1. What you’ve got to know is she WROTE those songs!

So it’s October 1973. I’m driving with the top down on my 1963 Chevy Impala trying to get something on the radio.

This was before cassette decks. Sure, you could buy an aftermarket 8-track, but they sat under the dash and were notorious for getting stolen. Furthermore, the 8-track format itself was wonky. With the movement of the heads from track to track…tapes wore out quickly and thus were a bad investment. Which is all to say when you were in the hinterlands, long before the days of Bluetooth, never mind satellite radio, you’d drive down the highway with your right hand on the radio dial, trying to pull in a listenable station.

Now this was in the hinterlands of Vermont. Needless to say, this ’63 convertible didn’t have FM, not that there was a station broadcasting in the backwoods. But AM signals travel further and…

What you notoriously got was rural news, the farm report, and country music. In an era where no proud rocker followed what was going on in Nashville.

Sure, Ringo made a record in Tennessee. But most of us in the north had never even been south of the Mason-Dixon Line, unless it was the hop, skip and a jump to Florida. We wrote off the south, that’s where you went with your long hair and got attacked by rednecks.

Now don’t confuse today’s country music with yesteryear’s. Today’s country is the rock of the seventies. Back then, it was people with high hair singing twangy songs…

Sure, there was a TV show, “Hee Haw.” But this was long before the average fan of the Fab Four gave props to Roy Clark for his picking ability. As for Buck Owens…we couldn’t find Bakersfield on a map, never mind name a single song of his.

Sure, we knew Roger Miller from the AM radio of the sixties. “Trailers for sale or rent…” This was what we endured to get to the Beatles.

But I’m in a pensive mood, wondering how I’m going to endure another year of college, it’s a brisk day and I stumble on to a station and what comes out is “Jolene.” It was not only the first time I heard the song, it was the first time I’d ever heard Dolly Parton. She hadn’t crossed over, she wasn’t featured on Top 40 radio in the metropolis. But rather than continuing to mosey down the dial, looking for some rock, I listened.

“Jolene, Jolene, Jolene, Jolene”

This was rootsy. Not that different from those Bonnie Raitt albums I was enamored of. This was not drippy drama, songs to sleep to. I could relate. And I never forgot it.

2. Now we knew who Dolly Parton was. I mean how could you not? With that hair and those boobs?

But the real breakthrough into the mainstream was “9 to 5.” Back when Jane Fonda could open a movie and a flick like this could garner an audience. “9 to 5” was a staple. Everybody saw it. And what they saw in Dolly Parton was someone who didn’t deny her roots, but was in on the joke. That was the thing about Dolly Parton, she had a sense of humor, she could make fun of herself. Not to mention writing the title song, which went all the way to number one and earned her an Oscar nomination.

Dolly Parton was now part of the firmament.

From the holler, but never lumped into the same bucket as Loretta Lynn and George Jones, no matter how talented they might have been. Dolly Parton was now mainstream, when those other acts were not. They were still inhabitants of the country ghetto, Parton had transcended that.

And she maintained this status for the next half century. To this day! Most people have ups and downs, their careers wax and wane. People change their opinions on them. But not Dolly Parton. Somehow by being aw shucks and exhibiting all that talent, she was embraced.

And, once again, she was in on the joke. She’d go on late night TV and play the role. You’d think she was ditzy, almost a bimbo, and then she’d let out a zinger showing that she was as sharp as you and me and to underestimate her was a mistake.

3. But Parton’s crossover appeal, the cementing of her credibility amongst those who were not country fans, was the 1987 “Trio” album, which she made with Linda Ronstadt and Emmylou Harris.

I bought that album, played it too. It was a natural extension of the country rock that began with “Sweetheart of the Rodeo,” which always had a place in the firmament, it never died.

Now the funny thing is the true star, the person who could make it happen, was Linda Ronstadt, who was a superstar in the seventies and then broadened her purview to the stage with “Pirates of Penzance” and then cut three albums of standards with Nelson Riddle. If Ronstadt’s name was on it, it sold.

And in truth, Linda had much more broad-based musical success than Dolly, more hit albums, but now, nearly forty years later…

Linda’s star in the public firmament has faded, yet Dolly’s shines as bright as ever.

Because Dolly wrote.

That’s what makes it so you’re remembered. The songs.

And Dolly’s songs were personal. And her story from there to here was one of lifting herself up by her own bootstraps. Gloria Steinem may have gotten all the ink, but Dolly was just as much of a role model for women’s liberation, if not more.

Dolly wrote for herself. And the personal is universal, when you do it right.

And she was so damn likable. Without being syrupy sweet, without shaving off all of her rough edges. She played the game with a wink. And those who play and can beat the odds doing it their way…we cotton to them.

4. And then there was the whole kerfuffle with the Rock & Roll Hall of Fame.

Unlike the desperate with a chip on their shoulder, looking for the accolade as a victory lap they can put on their résumé, Dolly thought she didn’t deserve induction, because she wasn’t really a rock artist.

But if you’re going to induct Whitney Houston…

And, of course, Dolly wrote Whitney’s signature song, “I Will Always Love You.” An outstanding performance, but it’s the song that will live on, not Whitney Houston. Look at history, rarely are interpreters remembered, but writing, when done right, is forever.

So Dolly Parton, of all people, is calling the Hall on its B.S. Ironically, she’s standing up for the leather jacketed crowd pissed that pop, never mind hip-hop, is now part of the Hall. She was more interested in the integrity of the institution than the award.

But when Dolly finally acceded, she took the stage, played the guitar and ROCKED! I was there. You couldn’t watch it without a smile on your face. If this was the Rock Hall, she was going to deliver, and she did!

5. Now if you want to know every facet of Dolly’s career, there are plenty of obituaries to fill that need. You can go on Spotify and listen to her catalog. I’m no expert.

I’m just like so many of you. Country music of the sixties and seventies was not my bag (Although I did love Charlie Rich’s “The Most Beautiful Girl”… Then again, do youngsters even know that classic? I don’t see any of them covering it. But young acts continue to cover “Jolene” and other Dolly Parton songs.), but Dolly Parton was an exception. We all knew her, she was embedded in our hearts and minds. As much as she appeared, she was never overexposed, we were always glad to see her. She was like someone from down the street, dropping by for a cup of coffee, gossiping with relish. She was more than a performer, she was a person!

I know you know what I’m talking about.

Which is why there’s a national, international outcry over her passing.

Old rockers? They’re dropping like flies. Then again, when they’re not on the road…out of sight, out of mind. But Dolly Parton never left the news. And she’s left a hole that cannot be filled, because she was sui generis, there was only one Dolly Parton.

And there will never be one again.

Just like the Beatles were a product of post-war Liverpool…

Dolly Parton was a product of a rural America that has expired with modernity. Sure, there’s still poverty, but there’s also flat screen TVs and smartphones and the internet…

Actually, all you can really do is marvel. At what Dolly achieved, and she never rested on her laurels, she continued to march forward.

