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...]
You Invest, They Win
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...]
The Fed Needs More Voices Who Know the Value of Your Dollar
When you measure the value of your dollars, it should be as dependable as the number of inches in a foot. Judy Shelton understands this simple principle better than most. Her nomination to the Federal Reserve Board of governors will be voted on by the Senate Banking Committee on July 21. James Freeman explains in The Wall Street Journal why this has so many people so angry. He writes: This year the Fed’s balance sheet surged to more than $7 trillion from a pre-Covid $4.2 trillion to offset the economic lockdowns. A slight recent decline offers hope that the money-printing festival may be … [Read more...]
Every Stock You Own Deserves a Decision
There’s never been a better time to get your financial house in order. Don’t let inertia beat you down. It’s time to get up, put pen to paper, and make sure everything you own deserves a place in your portfolio or decide if it has served its time. Treat your portfolio with the love and care you have for your home and garden and, believe me, good things will happen for you and your family. Make it a good day. Life is Good: You’re Ready to Protect Your Turf Your Retirement Life: Investment Planning in One Chart Your Retirement Life: Parents, do You have an Investment … [Read more...]
The Fed Is Dealing Massive Doses of Monetary Drugs to the Market
In a sweeping piece in The Wall Street Journal, Jim Grant likens the actions of Fed Chairman Jerome Powell to those of a drug dealer, feeding highly addictive monetary drugs to the market, with no regard for the side effects. In the piece, Grant notes that like the portfolio managers of CalPERS who are California Dreamin', Powell explains his actions as necessary. But is that really true? Grant writes: If Federal Reserve Chairman Jerome Powell were selling a prescription drug instead of a monetary policy, the Food and Drug Administration would likely want a word with him. “What we’re … [Read more...]
The Sophistication of Simplicity as it Relates to Your Money
You’ve read my series You Invest, They Win. In a wonderful op-ed in the Weekend WSJ was “The Joy and Wisdom of Simplicity,” by Fay Vincent: The other day I found someone citing Henry David Thoreau’s advice from “Walden”: “Simplify, simplify.” I began to think of some seemingly simple yet unusual statements I had encountered. I once asked the late Las Vegas tycoon Kirk Kerkorian if he was troubled by the enormous debt he ran up to finance his corporate takeovers. He was then trying to gain control of Columbia Pictures Industries, where I was CEO. His simple answer stunned me. “Look, that … [Read more...]
The Big Winners When You Faithfully Give to a Cause (Retirement)
If you didn’t read about the massive fund controlled by the Mormon Church, you will. With 16,000 plus members tithing 10% of their earnings, the fund has amassed a $100 billion fortune—a cash-generating behemoth that would make Warren Buffett blush. Roger Clarke, the head of the investment fund Ensign Peak that controls the church’s money, used to be a professor at Brigham Young University, reports Ian Lovett and Rachael Levy for the WSJ. He was running an investment firm in Los Angeles when he got the call. “It certainly wasn’t the most attractive financial office,” Mr. Clarke said. “But … [Read more...]
When the Rules Apply to You but Not to Them
Justin Baer reports at The Wall Street Journal that the giant bond investing firm, Pacific Investment Management Co. (Pimco), "was aware employees had used the services of the firm founded by the figure at the center of a sweeping college-admissions scandal but it had “no information” suggesting these workers acted improperly." He writes: Douglas Hodge, a longtime Pimco executive who served as its CEO until 2016, was one of 33 wealthy parents accused this week of paying for bogus entrance-exam scores or fake athletic achievements to get their children admitted into competitive … [Read more...]
You Invest, They Win: Ray Dalio Lives his “Best Life” on Your Fees
The founder of the largest hedge fund in the universe, Ray Dalio, tweeted this from Burning Man: Just back from Burning Man. Reminds me of Woodstock with better art (installations) and less good music. What a great vibe and what amazing creativity! Photo is with my pal and coworker Jeff Taylor at his great music camp Root Society. If you go next year, 1-5am is best. Are these the guys you want running your money? You invest, they win. But hey, it’s not about the money. It’s about saving the planet man. Because if it’s about the money (Dalio has a personal net worth of $19 billion) then … [Read more...]