Young Research & Publishing Inc.

Investment Research Since 1978

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Archives for January 2012

The Dollar Game Is Rigged

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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 meeting result could have been worse. The Fed might have announced more purchases of U.S. Treasurys and mortgage securities. It already owns nearly $2 trillion worth and has no limit on its expenditures, which fall completely outside the federal budget. Bond traders have been pleading with the … [Read more...]

Don’t Let This Mutual Fund Mistake Cost You Thousands

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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 winners—also known as performance chasing—is a time-honored tradition for many investors. No matter how many warnings they hear on the pitfalls of performance chasing, many novice investors continue to engage in this practice. Poll your friends and family who have 401(k) accounts. Ask them how … [Read more...]

Future Dividends, Coupons, and Principal

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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, or coupons and principal, must be adjusted for expected changes in the purchasing power of money. The purchase of a stock or bond, like other transactions which give rise to the phenomenon of interest, represents the exchange of present goods for future goods—dividends, or coupons and … [Read more...]

A Recovery in Housing

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Has the long anticipated recovery in housing finally arrived? The latest round of economic data on the housing market points toward improvement. On Wednesday, the National Association of Home Builders (NAHB) released their monthly home builder confidence index. The NAHB/Wells Fargo Housing Market Index asks builders to rate current single-family home sales and sales expectations and prospective buyer traffic. The responses are used to generate an index where any number over 50 signals that more builders view conditions as good than bad. In January, the Housing Market Index increased to 25—the … [Read more...]

Owning the Best Performers

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In its quarterly funds report printed on January 9, The Wall Street Journal lists the 45 largest stock and balanced funds by assets. The best performers of this group for 2011 were a gold ETF, SPDR Gold (GLD), up 11.2%, and a balanced fund, the Vanguard Wellesley Admiral shares (VWIAX), up 9.7%. The worst performers of the group of 45 were both emerging market funds, each down about 19%. On average, U.S. stock funds were down 2.9% and U.S. taxable-bond funds were up 4.6% last year. The two best five-year average returns on the list were, once again, SPDR Gold and Vanguard Wellesley Admiral … [Read more...]

What We’re Reading 1-13-12

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Rich managers, poor clients, The Economist Cyberattacks likely to escalate this year, Byron Acohido, USA Today Iran Says Nuclear Scientist’s Murder Shows Foreign-Backed Terror Campaign, Ladane Nasseri and Nicole Gaouette, Bloomberg Class Warfare and the Buffett Rule, Arthur B. Laffer, The Wall Street Journal … [Read more...]