When your “check engine” light is displayed it usually means the car’s emissions control system is faulty and the vehicle is polluting the air beyond allowable federal standards. A vehicle with this condition would likely fail an emissions inspection. Common causes include a gasoline cap that is loose, oxygen or mass airflow sensor is bad, spark plugs may be caking with too much carbon buildup, spark plug wires are bad, or the catalytic converter is faulty (rare). You should not confuse the “check engine” light with the maintenance or service light; those signal a more immediate condition and should be promptly diagnosed.
Category Archives: Monthly Commentary
“Ruff & Reddy” and “Hotel California” – Nvest Nsights Q2 Newsletter
On June 30, the S&P500 enjoyed its 34th new closing high of the year, and is now up roughly 95% from its March 2020 low. Remarkable! Our first article, “Ruff & Reddy” reviews the catalysts behind this powerful advance, but also that under the surface there is rotation underway and broader market momentum is softening. This is normal in the second year of a new bull market and is often accompanied by more volatility. Government remains a key factor for the prospect of volatility as well. In that regard, the lyrics of the 1976 Eagles song “Hotel California” may be a good summary of the challenge government may face when they at some point attempt to walk-back from deficit spending or target inflation. In a different way, the song’s lyrics may be spun toward appropriate guidance for individual investors too.
The personal finance article this quarter, “Is Your Beachbody Ready for Summer?“, shares a client’s motivation to participate in a recent stock IPO. We are often asked by clients about various investment ideas – ranging from ‘meme-stocks’, bitcoin, or real estate; this client’s thoughtful approach to an investment receiving lots of buzz provided a refreshing and textbook example of how to avoid potentially unhealthy financial behavior.
A printer-friendly version of our quarterly newsletter can be obtained here: Q2 Nvest Nsights
Huff & Puff – June Commentary
Do you ever “huff and puff’? Is this question relating to breathing heavily with exhaustion, or is it expressing annoyance in an obvious or threatening way? In life, we huff and puff when winded or short of breath, from wheezing or feeling done-in; even spent or exhausted. Often, despite much huffing and puffing about the “bus” service, traffic, or government policy, nothing happens. Recall the wolf in “The Three Little Pigs”? The mother pig sent her three little ones out into the world to make their own way. Each built their own shelter. The wolf traveled the lane where each lived, and smelling the little pig inside, pounded on the door, “Let me in! Let me in!” Each pig yelled, “Not by the hair of my chinny chin chin!” The wolf was annoyed, declaring “Then I’ll huff and I’ll puff and I’ll blow your house in!” He blew in the straw house, the wood house, but not the brick house (where all 3 were finding refuge). The wolf lost his frustrating endeavor after bounding up the roof and climbing down the chimney, where he fell into a huge pot of boiling water in the fireplace. Whether weary from exhaustion or expressing annoyance, we never know when fear is going to come knocking, or pounding, on our door.
Is This as Good as it Gets? – May Commentary
The first quarter offered lots of “candy” (government spending) and no “spinach” (tax increases). But that idea started changing in April with government policy shifts: the unveiling of big infrastructure spending (spread over 8 to 10 years), plus new large-dollar child spending programs; both to be funded with higher taxes – corporate and individual. Taxes are oriented as an aggressive path to pay for massive spending. At present, the combination of extraordinary fiscal spending and monetary stimulus is pulling forward demand, output, revenue, profitability and investment (perhaps stealing it from 2022 and maybe beyond; called a growth hole). After such a strong start to the year, and remarkable 12 month recovery, the biggest hurdle the market faces is high expectations and crowded positioning. At present, there appears to be a peak in positive data and eager market participation (number of stocks rising at the same time), usually found in the first third of a new bull market run. With so much good news already priced into stocks, any bad news or “miss” could spark near-term volatility. So let’s ask… Is this as good as it gets?
