The question on “everyone’s” mind, whether the back or the front, is where will the stock market be in two, three, six years?

Politicians and think-tank wonks of all stripes love to condemn government “waste, fraud, and abuse.” But saying it isn’t hard. Who is the opposition? No one says we need more waste, fraud, and abuse. We’re all 100% agreed all three are bad.

Two weeks ago, I opened this letter by noting the election uncertainty, once over, would give way to a different uncertainty about what comes next. That’s where we are now.

I went to bed “early” on election night, around 10:30 pm. We are in the five months of the year where Puerto Rico is one hour ahead of Eastern time, and nothing I was seeing made me think it would be an early night. And by that I meant 3 or 4 am.

Anyone else ready for the election to be over? This uncertainty is exhausting, no matter how you want it to end. But sadly, it won’t really end. We will just transition to a different uncertainty over what will happen next. I will offer my thoughts on the election at the end of this letter, after setting the stage.

We don’t talk about China enough. I suspect this is for several reasons. First, because the country is so incomprehensibly big and populous. Second, it has been an economic miracle. Many Chinese enthusiasts just see a straight line projection of their growth. To the moon, Alice!

Housing prices matter to everyone, even if you aren’t trying to buy, sell, or rent a home. They are the key to inflation, which drives Fed policy and interest rates, which drive financial markets. We’re all part of this, like it or not. Today we’ll review what is happening.

Everything I’ve learned and experienced in 50+ years of watching the economy tells me not to expect a soft landing. But maybe that’s because I’ve never actually seen one.

It’s my birthday week and I have guests and family gathering in the next room, so this will hopefully be a quick letter as well as ending with what will likely be controversial food for thought.

Two weeks ago, I began reviewing Martin Gurri’s important book, The Revolt of the Public. Rather than try to do a general review, I am going to liberally quote from Gurri’s book and interviews, trying to let him explain himself in his own words.

I’m moving up a letter I was planning to share with you on my birthday weekend in two weeks. The story about sandpiles and the financial system may be the most popular letter I’ve written in the last 25 years. It is one we should all re-read every few years to remind us how change happens slowly, then suddenly.

In my cycles book I’m reviewing the forecasts of Neil Howe, Peter Turchin, George Friedman, and Ray Dalio. For different historical reasons and patterns, all see a crisis culminating at the end of this decade. Some readers have legitimately pushed back, saying no one knows the future.

We are entering a time I think will include a deep crisis. We are going to need each other. We really do need to “find our tribe.”

I asked my great friend and business partner David Bahnsen, who is about as politically wired as anyone and one of the truly great economic and investment minds, to reflect on the intersection of politics and markets. It is a quick, balanced, and reasonable read...

This week we take a not-so-random walk through the data, trying to simplify what is actually a fairly complex subject. I think it is quite fun, but also important. Let's dive in.

Head fake is a trading term, too. Some bit of information convinces investors a market is going to move a certain way. They reposition their portfolios accordingly… just in time to find out the information was wrong. Oof.

I can't let this month pass without noting a significant anniversary: This is the 25th year I’ve been writing Thoughts from the Frontline. You can visit the archive and see every issue since January 2001.

The Federal Reserve is between the Rock of Gibraltar and the Rocky Mountains. The data they use to explain their policy choices is in apparent transition. A self-aware analyst, seeing the conflicting data, knows that the right policy choice will only be understood in hindsight.

Progress toward a goal usually isn’t linear. The first 50% isn’t too bad, the next 40% is harder, and the last 10% consumes most of the effort and resources. Business strategists call this the “last mile” problem… and it applies to inflation, too.

The inflation picture is getting better but we still have too much of it. Inflation is going but not gone, and probably won’t be gone anytime soon. Today I’ll tell you why.

We are in the time of year when Americans pack transatlantic airliners for their European vacations. I had actually hoped to be one of them. That didn’t work out but we can still talk about events in Europe. And we probably should, because potentially major changes are happening.

Long-time readers know I have not been a fan of the Chevron deference. I think it was one of the worst decisions of the last century. I've been aware of it because I'm in a regulated business.

The giant federal debt we’ve been talking about isn’t just borrowed money. It is also lent money. Loans are two-party transactions. One side receives temporary use of cash which it agrees to repay with interest. The other gives up the current use of that cash in exchange for receiving interest. Ideally, it works out for both… but not always.

The old saw about doing the same thing and expecting a different result is less simple than it seems. Sometimes you need a few attempts to get it right.

You know I’m highly concerned about government debt in the developed world, particularly the US. I’ve said for years a crisis is coming. We’ve blown right past all our chances to avoid it. Now all we can do is imagine what the crisis will look like… and how much it will hurt.

