June 9, 2023
By Steve Blumenthal
“We only know by hindsight when the recession started, but there is an indicator you can watch that gives you some indication when the start of the recession is here, without knowing for sure, and that is when the inverted yield curve begins to flatten.”
“Damn, Skippy, I am,” he said. Damn, Skippy. Who says, Damn, Skippy? I think it was at that moment that I really fell “in like” with the man.
I started reading John Mauldin’s weekly newsletter at the very beginning, when he started writing it in 2000 or 2001. Just before then, he had been running one of the first fund-of-funds managed futures funds in the business as well as a a high-yield junk bond fund trading strategy. But he’d decided he wanted to leave money management and focus on his writing, so he was looking for a high-yield bond manager to take over. A friend referred him to me, and when he came up to Philadelphia from Dallas to meet me, we hit it off and began a wonderful friendship.
I asked John what he was going to do next. He told me he was working on a book titled Bull’s Eye Investing and, outside of that, he planned to focus on his weekly newsletter. I immediately went to his website, found “Thoughts from the Frontline”, and found myself paging down, and down, and down, and down. There was so much content. If you’ve ever read it, you know what I mean. I looked at him and asked, “You’re going to write one every Friday?”
“Damn, Skippy, I am,” he said. And Damn, Skippy… he continues to this day.
Bull’s Eye Investing went on to become a bestseller, as did a number of his other books, and he’s still writing his robust newsletter two decades on—to the benefit of the rest of us.
Now, in full transparency, John works with me at my firm in our multi-family office business, so there is a considerable emotional bias built into my heart, so keep that in mind.
John has other business ventures that I am not involved in, such as Mauldin Economics, his publishing and conference business. He sits on several boards, is very interested in longevity science (an area that is quickly gaining ground), and he recently partnered with another group in an oil–and–gas drilling partnership. My firm is not involved in those ventures.
Just a few years after John started focusing on his writing, he started the annual Mauldin Economics Strategic Investment Conference, which as you know I attended his 19th conference a few weeks ago. I’ve been to most of them over the years—San Diego, Arizona, Dallas. Since Covid accelerated virtual meeting capabilities and offerings, I can say it is easier to attend online and rewatch the presentations at my leisure. But I do miss the large conference gatherings—you meet so many interesting people. Those are lost opportunities that are hard to quantify.
Whether attending in person or virtually, though, I always learn so much. He manages to get some of the industry’s greatest thinkers and investors, and the information they share is invaluable. If you’ve never gone, you should consider attending virtually next year.
I’ve shared several of my reflections on this year’s conference in On My Radar over the last few weeks, and today, I want to conclude those thoughts with you from the closing panel with Feliz Zulauf, Neil Howe, Bill White, and John Mauldin himself.
Most of the developed world finds itself in a tough spot financially. As I listened to the various panelists, I kept thinking about an annual fishing gathering I went to in Maine—fondly called Camp Kotok—where I was sitting at the table with two former Fed officials. At the time, the total federal debt was around $22 billion, and the Fed’s balance sheet had ballooned to $4 trillion. I looked across the table and said, “OK, guys, what’s the plan?” I was shocked by the answer. One of the guys said, “The $4 trillion is an asset on one side of the government balance sheet (the Fed) and a liability on the other (the Treasury).” He then brushed both of his hands together, signaling they would zero it out. Whoosh—gone.
As you well know, there is no progress on this front. The Federal debt is now $31.5 trillion, and the Fed owns $8.3 trillion of it. Whoosh. I believe that is part of the Fed’s plan now, too. It may sound nice and easy, but it’s not without consequences. Especially as the numbers grow.
Ray Dalio believes we sit at the end of a long-term debt accumulation super cycle. We’ve been here before. The last time was in the 1930s. Mauldin calls it “The Great Reset.” Others call it the coming restructuring of our debt and entitlement systems. Can kicked down the road, it is a problem yet to be solved.
In the final 2023 SIC panel discussion, however, I think I gained a better understanding of what the debt-restructuring may look like.
The SIC final panel was a true Grand Finale. Some highlights from John’s letter follow along with a few of my summary notes in the section below.
Before we jump in, I want to share with you some data I included earlier this week in Trade Signals (find the chart in the Trade Signals section further below). It has now been 11 months since the yield curve inverted. For new readers, this simply means that short-term interest rates are higher than longer-term interest rates. If you were going to tie your money up for ten years, you should earn a higher yield than if you tie your month up for one day, one month, three months, six months, one year, etc.
