You’re not supposed to talk about religion or politics in the investment business. Your Survival Guy broke that rule on day one. I’ve always felt it’s important to know who you’re dealing with. The big firms try to play it right down the middle. They try to please everyone and no one at the same time. They don’t talk politics. Until now. And not on purpose. Let me explain. When the mutual fund industry rode index fees down to zero, they became victims of their own success. Suddenly, they needed a new way to skin the cat. Imagine the conference room discussions. “Bob, we need to get … [Read more...]
Archives for March 2023
Are 0DTE Options a Threat to Markets?
In Bloomberg, Lu Wang discusses the growing use of 0DTE options and their potential to cause market volatility, writing: Discovered by retail investors as a cheap way of gambling during the meme-stock era in 2021, zero-day options got a fresh boost on index trading after firms like Cboe Global Markets Inc. last year expanded S&P 500 options expirations to cover each weekday. The offerings became an instant hit among institutions as daily reversals ruled the market, spurred by the Federal Reserve’s most aggressive monetary tightening in decades. By the third quarter of 2022, 0DTE … [Read more...]
“I Need Preservation of Principal and Growth”
Is there anyone more important than you? You’ve made some promises: In sickness and in health, family first, love thy neighbor, etc. You’re the reason there’s so much to worry about. But in my conversations with you, you don’t always know—you. Let me explain. You’ve worked a lifetime to get to where you are. You have savings you can’t afford to lose. You need your money to last for the rest of your life. And like clockwork, you tell me this: “I need preservation of principal and growth.” Uh, huh. And then I think to myself. “I’ll also have the crème brûlée without the cals, thank … [Read more...]
Are You Fairly Wealthy? I’m Listening
Did you catch the Sunday New York Times article on the supper clubs in Palm Beach? Look, Your Survival Guy loves Palm Beach, especially lunch at the Brazilian Court, but a supper club? Sounds expensive. But wait a second. When I started running the numbers, I thought, “Self, it could actually work.” That is, if it’s the right one. You don’t have to be an uber-wealthy billionaire to have a nice life. Look for more supper clubs to show up, especially away from super high tax states. Welcome to Florida. OK, you really can’t make up these headlines. Pension funds rethinking private equity … [Read more...]
Treasury Studying How to Increase Deposit Insurance
Big news here, even if there isn’t yet an explicit guarantee. Treasury Secretary Yellen indicated policymakers may intervene to protect depositors at smaller banks. It is also reported that US officials are studying ways to temporarily extend FDIC insurance to all depositors. This news should be well received by the market and banks. James Politi reports in the Financial Times: Janet Yellen will signal further US government backing for deposits at smaller American banks if needed, a shift that seeks to protect parts of the country’s banking system struggling in the recent financial … [Read more...]
Your Survival Guy’s BEST Insider’s Guide to Key West
Happy Monday from New England. Your Survival Guy’s thin blood is adjusting to the cold, having just returned from a tropical island getaway to Key West. I’m here to report that the Conch Republic is alive and well. And notice it’s not a democracy. The Republic is where you go to get that neighborhood walkability without all the sensibilities. Tops on our list are lunches at Louie’s Backyard and the Thirsty Mermaid. Say hi to Patty at Louie’s and Ionela and Ava at Thirsty, and enjoy your cheeseburgers in paradise. Both are fab. And be sure to hit the waterfront at the Half Shell Raw Bar to … [Read more...]
For Whom Is Your Portfolio Serving?
Pressure and prices are no friend of the Prudent Man. When there’s pressure for your portfolio to “do something,” then you’ve already lost the game. The same is true with prices. If you need prices to get to some level, then forget it. Pressure and prices? These are terms for the speculator. Someone Your Survival Guy has no interest in serving. But there is a brighter way forward. Once you focus on a portfolio built on patience, dividends, interest, and compounding, an entire world opens up to you. One in which you control your destiny and can rise above the fray. You know, trusting other … [Read more...]
Who’s to Blame for Banking Vulnerability?
In Barron's, Viral V. Acharya and Raghuram Rajan explain how quantitative easing may have left the banking system vulnerable to volatility. They conclude: There is plenty of blame to go around. But leaving aside the banks’ risk management and bank supervisors’ apparent failures, there are deeper questions. Why did uninsured deposits grow so rapidly during the pandemic? Why are banks so heavily invested in long-term securities portfolios? Why are we seeing bank runs so soon after the Fed flooded the system with liquidity? Part of the answer lies in quantitative easing, a form of monetary … [Read more...]
Mortgage Market Not Expected to Settle Down Soon
The collapse of Silicon Valley Bank and Signature Bank has created volatility in mortgage markets, and according to Jennifer Hughes in the Financial Times, that volatility isn't expected to settle down overnight. She writes: The market volatility triggered by the failure of three banks in the past week has spooked traders in economically vital US mortgage-backed securities, leaving other lenders, usually important buyers, on the sidelines. The $11tn market for bundles of US home loans was already feeling the strain of last year’s soaring interest rates, which pushed up MBS spreads — the … [Read more...]
Are You Living Your Best Life?
Sitting in my cave today. Looking out at the beautiful landscape. Thanking myself for peace of mind. Knowing it’s my own decision to take shelter. It’s been a long time. Independent thinking is a lonely journey. Yes, it helps knowing this storm, too, will pass. But when? Will they ever learn? Because it’s in times like these, I appreciate the wisdom of my elders. Thinking about the fireside chats they shared with grace. Learning to tread lightly and to avoid the eager man looking to tread on me. I don’t like eager. I don’t like exciting. I’m fine preserving myself. … [Read more...]