Market Mindset

Hemingway, Hard Truths, and Today’s Market Divide

December 5, 2025

“’Listen,’ I told him. ‘Don’t be so tough so early in the morning. I’m sure you’ve cut plenty of people’s throats. I haven’t even had my coffee yet.’”

After docking his boat and entering a café in Havana, Captain Harry Morgan said this to a man trying to intimidate Harry into smuggling him and two others into the U.S. in Ernest Hemingway’s “To Have and Have Not”. Morgan wanted to show in a casual way that he wouldn’t be bullied. He began the book chartering his boat for wealthy clients out of Key West, and his story highlighted the disparity between his difficult life of poverty (the Have Nots) and the affluence of those that hired him (the Haves). As the Depression deepens his financial situation deteriorates, he turns to a life of smuggling. It leads to scenes like the one above and, then in the end, his eventual death.

To Have and Have Not. It’s the story of our world. It’s the story of our economy. It’s the story of the stock market. It was from reading Hemingway that I learned how to write. I owned every one of his books and read and dissected his work over and again. Because he was a trained journalist first, the adventurous Hemingway had a writing formula – subject, action verb, direct object. Someone or something (subject) does something (verb) to something or someone else. That’s it. He wrote strong simple sentences that carried the action forward. That’s how we’ll break down the action of the Have and Have Nots today. We’ll also look for signs to interpret as we watch the American public, the economy and the stock market continue to bifurcate.

Bifurcate (v): “to divide into two forks or branches.” This is a story of two branches of the American people and American companies – those that have and those that have-not.

To Have – F. Scott Fitzgerald wrote in his 1926 short story The Rich Boy: “Let me tell you about the very rich. They are different from you and me”. Hemingway replied: “Yes, they have more money.”

Ownership of stocks and other assets creates inequality, with those that own growing more through compounding than those that don’t. Speaking of stocks now, look at Corporate Earnings in the 4th Quarter. 9 (This is as of November 3rd.) Information Technology companies had a collective EPS Growth of 26.5%. Much of the Mag 7 resides in this space. (Some, however, are in Communication Services, which boasted a -6.9% collective loss.) Financials and Utilities were each up a little over 20%. The rich companies in the right sectors, and those who own their shares, get richer.

Statistics show that the Magnificent 7 stocks have exploded 270% since ChatGPT launched just over 3 years ago on November 30, 2022¹. That is over 4X the return of the S&P 500 which posted a 74% climb. The Magnificent 7 outclassed both silver (up 153%) and gold (up 130%). Count two bifurcations here: The Magnificent 7 (and those who own them) versus all the rest of the S&P 493, the Have’s, versus everyone else (though you can still be a Have with enough in the rest, of course). The difference though is breathtaking. These stocks comprise 35% of the S&P 500 as of this month. That’s up from 12.3% in 2015. The rich companies are getting richer. ETFs and mutual funds house these stocks everywhere, and those companies’ high participation in them amplify their gains and increase their market caps. (“The Magnificent Seven” is a group of seven high-flying stocks, which we’re using here for illustration only. They’re an important component to a portfolio, but we don’t recommend investing solely in those companies.)

Real Estate prices, while taking a slight temporary fall nationally earlier this Fall, resumed their march upward and onward for the month ending November 9th to $373,000². Buyers flout more leverage than they did a year ago, but hey, if you’ve got a sub-3.5% mortgage and your home value keeps going up, life is pretty good, so why entertain a buyer? If it ain’t broke don’t fix it, unless your house was built in 1981 like mine, in which case there are always things to fix.

Let’s look at the interest rate action. The CME Fed Watch tool reveals that 87% of futures traders believe the Federal Reserve will cut rates by 0.25% in its December meeting³. Over 80% believe that by June’s meeting the rate will be at least another 0.25% lower than that. So, the Fed will be likely cutting rates twice or more according to that tool, in what should be a very bullish move for stocks, into an environment of strong corporate earnings growth. The lesson is to own assets or be left behind.

To Have Not – “I don’t know who made the laws; But I know there ain’t no law that you got to go hungry.” (from “To Have and Have Not”)

We know from “the official” data from the Bureau of Labor Statistics that $1.00 in 2020 is equivalent to $1.25 now, so that’s “officially” 25% inflation in 5 years, not a sustainable track even if the numbers are correct⁴. We believe that the real rate is higher if things like housing and health insurance were measured correctly and not with a mind to paying out fewer benefits. Because of the cumulative effects of inflation, plus perhaps challenges from the onset of AI in the workplace, the American public that does not own many assets by and large has lost so much ground to those that do.

