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Don’t Get Political
This is it, the final Friday of summer 2024! How? I don’t know how it happened, but here we are. I hope you had an awesome summer and you’re getting fired up for fall. I know I am.
Paul Hickey from Bespoke Investment Group came on The Compound and Friends and dropped an amazing chart I want you to digest…
You’re looking at the returns on a $1,000 investment in 1953 in three scenarios (assuming the reinvestment of dividends). The red bar represents what $1,000 would have grown into had you only been invested during Republican presidencies over the last seventy years. The blue bar is $1,000 but only invested during Democratic presidencies. Paul notes that the main reason for the discrepancy is simply that there has been more time under Democratic presidents over this period of time. More time equals more compounding.
But I want you to look at the green bar. That’s the return on $1,000 if you would have just stayed invested regardless of which party controlled the White House. That $1,000 would have grown to $1.6 million and change. Versus $61,000 under only Democrats or $27,000 under only Republicans.
In case you need the message spelled out for you, it’s that the amount of time you’re invested will ultimately trump whatever party’s political positions you may or may not agree with. Don’t be cute. It’ll cost you. Big time.
The Compound and Friends
Gunjan and Paul
Joining Paul on the show this week is returning champion Gunjan Banerji, the lead reporter for the Wall Street Journal’s markets coverage and a returning champion as well.
We took a look at the post-Nvidia reaction, the sexiness of inverse and leveraged ETF flows and the miraculous stock market response to one of the most aggressive interest rate hiking cycles in history.
Chart Kid Matt made these visualizations for you, I hope you like them:
That thick blue line above represents the current rate hike cycle and it truly stands out in terms of the speed and magnitude of the hikes. We’ve been through quite a bit of tightening and the market / economy has held up throughout. We’ve had a few corrections and a notable cyclical bear market since it started, but earnings growth has resumed and valuations have hung in there. It’s been thirteen months of 5.25% Fed Funds rates since the Fed stopped tightening in July of 2023.
Above is a look at the history back to the mid 1980’s. We’ve been tighter in the past and, somehow, our ancestors managed to live their lives and survive. What’s coming next are lower rates, with a 70% probability of four cuts according to the futures market. Somehow I think we’ll survive that too.
You can listen to the new episode below or wherever you play your favorite podcasts.
How to Pod
This week Rob Passarella, the Compound Media’s CEO, informed me that we have now broken above ten million views across all of our shows year-to-date, which is leaps and bounds above where we were last year in terms of viewership / listenership. I wanted to offer my peers some insight into why the show works as well as it does. I posted this on my LinkedIn but in case you’re not following me there, here it is again:
The Compound has surpassed 10 million listens and views year to date, with over 100,000 people checking out The Compound and Friends each week. It's one of the largest, most engaged audiences in all of financial media.
When people ask me what's the trick, I give them the ingredients:
1. The coolest, most interesting guests who really want to be on the show and come ready to rock. Our guests are collaborators in the creation of each week's show, the doc is open Monday through Thursday for additions, subtractions, chart uploads and revisions. It's Saturday Night Live-esque in that way.
2. In-person recording at our own purpose-built studio, staffed by dedicated audio/video professionals. Pro audio, pro lighting, pro set design, pro editing. You want people to invest their time in your stuff, you need to invest your effort in making it good.
3. Immaculate vibes, everybody in a good mood, it's Thursday night! We don't platform negative, bitter, aggressive, obnoxious people. We're building an audience of winners, winners don't like to listen to the whining of losers. We cover bad news and potential risk through the lens of obtaining a better understanding.
4. Listening to the audience but trusting our instincts. When a guest really resonates with the fans, we bring that guest back. When a topic bores the audience, we take the hint - either we stop talking about it or find a more interesting way to do so.
5. Consistency is key. Podcasts are a ritual for the listener. Everyone has the day and time and activity during which they listen to a particular show - the commute, a long walk, bike ride, running errands, getting dressed for work. If you're not able to hit that weekly day and time, you'll never become part of the listeners' rituals. Someone else will.
We are in constant communication with our fans via The Compound Insider, which gives you the heads up on future guests and other stuff we’re working on. Subscribe for free and become an Insider now.
Giving our clients near daily access to our ideas, opinions and commentary has freed them up from having to schedule a meeting to hear from us. It’s also helped us achieve one of the highest organic growth rates in the advisor industry as new fans come in-house and hire us for help with their portfolios and plans. If you’re looking for some help or considering a change, it’s really easy to schedule an initial conversation.
Last year we launched Good Advice, which is a service tier for people with between $250,000 and $1,000,000 of investable assets - a level at which the wealth management industry has historically not had great answers for. We’ve got a full time staff of advisors, operations and portfolio managers working with clients in this tier and Callie Cox, our new Chief Market Strategist, is talking to our clients on a regular basis.
To learn more, visit Ritholtz Wealth Management and tell ‘em Josh sent you. Certified Financial Planners are standing by ready to chat.
That’s all from me this week, have a kickass Labor Day Weekend, talk soon - JB