An inverted yield curve is analogous to a person having a fever, but instead of there being something wrong in the body, something is wrong in the economy. The longer the fever lasts, the more serious the problem is. Looking at the data from 1980 to now, 11 months is the median number of months our economy has a “fever” before a recession begins.
Why is that significant? Because May marked the 11th month since the yield curve first inverted. On average, stock prices fall more than 30% during recessions.
A signal we can look for that indicates the start of a recession: when the difference between short-term rates and long-term rates begins to flatten. That’s now happening.
- At the end of May 2023, the difference between the six-month Treasury yield and the ten-year Treasury yield reached -1.92%—its most extreme point since the late 1970s and early-1980s. (See visual in Trade Signals section further below).
- Seven days later, on June 7, 2023, the six-month Treasury yield was 5.43%, while the ten-year Treasury yield was 3.79%, making the difference between them -1.64%. Still very wide, but beginning to flatten.
High Blood Pressure
Put your “goober goggles” on and have a quick look at the graph below showing that short-term yields are currently higher than long-term yields:
High
Normal Blood Pressure
By contrast, here is a more normal yield curve from one year ago, showing short-term yields lower than long-term yields:
You can have all kinds of fun with this graph by clicking on the data link here. Actually, it isn’t really that much fun. 😊 But it is important.
As Zulauf related, we’ve seen the yield curve start to flatten. I wrote last week that he believes we’re nearing the start of a recession—but not a long one. Rather, since the Fed and other central banks are overtightening due to inflation numbers (which are lagging indicators), he predicts the recession will be short and deep. Once they recognize we’ve hit a recession, Zulauf believes they’ll start quantitative easing (QE) quickly—as early as the third quarter. Here’s more of what he said:
“If the market declines the way I expect, it could lead to lower lows. I still have the target that I told my subscribers in late ‘21 of about 30% down, which is the low 3,000 in the S&P and maybe 9,000 in the Nasdaq. That means lows below [those of October 2022] sometime in the second half [of] this year. If all that happens, then we start another mini cycle that will be the last one in the long-term cycle that started in 2009. I would expect it to terminate sometime in 2025.”
You can find more on Zulauf’s predictions in last week’s On My Radar here.
Grab your coffee and find your favorite chair. In this newsletter, I’m bringing my notes on the 2023 SIC to a conclusion. I humbly say, “It’s a good one!”
Here are the sections in this week’s On My Radar:
- The Final Panel: Felix Zulauf, Neil Howe, Bill White, and John Mauldin
- Refilling the Treasury’s General Account
- Trade Signals: 7 Stocks Driving Performance
- Personal Note: Education
(Reminder: This is not a recommendation to buy or sell any security. My views may change at any time. The information is for discussion purposes only.)
If you are not signed up to receive the free weekly On My Radar letter, subscribe here.
The Final Panel: Felix Zulauf, Neil Howe, Bill White, and John Mauldin
The concluding panel did an excellent job pulling together various learnings from the conference. The panel brought together Neil Howe (“The Fourth Turning is Here”), Bill White, former Bank of International Settlements Economic Adviser and Head of the Monetary and Economic Department at the Bank of International Settlements, Felix Zulauf is a self-made billionaire and owner/president of Zulauf Asset Management, his private family office. And, of course, my family office partner at CMG, and Mauldin Economics conference patriarch, the brilliant John Mauldin.
First, a quick summary from the conference host himself. My high-level bullet point summary notes follow post John’s comments.
Let’s take a look at what John wrote in his Thoughts From the Frontline letter last week:
Relative Debt
On SIC Day 5 I had a fascinating conversation with William White, former chief economist at the Bank for International Settlements and veteran central banker. Bill speaks far more openly than most of his peers, and also isn’t reluctant to criticize. That makes him my favorite central banker. We talked about the debt situation and how it will play out.
Bill and I basically agree that there will be a reckoning in the not-too-distant future, likely sometime the latter part of this decade. I asked Bill whether we will rationalize the debt through inflation or deflation. For years, Bill has been telling me that both deflation and hyperinflation are possible. I questioned him a little bit more aggressively than usual, asking him to define the conditions that would bring about either outcome.
