“You didn’t build that.” — President Barack Obama, July 13, 2012
Monday’s Wall Street Journal headline delivered a simple but powerful story: “More Americans Than Ever Own Stocks.”
The Federal Reserve reports that 58 percent of Americans constitute the nation’s stock-holding Investor Class. Gallup revealed in May that 61 percent own stocks or stock-based mutual funds. The numbers are within the margin of error to each other.
They have to be accurate. Americans are building — on their own — their nest eggs.
More to Almost DailyBrett’s point, the US Debt Clock.org revealed that 23.24 million Americans are millionaires. Not all of them are Paris Hilton, inheriting and flaunting the family pot of gold.
Instead, they worked their tails off, buying low and selling high — and more often than not — living next door.
Heck, they may be you.
One of greatest untold stories — maybe even the most suppressed by America’s bi-coastal elite legacy media — is the upward movement starting in the Reagan 1980s of literally millions of Americans from the middle class to lower-upper class.
Did they all “Talk to Chuck?”
The Wall Street Journal subhead suggested the pandemic and zero commissions on trades greatly contributed to an expansion of Americans — yes America’s Investor Class — all of whom invest in Wall Street (read: the nation’s publicly traded private sector).
Is Wall Street a get-rich-quick scheme (it’s not Bitcoin)? No, it’s the wise, successful management and mitigation of risk over time. Those who invest early and never give up the fight may achieve the vaunted seven figures or more.
The vast majority maybe labeled as nouveau riche, but don’t behave or even remotely feel that way. There have been downturns (i.e., Internet Bubble, Mortgage Meltdown) and exogenous events (i.e., 9/11, Covid, Russian Invasion) causing markets to fluctuate, and they will continue to be volatile.
The infinite wisdom Inside-the-Beltway crowd rushes to the rescue with trillions of inflationary dollars of “stimulus.” Can you believe that some Americans actually took these dollars and invested them in markets?
More Americans Than Ever Are Waking Up As Millionaires
“It’s way past time we put an end to the era of shareholder capitalism.” — President Joe Biden, July 9, 2020
“I’m happy there (Omaha). I’d move, if I thought I’d be happier someplace else.” — Warren Buffett on his residence, which he bought in 1958 for $31,500
In 1996, the No. 1 bestseller was the aptly titled, “The Millionaire Next Door” by Professors Thomas Stanley and William Danko. Part of the reason for the book’s success was the distinct possibility that your neighbor — yes, in your neighborhood — had a net worth of seven figures (not including real estate).
Today we have the $121 billionaire next door, if you live adjacent to Warren Buffett in Omaha, Nebraska. His 6,570 square-foot residence (five bedrooms, two-and-one half baths) is worth $1.2 million, according to Zillow.
Buffett, 93, will not spend more than $4 for breakfast, stopping in each morning for his McDonald’s breakfast sandwich. Mr. Buffett is genuine.
Almost DailyBrett believes that the vast majority of America’s millionaires next door are genuine too. Maybe they live in the same modest house. Maybe they drive the same vehicles. Maybe they vacation once or twice each year.
Yes, they built their wealth through hard work over the years. They don’t want to see the end of shareholder capitalism. The system works.
Wish we could say the same about our confiscatory government.
“Know what you own, know what you own.” — Legendary former manager of Fidelity’s Magellan Fund Peter Lynch
“Never mind if the mule is blind, just load the wagon.” — Former Oakland Raiders Head Coach John Madden
As a Charles Schwab retail investor for more than three decades, Almost DailyBrett can issue with impunity an ex-cathedra statement: ‘Never bet against technology.’
Just load the wagon.
Have you ever checked out the ‘Magnificent Seven:’ Apple, Alphabet, Amazon, Meta Platforms, Microsoft, NVIDIA and Tesla. They will treat every investor to Maalox moments (particularly Tesla), but their trajectory is almost always upward to the right.
There are times these stocks take a pit stop or two, but soon enough they will be tearing up the track. Your author presently owns five of these seven: Apple, Alphabet, Microsoft, NVIDIA and Tesla.
