AWM Blog

I just don’t get it

I am looking at the stock market, and companies like Tesla, and frankly, I am confused. I can’t see any rational basis for investors continuing to pump new money into stocks at all-time highs, when the wheels are coming off of the economy. Unemployment is above 10% and is likely to rise substantially. Valuations on stocks cannot be justified under any acceptable metric. Real estate prices are at all-time highs…

Bottlenecks are the key to the spread of the coronavirus, and to reopening the economy

I’m not a doctor, but common sense tells us that there has to be a reason that the coronavirus spread more in New York City than in other highly populated areas like the large California cities. I believe the reason is that in NYC, because of the heavy reliance on mass transit and the high concentration of high-rise buildings, there has been much more concentrated surface contact, which spread the…

Small Business Should Use This Time to Update Their Business Plans

With the slowdown or complete cessation of business activity we are experiencing, this is an ideal time to update your business plan. Or, if you don’t have a plan, this is a great time to write one. When the economy reopens, business owners will struggle to manage the reopening process, which will include rehiring any employees that were laid off and that are needed, reconnecting with suppliers to schedule deliveries,…

First Quarter 2020 Update

We are living through an historic time for the markets and the world economy. Some of the drastic swings we have experienced have been the largest in history. For example, we had the worst quarter on record for the Dow, in its 124-year history, during the first quarter. The S&P 500 lost 20 percent. Unemployment claims last week were a record 3.3 million, and this week, they were twice that,…

We have turned the corner

The Dow is up almost 1,700 points today as we come to the close of trading. This is a clear example of how stocks are a leading indicator, meaning that the stock market is always looking ahead. Although uncertainty remains, the market is anticipating the beginning of improvement for the economy. It will probably be a volatile ride back to economic stability, but things appear to be improving. We should…

This is an unprecedented buying opportunity

Clearly investors are panicking. Virtually all of the stock market investment theories are founded upon an assumption that investors are rational – that is a joke. Modern Portfolio Theory assumes that investors are risk-averse, meaning they will only take on additional risk if they expect to get additional return. When the market is “good” meaning it is going up consistently, investors assume unwarranted risks totally out of scale with the…

A Payroll Tax Cut is Vital

Yesterday’s Federal Reserve action – slashing interest rates to a range of zero percent to ¼ percent, and initiating a $700 billion quantitative easing program with $500 billion in treasury purchase and an additional $200 billion in mortgage-backed securities purchases, did not have the desired effect. Futures on Sunday night traded limit-down, when the 5% limit was hit, and global stock markets plummeted, with the Asian and European markets seeing…

Corrections are healthy and inevitable

The recent stock market correct has resulted in a 20%+ decline in the Dow Jones Industrial Average, with the Nasdaq Composite and S&P 500 dropping by almost as much. And it’s not over. As I sit here at 3:51 a.m. Thursday morning, March 12, 2020, watching the futures market, Dow futures are down more than 1,200 points, S&P 500 futures are down 126, and Nasdaq futures are down 374. As…

The real reason the market has been falling

We have been bombarded of late with stories about the coronavirus – how terrible it is, how countries are shutting down (like Italy), and how China has had to setup emergency hospitals to deal with the overwhelming numbers of new cases (although they just reported yesterday that they are shutting down these temporary facilities, assuming China can be believed). While I do not personally trust China’s reporting of data, whether…

Tesla is heading down the same path as WeWorks

I have written quite a bit, and posted multiple articles about WeWorks and about Tesla over the past year or so. I thought I would discuss the two companies in comparison, because I see some parallels in the trajectory of the two. First, if you are not familiar with WeWorks, it is a real estate company that leases properties under long-term contracts and then rents office space on short-term agreements,…