Daily Commentary

MarketMinder’s View: Here is an informative look at one item in the House’s budget legislation: so-called “Trump Accounts,” which are tax-deferred investment accounts for children. If these pass in their present form, “a Trump account could be set up by parents who have children under age eight starting on January 1, 2026. Also, through a pilot program, the US government would contribute $1,000 to accounts for babies born from the beginning of 2025 through the end of 2028. The US Treasury would automatically set up accounts for eligible children who don’t already have them.” This piece covers a lot of the administrative details, including contribution limits ($5,000 annually, adjust for inflation, excluding contributions from the government or nonprofits), taxation (deferred until withdrawal, when money taken for qualified expenses would face capital gains rates) and approved investments (US stock index funds or “other diversified portfolios” of US stocks). All good to know. The rest of it focuses on the alleged implications, including the costs to the US Treasury and the potential long-term financial ramifications for the kiddos and society overall. All interesting, if speculative, but we see another potential benefit. If America’s youth all own some stocks, then America’s youth will all learn the magic of compound growth and other core principles, and financial literacy could improve overall. That might be an even bigger gift to these folks than the money itself—teaching a person to fish and all that. Anyway, if you have an eligible child or grandchild (or niece, nephew, godchild, what have you), keep an eye on this. And for more of the magic of financial education for the young’uns, see Ken Liu’s timeless column, “Personal Finance: It Isn’t an Election Anymore.”

MarketMinder’s View: This piece mentions several companies, and as always, MarketMinder doesn’t make individual security recommendations. It also starts with some politics, so we also remind you we prefer no political party nor any individual. We bring you this for the market implications and the broader claim only. Which is: Even if you don’t directly own cryptocurrencies, they “may already be snuggled in your nest egg, whether you know it or not.” The main reason is that some publicly traded companies own bitcoin and other cryptos, so if you own them either directly or through index funds, ETFs or mutual funds, you own crypto whether or not you want it, which could be bad. The article casts this all as a bit sneaky, but we have a hard time seeing how it is different than any other asset that might be on a company’s balance sheet. Some companies have a lot of real estate—would you consider that unwanted exposure to real estate in your portfolio? Yes, crypto might be a balance sheet risk, but again, it isn’t a unique one. And all told, we are talking about exceedingly tiny fractions of major indexes like the S&P 500 and MSCI World. The company getting the most pixels isn’t even in the S&P 500 and is less than one percent of Nasdaq Composite market cap. So while we aren’t inherently for (or against) crypto and agree the companies loading up on it could get caught out of it crashes (again), if you are in a broad, diversified portfolio or in index funds, it won’t make or break you. We agree it is important to know what lurks in funds you own, but this seems to be blowing the issue out of proportion.

MarketMinder: Sometimes, especially on a Friday in a week with a lot of bad news, it is healthy and helpful to pause for something uplifting and educational. So we bring you this piece, written by the daughter of Fischer Black—the late economist who, along with Myron Scholes and Bob Merton, developed an options pricing model “that helped birth modern finance.” Her recollections center on his simple approach to life: “Ask questions and think for yourself. My favorite quality of his was the freedom with which he approached conventional wisdom, unattached to even his own previous ideas. I remember the look of glee on his face when he told me he was working on a paper called ‘How to Use the Holes in Black-Scholes.’” This willingness “to push against old assumptions regardless of how ingrained they may be” is a bedrock mentality for investors. So much of the conventional wisdom about investing is really just myth people accept without testing. Like the belief high price-to-earnings (P/E) ratios are bad for markets and low P/Es good—wrong, there is no connection once you square up P/Es and forward returns. Ditto high oil prices, a strong dollar, a weak dollar, a high VIX, you name it—no meaningful, predictable connection with stock returns. Fisher Investments founder and Executive Chairman Ken Fisher wrote an entire book about fostering and exercising this mentality in 2006, The Only Three Questions That Count (read it, you will love it). And whenever we see these same principles espoused by others, we tip our hat.