Let's discuss the state of the U.S. dollar, the "safe haven" of bitcoin, the politics of oil, the nature of…
Dividend Cafe provides market perspective rooted in first principles, not the fads of the day. Authored by our Managing Partner, David Bahnsen, it covers a wide array of topics, it doesn’t try to do what it cannot do, and it strives to offer needed perspective not readily available in most financial commentary.
The MONDAY Dividend Cafe covers all going on in the present tense in public policy, housing, energy, markets, the Fed, and more.
The DAILY RECAP is rather self-explanatory.
And ASK TBG gives you a chance for daily interaction with our people on any issue important to you.
Let's discuss the state of the U.S. dollar, the "safe haven" of bitcoin, the politics of oil, the nature of…
Question:
I was hoping in a future missive, you’d share your investing advice, approach, etc., for people earlier in their careers and in the early stages of their wealth-accumulating phase (mid 20’s – early 30s).
~Chris
Answer:
The most valuable piece of advice I can offer to younger wealth accumulators is to budget fiercely, always spend less than you make, and save and invest the difference. That may sound simplistic, and it’s hardest to do when you’re early in your career when money is tight, but building that good habit as early on in your career will set the stage for building wealth over your entire lifetime. Avoid the use of high-interest-rate debt like credit cards. Tax-efficient savings tools like funding your 401K at work and/or IRA/Roth IRAs and investing those balances in stocks will allow you to compound those good savings habits into meaningful wealth. Defining and setting goals like retirement and funding your first home purchase and using financial planning software or even simple online tools early on can help you see the path in front of you and stick to the discipline it will take the achieve them.
Brian T. Szytel – April 25, 2024
Question:
“In a recent Dividend Cafe, David said that the Fed hasn’t been historically very good at price stability. I wonder if he could explain that a little bit.”
~ Ted H.
Answer:
The most optimal way to maintain price stability is to have a rules-based approach to the money supply, where the money supply grows with the size of the economy. Grow the money supply more than the economy grows? “Too much money chasing too few goods” – inflation (thank you, Uncle Milton). Grow money supply less than the economy grows? Deflation – a lost incentive to produce. Distorted economic calculation. It’s not good. Avoiding both depends on a stable supply of money, which comes best with rules, not discretionary interventions. Our Fed has tackled price stability by throwing rules out the window, intervening with a level of creativity I never thought possible, and exacerbating a boom/bust cycle that has created the very opposite of price stability.
David L. Bahnsen – April 24, 2024
Question:
“I read an author lately that said we are in hyper-inflation and just don’t know it. Do you believe demand for U.S. bonds will fall and all that money will avalanche into the market and rapidly destroy the dollar? Is this plausible or likely to happen?”
~ S.G.
Answer:
Here is my answer:
These catastrophists who do not manage any real money and have no real skin in the game have a business model dependent on ignorance and fearmongering. We are not in hyper-inflation, authors like this do not understand the lessons of Japan, and they certainly do not understand the concept of money velocity.
We have plenty of real problems that require real planning. This category is just not one of them.
David L. Bahnsen – April 24, 2024
Question:
“I know that David Bahnsen was highly influenced by The Intelligent Investor by Benjamin Graham. David works hard to explain dividend investing in his writing and work. How would you compare and contrast or explain the difference between dividend investing and value investing, if there is one?”
~ Jason A.
Answer:
Indeed, Graham’s The Intelligent Investor is a masterpiece, and will always be canon for value investors. Dividend growth investing and Graham’s intrinsic value investing have a shared space on a venn diagram, but are not 100% the same thing, but nor are they at odds with one another. Dividend growth as an investment objective uses capital return as evidence of the investment’s value, whereas Graham’s value approach speaks to an entry point of value as a means for entry. I believe Graham’s approach in the 21st century is a lot easier to use with private equity investing than it is public markets, as it is just a lot harder to find companies trading at a discount to intrinsic value (in expected earnings or in price-to-book). We seek to use principles of not overpaying for companies (Graham 101) in tandem with companies that return profits to shareholders via dividends at an escalating rate. The two concepts marry well.
David L. Bahnsen – April 22, 2024
In September of 2008 the world’s financial markets were brought to their knees by a debt bubble, the likes of which we had never previously seen. The turmoil in financial markets was severe and Wall Street banks were falling by the wayside daily. In this time period, David Bahnsen was working as a Managing Director at Morgan Stanley, responsible for the well-being of his clients. As their anxiety of clients intensified, David began writing a periodic bulletin to them. One bulletin became another, and then another, and all of a sudden, a weekly bulletin was organically born! Well after markets pulled out of the abyss of 2008, the weekly edition continued, evolving into something far more positive than its September of 2008 origins. This commentary distributed by simple email with an ever-growing following morphed into the Dividend Cafe when David and his team launched their own practice in early 2015.
Today, Dividend Cafe is still attempting to do what it was doing in the fall of 2008 – offering truthful perspective that may not be easily found elsewhere. The topics will vary from our dividend growth philosophy, to bedrock investing principles, to the challenges of interventionist monetary policy, to anything else that inspires David in a given week. The underlying objective is the same now as it was when we began – to build trust by telling the truth, not what people want to hear.
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