Holiday Schedule

This time of year doesn’t have many Holidays, but in the interest of telling you
when I won’t be reachable, here’s the schedule:

Passover

April 12th-April 14th.

The first night of Passover is a Saturday night this year, which is a day
I never work anyway. The next day (Sunday), I won’t be working.

Shavuot

June 1st- June 3rd

We’ll be up in Portland for Shavuot. This is a holiday where we don’t
work for 2 days (1st-3rd of June).

It’s the time of year when most people want to now when they need to make a retirement
contribution for 2024's tax year. I’ll list these in Limits, as well, for 2024.

• IRA’s (Roth & Traditional) - April 15th.
  • Limit: $7,000 for under age 50; +$1,000 catch-up for 50+ investors ($8,000 total).
• SEP IRA’s - Tax Filing Deadline. For most of you, that’s April 15th. If you filed an
  extension for 2024, it’s your extension deadline (October 15th of 2025).
  • Limit: 25% of adjusted net income, up to $69,000.
• SOLO 401(k)- Tax Filing Deadline if you started your plan by December 31st of last
  year. Unlike SEP IRA’s, you need to have your plan set up in the tax year you contribute
  for, even as your contribution deadline is the Tax Filing Deadline (same date as SEP).
  • Limit: $23,500 as employee contribution, 25% of adjusted net income as employer for
    a total of $69,000 maximum.

SIMPLE IRA & 401(k) - These are salary deduction plans that contribute by pay-period
as opposed to an annual lump sum total.

Immediately after the election, I received many dozens of emails & phone calls about the election. I
recorded a commentary webinar that you can check out on YouTube here if you haven’t seen it. The
past couple of weeks have changed tenor slightly, with concerns that are less theoretical and more
imminent broadly speaking.

Initially, markets gave a “Premium,” or a higher expected return, to stocks going forward before Trump
took office. In the more recent weeks, markets have removed the entirety of that Premium. Stocks
today are priced slightly below where they were the day after the election. Which is to say, things have
changed and markets now are more nervous about the administration than excited. Investors are
rightly asking two questions: “will the market crash?” and “is there a recession?”

To start with the first question, as of today, we’re not in a crash. Markets reversed the gains of
November 6th and very little more than that. If we were to have another sell-off cycle, that would look
more like a real Bear Market- a market where investors are pricing in worse forward returns for
companies in the future than have recently occurred.

Will they crash later? It’s impossible to say. For those worried that a future fall is already in the price of
stocks today, it’s important to to highlight that all future return expectations are reflected in the price
of assets on any given day. If there were a certainty of lower prices tomorrow, you’d have lower prices
today. Which is to say, if a market hasn’t “crashed” already, prices today don’t anticipate them doing so
in the future. We can take from market prices today that a crash is not a base-case expectation.

Is There an Imminent Crash/Recession

Taking things back to asset pricing 101, market prices have 2 slices: earnings and dollars paid per
dollar earned. The market’s price takes dollars of earnings and then multiplies that by how many
dollars it’s willing to pay for each of those dollars. The S&P 500 has a multiple of 22 today.

The reason you care about multiples & earnings is that the multiples (the number of dollars per every
dollar earned) is the main driver of market downturns. Today, those multiples are high- unnervingly
high, if you’re me. The chart you’ll see at the bottom is the Risk Premium Index (Standard & Poor’s).
This index hit an all time high in December of 2024, meaning stocks have never had higher multiples
versus risk free assets in absolute index terms. I suspect that our multiples are at risk this year.

But there’s something very important you’ve likely heard from me that I’m obliged to say again: it’s
possible for dollars paid by investors to fall without a recession. A recession doesn’t per se mean we get
fewer multiples paid. What a recession does

mean is that we get fewer dollars of earnings

from Corporations on markets.That can lead

markets down, but this is the most reasonable

version of market “crash.” It’s also potentially

means that contractions are shorter- all firms

have to do is earn more money at that point.

