Investors are in what Bloomberg writer Adam Haigh calls a euphoria today. According to my RAGE Gauge, Americans are still not factoring in much, if any, risk. While the economy is strong and the stock market is up, it's always a good idea to be wary when others are not. When you hear words like euphoria being used to describe investor mentality, it pays to be skeptical. Haigh writes: Euphoria on Wall Street that stocks can just keep on building on record highs is getting so stratospheric that it’s reaching levels that previously signaled a slump. Analysts are ratcheting up their forecasts … [Read more...]
Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future
One of my takeaways from the book Elon Musk: Tesla, SpaceX, and the Quest for a Fantastic Future by Ashlee Vance, is Musk’s ability to stay focused on his long-term goal of putting humans on Mars. At his rocket company, SpaceX, there was some grumbling from employees about when the company would file for an IPO enabling them to cash in on their rigorous years of work for the task master Musk. Here’s his email to employees (my emphasis in bold): Per my recent comments, I am increasingly concerned about SpaceX going public before the Mars transport system is in place. Creating the technology … [Read more...]
The ‘Hated’ Stock Market Rally
Do investors even believe this stock market? Despite reaping the benefits of the second longest bull market on record, investors seem to hate the rally. Wall Street Journal reporters Akane Otani and Chris Dieterich report: Rather than celebrating this wealth-generating machine, individual investors have expressed in multiple surveys just how little enthusiasm they have for this stock market. For years, analysts have described an “unloved” or even “hated” stock rally, where prices defiantly rise despite one of the weakest U.S. economic recoveries on record, Washington’s policy sclerosis and … [Read more...]
Will France Succeed in Privatization Drive?
The next time you fly into Paris, you may be landing at a privatized airport. That's the plan of the administration of President Emmanuel Macron. The new president and his allies want to privatize a large chunk of the 81 companies in which the government has ownership stakes. They appear to be focused on Aéroports de Paris (ADP), operator of Paris Charles de Gaulle and Orly airports as a starting place. David Keohane reports in FT: France owns 50.6 per cent of ADP, which has a market capitalisation of €15.6bn. The next largest shareholder is Vinci, the French construction and infrastructure … [Read more...]
The Emotional Toll of the Great Recession
Despite years of distance between today and the depths of the Great Recession, many retirees and savers are still feeling the pain. Lydia Depillis, writing for CNNMoney details the despair some Americans are still in. A business lost, a life reinvented Landscape architect Dan Donohue and his wife, who ran marketing and accounting for their small firm in Batavia, Illinois, had been through downturns before in his 25 years of experience. But the Great Recession, which brought to a halt the real estate development they counted on, knocked them out. With no business and four young kids to … [Read more...]
What Will Pensions Buy in 2018?
Securities valuations are at the highest levels they've ever been. You can see on my price-to-sales ratio chart of the S&P 500 that valuations are higher today than they were during even the dotcom era. While stocks are valued at record levels, the situation in fixed income markets isn't any better. With such high valuations for stocks and bonds, there is nowhere to go for pension funds looking for bargains. Despite the expensive markets, pension funds are still buying assets. Heather Gillers reports in The Wall Street Journal: In the public pension world, the willingness to chase … [Read more...]
The Truth Behind the S&P 500: Part V
As I've written to you before, the S&P is constructed somewhat like an actively managed fund. Real people choose which stocks go in, and which remain out. Robin Wigglesworth writes in the Financial Times that David Blitzer, the current head of the S&P Dow Jones' index committee, has done what few others have been able to do by creating decent low risk returns. But Wigglesworth also points out that it is unlikely Blitzer's success can be maintained (that's not a knock on Blitzer who isn't attempting to generate maximum returns with his picks). It's just math. As volatility increases … [Read more...]
Is College the Best America Can Do for its Students?
In today's job market it's hard to find any well paying job that doesn't require some level of college education. But should it be that way? In Switzerland apprenticeships serve to put young people into jobs immediately upon entering the workforce. How many unproductive years of college and even grad school must American students endure before entering the workforce for jobs Swiss youths are doing straight out of high school? Switzerland is one of the most competitive nations, and home to the world's most Fortune 500 companies per capita. At the Financial Times, Ralph Atkins explains why … [Read more...]
Amazon’s Nomadic Retiree Army
Every year, Amazon needs thousands of extra workers to meet the holiday crush, explains Jessica Bruder in “Meet the Camperforce, Amazon’s Nomadic Retiree Army,” Wired’s adaptation from Bruder’s book Nomadland: Surviving America in the Twenty-First Century. Many of them are nomadic retirees living in RVs. In Amazon CEO Jeff Bezos’s estimation, a quarter of all nomadic retirees in RVs will have worked for CamperForce by 2020. Their reasons for working are not necessarily good ones and the story illustrates how quickly one’s retirement plans can be turned upside down—requiring part-time … [Read more...]
Tax Bill Big Changes to 529 Plan
One item, in particular, that I like with the pending tax reform is how the 529 plan will be treated. It expands the use to elementary and secondary schools at a max of $10,000 per beneficiary per year for qualifying expenses. This from the NYT: Buried in Section 1202 of the tax bill are a number of proposals to consolidate and simplify various tax breaks for education savings. Part of the section in effect would neuter something called a Coverdell account, which families have used for years to save for both private school and college. But then comes the big change: Elementary and high … [Read more...]
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