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I am reminded of this chart every time I drive by a car lot. Before the pandemic, financing and insurance profits made up 70% of the dealer’s profits. Now, due to price appreciation of their inventory, that percentage has changed. However, the dollar profits from financing and insurance continue to increase. Car dealers have become more like finance and insurance companies.
Below is a great chart from Putnam, which shows that over the last 15 years, if you missed the top 10 best days of market gains, your return would have gone from 10.66% to only 5.05%.
Since we use both Vanguard and iShares by BlackRock Exchange Traded Funds (ETFs) extensively, one of my pleasures over the last few years has been seeing each company try to outdo the other by lowering costs. As they continue to lower costs, they gather more and more investments. As referenced in a recent Bloomberg article, together they account for 64% of the ETF market as Vanguard is getting close to the size of BlackRock.
It’s hard to do commentary when in the morning, the markets are down, and by lunch they are level, and by the close they might be up, and vice versa.
In a compelling article by BlackRock, they make an argument that even though we are facing higher than normal inflation and turmoil, that fear is driving investors to hold too much cash.
As with all things, patience is the name of the game in the long run. Below are three notes about today.
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