Wow.

~~~

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~~~

Originally published by Bob Lefsetz at the Leftsetz Letter

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• ‘A Deal Written in Pencil’: Tariffs Are Erasing America’s Credibility: David Hebert on the lesson Mark Carney says Canada drew from 18 months of dealing with Washington, after the US slapped a 50% tariff on $20 billion of Canadian goods. (The Daily Economy)) see also Wiped Out: US Faces Surging Toilet Paper Prices amid Trade War with Canada: Lauren Aratani on Carney’s vow to match US tariffs “dollar for dollar.” (The Guardian)

• The Government Report That Made Me Stop Trusting Our Statistical Agencies: Jared Bernstein has spent years waving people off this degree of mistrust. He writes that he no longer can. (Jared Bernstein)

• Bitcoin Treasury Companies Shed $80bn in Value as Business Model Unwinds: Nikou Asgari on an FT analysis of the 50 largest corporate bitcoin holders — combined market cap down from $150bn in July 2025 to $67bn today.(Financial Times) see also Bitcoin Is Great (For Systemic Theft of Aid Money): Robin Wigglesworth on a new NBER paper that uses on-chain data to trace exactly where the money went. Jamie Dimon’s acerbic list of bitcoin’s use cases holds up better than its defenders would like. (Financial Times)

• Logging In Was Never Supposed to Be This Complicated: Will Oremus on password managers, passkeys, and the tyranny of the two-factor-authentication code. (The Atlantic)

• The Teaser Period: Why the AI Boom Is Built to Break: Groundbreaker rewinds to summer 2006, when prices had risen for a decade, delinquencies were near record lows, spreads were tight, and the securitization machine hummed. Ask a trading desk then whether the mortgage market was months from seizing and most would have laughed. Trillions in compute commitments come due in 2027–2028. The hidden mechanics reveal how the AI boom breaks, and when. (Groundbreaker) see also Wiggleswroth: This Is How the A.I. Debt Binge Sinks the Economy: In other words, if 2025’s A.I. frenzy was merely bonkers, we are now entering the territory of bonkers squared — or perhaps even bonkers cubed. Robin Wigglesworth on the hyperscalers’ borrowing spree — if 2025’s AI frenzy was merely bonkers, we are now entering the territory of bonkers squared, or perhaps bonkers cubed. (New York Times)

• A State Gave Sheriffs 20% of Its Opioid Settlement Cash. We Followed the Money: Aneri Pattani on Louisiana sheriffs spending millions in settlement funds on law enforcement gear rather than treatmentt (Stat)

• They Dedicated Their Lives to Teaching. Then the Deepfakes Started: Caroline Haskins on teachers like Luis DeSantiago, whose likeness turned up in AI-generated photos circulating among students on social media. The deepfake epidemic in schools is affecting more than students. Four teachers tell WIRED about becoming targets of sexualized, AI-generated content—and how difficult it was to find accountability. (Wired)

• America Has 3 Billion Words of Legal Code Riddled With ‘Policy Sludge’: Outdated rules are gumming up governments across the country. Daniel E. Ho of Stanford: the Fed still sends Congress an annual report on the Presidential $1 Coin Program, years after the coins stopped being minted for circulation. Federal law demands it. (Washington Post)

• Josh Shapiro is battling RFK Jr. over measles, and the politics are getting messy: Rachel Roubein on the heated call between the Pennsylvania governor and the health secretary, minutes before Shapiro announced two measles-related deaths. A feud between the Pennsylvania governor and health secretary sparked by this week’s reports of measles-related deaths laid bare the increasingly polarized politics of public health. (Washington Post) see also RFK Jr Lied in Senate Confirmation Hearings, Newly Revealed Documents Indicate: Michelle R. Smith on letters obtained by the Guardian and AP contradicting the health secretary’s sworn testimony that his 2019 Samoa visit had “nothing to do with vaccines.”Letters obtained by Guardian and AP contradict testimony that 2019 visit to Samoa had ‘nothing to do with vaccines’ (The Guardian)

• Dolphins and other lovers: The Andoque of the Amazon know what we have forgotten: the forest’s most beautiful creatures are also its most dangerous (Aeon)

Video of the day: Your Reality Is a Simulation

Be sure to check out our Masters in Business with David Booth, Founder, Chairman, and former CEO of Dimensional Funds Advisors. DFA just crossed $1 trillion dollars, and has become the largest active equity ETF manager. Booth’s new book is “Stay Calm: Learn to Embrace Uncertainty in Investing and Life.”

One of two measles-related deaths of unvaccinated people in Pennsylvania was an infant

Source: CNN

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This week, I speak with David Booth, founder and chairman at Dimensional Fund Advisors (DFA) and author of the new book, Stay Calm.

We discuss his time at the University of Chicago Booth School of Business, where he was the research assistant to American economist and Nobel Laureate Eugene Fama, before leaving to start DFA. We also discuss his embrace of the uncertainty of markets and the importance of staying the course. His philanthropic history and giving back to the places that shaped him.

A list of his current reading/favorite books is here; A transcript of our conversation is available here Tuesday.

You can stream and download our full conversation, including any podcast extras, on Apple Podcasts, Spotify, YouTube (video), YouTube (audio), and Bloomberg. All of our earlier podcasts on your favorite pod hosts can be found here.

Be sure to check out our Masters in Business next week with Seth Bernstein, CEO of AllianceBernstein and Head of Asset Management of Equitable Holdings, the 69% owner AB. The firm manages $905.5B. Previously, he spent 32 years at JPMorgan Chase, where he eventually became the Global Head of Managed Solutions & Strategy at JPAM, responsible for all discretionary assets for Private Banking clients, and Global Head of Fixed Income & Currency. He eventually became CFO of JPM’s Investment Management & Private Banking division.

Newest Authored Book

Current Reading/Favorite Books

Paris 1919 by Margaret McMillan

1929: Inside the Greatest Crash in Wall Street History–And How It Shatteredâ a Nation

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• Who Pays the Cost When Americans Opt Out of Science?: Adam Frank thought science denial would hit a bottom once people experienced the direct consequences of being wrong. It turns out he was wrong. Astrophysicist Adam Frank used to think the consequences of rejecting science would play out on the individual level. He’s since changed his mind. (Big Think)

• Imagine an Organism: Imagine a human infant. And imagine, further, part of its development. The organism gestates for some time, eventually developing a visual system, a hearing system, a phonatory system, and some means of locomotion, among other things. It enters the world mostly fully formed, though not fully grown, and reacts to it in ever-changing ways during its physical development. It starts sorting out the world right away, and within 10 months has created a rich knowledge base, building categories of two main kinds – verbal and visuo-spatial – which in time will give rise to more abstract concepts. In particular, the organism puts together linguistic meanings (for gestures, words, and phrases) on the verbal side, and spatial relations and object categories on the visuo-spatial side; in time, these two kinds of categories will combine into more general representations. David Lobina reviews Blaise Agüera y Arcas’s What Is Intelligence? — noting that radiologists are still around, despite Geoffrey Hinton predicting their demise in 2016. (Inference) see also What To Expect When You’re Expecting (A World of Multi-Agent Systems): How do we model the future of work? It takes an AI village. Researchers gave a set of AI agents a shared goal, memory files, individual virtual computers, and a group chat, email, and Google Docs — then watched. The result is the AI Village. How do we model the future of work? It takes an AI village. (Asterisk)

