The stock market is broken! Today we talk about a broad range of economic, market, and behavioral topics, beginning with the cognitive bias of sunk costs and how it affects personal decisions, investing, and business choices, emphasizing the importance of recognizing losses and cutting them early. We also explore recent market signals, including distress in the credit and auto-loan markets, and the K-shaped economy. We also critique media and policy narratives, pointing to propaganda around climate change and the pivot to nuclear energy. It's important to be aware and prudent in your observations in uncertain times. We also remark on the rising cost of living, currency devaluation (the end of the penny), and market performance trends. Today we discuss...
- Sunk cost bias was illustrated with examples in plumbing repairs, investing in stocks like QQQ, and hiring ineffective marketers in business.
- People often continue bad relationships or investments due to the psychological discomfort of admitting mistakes.
- Non-decisions are still decisions, and it’s important to consciously choose a path rather than defaulting to inaction.
- The conversation shifted to propaganda in media and politics, including discussions about global warming and COVID messaging.
- Nuclear energy is the only scalable solution for energy needs if climate change is real, and that AI and technology interests influenced the shift in media focus.
- We discussed deliberate and coincidental market messaging, citing examples of Fed statements and past financial crises like 2008.
- Michael Burry’s recent fund positions and put options on Nvidia and Palantir were discussed as a signal for investors to pay attention, though not necessarily to follow blindly.
- Extreme caution in investing is recommended, particularly in markets or sectors one does not fully understand, such as the stressed auto-loan market.
- Signs of market stress were highlighted, including unusual moves in the SOFR rate and subprime auto-loan distress, though not on the scale of the 2008 mortgage crisis.
- The K-shaped economy was explained, where asset holders benefit from price inflation while those without assets see income stagnation and rising expenses.
- Rising housing costs and mortgage challenges were linked to declining fertility rates and generational effects on college and workforce participation.
- Indicators of market sentiment, including CNN’s Fear and Greed Index, were analyzed, with a caution not to follow them blindly as they often lag or mislead.
- Observations were made on shifting consumer behaviors, including declining cash usage and businesses refusing pennies as payment.
- Future discussion topics were teased, including REIT investment opportunities and year-to-date market performance insights.
"Cash is not trash... Cash is King" - Kirk Chisholm
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Today's Guest: Kirk Chisholm
Kirk Chisholm is a Wealth Manager and Principal at Innovative Advisory Group, an independent Registered Investment Advisor located in Lexington, MA. He has been providing wealth management services to individuals, executives, entrepreneurs, and their families since 1999. He is an outside the box thinker, risk manager, inflation expert, blogger, podcaster, and all-around interesting guy. Kirk is dedicated to developing lasting relationships with all of his clients and their families. One of the benefits of working with Kirk is his patience, empathy, and his ability to provide clear and easy-to-understand explanations to complex financial topics.
Kirk developed a unique philosophy for the wealth management industry called Risk Management First. The medical field has a similar way of thinking of “first do no harm”. This philosophy focuses on risk management for clients in all aspects of their lives in ways the industry does not address. Risk management does not stop with investments. It also requires working closely with other professionals to address areas of their financial lives not currently being met.
In 2008, Kirk co-founded Innovative Advisory Group to address the needs not being addressed by the wealth management industry. It started with specializing in alternative assets held in retirement accounts (i.e. self directed IRAs/401ks). Then the company expanded into the specialization of college funding (i.e. planning, strategy, and paying the least possible for a high quality education), Risk Management First, exit planning for business owners, advanced planning (estate, tax, etc), and providing practice management and leadership training to other financial advisors, accountants and attorneys.
Kirk's Online Presence:
Today's Panelists
- Kirk Chisholm | Innovative Wealth
- Douglas Heagren | Pro College Planners