You may have read that Vanguard is moving into a digital robo-only service. My take? Well, first off, when you sign-up for Vanguard advisor services you’re only going to be offered Vanguard funds. You will not be investing in my preferred, dividend centric stock approach. You are treated like all of the other sheep loaded into the mutual fund pen. Second, I believe Vanguard is essentially throwing in the towel (they’d never admit it) about their index funds and the problem with how big they’ve become. Offering a robo-only service will be a backdoor way for Vanguard to steer investor … [Read more...]
Archives for September 2019
Tech Slowdown? Will Chip Sales Improve?
Weakness is chip sales has South Korean producers worried and may portend weakness in the tech industry overall. Bloomberg's Sam Kim reports: South Korea’s flagging chip sales are set to send exports for a tenth monthly slide, dashing hopes of a near-term rebound in global tech demand. Exports during the first 20 days of September tumbled 22% from a year earlier, data from the Korea Customs Service showed Monday. Shipments to China, South Korea’s biggest trading partner, plunged 30%. Tech products showed a mixed performance -- semiconductor sales plummeted 40%, while those for mobile … [Read more...]
How to Build 37% of Your Wealth in Just Ten Days
In the Spring of 1996, I explained how important just ten days of a 31-year period were to building 37% of their wealth. I wrote that March: Market Timing Strategy—Bankrupt Before I tell you what other funds I have bought this month and which funds I have on my short list for the next few months, I want to startle you, shock you, and convince you beyond any doubt that market timing is a bankrupt strategy whose time has never come. Here’s the only example you’ll ever need to never market time again. T. Rowe Price put these numbers out a year or so ago. The original research was done by … [Read more...]
The Fed is Clueless
Don’t be head-faked by the Federal Reserve’s 25bps cut in the Fed Funds Rate (FFR) this week. Because the real story is in Repo where demand for Treasuries has been through the roof. If you look at my chart on the 10-year Treasury you can see this problem began not in 2019 but at the end of May 2018. Most investors, including the Fed, don’t understand bonds. The bond market, like stocks, is ruled by supply and demand just like real estate, for example. Something is going on with the plumbing of the global monetary system that the Fed is clueless about. For more … [Read more...]
“Lower Rates Aren’t Working”
At MarketWatch, Peter Morici says it's crazy for Fed Chairman Jerome Powell and ECB President Mario Draghi to consider taking rates negative, or further negative, as it's clear that lower rates aren't working. Morici writes: If the definition of insanity is to do the same thing over and over and expect a different result, then outgoing European Central Bank President Mario Draghi and Federal Reserve Chairman Jerome Powell, judged by their recent decisions to further ease monetary policy, may be going bats. However, the real prize should go to President Donald Trump. Both central bankers … [Read more...]
The Rich and Famous: How to Invest Like Jay Leno
If you want to see Jay Leno’s home in Newport, RI all you have to do is leave my office, turn on to Bellevue Avenue and head out to Ocean Drive, and you’ll see it right there on the water. “Leno and his wife first admired the house around 30 years ago, when he was in Rhode Island for a standup gig,” explains Fred Albert in Newport Life. “In 2017, the couple drove by it again — only this time, they stopped. ‘Let’s see if it’s for sale,’ Leno said, taking advantage of a departing gardener to slip through the open gate and drive up to the front door, where a caretaker greeted him.” Albert … [Read more...]
This Decision Could Lead You to Financial Disaster
Odd things are happening in the economy right now. The most obvious is the recent destruction of oil facilities in Saudi Arabia. But there are also subtler, less obvious warning signs, including the first injections of liquidity into markets by the Fed in 10 years on Tuesday and Wednesday. Couple that with the Fed’s lowering of the Fed Funds rate despite economic growth and low unemployment, and things appear uneasy. These are the times at which it would be easy to make an investment mistake. I wrote in July 1995: “My name’s Marlow. General Sternwood wanted to see me.” Devotees of the … [Read more...]
This is Why Vanguard is Too Big
If you want clear evidence of why Vanguard is too big, then look no further than the money flow into passive index funds. When investors are lulled to sleep by a bull market, they dream about things like early retirement, vacations, and second homes. What they tend to miss is that reversion to the mean is a fact of life. You can take my word for it and that of the father of index funds Jack Bogle. Index funds, like those built based on the S&P 500, weight the shares of a small number of the biggest companies heavier than those of small companies. That's the ugly truth behind the S&P … [Read more...]
Recession in a Year? CFOs Think So
According to the Duke University/CFO Global Business Outlook a majority of CFOs see a recession coming within a year. William Edwards reports for Bloomberg: More than half of U.S. chief financial officers anticipate the economy will be in a recession within a year, with optimism at its weakest point since 2016 as deteriorating prospects for earnings and difficulty finding qualified workers weighed on companies. Some 53% expect the economy will be in a downturn by the third quarter of 2020, while 67% see a recession occurring by the end of that year, according to the Duke University/CFO … [Read more...]
Your Retirement Life: To Everything There is a Season
Here in New England, you can already feel the change in seasons approaching. You can smell it in the crisp, dry, morning air and see it from the lower sun angle. You can hear it as noisy cicadas whir and squirrels busy themselves in the trees, signaling a change from Summer to Fall is near. You can even feel it, like when you’re wondering if your family is well prepared for the Fall and Winter. That kind of thinking is good. It means you’re alive, you want to stay that way, and you still want to live your life. A Terrible Foe Can Hold You Back There is one thing that keeps more … [Read more...]