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5 Lies About Money People Believe

We discuss five common “lies” people believe about money that keep them from living their best life and achieving genuine contentment.


1. Equity Markets – rose this week with U.S. stocks (S&P 500) up 1.16% while international stocks (EAFE) gained 2.94%

2. Fixed Income Markets – also saw gains this week with investment grade bonds (AGG) up 0.25% while high yield bonds (JNK) rose 0.17%

3. Yellen Backtracks – Treasury Secretary Yellen’s comment on Tuesday that “it may be that interest rates will have to rise somewhat to make sure our economy doesn’t overheat” sent markets lower on the expectation that the Fed would shift to more hawkish policy. However, the following day Yellen aimed to walk back her previous comments by clarifying that she was neither predicting nor recommending a rate hike, slightly easing concerns of a break from the Fed’s current dovish stance on the economy.

4. Swing and a Miss – Despite consensus economist expectations for a million jobs added in April, U.S. employers only added a modest 266,000 jobs. Research firm Hedgeye noted that this is a difficult time-frame to determine if worse than expected jobs numbers are more a result of labor demand or labor supply constraints. While job postings remain well above pre-pandemic levels, the NFIB “Jobs Hard to Fill” category is at an all-time high, suggesting certain employers are struggling to find qualified candidates. In addition, both materials and production constraints continue to impact the labor force as projects are temporarily put on hold.

5. Key Insight – [VIDEO] We discuss five common “lies” people believe about money that keep them from living their best life and achieving genuine contentment. [ARTICLE] With markets hovering near all-time highs and potentially conflicting data and stories wrestling for investors attention we discuss what it may mean, but more importantly what investors should take away from all of the noise.


One of the hardest things for investors that want to remain informed is that at any given moment you can find a number of knowledgeable and reputable money managers espousing opinions on what the market may do, which can be quite compelling AND completely contradictory.

What is a client supposed to do with this? And perhaps even more, what should they NOT do?

In my opinion there are a few important takeaways:

1) Use them to be informed about what may happen solely to help reduce your chances of being surprised by whatever does come about and therefore hopefully a little less likely to make a panicked response,

2) And while you use them to be informed about what MAY happen, do not let them lead you to believe any one thing MUST happen, such that you act impulsively or in a way that abandons a well thought out and diversified approach, and lastly

3) Use the existence of competing ideas to remind yourself that no one really knows what the future holds and that the best path through whatever does lie ahead is paved with discipline, humility and diversification.

So, what has people talking today and what arguments are being had?

Perhaps the biggest source of confusion/debate at the moment is what to make of earnings season. By any measure the numbers being reported, almost across the board, are spectacular but they have also largely been met with indifference by the market. As Goldman Sachs summarized, “So far in Q1, 68% of S&P 500 companies reporting earnings beat estimates by more than one standard deviation, much higher than the 46% historical average. However, beats have only been rewarded by a median 26bps of outperformance, versus 103bps historically. The market has been more focused on future guidance as we move towards economic normalization.” 

One explanation for this could of course be the Fed, and there is some merit to that (see summary point above regarding Yellen’s comments this week), but the more popular theory and critique of stocks is that the market is “overvalued.” They argue, and not incorrectly, that the U.S. market today trades at levels higher than 1929 and almost as high as 1999.

That has to be bad right?! Maybe, but then again maybe not.

First, valuation is not a catalyst for anything. Expensive things can still go up and cheap things can continue to go down – and both often do.

Second, any call on valuation to some degree makes assumptions about what the future holds in terms of growth – and trying to predict the future, as we stated above, is a poor way to manage a portfolio. This point is likely especially true now where both the economy as a whole and companies individually are coming off a crazy year and many metrics are temporarily skewed making efforts to extrapolate from historical comparisons even more difficult.

Third, market valuations are by definition very broad, and investors of course do not have to invest in “everything” or in equal fashion. Parts of the market should likely be avoided, but there are also many parts of the market.

