Socialist president Nicolas Maduro has run out of other people's money, and so his government is using inflation of its currency to pay its bills. The country's inflation has gotten out of hand, and hyperinflation has ensued. Now, the dropping value of the country's bolivars has decimated its manufacturing industry. The Wall Street Journal reports: Manufacturing’s fall reflects broader economic devastation. Venezuela’s economy has halved during President Nicolás Maduro’s six years in office, and is expected to decline another 30% this year as new U.S. sanctions on oil hit. The country’s GDP, … [Read more...]
Dear Amazon: National Right to Work President’s Open Letter
When politicians play games to lure companies to their state, it is oftentimes with tax breaks using money they don’t have, as was the case with New York’s tax breaks to Amazon. Amazon was going to pay much more in taxes than they received in tax breaks—by a lot—it was basically New York Prime. The topic came up at a recent lunch with clients. I told them I was torn. I have a real problem when politicians use other people’s money to do their bidding. But I’m certainly not sad to see the backlash Congresswoman Alexandria Ocasio-Cortez will face in 2020. My beef with politicians is, they … [Read more...]
Amazon, Groceries and What it Means for Wal-Mart
Delivering non-perishable goods is one thing. Making sure you’re happy with the apples and oranges they picked for you and delivered to your door is another thing all together. Americans are picky about their fruits and vegetables. And it’s why the grocery deliver business hasn’t been able to scale. It’s a major endeavor. Amazon announced last week it is opening a handful of grocery stores separate from its Whole Foods operation. The key to groceries is execution. It’s not good business to bet against Bezos, but when you look at Wal-Mart’s footprint, it’s hard not to believe there will be … [Read more...]
Wisdom from one of the Greats: Steve Jobs
When I think of great business leaders, Steve Jobs comes to mind. If you read Steve Jobs by Walter Isaacson, you come away thinking there’s Apple with Jobs and there’s Apple without Jobs. There’s no replacing an Apple with Jobs. But what’s incredible is that Steve Jobs was never a big business guy. He wasn’t a Wall Street guy, or a corporate titan from the 80s. Strikingly, he was more of an artist than CEO. He was good at both because you have to be a great CEO to lead a business. But he was more of an innovator. It was his ability to put a stake in the ground and rally the troops in a way … [Read more...]
Government’s Fidelity Probe Looks to be a Non-Starter: Part II
Yesterday I wrote to you about the government probe into Fidelity. My view continues to be that this looks to be a non-starter. But unfortunately, when you’re in the headlines, questions are always going to be asked. The thrust of the probe is related to an infrastructure fee Fidelity negotiates with other mutual fund companies for the privilege of listing their funds for sale on Fidelity’s FundsNetwork. The infrastructure rate is agreed upon between the two parties and is listed in the fund prospectus or plan document. A plan document is used by retirement plans such as 401(k)s to make … [Read more...]
Government’s Fidelity Probe Looks to be a Non-Starter
There is an article in today’s Wall Street Journal about a government probe into Fidelity regarding a fee charged to some mutual funds. It’s called an “infrastructure fee,” and is charged by Fidelity Investments to certain mutual fund companies (not Vanguard) to list their funds on Fidelity’s FundsNetwork. Most funds on Fidelity’s FundsNetwork are accessed through retirement accounts such as 401(k)s and/or 403(b)s. As such, they are governed by ERISA laws which are overseen by the Department of Labor. The article references a fee of 0.15%, which is misleading because not all companies … [Read more...]
Trump Pick to Oversee Fannie Mae and Freddie Mac
Congratulations to Mark Calabria on his advance by the Senate Banking Committee yesterday to become the next director of the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac. I know Mr. Calabria from his work with the Cato Institute, and I like his free market principles. If confirmed this Spring, Mark will move to the FHFA directorship from his current role as chief economist and senior aide to Vice President Mike Pence. You can listen to the hearing, and read Calabria's prepared testimony below. … [Read more...]
Illinois: New Governor, Same Old Pension Pyramid Scheme
Writing at Forbes, Elizabeth Bauer asks if Illinois' public retirement system is a pension fund or a pyramid scheme. The evidence doesn't look good. Despite electing a new governor, Illinois seems to be using the same old tactics to plug its pension holes. Bauer explains: Illinois's new elected officials and their advisors simply don't believe that it matters that public pensions are pre-funded. They view pension funds as something that exists on paper, and pension reporting as a nuisance to be avoided where possible, and ignored otherwise. Through their actions -- and indeed their words … [Read more...]
Will the Dow’s Mega-Companies Use Blockchain to Change the World?
You may still not have recovered consciousness after the 19% drop from October 3 through Christmas Eve. So, I wouldn’t blame you for not noticing the Dow’s rapid 16% rise over the past nine weeks. One question I receive quite often is, “what are your thoughts on technology?” My quick response—I love technology. But when it comes to investing, the company better pay a dividend. I want to be—and I want you to be—paid for investing in stocks. One area in tech I’ve been writing to you about is blockchain. It’s the backbone behind cryptocurrencies such as Bitcoin and Ethereum. And as I’ve told … [Read more...]
My March Rage Gauge: Take Inventory of Your Investment Life
My March Rage Gauge is in, and it feels like the calm before the storm. Does that mean the market will have a huge downward correction this year? Like I’ve written to you in the past, I’m not in the prediction business. Because for you to be a great investor, you need to put together multiple seasons of investing and then maybe you’ll be able to look back and say: “Well, I wouldn’t want to do that again, but we made it.” Let me explain. All of us have a pretty good feel for what’s going on today. Interest rates aren’t moving, the Trump economy is OK (It could be great again if the … [Read more...]
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