In a time dominated with news on the fate of Obamacare and any potential replacement, Dan Mitchell of the Cato Institute keenly refocuses attention on what is the world's biggest government program, and one that is headed for a fiscal train wreck: Social Security. The program will soon have an annual budget of $1 trillion, a budget larger than that of all but six countries on earth. But Dan points out the scary fact that the program will have a shortfall of $44.2 trillion between now and 2095. He writes: And for those who want to know about the gap between the inflow and outflow, here’s … [Read more...]
Archives for July 2017
The Shrinking U.S. Wheat Crop
Farmers were already cutting down on the amount of wheat they planted this year in response to a global grain glut, but the plains have been dry this year and the U.S. wheat crop could be even smaller than expected. As you can imagine that's having an effect on wheat prices. Benjamin Parkin writes at the WSJ: Now weeks of hot, dry weather in the Dakotas and Minnesota have been particularly hard on spring wheat, prized for high protein content that makes it well-suited for specialty breads and pastries. That could mean higher food prices for consumers if millers end up paying more for … [Read more...]
Tech Stocks Top DotCom Highs, Finally
After nine straight days of gains, the S&P 500's info-tech sector index has reached a new record, beating its previous peak set in 2000 just before the dotcom bubble burst. It has taken 17 years for tech investors to get back to zero if they were invested in 2000. Leading the charge have been Apple and Google. Today Apple's market cap is nearing $800 billion, and Google's is nearing the $700 billion threshold. Driving the sector have been a relatively low number of stocks, frequently referred to here on Youngresearch.com as the "Bubble Basket." It hasn't just been the info-tech … [Read more...]
Portfolio Strategy: Looking Past the End of the Bull
The current bull market which started in March of 2009 is now the third longest bull market on record. I’m using the Dow as the yardstick for bull and bear markets. Bear markets are defined as a 20% drop from a prior peak. The fuel that has kept this bull running is of course the most aggressive and prolonged use of monetary stimulus in U.S., and probably world, history. How do stocks perform following historic bull markets? The chart below shows the four longest Dow bull markets on record. The table on the chart shows the subsequent ten year capital gain performance from the day prior to … [Read more...]
Do Millennials Spend their Money Differently Than You?
It turns out, Millennials have some different shopping habits than GenXers or the Baby Boomers. They're very interested in motorcycles and eating out, but not very interested in clothes or cars. … [Read more...]
Are the Bulls Right about Netflix?
Netflix reported second quarter results earlier this week that “blew away” expectations according to many financial news outlets. It wasn’t a beat on earnings, which actually missed expectations, or a beat on revenue which was inline with expectations. Subscriptions are the metric Netflix investors care most about. Netflix's beat on subscriptions pushed the shares up almost 14% for an increase in market value of about $10 billion. The jump in Netflix shares yesterday pulled the shares of the rest of the FANG group higher with it. Young Research’s Bubble Basket is now back near its … [Read more...]
Report Shows Manufacturers Booming: Is This the New Trump Economy?
An index produced by the Association for Manufacturing Technology showed a 22% increase in manufacturing technology orders in May compared to the year before. Manufacturers are expanding their operations and seeking additional capacity. Industrial Distribution reports: Automotive customers made some significant orders in the month, and continued investment from machine shops indicates that manufacturers are seeking additional capacity. The gains in manufacturing technology orders are in line with other positive economic indicators for the manufacturing industry: industrial production, … [Read more...]
Getting to the Tennis Hall of Fame
Want to get to the International Tennis Hall of Fame? Work hard, practice and dedicate your life to the game or visit my office and walk across the street after our meeting. This week is the Dell Technologies Hall of Fame Open. This was yesterday's "shot of the day" at the tournament. … [Read more...]
Does Anyone Actually Want Their Groceries Delivered?
As the markets and the news spin around contemplating the effects of Amazon.com's purchase of Whole Foods, the Blue Apron IPO debacle, and Amazon's intent on entering the meal kit market, the question that must be asked is, does anyone actually want their food delivered? According a report in the WSJ by Heather Haddon and Julie Jargon, the answer for most is, no. Concentrated in cities and surrounding suburbs, grocery delivery is still a small business, accounting for less than 2% of last year’s $715 billion in food-retail sales, according to food-services research and consulting firm … [Read more...]
Three Serious Problems with Using AI for Investing
Here is a must read from the WSJ on the pitfalls of automated investing. James Mackintosh explains the pitfalls of algorithmic trading and the problems with artificial intelligence. He identifies three serious problems with using AI for investment. Ten years ago, computer-driven traders pulled the plug after their algorithms ran amok, leading to billions in losses and the eventual closure of Goldman Sachs ’s flagship quantitative fund. A decade on, artificial intelligence and machine learning are the buzzwords in automated investment. But for all the hype, applying AI to investment has … [Read more...]