Watching Sausage Being Made: The $3.5 Trillion Budget Reconciliation Package

Barnett and Company

Otto Von Bismarck, the man credited with uniting various fiefdoms into what is today Germany, once said there are two things the public must never see: one is sausage being made; the other is how legislation is passed into law. The $3.5 trillion reconciliation spending bill before Congress this week is already known for its […]

The Zombies Among Us: How COVID Has Affected Some Companies

Barnett and Company

Data shows that companies borrowed around $11 trillion to stay afloat during the time that revenues declined or disappeared. The repayment of this sum, along with the interest it generates, will impact profits and cash flows for years.

Inflation is Coming: Are You Ready? Are You Sure?

Barnett and Company

For a generation of investors, inflation is something read about in history books but never experienced. This is about to change. The combination of relaxed COVID restrictions, forced savings to be spent, fiscal stimulus, and an inability to match labor with demand are all resulting in higher prices. In this case, “higher prices” means higher […]

How Indexes Mislead: Performance of the S&P 500 Relative to Other Benchmarks

Barnett and Company

As of last Friday, the Standard & Poors Index, the basis for index funds under the same banner, had recorded a year-to-date appreciation of 11.29 percent. While this is a commendable number, it was attained entirely (and then some) on Price/Earnings multiple expansion. A year ago, the index had an average P/E ratio of 20.34. […]

How Avoiding Risk Can Create Risk: A Primer on False Risk Avoidance

Barnett and Company

Students of finance become acquainted with what is taught to be the “risk-free rate.” This is the return that can be obtained by investing in securities of the United States Treasury. Usually, the five-or ten-year treasury yield is counted as the benchmark rate, with potential returns taken as some increment of this rate.

After 2020: Ready for 2021? Insights for the New Year

Barnett and Company

This year will be best recalled as one where the economy went down, and the stock market went up. After suffering a 30 percent contraction in March and April, the GDP came back forcefully in the summer, only to fade out in the closing months of the year.