There were times when legacy techs were all the rage including: AT&T, Cisco, General Electric, Itty Bitty Machines and Intel. Will the Magnificent Seven eventually have their own dates with the ash heap of history? Nothing goes up forever? Right?
Remember the much ballyhooed FAANG stocks, Facebook, Apple, Amazon, Netflix and Google? FAANG is just so yesterday. They have been replaced with the aforementioned Magnificent Seven, which comprises more than 20 percent of the total revenues of the S&P 500.
As a former director of communications for the Semiconductor Industry Association and director of corporate public relations for LSI Logic, Almost DailyBrett is very familiar with the oft-heard adage: ‘When the semiconductor industry slams into the wall, there are no skid marks.’
With that admonition in mind, will there be a day that AI semiconductor innovator NVIDIA led by Jen-Hsun Huang slams into the wall? Most likely at some point. Will it be this afternoon when NVDA reports? Don’t think so.
Some Thoughts For The Retail Investor
“A person’s approach to money, his or her saving and spending habits, and comfort or discomfort with risk are deeply ingrained, and more emotional than rational.” — Charles Schwab, pioneer of Retail Investing
“There are bulls. There are bears. And pigs get slaughtered.” — CNBC Mad Money Host Jim Cramer
Growing up, mumsy (born in 1919) was a child of the Great Depression. She would never invest in markets. She once asked her youngest son — your author — if he was “playing” the market? The answer was and still is in the affirmative.
What yours truly found is the greatest mental gymnastics was always associated with not when to buy, but when to sell? Could one be leaving money on the table? Could one be watch a great paper gain end of being shot down in flames? Could one be a slaughtered pig?
For Almost DailyBrett’s University of Oregon master’s degree project, yours truly created a college course in corporate communications and investor relations. Too many students are graduating from major communications schools, and have no clue how to read an income statement or a balance sheet.
What the hell is GAAP? Better clean it up if it spills on the floor.
Teaching corporate communications and investor relations at UO and Central Washington University, your author asked a simple opening question to students: ‘How does a company make money (e.g., how does Apple make legal tender)?
This first question takes one back to Peter Lynch’s admonition about knowing what you own? If not, you are gambling or the same, invested in Bitcoin.
The Gallup organization reported that 61 percent of Americans are invested in individual shares or stock-based mutual funds. Is every member of the nation’s growing Investor Class rolling the dice with their retirements? Don’t think so.
Once visiting the editorial offices of Investor’s Business Daily (IBD) in Gotham, there was a jagged chart continuously upwards to the right from 1929 to the present day. Retail investing is not get rich quick. There is an element of risk. It’s far better investment vehicle than all others.
Since Almost DailyBrett first invested a few shekels with Schwab in 1992, there have been über-exogenous events that resulted in major bear markets (i.e., Internet Bubble, Mortgage Meltdown, Covid Pandemic). Will there be more (i.e., Biden re-election, Trump election, China invades Taiwan)? You can bet on it.
Many preach diversification, including desultory expensive ill-liquid bonds, as the best defense. Others are concerned about FOMO (Fear of Missing Out). And some say never put too much into any one stock.
If legendary investor Warren Buffett reportedly has personally invested 50 percent of his portfolio in one tech stock, the most widely held security on the planet, Apple, then that’s a fantabulous recommendation. More Apple, please.
Which brings us back to the Almost DailyBrett Golden Rule of Investing; Never get giddy. Never get depressed. Stay the course. Invest in America.
Almost DailyBrett knows when something sounds too good to be true — more times than naught — it’s too good to be true.
The Covid pandemic changed the world. Having said that, when some things change many others remain the same. One of those is the strategic advantage of coming back to the office.
Apple is now requiring its corporate employees — starting right after Labor Day — to report to its Cupertino campus Tuesdays and Thursdays and at least one other week day with the approval of their individual managers.
At least 700 employees (out of Apple’s estimated 154,000-person workforce) are pushing back — signing a petition to protest the return to the office — but is that stance in their best individual interest?
