For over a century, if you were looking for a better America, California was where you headed. From the Gold Rush days of 1849, to the post-World War II boom of California's suburban crowd, the state's beauty, resources, climate, and wildness attracted droves of Americans. Now though, Americans are fleeing California. The reason for their departure is that California's government makes living hard in the Golden State. Mismanagement in the state has led to increased risk of wildfire, the erosion of workers' rights, dystopian streets full of homeless Americans, frequent power outages, and … [Read more...]
Archives for March 2020
Bitcoin: A Store of Value?
We hear a lot about Bitcoin being the new and improved "digital gold." Bitcoin is a store of value the bulls contend. Maybe, but since the market peaked on February 19th, Bitcoin is down more than 30%. For the year, Bitcoin is down 14%. How about that old barbarous relic, gold. Gold is up 7% on the year. … [Read more...]
Margin of Safety Still Matters: High-Yield Bond ETFs Crater
For much of the last five years, junk bonds have outpaced short-term investment-grade bonds. Ultra-low interest rates, quantitative easing, and a central bank set on rescuing investors during every episode of market turbulence emboldened investors to reach for yield in high-yield bonds. We advised against such a strategy. Risk must always be evaluated before return. Turns out, easy money can’t cure coronavirus. The iShares High-Yield Bond index just gave up more than 5-years worth of return advantage over the Vanguard Short-term Investment Grade fund. It only took a couple of weeks for … [Read more...]
Coronavirus Infects Stock Market: Part XIII
"De-densify." That's the word Harvard is using to describe its efforts to move people out of dorms and send them home. CNN's Carma Hassan and Brian Ries report: Harvard University is moving to virtual classes because of the novel coronavirus outbreak and the university is asking students to move out of their dorms in five days, according to university spokeswoman Rachael Dane. "Harvard College students have been asked to move out of their Houses and First-Year Dorms by Sunday, March 15, in an effort to de-densify our community," Dane told CNN in an email. All academic courses will … [Read more...]
Coronavirus Infects Stock Market: XII
If you’re a client of Richard C. Young & Co., then you know how much we love Baby’s Coffee—Southernmost Coffee Roasters in America. Clients of mine sent this pic yesterday telling me how much they enjoyed a recent trip to Key West. They look happy, don’t they? You know what’s worth noting is we didn’t spend a ton of time talking about the market today (Monday), even with it being shut down after opening down more than 7%. We talked about it, no doubt, but we had more fun talking about stone crab claws and their beautiful Airstream. Talk about timeless. You and I know the future is … [Read more...]
Russia & Saudi Arabia Blow up OPEC Coalition
Yesterday’s market rout was made worse by a collapse in the OPEC+ oil coalition. Saudi Arabia wanted to cut production by 1.5 million barrels per day to deal with falling demand resulting from the coronavirus. Russia didn’t like the idea, complaining that the cut would be a gift to U.S. shale producers. Without participation from Russia, Saudi Arabia decided to reverse course and pump oil all-out into a market where demand is collapsing. Anticipating more supply and much less demand, traders shaved 25% off of the price of oil on Monday. Neither country’s decision makes a lot of economic … [Read more...]
Walmart Expands Private Trucking Fleet
Walmart, already one of America's biggest trucking fleet owners, is planning to expand its fleet with 500 more drivers in the next few months. CCJ's James Jaillet reports: Walmart Transportation, which last year aggressively grew its private fleet by 900 drivers, hopes to continue that growth this year by adding another 500 drivers in the coming months. The fleet’s expansion is meant to serve a two-fold purpose: To keep up with demand from the retail giant’s sales growth both in stores and online and to bring more of its transportation needs in house — and away from the for-hire … [Read more...]
Coronavirus Infects Stock Market: Part XI
One of the challenges of having high school kids in different schools is scheduling—they’re not on the same one—which is how Owen and I ended up skiing Friday at Attitash, NH, while Izzy was in school. My parents spend much of their winter in New Hampshire skiing (it’s early Saturday morning as I’m writing to you), and we had a great day together yesterday on the slopes. Part of the reason Owen and I had to get up to our cabin was to bring our gear back home for our trip out west later this month. If you’re a ski family, you tend to gather a lot of ski gear. As I rummaged through my … [Read more...]
Coronavirus Infects Stock Market: Part X
When I was a junior in high school I spent a week as a crewmember on a schooner. One of my duties was taking a shift each night on watch. On calm nights it was pretty peaceful. But less so when the wind was up and the white caps lashed against the hull. On nights likes these, you had a more purposeful walk to the bow to check the anchor line. Our captain made the night watch a priority no matter the weather. I learned a lot from his seriousness and expertise. If you were to listen to the so-called experts, you would have sold your bonds a long, long time ago. Don’t listen to them. … [Read more...]
This Billionaire is Buying up the Energy Sector
While most investors are retreating, billionaire Sam Zell is buying up the energy sector. Shawn Langlois reports at MarketWatch: That’s Chicago billionaire Sam Zell talking to CNBC “Squawk Box” on Thursday about how he’s navigating his investments in the coronavirus scare. The founder of Equity Group Investments said he has added to his ownership stakes in a couple companies, including one in the beaten-down energy sector, which was under heavy selling pressure even before the recent drop in the broader stock market. The S&P 500 energy sector is the only sector in an outright bear … [Read more...]
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