Outliving Your Money
In this 0%-interest-rate environment, public pensions like Rhode Island’s are using an assumed rate of return of 7.5%. If and when that estimate goes unmet, it’s up to taxpayers to make up the difference. It’s preposterous that public pensions are assuming a 7.5% rate of return. The only way they’ll... Read the full story
Coordinated Currency Devaluation: Time to Buy Gold
Not to be outdone by Europe or the U.S., the Bank of Japan announced yesterday that it would print an additional 10 trillion yen ($128 billion) to expand the size of its asset-purchase program. The BOJ’s decision comes on the heels of the European Central Bank’s December decision to massively expand... Read the full story
We Are All Subprime Now
Over the last 10 years (since year-end 2002), profligate spending in Washington has resulted in a staggering $6.9-trillion increase in debt held by the public. That’s $22,000 for every man, woman, and child in America. A family of four is looking at an $88,000 increase in their debt burden. How generous... Read the full story
VIDEO: Why the Fed can’t fix the housing problem
Gold King as Currencies Debased
Yesterday the Bank of England announced another round of quantitative easing, this time spending $79.1 billion on government bonds. On the chart below you can see the effects previous rounds of quantitative easing have had on the price of gold in U.S. dollars and pounds sterling. As monetary authorities... Read the full story
Who’s Custodian for Your Money?
You can see the hubris. As the bankruptcy of MF Global unfolds, customers are still looking for their money. That money should have been segregated and not part of the bets the firm was making with its own money. So far, $1.2 billion in client funds is missing. Where did it go? From Vanity Fair’s... Read the full story
Employment Picture Brightens: Is it Bullish for Stocks?
The Bureau of Labor Statistics released the monthly jobs report this morning. The headline numbers blew away expectations. Non-farm payroll employment increased by 243,000 in January compared to estimates of 140,000. The unemployment rate came in at 8.3%, 0.2% better than expectations. The big upside... Read the full story
The Dollar Game Is Rigged
You’re getting less than $0.20 on a 1971 dollar. You can see the decline in my chart. And based on the Fed’s rock-bottom interest-rate policy, there’s no reason to believe it’s getting any better. That’s why you want to study the Wall Street Journal op-ed by David Malpass. He writes: Wednesday’s... Read the full story
Don’t Let This Mutual Fund Mistake Cost You Thousands
What mutual fund mistake am I talking about? This mistake is so common, chances are you have committed it yourself—before you became a savvy, successful investor, of course. If you have ever purchased a mutual fund solely on the basis of past performance, you have made this mistake. Buying yesterday’s... Read the full story
Future Dividends, Coupons, and Principal
Your purchasing power is your lifeblood in retirement. On my office credenza is The Theory of Investment Value by John Burr Williams, first published in 1937. Chapter five is titled “Evaluation by the Rule of Present Worth, Section I. Future Dividends, Coupons, and Principal.” Burr writes: [D]ividends,... Read the full story
