Billionaire Boasts | News or Noise

In the span of 2 weeks, a few well-known billionaires have done a lot of flip-flopping on TV.  One well know banker went from publicly guiding up his bank’s 2nd half outlook on May 23rd,  saying the economy was strong,  to telling investors on June 1st,  to batten down the hatches; the economy may be facing an economic hurricane.

I’m Chris Perras, Chief Investment Officer with Oak Harvest Financial Group.  And This is our investment team’s mid-week release when we examine a news item, headline, or story making the rounds from publicly available sources, and ask, “Is it News or Noise for your investment portfolio?”  This week’s topic is something I want to call “Billionaire Boasts?”  And I apologize in advance if this sounds like a bit of a rant.

For the last two weeks, between the Davos World Economic Forum in Switzerland, which in my opinion has just become a big ego party for billionaires and politicians, and more local media reports, we have been flooded with hundreds of news stories reporting on virtually every billionaire’s opinion on the economy and stock markets.

Elon Musk has gone from boasting of making a $44 billion takeover bid for Twitter to 6 weeks later telling reporters “he has a super bad feeling” about the economy and saying that Tesla was looking to cut its workforce by 10% or about 10,000 jobs.

Jamie Dimon, the CEO of JP Morgan, likewise, in late April of this year, said he wasn’t sweating higher interest rates.  Just one week ago, he said he was optimistic about the second half of 2022, so much so that he raised profit margin goals.  However, seven days later, in even less time than Elon, he reversed this stance from sounding optimistic on the second half of 2022, to then warning of the potential of an economic hurricane caused by rising long term interest rates, that, I have to point out, are at the exact same levels as they were when he was more optimistic.

What gives?  I have no idea.  Little to nothing has changed over the last few weeks.  The real-time data continues to show a slowing in consumer goods purchasing and a higher consumer spending on services.  The data also shows that inflation looks to be peaking, albeit slowly, and beginning to decline in many areas.

Maybe Elon stopped obsessing over Twitter and went back to the Tesla car plants and saw that the production lines weren’t moving as fast as in 2021.  Perhaps he just realized what the rest of the world has known for over 2 or 3 months: China was virtually shut down for most of the first quarter and the beginning of the second quarter due to Covid, and demand and supply chains would be abysmal this quarter.  I don’t know.

What I believe and know is this.  The crowd that gathers and parties in Davos, Switzerland, and most CEOs, have horrible track records of predicting the economy and, worse yet, forecasting the financial markets into the future.  I also know that while I respect the careers, accomplishments, and success of many of these people like Elon, I know that they gained most of, if not all of their wealth, not by forecasting the economy and investing in the stock and financial markets, but rather by three things, specialization, focus, and growing their own businesses.

So, the next time you hear a well-known billionaire or CEO pontificating about financial markets or other things in the press, ask your-self “why do I care about this person’s opinion”?  Is their area of expertise at all relevant to my investments?  Or is it just another entertaining opinion, being hyped by the financial press because of the individual’s massive net worth?  From an investing, not an entertainment perspective, I personally want to listen to real-estate executives talk about real estate, software billionaires discuss software technology, and bank CEOs talk about banking.

Are these stories news for your investment portfolio?  Hopefully not if you have already listened to our and many others’ market forecasts.  Those forecasts being that the first half and possibly first three quarters of 2022 were most likely not going to be fun in both the financial markets and economy as we come down off the fiscal and monetary sugar highs of 2020 and 2021.

News or Noise:  Noise

At Oak harvest, we think our clients are best served by us helping them plan for their future needs, instead of focusing on the past. The future is always uncertain and that is why our advisors and retirement planning teams plan for your retirement needs first, and your greed’s second.

Give us a call to speak to an advisor and let us help you craft a financial plan that helps you meet your retirement goals. Call us here at (877) 896-0040, and schedule an advisor consultation. We are here to help you on your financial journey into and through your retirement years.

I’m Chris Perras and from everyone here at Oak Harvest Have a blessed week.