Will they someday be real sorry they affixed their John Hancock to this silly document? If they are laid-off, will they be secretly cursing themselves? Must suck to actually have to commute to work.
Apple has already intimated it’s slowing hiring and most likely there will be reduction in force (RIF). The nation is entering into a deepening recession, the inflation genie is out of the box, interest rates are rising, the age of cheap money is long gone. Days of “pain” are in the offing.
Besides the fact that Apple is the most widely held and best managed company of the planet. The No. 1 S&P 500 company in the world is not going to be organized.
Employees are lucky and should be appreciative they have a job at Apple with a competitive salary, awesome benefits, Employee Stock Purchase Plan (ESPP) and for thousands and thousands, stock options.
Apple shares (NASDAQ: AAPL) have advanced 312 percent in the last five years. The company’s market cap is $2.63 trillion, essentially the same as No. 7 France’s gross domestic product (GDP).
What a deal.
Out of Sight, Out of Mind?
Having headed employee communications among other public relations responsibilities at LSI Logic for a decade, Almost DailyBrett is very familiar with the deadly saying: “Out of sight, out of mind.”
Your author’s modest cubicle with a nearby Diet Cherry Dr. Pepper refrigerator was about 50 feet away from the office/board room of our founder, chairman and CEO Wilf Corrigan. Wilf was a serial wanderer, and almost every day he came over to talk about the news of the world.
Please allow Almost DailyBrett make an ex-cathedra statement: Being seen every day by the C-Suite team and being regarded as an asset constitutes the best job security on the planet. Even though LSI Logic carried out seven reductions in force when the Internet Bubble burst, your author never really worried about being laid off.
After all, a publicly traded company is required to report and issue news releases under SEC rules. Yours truly played a hand in all of these communications.
If you are working for Apple in these troubled times (or any other publicly traded company with a fiduciary responsibility), wouldn’t it be nice to bump into the boss Tim Cook in the hallway? Wouldn’t it be better if key executives knew your name?
What if you buy a bucolic residence in Bozeman, Montana, working for Apple from more than 1,000 miles and one-time zone away? You can grab a cup of coffee, work in your PJs and participate in Zoom Video calls.
What happens, if Apple (or any other of thousands of publicly traded companies) decide in favor of a reduction in force? Would you rather be down the hall or out of sight, out of mind? You are one name among thousands and thousands on a spread sheet.
You are anonymous. The mission is to reduce costs in the face of a difficult global economy.
And if you are cashiered, is there another job for you in Bozeman? Can you sell your house? What about kids in school? Want to watch the snow in your PJs?
Commutes are bad enough. Being laid-off because you are not in the corporate consciousness can be an absolute nightmare.
“Sometimes the most obvious question really is the question. In Enron’s case: ‘How do you make money?’” — Bethany McLean, Fortune Magazine
Can we ask the same question about Bitcoin?
Don’t we know from experience that a Miata immediately depreciates, Bitcoin always appreciates?
For nearly 34k give a shekel or two, one can buy one Bitcoin or purchase a Japanese sports car including tax and tags.
Almost DailyBrett knows from experience that once you drive a little green chariot off the Mazda dealer’s parking lot, the two-seat sports car immediately depreciates.
Cryptocurrency Bitcoin in comparison always heads upwards to the right. If you don’t believe your author, just ask those who are inexplicably making a fortune in cryptocurrency.
Easy choice? Right? Can’t miss? Correct?
Want to buy some tulips too?
There are those who piously contend that Wall Street is gambling. Those who “invested” in Enron, not having a clue how the company made money, lost everything when the energy trader declared bankruptcy in 2001. Many investing today in Bitcoin were not alive when can’t miss Enron went belly-up.
Most had no idea how Enron made money, prompting Bethany McClean to ask her infamous question to Harvard trained Enron president Jeffrey Skilling. He couldn’t answer the question either without an accountant present.
What?
A little more than 11 years ago (January 3, 2009), Satoshi Nakamoto issued a Genesis Block of 50 Bitcoins, a cryptocurrency free of control by governments or central banks (e.g., Federal Reserve). Four years later, Bitcoin reached $400. By 2017, Bitcoin spiked to $20,000 before dropping to $3,200 the following year.