• App Life in China Notes on a Long-Delayed Return to China: It may be hard to make money in China in 2026, but it is very pleasant to spend it. A major element of involution is the brutal competition in every market that puts downward pressure on prices as consumers, spoiled for choice, demand higher and higher quality. Hotels, trains, flights, food, clothes, cars, phones, electronics, massages, mountaineering gear, Labubus: all are cheap compared to the United States. (ChinaFile)

• Einstein’s Miracle Year: Many attempts have been made to explain relativity to non-scientists, among them several by Einstein himself, beginning with Relativity: The Special and General Theory (1916, first published in English in 1920). It is still in print today, though despite having had so many readers it has not succeeded in persuading the general public to abandon fundamental intuitions about space, time, mass, motion and gravity in favour of the deeply counterintuitive view of the physical world put forward by Einstein. Our minds and imaginations remain stubbornly Newtonian. Most of us find it hard to shake the instinctual belief that an apple falls to the ground because it is pulled there by the force of gravity, the same force that keeps the planets in their orbits. (London Review of Books)

• The Church of Raising Cane’s: The hottest restaurant chain in America is inspiring people to fly 16 hours to try it. I went to find out why—and I saw too much: Steffi Cao joins the Church of Raising Cane’s — a chain inspiring people to fly 16 hours for chicken fingers. “I went to find out why—and I saw too much.” The hottest restaurant chain in America is inspiring people to fly 16 hours to try it. I went to find out why—and I saw too much. (Slate)

• LIV Long and Prosper: Dispatches from the End of an Era: Loathe it or love it, LIV Golf was a gift from the content gods. Lives were changed, fortunes amassed, legacies elevated and reputations shattered. It all came to an unceremonious end on Sunday night in Indianapolis. Flash mobs and the Rhino Jive, NFTs and positive EBITDA — four and a half years of LIV Golf’s fever dream come to a close in Indianapolis. (Skratch)

• The Kill Switch for Harmful Genes: Saloni Dattani on why biomedical research has spent decades as a boot stamping on a biologist’s face — the boot labeled “medicinal chemistry” — and the new class of drugs that changes the equation. (Works in Progress) see also Every Disease Is a Policy Failure: Mathias Kirk Bonde on why doubling global life expectancy in a century fails to register. (Works in Progress)

• The most influential works of American culture: Elvis Presley, Bob Dylan and the iPhone were the most cited omissions on The Post’s list. Carla Spartos on what readers said the Post’s list of 25 left out — one work per decade since the founding was never going to satisfy anyone, and monuments were the first complaint. (Washington Post)

• The Qataris Gave Trump an Airplane. He Crippled Their Country in Return. The tiny Gulf state is learning that the U.S. president doesn’t always keep his end of the deal. Shane Harris on the repurcussions. (The Atlantic)

• An Oral History of Tim Curry’s Escape to the One Place Uncorrupted by Capitalism: Is it the sweet transvestite from Transexual, Transylvania in The Rocky Horror Picture Show, is it Wadsworth the butler who butles in Clue, is it Stephen King’s sewer clown in It? Or is this—seriously, this short, ridiculous cutscene from Red Alert 3—the defining performance of Tim Curry’s long career? (Vice)

Video of the day: Martin Scorsese Breaks Down His Most Iconic Films | GQ

Be sure to check out our Masters in Business next week with David Booth, Founder, Chairman, and former CEO of Dimensional Funds Advisors. DFA just crossed $1 trillion dollars, and has become the largest active equity ETF manager. Booth’s new book is “Stay Calm: Learn to Embrace Uncertainty in Investing and Life.”

The Market, Not The Fed, Now Sets Long Rates

Source: Apollo

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Today was Fed Chair Kevin Warsh’s first speech as chair at Jackson Hole. The line that stood out to me was not his discussion of AI, but rather, “The Fed should be humble and never naïve.” So let’s delve into the idea of a more humble Fed…

My professional focus has been identifying and trying to correct the common behavioral errors we all make as investors. One cannot help but notice how similar mistakes are made by these collections of people operating within large organizations.

One side effect of this, as a market and economic observer, is seeing the errors made by giant institutions. Not just big asset management firms, but the Federal Reserve, Treasury, Congress, corporations, and other institutions; they can – and all too often do – engage in the same behavioral mistakes we see individuals make. After all, large institutions are essentially collections of individuals, in a hierarchical structure, acting on behalf of their owners, patrons, and constituents.

The difference between individual errors and institutional ones is in magnitude. When Congress screws up, we may get a financial crisis; when the Fed makes a big mistake, unemployment may rise, or inflation may get out of control. The stakes for institutional errors are so much greater than the regular snafus each of us falls prey to.

I, too, would like to see a more humble Fed. I’d like to see less certainty in their beliefs, fewer forecasts, reduced reliance on surveys and inflation expectations, and even less reliance on their belief that they are the dominant player impacting prices. And I’d like to see a greater acknowledgment that their models, while often useful, are also wrong.

Worse, I see little evidence of any humility in the Fed’s 2% inflation target: “The Fed’s price-stability objective of 2 percent, as measured by the personal consumption expenditures (PCE) price index, is a firm, fixed target.”

Sorry, but that reveals both error and a lack of humility. I have discussed this before, but rather than repeat those complaints, let’s consider the target from the perspective of institutional error and correction.

–2% Inflation Target History: As former Fed Vice Chair Roger Ferguson explained, it is an anomaly that traces back to an offhand political remark by Finance Minister Roger Douglas on New Zealand television in March 1988, in which he said he wanted inflation brought down to “around 0 to 1 percent.”

Thus, the 0–2% band was born and codified by the Reserve Bank Act of 1989. It was adopted by Canada in 1991, the UK in 1992, Sweden, Australia, and Finland in 1993, the ECB in 1998, and, finally, by the Fed at the July 1996 FOMC meeting.1 On January 25, 2012, then Fed Chair Bernanke made it official.

–Evidence for 2% is non-existent: Little in the academic literature suggests the 2% inflation target is anything other than an arbitrary number. 2 I will spare you the tedious exercise of reviewing a spate of papers, and instead point you to a survey of 600 economists: more than half would keep the current 2% target, citing the “credibility cost” of changing the target – not what target number is optimal. 3

This is classic institutional behavior: refusing to correct an error for reputational or credibility reasons is simply ego over substance.

–The Post-Pandemic Regime: The largest U.S. pandemic in over a century was followed by the biggest post-World War II fiscal stimulus (as a percentage of GDP). This changed everything: It scrambled supply chains, shifted consumption habits, and upended inflation. In light of massive regime change, one might imagine the Federal Reserve would adapt to radically new and different conditions or acknowledge the error. Yet they have continually failed to do so.

So much for humility…