None of this is to say that valuations don’t matter and shouldn’t be kept in mind, as they do have utility in probability-weighting potential upside and downside over the intermediate term but to use them to decide to get in or out of the market, while common, is also foolish.

All the actual catalysts for this bull-market remain intact 1) easy money from the Fed, 2) continued reopening’s, 3) solid macro-economic data, and as highlighted above 4) spectacular earnings that once again demonstrate the resiliency and innovative mindsets alive and well in America’s private sector.

These catalysts are not reason to ignore the warning lights of valuation, but again taken in totality the point to all these arguments and data points is that now, as much as ever, is a time for discipline and balance.

Have a wonderful weekend,

Tim and the team at TEN Capital

*Below is a great article I came across that highlights the many potential positives that very well may justify today’s market levels in the not-so-distant future. His thoughts and conclusions are of course his own, and do not necessarily reflect our own here at TEN.


Putting The Pedal To The Metal

May 01, 2021 by Bill Ehrman (famed hedge fund manager)


· Our global, top-down macroeconomic view has never looked better for 2021 and 2022.

· Excess liquidity will continue to drive prices higher for financial assets.

· Our bottom-up analysis looks outstanding, too, as corporations are managing their businesses exceptionally well.

The domestic economy is recovering sooner and is more robust than we anticipated a few months ago. First-quarter corporate revenues, earnings, and cash flow reported so far are nothing short of sensational, especially for the FANG stocks, such that their comparisons will get more difficult for them as the year progresses.

In contrast, year-over-year results will continue to improve sequentially for the economically sensitive companies as we move through the year into 2022 and even 2023, supported by overly accommodative monetary and fiscal policies. We expect growth overseas, with some exceptions, to lag our recovery by several quarters as it is taking them longer to get their arms around the coronavirus. We then expect a robust synchronous expansion as we move through 2022, which could last several years as long as global monetary bodies remain accommodative. They want their economies to run hot despite expected higher near-term inflation. Putting the pandemic in the rearview mirror with all that excess liquidity, pent-up demand, and woefully low inventories out there combined with accommodative monetary and fiscal policies will lead to a supercharged global economic expansion, even in the ECB. Earnings will surprise on the upside, especially for the economically sensitive companies, as we expect record levels of operating margins along with tremendous free cash generation that will lead to much higher dividends and record share buybacks. If liquidity drives financial markets, just imagine that we had over $6 trillion in personal savings reported for March and a 27.6% savings rate compared to a norm closer to 5%. Need we say more? Yes, we can have corrections at any time, but they should be bought, as the next few years look great.

The number of vaccinations continues to increase sequentially, and over 1.1 billion doses having been administered across 174 countries so far. In the United States, approximately 237 million doses have been given, averaging now close to 2.64 million doses per day. We continue to believe that we could reach herd immunity in the United States by early summer and globally before next winter, which gives us confidence in the sustainability of the economic recovery. Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) can produce several billion doses in 2021 and over 5 billion doses in 2022. Pfizer hopes to have a new at-home pill to treat Covid by year-end, which is remarkable. We are pleased to see New York fully reopen by July. All good news for sure.

The Federal Reserve met last week and left interest rates near zero and maintained the pace of asset purchases at $120 billion/month. Powell reiterated at the following press conference that the Fed would wait for inflation to moderately exceed its 2% target for some time before moving to curb its expansive monetary policy. He also noted that "the economy is far away from the Fed's goals, and it is likely to take some time for substantial further progress to be achieved." He concluded by saying that "we expect to maintain an accommodative stance to monetary policy until these employment and inflation outcomes are achieved." This is the same message that we hear from the Bank of England, BOJ, and the ECB. All monetary authorities are willing to let their economies run hot before even considering first tapering and, secondly, hiking rates.