His answer was both surprising and clarifying. He thinks it will depend on whether the problem is primarily government debt or private sector debt. Here’s Bill from the SIC transcript:
“The private sector is deeply indebted. In the US, the households have come back a bit, which is good, but looking at it sort of globally, private sector debt has risen enormously. When you look at government debt, it’s almost exactly the same thing. It’s risen enormously. And in a way, this is how I think of it anyway, if we have real problems on the private sector debt side, that’s going to drive us more into the deflationary outcome. If we have problems more on the government debt sustainability side and it’s the government that’s got control of the printing presses, then you’re going to have more likelihood of an inflationary outcome.”
That made a lot of sense to me. Central banks are responsible to governments, and, thus more likely to create liquidity when their government is over its head in debt. That’s an inflationary scenario. Conversely, if it’s the private sector which is most overindebted, central banks are more likely to let that debt deflate. That’s what happened in 2008.
Yet the lesson central banks have learned in such a situation is to provide liquidity to markets, and they will keep doing that with each crisis until it no longer works. That leads to a sovereign debt crisis and higher inflation.
At that point, central banks will be powerless, and the government will be forced to get its own house in order. That will be the necessary crisis I mentioned above.
Keep in mind, we’re talking relative debt here. Governments, households, and businesses are all in trouble. In the end, Bill thinks we may see both very high inflation and deflation as well. None of the scenarios are good. They’re simply different.
Bill said once we get past the initial stages, people will start questioning the institutional structures that let it all happen. That crisis of confidence in institutions and government, coupled with the economic chaos that it creates, will make the public want to “fix things.” That led nicely to our final panel where Bill reappeared alongside Neil Howe and Felix Zulauf.
“This Is a Country Capable of Miracles”
I design the SIC final panel to pull the pieces together. This one did exactly that with an unexpected twist.
Like I said above, the panelists didn’t just foresee a crisis. They welcomed a crisis because they see it as the only way out of this mess. Let’s start with Felix Zulauf:
“I’m a very optimistic person and a very happy one. As an analyst and coming from the macro side, I have a bias to skepticism, of course. And my expectation for the next 10 years is one of major change in geopolitics, in economics, in the way the world is run. I think Neil has laid the groundwork for that with his Fourth Turning. I used to think that we repeat the mistakes of our grandfathers, but it’s probably even our great-grandfathers.
“What I think is we cannot continue to run the world the way we have run it for the last 30 years. And human beings are lazy by nature, and they try to continue in a way it has worked in the past. And they will only change if they get forced to change. So, I think we will run into several brick walls that will stop the trends of the past and force us to change. And this has to do with fiscal policy, with monetary policy, with geopolitics, demographics changing, etc. I think we are in for some rough times, and I could even see some depression in the later part of the ’20s, a depression that will be very different from the depression of the 1930s. [Later Felix clarified that he thinks it will be a depression of down 3% a year for three years rather than the down 25% of the Great Depression.]
“In the 1930s, we had a fixed exchange rate system based on gold. It was fixed and rigid. This time we have a fiat currency system. I think last time, they let the economy go down, and the currency remained stable. I think next time, they will try to save the economy and let the currency go down. And this leads to what Bill alluded to in his previous session, that there is a risk that we could have some major write-offs in debt, and write-offs in debt means eventually risk of currency reforms and things like that. I think we are going through a very difficult, structural, and secular change to a transition period into a better 2030s.”
Now let’s turn to Neil Howe:
“What we face over the next decade is a very sobering environment. We have two leaderless parties in the United States, driven by debilitating partisanship, leading a government that’s currently heading into default in a world surrounded by building great power threats… Moreover, we have all of the long-term recession indicators pointing to a downturn at the outset of a decade, which we know, in demographic terms, is going to be record-low economic growth, not only for the United States but for the developed world and even the emerging economies, just driven by demographic reality, very little working-age population growth. This is a very challenging environment which could go critical at any time.
“I think the upside of the decade we’re moving into is that great challenges, particularly when they become crises, galvanize people to engage. And that’s what gives me optimism because Americans always have a wonderful track record once they are fully engaged citizens. This is a country capable of miracles, but it is going to require that kind of urgency, that kind of engagement.
It’s not going to happen on a sunny day, and that’s [the crisis] when we make our great decisions. I do expect a lot of trouble, both domestically in politics with the economy, with financial markets, and particularly compounded by kind of the great power kind of risk situation.”
You think we need a miracle? We’re capable of them when we are sufficiently motivated. And we will be. Neil picked up this theme a little later:
“John nailed it on the head when he said that the fundamental contradiction in our current policy regime is not monetary policy, it’s fiscal. There was no question about that.
