Wednesday, September 18, 2024

News and Ideas Worth Sharing

Allen Harris

Allen Harris is the founder, CEO and CIO of Berkshire Money Management based in Dalton, Massachusetts. He is a Certified Exit Planner, Certified Value Builder and Certified Business Valuation Specialist, and specializes in working with business owners intending to accelerate their growth and/or transition. Harris is also the author of 'Build It, Sell It, Profit: Taking Care of Business Today to Get Top Dollar When You Retire,' publishes the Berkshire Business Confidence Index, and hosts the BMM Business Roundtable. He built and sold his previous business, the Navigator Newsletters Group, a financial publication with 16,000 paid subscribers (one of the five largest of its era). Beyond his professional work, Harris is passionate about the well-being of animals. He is an avid supporter of spay and neuter efforts and animal rescue. Additionally, he is a strong advocate for both economic revitalization and the arts in the Berkshires, including First Fridays Artswalk, Shakespeare in the Park, Alchemy Initiative, Tanglewood, Jacob’s Pillow and other nonprofit organizations.

written articles

CAPITAL IDEAS: The recession everyone was expecting already happened; now it’s getting better (but barely)

For 19 months, I have heard from many that a recession is right around the corner. None of the recent data feels recessionary.

CAPITAL IDEAS: The Leading Economic Index intimates impending recession, but it’s not all bad news

I agree that the odds of a recession this year are coming down. But are we just feeling giddy because of higher stock prices? Are we ignoring the signs? Is Godot about to show up?

CAPITAL IDEAS: Are we being tricked into believing there will be a soft landing?

The current economy looks good in many respects. But that doesn’t mean it has landed. It’s difficult to consider these things and expect that we avoid a recession.

CAPITAL IDEAS: Is the stock market due for a correction?

It’s easy to conclude that there will be a recession in 2024. It’s challenging to determine when (or if) I should increase the cash allocations of my investment portfolio to get more defensive.

CAPITAL IDEAS: Will lower inflation lift stock prices to record highs?

When it comes to investing, the third rule is, “Don’t promise anything.“ (The first rule is “Don’t lose money.” The second rule is “Don’t forget the first rule.”) I can’t promise that the U.S. will succumb to another recession, but it’s ignorant to think it wouldn’t.

CAPITAL IDEAS: Keep invested but be aware of recession odds

Although slow in pace, the odds of avoiding a recession are heading in the right direction. Besides the case of something like COVID-19 shutdowns, the massive U.S. economy doesn’t just turn on a dime. Data doesn’t flow; it trickles. Based on current data, there is roughly a 50/50 chance of a recession beginning in 2024.

CAPITAL IDEAS: Is a surge in bullishness a contrarian signal?

Last year, my gut told me that too many pros were too bearish to pile onto that trade. However, I fact-check my gut. A few hundred bearish investment professionals provided many anecdotes. However, the plural of “anecdote” is not “data.”

CAPITAL IDEAS: How to determine asset allocation in a rising interest rate environment

Even after 14 months of surging interest rates, there is still a 36.9 percent chance that the Federal Reserve will raise the Federal Funds interest rate by one-quarter percentage point at its June 14, 2023 meeting.

CAPITAL IDEAS: How can we become better investors?

The best athletes are born with superior genetics. Leading thinkers are born with naturally high IQ potential. It stands to reason that the best investors have something in their brains that is different from the rest of us, making them think more rationally.

CAPITAL IDEAS: Will lower inflation mean bigger returns for the stock market?

The following are the bullet points on the consensus views from my panelists and other speakers. These aren’t necessarily my views, but the zeitgeist of this esteemed collective—including former Massachusetts governor, Bill Weld, and co-owner of the Boston Celtics, Steven Pagliuca.

CAPITAL IDEAS: What is the debt ceiling, and how does it affect the stock market?

The U.S. Treasury has nearly borrowed as much money as was allowed by Congress since the last time it raised the debt limit. Increasing the limit is procedural, and the amounts are arbitrary. The procedure allows Democrats and Republicans to flex for voters while simultaneously eroding America’s reputation of being orderly and able to pay its debts.

CAPITAL IDEAS: Is your elected official “an economic illiterate or a silver-tongued demagogue?”

Famed investor Warren Buffett defended corporate stock buybacks in Berkshire Hathaway’s annual letter. In doing so, Buffett was taking a swipe at politicians who demonize the practice.

CAPITAL IDEAS: The U.S. is a job-creation machine. Will that erase recession fears?

Despite technology company cutbacks and the Federal Reserve trying to slow the economy, the U.S. created an average of 401,000 jobs per month in 2022.

CAPITAL IDEAS: The dollar’s decline could support stock prices, China’s reopening could tear them down

One of the most significant risks to the U.S. stock market is that the Chinese economy could boom in 2023.

CAPITAL IDEAS: How much have record corporate profits contributed to recent inflation?

In the last couple of years, companies had to contend with higher costs of inputs such as commodities, labor, and wholesale inventories. In response, companies you and I buy from had to raise prices to remain profitable.

CAPITAL IDEAS: Americans expect they’ll need $1.25 million to retire

Even if you’ve achieved a lofty retirement savings of $1.25 million, you may not retire as comfortably as you’d expect.
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