There was a time, not long ago, when most Americans would answer that question in the affirmative without much thought. It was one of those "truisms" that we didn't give much thought. But today, many experts are debating that answer.

 

Back in the day, after World War II, our military prowess, (aided by the development of the atomic bomb) was unquestioned throughout the world. Growing up, it was never a question of spending on defense for me, it was simply how much. Republicans wanted more, Democrats wanted less. Today, not only is the amount of spending crucial but also its predictability and even more importantly, what those billions are spent on.

 

The Pentagon's National Defense Strategy was issued in January. Like all of their tomes before, it is heavy reading and fairly boring but this time around things were different. The United States Institute of Peace, a federal institution, issued a 98-page report rebutting some of the assumptions made about peacetime competition or wartime conflict.

 

The authors focused primarily on our top competitors for global hegemony, Russia and China, but also included recognized threats in Europe, Asia, portions of the Middle East. The report authored by a panel of former security officials and military experts did not mince words.

 

"The U.S. military could suffer unacceptably high casualties and loss of major capital assets in its next conflict. It might struggle to win or perhaps lose, a war against China and Russia. The United Sates is particularly at risk of being overwhelmed should its military be forced to fight on two or more fronts simultaneously."

 

Unlike WW II, where we did fight successfully on two fronts, on future battlefields we will face enemies that have developed extremely lethal weaponry, outnumber us, will be fighting on their own turf and will get to hit us first. In addition, it would be a big mistake to assume that our enemies would confine their attacks to the war theater. America and its military should expect devastating kinetic, cyber or other types of attacks (biological or otherwise) while fighting us abroad.

 

Until recently most of our conflicts were fought with America enjoying total air dominance, our logistics base (supply lines) were safe and secure from interdiction. Rarely, if ever, did we face long-range fire. About the worst anti-armor our tanks and Humvees faced were rocket-propelled grenades. We also owned the field when it came to unimpeded communications.

 

What our soldiers can expect to face in the next war will be advanced, tandem warhead anti-tank guided missiles, precision-guided artillery projectiles, long-range guns, armed drones and air-delivered weapons. The skies will no longer be exclusively ours as well. By now you are getting the picture.

 

Warfare is changing but the report says we are not keeping up. The proliferation of advanced technology, things like hypersonic and artificial intelligence that our enemies are applying to weaponry and soldiers on a mass scale are quickly eroding U.S. advantages and creating new vulnerabilities in a military that has relied for far too long on more ships, tanks and aircraft carriers.

 

Not only must the actual spending be increased but it should be allocated to those areas where we are behind the competition. The report suggested a 3-5 percent increase (above inflation) for the Department of Defense with areas such as cybersecurity and new technologies taking the brunt of the increase. Of course, that will cause lots of problems in Congress where "pork" has been a tradition among legislators when voting for the defense budget roll s around.

 

Year after year, politicians allocate the lion's share of defense spending to their states, which manufacture all that traditional and increasingly obsolete hardware. That would need to change but don't hold your breath. Those jobs (and votes) are what make Washington the swamp that it is.

 

The demand for sustainability investments is growing. Companies that offer measurable social and environmental impacts that address issues like world hunger, climate risk, poverty and access to health care, seem like a good investment for those socially-minded. Finding companies that also provide a good financial return at the same time is not so easy.

 

Sustainability investing is different from the decades-old trend called "social investing." Generally, social investments are those that bet on solar power, clean water, or the avoidance of "sin stocks" such as tobacco, guns or liquor companies. Most of these areas were not viable investments without a great deal of government help.

 

The idea of sustainability goes far beyond that concept.  In this modern-day make-over, the idea is to use your money to solve some of these enormous global environmental, social and governance (ESG) issues and also make a profit over the long-term. Of all social groups measured, it is the Millennials who profess the most interest (80 percent) in social-impact investing.  An increasing number of younger investors (28 percent) are putting their money where their mouth is. They want to select investments that reflect their own values and personal priorities.

 

After all, when you think about it, they are inheriting a world that we, the Baby Boomers, have totally messed up. Just look around you. Our fossil fuels are burning the planet alive. The air in China, or in Mexico City among many other locales, is so bad citizens routinely wear masks. Millions are starving. Water is fast disappearing from much of the earth.

