After being relentlessly told they should go to college for their entire lives, many Millennials are waking up to the reality that their student debt and poor job prospects prohibit them from purchasing homes. The Federal Reserve has done research that shows that student loan debt is preventing young Americans from purchasing homes. Josh Mitchell and Laura Kusisto report: The Federal Reserve has linked rising student debt to a drop in homeownership among young Americans and the flight of college graduates from rural areas, two big shifts that have helped reshape the U.S. economy. The … [Read more...]
Archives for January 2019
To Those Who Don’t Think Politics Matter in Investing
In Davos, Ray Dalio explains that the income tax increases being discussed in the United States could soon play a role in market expectations for the future. Bloomberg reports: Discussing the outlook for a slowing world economy, Dalio said that next year will see “the beginning of thinking about politics and how that might affect economic policy beyond. Something like the talk of the 70 percent income tax, for example, will play a bigger role.” He didn’t mention Ocasio-Cortez by name. “There’s an element, yeah, where people are going to have to start paying their fair share,” … [Read more...]
U.S. Pipeline Shortage Bottlenecks Global Oil
Shortages of pipeline capacity in the U.S. oil patch could put upward pressure on global oil prices as the main source of growth in world oil supply is curtailed. John Kemp reports for Reuters: U.S. oil production is running into capacity constraints, which are starting to have a material impact on the global availability of crude, causing the market to tighten and putting upward pressure on prices. The biggest problem is the lack of sufficient pipeline capacity to move oil from shale wells in western Texas and eastern New Mexico to refineries in the Midwest and export terminals on the … [Read more...]
Nine Ways to Powerfully Boost Your Investment Performance
Even after the recent correction there are a lot of overpriced, overhyped stocks in the market, but you can still chart your way to success. Here are nine rules you can use to guide your way. I first listed these back in August of 1996, but they work just as well today as they did then. Investment success hinges on a handful of time-tested principles: As Albert Einstein pointed out, compound interest is the greatest mathematical discovery of all time. I write every issue with a compound interest table at hand. Investment results are inversely proportional over time to trading … [Read more...]
Grantham’s GMO says U.S. Stock Bubble is Busting
Jeremy Grantham’s firm, GMO, says the bubble in U.S. stocks is busting. Grantham is an expert in financial bubbles and widely known for identifying in advance the dangers of the dotcom and housing bubbles. In a recent piece written by one of Grantham’s associates, a new model of bubbles suggests we may be at the beginning of the end of inflated U.S. stock valuations. Bloomberg has the story. The size and duration of the moves in stock prices in the final three months of 2018 toward their long-term average valuation is consistent with the moves linked with the bursting of the technology … [Read more...]
What’s Good for Thee is not for Pelosi
As Madame Pelosi cools her heels on the tarmac—thank you President Trump—she might ponder why Americans are fed up with her duplicitous stand on the WALL. Because behind her smirk and her walled family compound, is anyone really home? You would think she’s working for the Russians. Maybe she and AOC should get a boots-on-the-ground look at the border. There’s plenty of room on my downtrodden mule below. By the way, who in their right mind would work if 70% of their income were confiscated by pols like Pelosi & Co.? Exactly. For them, is there anything better than an unemployed voter? … [Read more...]
The Double Whammy Hitting Today’s Retirees
Retirees today are overcoming a mountain of bad timing. Read why in this post I wrote on December 3, 2018. Retirees today are the victims of an unfortunate double whammy. In the prime home-buying days of their youth, they were forced to pay the exorbitant mortgage rates of the late 70s and early 80s. Then, during the Financial Crisis, which should have been the peak of their earning and saving years, many lost jobs and watched their stock holdings evaporate. In the following years when many would have typically moved more of their portfolio into fixed income, they were left with the crumbs … [Read more...]
R.I.P. Jack Bogle.
Vanguard’s founder Jack Bogle contributed so much to each of us in the investment industry that it is impossible for me to know where to begin. In my case, it is perhaps a little easier to understand Jack’s importance in the investment industry because I was there when Jack founded Vanguard. In the Summer of 1971, Jack was still with his former employer, Wellington Management. Wellington was then, and remains today, based in Boston. And Jack’s firm was my favorite institutional research and trading client. Today, nearly 50 years later, I deal with a Jack Bogle firm nearly every … [Read more...]
Is a Shaky Outlook for Aluminum a Shaky Outlook for the Global Economy?
Alcoa CEO Roy Harvey has sounded the alarm bell on global aluminum demand. Aluminum is widely considered an indicator of global economic health. The FT's Ed Crooks reports: Global demand for aluminium is likely to grow this year at its slowest pace since the global recession of 2009, according to Alcoa of the US, in the latest sign of a worldwide economic slowdown. Roy Harvey, Alcoa’s chief executive, said in a presentation to analysts that the company expected worldwide demand to grow by 3-4 per cent this year, which would be the slowest rate since the world market shrank during the … [Read more...]
Remembering Jack Bogle
You know the Vanguard 500 Index thanks to him. And someday, if a Mount Rushmore for investor legends is carved into a mountain side, Jack Bogle will be there front and center. Mr. Bogle passed away yesterday at the age of 89. He will be remembered for the low cost index fund—an idea he made into reality. Though he cautioned in recent months about his grave concerns regarding the explosive growth of indexing—perhaps a product also in its twilight—it turned out that offering a sound investment product at a low cost was, and is, a great idea for investors. Originally posted on Your … [Read more...]