What we’re reading (12/9)
“Decisive Moment Arrives With $4 Trillion Stocks Rally At Stake” (Bloomberg). “Investors are facing a pivotal week as a key measure of inflation that hits Tuesday and the Federal Reserve’s interest-rate decision on Wednesday are expected to set the tone for the stock market and economy heading into 2024.”
“A New Era Of Income Investing Is Turning Boomers Into Bond Buyers” (Wall Street Journal). “Decades of stellar stock-market returns produced by a series of bull markets that began in 1982 coincided with boomers’ prime working years and made their nest eggs grow. Their good fortune continues in retirement. The recent surge in interest rates that sent bond yields near a 15-year high is the “single best economic and financial development in 20 years” for retirees, said Joe Davis, global chief economist at Vanguard. That shift is turning the stock-loving Woodstock generation into bond buyers. With current yields on 10-year U.S. Treasury notes at 4.23%, boomers, ages 59 to 77, have reason to move money into the more conservative investments. The Gen Xers behind them—now around ages 43 to 58—are eyeing those moves, too.”
“Now Is A ‘Fantastic Time’ To Add Small- And Midsize-Company Stocks To Your Portfolio, Says Investing Pro” (CNBC). “Stocks in S&P small- and mid-cap indexes both currently trade at about 14 times estimated earnings for 2024, compared with a ratio of about 20 for the S&P 500. That means small- and mid-caps trade at a roughly 30% discount to large-caps. What’s more, small and medium stocks are looking cheap relative to their history. Midsize stocks are trading at a 14% discount relative to their average P/E dating back to 2005, according to data provided to CNBC Make It by CFRA chief investment strategist Sam Stovall. Small-company stocks are trading at a 19% discount to their historical average.”
“Dodgers’ Decade-Long Pursuit Of Shohei Ohtani Finally Comes Through” (Sports Illustrated). “In the end, of course, it is always about money—and in this case more than any ever handed to an athlete: $700 million over 10 years. But it was Ohtani who told his agent, Nez Balelo, to craft a deal with so much deferred money that it would reduce the Dodgers’ hit toward their competitive tax rate.”
“Jeremy Grantham Warns Stocks Could Fall As Much As 52% As A Recession Awaits The US Economy — But Says To Look To These 2 Investments For Long-Term Outperformance” (Insider). “In January 2022, Grantham published a note titled ‘Let the Wild Rumpus Begin,’ in which he said a bubble in the S&P 500 was due to unwind spectacularly. Since then, the index has been just about flat. But he’s standing by that call, as he's seen bigger rallies unfold after calling a bubble. Take 1998, for example, when he warned of the dot-com bubble. Despite being at record valuations, the S&P 500 rose another 50% after his prediction. While he was early, Grantham's forecast, of course, proved correct in 2000, when the market began its 46% descent. He was also prescient about the 2008 crisis by both predicting the market's crash and nailing the bottom within days of the low in March 2009.”
