You have seen a lot of rosy news about the economy, but in certain corners, things are less than ideal. Many companies are going through "restructuring," which is a boardroom word for firing employees. PayPal is doing its own restructuring, to the tune of 9% of its global workforce being let go. Sabela Ojea reports in The Wall Street Journal: PayPal plans to trim 9% of its total workforce this year as part of a restructuring plan. The digital payments company’s head-count reduction comes on top of a prior round of layoffs of 7% last year and will be made through direct cuts and the … [Read more...]
Time to Get Your Lazy Money Working
When you look at my charts from yesterday, now is a good time to get your fixed-income house in order. After a certain point in an investor’s life, there’s a time to recognize that, “Self, I might not want to work forever. How am I going to make ends meet?” Believe Your Survival Guy when I say retirement is a most stressful time and is in the top ten of life’s emotional events. I know this firsthand because I talk with hundreds of investors about it. There comes a point where you can’t afford to risk your net worth to 100% stocks. Not that you ever do. But at some point, you might want … [Read more...]
Not Worried about Inflation? Try Buying a House
You know that inflation is down, but not out. And if you aren't sure inflation is still a problem, try buying a house. Prices for houses just reached new all-time highs, despite the higher interest rates. Aarthi Swaminathan reports in MarketWatch: Home prices in the 20 biggest U.S. metros rose for the 10th consecutive month, hitting a record high, due to a low number of home listings. The S&P CoreLogic Case-Shiller 20-city house price index rose 0.1% in November compared to the previous month. Home prices in the 20 major U.S. metro markets were up 5.4% in the last 12 months ending … [Read more...]
Investors Burned by Chinese Developer’s Collapse
You have read regularly on Yoursurvivalguy.com about the world's most indebted property developer, Evergrande, a Chinese firm that has been working its way through a slow-motion collapse, and the order has finally come to liquidate the company. From the first reports, it appears that buyers who put down payments on apartments that were never built will receive seniority to lenders, leaving Evergrande's creditors with little to nothing. Bloomberg reports: China Evergrande Group creditors are set to recover just a fraction of the billions of dollars worth of the builder’s debt they hold, with … [Read more...]
Three of My Favorite Charts
Your Survival Guy studies these charts daily: Action Line: Keep your eye on what’s happening, and let’s talk. … [Read more...]
Inflation Is Down, but Not Out
Don’t forget even a little inflation can do a number on your purchasing power. Be an inflation fighter, not a victim. Inflation is down but not out, and the market is looking for any reason to cut, so inflation could come right back if the Fed cuts too soon. Nick Timiraos reports in The Wall Street Journal: Federal Reserve officials start the year with a problem they would ordinarily love to have: Inflation has fallen much faster than expected. It does, nonetheless, pose a conundrum. The reason: If inflation has sustainably returned to the Fed’s 2% target, then real rates—nominal rates … [Read more...]
What if Today’s Opinions Are Wrong?
I would be surprised if the average investor understands how major securities indices are composed. Take the S&P 500, for example. It’s a market cap weighted index. What’s a market cap, and how is it calculated? It’s surprising to me how little attention this gets. Market capitalization is the value of all the shares of a company added together. The market cap of the S&P 500 is the value of all the shares of all five hundred companies added together. The companies with the biggest market caps themselves, therefore, make up a bigger part of the index’s market cap. So, when you … [Read more...]
Even a Little Inflation Can Hurt
Prices rose in December by 0.2% month-to-month according to the PCE, that's 2.6% annualized. That may seem like a small number, but compound it over a couple decades of saving for retirement and it can drastically reduce the purchasing power of an investor's savings. Dick Young recently warned investors about the "debilitating" effects even lower levels of inflation can have on portfolios. It's true, and that's why Barron's is declaring that the Fed's "long-running battle against rising prices is not over yet." Daniel Avis reports: The US Federal Reserve's favored measure of inflation ticked … [Read more...]
Dow 38,000 and Beyond
Let’s not get too excited about Dow 38,000. Your Survival Guy remembers when we hit Dow 10,000 in 1999. As you can see, we crossed that bridge again and again. What’s always amazing to me is how short the average investor’s memory is (you’re not average, dear reader). Look how long it took for Dow 10,000 to gain some terra firma. Then, look at how long it took for NASDAQ. Not pretty, as an entire generation was lost to price wars—prices were stagnant. With the so-called Magnificent Seven running a third of the show for the S&P 500, let’s not forget that diversification … [Read more...]
Is Inflation Improving? It Depends on Who You Ask
Americans have suffered through three years of Bidenflation, and by all accounts, the rate of inflation is improving. But some people, mostly those affiliated with the current administration, are taking a victory lap based mostly on the PCE price index, while other inflation measurements are still coming in at distressingly high levels. Gwynn Guilford reports for The Wall Street Journal: The core index of the Federal Reserve’s preferred inflation metric, the personal consumption expenditures price index, increased 2% from the prior quarter, the same as in the third quarter and in line with … [Read more...]
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