CAST YOUR MIND BACK 10 years—to Oct. 3, 2011. There was a fire-sale on Wall Street. Two months earlier, brinksmanship on Capitol Hill had culminated in Standard & Poor’s first-ever downgrade of the U.S. government. Meanwhile, Greece was on the verge of collapse, prompting the European Central Bank to take extreme measures to combat the region’s debt debacle.
It was a scary time. But—as is so often the case—the dire stories on financial television marked the beginning of a great period for long-term investors.

SUPPOSE THE S&P 500 ended the year at Friday’s close of 4455.48. Let’s also assume that the analysts at S&P Dow Jones are correct, and the S&P 500 companies have 2021 reported earnings equal to an index-adjusted $185.32. That would put the S&P 500 at 24 times earnings, versus today’s 34.8.
That would be considered high by historical standards, though it isn’t outrageous given today’s low interest rates. But what would it take for stocks to look like a compelling investment?

OPEN AN ECONOMICS textbook, and you’ll find this fundamental principle: When the money supply expands—that is, when the government prints more money—higher inflation is often the result. This topic has, for good reason, been on investors’ minds lately. Since the pandemic began, the Federal Reserve has increased the money supply by several trillion dollars.

Is higher inflation inevitable? I see five possible answers to this question:

1. Yes, of course. Between 2010 and 2020,

DIVIDEND YIELDS MAY be tiny, but they sure they get talked about a lot. As Rick Connor pointed out on Friday, the S&P 500 stocks collectively yield just 1.3%—near 20-year lows. Yields have fallen as share prices have climbed and as companies have put more emphasis on stock buybacks. In fact, today, companies spend more on buying back their own shares than paying dividends.
Companies continuously manage their capital structure—how much of the enterprise is funded by issuing stock and how much with debt.

WE’VE ALL BEEN looking for signs that the financial world is returning to some semblance of normalcy. I recently read a CNBC article that gave me hope. The article said that worldwide dividend payouts were expected to reach $1.39 trillion in 2021, almost back to pre-pandemic levels.
The data came from a report by Janus Henderson, a U.K. money manager. Dividends in this year’s second quarter increased 26% from 2020’s second quarter and were only 6.8% below 2019’s second quarter.

AT THE CRACK OF DAWN each day, I grab a cup of coffee, and then dig into the latest investment articles and research reports. Last week’s most intriguing insight: According to data from Emerging Portfolio Fund Research, investment flows into global stocks are on pace to hit $1.048 trillion this year.
To appreciate the magnitude of this year’s inflows, consider that 2017 ranks as the next strongest year—at a relatively paltry $300 billion. Other years,

ON SEPT. 11, 2001, I spent an hour and a half standing on a crowded subway train two blocks from the World Trade Center. During that time, both towers collapsed. No smoke came shooting down the subway tunnel. The earth didn’t noticeably shake. There were no deafening noises. Instead, we were just another subway car packed with disgruntled passengers, muttering about the perils of public transport.
It was only when the train backed up to Penn Station in midtown Manhattan that we learned what had happened that day.

FROM THE TIME I started covering Washington as a reporter in 1980, politicians have been condemning the federal budget deficit. Ronald Reagan was running for president that year. He excoriated his opponent, President Jimmy Carter, for increasing the federal debt by—brace yourself—$55 billion in 1979. These days, that wouldn’t pay a week’s bar tab for Uncle Sam.
With the sole exception of Bill Clinton, every president for 40 years has added to the federal debt,

U.S. AND FOREIGN STOCKS are highly correlated, with monthly returns that move in the same direction almost all the time. Because of this, some have argued that there’s scant reason to diversify internationally.
But there’s a small problem with this argument: Just because investments move in the same direction doesn’t mean they generate the same return. For proof, consider the past 20 calendar years.
Over that stretch, there were only three years when U.S.

ALL EYES ON FRIDAY were focused on Federal Reserve Chair Jerome Powell. “Will Powell announce an aggressive taper plan?” many market-watchers wondered. Not a whole lot new was presented, and that triggered a stock market rally. The S&P 500 notched its 52nd all-time high of 2021 and the Russell 2000 small-cap index had one of its best days of the year.
Small caps got off to a hot start in 2021. By mid-March, the Russell 2000 was up 19% on the year,

ON AUG. 15, 1971, President Richard Nixon made the weighty decision to end the convertibility of the U.S. dollar into gold. By doing so, he drove a stake through the heart of the gold standard, a monetary system which fixed the worth of a unit of money to a specific amount of physical gold. Before that day, foreign central banks were able to exchange $35 for one ounce of gold from the vaults of the U.S.

THERE’S A LOT of handwringing right now about U.S. stock market valuations. Prof. Robert Shiller’s cyclically adjusted price-earnings ratio, or CAPE, has rarely been more famous—or perhaps infamous. It’s currently perched near 39, meaning buyers of the S&P 500 are paying almost 39 times average inflation-adjusted corporate earnings for the past 10 years. That number might mean little to many without proper context. It was around five at the worst of the Great Depression,

BANK OF AMERICA’S monthly fund manager survey takes the pulse of portfolio managers around the world. The latest survey was released last week—and some of the results weren’t so rosy.
Despite a record-breaking quarter for corporate profits, which blew past analysts’ predictions, money managers have turned more bearish. Perhaps recent market volatility, especially among foreign stocks, has caused jitters. Also casting an ominous cloud is the Delta variant’s global spread. On top of that,

REMEMBER 2020’S BIG market swings? Financial markets have been more boring of late. But are things too quiet?
The VIX is the most  commonly cited indicator of market volatility. Turn on CNBC or flip through The Wall Street Journal and you’ll likely learn the latest reading for the “fear gauge.” Last Friday’s close was among the lowest of the year, with the VIX at a little more than 15, versus an historical average closer to 20.