Seasonally adjusted retail sales recorded a 1.1% increase in February. The problem with the increase is where the money came from. As you can see in the chart below, Americans drove their savings down to the lowest levels since November 2007 to finance their spending. In a recovery that has relied heavily on the consumer to pick up the slack, once those saving are spent, where will growth be generated? With lending standards still very strict it won’t be from borrowing. Lenders aren’t keen on handing out money at today’s low rates to borrowers who have less ability to repay. Perhaps if rates … [Read more...]
Archives for March 2013
It’s Never Too Late for Dividend Religion
It’s never too late to get some dividend religion. Yes the media is all over this record-setting Dow Jones Industrial Average (DJIA). But what good is a record if you didn’t participate in it? I’m afraid that’s the truth that too many investors would not care to admit. It’s never fun when you miss the boat. Companies are drowning in cash, partly because they’re too scared to do anything with it. That’s why this year will be a record year for dividends and stock buybacks. I prefer dividends because I trust myself more than the corporate guys who are good at exploiting business opportunities … [Read more...]
Fields on Fire: Agricultural Land Boom
For the last three years a revolution in real estate has been growing in America’s heartland. Since 2010 prices of agricultural land have climbed significantly. What’s behind the boom and do prices have further to climb from here? Or are they about to take a turn into negative territory? … [Read more...]
What We’re Reading 3-8-13
Dow Jones high on Fed steroids: Our view, The Editorial Board, USA Today Treasury Needs a Better Long Game, John H. Cochrane, Wall Street Journal Tax bills for rich families approach 30-year high, USA Today Moroccan Pottery Classes, Shrimp On Treadmills And Obamaphones - Bernanke's Biggest Bloopers Tie It All Together, Tyler Durden, Zero Hedge ObamaCare and the '29ers', Review & Outlook, Wall Street Journal … [Read more...]
VIDEO: U.S. Will Be 99% Energy Independent by 2030: BP CEO
March 7 (Bloomberg) -- Bloomberg's Adam Johnson sits down with BP CEO Bob Dudley and discuss Venezuela's largest oil reserves and how new leadership in Venezuela will make an impact. They speak on Bloomberg Television's "In the Loop." … [Read more...]
Investors Driving Real Estate’s Wild Ride
You can see on the chart below that over time, sales of homes and the number of mortgage applications have tracked each other pretty close. Those fundamentals seem to have broken down at the end of 2006 when the number of mortgage applications was still rising but the number of homes actually being sold was plummeting. Throughout the recent crisis the relationship failed to repair itself. But something interesting is happening now. While the number of mortgage applications has been slowly rising from the middle of 2010, since the middle of 2011 home sales have been surging upward. That’s a … [Read more...]
What to Do about Vanguard GNMA
You don’t want to sell Vanguard GNMA. I know its price is down. And often, when investors see share prices go down, they sell. They follow the herd. Resisting that impulse isn’t easy. But the herd forgets that stocks were slaughtered in 2008 while GNMA was a port in the storm. You can bet there will be another stock market crash as bad as or worse than 2008. It’s really just a matter of when. 2008 wasn’t a bloodbath for everyone. The average GNMA fund tracked by Morningstar was up 6.6%. It was a terrific year. Unfortunately, it seems you can count on one hand the lucky few who stuck … [Read more...]
Retiring Baby Boomers in the Days of Bubble and Bust
Are you a Baby Boomer heading into retirement? Chances are 2008 hit you like an anvil. Your pension portfolio and the price of your house plummeted. Together, those investments are probably the majority of your wealth. But according to new research by the Social Security Administration, by 2010 Baby Boomers born between 1948 and 1953 had lost only an average of about 2.8% of their real wealth from 2006 to 2010. “How could this be so low?” you might be asking. In 2006 64.3% of the average Boomer’s wealth was tied up in pensions and housing and real estate. Between 2006 and 2008 housing … [Read more...]