Young Research’s dividend-centric Retirement Compounders continue their upward trajectory. How have trillion-dollar budget deficits year after year been funded? By blowing up America’s debt level and simply printing money to fund deficits. And the stock market has advanced into a new bubble phase. In this brutal environment, Young Research’s Retirement Compounders (RCs), on a risk-adjusted basis, have outrun each of the 10 biggest equity mutual funds representing four enormous fund families: American, Dodge & Cox, Vanguard and Fidelity. My 10-year bar chart [below] shows the … [Read more...]
Archives for July 2014
The Investment Idea that made Warren Buffett Billions
Last week E.J. posted part I in his series on Benjamin Graham’s The Intelligent Investor. You may have heard this from us before, but it is worth repeating for the benefit of those who have not. The Intelligent Investor truly is the best investment book ever written. It is a timeless classic that remains as relevant today as it was when it was first published over six decades ago. Not a single investment book comes close to providing the fundamental insights that Graham so masterfully delivers in The Intelligent Investor. If you don’t yet have a copy, order one today. It will be the best … [Read more...]
Who’s the Sucker?
This story doesn't have a happy ending. You see this often in the late stages of a bull market. After missing the bulk of the rally in the stock market from the prior bear market lows, the general investing public gets greedy. Those investors who couldn't find a thing to like about the investment climate become the biggest cheerleaders for a permanent prosperity. The regret of missing most of the bull market gains pushes many to make up for lost time by getting too aggressive. Stocks with questionable business prospects that most wouldn't touch during the prior bear market become the most … [Read more...]
Losing Your Livelihood
This is an excerpt from Young Research’s Global Investment Strategy, where we help investors compound wealth with investment strategies that span the global investment landscape. We cover the global stock and bond markets as well as currencies and commodities. Young Research's Global Investment Strategy is designed for the investor who does not want his investment success bound by the opportunities of a single market. How would you react if your life savings, the source of your livelihood in retirement, was cut in half? Would you have the nerve to ride out the storm in hopes of making your … [Read more...]
The Intelligent Investor: Part III
“It is surprising how little attention has been paid by economists and by Wall Street to this development. The debt of corporations has expanded nearly fivefold while their profits before taxes a little more than doubled,” wrote Benjamin Graham in The Intelligent Investor. What Ben Graham was referring to was the expansion of Net Corporate Debt from $140.2 billion in 1950 to $692.9 billion in 1969—a fivefold increase—compared to the expansion of Before Income Tax Profits from $42.6 million to $91.2 million—only a little more than double. A fivefold increase in debt only to double profits … [Read more...]
What We’re Reading 7-14-14
Small-Caps Look Toppy Small-cap stocks are sending a signal of caution. The Russell 2000 index of small-cap stocks appears to be forming a double top. As far as technical indicators go, a double top is one of the more reliable chart patterns. The key resistance level to watch for the Russell is 1100. A break below 1100 could lead to further losses. A breakdown in small-caps is also a signal of a narrowing market. When fewer stocks are driving gains in the major indices, it is often a sign that the market is due for a rest. A New Era For Fed Policy… And Inflation?, James Picerno, The … [Read more...]
The Biggest Buyer of Stocks
"Stockholders as a class are king. Acting as a majority they can hire and fire managements and bend them completely to their will." - Benjamin Graham, The Intelligent Investor Corporations have been buying back shares at a record pace, buying mores stock than any other group of investors today including: Hedge funds, foreigners, insiders, pension funds, insurance companies, and individual investors. In the first quarter of this year corporations purchased $188 billion of stock—the highest quarterly amount since 2007, according to Birinyi Associates. We all know how stocks did after … [Read more...]
The Global Imperative
Check out this chart on oil demand. The black line shows oil consumption of major developed markets. This is basically the U.S., Japan, and developed Europe. The grey line is oil consumption of the rest of the world, which is dominated by emerging markets. Up until about 15 years ago, if you were interested in the oil market, you focused on demand in the world’s largest economies. But in recent years, developed market demand has become a marginal influence on prices. The most important driver of global oil markets today is demand from the rest of the world. The U.S., Japan, and … [Read more...]
Marc Faber: The asset bubble has begun to burst
CNBC: It's the question investors everywhere are wrestling with: Are asset prices in a bubble, or do they simply reflect the fact that the global economy is growing once again? For Marc Faber, the answer is clear. In fact, he says the bubble may already be bursting. … [Read more...]
Mission Paris
Last week I told you about The Best Table in Newport. After TSK, Chad Hoffer and Tyler Burnley felt Newport needed a good burger joint so they opened up Mission, which in no time created a cult like following. I had that confirmed on a recent trip to Paris, France. In May, Becky and I visited her parents Debbie and Dick Young who spent the month there. One of the many memorable dinners we had was on the Left Bank at L’Epi Dupin. It was a short walk from our Hotel de L’Abbaye and right near the famous Paris department store Le Bon Marche. I would have never expected such fine food except … [Read more...]