At the close of market Tuesday, the price of a single Bitcoin stood at $33,937, up $2,501 or 7.97 percent for the day. Can’t wait for tomorrow.
There is zero doubt there is frothiness when it comes to Bitcoin speculation. But what do we know that prompts the cryptocurrency to increase or heaven forbid to decrease in value?
What is the business plan for Bitcoin? Who manages Bitcoin? Conventional currencies include the backing of the United States, United Kingdom, European Union, Japan and many other governments. What is the support mechanism for Bitcoin?
There are those who invest. There are those who day trade. There are those who invest and day trade. And there are those who speculate in Bitcoin. Do they know why they are winning (do they care?) and conversely why if they start losing?
“Irrational Exuberance“
“Know what you own, and know why you own it.” — Wall Street trader Peter Lynch
Federal Reserve Chairman Alan Greenspan popularized the term, “Irrational Exuberance” in a speech to the American Enterprise Institute in 1996. He made his remarks four years before the bursting of the Internet Bubble, and more than a decade before America’s housing crisis.
Is Bitcoin the latest celebrated case of “irrational exuberance?”
More to the point is Bitcoin a Ponzi scheme? How many will be left holding the bag?
It may not be cool for Almost DailyBrett to question those who are making money hand-over-fist with Bitcoin, nonetheless these questions must be asked:
If you are clueless how Bitcoin works. If you don’t know who manages Bitcoin. If you have zero financial information (e.g., income statement, balance sheet). If you can’t decipher how Bitcoin makes money.
Then why pray tell are you speculating in Bitcoin?
If you invest in Wall Street, you can Buy Low Sell High. If you head off to Vegas, you can potentially count the cards. If you speculate in Bitcoin, you can lose it all.
Almost DailyBrett is making that call: Bitcoin will not end well.
At least with a Mazda Miata, you can drive to either Las Vegas or Wall Street. You’ll have to thumb a ride when Bitcoin crashes and burns.
“When the war was over, the men and women who had been involved … joined in joyous and short-lived celebrations, then immediately began the task of rebuilding their lives and the world they wanted … They married in record numbers and gave birth to another distinctive generation, the Baby Boomers. They stayed true to their values of personal responsibility, duty, honor and faith.” – Former NBC anchor Tom Brokaw, The Greatest Generation
“Tom Brokaw once wrote a book about the greatest generation, those brave people who survived the depression and fought in World War II. Unfortunately that great generation spawned a generation of narcissists: the baby boomers.” – Huffington Post blogger Gene Marks
The Baby Boomers are inevitably moving day-by-day toward the ash heap of recorded history … and not a moment too soon.
USA Today last week reported for the first time ever, the number of Millennials exceeds the population of Baby Boomers by an 83.1 million to 75.4 million count, according to the 2014 U.S. Census.
Poor Millennials and X-Gens. They will be the first generations in American history to have a worse standard of living than the preceding generation … that would be the Baby Boomers.
Many Millennials are going to college, graduating with oppressive student loan debt or for the lucky few, no debt, and settling for a job that once did not require a degree, and pays $10,000 less now than it did in the 1980s.
“Will that be a latte, cappuccino or mocha, sir (or madam)?”
And as a result of this economic dilemma, many Millennials particularly those saddled with an average of $40,000 in college loan debt, are being forced to … yes, move back into a parent’s or parents’ home.
Where will the “Hello Kitty” poster go?
Can Millennials buy a house, even with near-record, low-interest rates averaging 4.19 percent this week? The author of Almost DailyBrett remembers buying his first house for $120,000 in Sacramento in 1984 at a 30-year fixed rate of 14.25 percent, paying two points for the privilege. Two years later, your blogger refinanced the loan down to 10.25 percent, once again paying two points.
Do you think Millennials can find any house in California for $120,000 that will not come with meth- lab neighbors, who will soon be auditioning for The Jerry Springer Show?