President Biden addressed Congress last Wednesday and presented his American Family Plan, which includes $1.8 trillion in new spending and taxes over ten years for workers, families, and children. That's on top of the $2.3 trillion infrastructure plan that he released at the end of March. This new plan includes $225 billion towards child care; $225 billion to create a national comprehensive paid family and medical leave program; $200 billion for free universal pre-school for all three and four years old’s; $109 billion toward ensuring two years of free community college; $85 billion toward Pell Grants; $62 billion grant program to increase college retention and completion rates; $39 billion for subsidized tuition; $200 billion for lowering health insurance; and making permanent some child care credits, earned income credits and other tax credits included in the Covid Relief Bill. He would pay for this by hiking the top tax rate of the "very" wealthy to 39.6%, closing a series of tax loopholes, increasing collections, and increasing the capital gains rate to 39.6% for the "very" rich.

Cutting to the chase, we do not see anywhere close to this proposal being passed by the Senate, nor do we see anywhere close to his $2.3 trillion infrastructure bill raising corporate taxes to 29%. We continue to see water-downed, more traditional infrastructure bills closer to $1.8 trillion with corporate tax rate hiked to 25%, increased collections and user fees, and some additional social programs passed in 2022, hiking the individual and death tax for the very wealthy, plus closing loopholes and growing collections. We feel that Democrats run the real risk of losing the House in 2022 if they insist on pushing too hard their far-left agenda. Recent redistricting does not help their cause either, as conservative states gained while liberal states lost. One way or another, we will gain several trillion of additional stimulus in 2021 and 2022 on top of the $6 trillion already passed that will all boost economic growth.

Recent economic data points have been off the charts; jobless claims fell to 553,000, a pandemic era low; Chicago PMI rose to 72.1; April Consumer Sentiment increased to 88.3; Current conditions rose to 97.2; index of consumer expectations increased to 82.7; personal income increased $4.2 trillion in March with a 27.6% savings rate(yep!); durable goods orders rose 0.5%; regular shipments increased 2.5% as unfilled orders rose 0.4%; home prices soared the most in 15 years; and finally first-quarter GNP gained 6.4% boosted by consumer spending, fixed residential and nonresidential spending along with more government spending. It is interesting to note that excluding the trade and inventories component of GDP, final sales accelerated to a 10.6% pace in the quarter. Don't forget that more stimulus is coming too. If excess liquidity drives the economy and financial markets, the best days are clearly ahead. And this will be a global phenomenon too!

That's putting the pedal to the metal.

Investment Conclusions

Our global, top-down macroeconomic view has never looked better for 2021 and 2022. Excess liquidity will continue to drive prices higher for financial assets. Interestingly, our bottom-up analysis looks outstanding, too, as corporations are managing their businesses exceptionally well. So far in this earnings season, over 88% of the company's reporting are beating on both the top and bottom line plus generating much more free cash flow, which is being designated for dividend hikes and buybacks as balance sheets have never been stronger. We expect to see record levels of M&A, too, as most deals are for cash and are therefore non-dilutive as cash on balance sheets earns virtually nothing.

We continue to emphasize in our portfolios companies leveraged to the upcoming surge in global economic activity as their earnings growth will be accelerating going forward while the pandemic beneficiaries, like the FANG stocks, are seeing their best days now, and incremental gains are likely to slow ahead from their current torrent pace.

Areas of concentration include global capital goods, machinery, and industrials; financials, as we expect the yield curve to continue to steepen; technology at a fair price as we certainly are in a technological revolution; industrial and agricultural commodities as we expect shortages for several years; transportation; and several unique situations. We suggest listening to Berkshire Hathaway's (NYSE:BRK.A)(NYSE:BRK.B) Annual Meeting today to gain insight into the global economy while hearing investment advice from two of the most successful investors in our lifetime, Warren Buffett and Charlie Munger.

Remember to review all the facts; pause, reflect, and consider mindset changes; look at your asset mix with risk controls; turn off your cable news; listen to as many earnings calls as possible; do independent research; and...

...Invest Accordingly!

[end of guest article]

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