The Sunday Drive - 12/31/2023 [#91]

👋🏼 Hello friends,

Greetings from Saratoga Springs, NY! It’s New Year’s Eve, or as I like to refer to it, Amateur Night. I hope you all have a safe and happy start to 2024.

Now, let's take it easy and enjoy a leisurely Sunday Drive around the internet. 

🎶 Vibin'

As a child of the 70’s, I was blessed to grow up in the heyday of many, many great guitar bands. One of my favorites was the Pat Travers Band, featuring an amazing duo of guitarists, Pat Travers and Pat Thrall, and one of the best rhythm sections ever with Mars Cowling on bass and Tommy Aldridge on drums.

I had the pleasure of seeing them in concert a number of times in Dallas back in the 80’s, and they always gave one of the strongest live shows I ever witnessed.

So in the spirit of the New Year that lies ahead of us, this week I’m vibin’ to Gettin’ Betta from the 1979 album Go For What You Know, recorded live at the Opry House in Austin, TX.

💭  Quote of the Week‌

📈  Chart of the Week

 

In the recent equity market environment, much discussion has been centered around large cap versus small cap performance, or perhaps more often, the performance of the Magnificent 7 as compared to the other 493 stocks in the S&P 500.

The Chart of the Week gives a different look - that of the relative performance of large cap value stocks as compared to large cap growth stocks. 2023 (through 12/6 when this chart was compiled) was the second worst performance of value versus growth going back to 1979. Only 2020 was worse. I was actually surprised that the Tech Bubble of the late 1990’s wasn’t the worst relative performance period.

As interest rates begin to come down with receding inflation expectations in 2024, I would expect value stocks to catch up in terms of performance versus growth stocks over the next year or two. In fact, during the last couple of months of 2023, we might have begun to see glimpses of it already.

🚙 Interesting Drive-By's

This week we have articles on the Roaring 20’s, long term thinking, the power of writing, and estate planning:

📈 The Roaring 20’s Are So Back, Baby! - from Business Insider

The winding down of a pandemic, a strengthening US consumer, and record highs in the stock market.

Today's headlines sound a lot like the articles that were printed in newspapers across the US during the 1920s, when America was experiencing an economic boom driven by consumer spending and technological innovations following the end of World War I and the Spanish flu pandemic.

"The parallels are quite similar," NorthEnd Private Wealth's chief investment officer, Alex McGrath, told Business Insider.

Those similarities have sparked some speculation on Wall Street that America is again heading for a prolonged economic boom that will drive the stock market to new heights, akin to what happened a century ago. [link]

🤔 Long-Term News - from Morgan Housel

In what analysts called “the most important economic metric that exists,” 360,000 people were born yesterday, 78% of whom are expected to survive into late adulthood. Most will grow up to become productive, working members of their societies.

Subtracting the 150,000 global deaths reported during the day, economists said there were a net 210,000 new humans on the planet Tuesday. Amid news that three-quarters of the world now lives in a free or mostly free political state, at least 100,000 new humans entered the world on Tuesday who will be given the opportunity to learn the accumulated lessons and knowledge of the 100 billion people who came before them.

“This week alone, we’ll add the equivalent of the population of Seattle to the global economy in new people with the odds in their favor of growing up more knowledgeable and productive than you or me,” said Bryan Douglas, an economist with Deutsche Bank. “This year we’ll add the equivalent of the population of New York. Same next year. It’s just amazing.” [link]

💡 Having a Conversation With Yourself: 2023 - from Kyle Harrison

The conversations I've had with the dozens of people through my writing is a powerful side benefit of writing consistently. Every time I talk about why people should write online, I always use the same phrase: "sending your vibes out into the world and seeing who responds." That's one of the most powerful side effects of the internet. You never who you'll vibe with.

But as powerful as the conversations with other people are, the conversation with yourself will always be the most powerful result of writing. Last year, around this same time, I published a piece called "Having a Conversation With Yourself." In full transparency, I just thought it would be an easy way to not have to write anything new at the end of the year.

But it turned out to be one of the most valuable exercises for me. Writing once a week is... a LOT. You end up writing things you don't even remember writing, like a secret public journal that is secret even from yourself. For example, one theme I didn't even realize I had revisited over and over again was how storytelling can rewrite reality; for better or worse. But turned out I found at least ~10 instances where I had unpacked that idea over the past year.

I was literally having a conversation with myself because I hadn't even remembered unpacking those ideas. It was a honest-to-goodness real-life example of the quote that I return to so often:

"I write because I don't know what I think until I read what I say." (Flannery O'Connor)

So after having already taken some time to reflect on what I wrote this year, and what I read this year, I decided to once again spend some time reflecting on what I thought this year. [link]

🕓 Estate Planning: What “Real People” Want to Know - from Rethinking65

Over the past several weeks, I’ve had the opportunity to travel around the country and speak with end investors about wealth transfer and estate planning. These presentations always provide an interesting way for me to understand what “real people” are truly worried about and how financial advisors can help.

Perhaps not surprisingly, many people are initially reluctant to talk about wealth transfer. I’ve found that there are a few common reasons for this. First, wealth transfer at its core is a conversation about death. Most of us are loath to consider our demise as it can bring up all sorts of emotions, thoughts and regrets, not to mention simply reminding us of our age.

The second reason people shy away from the topic is the legal costs and complexities that go along with estate planning. For many clients, paying thousands of dollars for a bunch of paperwork doesn’t seem like a good value, especially since it may not be “needed” for several years.

Finally, people tend to avoid talking about estate planning because of the difficult financial and non-financial decisions associated with the transfer of wealth.

When I encounter these hesitations, I’ve found that the idea of legacy is a good way to get people over the hump. Each of us will leave some sort of legacy. The question for clients is, what is the legacy you want to leave for your family? Is it a plan that was created to ensure you were able to provide as much as possible for the next generation? Or is it memories of confusion, disorganization and possibly even resentment or intrafamily conflict? [link]

👋🏼 Parting Thought

 

If you have any cool articles or ideas that might be interesting for future Sunday Drive-by's, please send them along or tweet 'em (X ‘em?) at me.

Please note that the content in The Sunday Drive is intended for informational purposes only, and is in no way intended to be financial, legal, tax, marital, or even cooking advice. Consult your own professionals as needed.

‌I hope you have a relaxing weekend and a great week ahead. See you next Sunday...

Your faithful financial provocateur,

-Mike‌