You pay attention when the founder of the Vanguard Group, Jack Bogle speaks. As the father of the index fund it would be hard not to include Mr. Bogle’s bust on the Mount Rushmore of financial legends. Therefore, when Bogle speaks, I listen. As do thousands of his groupies known as "Bogleheads." “There no longer can be any doubt that the creation of the first index mutual fund was the most successful innovation—especially for investors—in modern financial history,” writes Bogle here, “The question we need to ask ourselves now is: What happens if it becomes too successful for its own … [Read more...]
Archives for November 2018
Millennials Want to Spend like their Parents, but Can’t Afford It
Millennials are known in some circles as not wanting to spend any money on anything. They live with their parents, they buy brandless goods at cheaper prices, and many times they would prefer to take an Uber than buy a car of their own. But this characterization of Millennial spending habits may be misconstrued. New research from the Fed indicates that Millennials may have all the same desire to spend as their parents, but simply can't afford it. Bloomberg's Jeremy Herron and Luke Kawa report: Millennials, long presumed to have less interest in the nonstop consumption of goods that … [Read more...]
Most People Aren’t Measuring Performance Correctly: Here’s How
When you measure performance in your portfolio, are you getting the right picture? If you are like most investors, the answer is no. Here is what I wrote in December 2013 about how you should be measuring performance: Cycles and Investment Success Understanding cycles is vital to your long-term investment success. Most folk intuitively understand that the economy and the financial markets go through cycles. The economy expands and then it contracts, the stock market rises and falls, interest rates go up and they go down. Cycles just come with the territory in a free market economy, but … [Read more...]
Will Parliament Accept May’s Deal with the EU?
The government of British Prime Minister Theresa May has signed a Brexit deal with the EU. Now May will try to get the deal through the U.K. Parliament, which must agree in order for the Brexit process to move forward. Max Colchester and Laurence Norman report at The Wall Street Journal: European Union leaders approved on Sunday a treaty outlining divorce terms with the U.K., a milestone in Britain’s bid to extract itself from the bloc that now leaves Prime Minister Theresa May with a tough task selling the deal to skeptical lawmakers in Parliament. Since Britons voted to break from the EU … [Read more...]
Maximize Your Retirement by Leaving Income Taxes Behind, Part II
You may recall this piece I wrote to you, Maximize Your Retirement by Leaving Income Taxes Behind. A reader friend of mine wrote and asked why our favored state of New Hampshire didn’t make the cut. After all, he noted, what’s not to like about no sales or ordinary income taxes? Agreed. But unfortunately, NH does levy a five percent tax on dividends and interest—a form of income especially in retirement. There’s always room for improvement. New Hampshire legislators introduced SB 404 on March 15, 2018, which would have phased out the five percent tax over a five-year period and ultimately … [Read more...]
Facebook: Ethics for Sale?
Like many tech companies claiming to be ethical, or not evil, Facebook seems to condition that morality on whether or not it is getting paid enough to change course. During internal discussions reported on by The Wall Street Journal, Facebook executives and employees appear to have considered ways in which to generate greater profits that would have gone against the stated ethical philosophies of the social network company. It should be noted that Facebook didn't ultimately follow through on those unethical practices, but its seems that the line holding Facebook back from such betrayals of … [Read more...]
Trump is Right to be “Angry” about GM
The drive by media has a lot of heart—giving President Trump a hard time about GM (Government Motors) cutting jobs—running headlines that he’s “Angry” and is “Threatening” the company. Talk about inheriting a government disaster. It was the Obama administration’s misguided bailout of the autos in 2008 that lead to this mess to begin with. And it was put on Trump’s plate. An industry reckoning was simply delayed as Obama doled out $11.3 billion to resuscitate—essentially an underfunded pension plan that happens to make cars and trucks—a dying business. And it was under Obama’s watch … [Read more...]
What Will Happen if Trump Increases Tariffs on China?
This week President Trump said it would be “highly unlikely” that he would hold off on increasing many tariffs on Chinese goods from 10% to 25%. Analysts are asking, what will happen if he goes forward with his plan? The media is answering that question with a spectrum of possibilities ranging from apocalypse to Armageddon. But what happens if Trump doesn’t take a tough stance with China? What is China’s endgame? And, if China is successful in implementing its plans via unfair trade practices, would the potential outcome be any better for the U.S. economy than the negative aspects of a … [Read more...]
Is this the Start of a Profound Structural Change in E-Commerce?
Amazon is moving into advertising in a big way. The implications and opportunities of such a shift are profound, but there are also risks. Will consumers accept ads on Amazon’s platform? If they do, what does that mean for small businesses on Amazon’s platform? How will big businesses use the platform? What does this mean for Amazon’s competitors? It is still early days here, but this is a trend all investors should be watching. The WSJ has the story. “I think the giant has been awoken,” said Bill Wise, chief executive of Mediaocean, a software platform that processes over $150 billion of ad … [Read more...]
Is This Just the Beginning of the FAANG Collapse?
Barbara Kollmeyer, reporting at MarketWatch, rounds up a host of negative views on the future of the FAANGS. She writes: Hide behind defensives? That doesn’t seem like such a crazy strategy lately as investors wait to see if worries about the U.S. economy turn into real problems in the coming year. Tuesday’s session offered the most recent evidence of that as health care, consumer staples and utilities drove the gains for the S&P 500. Compare these numbers—the Utilities Select Sector SPDR XLU, -0.30% is up 4% for the quarter, while the Technology Select Sector SPDR XLK, +0.84% has … [Read more...]
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