If you’re feeling like you’re losing control of your money, there may be some truth to that. Do you want your investments used as a tool to invest in other people’s political agendas? When it comes to ESG and BlackRock, for example, that’s exactly what’s happening. Through their mutual funds and ETFs, you’re part of their political crusade. But being part of their political crusade probably isn’t one of the reasons you invested with them to begin with. No offense to BlackRock, but this is about your agenda—your retirement. Why would you waste your time with mutual funds when they’re … [Read more...]
Archives for May 2022
STABLECOIN DEATH SPIRAL? TerraUSD Becomes Terra0.5USD Overnight
A selloff is currently hitting cryptocurrencies, and one, in particular, is beginning to look like an emperor with no clothes. TerraUSD, a so-called "stablecoin," because of its purported peg to the dollar at 1 to 1, has lost around half its value overnight. The loss was so great, according to industry analysts, that it could even enter what's known as a "death spiral." According to The Wall Street Journal, TerraUSD uses " financial engineering to maintain its link to the dollar." Does that sound very "stable," to you? Caitlin Ostroff and Elaine Yu explain the breakdown, writing: The … [Read more...]
FRIEND OR FOE: Are You Investing with Time, or Against It?
As pensions loaded up on real estate as a “sure thing, can’t miss” investment, office buildings are drowning from a wave of sublease space. Konrad Putzier reports on the glut of office space in The Wall Street Journal, writing: The amount of space listed for sublease surged in the first year of the pandemic to the highest level in decades in some cities. But it fell in the second half of 2021 as offices leased up and some companies took listings off the market. Now it is rising again. Sublease availability across the U.S. increased 3.6% in the first quarter to 159 million square feet, … [Read more...]
EV Stocks Have More to Lose than Most
It's expensive to launch a new car company, and with rates rising, it's getting even costlier. Stephen Wilmot writes at The Wall Street Journal: While the rising cost of capital is hitting speculative stocks in other sectors too, EV startups have more to lose than most. Launching a new car maker is extraordinarily expensive, and the costs come years before the profits. Bridging this gap is much easier if money is essentially free, as was the case with the influx of cash from special-purpose acquisition companies last year. Those days are fading fast. Companies filled up on cheap capital … [Read more...]
Don’t Throw Your Bond Portfolio Out the Window
Remember, as interest rates rise, you’re able to buy bonds at higher yields. We’re not that far from an interest rate level that will be a game-changer for retirees. I like this from Jason Zweig at The Wall Street Journal: Thanks to the recent plunge in prices, the yield on the aggregate U.S. bond market, at about 3.6%, has doubled since Dec. 31. People always chase the past with their money. Investors added more than $445 billion to bond funds in 2020, largely because past returns were so strong. But by the end of that year, the yield on the U.S. bond market had fallen to barely more than … [Read more...]
FAANGS Fall Like a Ton of BRICS
Do you remember the BRICS? Did you think "this time is different?" It turns out, that catchy acronyms are not the best way to invest. Ruchir Sharma explains in the Financial Times: Given the battering markets have dealt so far this year to tech stocks, led by the Faangs, it is worth stepping back and recognising what is coming apart: the whole concept of acronym investing. The unbundling of the Faangs is much like the fall of the big emerging markets, known as the Brics, a decade ago. A hot theme seizes the imagination of investors. Marketers coin an acronym to capture the trend and it … [Read more...]
The Truth About the S&P 500 is Finally Out
You have been reading warnings about the S&P 500 and the truth behind it here on Your Survival Guy for years. Now, everyone else is catching up. The big firms making up a disproportionately large part of the index’s value are suffering declines and bringing the index with them. Matt Murray writes in The Wall Street Journal’s 10 Point email: The 2022 pullback in U.S. stocks is changing investors’ behavior, with more volatility expected. The breadth of the market’s selloff has been striking, dragging valuations lower and tempering enthusiasm for risky bets in the options market. Shares … [Read more...]
Here’s What the Fed SHOULD Do, and Why It Probably Won’t
Your Survival Guy’s take on the Fed’s wavering on future rate increase amounts? Business as usual. The Fed’s a political beast and always fails at doing its one real job—protecting the value of your dollar. The Fed’s been in the business of ruining dollars forever. This is nothing new. So why the uproar? Well, tech investors are getting a dose of reality with Nasdaq down 21.3% YTD. Welcome to investing. When you have politicians pulling levers to get reelected—or in the case of Fed Chairman Powell to get reappointed—then the waters are muddied. Listen. I have the answer. But I’m Your … [Read more...]
Will Market Prices Soon Be Meaningful Again?
In the Financial Times, John Plender suggests that market prices could soon be meaningful again, after years of central bank distortion. He writes: It took a devastating combination of the pandemic, war in Ukraine and a central banking U-turn on inflation to do it. Since the turn of the year the rules of the game in markets have been dramatically upended. Gone are those notorious acronyms Fomo (fear of missing out), Tina (there is no alternative to higher risk equities and credit) and BTD (buy the dip). The ecstatic equity market response to what were initially seen as dovish signals in … [Read more...]
Intelligence Report: How $10,000 Grows to $28 Million
Your Survival Guy wants your grandchildren to be as rich as Croesus. How can you help them do that? Get them on the path to riches by putting time on their side. It’s time that’s the key ingredient to compound interest. As Dick Young wrote to you back in July 2016: How $10,000 Grows to $28 Million I’m assuming each of my grandchildren invests $10,000 at age 25 with a goal of compounding that investment for either 30 or 50 years. Each will purchase 500 shares of a stock (at $20/share) with a long history of paying dividends and offering an initial 4% dividend yield. Using an early … [Read more...]