Phil Kernen

Phil Kernen

Phil Kernen, CFA, is a portfolio manager and partner with Mitchell Capital, a financial planning and investment management firm in Leawood, Kansas. When he's not working, Phil enjoys spending time with his family and friends, reading, hiking and riding his bike.

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Here for the Duration

Phil Kernen  |  Nov 15, 2022

BONDS ARE OFTEN SEEN as the safe harbor in a retiree’s portfolio. But that sure hasn’t been the case this year.
As the long era of easy monetary policy—one that dates back to 2008—has come to an end, bond owners have been handed hefty losses. With interest rates rising and the Federal Reserve tightening, many investors have come to understand the risks they run with bonds.
Was there a way to know the risk beforehand?

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Rates Up Fed Down

Phil Kernen  |  Aug 7, 2022

THE FEDERAL RESERVE has been the biggest buyer of Treasury and mortgage-backed bonds for the past decade. In that time, it expanded its balance sheet from about $800 million to more than $8 trillion.
As long as inflation remained low, its bond purchases helped produce a slowly growing economy by keeping interest rates and unemployment low. Now that inflation is at its highest level in 40 years, the Federal Reserve is starting to raise interest rates in response.

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Going Strong, Alas

Phil Kernen  |  Jul 5, 2022

THE FINANCIAL NEWS these days is all about inflation—what caused it, what it means for American families and how we should address it. Little wonder: The annual U.S. inflation rate hit a 40-year high of 8.6% in May.
How can we track a slow-moving force like inflation to figure out when it’s starting to cool? I’d watch four areas: energy costs, housing demand, employment rates and retail spending. When I examine the latest trends from these four bellwethers,

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Dangerous Curves

Phil Kernen  |  Mar 22, 2022

FINANCIAL MARKETS are full of indicators and data relationships from which we tease conclusions. Few signals grab our attention more than an inverted yield curve and its habit of showing up before recessions. But is this signal still accurate in predicting economic trouble?
When U.S. Treasury bond yields are plotted on a graph, they normally have an upward slope, with short-term yields generally lower than longer-term yields. That makes sense: Lenders demand a higher rate for 30-year loans than 10-year loans because their money is at risk for longer.

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AAA Is for Apple

Phil Kernen  |  Jan 28, 2022

TO BE AWARDED a triple-A credit rating was once a priority for some of the biggest and best-known U.S. companies. Only the financially strongest companies, organizations and governments can earn a triple-A rating.
The triple-A rating typically bestows the lowest borrowing rates and suggests the highest ability to repay bondholders. But the triple-A club has been shrinking over the past four decades. Apple recently became only the third current corporate member of this exclusive club.

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Too Much Talk

Phil Kernen  |  Jan 20, 2022

OVER THE PAST 25 years, the Federal Reserve has become more transparent than ever. Much of this is the result of political pressure. Still, the Fed has taken it further, believing greater transparency to be a good thing in helping the public understand the likelihood of future policy changes. Talking more may have helped us move past the 2008 financial crisis. But it isn’t helping us now.

Congress created the Federal Reserve in 1913.

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Pain Postponed

Phil Kernen  |  Dec 21, 2021

BUY NOW PAY LATER is an online payment method that’s growing in popularity. Money and investors have moved toward participating companies big and small, as they seek to stake their claim in this growing market. What’s the big deal and why is everyone excited?
Buy Now Pay Later (BNPL) allows consumers to purchase goods and pay for them in the future. Approval happens in seconds. You make a down payment, such as 25% of the total purchase,

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All in the Execution

Phil Kernen  |  Nov 15, 2021

A FRIEND WAS RECENTLY asked by his father to be executor of his estate—and, without hesitation, my friend agreed. But then the conversation quickly moved on to other topics, leaving my friend confused about his role.
My suggestion to my friend: Have another conversation with your dad—and ask these four questions:
What are your expectations? Someone who creates a will is known as a testator. The primary role of an executor is to settle the testator’s estate.

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Keeping Score

Phil Kernen  |  Oct 19, 2021

WHAT’S YOUR CREDIT score? That’s hard to answer because none of us has just one. You likely have a dozen or more. So how did consumers come to think that one credit score—the FICO score—is the sole reflection of their ability to repay a loan?
Following decades of growing consumer spending, and associated data collection, the Fair Credit Reporting Act of 1970 required credit bureaus to open their files. The intent was to protect consumers from lenders who were relying on incorrect information.

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Help Helping Others

Phil Kernen  |  Sep 30, 2021

AMERICANS ARE a generous people. They gave $471 billion to charity in 2020, according to Giving USA. Of that sum, 69% was contributed by individuals like you and me, as opposed to foundations or corporations, plus another 9% took the form of bequests.
Are you charitably inclined? Donor-advised funds can offer a tax-efficient way to make financial gifts, allowing folks to fund their own giving foundation and then direct money to charities for years to come.

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No Green Light

Phil Kernen  |  Sep 7, 2021

MORE AND MORE investors are using environmental, social and governance (ESG) criteria to direct their investment dollars toward companies fighting climate change. An obvious question: Do companies that deliver “green” innovations earn high ESG scores?
It seems not. The authors of a recent study from the European Corporate Governance Institute found that:

Companies with lower ESG scores are producing more and higher-quality innovations designed to mitigate climate change.
A sizable percentage of recent U.S.

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Going Direct

Phil Kernen  |  Aug 23, 2021

HEARD OF DIRECT indexing? It’s supposed to be the next big thing in investing. Let me tell you why that isn’t likely.
Direct indexing arose from a shortcoming in the way exchange-traded funds (ETFs) work. Most ETFs mimic a market benchmark such as the S&P 500 or the Russell 2000, and are bought and sold on an exchange like stocks. Their main selling point is that there are no active portfolio managers selecting the securities,

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Three Other Legs

Phil Kernen  |  May 7, 2021

THE THREE-LEGGED stool is a metaphor for how the post-Second World War generation looked at retirement. The legs represented Social Security, an employer pension and personal savings. All three legs were viewed as necessary for a solid retirement plan.
Today, that notion seems quaint. Pension plans continue to be phased out. The number of employees covered by a defined benefit pension has been declining for decades, falling to 26% as of 2019, according to the Bureau of Labor Statistics.

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Virtue’s Vice

Phil Kernen  |  Apr 22, 2021

IT’S BEEN A GREAT stretch for many mutual funds and exchange-traded funds that buy stocks based on environmental, social and governance (ESG) criteria. For instance, the actively managed Parnassus Core Equity Fund notched 19.3% a year over the three years through March 31, Fidelity U.S. Sustainability Index Fund has climbed 17.4% and iShares ESG Aware MSCI USA ETF 18.2%. All three funds look like winners compared to the S&P 500’s 16.8% annual total return.

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Staying Safe

Phil Kernen  |  Mar 30, 2021

FOLKS FORGET passwords every day, an inconvenience that can usually be quickly fixed—but not always.
In January, The New York Times wrote about a German programmer living in San Francisco. A decade ago, he had been paid 7,002 bitcoins for making a video explaining how cryptocurrencies work. He stored them in a digital wallet on a hard drive and wrote the password on a piece of paper, which he has since lost.

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