 

I know, I know, I can already see your eyes glaze over. By this time, most oldsters of my generation have tuned out these warnings. Most Boomers are immune to socially-responsible rants. They don't want to hear it, have no solution for it, and don't want to face the guilt and shame of their actions.

 

 But realize that there are one and maybe two generations of our population that want (and need) to do something about it. Given that the millennials and the Gen Z populations are the ones who will inherit this earth, from their point of view, they need to tackle these problems, because for them it is a life or death proposition. 

 

A number of studies predict that Millennials are poised to receive more than $30 trillion of inheritable wealth. The money is already starting to flow in as my generation kicks the bucket. These young investors are fully-versed on the issues they face. For example, by 2050, an estimated 2 billion more people will crowd into the earth's cities and towns. Global demand for food, water and energy will drive the need for innovative improvements in infrastructure simply to handle the demand for additional resources.

 

The question is: can you also make money by fixing these issues?  The jury is still out on whether the two can be accomplished together, but initial results are encouraging.

 

Sustainability investing is experiencing a compound annual growth rate of over 100 percent. Granted, it is still only a niche market, representing only 18 percent or so of the wealth and asset management industry. A recent study by mega-broker Morgan Stanley, which evaluated over 10,000 funds and managed accounts, show that sustainability investing has usually met and often exceeded the investment performance of comparable traditional investments.

 

 Environmental, social and governance (ESG) investment performance achieved an annualized return of 10.2 percent versus the bench market S&P 500 equity Index return of 9.7 percent.

 

Since all of the challenges facing the world are also long-term in nature, it makes sense that global pensions funds, especially in Europe and Japan, would be interested in this area. Given their own long-term investment views, global pension managers have invested about $23 trillion or 26 percent of managed assets in these areas.

 

To date, there are 50 ETFs(exchange-traded funds), and about 250 open-end mutual funds that offer access to the ESG/sustainability area. ESG funds (as they are called) have the least assets among the eleven smart-beta categories according to a Bloomberg survey. But before you start buying, investors should beware that most of these investments are extremely illiquid, experience enormous amounts of price volatility, and should be thought of as very speculative, long, long-term investments at best. They are not for widows, orphans or 98 percent of retail investors.

 

As you finish your turkey and prepare to get an early start on Black Friday shopping, you might wonder how shopping became such an integral part of your Thanksgiving holiday. The term has followed a circuitous route through our financial history.

 

Although the term "Black Friday" is a new phenomenon, its origins date back to the late 19th century. The term was first associated with a stock market crash on Sept. 24, 1869.

 

Two speculators, Jay Gould and James Fisk, tried to corner the gold market. This created a boom-and-bust atmosphere in gold prices. That volatility spilled over into stocks. Before it was all said and done, stocks lost 20 percent of their value, while commodities fell by over 50 percent. Neither speculator was ever punished for their deeds (sound familiar?) due to political corruption within New York's Tammany Hall. The term Black Friday, however, was used to describe that period of our financial history for the next century.

 

It wasn't until 1905 that the day after Thanksgiving had anything to do with shopping. It was in that year that a Canadian department store, Eaton's, launched the first Thanksgiving Day parade in downtown Toronto. Santa lead the parade in a horse-drawn wagon, while Eaton's benefited by seeing an uptick in shopping at their store the following day.

 

But it wasn't until 1924 that Macy's followed the Canadian lead by announcing their own parade. A similar increase in holiday shoppers convinced Macy's and soon other retailers across the nation, that Thanksgiving parades were good for business.

 

Retail sales on the Friday after turned out to be so good that the government got involved just to ensure that this extra business was here to stay. Congress passed a law in 1941 that made Thanksgiving the fourth Thursday in November. That allowed retail stores to plan their holiday shopping events every year on a predictable schedule.

 

It worked so well that the Friday after became just as important as the holiday itself. In the 1950s, shoppers began calling in sick on Friday to extend the holiday to a four-day weekend while also taking advantage of the shopping deals. It soon became a wholesale practice among workers across the nation. Businesses, after attempting (unsuccessfully) to discourage the practice, began giving that Friday off as another paid holiday and everyone was happy.

