Millbrook Advisors, LLC

Millbrook Advisors, LLC - a fee only financial planning firm - offers this blog on selected planning topics for the use of the general public. Millbrook is not an investment adviser and does not offer, for compensation, advice on the value of securities or the advisability of investing in securities.

shakespeare Financial planning tip for the day from Shakespeare!

Investigate the free, interactive and self-directed financial planning advice available on this website. Complete a shortself survey to determine your financial risk tolerance and suggested asset allocation. Investigate the many benefits of the super IRA - a.k.a. health savings account. Analyze the rent vs. buy investment tradeoff for homes in your area. And more! The chart below presents key trends in the US stock market since we dumped the gold standard in 1972:
  • The blue line is the S&P 500 index in log scale
  • The violet line is the composite earnings of the S&P500 in log scale
  • The shaded bars are the official recessions during the period
  • The yellow X-factor line (right axis) is the difference between the actual S&P earnings yield and the S&P earnings yield estimated by a regression on the yield on AAA corporates and the inflation rate through 2020.
While the random walk theory is a powerful one, we at Millbrook Advisors nevertheless find the X-factor helpful. When it goes strongly negative, the market seems headed for trouble. For the quarter ended September 30,2022 the X-factor continued negative but turned upward as the S&P500 dropped and inflation moderated slightly. The earnings outlook has turned slightly negative. The Fed is intent on fighting inflation with proposed interest rate increases and rollback of quantitative easing. Stock price volatility increased.
Recent financial news that we, with our contrarian bent, found worthy of note:
  • In the long run, we are all fine? Unlike death, inflation in the U.S. - so far - has not led to the end of days. Real returns have kept their head above water since the shift to paper money in 1972. But the lost decade of the 1970's required a long convalescence. Now the spectre of the lost decade is back with us! Inflation is running hot and the Fed has slammed on the brakes. For the alert investor, what steps would have dodged the bullet of the 1970's? Would they make sense in 2022?
  • Is Gold the Real Deal? Keynes dismissed gold as a barbarous relic; gold bug is not usually offered as a complement. Yet the trailing 20-year average return for gold is 8.9% as of 12/31/19 - helped by another strong return last year. In our efficient frontier analysis it trounces government bonds as an equity diversifier for all but the most conservative portfolios. Is the wisdom of crowds sensing that central banks and fiat money have led us astray?
  • Is College Worth It? Absolutely. Although saving and paying for college is a huge challenge for many families, the payoff is high. Of CareerCast's Best 20 jobs for 2019, all require a college degree or more. These jobs are an eclectic and interesting mix.

Contact us at 207-232-1630 or via e-mail at Millbrook Advisors.

Last updated 11//28/2022