“Where are high-tax state exiles going?” asks the WSJ’s Review and Outlook. “Zero income tax Florida drew $16.5 billion in adjusted gross income last year.” It’s a trend you and I have been watching for years and will continue to see as Democrats ruin the fiscal health of the states they’re leaving. The good news is that the inflow will give states like Florida more representation in D.C. The bad is they packed bankrupting politics in the U-Haul. The Editors at The Wall Street Journal write: Many have also fled to Arizona ($3.5 billion), Texas ($3.5 billion), North Carolina ($3 … [Read more...]
Archives for January 2020
What the Iran Situation Means for Gold
Since the end of 2019, gold prices have been on a breakout trajectory. Now, in response to rising tensions with Iran, things are getting very interesting. The news that the United States had bombed Iranian Major General Qassem Soleimani increased the perception of risk in the Middle East, and drove the price of gold even higher. I have always suggested to investors that they maintain a gold component in their portfolios, not as a road to riches, but as an insurance policy against inflation, disaster, and war. Typically when every other assets’ price is falling, gold’s is … [Read more...]
Trump Right on the Money with Iran
“Finally, to the people and leaders of Iran: We want you to have a future and a great future — one that you deserve, one of prosperity at home, and harmony with the nations of the world. The United States is ready to embrace peace with all who seek it.” Watch the entire speech here. Originally posted on Your Survival Guy. … [Read more...]
2020: Markets Still Dependent on Fed Liquidity
Fed liquidity is the grease that’s making this market run. When the grease runs out or fails to work, will the market melt-up come to an abrupt end? This is uncharted territory, which to me means you need to make sure you have your risk tolerance figured out before it’s too late. Michael S. Derby reports for The Wall Street Journal (abridged): After a dimming in demand for Fed money just after the start of 2020, this week has seen increase operation sizes. On Monday the Fed added $76.9 billion. Analysts at Wrightson ICAP said money markets may see frictional pressure Tuesday. That may explain … [Read more...]
Think Your ETF Portfolio is Diversified?
If you are buying ETFs because you hope to build a more diversified portfolio than you believe you can get by purchasing individual stocks, this chart is for you. The chart below from Bespoke dispels the myth that ETFs always provide adequate diversification. The chart shows the weighting of the top two holdings in each S&P 500 sector. Like many ETFs, the S&P 500 sector ETFs are market-capitalization-weighted. As you can see, the top two stocks are driving the ship in most sectors. In the Communications Services, Energy, and Technology sectors, the top two stocks account for about … [Read more...]
You Achieve Big Gains When Wall Street Misses the Boat
Your best move in 2020? Turns out it’s what we’ve been saying all along: invest for the long haul in rock-solid companies. According to Jason Zweig in his Intelligent Investor piece “How You Can Get Big Gains That Wall Street Can’t,” investing for the long haul actually works but is more difficult to do. Take mutual funds and ETFs with a set mandate to invest in smaller companies for example. “Small-company mutual funds that owned Amazon when it was tiny had to sell it once its market value grew into the billions,” explains Zweig. “Otherwise it would have dominated their portfolios. … [Read more...]
The Silver Lining in the Iran Conflict
Originally posted on Your Survival Guy. … [Read more...]
Selecting a Financial Advisor? This is a Must
When searching for a financial advisor this is one box that absolutely needs to be checked. Glenn Ruffenach explains at The Wall Street Journal: Fiduciaries matter. Along the same line…what kind of adviser were you using, and what kind of advice were you getting, in the years prior to the two recessions noted above? Was your adviser, and your nest egg, prepared for the possibility of a downturn? The point: If you work with a financial adviser, work only with a fiduciary, a person who must place your interests ahead of their own and disclose any conflicts of interest. That’s one of the best … [Read more...]
Yes the U.S. Tax Overhaul Was a Success
You can see on the charts of employment and earnings that the Trump tax reform was a success. Richard Rubin and Theo Francis report in The Wall Street Journal: Employment and wages rose. If companies were restrained in their capital investment, there’s little question that the job market improved, particularly for those of prime working age, driven at least in part by greater consumer spending. Read more here. Originally posted on Your Survival Guy. … [Read more...]
If it Walks like a Duck…
In an October speech after the Fed decided to start expanding its balance sheet once again under the auspices of fixing problems in the repo market, Fed Chair Powell said, I want to emphasize that growth of our balance sheet for reserve management purposes should in no way be confused with the large-scale asset purchase programs that we deployed after the financial crisis. Neither the recent technical issues nor the purchases of Treasury bills we are contemplating to resolve them should materially affect the stance of monetary policy, to which I now turn. During the Q&A session following … [Read more...]