 

It wasn't until 1966, that the modern-day term "Black Friday" was officially coined in my home town of Philadelphia. It was there that the police department in the "City of Brotherly Love" used the term to describe the traffic jams, the free-for-all invasion of the town's department stores, and the well-publicized fisticuffs among shoppers that was becoming a tradition among consumers.

 

Since the 1920s, retailers had followed a "gentleman's agreement" to wait until Black Friday before advertising holiday sales. It worked. If one looks back through history, roughly half of all holiday shopping occurred on Black Friday. But that agreement began to unravel in the new millennium.

 

The advent of internet shopping spurred many retailers with a presence on the internet to extend the shopping holiday to include Mondays. On November 28, 2005, two marketing agents created the term "Cyber Monday." The concept proved an astounding success. Last year internet sales on that Monday reached $6.59 billion, making it the largest single internet shopping day of the year.

 

In 2011, retailers (ever a greedy group of buggers), disgruntled to see an increasing share of their brick and mortar sales being siphoned off by the internet, came up with a solution to make up those sales. Why not extend the shopping weekend by yet another day? Thus, the crowding out of Thanksgiving in exchange for more hours in the store.

 

At this point, I suspect someone will need to invent yet another catchy phrase to describe this national, five-day, retail spending spree. It is a trend that has all but obscured a day when, in the distant past, we came together as a family, to give thanks for something more than a 20 percent discount on a 4-D TV.

 

Nonetheless, as a traditionalist who is showing his age, I wish all my readers a Happy Thanksgiving. You can bet I will be spending it with my family, giving thanks for all I, and this nation, have received.

 

Go into just about any supermarket right now and what do you see? Bins and bins of gorgeous red, green, and golden apples. The harvest is overwhelming, but some apples are worth more than others.

 

If you are like me, an average consumer, it takes about 23 minutes to do my grocery shopping, according to Proctor and Gamble. During that spate of time, I buy an average of 18 items out of maybe 30,000 to 40,000 choices. I have little time to browse and, most of the time, I don't even check the prices, which brings me back to the apple cart.

 

You see, I value my fruits and vegetables. The more local, the better, because to me, the taste is everything. Until recently, I was partial to certain kinds of apples depending on whether I was baking, cooking, or just chomping down on one freshly picked from a local orchard. That's until I encountered the honeycrisp.

 

If you have sampled one, you know what I mean. They are everything an apple should be: crisp, with an electrifying mix of acidity and tangy sweetness. It is an apple worth buying, even if the price is two or three times the cost of the next best thing.

 

Why is the honeycrisp worth so much more than the Fuji or Gala? Is the taste really that different, or is it all a clever marketing gimmick? To understand the difference, let's look at the apple business in general. This year the industry expects a nationwide apple crop of 256.2 million, 42-pound bushels of apples. That is about 6 percent lower than last year's crop. Washington State accounts for about 61 percent of that total. The Midwest produces 31 million bushels. The harvest there, thanks to better weather, is up 35 percent from last year. The East Coast will be about flat from last year totaling 58.4 million bushels.

 

In this era of changing consumer tastes, foreign competition (think tangerines and kiwis), and the overwhelming dominance of a hand-full of supermarket chains, in order to survive in the apple business, you need to be close to the ground and light on your feet when it comes to consumer preferences.

 

There was a great article in Bloomberg this week that illustrates the need to be all the above. Evidently, my preference for the honeycrisp is shared. It is taking the nation by storm and leaving orchards in the Northeast flatfooted, according to them. The origins of this apple would, on the surface, contradict everything an apple farmer might have learned about America's modern commercial environment. The honeycrisp was never bred to be grown, stored, or shipped. Here's why.

 

It takes much more pruning than its lesser brethren so that the apples on the lower branches receive enough sunlight. It is also lacking calcium, which will result in brown spots, unless you feed them a vitamin supplement — in this case spraying them with a form of calcium. They are also difficult to store. While most apples can go from the tree right into the refrigerator, honeycrisps need 5-10 days to get acclimated at a mild temperature before they can be put into cold storage.

 

The negatives go on and on: birds love them, so protective fencing and nets are mandatory. They also get sunburned since they are so thin-skinned that the stems need to be clipped off lest they tear into the adjacent fruit.