“In order to actually balance our budget or just make it sustain—forget balance, we’re never going to balance it—but just make it sustainable on a long-term basis, we’re going to have to have huge reductions in both entitlement programs… where all the long-term growth is, by the way. It’s all in entitlements. We can’t cut defense really at this point, and we are going to have large increases in revenues. And probably on top of that, we’ll need at least some large one-term inflation hit to basically do what we did after World War II… getting rid of a lot of our debt simply by inflating our way out of a lot of it before people readjust their expectations.
“We’re going to have to do all three of those. And what I’m saying is politically, we are nowhere near that ever happening. Our country would right now break in two pieces rather than come to an agreement like that. We’re going to have to be scared into it. And I think this is why crises become actually useful, right? Because they motivate people.”
I have to say, this was the strangest mix of doomsaying and optimism I can remember in 19 SIC events. David Bahnsen asked Neil if he thought the American people were still capable of doing what it will take. Neil had no hesitation.
“I remain very optimistic, and I think leadership and policies do absolutely reflect the people. They reflect the social mood. And as I point out in my forthcoming book, I have a lot of confidence that today’s generations can respond very favorably to crises. It will take a crisis, but I have no doubt that they can respond favorably.”
Neil has been saying since the 1990s the Fourth Turning would shake the country to its core and one particular generation would lead us out of the abyss. Last time around it was what we now call “The Greatest Generation” who pulled the country through the Great Depression and fought World War II. Their successors are the Millennial generation, children of the 1980s and 1990s. They will gain influence as my generation begins leaving the scene. Neil Howe thinks they will do what it takes.
We only touched briefly on the fact that both Neil Howe and George Friedman and others are predicting a serious conflict accompanying this economic crisis. The problem is we don’t know where the conflict will come from or what it will be. Will it be an internal conflict within the US and other countries? Will it be a geopolitical conflict? We have no way of knowing today.
The crisis—and that’s exactly the right word in this case—will be agonizing and painful for many. But it has to happen. And we will get through it. Together.
That concludes John’s remarks.
SB Here – Following are a few additional bullet point notes to add to the above from John:
Felix Zulauf:
- I think we are going through a very difficult, structural, and secular change in period, a transition period into a better 2030s. So it’s a transition period, and in the markets, it’ll be a rollercoaster environment that will be very difficult for most or for the majority of investors to steer through without suffering badly.
David Bahnsen asked Bill White if he agreed with Felix that the various monetary and fiscal challenges that all of us have encountered and discussed in one form or another over the last week and a half, does he see actual depression on the horizon by the end of this decade?
William White:
- I certainly wouldn’t rule it out. As I was saying in my conversation with John, there are a number of ways in which you could get to that result.
- On the one hand, I mean, it’s entirely possible that the current unfolding will lead to financial instability and to some pretty unpleasant outcomes. I certainly hope not, but he can’t be ruled out.
- Felix, in his presentation, said he thinks we get one more kick at the can, that we do get a recovery from the current circumstances, but that it sort of gets out of control, and then we have a problem of deflation afterward, and then, somehow, a resurgence.
- My question back to Felix is, how do you see that deflation—or that sort of period of depression and inflation— turning into something better? What’s the final tipping point?
Felix Zulauf:
- The depression would not be down 25% in GDP. The depression that I see is maybe down 3% per year, three years in a row.
- And then, eventually, the currencies will collapse, and we need currency reforms.
- And then the question is, will we have such strong leadership in politics in the major economies that we can go back to a free market-based economy / a free democratic system, or will we go more in an administered type of planning economy?
- That will be the big question that will come in the early ’30s, in my view.
- And I cannot tell you how the odds are.
- I think it’s 50:50.
Neil Howe:
- We have all of the long-term recession indicators pointing to a downturn at the outset of a decade, which we know, in demographic terms, is going to be record-low economic growth, not only for the United States but for the developed world and even the emerging economies
- The demographic reality is there is very little working-age population growth.
- … many Americans love the middle; they would love to compromise. On the other hand, there’s been an awareness that we got to where we are by half solutions and by kicking the can down the road.
- He exampled the budget deficit and debt ceiling problem, pointing out, why are we here? We never really resolve anything.
- We’re always pushing problems off, and there’s a point at which challenges have to be faced head-on.
