In this episode: Steve Wolff discusses how excided he is about the investing opportunities in this techno-digital revolution.
Full transcription below:
Steve Wolff:
Hello everyone, this is Steve Wolff with another edition of Steve’s Stock Stories. I’m here with my
cohort, producer and friend Joscelin Magaña.
Joscelin Magaña:
How’s it going everybody?
Steve Wolff:
This is one of my favorite topics. I am so happy to be alive at this point in time, because we are going
through a technological digital revolution. This must be what it felt like to be in the industrial revolution,
when you went from the horse and buggy to cars. Of course, eventually putting men on the moon. But I
mean, all the things that happened in that time are happening now only they’re happening digitally.
Joscelin Magaña:
I feel the same first feeling when I saw the world change in a dramatic way where I was so excited. Two things that I remember surfacing, the mobile phone and the internet.
Steve Wolff:
Oh, yeah.
Joscelin Magaña:
Remember when the movie The Saint came out? That little phone was amazing. He had video on there, he got text messages. I thought, “Oh my gosh, if that could ever possibly happen.” Then we have way better phones than that now, you just throw that little toy away. Right? The other big thing that I saw was the internet. When I was in college, we were just using email at the time. There were these things called websites. I remember thinking, “Wow, we’re going to be able to buy stuff on the internet
someday.” I remember telling somebody, “Hey, this is going to be an amazing space because we’re just
going to be buying stuff on the internet.” And they’re like, “Who’s going to buy stuff on the internet?
You just go to the store. Why the hell are you going to-?” Okay. One technological advanced before this, which kind of wasn’t, but everybody thought was crazy, was when everybody started buying bottled water; but that’s a whole other subject.
Steve Wolff:
Well you talk about phones. I remember watching the movie Wall Street with Michael Douglas and he
had a mobile phone, but it was probably, I don’t know, 12 inches.
Joscelin Magaña:
Oh, yeah. They were big.
Steve Wolff:
They were huge.
Joscelin Magaña:
They were big, like a shoe box.
Steve Wolff:
Right, they were big. You could make a phone call on there today, my goodness, you could do just about everything. You can turn on your car, you can-
Joscelin Magaña:
You can turn on your sprinklers in your house, you can see your front door. It’s amazing.
Steve Wolff:
What they have in that little phone is way more powerful than what IBM first came up with when they had that first computer that took up, I don’t know, three rooms or something. With vacuum tubes and whatever, it’s just incredible.
Joscelin Magaña:
I guess where I’m going with this is that I’m as excited now as I was when mobile phones were becoming more accessible and the whole mobile phone revolution and the internet. I remember my first job we didn’t even have computers on our desks…
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Market Update: 7/9/2021
Transcription below:
There’s been a lot of good news in the last month. With COVID cases declining, there are more people getting vaccinated, there has been a lot of re-openings in the economy and the earnings have been good as well. This resulting in a really good time to be in the stock market. The market is still favoring rotation into the pandemic recovery plays. Those stocks that lagged last year have caught up a lot this year. It might even be slowing down just a bit, but June was a good month for that. Financials and energy continued to lead the way with tech stocks being a little bit further behind, although everything grew a little in the last month.
Let’s talk a little bit about inflation because in the middle of June, there was a pretty good-sized dip in the market. This dip was probably 5% to 7% and people got a little bit nervous because suddenly, bonds were spiking up in yields and people were getting afraid because of inflation.
It is really is funny because when the economists talk about inflation, they do ex-oil and ex-food, which means without including those. I think that’s a load of bull hockey for anybody who likes to eat and goes to the grocery store. They know that food is way more expensive than it was just a few months ago. Also, if you are not in one of those battery-operated cars and you have to go to the gas station, you know that you’re paying a lot more for fuel than you were paying before. Inflation is real in your pocketbook, even if the economists aren’t including that.
Crude oil prices are up to $75 a barrel, and that’s the highest they’ve been since 2018. In the U.S., it now costs more than an average of a dollar or two a gallon than it did just a year ago, according to GasBuddy who analyzes fuel prices. If you were paying maybe three bucks last year and you’re paying four bucks today, that’s a 33% increase. I don’t know about the economist, but I think that’s inflation in my pocket.
There’s also been a shortage of semiconductor chips, which is causing some havoc because semiconductors are in everything we have, from toasters to ovens to microwaves to computers to cars. As a matter of fact, the auto industry has really been hit the hardest because they cannot finish producing a car without computer chips. Companies like Ford, Volkswagen, Jaguar, have all had to stop production because they just don’t have enough chips in supply for those cars. Right now, demand is far outstripping the supply of computer chips. Those computer chip companies are probably happy because as soon as they have a chip, they can sell it; and generally speaking, supply and demand means they could probably raise the price a little bit. So those companies probably are doing very well.
Now, looking at the market for the first half of this year, some people might call this a Goldilocks market, and we’ve heard that many, many times in the past. I call it a duck market. Why? Because everything is ducky right now out there. You almost couldn’t ask for a better market.
Now, I think there’s going to be continuing to be bouts of volatility as we go. But if you’re looking forward a little bit, I really think that stocks are still the right place to be because the re-openings are there, for example, anybody who wants to get a job can get one. There are help wanted signs all over the country. Unfortunately, some people are still staying at home because they’re getting a little bit more money to stay at home than to work, but eventually, that’s going to run out. Those people are going to get jobs and I think employment will get back to a pretty good level. Matter of fact, I think tomorrow July 2nd, there’s an employment report coming out. My guess is that as we continue to go into the future, the job market will continue to get better.
For all of you out there who are wondering what you should do, I still think that stocks are the right place to be. I think they’re better than bonds, at the moment. If yields do spike up, bonds will go down in price. It may hurt stocks a little bit too, but that’s a ways down the road. I still think we have time to go before that ever happens.
Steve Wolff is a Managing Partner at WWM Financial in Carlsbad California.
Steve can be reached at 760-692-5190.
Disclaimer
The opinions expressed in this article are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. It is only intended to provide education about the financial industry. To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparison are unmanaged and cannot be invested into directly. As always please remember investing involves risk and possible loss of principal capital; please seek advice from a licensed professional.
WWM Financial is a Registered Investment Advisor. Advisory services are only offered to clients or prospective clients where WWM Financial and its representatives are properly licensed or exempt from licensure. No advice may be rendered by WWM Financial unless a client service agreement is in place.