Caffeine Frenzy – February Commentary
Too much of anything can be bad. Sometimes, it only takes a spoonful, or even less. In July 2014, the Food & Drug Administration warned about powdered pure caffeine. Usually added to drinks before workouts for an energy boost or to aid weight loss, or as a dietary supplement. It was also used as a study aid among college students. In May of 2014, a high school senior in LaGrange, Ohio died, days before graduation, after consuming one teaspoon of powdered caffeine – the equivalent of drinking 25 cups of coffee or 70 cans of Red Bull. His autopsy found more than 70 micrograms of caffeine per milliliter of blood in his system, more than 20 times that of an average coffee drinker. The difference between a safe and lethal amount of caffeine is very small.Continue reading
Energizer Bunny Breaks Loose – December Commentary
The Energizer Bunny is the marketing icon and mascot of Energizer brand batteries in North America. It is a pink mechanical toy rabbit wearing sunglasses and blue and black striped flip-flops that beats a bass drum bearing the Energizer logo. The Energizer Bunny advertising tagline is brilliant, “Keeps going and going…” When used as a synonym to describe a person or other object, it means a person who seems to have limitless energy and endurance. Is it appropriate to characterize the stock market rally since March 23 as being like the Energizer Bunny? It appears everything is breaking out. Market strategists indicate this is the broadest rally, both domestic and geographically, since 2013. 93% of the stocks making up the S&P500 are above their 200-day moving average (trend line of the last 200 days). That’s a top decile reading historically. The high reading suggests the market is overbought (high enthusiasm; more on this below), but in fact bodes well for 12-month forward returns being positive. The current market rally “keeps going and going…”
“Life in Perspective: Identifying Your Investment Focus” – November Commentary
Many are asking, “what’s next?” given election stress is ending. Let’s start with a true story.
Kati Metro, 74, was hiking near Phoenix, Arizona when she fell, injuring her face, wrist, and hip. Rescue workers arrived by helicopter, and strapped her to a stretcher. Unfortunately, fierce winds caused one of the lines – intended to stabilize the stretcher and prevent spinning during its lift into the helicopter – to fail. As the horizontal stretcher was pulled upward, it started spinning faster and faster, like the runaway hands of a clock – over 170 rotations during the two minute ascent. Katie survived the ordeal, although she was dizzy for days. As horrifying as the experience was, it’s a bit of an analogy about how a lot of people feel right now. Seeing clearly with “20/20” vision is challenging this year. Too many big and noisy developments continue to alter most everything about daily life; we are fatigued by this yearlong dizzying experience. Identifying your focus is important, particularly in the world of investing.
Don’t Surrender to Cash
“Forced Perspective” is a technique employing optical illusions to make objects appear closer/farther, or bigger/smaller than they actually are. Filmmakers would for example place a miniature dinosaur close to the camera so that it would look gigantic in the film. Similarly, many tourists at the Leaning Tower of Pisa take a “selfie” with their smartphone camera, making it appear as though they are preventing the structure from toppling. Reflecting on years of experience it is hard to recall a time where it felt like there was more uncertainty than the present. A global pandemic, social unrest, and a polarizing US presidential contest are presently being placed very close to the “camera” by media, creating HUGE worry – a forced perspective. We cannot recall a time where there were not several big worries simultaneously distracting investors. The chart below provides just some past examples.
“Humor Lightens the Load” – September Commentary
Our last monthly commentary “Weird Words About a New Abnormal” attempted to update about the markets and a frequent question on investor’s minds – “After the significant financial market rebound, should I consider becoming more conservative (for various reasons)?” The weird words were entertaining and appropriate for a heavy topical discussion. Let’s take a cute (humorous) route this month. Let’s lighten the load with some humor while discussing the current market action and outlook. The biggest difference in people who demonstrate resilience and those who don’t is their perception – how they conceptualize traumatic or stressful life situations. It’s all the little things that happen in your day-to-day life; how do you perceive them? One way to change bad feelings is via good doses of humor.
“Weird Words About a New Abnormal” – August Commentary
Do you feel a little discombobulated by strange words? If someone is talking lots of gibberish, gobbledygook, and poppycock, they may be trying to discombobulate (verb) you. If you are very discombobulated (adjective), you are also flummoxed. Confused? That’s what these two words mean – “confuse” (19th century words).
Amazingly – time is flying; it is already more than 4 months since a large share of the global economy was mandated to a near-subsistence crawl. While there is evidence of emerging green shoots that suggest the trough levels are past, the persistence of COVID-19 with its related behavioral accommodations dampens reopening the economy and makes for an abnormal jagged experience.