The Dividend Cafe

Latest market updates and news from David L. Bahnsen of The Bahnsen Group

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Tell me what you think about these two statements:

(1) Markets are dynamic, ever-changing forces. They are never predictable, their outcomes are never assured, the inputs are constantly adjusting with the ebbs and flows of different circumstances and facts that have to be monitored, studied, and adjusted as needed.

(2) There is nothing new under the sun.

I believe these two statements are both true, and I believe that the apparent contradiction between the two actually represents one of the great challenges and obligations for professional investment managers. And that is the subject of today’s Dividend Cafe.

We live in interesting times. We live in unpredictable times. And we live in times that offer a milieu of circumstances which combine the novel with the redundant. And for all of the uncertainty about the future and the debate in the present, there does exist a past that can, at a bare minimum, help inform us in the present and in our preparations for the future.

The “new” must be informed by the “old.” And that is what we are going to discuss in the Dividend Cafe today.

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This week’s Dividend Cafe took a funny twist over the last 24 hours.

First, I ended up flying back to California from New York late Thursday night for a Friday matter that came up (I was supposed to fly to California on Sunday). This substantially altered my reading and writing plans for this commentary, along with work issues. On Thursday the market had a little reaction to the shocking – shocking – news that the Biden administration was looking to raise capital gain taxes on high-income brackets. I say “shocking” because it had been, well, you know, on their campaign website all of last year, and discussed and mentioned 37 times since his inauguration. And because nothing in the announcement came with Bernie Sanders replacing Joe Manchin in West Virginia or Elizabeth Warren replacing Kyrsten Sinema in Arizona.

And by the way, as of press time Friday morning, the market is down a whopping ~150 points on the week – a rounding error – after a few up days and down days mostly offset each other this week.

Still, though, the cap gain tax issue does matter, so I wanted to address it this week along with a few other things that seem to be a source of worry right now for many investors.

But you can’t spell “investor” without “t” and I found that out the hard way when I arrived at JFK’s Admirals Club yesterday and the “t” button on my keyboard was not working. I had a DC Today to finish, and ambitious plans for 5+ hours of work on a cross-country flight. Well, I did all I could, but just so you know, a lot of words in the English language have “t” in them – a lot. And doing a “Ctrl-C” and “Ctrl-V” for all your T’s is enough to make someone want to ask for the bartender (I don’t drink, so had to settle for my typing productivity being, well, diminished).

But the use of an iPad Bluetooth keyboard, a munted attempt with the munted keyboard, my desktop at my California office, and a brand new Surface Pro laptop I had overnight shipped the second I discovered the trouble have all coalesced together to make this Dividend Cafe possible. And to think my dad wrote 500-page books on a typewriter!!!

Jump on into the Dividend Cafe!

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Replay of our National video call, April 19, 2021, covering the market performance, energy, and potential changes to the tax code.

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This week’s Dividend Cafe is going to dive into the “abnormalcy” of the economic contraction during COVID, the abnormalcy of the economic recovery we are currently in (and will be in for months to come), but then also the “normalcy” of pre-pandemic economic life, and what that means on the other side of this. I will humbly suggest that despite the changes in the economic landscape brought about by the fiscal and monetary monstrosities of the last year, “normalization” will mean “resuming our obsession with the question of _____”

That __ is what today’s Dividend Cafe will fill in.

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The title of this week's Dividend Cafe comes from one of my favorite quotes, ever.

"It ain't what you don't know that gets you into trouble.  It's what you know for sure that just ain't so."

(I attribute to Mark Twain because everyone does, but ironically given the substance of the quote, even this appears to be untrue, with most scholars believing there is no reputable source for who quoted these exact words).

The underlying message here is never more relevant than in investing, it seems to me.  Plenty of people don't know certain things, and that has some impact at given times.  But I am quite convinced that far more damage is done, not at the things that are that people don't know, but the things that people believe to be true (and act upon), when in fact they are not.

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David and Scott recap Q1 2021, discuss economic outlook looking forward, and explore opportunities for investors in current markets.

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The actual event that I am discussing may be totally foreign to you, despite the fact that it has dominated the financial news for five or six days. There is a good reason for this if, indeed, it is true for you. The event has proven to be a really weak “news” story in my mind (not for lack of trying), but even apart from the broader news hype, it has further proven to be a weak “financial news” story, and that really, really comes not for lack of trying. This news story begs for us to address the subject of “contagion risk.”

After listening to this episode, you will know much more.

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Who would have guessed that at the one-year mark of the worst market drop since the Great Financial Crisis, one of the hottest topics in financial markets is whether or not we are in a “bubble.” Am I the only one that sees a tiny bit of irony here? A year ago, the conversation was entirely focused on whether or not millions of American people were going to die, how long the entire American economy would be shut down for (hint: it lasted longer than 15 days to bend the curve), and whether 18,000 in the Dow would prove to be low enough.

Painful times, painful memories.

Today I want to look into the very idea of bubbles, evaluate as intelligently and objectively as I am able what is going on in markets right now and what is not going on, and see if we can’t offer a little clarity into a subject that I think gets quite polluted by poor punditry. Of course, if it weren’t for poor punditry, wealth advisors like us would have a lot less cleaning up to do.

Join us in the Dividend Cafe …

Links mentioned in this episode:

Zoom Replay of National Call

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