Dave Lutz Jones Trading EARNINGS ROLLS– Results from the big tech companies have sparked investors’ hopes that the worst of the postpandemic hangover is fading, but they also show how much growth has slowed – Companies as varied as AMZN, GOOGL, META, INTC signaled to investors in recent days that the brutal slowdown in sales growth that began as people emerged from the pandemic and re-engaged with daily routines was coming to an end. Digital ad spending is stabilizing, for instance, and laptop buying is showing modest signs of life. The big tech companies that reported results this past week added a combined $320 billion in market valuation after posting their figures, according to WSJ
For many individual investors, the stakes ramp up Thursday when Apple is on deck to report its earnings. The company makes up about 19% of the average individual investor’s portfolio, according to WSJ. Bespoke notes Apple and Microsoft account for 39% of the S&P’s gain so far in 2023. Add in NVIDIA and Meta and it’s 60%!
I-Bonds Hit a High Over 9% But They Re-Set Every 6 Months.
New I-bonds are now officially earning 4.3% as inflation wanes, but have an attractive 0.9% fixed rate
Beth PinskerFrom May 1 through the end of October, any new purchases get a 0.9% fixed rate for up to 30 years, making it pretty good deal for long-term savers.
With inflation numbers coming down, the Series I Bonds interest rate took a tumble for its semiannual adjustment, officially announced Monday.
New I-bonds, issued May 1 through the end of October, will have a composite rate of 4.3%, which is down from 6.89% over the previous six months and a peak of 9.62%. That includes a fixed rate of 0.9%, which is up from the last rate of 0.4% in the last six months, and 0% for several years before that.
The U.S. Treasury usually waits until May 1 and Nov. 1 to reveal the new rate on the investments, but this time posted the update with no warning on Friday on its TreauryDirect.gov, which is the only place to buy I-bonds, once sales were locked out for the previous rate on April 27. I-bonds have grown in popularity over the past two years as rates have climbed, and that the news spread quickly.
I-bond rates have two components: an adjustable rate based on inflation data that resets every six months and a fixed rate that is set at purchase and sticks with the bond until redemption (up to 30 years).
Some rules apply, most important: You can only buy up to $10,000 a year per individual. Also, you must hold I-bonds at least one year, and if you cash out before five years, you lose the last three months of interest.
At a rate of 4.3%, I-bonds will no longer be top of the savings heap when CDs, savings accounts and other Treasury products are yielding as much or more. But because of the way the inflation protection works, I-bonds are still attractive for long-term savers. That’s because the new issue I-bonds have such a robust fixed rate. Those who bought I-bonds in the last two years when the fixed rate was 0% might want to think about cashing those out and buying new ones, but this strategy involves waiting at least 15 months rather than just one year.
“I would recommend cashing out old bonds at 0% to switch to new bonds at 0.9%, but you have to be careful not to lose the 6.48% variable rate,” says Harry Sit, founder of the blog The Finance Buff.
The inflation conundrum
You might be wondering: If eggs are still so expensive, why did the I-bond interest rate drop so much?
“Inflation is never an ‘is’–it’s only a ‘was,’” explains Jeremy Keil, a financial adviser based in Milwaukee.
I-bonds are based on the last six months of inflation data from the Consumer-Price Index, which does not have the peak numbers from a year ago that are still included in headline inflation data. “Inflation is percentage of growth and it depends on when you start counting,” Keil says.
Liz Ann Sonders Schwab Survey from LendingClub shows that 65.5% of Gen Z were living paycheck-to-paycheck as of March, up from 58.3% a year earlier … share is greater for Millennials (73.2%), but increase from prior year (+0.3%) wasn’t as dramatic
9. Nearly three-quarters of Americans blame media for dividing nation, poll says
By DAVID KLEPPERtoday WASHINGTON (AP) — When it comes to the news media and the impact it’s having on democracy and political polarization in the United States, Americans are likelier to say it’s doing more harm than good.
Nearly three-quarters of U.S. adults say the news media is increasing political polarization in this country, and just under half say they have little to no trust in the media’s ability to report the news fairly and accurately, according to a new survey from The Associated Press-NORC Center for Public Affairs Research and Robert F. Kennedy Human Rights.
The poll, released before World Press Freedom Day on Wednesday, shows Americans have significant concerns about misinformation — and the role played by the media itself along with politicians and social media companies in spreading it — but that many are also concerned about growing threats to journalists’ safety.
“The news riles people up,” said 53-year-old Barbara Jordan, a Democrat from Hutchinson, Kansas. Jordan said she now does her own online research instead of going by what she sees on the TV news. “You’re better off Googling something and learning about it. I trust the internet more than I do the TV.”
That breakdown in trust may prompt many Americans to reject the mainstream news media, often in favor of social media and unreliable websites that spread misleading claims and that can become partisan echo chambers, leading to further polarization.
Overall, about 6 in 10 said the news media bears blame for the spread of misinformation, and a similar percentage also said it has a large amount of responsibility for addressing it. Majorities also think others, including social media companies and politicians, share in the responsibility both for the spread of misinformation and for stopping it from spreading.
“So many people get their information from social media, and people believe whatever they want to believe,” said Araceli Cervantes, a 39-year-old Chicago woman and mother of four who said she is a Republican.
When it comes to protecting the freedom of the press in the U.S., 44% of respondents say the U.S. government is doing a good job, more than the 24% who say it’s doing a bad job. Most Americans are at least somewhat concerned, however, when it comes to the safety of journalists, with roughly a third saying they’re very concerned or extremely concerned about attacks on the press.
The poll of 1,002 adults was conducted March 30-April 3 using a sample drawn from NORC’s probability-based AmeriSpeak Panel, which is designed to be representative of the U.S. population. The margin of sampling error for all respondents is plus or minus 4.4 percentage points.
The world is full of difficult personalities, but the one that’s impossible to avoid is the narcissist. They are usually the most insecure people in the room, but have established a way of appearing ultra-confident.
