Catching up on some of the most interesting posts that caught my eye recently
Regular readers know that I'm always on the lookout for investment lessons and interesting facts that I see crop up across various sources...
So today, I'll share some of the best ones I've seen recently, from posts on social media platform X and elsewhere.
1) The first four underscore some important investing lessons I've also discussed many times...
Up first is this post on X from financial commentator Jon Erlichman. He shared an 81-second clip of Warren Buffett outlining his famous "20 punches" concept.
With this concept, every young person would get a "punch card" and could make no more than 20 major financial decisions in their lifetime.
It helps underscore one of the most important pieces of investment advice ever: only swing at the most juicy pitches – and when you do, swing hard!
Next, the chart in this post from financial writer Mike Zaccardi underscores another critical lesson...
According to the chart, the reason tech stocks have outperformed by such a wide margin since the Global Financial Crisis is because their earnings have far outpaced other sectors.
In other words, the lesson is that stocks follow earnings:
I love the chart in this next post...
It's from author and financial adviser Peter Mallouk. And it underscores another important lesson I've said time and time again – invest in stocks for the long run:
Right now, cash (properly invested, which I've highlighted many times) is paying in excess of 4%. That's higher than inflation. So for now, that's making it a reasonable alternative to stocks – which are trading near all-time-high valuation levels.
But over time, you want your long-term investments to be in stocks – not cash.
Meanwhile, Creative Planning's Charlie Bilello recently shared more evidence on the problem of letting your personal politics affect your investment decisions...
As he said in one of his Week in Charts blog posts last month...
Gallup poll from this spring: 59% of Republicans were expecting gains for the stock market over the next 6 months versus just 12% of Democrats. The 47% spread between the two outlooks was the largest on record.
This chart helps illustrate the big divide:
I've said it over and over again...
If you want to be a successful investor over time, you can't let your political leanings affect your investment decision-making.
2) Up next are two staggering charts in a pair of posts on X from early July. They help show the sheer size of the U.S. stock market.
First, this one shows the extraordinary growth in the value of U.S. stocks over the past 40 years:
And this next one shows that the U.S. market's value exceeds that of the next dozen countries/regions combined:
Such a vast difference raises an interesting question: Should investors be looking to diversify away from the U.S. market into foreign ones?
Well, I don't think that's a bad idea today...
I wouldn't argue with someone who wanted to take, say, 25% of what they invested in an S&P 500 Index fund and instead put it into an international-focused one like the Vanguard FTSE All-World ex-US Index Fund (VFWAX) or the iShares Core MSCI EAFE Fund (IEFA).
3) Turning to America's housing affordability crisis...
Regular readers will recall that I discussed the ballooning cost of housing in my July 1 e-mail.
Sadly, housing has become increasingly unaffordable... And that has been putting the dream of home ownership out of reach for more and more people.
Well, here's Bilello in a Week in Charts post late last month with more on "the most unaffordable housing market in history":
The median household income necessary to purchase the median priced home for sale in the US ($123k) is now 56% higher than the current median household income ($79k).
Take a look at the chart he shared:
4) Even worse than housing is the soaring cost of health care...
In a mid-July Week in Charts post, Bilello shared this stunning chart from the New York Times. As you can see, it shows that Americans are spending more on health care than food or housing:
I don't think it's sustainable that we spend so much more on health care than any other country. So that makes me a bit wary of investing in sectors that benefit from charging exorbitant prices – such as medical devices, hospitals, and pharmaceuticals.
5) Up next is an interesting Wall Street Journal chart that Bilello also shared in a recent Week in Charts post...
I would have never guessed that 20% of companies in the S&P 500 Index have fewer employees today than a decade ago.
Some have simply done poorly, like HP (HPQ) and General Motors (GM).
Others like McDonald's (MCD) and Yum Brands (YUM) have franchised restaurants – meaning total employees have actually gone up, but are on the payroll of franchisees.
Meanwhile, others have become leaner operators – like Procter & Gamble (PG), Walmart (WMT), and McKesson (MCK).
Here's the chart:
And as Bilello wrote in the post:
Most of the job cuts have been in "white-collar" departments, with reductions in staff, executives, and managers since the start of 2022.
This trend, combined with the rise of artificial intelligence, is going to continue to put downward pressure on the number of white-collar jobs.
As this new NBC News articles notes, college graduates are seeing this already...
In a survey, NBC News reached out to young folks who had recently finished technical school, college, or graduate school. The survey asked how these folks' job application process was going. Here's how the results came in:
In more than 100 responses, the graduates described months spent searching for a job, hundreds of applications and zero responses from employers – even with degrees once thought to be in high demand, like computer science or engineering. Some said they struggled to get an hourly retail position or are making salaries well below what they had been expecting in fields they hadn't planned to work in.
And as the article also notes, this has been one of the toughest job markets for recent graduates since 2015.
6) Finally, kudos to JPMorgan Chase (JPM) CEO Jamie Dimon...
He has unlocked enormous value at his firm. Take a look at the chart in this recent post on X from Bilello:
Over the past decade, JPMorgan's nearly 350% return has far surpassed the S&P 500's roughly 200% gain. That in turn beats the roughly 150% rise of Bank of America (BAC)... and piddly gains by Wells Fargo (WFC) and Citigroup (C) of around 50%.
One could argue that JPMorgan's outperformance has been due to the company being better positioned than its peers. But I think the main difference is better management.
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.