- As John highlighted above, Neil thinks the upside of the decade we’re moving into is that great challenges, particularly when they become crises, galvanize people to engage.
- And that’s what gives me optimism because Americans always have a wonderful track record once they are fully engaged, citizens.
- This is a country capable of miracles, but it is going to require that kind of urgency, that kind of engagement.
- It’s not going to happen on a sunny day, and that’s when we make our great decisions.
- He does expect a lot of trouble, both domestically in politics with the economy, with financial markets, and particularly compounded by kind of the great power (China) kind of risk situation.
John Mauldin:
- We’re growing our debt faster than what they’re projecting, and so forth, and so on.
- We’re going to end up with 50, 60-plus trillion-dollar debt by the end of this decade. I think that’s a number that’s going to be difficult to rationalize.
- My concern is they’re going to try to solve it with monetary policy. Then we get to the problems that Bill White and I talked about earlier. That doesn’t help anything. And then you get the political divide…
- When debt is crashing one way or another, government debt and personal debt doesn’t make any difference. People are going to be screaming, “Do something!”
There is more. Email me if you’d like a copy of my full notes.
Conclusion: I walked away with some greater awareness as to what to look for in terms of how the debt cycle may get restructured, the outcome for the dollar, and whether depression/deflation or inflation/stagflation. Of course, all this intersects in the economy and the risk markets. If you are looking for a solid answer as to which outcome we will get, we just can’t yet know. Which leaders rise to the challenge. How will countries interact with each other? Who will be at the helm of the Fed and the other major central banks? As Zulauf said, expect a roller coaster-like risk for risk assets with large down moves and large up moves.
From an investment perspective, in the what you can do about it category, there is so much we can do. We’ll talk about specific ideas next week. Stay tuned.
Refilling the Treasury’s General Account
Excellent commentary from Axios Markets, June 5, 2023
Keep this too on your radar:
The U.S. government’s well-oiled borrowing machine, which screeched to a halt in January, is now playing catch up. And the incoming deluge could strain the system.
- Whether it will morph from a mere challenge into a broader market disruption is a hotly debated topic right now — especially with the economy slowing and the banking sector still vulnerable amid its own simmering crisis.
The big picture: “Outside of a major crisis, like 2008 or 2020, this is going to be the largest issuance of T-bills on record,” says Gennadiy Goldberg, senior U.S. rates strategist at TD Securities.
- “It’s kind of like watching a person walk across a tightrope,” says Jim Caron, co-CIO of Global Balanced Funds at Morgan Stanley Investment Management. The tightrope is not without risk, but the walker believes the risks are knowable and can be managed.
- Chief among those risks: The new bills could siphon more money out of a banking system already damaged by mass outflows this year. That could send banks scrambling to raise more cash, pushing up their funding costs and further stressing the system, Goldberg says.
Some think the fears are overblown. Putting a half-trillion or more of bills into the system “might sound terrible, until you realize that there’s an extra couple trillion sloshing around out there anyhow, that can’t find a home, and that ends up in the Fed overnight,” says Robert Tipp, chief investment strategist at PGIM Fixed Income.
- He’s referring to the over $2 trillion in money market assets currently parked at a Fed overnight facility that yields more than 5%.
- Caron is inclined to agree: “There’s an awful lot of money in the short-term markets and in cash, that’s looking for an outlet, looking for a little bit more yield.”
- Treasury will have to pay up, of course, to entice that cash out of the Fed facility — and those higher yields will effectively tighten financial conditions.
Yes, but: Treasury’s just playing catch up — the lack of supply over the last several months probably kept yields lower than they would have otherwise been, Tipp notes.
The bottom line: “You never know how much of an impact something is going to have until it’s upon you,” says Tipp.
- “But I don’t think this is going to be the blood sport that people are fearing.”
SB here: Expect pressure on yields to remain over the near term. The Treasury needs to refill its savings account. This is equivalent to pulling liquidity from the system. Injecting liquidity into the system is bullish for stocks. Removing liquidity from the system is bearish for stocks.
(Reminder: This is not a recommendation to buy or sell any security. My views may change at any time. The information is for discussion purposes only.)
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Trade Signals: 7 Stocks Are Driving Performance
“Extreme patience combined with extreme decisiveness. You may call that our investment process. Yes, it’s that simple.”
