A Stacked Deck: Is your broker providing compromised investment advice?
I want to briefly touch on the subject of broker dealers (especially publically traded firms) as they relate to our private, family registered investment-advisory firm. I started our money management business over two decades ago in response to years of requests from my strategy report readers for such assistance. Back then, I was still researching and writing every word of Young’s World Money Forecast. YWMF was a 50-page monthly monetary and economics report for institutions and corporate financial officers, I was kept busy. I could only work with a handful of clients. As time passed and it … [Read more...]
The Two Most Important Words in Investing
The two most important words in investing are “compound interest.” Albert Einstein referred to compound interest as the eighth wonder of the world. And Ben Franklin said compound interest is “the stone that will turn all your lead into gold.” Many investors are familiar with compound interest, but few appreciate its awesome power. Until you fully appreciate the power of compounding, attempts at crafting a successful long-term investment strategy will likely fall short. If you are among the millions of Americans who still believe investing is buying a security today and selling it at a … [Read more...]
Debunking the China Story
Invest in China, you are told. China’s economy is booming. GDP growth is among the fastest in the world. Since China is growing faster than the rest of the world, it must follow that Chinese stocks are a good buy. That’s the pitch the pundits and promoters continue to make, but is it true? Just this week China reported GDP numbers for 2010. Yes, somehow China, a country with a per capita income that is a fraction of U.S. per capita income manages to report GDP figures before us. Makes one wonder, but that’s a topic for another day. China’s real GDP growth came in at 10.3%—exceeding … [Read more...]
Happy New Year!
With only one trading day to go in December, the S&P 500 is up 6.55% for the month. If stocks hold onto their gains it will be the best December for the stock market in almost two decades. And since Ben B. first floated the idea of printing a few billion more dollars in August, stocks have gained more than 20%. He must be delighted. Investors are buying stocks indiscriminately—the riskier the better. Investor sentiment is at multi-year highs. Brokerage analysts are bullish, investment managers are bullish, and individual investors are bullish. The mantra on the street is “don’t fight … [Read more...]
Christmas Price Inflation
Inflation risks are greatly overstated, says Ben Bernanke. We should be worried about debilitating deflation, not inflation. Ben B., of course, focuses on core inflation as his guide to price stability. Core inflation excludes food and energy. So as long as you don’t mind starving in the freezing cold with the lights off, core inflation is what you should focus on. However, if you are like the other 308 million of us who prefer to eat with the lights on in a warm house, core inflation is not at all useful. The headline Consumer Price Index (CPI), which includes food and energy, is a better … [Read more...]
The Dividend Mandate
Income investors can’t help but be discouraged by the current state of affairs. T-bills yield 0.10%, and two-year Treasury notes yield 0.62%. Albert Einstein described compound interest as the greatest mathematical discovery of all time, but compounding is not so great when interest rates are at 0.1%. At 0.1%, it would take 720 years to double your money! For income seekers and those in or nearing retirement, there is no source of risk-free interest. To earn a decent yield in the fixed-income market today, you must be savvy and selective. You have to pick your credit exposure and an … [Read more...]
The Revolt
President Obama has a revolt on his hands. This week, his former allies in the house turned on him. The Democratic caucus voted on Thursday to reject the Obama-McConnell tax compromise. Those in the far-left wing of the Democratic Party find the tax deal unacceptable. They have a problem with the estate tax provision that GOP members negotiated and the extension of current tax rates on high-income tax earners. It is no wonder that House Democrats took a beating in November. The provisions that the Pelosi-led liberals want stripped from the bill are the only two Republican proposals in the … [Read more...]
The World’s Best-Performing Commodity
Do you know which major commodity has increased in price most YTD? It’s cotton. Cotton is up 96% YTD. The second-best-performing commodity is palladium. Palladium has gained 88% YTD. The big gains in cotton and palladium are not outliers, though. In Young Research’s Global Investment Strategy, we provide subscribers with a Global Investment Scorecard that shows the performance of all of the major developed and emerging equity markets as well as major fixed-income sectors, U.S. stock sectors, and all the major commodities. For commodities, we break out the performance of energy commodities, … [Read more...]
A Treasure Trove for Dividend Investors
As many of you know, I invest exclusively in dividend-paying stocks, and I advise the same for my strategy report subscribers. If a company does not pay a dividend, I won’t even consider it. At my family investment company, our common stock portfolios are invested exclusively in dividend-paying stocks. We favor companies with strong balance sheets, stable businesses, and a long history of consecutive dividend payments and annual dividend increases. A steady stream of dividend income today and the promise of higher income tomorrow has appeal for conservative investors and those in or nearing … [Read more...]
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