As a psychologist who studies narcissism, I’ve found that, in most cases, highly narcissistic people are masters of gaslighting. Their primary goal in a relationship is to offset their insecurity by controlling and manipulating others.
Here are six phrases that they always use — and how to deal with them:
1. “I don’t want to make this about me, but…”
Statements like this show that narcissistic people know they shouldn’t dominate the conversation, yet they do it anyway. It’s like a pseudo-disclaimer that gives them permission to only focus on themselves.
Olivia de Recat for CNBC Make It
How to handle it: If you get into a conversation with a narcissist, be prepared for their story hour. If it’s interesting, listen. You can even treat it like an IRL podcast. But if you’re hoping for a two-way conversation, look elsewhere.
2. “I’m sorry you feel that way.”
Narcissists have a hard time admitting fault, and this is their classic attempt at an apology. But it’s actually more of a deflection.
With this phrase, they’re implying that your feelings are your issues alone, and that they’ll take no responsibility for their behavior.
How to handle it: Without genuine remorse, no matter what the transgression was, they’ll likely do it again. My advice is to simply disengage. To avoid getting hurt in the future, it is often best to see people for who they really are.
3. “Why are you doing this to me?”
Narcissists have a stunning capacity to shift from being the offender to being the victim.
You may be the one who has the flu or a tough week at work. But if whatever you’re struggling with inconveniences them, it will be framed as their problem.
How to handle it: You can get a degree of power back through self-awareness. Otherwise, you may find yourself constantly wondering if you’re actually at fault. Seek support — from a therapist or empathetic friend, for example — to remind yourself that you’re not the offender.
4. “I’m a busy person. I don’t have time for this.”
“This” can be anything — maybe you want to discuss a project you’re working on together or you’re inviting them to a work event.
The hallmarks of a narcissist are entitlement, a lack of empathy and the inability to maintain reciprocal relationships. Not only are they unable to understand another person’s needs, but they’re also dismissive of them.
How to handle it: Recognize their limitations. They likely won’t make time for you unless they need something. These relationships are often the equivalent of going to an empty well for water, so do what you can to foster support independent of the narcissist.
5. “I hope you know who you’re messing with.”
The evil twin to this is: “If you ever do wrong by me, I’ll make your life a living hell.”
This tactic of dangling menace and the possibility of vengeance is how they create an illusion of power and a sense of fear in you. Most people don’t want to face this perceived threat, so they comply.
How to handle it: This can be unsettling, especially if you’re dealing with someone who does have a track record of making other people miserable. Documentation is key. Save all emails and messages. If there’s a genuine safety issue, work with local authorities to devise a plan.
6. “It’s not fair.”
Narcissists believe there should be a set of rules for them, and separate set of rules for everyone else. When they have to comply, or a consequence is enforced, it’s a reminder that they are not special.
Whether their friend’s company is doing great and making lots of money, or they have to pay a penalty because they tried to game the system and got caught, you can expect a rant of “it’s not fair” statements.
How to handle it: You may be tempted to appease them, perhaps out of guilt or to avoid conflict. But doing so will set an impossible precedent. Don’t try to be a person who tries to make life “fair” for them by making unreasonable personal sacrifices.
3. Market Cap to Equal Weight S&P One of Widest Spreads Ever 2023
Bespoke Investment Group-Whenever you see a list of best-performing stocks, it’s inevitably loaded with many small stocks that most investors have never heard of. This year, though, it’s practically been the opposite trend as the two top performing stocks in the S&P 500 on a YTD basis – Meta Platforms (+96%) and Nvidia (+88%) – are not only household names, but they also have market caps of more than $500 billion. We’d also note that both stocks are more than 30 percentage points ahead of the next closest stocks in terms of top YTD returns!
With such strong returns among the largest stocks in the S&P 500, the YTD performance spread between the market-cap-weighted S&P 500 and its equal-weighted counterpart is among the widest ever seen on a YTD basis through the end of April. Through Friday afternoon, the market-cap-weighted S&P 500 was up 8.26% YTD, while the equal-weighted index was up just 2.13%. At 6.14 percentage points, the YTD performance gap between the two indices is the second widest since 1990, trailing only the 6.8% percentage point gap in 2020. Besides 2020, the only other year where the gap was wider than two percentage points was in 1997. While it’s a small sample size and history doesn’t always repeat itself, we’d note that the S&P 500’s rest-of-year performance was a gain of over 20% in both of those years. Just saying.
Besides the two other years where the performance gap was significantly wide like this year, what stands out about the chart below is how common it has historically been for the market cap-weighted index to underperform the equal weight index in the first four months of the year. Including this year, the cap-weighted index has only outperformed nine times in the last 34 years.
Source: Bloomberg Finance L.P., J.P. Morgan. Data as of April 27, 2023. Weight and contribution are proxied by the SPY ETF. Weight refers to the average daily weight so far this year.
5. Mortgage Originations…2020-2021 vs. GFC 2008 Crisis
2021 Super Prime 70% vs. 2007 26%…..2021 Sub-Prime 2% vs. 2007 12%
7. Saudi Mega City Project $500B vs. Inflation Reduction Act $370B
Scott Galloway-This sci-fi mega-city is the centerpiece of Saudi Arabia’s Neom project, budgeted at $500 billion. Keep in mind, that’s the budget — and 9 out of 10 mega-projects go over budget. Saudi Arabia is also building the Diriyah Gate, a $20 billion property development that will add 20,000 homes to the historic district of Diriyah, and the Red Sea Project, which will build 1,000 homes and 50 hotels across 22 small islands. Meanwhile, Qatar is building its own “city of the future” fit with a 90,000-capacity sports stadium, a dedicated entertainment district (“Entertainment City”), and the country’s first six-star hotel. No ski resort, though.
10. Practice Improves the Potential for Future Plasticity-
E. Paul Zehr Ph.D. The more you attempt to learn skills, the better your brain gets at learning.
KEY POINTS
Motor skill learning leads to changes in brain structure and function.
Some of the neuroplasticity from skill learning is related to getting better at learning in general.
The training we do produces neuroplasticity to get better at what we are doing now and may help us learn better in the future.
