June, 2024

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Seattle Redux: Misunderstanding Seasonal Adjustments

The Big Picture

@TBPInvictus here. About a decade or so ago, the city of Seattle undertook to raise its minimum wage, over time, to $15/hour. (Massive credit to my friend Nick Hanauer for his efforts to make that happen.) What followed in the immediate aftermath of both the announcement and implementation was nothing less than a apocalyptic, collective head explosion on the right about the devastating effects the increase would have, particularly in the food services sector: However, there’s little doubt that t

Food 336
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Top clicks this week on Abnormal Returns

Abnormal Returns

Also on the site Father time is undefeated: on the impact of cognitive decline on financial outcomes. (abnormalreturns.com) Top clicks this week The S&P 500 is getting three new members. (reuters.com) We are in a 'bear market for diversification.' (thinkadvisor.com) The stock market is increasingly concentrated. Should you be worried? (theirrelevantinvestor.com) More investors are facing up to the problem with illiquid alternatives.

Taxes 316
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How Financial Advisers Can Boost Online Reputation Through Google Reviews (While Complying With SEC Marketing Rule Requirements)

Nerd's Eye View

Online reviews are commonly given and used by consumers across many industries, from finding a good restaurant in a new town to reviewing a lawn care service provider. Nonetheless, fewer than 10% of SEC-registered investment advisers report using them, even though the SEC’s updated investment adviser marketing rule allows financial advisors to proactively encourage testimonials (from clients), use endorsements (from non-clients), and highlight their own ratings on various third-party revie

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Market Commentary: The Summer Rally Continues Amid Strong Job Gains

Carson Wealth

The Summer Rally Continues Another week and more new highs for the S&P 500. As we’ve noted before, summer rallies are actually quite normal in an election year and we didn’t think this year would be any different. In fact, the three summer months are up more than seven percent on average in an election year and higher more than 75% of the time, the best out of any three-month period.

Marketing 142
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Less Stress, More Success: Accounting Best Practices & Processes for 2025

Speaker: Duke Heninger, Partner and Fractional CFO at Ampleo & Creator of CFO System

Are you ready to elevate your accounting processes for 2025? 🚀 Join us for an exclusive webinar led by Duke Heninger, a seasoned fractional CFO and CPA passionate about transforming back-office operations for finance teams. This session will cover critical best practices and process improvements tailored specifically for accounting professionals.

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Roger Federer vs. the Stock Market

A Wealth of Common Sense

Roger Federer delivered an excellent commencement address at Dartmouth’s graduation recently. This part floored me: In tennis, perfection is impossible… In the 1,526 singles matches I played in my career, I won almost 80% of those matches… Now, I have a question for all of you… what percentage of the POINTS do you think I won in those matches?

Marketing 138

More Trending

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Inflation is Obvious But Wage Gains Seem Invisible

The Big Picture

I’ve been observing how radically unusual various sentiment readings have been for a few years now. It made little sense to me that the post-pandemic era saw sentiment levels far below major dislocations such as the ‘87 crash, the 9/11 terrorist attacks, the Dotcom implosion, or the 08-09 great financial crisis. We have tried to identify the causal factors by considering social media , increases in partisanship , ignorance, even trolling of pollsters.

Economics 321
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Sunday links: asymmetric returns

Abnormal Returns

Strategy Mean reversion happens in the stock market. Good luck trying to time it. (awealthofcommonsense.com) Successful investing requires getting your time horizon correct. (disciplinefunds.com) Always check the ticker. (scheplick.com) Business The degenerate economy is booming. (howardlindzon.com) How veterinary medicine became a big business. (nytimes.com) The defense sector can't hire workers fast enough.

Medicine 311
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Weekend Reading For Financial Planners (June 15-16)

Nerd's Eye View

Enjoy the current installment of "Weekend Reading For Financial Planners" - this week's edition kicks off with the news that a recent study found that advisory teams tend to have higher assets under management per advisor, serve wealthier clients on average, and have stronger growth than solo advisors, thanks in part to the efficiencies gained from sharing expertise and back-office support.

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Private Equity May Not Be the Diversifier We Think (Due to Volatility Laundering), But Private Credit Could Be

Alpha Architect

Volatility laundering causes the risk-adjusted returns and the diversification benefits of private equity to be significantly overstated. However, the problem of volatility laundering is not a problem for all private investments, specifically not for high-quality, floating rate, private credit. Private Equity May Not Be the Diversifier We Think (Due to Volatility Laundering), But Private Credit Could Be was originally published at Alpha Architect.