~~~

All good traders know that their cheapest mistake is their first one — and it should be unwound immediately. Doubling down, refusing to fix a bad trade, failing to acknowledge that conditions have changed — these are recipes for expensive failures.

The 2% inflation target is an accidental anomaly, a political improvisation from New Zealand circa 1988. Hardening it into monetary policy orthodoxy is a classic form of institutional error. The sooner the mistake is unwound, the better off the global economy will be.

We all suffer from cognitive judgment errors. It is an unavoidable aspect of the human condition. If we can better understand how and why these errors occur, we have a fighting chance to correct them. It would be enormously productive for society if our largest, most influential, and most important institutions could do the same.

Previously:
2% Inflation Target is Silly (July 26, 2023)

3% Is the New 2%… (August 3, 2026)

What’s Upsetting the Bond Market? (August 25, 2026)

Five Ways the Fed’s Deflation Playbook Could Be Improved (Businessweek, August 18, 2023)

What Models Don’t Know (May 6, 2020)

Source:
In Our Time Chairman
By Kevin Warsh
Fedewral Reserve, August 28, 2026

__________
1. Greenspan insisted the number stay secret: “If the 2 percent inflation figure gets out of this room, it is going to create more problems for us than I think any of you might anticipate.”

2. Claude tells me the following: “No paper derives 2% as the optimal inflation rate. The number preceded the research, and the literature since points in every direction.”

The specific examples include The Boskin Commission, Akerlof, Dickens & Perry (1996), Blanchard, Dell’Ariccia & Mauro (IMF, 2010), Ball (2014).

3. See “The optimal inflation target: Views from 600 economists,” by Kim Ristolainen, Andrea Ferrero, Esa Jokivuolle, Gene Ambrocio, 21 Jul 2022.

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• Current Issues in Forward Guidance: “Broader communication about reaction function remains essential as long as it is conditional, disciplined, and uncertainty aware. Risks should be clearly spelled out. Central banks may still seek to influence the yield curve, but communication should emphasize the contingencies under which the path would change rather than a promise to deliver it. Scenario-based communication can be helpful in this respect.” (IMF)

• Kenneth Rogoff: Is the Trump Treasury Panicking Over the Level of US Debt?: Kenneth Rogoff on the first signs of panic as US debt surpasses $40 trillion and the steady rise in global long-term rates — which he long argued was inevitable — starts causing real pain. With the federal deficit near 6% of GDP and the national debt over $40tn, America’s fiscal position looks increasingly precarious (The Guardian) see also What a century of data tells us about today’s corporate bond spreads: Low spreads were normal. Are they so again? Duncan Lamont of Schroders on whether 30 years of data is enough to judge credit spreads that are, to use a technical term, piddly. (Financial Times)

• The Fall and Redemption of Bill Miller, Once the Greatest Money Manager of Our Time: Most licked their wounds and moved on, but for those close to the fire, like Miller, whose Legg Mason Value Trust was decimated in the crisis, the healing took longer. “I think his investing genius and record is deeply underappreciated because of the timing of his departure from the Value Trust,” says Chris Davis, chairman and portfolio manager of Davis Advisors. The Legg Mason manager who beat the S&P 500 fifteen years running, lost it all in the financial crisis, and made it back again. (Barron’s)

• How to Stop Being Financially Nihilistic Without Pretending Everything Is Fine: Hanna Horvath answers the question she gets most from readers — “okay, but what do I actually do about this?” — with tactical financial advice that meets you where you are. (Your Brain on Money)

• The Shingle-Style Home Gets Reinvented for the 21st Century: Homeowners are modernizing the historic exteriors by paring back moldings and columns in favor of bolder, more colorful facades. (Wall Street Journal) see also Four Ways to Spot HOA Risks Before You Buy a Home: Buying into a homeowners association means going into business with your neighbors. (Wall Street Journal)

• Where Drones Cannot See, the Ukraine War Is a Deadly Game of Cat and Mouse: Carlotta Gall’s dispatch from the Zaporizhzhia front, where Russian troops infiltrate the overgrown basin of the dam they blew up three years ago and Ukrainian soldiers hunt them at close quarters. (New York Times)

• The Choices We Make About AI Now Are Critical: Bill Gates argues the transition to the AI era will be one of the most turbulent times in human history — and right now, we are not preparing adequately for it. (Gates Notes) see also Bill Gates Says We’ve Passed AI’s Danger Thresholds. Now What?: Mat Honan sits down with Gates in Kirkland. (MIT Technology Review)

• How to spot a psychopath: ‘It’s like the difference between a domestic cat and a wild cat’: Zoe Williams on Robert Hare’s classic 20-trait checklist, developed in 1980 entirely from prison populations — and what it misses. People with persistent predatory personalities cause an inordinate amount of pain. Recently, our shared understanding of them has grown – and it could help protect us (The Guardian)

• MLB players reveal a modern toll of legal gambling: Threats, DMs and encounters: With the proliferation of legal gambling and the convenient access social media platforms can provide, athletes are hearing more than ever from those who tie their checking accounts to their performance. A pitcher coughs up a lead, returns to his locker, and finds the direct messages waiting. The Athletic polls players on what the proliferation of legal betting has done to their inboxes. (The Athletic)

• First Look: What If Matthew McConaughey and Woody Harrelson Really Are Brothers?: Rebecca Ford on the project born nine years ago on a porch in Greece, when the two actors’ kids decided their fathers had to be related. In their new Apple TV comedy series, the actors and best friends play fictionalized versions of themselves as a way to explore a long-standing rumor that they’re actually related. (Vanity Fair)

Video of the day: China Unveils 7 2027 Models and They’re ALREADY Scaring the Rivals

Be sure to check out our Masters in Business this weekend with David Booth, Founder, Chairman, and former CEO of Dimensional Funds Advisors. DFA just crossed $1 trillion dollars, and has become the largest active equity ETF manager. Booth’s new book is “Stay Calm: Learn to Embrace Uncertainty in Investing and Life.”

2026: A Climate ‘You Are Here’ Last part of the ‘Super El Niño’ series

Source: God’s Spies by Thomas Neuburger

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• What’s Cool in High School? Personal Finance: Thirty-nine states now require a personal-finance course to graduate — up four since 2024 — while economics requirements are shrinking. (Wall Street Journal) see also Could You Beat a High-Schooler on the New AP Personal-Finance Test?: The College Board rolls out AP Business with Personal Finance this fall. (Wall Street Journal)

• How Universities Should Prepare Founders: Paul Graham on what the YC partners actually look for after 20 years of refining the model — “We’re like grad school. We get them next.” (Paul Graham)

• Wiped out: US faces surging toilet paper prices amid trade war with Canada: Paper products among hardest-hit sectors after trade negotiations broke down, with 25-50% tariffs estimated. (The Guardian)

• Getting Ahead Has Never Been Easy: Ben Carlson on the minor miracles we take for granted — electricity, clean water, indoor plumbing, music on demand — and why not celebrating them is itself a sign of progress. (A Wealth of Common Sense) see also Ordinary Abundance: Edward Bellamy once imagined music on demand would be “the limit of human felicity.” (Ordinary Abundance)

• One Hundred Percent AI: Ted Merz on the dustup after Stanley Druckenmiller used AI to write a WSJ op-ed criticizing Treasury Secretary Scott Bessent. When readers spotted the linguistic patterns, Druckenmiller copped to it: “there’s a reason I moved from an English major to an economics major.” (Ted Merz)

• ‘The Worst I’ve Ever Seen’: Cargo Thefts Have Turned Violent in Pursuit of AI Hardware: Paresh Dave on two recent California incidents that show how far criminal organizations will go to steal servers and other data-center gear. Experts allege that two recent incidents in California show the extreme lengths that criminal organizations are willing to go to to steal servers and other gear meant for data centers. (Wired)

• The Catskills Were Once Considered a Hidden Gem. Now the Secret’s Out: Priced out of the Hudson Valley, wealthy New Yorkers are heading north, pouring millions into home renovations and new builds. Pandemic lockdowns sent a Long Island couple looking for a second home in Sullivan County; they paid $1.65 million on the Toronto Reservoir in 2021. Plenty of people had the same idea. Now the Secret’s Out. Priced out of the Hudson Valley, wealthy New Yorkers are heading north, pouring millions into home renovations and new builds (Wall Street Journal)