Learning something new is hard. It doesn’t matter what it is, from motor skills for martial arts to musing about Mozart’s motivations, the process of acquiring knowledge, skills, and abilities is challenging. We can be trying to do something new or even reassembling and repurposing disparate bits of knowledge we already have. Regardless of the context, learning takes us out of our comfort zone and into discomfort while we try to kickstart the neuroplasticity that will take us forward.
Priming plasticity with prior practice
But can you get better at learning how to learn? This is basically the question that Jamie Kweon, Megan Vigne, Richard Jones, Linda Carpenter and Joshua Brown at Butler Hospital and Brown University were interested in answering with their research. These folks wondered if the effort and training that musicians and athletes undergo to learn and acquire skills has a more generic benefit of being better at learning in general.
We already know that learning motor skills produces changes in brain structure and function. Folks who have trained for a long time show these changes and acquired neuroplasticity.
From Mozart to Martial Arts Moves
In groups of musicians, athletes, and untrained “control” participants, the researchers used repetitive brain stimulation and pharmacological manipulation known to be related to the cellular basis of skill learning. The idea was to see if excitability of the brain related to motor activity was different in those who had intensively trained to learn skills and those who had not. They found that there was no inherent difference in general excitability between the groups. However, when the brain stimulation and pharmacological conditioning designed to enhance neuroplasticity, the musicians and athletes had a much more powerful response.
The overall “findings suggest that motor practice and learning create a neuronal environment more responsive to plasticity-inducing events”. It seems that deep history of skill learning allows for a better ability to switch to an enhanced learning mode. Since this was a cross-sectional study, it would be great to see an experimental study measuring such changes over time.
In any case, this interesting result has big implications for designing strategies and paradigms for learning in general but also for “psychotherapy and rehabilitation…including recovery from neurological disorders…like stroke rehabilitation, cognitive-behavioral therapy, or clinical rTMS”. This includes translation to other brain areas and “networks, such as those theoretically targeted with dorsolateral prefrontal cortex rTMS for depression“.
Yearning to Learn How to Learn
When I came across this study it brought to mind something related to this that I’ve seen so many times over the years. And this has been in both my own practices of physical activity especially in martial arts, but also teaching martial arts across the lifespan. A big part of what people learn at the beginning of training is actually how to learn the thing they’re doing. Once they get that down and achieve some level of neuroplasticity related to learning the tasks they’re trying to do, their learning going forward is enhanced and proceeds at a different rate than it did in the beginning.
I have seen this across many decades of teaching martial arts and also in my own practices and learning. In recent years I’ve expanded my repertoire to include more Chinese martial arts. The teaching methodologies of these traditions differ wildly from my prior experiences in Japanese and Okinawan martial arts. A big part of my ability to learn those new traditions was actually understanding how to “learn the learning”. In each case, once I worked through the hard work of learning how to learn, subsequent training was easier to do.
A takeaway is that steady work and dedication to learning skills and abilities will lead to better learning in the future. We just have to endure the upfront discomfort in the brain for beneficial long-term gain. This applies whether we are learning how to play guitar, apply a wrist lock, or implement strategies in cognitive-behavioral therapy. Like all things, it gets better with practice, and present practice can enhance future plasticity.
(c) E. Paul Zehr (2023)
References
Kweon J, Vigne MM, Jones RN, Carpenter LL and Brown JC (2023) Practice makes plasticity: 10-Hz rTMS enhances LTP-like plasticity in musicians and athletes. Front. Neural Circuits 17:1124221. doi: 10.3389/fncir.2023.1124221
2. Speculators/Hedge Funds Short the S&P and 10 Year Treasury
Liz Ann Sonders Schwab Just as large speculators/hedge funds have built largest net short position for S&P 500 futures since 2011 (blue), leveraged investors have also boosted net short positions on 10y U.S. Treasury futures (orange) to record
3. Market Still Pricing in Deep Rate Cuts in Next 18 Months.
The Daily Shot Brief The market continues to price in deep rate cuts over the next 18 months amid concerns about the banking sector and the debt ceiling. This chart shows the near term forward spread of the three-month Treasury bill.
Source: The Daily Shot
4. S&P Futures Positioning is the Most Bearish in 10 Years
Equities: S&P 500 futures positioning is the most bearish in over a decade.
Grant Interest Rate ObserverWork from home comes home to roost: Vornado Realty Trust dropped a late afternoon thunderbolt yesterday, announcing it will postpone dividend payments until the end of the year, at which time shareholders will receive their allotted payout “in either cash, or a combination of cash and securities.”
That belt-tightening initiative from the beleaguered NYC-based office landlord, which will save some $215 million per Morgan Stanley, caught industry observers off guard. “It’s a big surprise,” Alex Goldfarb, analyst at Piper Sandler remarked, adding that such a drastic step “suggests more going on inside [corporate headquarters] than the Street appreciates.”
Further coloring that maneuver is the real estate investment trust also announced that the board of directors has authorized a $200 million stock buyback. Though the repurchase program could help stem the bleeding after a 63% selloff over the past year to leave shares at their lowest level since 1996, Vornado’s balance sheet could also stand for some sprucing up. Net debt stands at near 10 times trailing Ebitda as of Dec. 31, up from 8.5 turns of leverage on the eve of the pandemic.
On March 31, S&P Global slapped a negative outlook on the triple-B-minus rated outfit, warning that “leverage metrics will remain under pressure over the next several quarters.” Moody’s followed suit six days later, adding that “sustained and meaningful weakness in office real estate valuations. . . could impair the REIT’s capital access in 2024 and beyond.” https://www.grantspub.com/almostDailyHTML.cfm?dcid=1276&article=1&email=mtopley%40lansingadv%2Ecom
· The record sales figures, contained within the International Energy Agency’s Global EV Outlook for 2023, continue a trend of sustained growth for the industry.
· “Electric car sales — including battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) — exceeded 10 million last year, up 55% relative to 2021,” the IEA’s report says.
