The Dividend Cafe

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This week’s Dividend Cafe does cover a lot of topics, but all through the prism of looking at the recent past as well as the pending future. I think you’ll find it an interesting historical journey and, even more so, a good analysis of so many investment and market realities.

The market enjoyed a little roller coaster this week, and I also dive into some lessons from that. I think a lot of stuff that gets covered in Dividend Cafe may mean nothing to some readers. It all means something to me, but different readers may find different topics with varying levels of application and interest. But the one universal – the one thing I constantly pray will come through in the pages of Dividend Cafe – is the primacy of behavior. My unpacking of matters monetary policy, valuations, economic growth, profit trajectories, market history, alternative investments, and all those things – none of them – not a single one – will ever trump the underlying thing I most care about for investors: Their own behavior.

Some bad things happened this week – for those who behaved badly. Nothing terrible happened this week – for those who behaved well. That is more or less a dual truism that I could repeat every single week.

In the meantime, let’s jump into the Dividend Cafe!

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As I have teed up all week, I am devoting today’s Dividend Cafe to the takeaways from this week’s SALT Conference here in New York City.

The quick qualifier I will offer is that this is not going to be a boring recap of all the speakers, all the events, and all the things that you don’t care about. I did not attend the Chainsmokers concert on Tuesday night, and I did not attend the luncheon address from Paris Hilton on Wednesday, either. In the ten years I have attended the event in Las Vegas I don’t think I ever got a concert either, despite such names as Lenny Kravitz, Duran Duran, Train, One Republic, and The Killers performing. I did attend past luncheons with Dennis Miller, Magic Johnson, Coach K, and the now late Kobe Bryant. In fact, that lunch event with Kobe Bryant started a domino train that led to me doing a real estate transaction with Kobe – but I will save that story for another day.

But as much as they have always done to make this a pretty fun event with a powerful complement of entertainment to the symposium of content, whether in Las Vegas or now this year in New York City, there is nothing that they can do to make me a fun person. I absolutely love the speakers, and for the last two events, I have been honored to be a speaker myself.

But whether or not you care about this conference, I believe there are some takeaways from the event this year that are going to make this a meaty and substantive Dividend Cafe. So read on, and I promise I won’t let you down.

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I am typing this week’s Dividend Cafe from 30,000 feet very late at night on Thursday night/Friday morning, after spending four and a half hours on the plane, on the runway, alongside 100+ other planes that were unable to take off as airspace was closed for Kamala Harris' visit to the LA area (campaigning with Gavin Newsom against the recall). My wife and I will land in Nashville in the middle of the night, and we will forget this experience soon (I hope). Anyone who travels a lot has had bad experiences. I travel 50x a year and have been through everything, but as a percentage of the times I fly, I have had it easy over the last 25 years. It’s never fun, but it happens.

But twenty years ago Joleen and I were also flying together, this time departing LAX for a Tahitian honeymoon. As I mentioned the other day Joleen and I celebrated twenty years of marriage this week. On September 10, 2001, we left LAX on a redeye with a planned landing in Tahiti in the early morning. One hour before we landed the most horrific act in American history took place. It is that event that is the subject of today’s Dividend Cafe.

Sure, there are some personal reflections and musings. But there really is a market lesson in all of this, and I hope you will find this to be meaty enough for your normal Dividend Cafe longings. Truth be told, the rather basic message I have to share for investors on this 20th anniversary of 9/11 is more significant in practical terms than any commentary I have ever written about monetary policy or capital allocation.

I will forget the wait of today, but I will never forget 9/11. Let’s jump in.

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I have been surprised by the level of interest in my treatment of the “China investment” subject in recent weeks. I kicked things off at the beginning of August with this piece, presenting the background around the tensions between U.S. investment in Chinese equity vs. Chinese fixed income. I followed up with this piece making the case that the Chinese perception of U.S. global economic intentions (primarily around our use of the dollar as the world’s reserve currency to facilitate large twin deficits) is at the heart of Chinese beliefs and agendas with their own currency.

None of this has been for the purpose of mere armchair theorizing or navel-gazing. While high level takeaways in the discussion of China’s place on the global economic stage can be interesting and even provocative, our agenda is investment-specific. We may or may not have an investment thesis to act upon around Chinese financial markets. And we certainly believe the entire discussion is highly relevant for all investors in terms of how the geopolitical and monetary components play themselves out.

This week I bring in some reinforcements. Louis Gave of Gavekal Research, one of the foremost economists in the world when it comes to China, Hong Kong, the Pacific Rim, and global fiscal dynamics joins me for a podcast/video discussion on this entire subject. His own views help shine a light on what the fundamental question is we must answer. I will leave you in suspense as to what that is.

Once again, all free people can conclude different things about these subjects. But choosing to ignore the entire topic is not an option. History is being made right before our eyes, and our portfolios are asking us to understand it. To that end we work.

Links mentioned in this episode:

Links mentioned in this episode:

I was going to use this week’s Dividend Cafe to continue the discussion on China, one that I more exhaustively began three weeks ago, then expanded upon last week. And in fact, I have done a podcast interview with Louis Gave of Gavekal Research on this very topic, poking him and pushing him around his thesis that China’s strategic objectives in their bond market and currency are aligned with the objectives of U.S. investors. But I am going to hold this for next week, first of all, to give my communications team time to properly curate and edit that interview, but also because I believe there is a more timely message that is needed this week.

By the time you are reading this, I presume Federal Reserve Chairman, Jerome Powell, will have given his speech in Jackson Hole, Wyoming. I am very purposely writing this before such a speech has been delivered or pre-speech teasers on its content have been circulated. I am, therefore, obviously writing it before I know the market reaction to the speech (stock or bond market).

This is on purpose. I do not want the focus to be on what is or is not said at Jackson Hole today, or what the market does or does not do after such speech.

I want Dividend Cafe to be about the extraordinary problem that we even care about so much, to begin with about this speech. Far more than anything that is said today is the fact that there even is such a focus on it to begin with. And this hype, this prioritization, this captivation in financial markets, with one man giving one speech on one day, is symbolic of where I feel so much has gone wrong.

And what THAT is and what it specifically means to you is the subject of this week’s Dividend Cafe.

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I got a lot of feedback on the special “China edition” Dividend Cafe two weeks ago, but I promised a lot more to come on the subject, and that is what we have today. I don’t only want to walk through various perspectives on Chinese investment, but really want to make sense of what much of this means for hemispheric changes taking place in global monetary realities. There is a tremendous investment relevance to all of this, and that will be just as true for anyone who never buys a dollar of Chinese stocks, bonds, or currency. We ignore this topic to our own peril.

It has been a historical week in a lot of ways, and I have written about Afghanistan and its potential impact on American domestic policy throughout the week at The DC Today. We will know more next week about the sausage-making on capitol hill. Market volatility this week was largely Fed-driven and seasonal. I don’t believe the events in Afghanistan this week will be remembered by markets for minutes, but I believe they will be remembered globally for decades.

And globally, we have much to consider if we are to be smart investors. So to that end, we work …

Join me in the Dividend Cafe (where as a special bonus today, some pretty hardcore facts about dividend growth superiority will be presented).

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Join David L. Bahnsen, CIO and Managing Partner of The Bahnsen Group and Scott Gamm of Strategy Voice and Associates with answers the important questions from investors.

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