Shipping crews traveling along Africa's West coast are being targeted with increasing frequency by pirates looking to abduct sailors and hold them for ransom. Costas Paris reports for The Wall Street Journal: Armed attackers kidnapped 17 crew members from German and Greek vessels in piracy-troubled waters off the coast of Cameroon in two incidents last week and are seeking “huge sums” for their release, people involved in the matter said. The first attack, on Aug. 14, involved the German-owned MV MarMalaita, a multipurpose cargo vessel owned by Hamburg-based MC-Schiffahrt, which was … [Read more...]
Archives for August 2019
My Battle-Hardened Stock Market Strategy for the Worst of Times
In September of 2014, I explained to readers my battle-hardened strategy for dealing with the worst of times in the stock market. My strategy was inspired by Ben Graham, and I have used it throughout my 55-year career in investing. Here’s how it goes: Ben Graham’s The Intelligent Investor was first published in 1949. I came in a little late in the game with my 1973 edition, which I have in front of me as I write. It is important to me that you and all of our management clients are able to sleep well, even during the periodic stock market busts that we all have to ride through from time to … [Read more...]
Here’s Who Benefits from New England’s High Taxes: It’s Not Who You Think
Residents of New England and nearby New York and New Jersey endure some of the nation's highest tax rates (not New Hampshire). With the capping of the State and Local Tax (SALT) deduction on federal taxes, the bad behavior of these states was revealed to everyone. You may think that the federal government and those who want to "tax the rich," are the real winners of the SALT cap, but that doesn't appear to be the case. The tax the rich crowd isn't so keen on taxing the rich when that means themselves. And the federal government is giving away far more in revenue than it's getting with the … [Read more...]
Is China Set for a Crisis Four Times Worse than the Great Recession?
According to J. Kyle Bass of Hayman Capital Management, China could be in line for an economic downturn four times worse than America's "Great Recession." Bass makes some predictions in an interview with Yahoo Finance, saying that China could be in line to lose $3 to $4 trillion. Julia La Roche reports: In an interview with Yahoo Finance, Bass drew comparisons between the 2008 crisis, and what might happen if world’s second-largest economy hits a rough patch — which may happen as the U.S-China trade war escalates. "In our crisis, we had $17 trillion worth of assets on balance sheet in our … [Read more...]
As Bankruptcies Rise, What’s Your Best Asset?
The NY Post reports that while bankruptcies are still nowhere near Great Recession levels, they are rising noticeably. John Aidan Byrne writes: New York state’s bankruptcy filings, for instance, have risen steadily the past three years, hitting 34,711 in 2018, up from 30,112 in 2016, according to the American Bankruptcy Institute (ABI), based on data from Epiq Systems. More consumers nationwide are falling behind on their payments and filing for bankruptcy to resolve overwhelming debt loads. And low unemployment, an uptick in average wages and the latest Fed interest rate cut have not … [Read more...]
Could This Be the End for the Mortgage Interest Deduction?
For decades the mortgage interest tax deduction has rewarded homeowners at the expense of other taxpayers, but with the 2017 tax reform, much of the benefit for homeowners was eliminated. Most middle class homeowners achieved better tax results by taking the standard deduction, bringing the percentage of taxpayers using the mortgage interest tax deduction down from 21% in 2017 to only 8% in 2018. At Bloomberg, Karl W. Smith suggests the deduction should be eliminated entirely. He writes: After 1986, when Congress eliminated the deductibility of interest on personal loans and increased the … [Read more...]
Pensions, Unsurprisingly, Miss Their Mark
I have warned for years that public pensions are overestimating their future returns, and therefore are a giant source of debt for future taxpayers who will be forced to pick up the deficit. At the end of the fiscal year in June, median public pensions had missed their expected returns by 1.1 percentage points. Bloomberg's Martin Z. Braun reports: U.S. public pensions posted their weakest performance in three years, falling a percentage point short of their investment targets, and the prospect of rock-bottom interest rates and a trade-war induced recession could put a greater strain on … [Read more...]
Automation is Making Markets more Volatile
Analysts say using computers to automate the selling of stocks in volatile markets is making them even more volatile reports Richard Henderson in the Financial Times. He writes: So-called “volatility-targeting” funds that manage about $400bn in assets have bought up stocks this year as markets have calmed since markets’ dramatic end to 2018. But the renewed turmoil means they were pegged to sell $50bn by the end of Wednesday, according to Wells Fargo estimates. “When volatility jumps, systematic funds rebalance portfolios away from risky assets like equities,” said Pravit Chintawongvanich, … [Read more...]
Chinese Lending Slumps on Low Demand
In a sign that the trade war is hurting Chinese business, lending in July fell on weak demand. Grace Zhu reports in The Wall Street Journal: Lending by Chinese financial institutions slumped in July on weakening demand, signaling further economic headwinds from trade tensions with the U.S. and potentially paving the way for more stimulus efforts by Beijing’s policy makers. Chinese banks issued 1.06 trillion yuan ($150.2 billion) of new yuan loans in July, down from 1.66 trillion yuan in June, the People’s Bank of China said on Monday—lower than the median forecast of 1.25 trillion yuan by … [Read more...]
Retirees Still Cannot Afford a Walloping
With securities markets in a heightened state of volatility, it’s a great time to ask yourself how exposed your portfolio is to risk. Most investors, if asked, would be able to provide little detail about the risks to their portfolio. If you find yourself unable to answer, that’s ok. It’s Not Too Late, Yet Now is the time to begin assessing the risk in your investment portfolio. If your holdings are not balanced to help you achieve your goals, you should begin shifting them as soon as possible, because, as I wrote in April 2017, retirees cannot afford a walloping. Retirees Cannot Afford a … [Read more...]