· The Paris-based organization says more than 26 million electric cars were on the world’s roads in 2022, which represents a 60% increase relative to 2021
Electric car sales jumped to more than 10 million last year, with China accounting for roughly 60% of the market, according to a report from the International Energy Agency published Wednesday.
The record sales figures, contained within the IEA’s Global EV Outlook for 2023, continue a trend of sustained growth for the industry.
“Electric car sales — including battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) — exceeded 10 million last year, up 55% relative to 2021,” the IEA’s report said.
“This figure — 10 million EV sales worldwide — exceeds the total number of cars sold across the entire European Union (about 9.5 million vehicles) and is nearly half of the total number of cars sold in China in 2022,” it added.
The IEA defined “sales” within its report as being “an estimate of the number of new vehicles hitting the roads.”
In total, it said more than 26 million electric cars were on the world’s roads in 2022, which represents a 60% increase relative to 2021.
Plug-in hybrid electric vehicles, or PHEVs, have an internal combustion engine as well as a battery-powered electric motor.
Some regard them as an important tool in the transition toward low- and zero-emission forms of transport. Others, including organizations such as Greenpeace UK, take a dim view of them.
Looking ahead, the Paris-based IEA — seen by many as an authoritative voice on the energy transition — said it was estimating worldwide sales to reach almost 14 million in 2023.
“This explosive growth means electric cars’ share of the overall car market has risen from around 4% in 2020 to 14% in 2022 and is set to increase further to 18% this year, based on the latest IEA projections,” a statement accompanying the report noted.
Chinese market dominant
The IEA described China as being “the frontrunner” when it came to electric car sales. It added that over 50% of electric cars on the road could now be found in the world’s second-largest economy.
“In Europe, the second largest market, electric car sales increased by over 15% in 2022, meaning that more than one in every five cars sold was electric,” the IEA said, adding that U.S. electric car sales had risen by 55% in 2022.
Bloomberg Semiconductors account for 56% of the $330 billion of North American megaprojects announced since 2020, according to Melius Research, which counts $86 billion of US electric-vehicle and battery-plant announcements in the same period.
Russia’s neighbors in Europe have upped their military spending since the invasion of Ukraine in early 2022.
But, as Statista’s Katharina Buchholz notes, even before the war – over the course of the past decade – expenditure on defense had already increased substantially in these nations.
Psychology Today Busy doing something but accomplishing nothing? These 3 tools will help.
KEY POINTS
While being “busy” may seem important, simply being busy to be busy accomplishes nothing.
There are a number of creative ways to help avoid busywork.
It is not only possible to avoid busywork, but rewarding and meaningful as well.
I have worked my entire adult life. I have even worked a portion of my childhood—going door to door washing cars for five dollars a pop in a Los Angeles suburb where I grew up. And in all that time, I have witnessed a phenomenon that took me well into adulthood to understand. That phenomenon is the amazing ability that we humans have to be busy simply to be busy—accomplishing nothing more than meaningless tasks[1]. Literally producing nothing but the perception and appearance of being busy.
It gets worse. On top of that, people who appear to be busy are often esteemed or viewed as being important at work, even if there is no meaningful productivity from all this busyness. It’s quite amazing from a productivity standpoint how many hours are wasted on endless meetings that go nowhere and on paperwork that amounts to nothing—in fact, new research shows that 70 percent of meetings keep employees from doing productive work[2]. So here are three tools I have identified from a creativity and innovation standpoint that can help you keep on track—getting real and meaningful things done—rather than just being busy for busyness’ sake:
1. Ask Questions.
When we ask questions instead of just doing, we uncover some profound reasons why we are doing what we are doing[3]. Far too often, we are driven by the task at hand, and completing the task is our only goal. But we need to broaden that if we are to invite creativity and innovation into our process.
So, instead, ask questions. Questions like “Why are we doing this?” and “Who gets the most benefit?” are a really good start no matter what you are working on. Questions like “Do we benefit internally as much as our customers or clients do externally?” may be even better. When we ask questions—any questions, really—we give our work meaning in a far greater scope than just executing a task.
Asking questions can also lead to creative discoveries. The way that we ask questions and the types of things we are curious about may be completely different from one person to another. So asking questions—especially from multiple team members—uncovers vastly different perspectives on the same problem. In other words, asking questions can reveal a path toward a solution that would never materialize if we hadn’t asked the questions in the first place.
2. Look at History.
If there are certain tasks executed by your company or in your career over and over again with little results—it may be time to look at history. Often, we are so busy in our careers that we are focused on accomplishing the tasks ahead of us, irrespective of where those tasks are leading. It’s almost as if we have our blinders on—not knowing how each part of our tasks go together to make up the whole of what we are doing.
So, for instance, if you are constantly reinventing the wheel at work—say for proposals that need to go out to market—if we look at the history of what is going on and why that is, we can uncover some incredibly creative and innovative tools that can help remedy the situation. We may find in this case that our process for proposals is lacking—or that we don’t fully have a grip on our pricing model, and that is why our proposal process is a mess. Like the domino effect, most issues in business are interrelated. And we may uncover that someone who used to quarterback our proposals has been shifted to another department, and that is where the gap lies. Again—it is all about looking at the history of a particular task and then analyzing how we got to where we are today—and using history to solve problems.
Too often, people are afraid of history because it is seen as something that is “slowing us down,” or “wasting energy,” or something that is “impeding progress in some way.” But I argue that a tree without its roots is no tree at all. If we don’t know what happened yesterday, we can never be prepared to handle what will come tomorrow. So instead of constantly looking forward, it’s good to take a peek back every once and a while to make sure that you are not just busy for busyness’ sake—but you are indeed working to solve issues that matter.
3. Take a Macro View.
There are too many times at work when we subjugate tasks to particular teams without an explanation of the full impact each part has on the whole. This leads to a number of issues, not the least of which is being busy for busyness’ sake. The other main issue that happens is burnout and fatigue, as folks who don’t have a good idea of where the company is going and what their role is in that journey become frustrated and disconnected. A skeptic may say that staff becomes empowered to execute tasks—fair enough—but these tasks are meaningless without a broad-scope macro view as to why the tasks are important in the first place.
