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March 5, 2021
Dear WEALTHTRACK Subscriber,The impact of “social media investors” on individual stocks, the markets and investor behavior is of great interest to this week’s podcast guest. John Rekenthaler, Vice President of Research at Morningstar and author of the twice-weekly “Rekenthaler Report” has been analyzing and following the mutual fund industry and markets since 1988. One of the topics that has most intrigued him recently is the online investment communities that have driven GameStop’s meteoric rise and stunning declines. More stocks are coming under their sway and Rekenthaler says their influence is here to stay, at least until regulators get involved. We discuss their influence this week in the first of a two-part podcast series with him. Next week we will focus on the ascendancy of ETFs as an industry standard and the choices it presents to investors. How quickly sentiment turns. We’ve gone from a low-rates-forever mentality to a higher-rates-sooner one in a matter of days. The yield on the 10-year Treasury note closed above 1.5% Thursday, the highest level in a year. In January it was as low as 0.915%. Homebuyers who have been on a financing and buying spree are suddenly facing higher mortgage rates. The average rate on a 30-year fixed-rate mortgage is now slightly above 3% for the first time since July. The shift in interest rate outlook has hit growth stocks which benefited from low fixed income returns. Thursday the NASDAQ composite suffered its third consecutive decline of more than 1%, a nearly 10% slide from its most recent high which would put it in “correction” territory. Meanwhile the hottest investment areas are suffering a chill. The ARK funds, a family of five exchange-traded funds which focuses on “disruptive innovation” companies and had attracted $51 billion in assets as of the end of February are seeing significant losses and outflows. Shiller is also the co-creator of the widely cited gauge of U.S. housing prices, the Case-Shiller Home Price Index, and creator of the cyclically adjusted PE ratio known as the Cape Ratio which is a price earnings ratio for the S&P 500 based on average inflation-adjusted earnings from the previous ten years. Because it includes ten years of earnings many consider it to be a more reliable gauge of market value. I am honored to say Bob has also been a guest on WEALTHTRACK since the very beginning and we always cherish his time with us. His presence could not be more timely. He is known for identifying the tech and housing bubbles long before anyone else did, and here we are recovering from an economy crushing pandemic with home prices booming and stock prices hitting new records, at least until a few days ago. We started with the stock market, his analysis of the record-setting performance. If you miss the show on public television, you can watch it on our website over the weekend. You can also find the WEALTHTRACK podcast on TuneIn and SoundCloud as well as iTunes and Spotify. Thank you for watching, have a super weekend and make the week ahead a healthy, profitable and productive one. Best regards, Consuelo | 
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