When it comes to your money, I want you to be a survivor. As you can see in my table, stocks have declined by over 30% three times already in this young century, and I’m talking about blue-chip stocks in the Dow Jones Industrial Average. When we look at the tech-laden NASDAQ and the S&P 500, declines have been far more precipitous—declines as high as 68% and 55% respectively. Moving forward, your job will be to survive the wreckage. I’m here to help. In my table below, you’ll see the performance of the Vanguard Wellesley and Wellington funds during these tumultuous periods in history. … [Read more...]
Archives for May 2021
The Emergency Is Over, but Fed Presses On
Despite what is projected to be strong economic growth and massive amounts of fiscal stimulus available, the Federal Reserve, chaired by Jerome Powell, is pressing on with its emergency policies. Christian Broda and Stanley Druckenmiller write in an Op-Ed in The Wall Street Journal: With Covid uncertainty receding fast, and several quarters deep into the strongest recovery from any postwar recession, the Federal Reserve’s guidance continues to be the most accommodative on record, by a mile. Keeping emergency settings after the emergency has passed carries bigger risks for the Fed than missing … [Read more...]
Don’t Take Government’s Word on Inflation, You See It for Yourself
Your Survival Guy is seeing rising prices on stuff we actually use. You need not be confused by some useless and outdated government measurement. You can see it for yourself. Jaewon Kang reports in The Wall Street Journal: Americans accustomed to years of low inflation are beginning to pay sharply higher prices for goods and services as the economy strains to rev back up and the pandemic wanes. Price tags on consumer goods from processed meat to dishwashing products have risen by double-digit percentages from a year ago, according to NielsenIQ. Whirlpool Corp. WHR +1.02% freezers and … [Read more...]
MOVING THE GOODS: Pent Up Demand Drives Transport Higher
Americans want their stuff and they want it now. Demand for goods has driven up transportation companies' profits. The improved business has driven transport stocks to new highs, as can be seen in the chart of the Young Research Moving the Goods Index below. The FT reports: The Dow Jones Transportation Average, the world’s oldest benchmark that tracks some of America’s biggest transport and logistics companies, is outperforming major indices this year, underlining the strength of the US economic rebound. The benchmark has been on a winning streak since the start of the year, rising just … [Read more...]
Your Survival Guy: MVP, Cryptos, GUNS, Big Macs & YOU
How are you? Are you thinking about where we are in life right now? Wondering if it will ever go back to “normal?” I know I am. It can get pretty upsetting thinking of how easily they take things away. As if they know what’s best for you and me. They don’t. In thinking about survival, one theme that rings true is our attitude. Do we believe we’ll make it? Do we believe in ourselves? I know I believe in you. When you read about survival stories, oftentimes there’s not a heroic act that separates those who make it from those who don’t. It’s an important reminder to keep in your back pocket. … [Read more...]
Was Archegos Just the Tip of a Hidden Iceberg?
The Federal Reserve is worried that hedge funds aren't accurately measuring risk, and that the fall of Archegos Capital could be a harbinger of what's to come. Gary Silverman and James Politi report in The Financial Times: The US Federal Reserve has warned that existing measures of hedge fund leverage “may not be capturing important risks”, pointing to the collapse of Archegos Capital as an example of hidden vulnerabilities in the global financial system. The US central bank’s semi-annual report on financial stability found that some asset valuations are “elevated relative to historical … [Read more...]
The Biggest Part of Successful Stock Investing Is This
You and I are in uncharted waters as we look ahead. The next sixteen years are unknown—but those years will make up a good chunk of your pre-retirement savings or retirement years. Let’s look at the past, in sixteen-year groupings, shall we? (Note: Chart four is only halfway there). As you can see, if you had your choice, you’d want to retire in 1981. But since you can’t do that, there’s plenty to worry about—especially when you start socking away serious money. Why risk it on an all-stocks strategy in your 50s? Your 50s are when you need to be dead serious about smoothing out your … [Read more...]
Tesla Set to Lose Major Emissions Credit Buyer
As a result of the merger between Fiat Chrysler and PSA, the need for the former to buy emissions credits has been eliminated as the newly merged entity is compliant with EU rules on emissions. Tesla will lose hundreds of millions of dollars in payments because of the loss of the market for credits. Peter Campbell and David Keohane report in The Financial Times: In 2019 Fiat Chrysler (FCA) entered a deal to pool with Tesla to pass tough European carbon dioixide rules, agreeing to pay to offset the emissions from its own line-up. But Stellantis, formed earlier this year by the merger of … [Read more...]
Your Survival Guy’s Survival Stock/Blockchain & Bitcoin
Your Survival Guy's survival stock for you today is a company using blockchain technology to help bring you a better product. You may have heard of it: McDonald’s. Want to know how those two sizzling Big Mac patties get to you? Well, one supplier, Golden State Foods, uses blockchain through IBM’s Food Trust (see below). But before we dig into this feast, what you and I need to know is: does it pay a dividend? And the answer is a big YES—since 1976. Like hot french fries dipped in ketchup—one, after another, after another. And one year before that dividend began, some clever operator in … [Read more...]
Fidelity Escaped: Now Young Professionals Are Following
Opportunistic, fresh out of college, young Americans moved to big cities for decades until the COVID-19 pandemic and the BLM/Antifa riots and looting hit in 2020. For a new generation whose college educations couldn't be put to use in their suburban or rural home towns, city living was the best path to success. Now, with the rise of remote working, governors gone wild, and America's big blue cities in chaos, young people are finding their way back home in what one professor calls a rethinking of the "balance of our lives." Here's the story of one couple who came back to Rhode Island, … [Read more...]