One of our hot buttons at Sua Sponte Wealth Management, if you haven't picked up on it by now, is the high cost of college tuition. Metropolitan State College of Denver, on Thursday, announced they would raise the price of tuition by 9%. At the same time, Mero State indicated they renewed the contract of President Stephen Jordan with salary and compensation valued at $386,000. Well, I'm sure he is worth it. The point is, how are ordinary individuals expected to keep up with that pace? Wages are stagnant, inflation bounces around 1.5 to 2%. The economy remains extremely fragile. College administration is driving up the costs for our children. Where do you put your money if you are even thinking about saving for college?
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Behavioral Finance: Back in the 1990s, everyone was a financial genius. Experts at stock picking. You could sneeze and get 20% returns. Get in on an IPO, dump it as quickly as you could, and you were sitting pretty. Since the heyday, stock inputs by ordinary investors are down by over $400 Billion. Those 1990 experts have chosen the sidelines. Is the market dangerous?
There are no similarities between the market of old and today. We do have an uneasy feeling that chaos could strike at any moment, the economy is on life support and world war is a possibility. Nonetheless, being in the market is not stupid.
Today, the market is not driven by speculative internet and technology companies whos wares were hawked by sock puppets and celebrities. These earnings are real. It appears that companies are making real money. The PE ratio in May of 1999 was 29, the PE ratio in May of 2013 was 16 (we are keeping a close watch). Fundamentals seem strong and the values seem reasonable,
Current profits are not concentrated in technology alone. Positive earnings are spread across multiple sectors. In 1990, stock market gains were concentrated in telecommunications and technology. Gains in 2013 appear to be spread across all industries. The strong stock market performance is backed up by strong earnings. Corporations have more cash than they know what to do with. Profits are at an all time high. Companies with positive EPS in May was 88% compared to 53% in May of 1999.
Today, the market is not driven by speculative internet and technology companies whos wares were hawked by sock puppets and celebrities. These earnings are real. It appears that companies are making real money. The PE ratio in May of 1999 was 29, the PE ratio in May of 2013 was 16 (we are keeping a close watch). Fundamentals seem strong and the values seem reasonable,
Current profits are not concentrated in technology alone. Positive earnings are spread across multiple sectors. In 1990, stock market gains were concentrated in telecommunications and technology. Gains in 2013 appear to be spread across all industries. The strong stock market performance is backed up by strong earnings. Corporations have more cash than they know what to do with. Profits are at an all time high. Companies with positive EPS in May was 88% compared to 53% in May of 1999.
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Well, I think Stephen Jordan is doing very well for himself. If he has to worry, at all, about providing a quality education for his children, or grand children, appears he can afford to pay out of pocket. Or, I'm sure he can work out free tuition or maybe payment at only 20% of the going rate. The rest of us, with tuition rising at a clip of 6% to 9%, or more, we better be in the market.
What do you think, stupid to be in the market? Sua Sponte.
What do you think, stupid to be in the market? Sua Sponte.
Bradford C. Bruner for Sua Sponte Wealth Management