Investing 122
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Avoiding Lease Accounting Pitfalls in 2025: Lessons Learned from Spreadsheet Errors

Speaker: Abdi Ali, Sr. Lease Accounting Consultant

Join this insightful webinar with industry expert Abdi Ali, who will discuss the challenges that can arise from managing lease accounting with spreadsheets! He will share real-world examples of errors, compliance issues, and risks that may be present within your spreadsheets. Learn how these tools, while useful, can sometimes lead to inefficiencies that affect your time, resources, and peace of mind.

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America’s Piggie Banks Are Full

A Wealth of Common Sense

The pandemic housing boom means Americans have more home equity than ever. Households have added roughly $12 trillion in home equity since the end of 2019: To put this number in context, there was only ~$6 trillion in home equity following the bursting of the housing bubble following the Great Financial Crisis. Out of the $32 trillion in total equity, let’s say half of it is tappable (meaning homeowners can cash it.

Banking 129
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BLS: Job Openings Decreased to 8.1 million in April

Calculated Risk

From the BLS: Job Openings and Labor Turnover Summary The number of job openings changed little at 8.1 million on the last business day of April , the U.S. Bureau of Labor Statistics reported today. Over the month, both the number of hires and total separations were little changed at 5.6 million and 5.4 million, respectively. Within separations, quits (3.5 million) and layoffs and discharges (1.5 million) changed little. emphasis added The following graph shows job openings (black line), hires (

Numbers 132
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Market Concentration

The Big Picture

A quick break from book authorship to share a fascinating set of data and charts, via Sam Ro. In his weekly missive, Sam points to some amazing charts from Global Financial Data. They are based on historical data that looks at 200 Years of Market Concentration. You might be surprised at the findings. As the chart above shows, there are long periods of market concentration.

Marketing 316
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Top clicks this week on Abnormal Returns

Abnormal Returns

Also on the site Some reasons why being online is so exhausting these days. (abnormalreturns.com) Top clicks this week Mean reversion happens in the stock market. Good luck trying to time it. (awealthofcommonsense.com) The degenerate economy is booming. (howardlindzon.com) Stop dissing standard deviation as a risk measure. (morningstar.com) Holding cash is comfortable right now, too comfortable.

Economy 303
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Back to Basics with Reconciliations

Join us in this webinar, where we share best practices on how to think about the reconciliation work each month, when best to do reconciliations, how they should be prepared, and some common pitfalls to avoid. Learning Objectives: This course objective is to understand how to properly prepare and review balance sheet reconciliations and its impact on the financial statements.

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If I Only Had 12 Months to Live

Advisor Perspectives

I have long admired Jonathan Clements. His columns in The Wall Street Journal introduced me to index-based investing. I was deeply saddened to read his column in HumbleDollar, dated June 15, 2024, that, at age 61, he has been diagnosed with lung cancer that has metastasized to his brain and “a few other spots.

Investing 128
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Complexity is a virtue in return prediction

Alpha Architect

Simple models severely understate return predictability compared to “complex” models in which the number of parameters exceeds the number of observations. Complexity is a virtue in return prediction was originally published at Alpha Architect. Please read the Alpha Architect disclosures at your convenience.

Numbers 107
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When is the Mean Reversion Coming in the Stock Market?

A Wealth of Common Sense

I posted the following on Twitter this week: It’s turning into another banner year for the U.S. stock market (so far). Here’s a good follow-up question on these numbers: This is a legitimate concern. Since 2020 the S&P 500 has compounded at more than 14% per year. That’s not just a pandemic phenomenon either. Since the start of 2009, the S&P 500 has seen returns of 14.5% per year.

Marketing 127
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Housing June 24th Weekly Update: Inventory up 2.2% Week-over-week, Up 37.7% Year-over-year

Calculated Risk

Altos reports that active single-family inventory was up 2.2% week-over-week. Inventory is now up 28.4% from the February seasonal bottom, and at the highest level since July 2020. Click on graph for larger image. This inventory graph is courtesy of Altos Research. As of June 21st, inventory was at 634 thousand (7-day average), compared to 621 thousand the prior week.

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2024 Lending Outlook: Innovations and Evolutions in the Financial Sector

As we step into 2024, the lending landscape evolves rapidly with technology, regulations, and market dynamics driving change. For banks and financial institutions to stay competitive and meet the evolving needs of their customers, these drivers must be understood and engaged with. Lenders can anticipate significant transformation fueled by technological advancements, regulatory shifts, and changing consumer behaviors.

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Debunking QSR Minimum Wage BS: A Follow Up

The Big Picture

@TBPInvictus here A few days ago, Barry and I detailed how unscrupulous bad actors had taken Not Seasonally Adjusted data to falsely claim that California’s new $20/hour minimum wage had cost the state almost 10,000 quick-serve restaurant (QSR) jobs. I wrote: It appears to me that the Journal got that number from BLS. However, BLS only offers the series without seasonal adjustment; this makes a very meaningful difference.