I’m writing you from Cape Town, South Africa, where I’ve been warmly welcomed and reminded how much I enjoy international travel (well, except for jet lag!). Our world has so many wonders most people never get to experience. Of course, “there’s no place like home,” but seeing other places makes me happy, too.

Data is important but not everything. Perceptions matter, too. Today we’ll look at how people feel inflation and what it may mean in the years to come.

When new inventions turn into market frenzies, the contrarian part of me wants to be skeptical. But the optimistic part of me wants it to be true, especially when the idea promises to change life for the better. Reality is usually somewhere in between.

Sometimes two seemingly opposite things can be true at the same time. Right now, we can correctly say inflation is both a) better than it was and b) higher than it should be.

Any way you care to measure it, the United States has the world’s largest economy. It is not, however, the fastest-growing economy. And growth rates matter because, other things being equal, a faster-growing economy might eventually challenge US leadership.

I’m entering my annual post-SIC decompression period. I say that only half-jokingly. The last two weeks were my version of a dive deep into the sea, where you see shocking things and endure crushing pressure. The weeks of preparation are fun, but the sheer volume of information creates its own kind of pressure. You don’t just shift back into normal life after that.

This week is part two of our conversation about alternative investments. As I pointed out last week, this space has evolved into a distinct asset class of its own. I believe investors need to understand the good, the bad, and the ugly aspects of investing in alternatives.

Today, we look at the world of “alternative investing.” I put it in quotes because this was originally a somewhat pejorative term. Back in the 1960s (and maybe before?), brokers sold you stocks and bonds, saying that was how smart people invested

This week continues our series on dividends and dividend growth stocks. This is one part of my strategy to try to get through what I see as a coming crisis by the end of the decade with as much of my buying power as intact as possible.

A critical question is how do we get as much buying power as possible from the beginning of the crisis through to the other side? Part of the answer is Warren Buffett’s admonition to never bet against America. Better to do as he does, investing in specific parts of America.

Leaders take a lot of criticism. In fact, that’s part of the job. Presidents, governors, CEOs, football coaches, other top decision makers and even your humble analyst all have to answer for what happens on their watch—even when it’s not their fault.

If, like me, you’re old enough to remember the 1990s internet bubble, today’s AI excitement might be giving you flashbacks. The parallels are unmistakable.

You may have noticed the stock market rising lately. Much of the gain isn’t so much “the market” as a handful of mega-cap stocks. Nonetheless, the bulls are clearly in charge. The question is how long they will stay there. History suggests longer than many market bears think.

The idea that “market expectations” tell us anything about the economy’s future is – or should be – in serious doubt. That’s not to say the market is wrong. It just changes its mind so often as to be useless. And most of the time, it changes its mind after the fact.

Today, we have a different kind of letter. I’ve been in California for some rather innovative and hopefully life/health span-extending medical treatment.

Recently I saw a T-shirt for sale that said, “Science Doesn’t Care What You Think.” I used a similar metaphor recently, observing how many experiments show that jumping off a cliff will send you rapidly downward. If you want to test that theory, please add me to your will first.

If you’re a parent or grandparent, you may know of the “Choose Your Own Adventure” storybook series. Written in second person, they make “you” the hero.

One of the more fascinating and mysterious parts of watching the Federal Reserve is the ongoing dialogue between Fed leaders and Wall Street. We imagine private meetings held in great secrecy. Those may in fact occur, but I’m not sure they are even necessary.

Modern economies, even small ones, are unfathomably complex. The number of variables is far more than any human can comprehend or any model can track. It’s really no wonder so many forecasts are wrong.

In thinking about the 2020s, I often find myself looking back to the 1920s. That decade began with a deep recession/depression and ended with a stock market crash. While we now see the 1920s as a kind of “in between” period, people at the time didn’t know another depression and war were coming.

“Two is better than one” is a nice saying, but it really depends on what you’re describing. Two hurricanes or earthquakes aren’t better than one. Just one disaster at a time will suffice, thank you very much.

Having now spent almost six months describing the historical cycles and massive debt that surround us, I find myself looking for an “easy” exit.

It’s forecast season again, the time when people like me tell people like you what will happen this year. Sadly, we are often wrong.

It's that time of year when we start thinking about the old and envisioning the new. This has always been a special season for me, perhaps because of my unusual quirk of really wanting to divine the nature of the future—not just an investment in economics but in general.

First, let me wish you Merry Christmas, Happy Holidays or your favorite personal form of greetings for this time of year.