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Archives for December 2016

Financial Strategies of the Super Wealthy

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Every wonder how the super wealthy manage their vast fortunes? Here the WSJ reports on some of the financial strategies of the ultra-wealthy ($10 million or more in investable assets). Consolidate Your Accounts To prepare for his portfolio defense, Mr. Lerner created a spreadsheet of all his accounts, assets and liabilities. Putting everything down on one spreadsheet helped him get a clear, organized picture of what he owns and owes, he says. It also reminded him of something he thinks when he gets yet another financial statement in the mail. “I have too many accounts,” he … [Read more...]

Nuclear and Renewables Will Offer Powerful Growth

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Here ExxonMobil breaks out the big seven global energy trends. On Friday, we published ExxonMobil’s 2017 Outlook for Energy: A View to 2040, which outlines our educated estimates about global energy supply and demand and other economic trends. Over the next several decades, we see seven key themes that will shape our energy landscape: Energy will underpin economic growth. Developing countries will lead the way for energy demand. The global energy mix will continue to evolve; nuclear and renewables in particular will grow strongly, approaching a 25 percent share of the world’s … [Read more...]

This Pension Still Blind to its Ways

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The good news is that Rhode Island pensions are getting out of hedge funds. The bad is that some of the proceeds are going into private equity. “In some cases, you’ve just seen the emperor has no clothes,” Rhode Island General Treasurer Seth Magaziner said in an interview. Rhode Island in September decided to halve its hedge-fund investments, and it is redeeming from firms including Brevan Howard and Och-Ziff. It isn’t invested in York. The state plans to redeploy some of its hedge fund money into private equity. High fees helped drive the decision. Mr. Magaziner said more than half the … [Read more...]

Is this the Dawn of the Golden Age for Bank Stocks?

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Steve Eisman, one of the few traders who profited from taking a major short position in sub-prime mortgages before the financial collapse thinks we could be entering the golden age for bank stocks. Eisman was profiled by Micheal Lewis in "The Big Short." See the movie and if you have the time, read the book. Marketwatch has the story Eisman, whose story was told in Michael Lewis’s “The Big Short,” wagered correctly that these mortgage securities would eventually rock the financial system to its very core Now, Eisman is espousing a much more bullish position in the banking sector, which … [Read more...]

A New Revolution in Connected “things” to Blow by Smartphones

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Here hpe.matter.com predicts the innovators who will lead the charge. The conversation about the Internet of Things (IoT) has hit a crescendo this year. Sure, the number of connected devices in the world surpassed the human population eight years ago, but 2016 may mark something more significant. Some reports suggest that there will be more connected “things” in the world than traditional computing devices such as laptops and smartphones. As the digital web of smart devices expands and inspires new technology, the question arises: Who are the people conducting this growing IoT … [Read more...]

How to Survive Soaring Interest Rates

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For income investors, the threat of soaring interest rates is a nagging risk. If your portfolio is loaded up with the wrong types of bonds, rising rates can devastate your portfolio returns. See here for example. Rising interest rates don't impact all bonds in the same way though. Here at Barron’s, PIMCO (via a paid advertisement) makes the case that a properly positioned bond investor need not fear the threat of increasing interest rates. As one of the world’s largest bond fund managers, PIMCO of course has an ax to grind, but the insights they offer remain relevant. Bond declines … [Read more...]

They Trusted Him and He Lost $25 Million

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Here's yet another example of a hedge fund losing money courtesy of the Boston Globe: When MBTA Retirement Fund board members met in March 2007 to consider sinking $25 million into a hedge fund, several of them weren’t convinced it was a smart move. They wondered whether the fund was too risky, too expensive, or even a good match for that slice of pension money, records recently obtained by the Globe show. But a month later, the board’s executive director at the time, Michael Mulhern, recommended that they commit to the investment. He cited the “level of trust’’ they all had in the man … [Read more...]

You Need to Know Why I Love Vanguard GNMA

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Good morning from Newport, RI where at 5:22 am it’s 11 degrees outside, 1-3 inches of snow are expected, and with the wind it feels like -5. In Bartlett, NH my iPhone says it’s -6 outside with the wind blowing 29 mph making it feel like it's -34. It’s cold outside. But just like any other day, here I am writing to you. And that’s how I want you to think about your portfolio and one position in particular. If you own Vanguard GNMA you might be wondering if the winter vortex is upon you. You may be wondering if this is a time to sell, or, maybe this is a buying opportunity. I don’t want you … [Read more...]

The Triple Threat to your Muni Bonds

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Here the Financial Times outlines the triple threat that a Trump administration poses to municipal bonds. Muni bonds aren't an area of focus for us at Young Research. In addition to the potential risks to munis outlined below, we have tended to eschew the asset class(except during periods of extreme opportunity) because much of the market is long-maturity, liquidity is spotty on many issues, timely financial disclosure is lacking, and as pointed out below, there is the ever lurking tail risk that a major tax reform bill could eliminate the tax-advantaged nature of muni bonds. The US … [Read more...]

How to Become a Millionaire, Part II

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Originally posted April 21, 2016 The two most important words in investing, as I have been writing in Richard C. Young’s Intelligence Report for decades, are compound interest. Albert Einstein described compound interest as the greatest mathematical discovery of all time. Ben Franklin wrote on compound interest, “Tis the stone that will turn your lead into gold.” Charles Munger, longtime partner to Warren Buffett has often said, “Understanding the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things.” Richardcyoung.com … [Read more...]