Tl;dr: we haven’t seen any firms earn less-

I am very much focused on that part.

Is There an Imminent Crash/Recession (cont.)

Gold May be Wrong

Gold hit another all time high last week, breaking the $3,000/ounce mark. For investors,
Krugerrands- which is an important metric because it’s the most reliable, low premium gold you
can actually buy as a consumer- hit $3,125.

All of that might be wrong. Gold certainly has uses in industrial applications, but like you’ve
probably heard me say before: gold is still primarily an investment product. It is still used by
investors to speculate on the strength of the dollar. Right now, gold is up because purchasers
are fearing the worst for the US Dollar.

You can pick your specific rationale and narrative as to why this is possibly the exact opposite of
what will happen, but there are a bunch of them: Yale’s budgetlab roots this in US Demand; K.
Vanjani thinks it’s bad for stocks; MSCI thinks it may be bad for a lot of asset classes.

If you haven’t owned gold before, this means it’s possibly a bad time to start. None of those articles
say anything about gold, but if you can read those and still feel excited about gold prices, you are
brave. I own gold, I haven’t sold any, but I will admit to being very nervous about gold over the next
year.

I’ll conclude by highlight what gold needs to keep going at its current pace: it needs some people to
see it as a safe haven even as the dollar goes up. Such a phenomenon has happened before, and the
explanation for that kind of outcome are usually that investors can feel very nervous about
everything even when the root of all US assets- the dollar- is also getting stronger.

• ETF Exchange is an annual ETF event, and it’s usually very inconvenient. This year, it was
  inconvenient by the schedule but geographically close, at the Virgin Hotel in Las Vegas.
• 
  
• I learned a lot from this experience. These were the main themes:
• 
  
• Pessimism about the US forward looking returns for stock markets, but increased
  optimism that bonds will play the risk management role they historically had played.
• Fading interest in AI as an investment theme, and increased frustration with high prices
  for AI-related stocks.
• Enthusiasm for International Stocks; in Fixed Income, improved outlook for Global
  Bonds.
• Moderately growing interest in Cryptocurrencies as a serious sub-asset class, but still a
  lack of understanding on how Cryptocurrencies work and much of the jargon.
• 
  
• I had dinner with the Research Affiliates group (aka RAFI), and it was the most fun I’ve ever
  had at one of these conferences. RAFI is having a real moment lately, and it was great to get a
  number of uninterrupted hours with them. It was a real kvell moment for me, as a long-time
  investor in RAFI personally and advisor to a number of RAFI portfolios over the years.

It’s not a secret that I have had literally hundreds of phone calls, emails, instagram messages, etc., about
Donald Trump since November. I think everyone who reads this that didn’t know that could have guessed
it.

The second most frequent question is how I am doing personally with elections and... the absolute state of
the United States. I usually like to breeze past this topic as much as I can in interest of maintaining the
professional mystique- people with licenses and designations are expected to be well balanced at all times,
including during national upheavals. At this time, I am actually doing well. That’s not the answer that’s
supposed-to-be, it’s the real one.

For me, what we call Yirat Shamayim or a fundamental deference to HaShem is my go-to place to anchor to
emotionally. As someone who’s read financial news every single work day for more than 13 years, I am
fond of saying “the news is always bad.” It’s usually accurate. A truism from Wall St. is “markets climb a
wall of worry.” Which is to say, long ago I learned that rooting my well being in news is to choose endless
misery. Which is not to say that spirituality exists to feel good- it also can feel bad. But it’s my baseline now
as ever.

To those ends, I’ve been making some time for Gamilut Chassadim related to the LA fires. There are
insights that folks are looking for in terms of what the fires mean for them. It’s brought up a lot for me- for
one, I am reminded that I have a long standing belief in the need and efficacy of Ge’Mach
communities/Free Loan Societies. If you know people in LA that are struggling financially with fire
impact, please don’t hesitate to send them my way- I am doing pro bono work in this area as I can.

Personal Notes