The WSJ does a deep dive on the problems some are now facing with Universal Life Insurance. Universal Life became popular in the 1980s as a way for insurance brokers to offer a competing product to customers who started buying term insurance and investing the balance of their monies in stocks and bonds instead of buying whole-life insurance policies. The insurance policy type emerged in an era nearly four decades ago when the Federal Reserve was fighting inflation with high interest rates. Some financial advisers suggested people forgo traditional “whole life” insurance and buy less-expensive … [Read more...]
Archives for September 2018
Can Railroads Keep up with this Economy?
In an attempt to keep up with the booming economy, Union Pacific is stealing some ideas from the late railroad pioneer, Hunter Harrison. Harrison transformed both major Canadian railroads and CSX before he passed away last year. Now Union Pacific, desperate to keep up with the booming economy by clearing backlogs on its rails is attempting to replicate Harrison's successful methods. Paul Ziobro reports at The Wall Street Journal: Union Pacific Corp. UNP +0.27% never hired Hunter Harrison to run its sprawling network. But with congestion clogging its system, the company is now adopting the … [Read more...]
The Three Word Secret to Sound Investing
If you aren’t getting paid regularly for your investment in a company’s stock, you are taking it on faith that someday, at the precise moment you need to sell to generate cash, the price will sit at a gain for you. Buy low, sell high, right? But what happens if there is no “high?” Stock prices can remain depressed for agonizingly long periods of time. From year-end 1965 – 1981, the Dow Jones Industrial Average was down 10%. Investors who were counting on capital appreciation to fund a comfortable retirement were short changed. Meanwhile, those investors who demanded a margin of safety in … [Read more...]
Do ETFs Belong in Your Portfolio?
My quick answer is no. Because everywhere I turn there’s yet another ETF being formed and an article espousing their benefits. And with Wall Street firms plastering their names on all sorts of ETFs, the landscape has become littered with products that would feel more at home on the Vegas Strip. Investors be warned: Passive investing basically guarantees benchmark returns. Make sure your portfolio doesn’t rely too much on the wrong measuring stick. As Robert Powell reports in USA Today, it's also a good idea to avoid newly launched ETFs: Well-known, long-established indices are better … [Read more...]
Stock Market Playing Defense?
Defensive industries have been leading more speculative sectors in the S&P 500 this month. Akane Otani writes in The Wall Street Journal: This month, the biggest gainers in the S&P 500 include firms focusing on telecommunications services, consumer staples and utilities—so-called safe sectors whose steady dividend payouts have long made them investor favorites when markets are volatile or declining. These shares typically lag behind major indexes during rallies, in part because they are perceived to offer limited potential gains. But in September, telecom shares are up 3.1%, consumer … [Read more...]
Augmentation and Replacement: The Future of Robot Workers
Robots are coming to the workplace in ways they have never done before. Automating backroom tasks could eliminate many jobs, but will also augment the productivity of others, leading to greater incomes and larger economies. The World Economic Forum recently released its Future of Jobs 2018 report, and Sara Castellanos explains the results here: The Future of Jobs 2018 report, released Monday, predicts that by 2025, more than half of all current workplace tasks will be performed by machines, as opposed to 29% today. But the impact of machines and algorithms on the entire workforce will … [Read more...]
When Governments Compete, Citizens Win
One of the less touted but possibly most significant outcomes of the Trump tax reform was forcing states into greater competition over taxation. States with already high taxes had the sheet pulled off their ugly policies. The tax reform bill stripped those high taxing states of the federal deductions that had masked their inefficient policies. With all states now competing on an even playing field, citizens are getting a first hand look at just how badly their states have been bilking them. At the Cato Institute, Chris Edwards writes that high income earners, who were already fleeing high … [Read more...]
The One Mistake Some Investors Never Learn From
One of the investing mistakes that some make in high growth glamour stocks is extrapolating today’s growth rates and profitability forward without accounting for future competition. High growth markets with high returns on capital attract competition. And too seldom is the impact of increased competition accounted for in future results. Tesla is the largest car company in America even though it produces a fraction of the cars that Ford or GM produces. That is partly because investors aren’t baking enough competition into their calculations of future profits. The same scenario appears to be … [Read more...]
Americans Still Shopping Like it’s 2009
Despite nearly ten years since the market lows of the Great Recession, Americans are still looking for deals when they shop. With a changing landscape, there may never be a return to "normal," for American retailers. Lauren Thomas reports at CNBC: "Fundamentally, as prices have come down in retail, that has squeezed out many retailers," Meyer said. "My sense is that is still true today." Shoppers still have a higher sense of price value, he said, and apparel is less of a focus when shoppers think about their budgets. That's really weighed on apparel companies. Shares of Ralph Lauren have … [Read more...]
My Personal View on Fidelity Investments for You
Ned Johnson was CEO back in the mid-90’s when I worked at Fidelity Investments. Today the CEO is his daughter Abby. What hasn’t changed at Fidelity is its commitment to invest in technology to help give it an edge. John Tlumacki writes for the Boston Globe: Johnson said that when her father, Ned Johnson, launched FCAT in 1999, the goal was to help clients and employees explore emerging technologies that could help spur Fidelity’s growth. Among FCAT’s more recent initiatives: a virtual reality experiment known as “Cora” — created in partnership with Amazon Web Services — that could provide … [Read more...]
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