So instead, take a macro view. A macro view is a long-term vision or plan that allows for multiple little victories to be achieved along the way. These little victories can be tasks, or they can be something else—but keeping track of these victories and stopping every once and a while to recognize accomplishments is very important. It creates less wasted energy and work for work’s sake—and gives meaning to each person completing the seemingly meaningless tasks. It gives meaning to these tasks and builds a sense of camaraderie that—yes—the tasks can be done, and they lead to a bigger macro picture. And that is something that everyone can contribute to and feel proud to accomplish. Nobody uses the appearance of being busy if they know how important their role is in the entire apparatus.
The myth of being busy for busyness’ sake is a damaging enterprise across all levels. Who hasn’t worked somewhere where being chained to your computer and “doing something” all day was seen as a job well done—regardless of whether the “doing something” was of any value? But there is hope. Just doing things and endlessly grinding over tasks that may or may not be important is not only a waste of time, but it is also demoralizing and leads to burnout and disengagement[1]. The three tools above can help you institute a new process that will lead to meaningful work instead of busy work—and there is plenty here to boost creativity and drive innovation and meaning for your business and career moving forward.
1. Retail Investors Losing Money Daily on Zero Dated Options
Marketwatch How popular have “0DTEs,” or option contracts with zero days until expiration become? The below chart, from a study by researchers at the University of Muenster, shows an explosion in the number of investors trying their hand in trading S&P 500 options from 2020 into this year.
UNIVERSITY OF MUENSTER
But beyond the chart are some unsettling numbers. The researchers note that between February 2021 and February 2023, retail investors lost $184,000 on the average day, but since the introduction of a daily expiration calendar in May of 2022 — meaning they can trade expiring options everyday — average losses have totaled $358,000 per day.
“We find that retail investors correctly take the expensiveness of 0DTE options into account when placing their orders, but that the substantial spreads charged by market makers lead to significant losses. Our study is a cautionary tale against unrestricted access to highly complex trading vehicles by investors who lack sufficient financial education,” said the researchers.
Bespoke Investment Group If you haven’t checked the price of lithium lately, you might be in for a surprise. Spot prices for lithium carbonate in China have collapsed by two-thirds since hitting record highs in November of last year. Prices have gone from $84k per ton to $25k per ton. That unwinds the vast majority of a spectacular surge that played out from 2020 to 2022. Lithium initially surged 1,279% from July 2020 to March 2022 as part of the broader explosion of commodity prices and booming demand for electric vehicles, eventually peaking up 1,387% from the post-COVID lows. It’s easy to forget that this critical battery input had already gone through one such cycle. A 224% rally in 6 months during late 2015 and early 2016 before a long, slow bear market that saw prices down 78% over several years.
In the equity market, the price cycle hasn’t been as dramatic in percentage terms, but there has still nonetheless been a double cycle of surging stock prices in 2016 followed by a grinding bear market, and then an even more dramatic surge through late 2022 that is now sliding into reverse. On Thursday, Chile’s government announced reforms to its lithium extraction policy. While existing contracts with firms that operate in the rich lithium brine deposits of the Chilean Atacama desert will be honored, the market is looking at weaker lithium prices and the fact that existing contracts will be replaced by less favorable ones 10+ years down the line and hitting lithium players. SQM is off 21% today while ALB is 10% lower.
Millennials were more likely than any other generation to flee the stock market during last year’s rout. That meant they were also more likely to miss out on the subsequent rally.Those were the results of a survey released Monday by Ernst & Young’s wealth management unit, which found that nearly half of millennial respondents turned to cash amid the market volatility. By comparison, just 34% of Gen X and 24% of Baby Boomers sought safety in cash.
The survey of more than 2,600 clients was conducted from October to November, right around the time the stock market bottomed. Since its low on Oct. 12, the S&P 500 Index has jumped about 16%. Despite the stock rally, cash is increasingly in vogue. Vehicles like high-yield savings accounts, money market funds and certificates of deposit are offering attractive returns for the first time in years amid the Federal Reserve’s aggressive rate-hike campaign. Still, there’s plenty of debate over whether those products can compete against inflation and the stock market. There’s also downside to pulling money from stocks: JPMorgan Asset Management data show that investors who were absent for the S&P 500’s 10 best days in the two decades through 2022 received half the gains of those who were in the market for the entire period.
Investors Pay Steep Price for Missing Best Days of Rally Performance of $10,000 invested in S&P 500 in 20 years to end of 2022
Source: JPMorgan Asset Management
Baby Boomers are more likely than millennials to work closely with a financial adviser, which may have encouraged them to stay invested during the market volatility, said Mike Lee, leader of EY Global Wealth & Asset Management. They may also have a stronger stomach for market swings after watching past market recoveries, including the rebound after the 2008 financial crisis, he said.
EY Global Wealth & Asset Management found that more clients may flock to cash. “If volatility continues, a greater proportion of clients (43%) would further increase their exposure to savings and deposits,” the report said.
The survey used the following age definitions: Millennials (21-41), Gen X (42-57) and Baby Boomers (58 and over)
Bloomberg Dani RomeroLandlords in Houston and Dallas are having a tougher time filling their empty office buildings with new tenants than any other market in the country, according to office market statistics compiled by CoStar and JPMorgan.Why? One reason: They overbuilt when interest rates were low.
Between 2010 and 2021 the Dallas and Houston metro areas put up 48 million and 46 million square feet of new office space, according to 42 Floors, more than any other place in the country except New York City. They were No. 1 and No. 2 when counting all commercial real estate construction during that period.
Their biggest challenge is selling tenants on the older space put up during previous booms decades ago. Newer buildings that were built five years ago or less have single-digit vacancy, according to Aguirre, while older space from the 1980s is a much harder sell.
“There’s not a ton of prime space,” said Bill Kitchens, director of market analytics at CoStar Group. “We really do have to look at the configuration, the quality of the space, all those considerations that the tenants are still focused on.”
