It was a typical Sunday morning. The kids were up early, shows had been watched, books read to them, and pancakes eaten. Standing up with a cup of coffee, looking out at the backyard full of leaves and sticks, I thought to myself: “I could easily let the morning go and forget about the yard. Or, I could get the job done in a couple hours and perhaps catch some of the Pats game.” As I was tying my boots, I felt them staring down at me. One of them asked, “What are you doing?” “I’m going to rake the yard. It won’t take long.” I said. “Can we help?” they asked. “Maybe you can come out … [Read more...]
Archives for April 2020
The View from a Bear
Has the market bottomed, or will we retest the lows? As much as most of us want to believe there is an expert with the answer, the truth is nobody knows for certain whether we are going to retest the lows or sail to new highs. Savvy investors recognize good investing isn’t about picking the right outcome. Good investing is assessing the probability of a range of outcomes and factoring in an adequate margin of safety for the times you are wrong. Gary Shilling offers a pretty negative scenario below. Even if you don’t agree with Shilling’s views, the probability of that scenario isn’t … [Read more...]
Future Look at Covid-20, or the Next Deadly Virus
What will the response be for Covid-20 or some other deadly virus down the road? Imagine what it will be like when there are opposing views within families, never mind on the county, state, and country levels. Let’s begin with investing. Guess which area has done well. Companies that offer stuff people need, such as consumer staples—specifically dividend payers with a history of increasing them. Compare a tech app on your iPhone you can delete with a swipe of your finger. How about relationships? When your spouse has a check-list before anyone enters the house, never mind your bed, what … [Read more...]
New Investors Treating the Stock Market Like a Casino
This is a troubling trend. Many of you have been around the block and have seen the mistakes day traders and speculators made during the dotcom bubble. Based on Bloomberg’s reporting, it sounds like a new crop of investors is likely to learn that when you treat the stock market like a casino, the house usually wins. Sarah Ponczek writes: Back on March 23, it seemed like stocks would never stop falling. Congress was struggling to pass stimulus, coronavirus cases were climbing, futures were pinned to their bottommost tick and $10 trillion in value had vanished. Meanwhile in Northern … [Read more...]
Your Survival Guy Thinks about: Guns and Oil Prices
Your Survival Guy thinks: When will Chief Justice Roberts’ Supreme Court protect your Second Amendment rights? Meet the new #1 gun salesman for New York. A judge has ruled that Virginia's anti-gun governor Ralph Northam overstepped his authority when he shut down gun ranges in the state via an executive order in March. A gun is a shield. It protects you. Has there ever been a more important time to own one? I put a tremendous price on my family’s peace of mind. It’s behind everything I do. Weak gun laws put peace of mind at risk. Blue-chip dividend paying stocks may never look … [Read more...]
Fed Goes Junk Shopping
The Federal Reserve has destroyed investors' sense of risk. Bloomberg's Davide Scigliuzzo, Craig Torres, and Lisa Lee explain how no junk debt is too risk for the Fed. They write: Long before the coronavirus pandemic would bring business to a standstill all across America, Surgery Partners Inc., a sprawling network of outpatient clinics, already had its share of financial problems. This was no secret on Wall Street. Surgery Partners’s majority owner, the buyout firm Bain Capital, had loaded so much debt onto the company’s books that when it went to the market last year to refinance … [Read more...]
Cure is Worse than Disease as Government Loses It’s Way Back Home
Coronavirus Infects Stock Market: Part XXXV You feel it in your gut: The cure is worse than the disease. The numbers don’t support a stay-at-home, out-of-work policy for an entire country, never mind most of the world. Turns out Sweden was right from the beginning as was President Trump, who explained that America is not meant to be closed for business. Business, not the government, is our country’s lifeblood. Don’t tell that to the blue states though, as they demand bailout checks for pensions—math that even a first-grader knows doesn’t work. Remember the Golden Rule muni bondholders: He … [Read more...]
Global Central Bank Takeover of Private Economy Continues
Megumi Fujikawa reports in The Wall Street Journal on the Bank of Japan's efforts to prop up the country's economy, writing: The Bank of Japan said it would nearly triple its maximum holdings of corporate debt to ¥20 trillion ($186 billion), joining other global central banks in trying to prop up companies during the coronavirus pandemic. The BOJ forecast that Japan’s economy would shrink between 3% and 5% in the year ending March 2021. With many companies seeing a sharp fall in revenue, central banks are concerned that a spiral of bankruptcies could result if borrowers don’t have ready … [Read more...]
The Fed Has a 100% Error Rate
Much like the terrorist attacks of September 11, 2001, the coronavirus has revealed an overvalued market to investors. The blame for this overvaluation lies with a Federal Reserve that has so distorted interest rates, the view of risk has become clouded. A few years ago, I wrote: In End the Fed, Ron Paul writes, “The essence of the Federal Reserve Act was largely unchanged from when it was first hatched years earlier. With a vote by Congress, the government would confer legal legitimacy on a cartel of the largest bankers and permit them to inflate the money supply at will, providing for … [Read more...]
What a Wretched Idea
Former Fed Chair Narayana Kocherlakota wants the Fed to take rates negative by 0.25% at its next meeting. Why? Apparently a quarter-point rate reduction in short-term interest rates is going to stimulate growth. What Mr. Kocherlakota’s model seems to be missing is that negative rates will destroy a multi-trillion dollar money market industry, hurt banks when you need them to lend to stimulate growth, and encourage Americans and American banks to hold money in cash. Mr. Kocherlakota nods to some of these problems, but he likely underestimates America’s financial innovation and "Don’t … [Read more...]
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