• Diabetes can now be easily reversed. Here’s how: With the right steps, it’s possible to put type 2 diabetes into remission and restore healthy blood glucose levels. Ling Thomas on research showing type 2 diabetes doesn’t have to be a lifelong chronic condition — the secret is taking the pressure off our organs. (BBC Science Focus) see alsoIs Expensive Bottled Water Actually Better for You?Megan Tomos on the industry that turned the simplest thing we consume into glacial, iceberg, volcanic, and alkaline varieties — complete with water sommeliers and restaurant water menus. Luxury water can contain different minerals and taste noticeably different. But a remote source, alkaline pH, and high price do not necessarily mean better hydration. (Wired)

• Near-total lunar eclipse is coming up with the Americas in prime position: After being shut out of this month’s total solar eclipse, the Americas will have the best seats in the celestial house when Earth’s shadow briefly envelops the moon. Almost the entire lunar surface will be masked Thursday night into Friday — a whopping 96% — making this an especially deep partial eclipse. Marcia Dunn: after missing this month’s total solar eclipse, the Americas get the best seats Thursday night into Friday as 96% of the moon goes dark. (AP)

• Dolly Parton: Photos From an Extraordinary Life and Career: Alan Taylor’s photo retrospective of the singer, songwriter, actor, and philanthropist, who died this week at 80. (The Atlantic) see also What We Loved Most About Dolly Parton: Is there anyone with a fan base as deep and wide — Christians, union organizers, drag queens, cowboys, Jane Fonda and Donald Trump? (Washington Post)

Video of the day: The rise and fall of Ticketmaster

Be sure to check out our Masters in Business next week with David Booth, Founder, Chairman, and former CEO of Dimensional Funds Advisors. DFA just crossed $1 trillion dollars, and has become the largest active equity ETF manager. Booth’s new book is “Stay Calm: Learn to Embrace Uncertainty in Investing and Life.”

Text got cheap. Judgment didn’t.

Source: Grasping Reality

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At The Money: Dividend Growth with David Bahnsen (August 25, 2026)

Dividends are among the oldest and most highly regarded forms of equity investing. But in an era of mega-cap growth, should you own dividend-paying equities?

Full transcript below.

~~~

About this week’s guest:

David Bahnsen is founder, managing partner and chief investment office of The Bahnsen Group, a national private wealth management firm. His new book is “Profit from the profit: the past, present, and future of dividend growth investing.”

For more info, see:

Personal Bio

Professional website

LinkedIn

~~~

Find all of the previous At the Money episodes here, and in the MiB feed on Apple Podcasts, YouTube, Spotify, and Bloomberg. And find the entire musical playlist of all the songs I have used on At the Money on Spotify

TRANSCRIPT:

At The Money: David Bahnsen: Profit from the Profit — Part 1
Bloomberg  |  Host: Barry Ritholtz

BARRY RITHOLTZ: How often do you think about dividend investing and, in particular, dividend growth investing? Dividends are one of the oldest and most highly regarded forms of equity investing. But in an era of mega-cap growth, should you be chasing dividends or buying growth? David Bahnsen is the author of a new book, Profit from the Profit: The Past, Present and Future of Dividend Growth Investing. He’s also the founder and chief investment officer of The Bahnsen Group, managing over $10 billion.

So David, let’s start with just the title of the book, Profit from the Profit. Explain the difference between profiting from a company’s underlying economic activity versus merely profiting from a change in stock price.

DAVID BAHNSEN: Well, my view, Barry, is that all investing comes down, at some form or another, to the underlying profits of what is being invested in. And you could say, well, what about pre-profit companies, pre-revenue, venture capital? All of those things still are being invested in out of some outlook on future profitability.

And to the extent you want something that’s more liquid and a little more stable and diversified, the types of things that usually are found in public markets, then you’re dealing with underlying profits and some sort of discounting of those future profits into a present valuation. And what I’m suggesting here in the prepositional phrase, “profit from the profit,” is I’m saying, let’s take those profits that we own the company for and let’s allow the individual investor to participate in those profits in the way that, throughout history, they often did, which is the receipt of a dividend.

Now, of course, I recognize companies cannot pay all the profits out to their risk-taking investors. They need to hold onto some profits and retain some for a rainy day. They need to pay down debt. They need to reinvest in CapEx and growth of the company. But there has to be some reward to the risk-taker, and dividends represent a palatable, tangible, repeatable profit from those profits.

BARRY RITHOLTZ: So let’s dive into that philosophy, which you describe as really a philosophy of ownership rather than simply an investment strategy or even a tactic. I really like that framing. Explain the foundation of thinking of your ownership of a stock as owning a company. I believe it’s an underlying business that has a market strategy, that has a management team, right?

DAVID BAHNSEN: It’s a real company. Every company we own is effectively a lemonade stand, and there’s different levels of complexity and all of those things, and it’s goods or services or both. But at the end of the day, it’s a business. And one of the problems with the success of index investing is we do start to think something that isn’t true: that we made our money from the market, from the index going up.

Companies go up, and you can aggregate that, and the math gets very complicated, but there’s only value being created when there are underlying businesses that are adding value, and there are customers of businesses that are buying goods and services that meet the needs of humanity. So this underlying first principle drives what I believe about value creation, and therefore the generation of profits, and from the generation of profits, the ability to reward shareholders with those.

BARRY RITHOLTZ: So some of the writings you’ve put out over the years that I’ve seen really draw a distinction between what you just described as value creation, as opposed to buying a couple of numbers on a screen and the numbers go up. And you’ve been pretty blunt about describing that there is a difference between owning a company and speculating in the market. Discuss that difference. How do you draw the line between economic investing and just speculation and gambling?

DAVID BAHNSEN: Well, I think that, by definition, the easiest line is things that are zero-sum versus things that are not. And so when you place a wager with your friend on the Mets game, first of all, if you took the Mets, you’re probably gonna lose the bet. Second of all, there’s one winner, one loser. But when you invest in Procter & Gamble, I don’t believe that’s the case. You’re investing in them creating new wealth, new profits, new opportunities, et cetera. And so that, by definition, de-speculates the investment to some degree. But also there’s just a lot of investing that is based on a guess of a price in a certain period of time.

One of the reasons that we don’t do option investing at my firm is because even if I have a lot of conviction in a company, and I can go buy a call option on it, I can’t make any money doing that unless I also attach the time value to it. But I’m not interested in speculating on when an announcement may come or when the company may be honored in the market with a higher valuation. Long-term value creation is not necessarily gonna be within a timeline. And so, you know, there’s different ways people can get to this, but our view is that speculation, you know it when you see it.

And at the end of the day, we’re right now in a speculative mode. I never thought I’d see speculation like we saw in the ’90s when I was starting my investing career, and what we saw going into real estate with the pre-’08 period. There’s been a lot of moments of speculative mania and fervor in my career. Right now, the instrumentation that exists for speculation, with literal speculation in DraftKings and sports markets, and now these prediction markets, single-day option ETFs, all of this stuff, it’s unbelievable. They’re all consciously geared towards speculation.

A dividend portfolio is saying, “Hey, I really believe people are gonna buy soda pop,” or they’re gonna continue needing oil and gas to heat their homes, et cetera.

