Good morning. There is a headline right now on Yahoo Finance that reads: “Consumers are loud and clear: They’re souring on the economy.” While this might lead a reader to think holiday shopping will be light, there is one thing they are certainly buying this morning … stocks … as all U.S. indexes are rising. The problem, of course, is … to quote an Alan Greenspan comment of long ago … “irrational exuberance” … for AI is the buzz word right now … and purchases are being made on anything that claims to benefit … as investors certainly don’t want to miss out if the trees they’ve been watching continue to grow to the sky. I was out with friends last evening and discussion turned to the markets (as it often does) and we talked about investors taking on risk. Sure, they fill out forms and claim full understanding of a market that can fall on a dime … but there is one thing I’ve learned over the years while watching people fill out investment forms: the tolerance for risk is highest when losses are hypothetical. When real money is lost (if ever) … well … it is then that risk acceptance starts to change. On a related note, I had a chat with my brother yesterday who told me he could accept market volatility as he was “investing for the long-term.” I asked what he meant by the long term and he told me: “next Tuesday.” Each have our own definitions. Don’t get me wrong as I do participate in the optimism seen in stocks of late. Both Goldman and Citadel are pointing out that since 1928, stocks have risen during the last two weeks of December 75% of the time. I like to see this type of reporting as it increases my own confidence as I am sure that the market will continue to rise … until it doesn’t. And at that point I might find myself wishing I had considered my risk tolerance a bit more seriously. Meanwhile, reading about a Waymo car’s activities this morning reminded me of people such as Roy Riegels, Jim Marshall and aviator “Wrong Way Corrigan” … as a driverless vehicle in Austin decided to drive headfirst into a lane facing oncoming traffic. While, fortunately, it did not result in an accident, my first thought was the talk surrounding the introduction of driverless tractor trailers. I am unsure if we will ever truly be ready or comfortable. That’ll about wrap it up for me today. I need to run out to buy my Powerball ticket for tomorrow night’s drawing. $1.5 billion! I know it is a waste of money but worth a little gamble … just to dream. And I might even ask AI to pick my numbers … … though I do get concerned that … if I win … some humanoid robot would show up at my door asking for a cut. Have a great day, Joseph G. Witthohn, CFA Have any questions? Please contact info@teamemerald.com
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