We break the American public into two parts here as well, those that need to fund their spending with debt, and those that don’t. American consumers spent a mind-blowing $44.2 billion over the Cyber Week (Thanksgiving weekend plus Cyber Monday), which is up an astonishing 7.7% from 2024⁵. That looks extremely healthy and many of those shoppers spent within their means. There were many, however, that didn’t. Adobe Analytics reported that “Buy Now Pay Later” (you know the Klarna or Affirm options you see on major retailer sites) sales are projected to hit $20 billion in November plus December, which is 10% more than last year AND does not include credit card swipes. It’s estimated that 3 in 10 U.S. shoppers used “Buy Now Pay Later.” So at least 30% of shoppers chose to fight inflation with financing and debt and we know the figure is far worse if you lump in credit card purchases.

We mentioned that home prices are bouncing again. This hurts affordability for those that Have Not. Young couples and many middle-aged couples even are struggling to afford the killer combo of elevated prices and higher mortgage costs. So, while it was great for the Haves that home prices rose 2.4% year over year, it’s that much more painful and difficult to get into a new home from rental status. That’s not to mention the fact that as interest rates have come down, mortgage rates haven’t exactly followed, and underwriting standards have tightened. The hurdle of home ownership climbs higher.

Jobless claims hit 1.96 million on November 15th and that’s the 3rd highest since November of 2021. Americans perceive the job market to be worse over the last 3 years and that’s a precursor to problems generally. US ADP Private Payrolls caught most off guard this week as they fell by 32,000 jobs in November when the expectation was a gain of 10,000 jobs. More Have-Nots are on the way. Youth employment is particularly concerning as 8.6% of recent college graduates are unemployed.⁶

Things got so bad that one young unemployed raccoon⁷ needed to blow off some steam and went Full-Bender Mode. The masked bandit went through a broken ceiling tile to break into a closed liquor store in Virginia this week and scoured the bottom shelf, where the scotch and whiskey were stored and had a party of one. There was $250 in damaged bottles and the Trash Panda’s beverages of choice were rum, scotch, moonshine, peanut butter whisky and eggnog. My stomach is turning over just thinking about it. Later he was found drunk and passed out by the bathroom toilet. At least he knew he needed water. American Trash Pandas are clearly living for today.

We look at these signs as the diversion of the Haves and Have Nots. The increasing wedge effect that is happening is very telling. The stocks at the top, funded by those with the means, the Have’s, are doing very well. How long can they continue to do so without the participation of the Have-Not’s remains to be seen, but corporate earnings look good in technology and communication services and healthcare. The next generation’s everything-affordability problem is not so good. At some point the bottom half of the country needs to come along for the ride but those signs aren’t there yet.

I keep speaking of signs. This book, “To Have and Have Not,” is special to me as it was a sign from above. I mentioned I was a Hemingway Super Fan. Before I proposed to my wife, I found in her family’s upstairs bookshelf the only Hemingway book I had neither read nor owned – “To Have and Have Not”. The odds that the one Hemingway book that I lacked she had all along were quite low (probably less than 5%) as it was not one of his well-known books such as “For Whom The Bell Tolls” or “The Old Man and the Sea”⁸.

We’ll continue to read the signs for you and try to interpret them to guide you in your meetings and in our phone calls. Deciphering corporate earnings or the effect of housing prices on Gen Z isn’t exactly divining God’s plan for us, but it’s a step towards helping you better. If you need help turning these macroeconomic thoughts into a Wealth Shield for you and your family, then channel your inner Ernest Hemingway. Take action and call us. If you listen to us, we’ll change your financial world …

Sincerely,

Scott Wright

Portfolio Manager

The Wealth Training Academy

Sources:

1 Financial Data provided by Nitrogen Wealth. From 12/2/2022 – 12/03/2025, the total returns (gross of any fees or expenses) were:

An-equal weighted basket of the Magnificent 7: 271.20% Total Return

The S&P 500 (SPY): 74.95% Total Return

The iShares Silver ETF (SLV): 152.96% Total Return

The SPDR Gold ETF (GLD): 130.51% Total Return

2@KobeissiLetter

3FedWatch – CME Group