Imagine for a moment you have a pile of cash. Where are you going to put it? Into the S&P 500? A passive index fund? Not me. Legendary investor Jack Bogle, and now Michael Burry, whose story was immortalized in The Big Short as one of the first investors to call the subprime mortgage crisis, have expressed their concerns. “There no longer can be any doubt that the creation of the first index mutual fund was the most successful innovation—especially for investors—in modern financial history,” wrote Bogle here, “The question we need to ask ourselves now is: What happens if it … [Read more...]
Trump’s Plan to Finally Privatize the Mortgage Industry
Since the financial crisis, mortgage companies Fannie Mae and Freddie Mac have been languishing on the federal government's balance sheet. The two federally backed mortgage securitization companies were taken into government conservatorship in 2008. Now, Federal Housing Finance Agency director Mark Calabria has been tasked with the almost impossible task of reprivatizing them. I know Mark from his time at the Cato Institute, and I can tell you that he is passionate about this fight. If anyone can do it, it's Mark, but it won't be easy. Congress has been less than helpful to the Trump … [Read more...]
You Can Kiss Your Savings Goodbye if this Happens
Your key to investment success is to align yourself with companies that are aligned with you. What do I mean? When it comes to investment counsel and account management, you want a fiduciary at the helm. By law, a fiduciary must act in your best interests. When it comes to investing your hard-earned money you want to own companies that put you the shareholder or owner at the head of the table. If Elizabeth Warren is elected those two investor rules to live by are thrown out the window as explained below by Phil Gramm and Mike Solon at The Wall Street Journal. Do yourself and your money a … [Read more...]
Here’s How to Explain Negative Interest Rates to Your Spouse
The Fed is pushing on a string. With interest rates so low, the Fed no longer has the pull it once did. It’s shadow banking that controls the money today as Andy Kessler explains in his excellent WSJ piece “The Fed Can’t See Its Own Shadow.” “What’s going on with the bond market, especially what the Journal has called ‘the relentless demand for longer-term debt securities’?” It’s called repurchase agreements, or “repos,” a form of short-term borrowing that today has led to nonbank lenders holding more assets than traditional banks. Today, no thanks to Fed intervention in the markets, … [Read more...]
Your 401(k) When You Retire
As you know the retirement investment landscape is ever-changing as discussed with the proposed Secure Act. Make sure you know the rules so you don’t unknowingly cross the line and subject your account to penalties. There’s a reason they make this stuff confusing. Here Fidelity explains what you can do with an old 401(k): Key takeaways 4 options for an old 401(k): Keep it with your old employer, roll over the money into an IRA, roll over into a new employer's plan, or cash out. Make an informed decision: Find out your 401(k) rules, compare fees and expenses, and consider any … [Read more...]
Another Legendary Investor Sounds the Alarm on Investments that Have Taken Over Nearly Half the Stock Market
I warned investors last year to heed the words of Vanguard founder Jack Bogle when he sounded the alarm on index funds. Now, Michael Burry, whose story was immortalized in The Big Short as one of the first investors to call the subprime mortgage crisis, has echoed Bogle's warning. CNBC's Yun Li reports Burry has said of the bubble in index investing "the longer it goes on, the worse the crash will be." She writes: Low-cost passive vehicles have gained popularity on Main Street. Passive investments have now taken over nearly half of the stock market as more investors shun stock pickers and … [Read more...]
Take it from the Forty-Niners, There’s a Better Way to Play Marijuana Stocks
In 1848, there were around 1,000 non-native people living in California. By the end of 1849's Gold Rush, there were over 100,000 living in the territory. By 1852, those settlers had found $2 billion worth of gold in the area. Despite the fortunes made by gold, most of the forty-niners weren't successful. The Sacramento Bee reports that "one in every five miners who came to California in 1849 was dead within six months." Legend has it that the people who really made money during the Gold Rush weren't the many prospectors who spent their time panning and digging for gold, but those who sold them … [Read more...]
There’s No Owner’s Manual for Life, But Here’s One Strategy for Getting Through
You can feel the tension building up in my house as we head into Labor Day Weekend. Because for us, school hasn’t started, so the harsh, cold reality of the end of summer hasn’t hit us yet. But it will. Like a ton of bricks. At 6:00 am Thursday. That’s when my daughter begins her senior year of high school, and my son will be a sophomore. I’ve been singing “It’s the Most Wonderful Time of the Year” like the guy happily shopping for school supplies in the Staples commercial. They tell me to “just stop.” It’s hard knowing that at this time next year, my daughter will be off to … [Read more...]
Young Americans Enjoying the Fruits of the Trump Economy
Americans aged under 35 are happier with their paychecks now than they have been since 2011. The Wall Street Journal's Lauren Weber reports: American workers under 35 report being happier with their paychecks than people over 55 for the first time since at least 2011, according to a new report from the Conference Board, a business-research organization that polls U.S. employees about workplace satisfaction. Overall, the share of workers satisfied with their paychecks rose to 46.4% in 2018, from 43% in 2017, an increase that mirrors federal data showing that wage growth accelerated in 2018. … [Read more...]
Is Google Hostage to its Radical Employees?
Aside from labor negotiations, no one expects employees at big firms like General Motors or Coca-Cola to make much of a fuss. But at tech firms like Facebook and Google, it seems employees are embracing new political causes every other day, and dragging their companies into their activism whether executives approve or not. In the wake of President Trump's ban on travelers from some countries, Googlers, including leadership, became actively involved in the fight against the president's actions. Natisha Tiku details at WIRED the moment when Sundar Pichai and Sergey Brin spoke to Googlers … [Read more...]
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