News from Schott Financial Management

Follow the Data, Not the Narrative

May 21, 2024

Don’t let the narrative guide you, go by the data.

The Dow Jones reached 40,000 last week! These are indeed interesting times. I just returned from my favorite annual conference, sponsored by First Trust, which many of you own. Their theme resonates with me: FOLLOW THE DATA, NOT THE NARRATIVE.

With 2024 being an election year, narratives are everywhere—from the media, social media, and even your friends and family. Let me share two important pieces of data with you:

  1. Narrative: The Federal Debt is going to bankrupt our nation. Data: While growing government debt is concerning, the current cost to cover it is approximately 2.4% of GDP, according to the Office of Management and Budget. From 1980 to 2000, that percentage was around 3.2% of GDP.
  2. Narrative: Corporate America is in disarray, struggling against foreign competition, etc. Data: The 12 most profitable quarters for pre-tax corporate profits have occurred in the last 13 quarters.

The takeaway for our clients and staff is that while there are significant economic issues that demand our diligence and hard work, the situation is not as negative and dire as some narratives suggest. Specifically, as we’ve been emphasizing for months, there is currently a promising opportunity in fixed income (bonds) that will disappear when rates decline.

If you’d like to discuss this opportunity further, let’s schedule a review. Additionally, I’m pleased to announce that we have a new assistant, Jesse Porter, joining our team next week. We look forward to welcoming her.

Finally, while volatility has been relatively in check for 2024, I anticipate increased volatility until the election period concludes.

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