Some landlords are turning to discounts on space that can be subleased from tenants who downsized or ditched their office space for newer digs. In Houston, office subleases are being discounted by 25%-60%, according to CoStar.
“The discounts out there really haven’t moved the needle, that’s the long and short of it,” Kitchens added. “It’s going to continue to be a headache not only for our market, [but] major markets in the U.S.”
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
fever, is an allergic reaction to irritants such as airborne pollens or molds that often occur in the spring. PHOTO: ALEXI ROSENFELD/GETTY IMAGES
This year’s allergy season is especially bad, making life miserable for annual sufferers as well as people who thought seasonal allergies didn’t affect them.
The pollen season this year started earlier and more forcefully than usual in some parts of the U.S., say allergists and pollen counters, meaning that even those without diagnosed allergies are wheezing, sneezing and reporting irritated and puffy eyes.
“This time of year, even people who don’t have a history of seasonal allergies can be symptomatic,” says Dr. Joyce Yu, a pediatric allergist-immunologist at Columbia University Irving Medical Center. “This winter, since it has been somewhat warm, the trees have been pollinating on the earlier side.”
True allergic rhinitis, also known as seasonal allergies or hay fever, is an allergic reaction to irritants such as airborne pollens or molds that often occur in the spring, when warmer temperatures lead trees to release pollen. About 25% of U.S. adults and 19% of children have been diagnosed with seasonal allergies, according to the National Center for Health Statistics.
Part of the reason this year is packing a bigger punch for many of us, allergists and environmental researchers say, is a warmer-than-usual winter, which meant pollen season got off to an early start. High levels of pollen can produce allergy-like symptoms, irritating the eyes and sinuses like any other environmental debris, such as campfire smoke, says Dr. Courtney Jackson Blair, an allergist-immunologist in McLean, Va.
Over-the-counter treatments such as nasal sprays and oral antihistamines might help symptoms regardless of whether they are true allergies or just irritation. Doctors recommend that people with allergy-like symptoms see a provider to rule out other health problems and develop treatment plans
Editor’s note (2010): When the members of the class of 2010 entered business school, the economy was strong and their post-graduation ambitions could be limitless. Just a few weeks later, the economy went into a tailspin. They’ve spent the past two years recalibrating their worldview and their definition of success. The students seem highly aware of how the world has changed (as the sampling of views in this article shows). In the spring, Harvard Business School’s graduating class asked HBS professor Clay Christensen to address them—but not on how to apply his principles and thinking to their post-HBS careers. The students wanted to know how to apply them to their personal lives. He shared with them a set of guidelines that have helped him find meaning in his own life. Though Christensen’s thinking comes from his deep religious faith, we believe that these are strategies anyone can use. And so we asked him to share them with the readers of HBR.
Before I published The Innovator’s Dilemma, I got a call from Andrew Grove, then the chairman of Intel. He had read one of my early papers about disruptive technology, and he asked if I could talk to his direct reports and explain my research and what it implied for Intel. Excited, I flew to Silicon Valley and showed up at the appointed time, only to have Grove say, “Look, stuff has happened. We have only 10 minutes for you. Tell us what your model of disruption means for Intel.” I said that I couldn’t—that I needed a full 30 minutes to explain the model, because only with it as context would any comments about Intel make sense. Ten minutes into my explanation, Grove interrupted: “Look, I’ve got your model. Just tell us what it means for Intel.”
I insisted that I needed 10 more minutes to describe how the process of disruption had worked its way through a very different industry, steel, so that he and his team could understand how disruption worked. I told the story of how Nucor and other steel minimills had begun by attacking the lowest end of the market—steel reinforcing bars, or rebar—and later moved up toward the high end, undercutting the traditional steel mills.
When I finished the minimill story, Grove said, “OK, I get it. What it means for Intel is…,” and then went on to articulate what would become the company’s strategy for going to the bottom of the market to launch the Celeron processor.
I’ve thought about that a million times since. If I had been suckered into telling Andy Grove what he should think about the microprocessor business, I’d have been killed. But instead of telling him what to think, I taught him how to think—and then he reached what I felt was the correct decision on his own.
That experience had a profound influence on me. When people ask what I think they should do, I rarely answer their question directly. Instead, I run the question aloud through one of my models. I’ll describe how the process in the model worked its way through an industry quite different from their own. And then, more often than not, they’ll say, “OK, I get it.” And they’ll answer their own question more insightfully than I could have.
My class at HBS is structured to help my students understand what good management theory is and how it is built. To that backbone I attach different models or theories that help students think about the various dimensions of a general manager’s job in stimulating innovation and growth. In each session we look at one company through the lenses of those theories—using them to explain how the company got into its situation and to examine what managerial actions will yield the needed results.
On the last day of class, I ask my students to turn those theoretical lenses on themselves, to find cogent answers to three questions: First, how can I be sure that I’ll be happy in my career? Second, how can I be sure that my relationships with my spouse and my family become an enduring source of happiness? Third, how can I be sure I’ll stay out of jail? Though the last question sounds lighthearted, it’s not. Two of the 32 people in my Rhodes scholar class spent time in jail. Jeff Skilling of Enron fame was a classmate of mine at HBS. These were good guys—but something in their lives sent them off in the wrong direction.
Doing deals doesn’t yield the deep rewards that come from building up people.
As the students discuss the answers to these questions, I open my own life to them as a case study of sorts, to illustrate how they can use the theories from our course to guide their life decisions.