Brokaw wrote about “personal responsibility, duty, honor and faith” in describing the virtues of the Silent Generation, born between 1925-1945, which stared down the Global Depression and won World War II on two theatres of combat.
Do you think anyone would ascribe any of these Silent Generation virtues – personal responsibility, duty, honor and faith — to the hedonistic Baby Boomers? Seems like a silly question.
The Entitlement Generation
“The selfishness that has been a hallmark of the Boomers will continue right up to the very end, as they force millions of younger Americans to devote an inordinate amount of time and resources to their care, bankrupting the Social Security system in the process. In their old age, the Boomers will actually take as much from the next generation as they did from the previous one, which fought WW II.” – The Onion, January 20, 1999
“But you know nowadays It’s the old man, He’s got all the money And a young man ain’t got nothin’ in the world these days I said nothing” — The Who, Young Man Blues
If it feels good; do it.
Sex, drugs and rock n’ roll.
Almost DailyBrett refrains for the most part in making absolute predictions, but will do so in this case:
Someone, someday will write an epic tome glorying the “Me, Me, Me” generation, and will attempt to be the Tom Brokaw of the Baby Boomers. It will be a pathetic effort that will nonetheless be coffee-table book lucrative because there will be some in the born-between-1946-1964 crowd, who will want to desperately justify their sorry existence on the planet.
They will point to the end of the Vietnam War. They will direct attention to the campaign for the equal rights for women. They will wax nostalgic about the civil rights marches. There are already plenty of revisionist Oliver Stone movies that make these very same points.
But weren’t all of these crusades … sorry bad word with religious overtones for some Baby Boomers … weren’t all of these movements mounted back in the 1960s? What have you done for us since then? Legalized marijuana?
The same-sex marriage victory? That achievement must be shared with Millennials and X-Gens.
Baby Boomers burned the flag, staged Woodstock and Altamont, the latter came with Hells Angels and bloody pool cues. Many against-the-war-in-Vietnam types still don’t like America very much, bitching and moaning, while not even considering moving anywhere else.
Way too many Baby Boomers made lifestyle choices, which contributed to a nearly four-times increase of former workers on disability from 2.8 million in 1981 to 8.5 million in 2011. Guess who is and who will be paying the bill for these Americans, most of whom will never work again?
The federal deficit was $2.8 trillion in 1989. Thanks mainly to the explosion of growing entitlements for Baby Boomers and some others; the red ink now stands at $18.1 trillion last month … another bi-product of the Baby Boomer generation.
Many Baby Boomers, including those who decried the “Military-Industrial Complex,” became very wealthy during the Internet boom (e.g. Yuppies), buying every McMansion in sight and driving up prices, until (you knew it had to happen) the Bubble burst, and their expensive cars were repossessed.
While markets were recovering, far too many Baby Boomers drove up their plastic debt, and then turned to real estate and refinanced to the max to keep up their spending habits until (once again: you knew it had to happen) … the real estate Bubble burst. Many were left with underwater mortgages … and simply walked away from their houses.
What was left for the Millennials, holding the bag? A rotten economy. Overpriced real estate, transforming the American Dream of home ownership into a pipe dream. Soaring tuition at colleges and universities and with it, $1.2 trillion in cumulative student loan debt.
And when they graduate? Part-time McJobs with no benefits for far too many. And you wonder why the Millennials are mad at the Baby Boomers?
Before going any further, the author of Almost DailyBrett has a confession to make: Yes, I was born in 1955, and am a card-carrying member of the Baby Boomer generation.
Does it seem that I am rooting for my own personal demise as more Baby Boomers pass into the abyss every day? Well, no.
Am I embarrassed to be part of this selfish generation and wished it was different, far different? You bet ya.
Will Steven Spielberg, born 1946, serve as the executive director for “Baby Boomer World,” featuring out-of-control, carnivorous, vegetarian, vegan and gluten-free dinosaurs?
When is it ever time to put a six-figure salary and the financial well-being of your loved ones in jeopardy?
You have a mortgage, kids in school, and financial obligations. Your salary, benefits and stock options could all be at risk.
