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Weekly Market Review

Weekly Market Review

Good afternoon,

 

“Mike, this was your best WMR since covid broke, thanks for the chuckles. Some of your takes are a little too partisan for my taste, but this one was great.” Was a reply from a reader last week.

Great, I’m glad you enjoyed it. I thought some comedy was necessary right now. I’m not trying to upset half of my readers each week, but I also don’t try to hide my opinions. And that’s what they are, my opinions. And readers are allowed to disagree with me, and often times they do, which is fine. I just try to keep the dialogue open and sometimes, to borrow a phrase from Brian Wesbury, to be “the antidote to conventional wisdom.” And just to illustrate that I can be non partisan, I promise that I did not watch any of the Democrat national convention this week and I promise that I will also not watch any of the Republican national convention next week. So there you go.

 

Quick follow up to the rich people leaving high tax states, California has a proposal on the table for the nation’s first wealth tax. A tax on how much you’re worth.

https://www.zerohedge.com/markets/california-set-pass-nations-first-wealth-tax-targeting-ultra-rich

We can’t emphasize enough what a bad idea this is. Wealthy people already pay the majority of taxes, hitting them harder will only drive them out faster, which will only make California’s budget problems worse. We’d suggest that the CA lawmakers read “Atlas Shrugged,” to see what happens when the takers start to outnumber the makers, but we doubt they’d believe it.

 

And outrageous tax rates aren’t the only thing driving the exodus from CA. Southern Cal has become a nightmare of homelessness.  And the leaders either won’t do anything about it, or don’t know what to do. Who wants a $3 million house on the beach in Santa Monica if there’s a tent city and porta potties set up across the street?

https://www.dailymail.co.uk/news/article-8631063/Hollywood-Apocalypse-rich-famous-fleeing-droves.html

Full disclosure: I lived in SoCal for several years back in my previous lifetime and really enjoyed it. Being a warm weather junkie, it was very much to my liking. Now however, the weather may not be enough to make up for the serious troubles they seem to be facing.

 

And speaking of taxes, see attached for what might happen to taxes with a Biden victory this fall. Still far too early to tell so we won’t make any investment changes yet, but we shall if some of this comes true.

 

Speaking of warm weather, the temperature hit 130 degrees in Death Valley last week. Maybe that’s why they call it that.

https://www.yahoo.com/news/death-valley-hits-130-degrees-053931284.html

Some like it hot, and I’m one of them, but 130 seems a little toasty even for my taste.

 

How is the market doing so well while it seems that the economy is not? The title of this article is “How can Wall Street be so healthy when Main Street isn’t?”

https://apnews.com/6cadd78335fd98926ffb1e5d6ecb2916

Good question. There are likely many reasons, but one could be that it’s because Wall Street was allowed to function and continue operating while Main Street wasn’t.  Big companies, like Costco, Target, McDonalds and such were allowed to stay open while small businesses were forced to shutter. Many of which won’t ever reopen. The number one reason companies go out of business is, hold your breath, not enough sales. Achieving a level of sales to stay viable is hard enough, not to mention revenue to achieve a profit, but if you’ve got zero sales because you’ve been ordered to shut down, that’s a big problem.

 

Speaking of small businesses, here’s a smart guy, Mohamed El-Erian, who says that the devastation of small businesses threatens capitalism itself. And because of that, the economy may have some challenges ahead.

https://www.cnbc.com/2020/08/20/el-erian-coronavirus-small-business-devastation-threatens-capitalism.html

And if you know anyone who needs a primer in why capitalism is the greatest wealth and prosperity creation mechanism of all time, just Google Peter Schiff and/or Naval Ravikant for the simple and eloquent answer.  If you want a primer on how to protect some of those market gains in case of a pullback in the future, call me to talk about it.

 

Happy Birthday!

Social security is 85 years old.

https://www.sandiegouniontribune.com/news/local-history/story/2020-08-14/from-the-archives-president-roosevelt-signed-the-social-security-act-85-years-ago

You may remember back in the B.C. days (Before Covid) I used to do workshops for CPAs on what exactly social security is, how it started, how it works, how and when to apply, how to maximize benefits and so forth. One of my presentations was 100 glorious minutes in front of 250 mesmerized CPAs. If you, or someone you know, wants to know how social security affects them, I’m your man. And I promise it won’t take 100 minutes.

 

Honey?

Yes dear…

No, real honey, the kind that bees make. Honey is the only food in the world that doesn’t spoil. Not only that, it’s good for you. Works better than antibiotics in many cases, is completely natural and devoid of any side effects.

https://www.theguardian.com/science/2020/aug/19/honey-better-treatment-for-coughs-and-colds-than-antibiotics-study-clams

Food should be your #1 medicine. Proper diet and nutrition, specific to your own body, can mitigate most ailments, especially chronic ones.

 

Thanks again to all of you who’ve been sending well wishes for my sister and her cancer fight. She’s doing well. Here is the latest, https://www.jackieacho.com/music-therapy/what-does-freedom-mean-to-you-a-taste-of-music-therapy/

 

“What are you doing Dad?” Asked my daughter.

Writing my WMR.

“Am I in it?”

Did you do anything noteworthy, funny or clever this week that readers might enjoy hearing about?

“I’m really funny, pretty much all the time.”

You are?

“Yes. You should write about me.”

Ok, I’ll keep that in mind.

 

This week’s chuckle is from Buddy Hackett on the Tonight Show with Johnny Carson from many years ago. No inappropriate language here, https://www.youtube.com/watch?v=aww4HT5g7ig

No ducks were harmed in the telling of this joke.

 

LF26 – “I’m proud to pay taxes in the United States. The only thing is, I could be just as proud for half the money.” – Arthur Godfrey.

 

Have a great week and stay healthy.

 

The opinions expressed are those of Michael Acho and not necessarily those of Lincoln Financial Advisors Corp.  CRN-3211346-082020

 

 

Michael J. Acho, MBA, CFP®
Private Wealth Advisor
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Lincoln Financial Advisors/Sagemark Consulting
1000 Town Center, 26th Floor
Southfield, MI  48075
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Michael.Acho@LFG.com

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