You work too hard to have your savings messed with. You have enough on your plate as it is. Between keeping track of the rules for Roths, IRAs, RMDs, it all adds up. You read about ESG funds that are supposed to be “good” for the environment and wonder, “But, are they good for me?” In my series for you, “You invest, they win,” you wonder. You may also wonder about my concerns with Vanguard being too big. “How do you know if it’s too big?” you ask. “Well, it might be too big,” I respond, “if your phone rep is greener than a recycling bin and working in a room the size of a football field.” If … [Read more...]
Archives for November 2020
S&P 500 Index Funds Double Down on Bubble Stocks
Tesla is being added to the S&P 500. Measured by market value, Tesla is the largest car company in the world and the 10th largest company in the United States. It is also the most expensive car company in the United States by a factor of almost 25 times when measured relative to sales. General Motors trades at .52X sales, Ford at .27X, and Tesla at 13.3X sales. Even if you assume Tesla can double sales by 2023, the stock is still about 12X as expensive as General Motors. Despite the astronomical valuation, funds that track the S&P 500 will make Tesla a top ten holding. Doesn’t … [Read more...]
The Dow’s Fastest Bear Market Recovery in 30 Years
Marketwatch reports here that the Dow just completed its fastest bear market recovery in 30 years. It takes an average of 1,483 trading days for the Dow to hit a new all-time high after suffering a bear market. This time it took only 193 trading days. Trillions of dollars worth of fiscal stimulus and a monetary stimulus program that crossed multiple redlines helped quicken the recovery. Pro-growth regulatory policy was also a likely contributor. The truth is, investors who took on too much risk lucked out in this bear market. Prolonged bear markets are the most destructive variety. Next … [Read more...]
Biden Seeking to Turn 401(k)s Into a Wealth Redistribution Scheme
Joe Biden wants to use the 401(k) system to redistribute wealth from wealthy taxpayers to lower-income savers. Daisy Maxey reports for Barron's: President-elect Joe Biden hopes to encourage lower- and middle-income workers to save more by changing the existing tax preferences for savings in retirement accounts. A divided Congress is likely to hinder his plans. Currently, workers contribute pretax dollars to 401(k) or 403(b) retirement savings plans, then pay taxes when they withdraw money in retirement. This upfront tax break is more valuable for richer households because they fall into … [Read more...]
Government Intervention Backfires Again
President Reagan had it right when he said over three decades ago that the nine most terrifying words in the English language are, “I’m from the government, and I’m here to help.” What has the world learned since? Not much it would appear. Government intervention into the private market, in many cases, causes more harm than good. The ban on bank dividends in Europe may be the latest example. The FT has more: Back when the British government imposed colonial rule over India, its leaders wanted to cut down on the population of deadly cobras in Delhi. So the government offered a bounty for every … [Read more...]
Richard C. Young Helped ME Get Re-Centered
I had a great talk yesterday with a prospective client who is ready to come aboard. He's a successful entrepreneur and triathlete coach. He said he doesn't just stand on the side and coach. He's in the pool, figuring things out with his athletes. I like that. For example, if he sees a problem with an athlete's swim stroke, he gets in the pool to copy the problem, and then he works on drills to correct it. It's a hands-on approach that puts him in the shoes of his customers. "I miss Richard C. Young's Intelligence Report," he said. "It's the reason I have the savings that I do." "I … [Read more...]
Biden’s Plan to Take More of Your Money
If Mr. Biden takes office with a Republican-controlled Senate, the most damage he can do will come via the regulatory channel. Regulatory overreach has a big impact on economic growth. Obama proved that. But the biggest threat to your personal wealth is from the legislative side. A Democrat-controlled house, Senate, and White House would give Biden a much better chance of passing his growth-smothering tax program plan. The Democrats will control both the House and White House (assuming Biden wins). The Senate is still undecided pending two runoffs in Georgia that take place early next year. If … [Read more...]
Short Seller Unmasks the Danger of SPACs
Ortenca Aliaj reports on Carson Block's harsh assessment of SPACs in the Financial Times, writing: Muddy Waters, the US short seller run by Carson Block, has launched a scathing attack on 2020’s hottest investment phenomenon, the special purpose acquisition company, and revealed it is betting against a company brought to market by former Citigroup dealmaker Michael Klein. In a report published on Wednesday, Muddy Waters said it had taken a short position in MultiPlan, a healthcare company that went public in an $11bn deal with one of Mr Klein’s acquisition vehicles earlier this year. Mr … [Read more...]
Is Your “Wealth” Manager Lending out Your Cash and Charging You 2%?
Is your broker making money lending out your cash? Because in times like these, banks are making money any which way they can. Thankfully Fidelity is not a bank. You can rest assure they’re not loaning out your cash. What are you sure about today? I’ll tell you what I know. First and foremost, we need to come to grips with low interest rates. This is more troubling than you think. When interest rates are this low, the average investor (not you, I hope) can’t sit still and just earn a couple percent. The average investor needs more. The average investor will think nothing of lending it … [Read more...]
Biden’s Energy Policy Would Make America’s Roads and Railways More Dangerous
The Biden campaign has promised to shut down the Keystone Pipeline that would bring Canadian oil into the U.S. Biden’s allies in the climate lobby also want to shut down the Dakota Access Pipeline that has been in operation since 2007. These are all part of "Blue Collar" Joe’s plan to phase out oil. Sounds like he’s a real friend to the roughnecks and construction workers who build America’s pipelines. Sadly for Mr. Biden, shutting down pipelines is largely symbolic. Canadian oil is still going to make it to market, but getting it there will be more expensive and more dangerous to boot. Oil … [Read more...]