BARRY RITHOLTZ: Yeah, it’s really becoming a problem, especially to the current generation of young men.

DAVID BAHNSEN: Yeah.

BARRY RITHOLTZ: Who pretty much have become gambling junkies. It was bad enough when people were betting on the outcome of games, but if you’re betting on, is he gonna hit this free throw? Well, you know, you’re just throwing dice. You might as well go to Vegas.

Related to this, you’ve discussed in the book the difference between endogenous and exogenous returns. Dive into that a little bit and explain what those differences are, and what it means to an investor, not a speculator.

DAVID BAHNSEN: Well, essentially, we’re just talking about the difference between trying to get your return from factors that are external, that are outside of your control, that are outside the underlying reality of the business. So, in this particular case, we’re sort of referring to what you believe others’ psychology will be, how other investors are gonna respond. I think the P/E ratio’s gonna get bid up because this stock is going to be popular. That would be an example of an exogenous factor, and I think it is by far the most, shall we say, prevalent way of thinking about investing.

But when you’re talking about stuff that is within the business, that my return is gonna come from the performance of the company, from their success in growing profits and competing and creating value, then that’s endogenous. And it is an entirely different mentality and approach. I do not suggest everyone’s self-aware of this. I don’t think it’s totally self-conscious. But I think that the implicit mentality or objective of many investors today is that they’re betting on what others are gonna do, as opposed to betting on how a company is gonna perform.

BARRY RITHOLTZ: Really, really interesting. So this book, Profit from the Profit, is a follow-up to your 2019 book, The Case for Dividend Growth. It’s been seven years. I’m curious, what has changed, either in the economy, the markets, or your own thinking, that made an update of the book necessary?

DAVID BAHNSEN: I think that you had basically the S&P nearly triple in seven years.

BARRY RITHOLTZ: Which is crazy, by the way. Crazy to think about.

DAVID BAHNSEN: But we had had a bit of a dip in 2018, and so there’s a little bit of convenient timing here. The S&P, I think, was down 5% in 2018 from the combo of a little bit of Fed tightening and President Trump’s trade war then. And then it rallied huge at the very beginning of 2019. We had a hiccup in COVID, but then really that only lasted about a month, and ended up having a very robust period. There was one bad year. It’s really the only bad year we’ve had since the financial crisis, in 2022. But then Nvidia, three 100% years in a row, you just have had a massive rally.

So it’s worth saying, “Hey David, your thesis from seven years ago, has it become antiquated?” And you look at it and say, well, actually, Barry, I don’t wanna jinx myself for 2026, but when dividend growth was up 5% in 2022 and the S&P was down 18, and dividend growth did fine in the three years in between, not as much as the Nvidia stuff, but still did fine. And now a year like this year, where dividend growth is beating the market by 400, 500 basis points, I think you’re gonna end up with a five-year number that’s better than the market, but that’s because of that first 2022 year. This story, to me, is very probable for the next three, five, seven years.

At a 23 times entry multiple on the S&P, earnings growth is great, but unless you think you’re gonna get a 29x, if you’re gonna actually have to fight against multiple contraction for the next few years, the math of the index return is what it is. I’m not being bullish or bearish here. I’m just being a mathematician. It’s gonna be very hard for the S&P to deliver continued 15% returns.

BARRY RITHOLTZ: Yeah. In the past few years we’ve had 25% returns. Good luck keeping up with that.

DAVID BAHNSEN: Exactly. And I think that the story of my first decade professionally managing money is what I’m now coming back to, saying, look, the market can retreat here even with good underlying fundamentals. It’s just that the Intels, Microsofts, Ciscos of the 2000s, all of them grew their earnings, their profits, their cash flows. All of them were lower at the end of the decade than the beginning of the decade. And I don’t know that that’s gonna happen with Nvidia. I’m not making a bearish AI call. But I am asking investors to realize that things are not as easy as they might have seemed the last three or four years.

And I think that the update of the book was my attempt to restate, update the argument. New charts, new numbers. But then also, Barry, I think it’s a little bit more philosophical. I’m adding a little more as to where I think about doomsday investing in dividend growth. And then I am encountering some of the objections. There’s folks like Meb Faber that notoriously talk about how a dividend is totally worthless, that all you’re doing is taking from one part of the company, the balance sheet, and giving it to someone else. It’s zero-sum. And I’m contending with that argument, contending with stock buybacks, contending with tax efficiency. Some may not find my arguments persuasive, but I am making an argument on all of those points.

BARRY RITHOLTZ: So typically dividend-paying stocks are often concentrated in mature sectors: financials, energy, utilities, staples, things like that. How do you prevent a dividend growth portfolio from being an unintended sector bet or value factor bet?

DAVID BAHNSEN: Well, the value factor bet is harder to avoid than the sector side. For us, it is true that we’ve always been very limited in our exposure to consumer discretionary because the consumer discretionary names, by definition, it’s hard to pay a sustainable dividend when you’re depending on 16-year-old girls liking your clothes at the mall. It’s just a very discretionary sector.

BARRY RITHOLTZ: A little bit fickle, yep.

DAVID BAHNSEN: Exactly. But there’s actually a lot of durability. And all of the cool kids from the ’90s are now dividend growers today. You know, your Qualcomms and Ciscos and even Microsoft; it looks like a low yield ’cause the stock price has gone up so much. But after George W. Bush’s second tax cut changed the tax rate on dividends, Microsoft all of a sudden became a great dividend payer. So I suspect that a lot of these tech names could end up becoming good dividend growers, and some of them already are. Texas Instruments, Broadcom. But they’re kinda old tech. They’re not the cool tech stuff.

But you wanna keep a benchmark agnosticism, in my opinion, but you still wanna be sector diversified. So we own basically every sector to some degree or another, but my weightings to those sectors, I’m agnostic to what the benchmark is. We’ve been overweight energy and underweight consumer discretionary for most of my career. It’s worked out just fine.

BARRY RITHOLTZ: Yeah, to say the very least. Let me throw an interesting curveball at you. One of the most interesting companies that does not pay a dividend has been Berkshire Hathaway. They’ve created enormous value without ever paying a dividend. They occasionally, when the stock gets, quote-unquote, cheap, they’ll do some buybacks. And they’re sitting on this massive, what is it, $300 billion cash pile. How do you distinguish between a company that should retain its earnings so it can make those opportunistic acquisitions versus one that really should be paying its shareholders some form of dividend?

DAVID BAHNSEN: You know what’s fascinating, Barry, is that Berkshire Hathaway is the company that proves my point, not the exception to the point. They are not a company. They are a holding company, and what do they hold? A whole bunch of companies that pay dividends to them. Now, they may choose not to return that cash to the shareholders because that’s what the investors consciously bought: a hold co where you are asking Mr. Buffett and Munger in the years past, now a new management team, to invest that capital. It’s much more like a mutual fund of private and public companies. But the Coca-Colas and Wells Fargos and Apples and, by the way, even the private businesses, the railroads and See’s Candies, have made massive cash payments to the hold co. So it isn’t really contradictory to it.

