Now, more than ever may be a good reminder that it's never a bad time to downsize your home. Americans are house rich and cash poor, not a great mix in times of economic turmoil. Wealth in cash is very liquid, you can spend it on what you need when you need it. Even stocks and bonds are relatively easy to sell to generate funds. But houses, they're a lot harder to sell quickly if you want to get all the value from them you deserve. In the Wall Street Journal, Ryan Dezember explains how many house-rich but cash-poor Americans are faring today, writing: Americans with mortgages have … [Read more...]
Archives for September 2020
Ford’s Existential Project
The Ford F-150 is the second-highest grossing branded product in the world. It is second only to the iPhone. Ford did $42 billion in sales of the F-150 in 2019. Morgan Stanley has estimated that the F-150 may be responsible for 90% of Ford’s total global profit. Ford and GM own the light-duty truck market in the U.S., but new competitors are emerging. Electric vehicle drive trains are all the rage in the stock market today. Not so much in the actual market for trucks just yet, but that may change. If it does, Ford and GM will have to stay on top to survive. Ford understands the stakes if … [Read more...]
Biden Wants to Gut the Tax Benefit of 401K Plans
Joe Biden wants to gut the tax-benefit of 401K plans. Americans have $6.2 trillion in 401K plans with another $11 trillion in IRAs that are partly from “rolled over” 401K assets. Over 42% of American families participate 401Ks and plans like them. What is Biden’s beef with the 401K plan? Biden doesn’t like that higher-income Americans get a bigger tax deduction on 401K contributions than lower-income Americans. He says it isn’t fair. Why does fair always mean you need to pay more taxes to a federal government that delivers the same services to every American? Biden wants to replace … [Read more...]
A Look at the Future of Main Street America
That’s no joke. Amazon is planning to open 1,000 mini-warehouses in suburbs and cities around the country. How long will it be before Bezos decides to expand to rural towns across the country? Amazon became a behemoth on the back of a special provision that allowed it to charge consumers no sales tax when all of its brick and mortar competitors had to charge sales tax. Amazon has now grown to a scale that has allowed it to put the mom-and-pop brick-and-mortar stores which define the character of many towns across the country out of business. How does a small retail operation survive … [Read more...]
Is Your Stock Portfolio Suffering from the Dunning Kruger Effect?
You could be suffering right now from the Dunning Kruger effect and not even know it. Worst of all, it may be affecting your stock portfolio's performance. If you are one of the recently arrived "Robinhood" investors and think you have cracked the market code, you may, in fact, be suffering from the Dunning Kruger effect. The syndrome is named after Justin Kruger and David Dunning, who outlined it in their 1999 paper in the Journal of Personality and Social Psychology. The authors introduced their paper by describing the effect: People tend to hold overly favorable views of their … [Read more...]
Ever Heard of Snowflake?
Snowflake is a technology company that develops database architecture, data warehouses, query optimization, and parallelization options. The company came public yesterday and the stock doubled from the IPO price. Snowflake, a firm we would guess many investors have never heard of, is now worth more than household names including Colgate, Deere, and TJX Stores (TJ Maxx and Marshalls). As of its closing value yesterday, Snowflake can be purchased for a mere 175X trailing 12-month sales! Despite a modest correction in technology shares this month, exuberance toward tech, cloud, and electric … [Read more...]
Amazon’s Fleet of Jets is Growing Rapidly
While fewer people are boarding airplanes, demand for cargo shipping has increased during COVID-19 as people around the world prefer to remain at home. Annie Palmer reports at CNBC, that Amazon has been rapidly expanding its own fleet of cargo-carrying jets. From last February alone, the fleet has grown by 40%. She writes: The airline industry may be reeling from the coronavirus pandemic, but Amazon’s air cargo business has rapidly accelerated in recent months. Between May and July, Amazon added nine planes to its Amazon Air fleet, “the most it has added over a three-month span since its … [Read more...]
Are You Prepared? A Long, Cold Winter for Stocks is Nothing New
The stock market/Wall Street has made a full recovery from March, but it certainly doesn’t feel that way on Main Street. The 10-year treasury pays you peanuts and that’s about what local businesses have earned compared to pre-virus. Why will they stay in business, especially in cooler New England when outside dining is basically gone for the winter? Cities like Boston that depend on sports/entertainment/dining are not coming back this season. In times like these, you can be your own barber—you can handle a bad haircut—but will you be your own investment counselor … [Read more...]
The Government is Coming for Facebook
The FTC is preparing a possible antitrust suit against Facebook report Brent Kendall, John D. McKinnon, and Ryan Tracy at The Wall Street Journal. They write: WASHINGTON—The Federal Trade Commission is gearing up to file a possible antitrust lawsuit against Facebook Inc. FB -1.09% by year-end, according to people familiar with the matter, in a case that would challenge the company’s dominant position in social media. The case preparations come after the FTC has spent more than a year investigating concerns that Facebook has been using its powerful market position to stifle competition, … [Read more...]
Apple Built Itself on Simplicity. Now it Is Confusing Customers.
What are Apple customers' best options? They can't tell. That's the problem facing Tim Cook and the Apple team. Nicole Nguyen reports in The Wall Street Journal: Apple AAPL -1.20% made three significant product announcements Tuesday—the Apple Watch Series 6, the redesigned iPad Air and the new Apple One service bundles—and managed to create more confusion about the best way for its customers to spend their money. When it comes to Apple Watch and iPad, the choice is no longer simply “Should I upgrade?” Apple, in trying to prove that its gadgets and services are for everybody, now offers a … [Read more...]
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