– Charlie Munger
Market Commentary:
An email from a reader came in last week. Dave M. asked, “Any thoughts on how to reconcile -4 on Zweig Bond Model with Zulauf expecting yield curve to flatten signaling onset of recession? If Zweig Bond Model means longer term government bonds may go up in yield, would this mean that the yield curve may flatten with long end going up instead of short end rates going down?”
My answer: Yes. Likely.
It is now 11 months since the yield curve inverted. That is the average for the recession start (small red arrow upper section of the chart). Here’s a look.
- Note the degree of the inversion (red arrow bottom section).
Zulauf noted that one of the characteristics of identifying the timing of a coming recession is when the inverted yield curve begins to flatten. The chart shows data through May 31, 2023.
- The spread at the end of May was negative 1.92%—the largest spread since the 1970s – early 1980s.
- It was 1.64% at the end of the day (June 7).
- The yield curve is beginning to flatten.
With the Zweig Bond Model in a sell (signaling higher long-term interest rates), David is right on point. Higher long-term rates will flatten the curve.
There is another signal that is concerning. Just seven stocks account for all of the year-to-date S&P 500 Index returns.
Bad Market Breadth
473 Stocks Down, 7 Stocks Up – Not Healthy – Signals High Risk
Seven stocks in the S&P 500 Index are up a combined 77% year-to-date and now comprise 28% of the index. The other 493 stocks in the index are down collectively 9% year-to-date. Terrible market breadth.
The dashboard of indicators is next, followed by the charts with explanations.
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Personal Note: Time To Ditch The Dated Education System
I follow Peter Diamandis, and I love his “Abundance” mindset. Fortune Magazine called him “One of the world’s 50 greatest leaders.”
He has some excellent and diverse podcasts, including Moonshots and Mindsets on Spotify, of which I’m a fan.
Topics range from entrepreneurialism, health, and longevity science to AI and more.
He’s also got a free, tech-focused newsletter, which you can subscribe to on his website. This week’s post really caught my eye, and I want to share a few points from it with you. (Though I recommend you go read the full thing on his site.) Note that some of his thoughts may provoke a few people. Please read it with an open mind. There are some good nuggets to take away.
The title alone is provocative:
SCHOOL IS FAILING OUR KIDS: TIME TO DITCH THE DATED EDUCATION SYSTEM!
And he dives right in: “As humanity accelerates, driven by exponential advancements in AI, robotics, 3D printing, AR/VR and biotechnology, it’s crucial to ask ourselves: Are our schools, specifically middle schools and high schools, adequately preparing our children for the future?”
Peter has two twelve-year-olds, andas he shares in the piece, he believes so much of our education system is wildly outdated, focusing too much on decades-old standards, including “teaching to the test,” and ignoring the pace of change—specifically technological change—that we’re experiencing today.
“Rather than teaching our kids to memorize facts and figures,” he writes, “we need to cultivate key mindsets and tools that will empower them to thrive in the age of AI.”
And in case you were wondering, he’s got a list of suggestions for what those mindsets and tools should be, including…
- Purpose and Passion
- Debate
- Leadership
- Asking Great Questions
- Curiosity
- Abundance and Solution-Oriented Thinking
- Critical Thinking and First Principles Thinking
- Exponential Thinking
For each point, Peter gives a full explanation of his thinking. The basic idea is that he believes teaching our children these things will help them develop confidence, resilience, creativity, an understanding of diverse perspectives, a love of learning, and a genuine enthusiasm for the world around them—things that are and will continue to be crucial for their success in the future.
In fact, as an experiment, Peter also asked ChatGPT to list the traits our kids would benefit from possessing in a fast-changing world of Artificial General Intelligence. Here’s the list it gave him:
- Adaptability
- Continuous Learning
- Critical Thinking
- Emotional Intelligence
- Ethical Awareness
- Resilience
Pretty symbiotic, isn’t it? (As Peter did with his list, the chatbot also elaborated on each point, but to read it in full, I again point you to Peter’s original post.)
Peter goes on to call for a full reinvention of our current education system to relinquish beliefs and approaches that no longer apply to our modern world and embrace change that will be more meaningful and effective.
Peter concluded, “The bottom line is that our current education system […] is failing our kids, leaving them unprepared for the challenges and opportunities that lie ahead. We have a responsibility to advocate for an education system that empowers our children to thrive in a rapidly evolving world. It’s time to disrupt the status quo, to reinvent the way we teach and learn, and to equip our kids with the tools and mindsets they need to succeed in the future.”