Businessman loses his job due to corporate downsizing while a sad coworker waves goodbye. Full body isolated on white.
What happens in those rare instances in which your employer is in the process of making a decision that you just can’t live with, maybe one that is immoral, unethical or even illegal? It’s easy in the abstract to say that you would take the honorable course of action and resign, but that is much easier said than done.
History has shown that meekly clicking heels and being complicit in improper activity is a non-starter. If you need further amplification just ponder the literally hundreds of Nürnberg defendants, who piously justified their atrocities by reciting: “I was just following orders.” They all hung just the same.
Fortunately in my three decades in public relations, I have only been faced with this dilemma once, and yes I was ready to resign if necessary. It concerned a planned layoff of 600 employees or 8 percent of our workforce at LSI Logic, a Silicon Valley semiconductor company.
What is immoral, unethical or illegal about a layoff? Certainly they are gut-wrenching, but most will conclude that sometimes they are absolutely imperative for companies to survive. And that was certainly the case shortly after the Internet Bubble burst circa 2000-2001.
Bloomberg reported the story accurately when it stated:
“LSI Logic Corp., the largest maker of custom semiconductors, said it will fire 600 workers, or about 8% of its worldwide work force, as it consolidates plants to cope with declining sales. The job reductions will be made mainly in ColoradoSprings, Colo., where an aging plant will be closed by the end of October. A smaller facility in Santa Clara, Calif., also will be closed.”
The key is the report ran in newspapers and online September 20, 2001, the day after the actual layoff and LSI Logic’s corresponding announcement to Wall Street investors that revenues would be 10-15 percent lower than anticipated.
The real story is that the layoff was planned for September 12, 2001, the day after…
… September 11, 2001.
The Height of Poor Taste?
Can you imagine the reaction both internally and externally if LSI Logic had the audacity to lay off 600 workers literally hours after the hijacked planes struck the World Trade Center and the Pentagon?
Would you want to work for a company that didn’t have the decency to wait before shedding 8 percent of its workforce only 24 hours after the country was attacked?
And yet that is what the leadership of the company’s Human Resources Department wanted to do, and they were arguing this point passionately to corporate executives.
Almost DailyBrett literally sat in horror as the then-vice president of Human Resources (a good person overall) described how the impacted would be informed, how HR reps were in place all over the country, and that all the final checks had been cut.
When your author was finally presented with an opportunity to weigh in as the director of Corporate Public Relations, he decided to hold off the suggestion to be personally added to the layoff list.
Instead, Almost DailyBrett diplomatically acknowledged the efforts of Human Resources, referenced the breaking September 11 news reports and suggested that the best course of action was to postpone this action until we knew more about the severity of the attacks.
The decision was made to postpone until Friday…whew.
When we met again the following day, September 12, HR was still committed to proceeding that Friday, the National Day of Mourning for the victims of September 11. The nation’s flags were at half mast. The planes were not flying. The stock exchanges were closed. The baseball and football games were cancelled. It clearly was not business as usual in America, and yet the Human Resources leadership was bound and determined to prevail.
Even though the layoff was postponed once, your author was still prepared to tender resignation if the company was going forward with the layoff that Friday. Once again, Almost DailyBrett put that proclamation in my back pocket (at least for the time being) and respectfully argued that there was a “stigma” associated with the work week of Sept. 10-14 and urged postponement until the following week.
Almost DailyBrett made absolutely no friends in Human Resources that week, and caused a lot of additional work on their part. But yours truly could not in good conscience allow the company to permanently impugn its reputation and brand for both external and internal audiences.
Besides, who would want to work for a company that would lay off nearly 10 percent of its workforce just hours after hijacked planes brought down the Wall Trade Center?
Your author certainly didn’t want to.
Editor’s Note: Normally, Almost DailyBrett does not comment on the inner workings of the organizations in which he served. In this case, the incident was a decade ago, names have been withheld and the company leadership has completely changed. More importantly, what should be a no-brainer decision is sometimes not a slam dunk. And what would you do if confronted with the same dilemma?
(Almost) DailyBrett 