Thoughtful Money Weekly Discussion Notes

Introduction

• Correction expected to last into October.
• Host: Adam Taggart
• Guest: Lance Roberts
• Discussion about the SOM rule, payroll numbers, and market trends.

Payroll Numbers

• Recent payroll numbers came in lower than expected: 114,000 jobs created vs 175,000 expected.
• Previous months' numbers also revised downward (June: 206,000 to 179,000).
• 5 out of the past 6 months have been revised down, indicating a weaker job market than presented.

Economic Outlook

• Discussion on the jobs market as bulwark against recession.
• Growing concern that the employment market might not be as strong as reported.
• The SOM rule triggered, indicating warning signs of a recession.

SOM Rule Overview

• Three-month moving average of unemployment compared to its lowest value over the last 12 months.
• Triggered if the average is 50 basis points higher.
• Indicates potential recession.

Current Economic Indicators

• Employment growth is weakening.
• Drop in weekly work hours and wage growth.
• Importance of keeping an eye on Fed actions and interest rate expectations.

Market Sentiment

• Discussion on the fluctuation of market sentiment and its impact on investments.
• Potential for strong ISM services reports to reverse negative trends temporarily.
• Importance of patience and proper timing in investment strategies.

Mega Cap Stocks vs. Small Caps

• Mega cap stocks (Apple, Microsoft) expected to perform better in a slowing economy due to earnings growth.
• Small cap stocks facing more challenges due to economic sensitivity.

Key Investment Strategies

• Importance of maintaining a diversified portfolio and understanding individual strengths and weaknesses.
• Consideration of future trends (AI, economic growth) when making investments.
• Need for continuous evaluation of investments and readiness to change strategies as necessary.

Negative Discovery Lessons

• Adam Taggart:

  • Emphasizes the importance of careful planning and avoiding emotional decision-making based on market trends.
  • Acknowledges weaknesses in consistently evaluating investments and the necessity of partnering with advisors.

• Lance Roberts:

  • Highlights the importance of surrounding oneself with successful individuals and being cautious of superficial appearances of success.
  • Recommends being selective about partnerships and investments based on solid research and understanding.

Closing Thoughts

• Acknowledgment of market volatility and upcoming economic indicators to watch.
• Importance of being proactive in risk management while not overreacting to short-term trends.
• Encouragement to seek professional financial advice if needed.