To be clear, a number of schools are already on this path. Susan and I are thrilled with the education our children received. And we have some fascinating conversations with our children about ChatGPT. Moving fast. Ever forward indeed.
It won’t be easy disrupting the status quo. Part of the “Fourth Turning?” Maybe…
But before we make it there, can I ask you a favor? I’d like your opinion as I seek to improve OMR.
- Do you think the posts are too long?
- Are there topics you’d like to see covered?
- Do you have other recommendations?
I’d very much appreciate your feedback—just as I very much appreciate your readership every week.
Have a great week,
Steve
Stephen B. Blumenthal
Executive Chairman & CIO
CMG Capital Management Group, Inc.
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Stephen Blumenthal founded CMG Capital Management Group in 1992 and serves today as its Executive Chairman and CIO. Steve authors a free weekly e-letter entitled, “On My Radar.” Steve shares his views on macroeconomic research, valuations, portfolio construction, asset allocation and risk management.
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IMPORTANT DISCLOSURE INFORMATION
This document is prepared by CMG Capital Management Group, Inc. (“CMG”) and is circulated for informational and educational purposes only. There is no consideration given to the specific investment needs, objectives, or tolerances of any of the recipients. Additionally, CMG’s actual investment positions may, and often will, vary from its conclusions discussed herein based on any number of factors, such as client investment restrictions, portfolio rebalancing, and transaction costs, among others. Recipients should consult their own advisors, including tax advisors, before making any investment decision. This material is for informational and educational purposes only and is not an offer to sell or the solicitation of an offer to buy the securities or other instruments mentioned. This material does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual investors which are necessary considerations before making any investment decision. Investors should consider whether any advice or recommendation in this research is suitable for their particular circumstances and, where appropriate, seek professional advice, including legal, tax, accounting, investment, or other advice.
Investing involves risk. Past performance does not guarantee or indicate future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by CMG), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CMG. Please remember to contact CMG, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. CMG is neither a law firm, nor a certified public accounting firm, and no portion of the commentary content should be construed as legal or accounting advice.
No portion of the content should be construed as an offer or solicitation for the purchase or sale of any security. References to specific securities, investment programs or funds are for illustrative purposes only and are not intended to be, and should not be interpreted as recommendations to purchase or sell such securities.
This presentation does not discuss, directly or indirectly, the amount of the profits or losses realized or unrealized, by any CMG client from any specific funds or securities. Please note: In the event that CMG references performance results for an actual CMG portfolio, the results are reported net of advisory fees and inclusive of dividends. The performance referenced is that as determined and/or provided directly by the referenced funds and/or publishers, has not been independently verified, and does not reflect the performance of any specific CMG client. CMG clients may have experienced materially different performance based upon various factors during the corresponding time periods. See in links provided citing limitations of hypothetical back-tested information. Past performance cannot predict or guarantee future performance. Not a recommendation to buy or sell. Please talk to your advisor.
Information herein has been obtained from sources believed to be reliable, but we do not warrant its accuracy. This document is general communication and is provided for informational and/or educational purposes only. None of the content should be viewed as a suggestion that you take or refrain from taking any action nor as a recommendation for any specific investment product, strategy, or other such purposes.
In a rising interest rate environment, the value of fixed-income securities generally declines, and conversely, in a falling interest rate environment, the value of fixed-income securities generally increases. High-yield securities may be subject to heightened market, interest rate, or credit risk and should not be purchased solely because of the stated yield. Ratings are measured on a scale that ranges from AAA or Aaa (highest) to D or C (lowest). Investment-grade investments are those rated from highest down to BBB- or Baa3.
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Certain information contained herein has been obtained from third-party sources believed to be reliable, but we cannot guarantee its accuracy or completeness.
In the event that there has been a change in an individual’s investment objective or financial situation, he/she is encouraged to consult with his/her investment professional.
Written Disclosure Statement. CMG is an SEC-registered investment adviser located in Malvern, Pennsylvania. Stephen B. Blumenthal is CMG’s founder and CEO. Please note: The above views are those of CMG and its CEO, Stephen Blumenthal, and do not reflect those of any sub-advisor that CMG may engage to manage any CMG strategy, or exclusively determines any internal strategy employed by CMG. A copy of CMG’s current written disclosure statement discussing advisory services and fees is available upon request or via CMG’s internet web site at www.cmgwealth.com/disclosures. CMG is committed to protecting your personal information. Click here to review CMG’s privacy policies.