What Financial Markets Are Telling Us Now, at FIC
Peter Ricchiuti, an economist and professor at Tulane University, gave an entertaining view of how to read the markets at the Franchise Investment Conference today.
The current economic expansion is the longest on record, 127 months, said Peter Ricchiuti, and a lot of people think the good times will last forever. They believe the most dangerous words in investing, he added: "This time it's different."
He's an economist and a professor at Tulane University's Freeman School of Business, who's as full of folksy sayings as corny jokes that nonetheless got the audience laughing at the Franchise Investment Conference today.
"Let's talk about what this market is telling us, and it's giving us a completely mixed message. The bond market is telling us to be bearish about the economy. The stock market is telling us to be bullish about the economy. Which way is up?" he said.
"I've never seen this kind of bifurcated market, and one of them is right," he said. "One of the reasons the market is crashing is because it was waaaay overpriced." Over the long run you can't have: low interest rates, elevated stock prices, growing deficit/debt and low unemployment. "Something's got to give."
In the last 60 years the U.S. has had six recessions, he said, in four cases lasting six or eight months, in one case lasting 16 months and in the most recent one, beginning in 2017, lasting 18 months.
Ricchiuti says he's often asked what he teaches his kids about finance, and he had a quick example: "I would get my kids ice cream and I would eat 38 percent of their ice cream to show them how taxes work."
He had more general advice, too, after showing a chart that tracked happiness from youth all the way through the 60s, 70s and up.
"At 18 you're pretty happy, then you go into the workforce and you're the low man on the totem pole … and then you get teenagers in the house which is terrific," he said, showing clearly by his body language the opposite is true. "And then you're caring for elderly parents and then finally, at my age, and things are a lot better.
"So the only message today is, DON'T DIE," he said. "It's going to get better."