As we celebrate this holiday season, here are 12 tidbits of recent financial news that you should know while talking with your friends and family at upcoming gatherings:
- The stock market is down around 20% this year. Going back to 1928, there have been only eight years when the market has fallen two calendar years in a row — the most recent occurring in 2002.
- The bond market is down around 11% this year, marking the worst year for bonds since the 1930s. This is only the third time in history that the bond market has had back-to-back losing years. The other two times they occurred were in the 1950s.
- There has never been a year when stocks and bonds were down simultaneously in consecutive years. But before you start feeling over-confident, realize history is being made all the time.
- We have a risk management process. We have used ETFs that have downside protection as part of their strategy to help preserve the value of your portfolio during this volatile time. The ETFs are called Defined Outcome ETFs and come with as much as 30% downside protection.
- Our 2022 predictions will be ready January 1st, 2023. That’s not a typo. These types of predictions tend to be 100% accurate (as well as 100% useless). Just remember that predictions are at best, opinions, and at worst, marketing.
- The consumer inflation report released on December 13th showed prices increased by 7.1% from one year ago. This is down from the 9% price increase reported in June.
- On December 14th, Federal Reserve Chairman Jerome Powell stated, “It will take substantially more evidence to have confidence that inflation is on a sustained downward path. I wish there were a completely painless way to restore price stability. There isn’t.”
Politics and the Markets
- For those relatives who love to debate politics: There is no relationship between the performance of the stock market and which political party is in power. Believe me — if a pattern existed, then we would all exploit it.
Reasons #101-103 Why You Can’t Spell “Crypto” without “Cry”
- FTX was a cryptocurrency exchange founded by Sam Bankman-Fried, also known as SBF. The firm was the second largest cryptocurrency exchange in the country and spent a ton of money on marketing and was a large donor to both major political parties. The company even bought the naming rights to the arena where the Miami Heat professional basketball team plays.
- FTX recently went bankrupt and SBF has since been indicted on eight counts, including defrauding FTX’s investors and customers. He is accused of running a Ponzi scheme where client funds were diverted for his own personal use. Federal prosecutors call the stunning collapse of FTX ”one of the biggest financial frauds in American history.” They estimate customers lost approximately USD $11 billion.
- Tom Brady and Gisele Bundchen filmed a commercial for FTX, which depicted Tom calling everyone he knows and telling them to invest with FTX. Ouch. That’s not a good look. There’s already a class-action lawsuit underway, and word on the street is that SBF was also trying to land a sponsorship deal with Taylor Swift. Miami-Dade County has asked a federal bankruptcy court for immediate permission to end its naming rights deal with FTX.
- Author’s opinion: “Die Hard” is a Christmas movie. The opening scene is on Christmas Eve. The setting was a Christmas party. One of the main character’s names is Holly. Christmas music is played throughout the movie. I don’t care what Bruce Willis says. Discuss amongst yourselves.
[AUTHOR EXITS STAGE LEFT INTO 2023]