Record low temperatures in much of the U.S. have kept air conditioners from running, and electricity demand low. The low demand, coupled with an inventory buildup running at a record pace, has led to price declines for natural gas. As you can see on my chart of estimated energy costs per million BTUs for various fuel sources, natural gas is heading toward parity with coal. Meanwhile prices for oil remain elevated, and post-Fukushima Uranium prices continue to fall. … [Read more...]
Archives for July 2014
Piping Hot Growth
Four Percent! Can you believe it? The first estimate of second quarter GDP growth was released this week and it came in at a piping hot 4%. That is the third highest quarterly growth rate since the recovery began and only the seventh time in the last 56 quarters that growth has been so high. But before you start celebrating, I should note that the 4% growth rate comes with an asterisks. Much of the growth in the second quarter was simply catch up from an especially weak first quarter. After revisions, the Bureau of Economic Analysis said GDP in the first quarter contracted at an annual … [Read more...]
Gut Check: Confidence Rises to Post Recession High
Consumer confidence has risen to another post-recession high. The Conference Board's Index of consumer confidence has nearly topped its historical mean, something it hasn't done since October of 2007. … [Read more...]
Your Best One-Two Punch
For my money the best balanced fund combination is a 50/50 mix of Vanguard Wellesley and Wellington. For clients I prefer a mix of Young Research's retirement compounder stocks and individual bonds and bond funds. The key difference from the Wellesley and Wellington mix is our stocks provide an eclectic group of international holdings and the bonds have a shorter maturity. But as you can see with my chart it's the balanced approach that gives you the confidence to stay in the fight. … [Read more...]
The Monday Melee: Euro Hits New 2014 Lows
What we're reading: Mark Cuban talks before he thinks. On Tax Inversions: "If You Move Overseas, I’m Selling Your Stock" (MoneyBeat) Talk about solar power. This is a risk you shouldn't ignore. (Washington Post) Modi govt makes first major reform move. (Quartz India) When China's real estate mania goes global (CNN Money) Bickering Vikings and blissful Greeks (Quartz) China hoovering up African timber. (Quartz) 8 in 10 Americans say a business background Is best for governing, but 5 in 10 vote for a community organizer. (Gallup) "The Volcker Risk Bubble" good read … [Read more...]
The Only Stocks We Buy
You read last week about putting margin of safety to work in your portfolio. I told you about three strategies we use to pick stocks with the margin of safety in mind. The first and most important is that the only stocks we buy pay dividends. Below you’ll read an excerpt explaining the benefits of dividend investing from our free special report, Collecting Rare and Hard to Find Dividends. I’ll detail the other strategies in the weeks ahead. Reduce Risk with Dividend Stocks What’s more, dividends help reduce portfolio volatility. Figure 3 shows that high-yielding stocks have been less … [Read more...]
Words from the Wise
Richard Russell's timeless Rich Man, Poor Man has been there for me when I needed some perspective. I hope it will do the same for you. RICH MAN, POOR MAN: In the investment world the wealthy investor has one major advantage over the little guy, the stock market amateur and the neophyte trader. The advantage that the wealthy investor enjoys is that HE DOESN'T NEED THE MARKETS. I can't begin to tell you what a difference that makes, both in one's mental attitude and in the way one actually handles one's money. The wealthy investor doesn't need the markets, because he already has all the … [Read more...]
The Shocking Truth Behind Falling Treasury Yields
There is an odd dynamic in the bond market that Wall Street can’t seem to figure out. Long-term Treasury yields are falling despite an economy that is showing signs of life. It is an apparent conundrum to many. Some analysts are attributing the move down in yields to the recognition by investors that there is a new lower speed limit for the U.S. economy. Others claim that yields are falling because pensions, endowments, and insurance companies are now flush. These investors are believed to be cashing in their equity chips and investing the proceeds in bonds. Still others believe that low … [Read more...]
The Calm Before the Storm
You don't have to be able to predict the future to be a successful investor. But being armed with battle hardened advice can certainly help you become one. From Richard C. Young's Intelligence Report, July 2007 (subscription required): Your Portfolio Mix At the start, retired investors and investors saving seriously for retirement (76 million boomers will begin retiring next summer) must answer two basic questions: (1) What is the proper mix of stocks and bonds? (2) How much money can be drawn annually from an investment portfolio? I have used Ibbotson data and examined 20-year rolling … [Read more...]
The Monday Melee: Housing Rolling Over
What We're Reading: Race to Cut Taxes Fuels Urge to Merge, Hoffman and Plumridge, The Wall Street Journal Better late than never. Liberals abandon Obamacare mandate. (Politico.com) Carl Icahn advises caution on US markets, Reuters China Plays Big Role in U.S. Bond Rally, Min Zeng, The Wall Street Journal Value Added Of Every Microsoft Employee: Negative $1.5 Million, ZeroHedge Arabs look for Martians. (GulfNews.com) Coca-Cola, the low sugar alternative! (Quartz India) Druckenmiller Warns Fed's "Market Obsession" Creates "Long-Term Risks To The Economy, … [Read more...]