At the Financial Times, Paul Woolley explains a troubling phenomenon in investing that he calls “the curse of the benchmarks.” He writes: All investing boils down to a choice of two distinct strategies implemented in a variety of ways. One is buying securities that are priced cheaply in relation to their expected future cash flows, which is what everyone assumes is done with their savings. Bizarrely, the other is almost the exact opposite: buying securities whose prices have recently been on the rise or that have already gone up most, both without reference to fundamental value. Another … [Read more...]
Archives for October 2020
Californians Desperate to Escape: Look for the Island Life
You can't enjoy life with wildfires, high taxes, crippling regulation, unchecked rioting in the streets, and a pandemic working through your overcrowded city. Yet, that's the situation many Californians face every day. That's why so many Golden Staters are looking to escape the city, and instead, live the island life. Many are looking to Hawaii as a refuge from California. Trevor Boyer of the Daily Mail reports "From January to June 2020, Californians have bought $587.6 million worth of Hawaii real estate, or 41 percent of the total from U.S. buyers." He writes: Beset by fire and a … [Read more...]
Is Google Unfairly Competing Against Travel Businesses?
Sam Schechner reports in The Wall Street Journal on the travel industry's concerns over Google's tactics. He writes: Google has long been one of the biggest drivers of new business for travel websites like Expedia and Tripadvisor. Some of them say the Alphabet Inc. GOOG -0.43% unit is also a big competitive threat. Berlin-based HomeToGo GmbH is an example of the bind facing many travel businesses. The vacation-rental website depends in part on Google to direct people to its service, but it says business has been affected by the search company’s placing a box of listings from third-party … [Read more...]
Why Vanguard is too Big: Part VIII: You Can’t Know What You Don’t Know
Let’s clear something up real quick. If you’re invested with Vanguard and it’s a major undertaking to shift your portfolio to Fidelity Investments—there are worse places to be stuck. In an industry littered with terrible, high-cost products, you’re lucky to be at low cost, no front or back-end load Vanguard. But what you might own at Vanguard and seeing how its assets continue to expand is concerning. As an aside, Vanguard has had some great managers retire such as the GNMA fund’s Michael Garret, from sub-advisor Wellington Management. You never hear about his retirement party. It makes it … [Read more...]
Kroger Scares up Business with Ghost Kitchens
Kroger is working with startup "ghost kitchen" company, ClusterTruck to expand its delivery of freshly made delivered foods. Ben Mahaney writes: Leading grocery chain Kroger and technology start-up ClusterTruck will launch two on-premise ghost kitchens at Kroger stores in Indianapolis, Indiana and Columbus, Ohio. The launch follows a pilot conducted by the two companies last year at stores in Carmel and Indianapolis, Indiana and Columbus, Ohio. The two-on premise ghost kitchens or delivery-only kitchens will offer a variety of over 80 freshly prepared meals on-demand with no service or … [Read more...]
Shopify Competing with Amazon: Opens New Opportunities for Retailers
Shopify is enabling small retailers to compete with Amazon by providing the fulfillment network they need to do so. It's difficult to understand why more firms haven't done exactly what Shopify has with its fulfillment network. Firms like UPS and Fedex should have been all over this. Amazon doesn’t have any real competitive advantage if a firm can match them on delivery. They were the first mover, but that’s typically not durable. Jennifer Smith reports for The Wall Street Journal: Shopify Inc.’s recent expansion into physical distribution is looking prescient, as surging digital sales … [Read more...]
How Low Rates Can Be a Killer
Investors have a short-term memory—they forget what losing money feels like. Do you remember how everyone was reaching for yield leading up to the real estate crash? I do. A lot of wealthy investors lost big time money trying to lock in a few measly points more than what the risk free treasury was (not) paying. Then the crash hit, and they not only didn’t get those extra points, they lost all of their principal. I’m talking big money. Then, like clockwork, came the Monday morning lawsuits. Investors cried that they should have been made more aware of the risks they were taking. Some … [Read more...]
Digital Currencies Would Stifle Economic Freedom
There is a movement afoot in central banking circles to shift from paper currency to digital currency. Sounds convenient and probably like a good idea to many, but the goal from the central banking crowd has almost nothing to do with convenience. Digital dollars would make the job of intervening in markets and manipulating spending and interest rates much easier. Think about an economic stimulus credited to your government issued debit card that has an expiration date. How better to force consumers to spend than to give their money an expiration date? Or what about negative … [Read more...]
Now Is the Right Time to Make Dividends Your Ally
For over five decades, the underpinning of everything I have written has been a foundation of dividends. It has served me well, and if you have followed my advice, it has served you well too. Shortly after the dotcom bust, I wrote a segment titled, “Make Dividends Your Ally.” In it, I said: Regarding dividends, corporate directors have deluded themselves for many years in two ways. First, they have been too concerned about double taxation. Many investors don’t care about double taxation because they are (1) saving in tax-deferred accounts or (2) need the dividend income in retirement. … [Read more...]
Why Vanguard is too Big: Part VII: What Do You Have to Lose? A LOT
You wouldn’t believe the conversation I had yesterday with a prospective client. It’s as if he’s done everything we’ve recommended over the years and we were set to talk yesterday—after all of those years later—to see how it all turned out. I’m here to tell you, quite well, indeed. This gentleman is wealthy beyond his imagination and I bet, having not met him face to face yet, I wouldn’t be able to pick him out of a lineup. That’s the beauty of quiet wealth: You control how you move about the world with no pressure to live up to some silly image. Long ago, my new friend and his wife … [Read more...]