Macro Minute: Week of June 12, 2023
Today, I’d like to highlight two charts. Recently, while discussing housing with Jessica, the topic of owning versus renting came up and it immediately reminded me of a chart I had seen recently:
The caveat here is that real estate is very specific to your location and averages like this are not always relevant to any one specific situation. Nevertheless, this visual serves as a reminder that rising interest rates directly affect housing. This is leading many to stay in low-rate mortgages and not move to prevent having a higher monthly payment.
Additionally, the shift to many now working from home has allowed people to stay in homes and not be forced to move for jobs. This is an interesting topic that could be discussed in much more depth but that is not for a Macro Minute. Very interesting chart none the less.
I also came across another Dimensional graphic that Meb Faber reposted from @ServoWealth:
I like this as a reminder that once a stock has gotten into the largest group of stocks most of that companies’ growth is reflected in the price. It is hard for a company to continue to innovate in a way that can sustain growing fast. This does not mean that these are not great companies and extremely profitable. Currently, there is considerable excitement around artificial intelligence (AI), leading to increased investments in companies like NVIDIA.
This chart serves as a cautionary note for investors expecting similar returns to continue. This is by no means a prediction on what will happen, only what has happened to other companies as they have become one of the largest.
That does it for this edition of the Macro Minute. If you find these informative, feel free to forward them on.
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