The Dividend Cafe

David L. Bahnsen and Scott Gamm discuss the market happenings of the day. DividendCafe.com TheBahnsenGroup.com

Anyone who knows me personally knows that I loathe melodrama. And hopefully, anyone who has followed my writing for any period of time, especially my financial writing, knows that I hate click-bait, hype, exaggeration, dramatic hyperbole, shock and awe, and other such media-friendly tactics designed to scare, provoke, or just plain manipulate us. I believe almost every day I am writing The DC Today is a boring day in the grand scheme of things. Markets may be up or down a lot on a given day, but as a goals-based investment advisor, with a few exceptions, those day-to-day movements in markets are almost entirely irrelevant. Some days have legitimate policy news, and every day has some aspect of economic information or perspective (Fed, housing, COVID, energy, etc.) that I genuinely love sharing. But it would take a lot for one of my daily investment pieces to warrant some kind of a, “not this is a day that changed history!” This week saw the highest levels of market volatility we have seen all year. It was primarily in high tech and small-cap and more growthy/saucy parts of the market, but the Dow had a couple of big down days, Japan got whacked, and it was the kind of day where financial TV media ratings are up 40% or so from the norm. And I am of the belief that this was a big, profound, and potentially impactful and historic week. At least, I think it will prove to be. I just don’t think the bigness of this week had anything to do with market volatility. I don’t think it had anything to do with tech, with the Nasdaq, with Japan, with the CPI number, with bond yields, or anything else in that vein. So what do I mean? Why am I being “dramatic”? And what does it mean for you as an investor? Jump on into the Dividend Cafe … (and no, this is not melodrama or clickbait; I am just out of room in my intro letter) … =) Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

One of the questions I get asked the most is, “what scares you right now?” Clients ask it every now and then, or some version of it, but I also get asked in various TV interviews that ever-so-compelling question, “what keeps you up at night?” There is one particular problem with the question I want to address in this week’s Dividend Cafe, and I want to provide a really thorough answer to it. What is the problem with the question, “what is keeping you up at night?” The problem is that the real question the person asking means to ask is, “do you think the market could go down?” It’s a dishonest question, but probably not intentionally so. It’s a couched way of basically asking something reasonably worthless and unhelpful. Why is it worthless and unhelpful? Because the market can always go down, and anyone asking the question knows it, or anyone invested in the market ought to know it. But, but, but you say – aren’t there times where it is extra super-duper extra likely to go down? And wouldn’t that have you worried? The answer to those two questions is, “of course not, other than in hindsight,” and “not at all.” But, but, but, I say – if one ever just asked the question, “are there macroeconomic conditions that bother you, that you really dislike, that even though they don’t foolishly lead you into market timing or false prophesy or clickbait dis-ingenuity, you really are troubled by?” Well, that question I can answer, and I will … DividendCafe.com TheBahnsenGroup.com

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

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. DividendCafe.com TheBahnsenGroup.com

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! DividendCafe.com TheBahnsenGroup.com

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

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. DividendCafe.com TheBahnsenGroup.com

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." ~ Mark Twain (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. DividendCafe.com TheBahnsenGroup.com

David and Scott recap Q1 2021, discuss economic outlook looking forward, and explore opportunities for investors in current markets. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com