Mike
Lipper’s Monday Morning Musings
How
Much Longer Can We Avoid
Thinking
About the Long-Term?
Editors:
Frank Harrison 1997-2018, Hylton Phillips-Page 2018
First Week 2026
Using the performance of equity mutual funds, it was a great
week with average gains of more than +2%. If repeated for each week of the year
it would produce returns of over 100%. Even the value of the US dollar rose a
bit during the week. That was the delusional news! What’s even worse, the
average commodity fund invested in gold and other precious metals rose +4.02%. Funds
owning stocks of gold and other precious metal mining companies gained +5.32%
on average through Thursday. The latter can suffer mining risks, labor strikes,
and raised taxes. Historically, gold has been a hedge against the value of a
currency, particularly the US dollar. There is also a small industrial market
for gold in the electronics market, which might be in the region of $1,000 an
ounce. How much demand for gold jewelry is really demand for a convenient way
to pass on its monetary value? I don’t know. Part of the demand for gold as a use
in the crypto world is not known by me. All told, I suspect over half of the
value of gold is as a substitute for the US dollar.
What Is The Value Of The US dollar?
Something is worth what someone is willing to pay for it.
Currently, it appears to be about $0.99 cents, up from $0.96 cents. However, the
critical question is its worth in the future. That appears to be what someone
is willing to pay for it, delivered today or on a specific date and quantity in
the future.
According to a paper prepared by the National Bureau of
Economic Research. Twenty-five years ago, people believed the US fiscal budget
looking forward 10 years would be $5.9 Billion, with all public debt paid off
by 2006. The readers of the One Big Beautiful Bill Act now project a 2054 debt
to GDP ratio of 199%, incorporating temporary provisions. Net interest payments
would rise to 6.3% from 3.2% today. (I don’t know how to impact these numbers
with the increase in gambling. In first
11 months of 2025, total sports gambling in New Jersey was $67 Billion. The
rise of non-securities backed gambling, particularly among the young, appears
to be on the rise.)
Why Should We Care?
Even with the increase in retail securities markets investing,
institutional investors set the prices of fixed income securities and many large-cap
stocks. Most money invested through 401k and similar retirement accounts are
invested in mutual funds or SMAs. Insurance companies, endowments, and other institutional
investors may increase their investment in foreign securities, which will
impact domestic stock prices. Both domestic and foreign controlled investors
may shift some of their investment focus if the dollar becomes weaker.
Leaders Increasingly Think Globally
Foreign leaders have increasingly thought globally in
determining their strategies. Our main adversaries, China, Russia, and North
Korea are strategists, whereas the US tends to view the world as tacticians through
domestic glasses and the next election time scale. Luckily, many of our
domestic commercial leaders are increasingly thinking strategically.
Strategies Going Forward
Going forward, we should recognize that the world is
changing at a rapid rate and we need to change with it. Old rules and
strategies will change. We must be careful.
Please share your thoughts.
Did you miss my blog last week? Click here to read.
Mike
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