The Investment Scientist

Archive for July 2022

The first half of 2022 was the “worst” six months of the stock market since 1970 according to the financial media. The S&P 500 is in bear market territory. The tech-heavy Nasdaq is down 30%. Even the bond market, which is usually up when the stock market is down, is down by double digits. What a blood bath!

I had rolled over an old 401k account to an IRA last October. By the end of June, the account was down nearly 15%. Let’s take a closer look at how I invested the money.

The Initial balance was about $711k, which I used to invest in 3054 shares of US Total Stock Fund (USTSF), 4511 shares of Global Real Estate Investment Fund (GREIF), 4900 shares of International Stock Fund (INTSF), 263 shares of Nasdaq 100 Stock Fund (NDQSF), and 53109 shares of High Yield Corporate Bond Fund (HYCBF). Note that all of these symbols are pseudonyms. 

After the initial investment, I made only one change in April, which was to sell some GREIF and HYCBF to buy 223 shares of Gold Fund (GOLDF). In the table below, I show how the amount of each asset increased (green) or decreased (red). In the last two rows, I also show the value and the income of the portfolio and how they increased or decreased over time.

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In a previous article, I used the Quantity of Money equation to explain what the Fed had done to rescue the economy from imminent collapse at the onset of the Pandemic. Today I will explain why doing that caused inflation and why that inflation is not unlikely to be transitory unless certain things happen.

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Michael Zhuang is principal of MZ Capital, a fee-only independent advisory firm based in Washington, DC.

Twitter: @mzhuang

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