There are companies out there that are operating companies that also have not been dividend growers that have been very successful. But I would argue that I could find 100 examples of ones that didn’t return capital to shareholders and set money on fire for every one I could find that proved to be a better steward of that capital. In the appendix of the book, I talk about the comparison of Viacom, and now that Sumner Redstone’s no longer with us, I make him the foil, because the amount of money these people set on fire over the years. They wouldn’t pay a sustainable dividend. A lot of their competitors did, and then they just did these media M&A orgies, and all of them were capital destructive. That, to me, is much more common than a company that, by not paying a dividend, is creating more value.

BARRY RITHOLTZ: When we go to lunch, remind me to tell you the story of a company I was affiliated with that had an opportunity to do a special giant one-time dividend, and instead they lit the money on fire.

But Berkshire, as the exception that proves the point, raises an interesting question. Do dividends, continually paid and actually increased dividends, does that impose a discipline on management? And how could you distinguish when having to meet the dividend is a positive thing versus when it might discourage investment or innovation or intelligent risk-taking?

DAVID BAHNSEN: You know, it’s such a thoughtful question, and I’m not just saying this to blow smoke here, but I very much doubt that very many other interviewers are gonna ask that to me, ’cause it’s really an important question, and you get it. Barry, that’s a trade-off that exists, right? There is a sense in which an opportunity might get missed because the faithfulness to the dividend causes someone not to pursue a risk that might have ended up paying out.

What I would suggest is that’s a risk worth taking for most investors. Not those with a highly speculative or high-risk, high-beta, high-octane part of their portfolio. But ultimately, if someone had said, “You know what? I’m not gonna do this AOL-Time Warner merger because we’re not gonna be able to sustain the dividend doing it,” that would have protected about $300 billion of capital. And I could go on and on. Those are not nut-picking examples; they’re the norm.

Now, there’s been plenty of good and healthy M&A. Exxon’s deal with Pioneer, Chevron’s deal with Hess, Exxon’s deal with Mobil. They didn’t cut the dividend during COVID, for God’s sake, when oil was negative. They didn’t cut the dividend during Valdez, during the financial crisis. Having the social contract where your cash flow, your payout ratio, your balance sheet enabled you to sustain it doesn’t mean you can’t do M&A, but it should mean you can’t do reckless M&A. And I would suggest that Comcast has been a more faithful user of M&A than Viacom and Paramount were.

BARRY RITHOLTZ: Huh. I saved my favorite question for last, which is you argue dividend growth allows investors to benefit from volatility rather than merely having to endure it. Explain what you mean by that. What’s the philosophy behind benefiting from volatility?

DAVID BAHNSEN: So when we say endure volatility, an S&P investor who is an accumulator, not a withdrawer, does not suffer from the volatility. And ultimately the premium return they get is a trade-off to the volatility that they’re expected to deal with. So that’s all what it is.

However, a dividend growth investor has an automatic purchase going on across a diversified portfolio. You assume volatility is a given. It’s going to happen, so there is therefore no way to escape the fact that you are mathematically benefiting because you are already compounding. Your return goes where it goes, and then you’re getting more the next year, the next year. Now you’re getting more purchases of the thing that is compounding. So it creates an automated compounding machine within a compounding investment.

And that leverage over time is monumental, and it ought to excite people that are 30, 40, 45 years old accumulating long-term, because you can say to yourself, “Every time the market’s down, I am buying more shares of the things that are, in the future, gonna be creating cash flow for me.” And that’s how you end up with the sort of stocks that are paying 30, 40, 50% of the original purchase price annually, which sounds crazy, but the math makes sense.

BARRY RITHOLTZ: Yes, sir. That’s exactly right. So to wrap up, if you’re interested in dividend growth investing, if you’d like to try and generate market-equaling portfolios with less volatility and higher wealth creation, check out the new book, Profit from the Profit: The Past, Present, and Future of Dividend Growth Investing by David Bahnsen.