 

Transportation, as you can imagine, is a challenge at the best of times. Some of these apples grow big. That causes a packaging problem when some of your apples might be the size of a grapefruit. Since preserving and bruising are important factors, there is a high attrition rate with no more than 55-60 percent of these apples surviving to the supermarket produce stalls.

 

And yet, production has doubled in the last four years. It now ranks as the fifth most popular apple grown, according to the U.S. Apple Association. Even so, the demand for the honeycrisp, outstrips supply by a mile. As such, those growers that have moderate weather and huge operations, like California and parts of Washington, have benefited at the expense of the Northeast where orchards are smaller, and weather is "iffy."

 

But don't think that the farmer's bottom line has exploded as a result of the honeycrisp. For most producers, the higher price somewhat off-sets the additional cost of growing and transporting these apples. However, in the end, it is the large supermarket chains that will dictate how much they will buy and sell and at what prices.

 

Bottom line: we are light years beyond Adam and Eve when it comes to the apple and everyone is on the lookout for the next honeycrisp, me included.

 

True to form, the opposition party regained control of the House, while the ruling party, in this case the GOP, retained control of the Senate. If history is any guide, this means that little in the way of legislation will be coming out of Congress for the next two years.

 

In the past, investors and the stock market alike did better than you might expect under this kind of political paralysis. That's because financial markets abhor the unknown. Given the unpredictability of politics and legislation, investors are far more content with inaction than action, unless of course, those actions are favorable to the markets or the economy.

 

Take for example, the tax cut of 2018. That sent the markets higher because most investors expected the cut would fuel additional growth in the economy.  In turn, that would generate higher earnings for public companies and provide a reason to bid the stock market up even higher.

 

While expectations for any additional tax cuts over the next two years are remote, there could be some surprises. There is some conjecture that the Federal government could undo parts of the tax cut. They could reinstate, for example, the federal tax deductibility of those states with an income tax. In exchange, the corporate tax rate might be raised a few percentage points. Of course, it's early days and any quid pro quo negotiation on taxes between the two houses and the president could drag out until 2020. 

 

The unfolding disaster that is the Affordable Care Act (ACA) over the first two years of Republican rule was not lost on voters. Health care was identified as one of the greatest concerns among voters in exit polls across the nation. That doesn't mean that the legislatures will suddenly be able to come together and fix a health care system that has run amuck.

 

 If the GOP, which had control of the executive branch and both Houses of Congress, could not come up with a plan to replace the AFC, why would we expect a divided Congress to do any better? At most, we may see drug pricing initiatives, but the passage of even that effort is doubtful.

 

The common wisdom of most political pundits is that the Democrats will launch investigation after investigation into the perceived wrong-doings of the president, his cabinet members, and anyone else they can target among the GOP. As a result, no one in power will have the time or energy to contemplate any new legislation. Most of their efforts will be tied up in defending themselves.

 

One area that might see the light of day might be infrastructure spending. Both parties have been talking about that since the early days of the Obama Administration. At that time, Republicans considered themselves deficit hawks and did not want to spend the money necessary to fund a multi-trillion-dollar spending program.

 

Today, however, Republicans, with few exceptions, have taken on the mantle of big government spenders. Democrats, at least since the days of Franklin Roosevelt and the New Deal, have always been saddled with that reputation. It is conceivable that enough elements of both parties could see their way into a compromise infrastructure spending bill. The caveat here is that the deficit itself could become an explosive issue next year as interest rates (and debt payments) continue to rise. In which case, neither party may be willing to add to the nation's debt for any reason.

 

In my opinion, the direction of the stock market will be far more dependent on how fast and how high-interest rates will rise. The outcome depends on the Federal Reserve Bank and not politicians in Washington, D.C.

 

There is one worry, however, that does continue to haunt the markets. President Trump's on-going trade war could ultimately sink both the economy and the stock market. The Democrats in the past, having been no friend of free trade, believe strongly that America has not been treated fairly by our trading partners. Given that the president and the Democrats may see eye-to-eye on this issue, it may embolden Trump to escalate his tariffs and other demands on our trading partners.