Back in 2008, well before U.S. markets began spiraling out of control, Russian stocks tumbled in free fall. This was not an earlier realization of the financial crisis, it was a reaction to Russia’s invasion of its southern neighbor Georgia. You may not remember that invasion because the Olympics were on at the time and of course, it was summer. But from the time the Russians moved into Georgian territory to the time the final signature was placed on the peace treaty (this time span shaded in grey on the chart below), the RTS fell 16%. Meanwhile, U.S. markets dropped 6.7%. Mind you this all … [Read more...]
Archives for August 2014
The Great American Oil Rush
9% Yield for Warren
Growing up in the 80s when the dollar was "strong" we would head to Canada to go skiing. Now the reverse is happening. If you've been to Jay Peak in Vermont lately, which is right near the Canadian boarder, you'd swear you're in Canada. There's a lot to like about Canada. For starters its banking system didn't explode back in 2008, and their corporate tax rates aren't the highest in the free world like ours. So can you blame Warren Buffett for jumping in on the Burger King/Tim Horton's deal and the 9% yield? I can. Instead of complaining about how he pays more taxes than his secretary, … [Read more...]
Dividend Stocks for the Long-Run
When we developed Young Research’s Retirement Compounders (RCs), our aim was to find a compelling competitive advantage to make the RCs a big winner, especially during bad times. Our overriding goal was to help investors like you achieve investment success with comfort and confidence. Our strategy was to accept underperformance during speculative market runs (like we’ve seen in recent years), with the expected tradeoff of better performance during down markets. The idea was never to beat the market over time or on a consistent basis. Rather, we fully expected the low risk RCs (both price … [Read more...]
An Investing Idea as Easy as 1-2-3
I’m looking forward to catching up with my friend Chris Edwards in a few weeks at the Cato Club 200 retreat at the Salamander Resort & Spa, Middleburg, VA. Chris is Cato Institute’s Director of Tax Policy Studies and editor of DownsizingGovernment.org. If you’re looking for a way to help advance the principles of individual liberty, limited government, free markets and peace, you've found it in the Cato Institute. Cato’s ideas are supported by facts and numbers (shocking, right?) and they’re located in the belly of the beast of Washington D.C., where good ideas normally die from … [Read more...]
The Monday Melee: Real Danger to the Economy
Quotable: “If the Fed gets this wrong here, I mean if [rate increases are] off by six months or a year, is there real danger to the economy? There could be.” - Federal Reserve Bank of Philadelphia President Charles Plosser Did you Know? "Tuition and fees have risen 538% since 1985, outpacing the CPI by over 400%. According to the Federal Reserve Bank of New York, the number of student loan borrowers increased 70% from 2004 to 2012. Now more than 70% of students graduate with loans and outstanding student loan debt totals $1.2 trillion—more than auto and credit card debt. Though it’s … [Read more...]
Don’t Chase Returns!
“Don’t chase returns.” It’s a mantra heard everywhere in the investment industry, but people still do it. If experience hasn’t already taught you the hard way, here’s the St. Louis Fed with the hard research proving it: If you’re chasing returns, you’re going to be months late. A few months ago, we highlighted research showing how much chasing returns in equity mutual fund investing can reduce performance, noting that this behavior had cost investors around 2 percent per year over the period 2000-2012. New research over a longer period of time shows similar results. In a recent Economic … [Read more...]
Missing Out on Stocks
The following poll tells me that the average investor is fed-up with this stock market. … [Read more...]
Even the Wealthy are Broke
Upper-middle income Americans aren't saving much money says a report from the Federal Reserve. Only 45% of upper-middle-income Americans reported saving any money in 2012. This doesn't come as such a surprise to anyone paying attention to the personal savings rate in America. The rate, while somewhat improved since 2005, is below its historical mean by 3.1 percentage points at only 5.3%. Another sad statistic from the Fed report shows that 68.6% of Americans feel as though their financial well-being is about the same, worse, or much worse than in 2008. For those with cloudy memories, … [Read more...]
My Recent Sailing Trip to the Vineyard
You can only imagine the despair when impatience rules the day. On a recent sailing trip the current in Woods Hole was dead against us. Instead of fighting the current we decided to wait for it to change in our favor. We anchored outside of Hadley’s Harbor, had lunch, went for a swim—it’s hard to imagine a more idyllic spot on the water. We made it to Edgartown on the Vineyard later in the day. Waiting out the current ended up being a great decision. Waiting out the recent junk bond sell-off was never an option for some retail investors. Mom and pop investors didn’t understand the … [Read more...]