If you are relying on a pension fund in a blue state, you're being played. Blue states that have mismanaged their fiduciary obligations are playing the country, waiting for the finish line, aka a federal bailout. The expected return targets of most of these pensions are 7%, on balanced portfolios. You can see from the chart of 10-year Treasuries below that the current state of fixed income is not supportive of those expectations. So pension managers must be relying on the stock market, which has recently endured its third major collapse in less than twenty years. The return expectations … [Read more...]
Gold Prices are Soaring: Here’s Why
Owning gold is like owning some insurance in your investment portfolio. When times are uncertain, its price may go up while others are going down. It has always made a great deal of sense to own gold, but now more than ever its price is rising. Joe Wallace explains why gold's price is soaring in The Wall Street Journal: The main reason is this year’s precipitous drop in yields on U.S. Treasurys to levels below the expected pace of inflation. Unlike bonds or bank deposits, gold doesn’t pay any income. As a result, owning gold means missing out on yields from other assets when interest … [Read more...]
Americans Spark Lumber Shortage in Escape from the City
You have read about the lumber shortages facing America as economic activity heats up. Americans escaping the city have initiated a housing boom that is creating lumber shortages. The Wall Street Journal reports on one woodworker here in Newport, RI that ordered four times the lumber he normally would, and still didn't have enough. The Journal explains: When woodworker Michael Hendershot stocked up with lumber in March ahead of building season, he feared the coronavirus pandemic would disrupt the supply of wood more than demand for fences, decks and cabinets. He multiplied his usual order by … [Read more...]
Retail Investor Mania Appears “Bigger—and Broader” Today than Dotcom Era
You have heard the hype. Everyone is trading stocks at home. What could go wrong? Reporters at The Wall Street Journal write that today's retail investor mania, pumped up by popular trading platforms like Robinhood Markets and E*Trade, appear "even bigger—and broader—this time" than during the dotcom era. For those of you old enough to remember the dotcom bubble burst, that's not a good comparison. They continue: Trades this year by individual investors more than doubled the usual level of retail activity, said Joseph Mecane, head of execution services at market maker Citadel … [Read more...]
Escaping the City Becoming a Bit More Expensive
You may want to escape the city, you're not alone. Many Americans are watching the riots and COVID-19 transmission rates in cities and making the decision to leave that life behind them. The "urban exodus" has begun driving up real estate prices in the suburbs and rural areas surrounding America's metropolises. Tom Olson outlines the effects in a piece at Think Realty, writing: If you are looking for a new place to live these days, the odds are good you have at least considered taking the “country mouse” route and buying a home in a rural area. The odds are also pretty good that a year … [Read more...]
With Headlines Like These, Is it Any Wonder Americans Are Escaping the City?
You know by now that Americans are rushing to escape the city. They're looking for a better America where they can raise their children, build their businesses, and retire in peace. The Wall Street Journal editorial board listed headlines from last week. Read them below and ask yourself, is it any wonder Americans can't wait to get away? July 21: “Authorities found the charred body of a man in the wreckage of a south Minneapolis pawnshop, nearly two months after the building was torched in the rioting that followed George Floyd’s death.” July 24: “A public hearing Tuesday night was … [Read more...]
Anyone With Success is Fleeing Blue State Cities
"I'm outta here." Those were the words Joe Rogan told his guest Joe De Sena recently. "Here" meant California, where Rogan has lived since 2003. Where is Rogan moving? Texas. Rogan's criteria for choosing his destination: Center of the country Easier to travel to both coasts A little more freedom An uncrowded area Implied in his point "a little more freedom" is the lower--read: zero--income tax rate in Texas. Rogan recently signed a mega-deal to move his popular podcast, The Joe Rogan Experience, to Spotify. The deal is worth $100 million, and moving to Texas could … [Read more...]
Is There No Escape from Big Labor?
Despite the perfectly clear decision made by the Supreme Court in Janus vs. AFSCME, unions are still trying to extract dues payments from unwilling participants in their extortion schemes. The National Right to Work Committee, which helped win the Janus case, tells the story of Ifeoma Nkemdi and Joanne Troesch who, are attempting to escape the grip of the Chicago Teachers Union. Here's the story: When the militant union bosses who run the Chicago Teachers Union (CTU/ AFT/AFL-CIO) ordered rank-and-file educators to go on strike last fall, many didn’t want to walk out on their … [Read more...]
Who’s Got Your Back in Times Like These?
Sometimes the most dangerous risk to your portfolio is you—because one of the more difficult actions an investor faces is when to sell a stock. Instinctively investors want to add to their winners (even when there’s no more meat on the bone) and sell the (temporary losers) because the losses are too hard to stomach. In both cases, inertia takes hold, and years later, the right choice becomes crystal clear. Too often, investors bet their savings on “ideas” and not “value.” Ideas are a dime a dozen. Discovering hidden value takes work, years of experience, and over time, is quite … [Read more...]
Skittish Investors Flock to Silver
Investors are recognizing some extra risk in markets and want protection. Gold, and more recently silver, have been a big hit. Amrith Ramkumar writes in The Wall Street Journal of silver's drive to a nearly four-year high: Both gold and silver tend to attract investors when money managers are skittish about the global economy and seeking alternatives to stocks and bonds. They continue to attract investors who expect a bumpy economic recovery in the years ahead. Meanwhile, ultralow bond yields continue to make precious metals more appealing to investors because the metals don’t offer any … [Read more...]
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