This song was written by Frank Loesser in 1944 and first performed in his New York apartment at his housewarming party as a way to let his guests know that it was time to leave. It was so popular that he and his wife were invited to all the high society parties so they could end the evening with the duet. In 1949 MGM Studios bought the song and used it in their dud movie "Neptune's Daughter". In 1950 the song won an Academy Award for Best Original Song in a movie. The song has become a seasonal Christmas song but the movie was originally released in June of 1949. There have been so many recordings of this song over the years that it would be impossible to list them here. The version released in 2014 by Idena Menzel and Michael Buble' is the one I listened to for this post.
Something else that has grown cold recently is the stock market. My portfolio has become a frigid wasteland. Many analysts are forcasting a gloomy 2025 for the stock market, citing the notion that the Federal Reserve Bank will not lower interest rates anymore during the year. There is also concern that the new administration will impose new tarrifs on China, Mexico, Canada, and European countries. The magnificient seven, or now called the mag 8 with Broadcom's, entry are also in a funk due to the slowdown in capital spending in the tech sector. Another factor may be that a rotation is occurring out of the growth stocks and into value stocks. Anything with a high multiple (PE ratio) is at risk of profit-taking at this time. Add in the rise in long term interest rates even in the face of the fed funds rate cuts and stock investors are nervous about just what that means.
Market fluctuations are a normal and necessary function of stocks. Sometimes certain sectors and the stocks within just get too frothy. The euphoria around AI simply got ahead of itself and needed some time to catch up with reality. In the meantime, some of the left-behind value stocks that have solid earnings and pay good dividends are attracting attention. So is the AI story over? My take is HELL NO! It will take some time for the companies that have invested many billions of dollars in new Data Centers and software to begin to see some return on their investments. In the meantime the valuations of some of the most promising stocks involved in the AI revolution are coming down. Even mighty Nvidia has seen its stock slump lately. I have no intention on selling my stake because even though the growth is slowing, it is still going to grow earnings faster than most other stocks this year.
My strategy for the new year hasn't really changed much from last year. I still like getting over 4% on my cash and CD's. Money market funds haven't lowered their yields as much as I feared when Powell cut rates last month. I have directed some cash to local banks' CD's because they are not callable like brokerage CD's are. Shopping around for the best local rates still results in over 4% yields. The best rates are short term (one year or less) and thats fine because rates may rise late this year if inflation spikes back up. My holdings include growth, value, cash, and fixed income so I will stand pat until the spring thaw.
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