I’m Barry Ritholtz. You’re listening to Bloomberg’s At the Money.

~~~

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The post At The Money: Dividend Growth with David Bahnsen appeared first on The Big Picture.

• Are Inflation-Fighting Bonds on Sale?: I just bought more Treasury Inflation-Protected Securities. Plus, more questions for your adviser about private funds (and happy 96th birthday, Warren Buffett)  Jason Zweig on why he just bought more TIPS. (Wall Street Journal)

• Forget the Bond Rout, Fund Managers Are in Party Mode: Robin Wigglesworth runs the list: Hormuz still closed, an AI boom fuelled by off-balance-sheet exposure, a Fed that may hike, Japan in a bond crisis, private credit stressed, leverage everywhere. And yet. (Financial Times) see also The Most Hated Asset Class in the World: Ben Carlson: in December 2024 it was international stocks, which have run nicely since. Today the same vibes are showing up in fixed income — a lot of intelligent investors want nothing to do with bonds. (A Wealth of Common Sense)

• The Debt-Equity Distinction: A Century of Policy by Accident. American Affairs Volume X, Number 3 (Fall 2026. (American Affairs)

• The Connections That Turned a Precocious Teen Into the Fallen ‘Nostradamus of AI’ A 24-year-old investor was hailed as a visionary and attracted billions—before turning into Wall Street’s latest cautionary tale. (Wall Street Journal).

• Mark Cuban wants to solve wealth inequality by making employers choose between paying higher taxes or giving every member of staff company stock: “I would like to see it so that every single CEO, founder, entrepreneur does what I did, which was to give equity to every single employee,” he said. “The way you’re going to reduce income inequality for anybody who works with somebody is making sure they get shares of stock and then they benefit.” (Fortune) see also Mark Cuban Says He Has the Solution to Growing Income Inequality, and It’s to Reward Every Employee — From CEO to Janitor — With Company Stock: The earlier “What It Takes” podcast version of the argument. (Fortune)

• A New Force Is Increasing Inequality in America: Shira Ovide: evidence is mounting that AI is helping the richest people and cities pull further ahead of everyone else. (Washington Post)

• Rich People Create Money Printers. They Don’t Save a Dime.: BowTied Bull on one of the biggest psyops in history — that the wealthy sit on big cash balances and huge incomes. They don’t; they build assets that throw off cash. (BowTied Bull)

• More U.S. Parents Opting Children Out of Vaccine Requirements, C.D.C. Reports: Francesca Paris: new exemption data lands a week after Trump signed an executive order calling to scale back childhood shots, with measles spreading. (New York Times) see also US Vaccination Rates Fall Again as Exemptions Continue to Rise, CDC Data Shows: Beth Mole: again, the CDC skipped the full report and simply posted the data online. (Ars Technica)

• NASA’s New Space Telescope Is Poised to Discover Hidden Facets of the Universe: Jay Bennett: the Nancy Grace Roman Space Telescope is expected to find as many as 200,000 new planets and probe dark matter and dark energy. The Nancy Grace Roman Space Telescope is expected to discover as many as 200,000 new planets and reveal details about the elusive nature of dark matter and dark energy. (Wired)

• Martha Stewart Recreates Her 1995 People Cover on Her Gorgeous Farm: Ana Calderone catches up with Stewart 31 years after the original cover story opened outside her $1.7 million house on Lily Pond Lane — still an insomniac, still up before dawn, still never slowing down. ‘Street Cred’ and Never Slowing Down: The lifestyle icon invited us to her New York farm, where she reflected on all she’s created — and what’s still left on her never-ending to-do list (People)

Video of the day: I Want to Hold Your Hand: The Hidden Details You Can’t Unhear in The Beatles’ Most Important Song

Be sure to check out our Masters in Business this past weekend with Alex Morris of TSOH Investment Research. He is the author of “Buffett and Munger Unscripted: Three Decades of Investment and Business Insights from the Berkshire Hathaway Annual Shareholder Meetings.” The book was named one of Amazon’s “Best Books of 2025.” To write it, he reviewed every Berkshire annual meeting from 1994 through 2024 — 100s of hours of video covering more than 1,700 shareholder questions over 31 years — after Berkshire released the meeting archives.

2026 Top 100 VC firm results

Source: Stanford GSB Professor on Startups & Investors

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This has been a confusing couple of weeks (years?) for market watchers and bond investors: Yen interventions; announced (but not yet executed) Treasury buybacks; sticky inflation; more (illegal) tariffs; a confusing muddle in the Iran war’s 6th(?) inning; a record $40 trillion debt. Perhaps we have even seen the return of the Bond Vigilantes! 1

This question keeps coming up — first Cash, now Bonds — so it’s probably time to address why the fixed-income market seems to be having a rough go of it lately.

What’s a bond investor supposed to do?

The short answer is to find ways to take advantage of higher yields – my preference is Munis and TIPs – but your answer will be dependent upon your specific age, income, tax bracket, and residence. While you think about that, perhaps an overview of the five 2 biggest crosscurrents currently impacting bond markets might help sort that out.

Inflationary Policies: Everybody has been tiptoeing around this; let’s just say it:

Tariffs + War = Inflation

The Tariffs I (before being struck down by the Court of Trade, the Court of Appeals, and the Supreme Court as unconstitutional) raised prices on numerous imports, from food to finished goods; this was on top of the increase in grain prices caused by the Russian invasion of Ukraine. Then the U.S. war on Iran hit energy prices hard, followed by Tariffs II.

None of these policies show any signs of abating anytime soon. When inflation is sticky, it is all but impossible for the Fed to cut rates. No wonder “Higher for longer” has become the bond traders’ refrain.

Federal Reserve Disruption: Historically, markets seem to challenge the FOMC whenever a new Fed chief takes over. In the current case, Kevin Warsh seems intent on disrupting the way the Fed does its job. From the five task forces Warsh created to review the Fed’s inner workings (!), to changes in how the Fed analyzes economic data, to reducing the number of meetings and dropping forward guidance, the new Fed chief has been antagonizing the bond market.

The tools at the Fed’s disposal include 1) higher federal funds rate, 2) size of the Fed’s balance sheet, 3) tighter financial conditions, or 4) some combination of all three. Now add two new strategies: changing the economic indicators the Fed relies on and dropping forward guidance.

The bond vigilantes’ response? Hitting the sell button on Treasuries, sending yields higher.

What is Neutral?: In case you forgot, the 2% Fed target was a made-up number with no academic or statistical significance that traces back to New Zealand in the 1980s. It made no sense in an era of fiscal not monetary stimulus, and is why I have been saying 3% is the new 2%.

For a variety of silly reasons – Credibility! Legitimacy! Change is scary! – the Fed has refused to revisit this simple truth. Rather than admit the error and move forward, the Fed has doubled down on an inflation target that will not be hit until there is a broad, deep, and painful recession. No thank you.

Bond Buybacks? If you think the financing of AI is circular, then what are your thoughts about the biggest issuer of sovereign bonds in the world buying back some piddly percentage of its own debt? At most, it barely impacts the short end of the curve; at worst, it is an admission of losing control of the narrative.

It is especially annoying to me since I spent most of the 2010s begging Congress to refinance the outstanding debt into 50- or 100-year Treasury bonds at the once-in-a-lifetime close to zero interest rates (See this, this, this, and this).

The bond market sets long-term rates—not the FOMC, not the Treasury Department, not Congress. James Carville was right…

$40 trillion in Federal Debt: Normally, I don’t pay much attention to deficits. After a half century of warnings, with none of the sky-is-falling dangers ever occurring, I have tuned out what is usually a partisan maneuver.  For my entire adult life, as ginormous as the debt seemed, it was innocuous.

Two things make today’s version somewhat different: First, all of the elements discussed above have taken borrowing costs from historically inexpensive to suddenly pricey. On top of that, the profligate spending and tax cuts have accelerated how fast the debt level is increasing. Rapid debt growth and pricier servicing costs are a one-two punch that makes people nervous.

via Bloomberg

The Bottom Line: Pardon me for stating the obvious, but:

Disruption is Disruptive.

Despite clearly stated goals of price stability, lower interest rates, and slowing the growth of inflation, the bond market seems to be bearing the brunt of a series of self-inflicted wounds. From the Fed, there has been a series of questions about a lack of clarity; the Treasury is engaging in gimmickry; White House policies, as enacted, have been counterproductive.

Markets approach all of this from the perspective of Ralph Waldo Emerson, who said, “Your actions speak so loudly, I cannot hear what you are saying…” 3

Previously:
Let’s Talk About Cash… (August 12, 2026)

How Wealth Is Created in America (August 19, 2026)

The Evolution of Alpha (April 3, 2026)

2% Inflation Target is Silly (July 26, 2023)

3% Is the New 2%… (August 3, 2026)

Refinancing America’s Debt:
Fix infrastructure on the cheap while you still can (July 12, 2013)

Do We Need a 50-Year Bond? (May 12, 2014)

The Bonds That Can Cure America’s Ills (March 19, 2015)

Time for a 50-Year U.S. Treasury Bond (May 19, 2016)

Cost of Financing US Deficits Falls (December 18, 2020)

The Greatest Missed Opportunity of Our Lifetimes (October 23, 2023)

A Historic Missed Opportunity (June 3, 2025)

See also:
The Most Hated Asset Class in the World
by Ben Carlson
Wealth of Common Sense August 23, 2026

Druckenmiller: Let the Bond Market Speak:
Rising interest rates are a signal of trouble ahead. Artificially suppressing it heightens the danger.
WSJ, Aug 25, 2026

JPMorgan says Warsh failure to buttress Fed credibility may force a rate hike before year-end
by Dow Jones  Aug 3, 2026,

The Government Report That Made Me Stop Trusting Our Statistical Agencies
Jared Bernstein Aug 22, 2026

Forget the bond rout, fund managers are in party mode
Robin Wigglesworth
FT, Aug 18 2026

JPMorgan says Warsh failure to buttress Fed credibility may force a rate hike before year-end
By Jules Rimmer
Marketwatch, Aug. 3, 2026

The Bond Market Is Returning to the Old Normal
Allison Schrager
Bloomberg, Aug 24 ,2026

KING CARNEY ACTIVATES KONG MODE WITH ZERO F*CKS
Carney Reads the Clock Like a Pro Wrestler
I F*cking Love Australia, Aug 22, 2026

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1. My friend (and neighbor, one town over) Ed Yardeni coined the term way back in 1983, while he was chief economist at E.F. Hutton…

2. If we wanted to add a 6th, then I would throw in the Private demand for capital. However, I am not (yet) convinced that the buyers of speculative AI capex boom high-yielding data center paper are the same allocators competing with the government for T-bills and Treasuries.

3. The full quote is: “Don’t say things. What you are stands over you the while, and thunders so that I cannot hear what you say to the contrary.”   -Letters and Social Aims

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