One of the theories that gives great insight on the first question—how to be sure we find happiness in our careers—is from Frederick Herzberg, who asserts that the powerful motivator in our lives isn’t money; it’s the opportunity to learn, grow in responsibilities, contribute to others, and be recognized for achievements. I tell the students about a vision of sorts I had while I was running the company I founded before becoming an academic. In my mind’s eye I saw one of my managers leave for work one morning with a relatively strong level of self-esteem. Then I pictured her driving home to her family 10 hours later, feeling unappreciated, frustrated, underutilized, and demeaned. I imagined how profoundly her lowered self-esteem affected the way she interacted with her children. The vision in my mind then fast-forwarded to another day, when she drove home with greater self-esteem—feeling that she had learned a lot, been recognized for achieving valuable things, and played a significant role in the success of some important initiatives. I then imagined how positively that affected her as a spouse and a parent. My conclusion: Management is the most noble of professions if it’s practiced well. No other occupation offers as many ways to help others learn and grow, take responsibility and be recognized for achievement, and contribute to the success of a team. More and more MBA students come to school thinking that a career in business means buying, selling, and investing in companies. That’s unfortunate. Doing deals doesn’t yield the deep rewards that come from building up people.
I want students to leave my classroom knowing that.
Create a Strategy for Your Life
A theory that is helpful in answering the second question—How can I ensure that my relationship with my family proves to be an enduring source of happiness?—concerns how strategy is defined and implemented. Its primary insight is that a company’s strategy is determined by the types of initiatives that management invests in. If a company’s resource allocation process is not managed masterfully, what emerges from it can be very different from what management intended. Because companies’ decision-making systems are designed to steer investments to initiatives that offer the most tangible and immediate returns, companies shortchange investments in initiatives that are crucial to their long-term strategies.
Over the years I’ve watched the fates of my HBS classmates from 1979 unfold; I’ve seen more and more of them come to reunions unhappy, divorced, and alienated from their children. I can guarantee you that not a single one of them graduated with the deliberate strategy of getting divorced and raising children who would become estranged from them. And yet a shocking number of them implemented that strategy. The reason? They didn’t keep the purpose of their lives front and center as they decided how to spend their time, talents, and energy.
It’s quite startling that a significant fraction of the 900 students that HBS draws each year from the world’s best have given little thought to the purpose of their lives. I tell the students that HBS might be one of their last chances to reflect deeply on that question. If they think that they’ll have more time and energy to reflect later, they’re nuts, because life only gets more demanding: You take on a mortgage; you’re working 70 hours a week; you have a spouse and children.
For me, having a clear purpose in my life has been essential. But it was something I had to think long and hard about before I understood it. When I was a Rhodes scholar, I was in a very demanding academic program, trying to cram an extra year’s worth of work into my time at Oxford. I decided to spend an hour every night reading, thinking, and praying about why God put me on this earth. That was a very challenging commitment to keep, because every hour I spent doing that, I wasn’t studying applied econometrics. I was conflicted about whether I could really afford to take that time away from my studies, but I stuck with it—and ultimately figured out the purpose of my life.
Had I instead spent that hour each day learning the latest techniques for mastering the problems of autocorrelation in regression analysis, I would have badly misspent my life. I apply the tools of econometrics a few times a year, but I apply my knowledge of the purpose of my life every day. It’s the single most useful thing I’ve ever learned. I promise my students that if they take the time to figure out their life purpose, they’ll look back on it as the most important thing they discovered at HBS. If they don’t figure it out, they will just sail off without a rudder and get buffeted in the very rough seas of life. Clarity about their purpose will trump knowledge of activity-based costing, balanced scorecards, core competence, disruptive innovation, the four Ps, and the five forces.
My purpose grew out of my religious faith, but faith isn’t the only thing that gives people direction. For example, one of my former students decided that his purpose was to bring honesty and economic prosperity to his country and to raise children who were as capably committed to this cause, and to each other, as he was. His purpose is focused on family and others—as mine is.
The choice and successful pursuit of a profession is but one tool for achieving your purpose. But without a purpose, life can become hollow.
Allocate Your Resources
Your decisions about allocating your personal time, energy, and talent ultimately shape your life’s strategy.
I have a bunch of “businesses” that compete for these resources: I’m trying to have a rewarding relationship with my wife, raise great kids, contribute to my community, succeed in my career, contribute to my church, and so on. And I have exactly the same problem that a corporation does. I have a limited amount of time and energy and talent. How much do I devote to each of these pursuits?
Allocation choices can make your life turn out to be very different from what you intended. Sometimes that’s good: Opportunities that you never planned for emerge. But if you misinvest your resources, the outcome can be bad. As I think about my former classmates who inadvertently invested for lives of hollow unhappiness, I can’t help believing that their troubles relate right back to a short-term perspective.
When people who have a high need for achievement—and that includes all Harvard Business School graduates—have an extra half hour of time or an extra ounce of energy, they’ll unconsciously allocate it to activities that yield the most tangible accomplishments. And our careers provide the most concrete evidence that we’re moving forward. You ship a product, finish a design, complete a presentation, close a sale, teach a class, publish a paper, get paid, get promoted. In contrast, investing time and energy in your relationship with your spouse and children typically doesn’t offer that same immediate sense of achievement. Kids misbehave every day. It’s really not until 20 years down the road that you can put your hands on your hips and say, “I raised a good son or a good daughter.” You can neglect your relationship with your spouse, and on a day-to-day basis, it doesn’t seem as if things are deteriorating. People who are driven to excel have this unconscious propensity to underinvest in their families and overinvest in their careers—even though intimate and loving relationships with their families are the most powerful and enduring source of happiness.
If you study the root causes of business disasters, over and over you’ll find this predisposition toward endeavors that offer immediate gratification. If you look at personal lives through that lens, you’ll see the same stunning and sobering pattern: people allocating fewer and fewer resources to the things they would have once said mattered most.
Create a Culture
There’s an important model in our class called the Tools of Cooperation, which basically says that being a visionary manager isn’t all it’s cracked up to be. It’s one thing to see into the foggy future with acuity and chart the course corrections that the company must make. But it’s quite another to persuade employees who might not see the changes ahead to line up and work cooperatively to take the company in that new direction. Knowing what tools to wield to elicit the needed cooperation is a critical managerial skill.
