News From the Control Tower - 5/4/2023
Shiny Objects –Amanda Vaught
It can be easy to get distracted by the new shiny objects in investing, but what about the tried and true? This can be seen in Warren Buffet's investment approach – it’s hard to argue with his performance even if his style might feel a little boring. This weekend is the Berkshire Hathaway annual meeting and that is an event that’s never boring.
But what about that classic advice of “Sell in May and go away”? The article below breaks down some of the numbers, but on average, this adage doesn’t hold water. The S&P500 has risen 70% of the time between May and October since 1990.
Checking in on the latest news with the banking system: things could be better. The government just took over First Republic, further contributing to bank consolidation. Meanwhile, Pacific Western bank is starting to have trouble. Something is amiss on the West Coast.
Finally, we frequently warn clients on the risks of being house poor. The recent case before the Supreme Court (Tyler v. Hennepin County) illustrates yet another reason why this can be dangerous: you need liquid funds to pay your property tax bill. If you can’t pay your property tax, many state governments have the power to seize your property, sell it to pay the tax, and then they also pocket the overage. The moral of the story? Don’t put yourself in this position.
1. Warren Buffett’s ‘Secret Sauce’ Involves One of Investing’s Most Basic Strategies
2. Everything You Ever Wanted to Know About Sell In May
And Carl Quintanilla (CNBC Journalist)shares a chart of summer performance on Twitter
3. JPMorgan’s First Republic rescue a sign of consolidation in U.S. banking: Experts
Liz Ann Sonders shared this eye-opening chart on Twitter showing the consolidation in the banking sector:
Every failed bank that falls into hands of industry’s giants contributes to decades-long consolidation trend in banking sector; number of U.S. banks down drastically from peak in early-1980s when there were 14,469 U.S. commercial banks; by end of last year, it was down to 4,135.
4. Supreme Court Wary of Windfall in Seizure of Condo for Unpaid TaxesThe justices considered the constitutionality of letting states keep all the proceeds of the sale of confiscated property even when they far exceed the taxpayer’s debt.