Food 305
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Top clicks this week on Abnormal Returns

Abnormal Returns

Top clicks this week The best time to prepare for a bear market is before it begins. (awealthofcommonsense.com) A review of major asset class performance in May 2024. (capitalspectator.com) Why you shouldn't be worried about index funds just yet. (thefinancialbodyguard.com) The current bull market is mid. (tker.co) The market has always been rigged, just not in the way you think.

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CB Leading Economic Index: Falls Again in May.But No Recession Signal

Advisor Perspectives

The Conference Board Leading Economic Index (LEI) decreased in May to its lowest level since April 2020. The index fell 0.5% from the previous month to 101.2. While the index does signal softer economic conditions lay ahead, the LEI is currently not signaling a recession.

Economics 126
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When Shorts Don’t Short

Alpha Architect

Low short positions come from positive public news, while negative news can drive average short or extremely high short positions When Shorts Don’t Short was originally published at Alpha Architect. Please read the Alpha Architect disclosures at your convenience.

Investing 112
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Banking on Loyalty: Holistic Financial Advice for Unparalleled Business Growth

Speaker: Joe Buhrmann, MBA, CFP®, CLU®, ChFC® Senior Financial Planning Practice Management Consultant eMoney Advisor

During an era of evolving consumer preferences, the banking sector is undergoing a profound shift. As customers continue to broaden their perspectives, banking professionals must support their customers' financial wellness by providing holistic financial advice that aligns with individual goals and circumstances. Without adapting, financial institutions will find that loyalty may crumble amid uncertainty.

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The Minsky Market

A Wealth of Common Sense

Through the end of May, the S&P 500 has experienced 24 new all-time highs this year alone. Volatility has been relatively low for some time now. We haven’t had a 2% down day on the S&P 500 in well over 300 trading days: That’s fast approaching the longest streak without a nasty down day over the past 10 years. The S&P 500 is up around 11% for the year on a total return basis.

Marketing 128
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AIA: Architecture Billings Declined in May; Multi-family Billings Decline for 22nd Consecutive Month

Calculated Risk

Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment. From the AIA: ABI May 2024: Business conditions at architecture firms continue to soften The AIA/Deltek Architecture Billings Index (ABI) score declined to 42.4 for the month , as more firms reported a decrease in billings in May than in April. In addition, there is increasing softness in the pipeline of new work coming into firms.

Clients 128
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BNY Pershing Lays Off Business Consulting Group, Product Staff

Wealth Management

Sources close to the company say the clearing and custody firm has let go of its business consulting group and half a dozen people in its product group, just a week after its annual INSITE conference.

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Sunday links: helping you win

Abnormal Returns

Markets Entertainment stocks are struggling YTD. (hollywoodreporter.com) Lumber prices are struggling YTD. (wsj.com) Strategy Europe's stock market has badly lagged the U.S. How much longer can it last? (awealthofcommonsense.com) There's no getting around it, investing is complicated. (tker.co) Don't forget, stocks are real assets. (downtownjoshbrown.com) Policy The Supreme Court has overturned the Chevron doctrine.

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Navigating Financial Storms: Strategies for Building Resilient Balance Sheets

Speaker: Carolina Aponte - Owner and CEO, Caja Holdings LLC

In today's rapidly changing business environment, building a resilient balance sheet is crucial to the survival of any business. A resilient balance sheet allows a company to withstand financial shocks and adapt to changing market conditions. To achieve this, companies need to focus on key strategies such as maintaining adequate liquidity, managing debt levels, diversifying revenue streams, and prioritizing profitability over growth.

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The Big Four Recession Indicators

Advisor Perspectives

Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process.

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U.S. Companies Have Outperformed Japanese Companies, or Have They?

Alpha Architect

While both the S&P 500 and the Nikkei indices have recently hit all-time highs, the valuation and balance sheet data we have reviewed indicate that the downside risks in Japanese stocks appear to be far less than the risks in U.S. stocks. Evidence such as this helps explain why legendary investor Warren Buffett has been buying Japanese stocks. U.S.

Valuation 106
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Not Getting Rich Fast Enough

A Wealth of Common Sense

The plural of anecdote is not data. You can’t extrapolate your individual experience or the experiences of your family, friends and peers to the broader economy, markets, political climate, etc. Just because the dumbest person you know is going all-in on Nvidia does not mean the stock market is going to collapse tomorrow. That’s not how any of this works.

Economy 121