The theory arrays these tools along two dimensions—the extent to which members of the organization agree on what they want from their participation in the enterprise, and the extent to which they agree on what actions will produce the desired results. When there is little agreement on both axes, you have to use “power tools”—coercion, threats, punishment, and so on—to secure cooperation. Many companies start in this quadrant, which is why the founding executive team must play such an assertive role in defining what must be done and how. If employees’ ways of working together to address those tasks succeed over and over, consensus begins to form. MIT’s Edgar Schein has described this process as the mechanism by which a culture is built. Ultimately, people don’t even think about whether their way of doing things yields success. They embrace priorities and follow procedures by instinct and assumption rather than by explicit decision—which means that they’ve created a culture. Culture, in compelling but unspoken ways, dictates the proven, acceptable methods by which members of the group address recurrent problems. And culture defines the priority given to different types of problems. It can be a powerful management tool.
In using this model to address the question, How can I be sure that my family becomes an enduring source of happiness?, my students quickly see that the simplest tools that parents can wield to elicit cooperation from children are power tools. But there comes a point during the teen years when power tools no longer work. At that point parents start wishing that they had begun working with their children at a very young age to build a culture at home in which children instinctively behave respectfully toward one another, obey their parents, and choose the right thing to do. Families have cultures, just as companies do. Those cultures can be built consciously or evolve inadvertently.
If you want your kids to have strong self-esteem and confidence that they can solve hard problems, those qualities won’t magically materialize in high school. You have to design them into your family’s culture—and you have to think about this very early on. Like employees, children build self-esteem by doing things that are hard and learning what works.
Avoid the “Marginal Costs” Mistake
We’re taught in finance and economics that in evaluating alternative investments, we should ignore sunk and fixed costs, and instead base decisions on the marginal costs and marginal revenues that each alternative entails. We learn in our course that this doctrine biases companies to leverage what they have put in place to succeed in the past, instead of guiding them to create the capabilities they’ll need in the future. If we knew the future would be exactly the same as the past, that approach would be fine. But if the future’s different—and it almost always is—then it’s the wrong thing to do.
This theory addresses the third question I discuss with my students—how to live a life of integrity (stay out of jail). Unconsciously, we often employ the marginal cost doctrine in our personal lives when we choose between right and wrong. A voice in our head says, “Look, I know that as a general rule, most people shouldn’t do this. But in this particular extenuating circumstance, just this once, it’s OK.” The marginal cost of doing something wrong “just this once” always seems alluringly low. It suckers you in, and you don’t ever look at where that path ultimately is headed and at the full costs that the choice entails. Justification for infidelity and dishonesty in all their manifestations lies in the marginal cost economics of “just this once.”
I’d like to share a story about how I came to understand the potential damage of “just this once” in my own life. I played on the Oxford University varsity basketball team. We worked our tails off and finished the season undefeated. The guys on the team were the best friends I’ve ever had in my life. We got to the British equivalent of the NCAA tournament—and made it to the final four. It turned out the championship game was scheduled to be played on a Sunday. I had made a personal commitment to God at age 16 that I would never play ball on Sunday. So I went to the coach and explained my problem. He was incredulous. My teammates were, too, because I was the starting center. Every one of the guys on the team came to me and said, “You’ve got to play. Can’t you break the rule just this one time?”
I’m a deeply religious man, so I went away and prayed about what I should do. I got a very clear feeling that I shouldn’t break my commitment—so I didn’t play in the championship game.
In many ways that was a small decision—involving one of several thousand Sundays in my life. In theory, surely I could have crossed over the line just that one time and then not done it again. But looking back on it, resisting the temptation whose logic was “In this extenuating circumstance, just this once, it’s OK” has proven to be one of the most important decisions of my life. Why? My life has been one unending stream of extenuating circumstances. Had I crossed the line that one time, I would have done it over and over in the years that followed.
The lesson I learned from this is that it’s easier to hold to your principles 100% of the time than it is to hold to them 98% of the time. If you give in to “just this once,” based on a marginal cost analysis, as some of my former classmates have done, you’ll regret where you end up. You’ve got to define for yourself what you stand for and draw the line in a safe place.
Remember the Importance of Humility
I got this insight when I was asked to teach a class on humility at Harvard College. I asked all the students to describe the most humble person they knew. One characteristic of these humble people stood out: They had a high level of self-esteem. They knew who they were, and they felt good about who they were. We also decided that humility was defined not by self-deprecating behavior or attitudes but by the esteem with which you regard others. Good behavior flows naturally from that kind of humility. For example, you would never steal from someone, because you respect that person too much. You’d never lie to someone, either.
It’s crucial to take a sense of humility into the world. By the time you make it to a top graduate school, almost all your learning has come from people who are smarter and more experienced than you: parents, teachers, bosses. But once you’ve finished at Harvard Business School or any other top academic institution, the vast majority of people you’ll interact with on a day-to-day basis may not be smarter than you. And if your attitude is that only smarter people have something to teach you, your learning opportunities will be very limited. But if you have a humble eagerness to learn something from everybody, your learning opportunities will be unlimited. Generally, you can be humble only if you feel really good about yourself—and you want to help those around you feel really good about themselves, too. When we see people acting in an abusive, arrogant, or demeaning manner toward others, their behavior almost always is a symptom of their lack of self-esteem. They need to put someone else down to feel good about themselves.
Choose the Right Yardstick
This past year I was diagnosed with cancer and faced the possibility that my life would end sooner than I’d planned. Thankfully, it now looks as if I’ll be spared. But the experience has given me important insight into my life.
I have a pretty clear idea of how my ideas have generated enormous revenue for companies that have used my research; I know I’ve had a substantial impact. But as I’ve confronted this disease, it’s been interesting to see how unimportant that impact is to me now. I’ve concluded that the metric by which God will assess my life isn’t dollars but the individual people whose lives I’ve touched.
I think that’s the way it will work for us all. Don’t worry about the level of individual prominence you have achieved; worry about the individuals you have helped become better people. This is my final recommendation: Think about the metric by which your life will be judged, and make a resolution to live every day so that in the end, your life will be judged a success.
A version of this article appeared in the July–August 2010 issue of Harvard Business Review.
Clayton M. Christensen was the Kim B. Clark Professor of Business Administration at Harvard Business School and a frequent contributor to Harvard Business Review.
