infinite and instantaneous access to news.

However, I question whether that has improved investors’ ability to price risk.

As John Naisbitt writes in Megatrends, “We are drowning in information but

starved for knowledge.”

I won’t bore you with the details, but he goes on to say in his

conclusion that he is not suggesting a bear market or correction is on the

horizon. I don’t have that type of clairvoyance, nor do my strategist peers

(though some think they do!). Anyway, that’s not how we think about investing.

Looking ahead, we expect high-priced financial assets that deliver

underwhelming fundamental performance to be repriced. When valuations are high,

the market’s tolerance for disappointing data (even if...