My first Summer job was scooping ice cream at Oxford Creamery in Mattapoisett, MA, where after every shift I'd mop the floors. I like this story from Tyler Bonin at The Wall Street JournaI. Bonin's advice for new grads is to "mop your way to success." It’s never too early to learn how to make yourself useful. He writes: Every commencement season, thousands of graduates are treated to something I call “standard keynote language.” Everyone can recognize these tiny, easily digestible nuggets of wisdom: “Don’t be afraid to take risks,” or “Be courageous.” And the classic: “Follow your passion.” … [Read more...]
A Risky Addition to an Otherwise Decent Dodd-Frank Reform: Part II
Yesterday I wrote to you about a risky change classifying municipal bonds as "high quality liquid assets." That change, though simple, could lead to increased spending by states and cities. This is obviously a danger given many states' indebted status, take for example the state of Illinois. A spiral of debt and taxes is driving residents out of the state, which in turn is worsening the state's revenue problem. Ben Bradley reports for WGN9 news from Chicago: 33,703. That’s how many residents left Illinois last year. People leave the state for a variety of reasons from weather to career … [Read more...]
A Risky Addition to an Otherwise Decent Dodd-Frank Reform
Despite passing a major reform to the Obama-era Dodd-Frank financial regulation, Congress has unfortunately added a few unnecessary, and even risky, clauses to the bill. The one that worries me most classifies investment-grade muni bonds as "high quality liquid assets." Some, repeat some, muni bonds are high quality assets. Many are not, even some of those that hold investment-grade ratings. What's worse is that few muni bonds are very liquid. They typically aren't large enough to create the kind of investor pool necessary for high levels of liquidity. The editorial board at The Wall … [Read more...]
A Warning for the Global Economy
The WSJ Logistics Report raises the red flag on a major warning sign for the global economy. Copper, known as Dr. Copper for having a Ph.D. in economics, has begun falling in price, even while other commodities are rising. Another early indicator of the direction of the world economy, the Baltic Dry Index, has plummeted as well. See my charts below on both. The WSJ reports: Warning signs for the global economy are being drawn in copper. After hitting a high of nearly four years in 2017, copper prices have slumped this year even as prices for other commodities have been rising. That’s a … [Read more...]
Wealth Shock! “All of a Sudden Their Wealth is Gone”
You simply cannot afford to take heavy losses in or near retirement. From a financial standpoint the arithmetic of losses is devastating—lose half your portfolio and you need a 100% gain (not likely) to get back to even. Now, a study has been done to show the impact of losing money on one’s health. And it’s not good. “Published last month in the Journal of the American Medical Association, [Lindsay Pool of Northwestern University] investigated how losing one’s life savings in the short term might curtail one’s lifespan in the long term,” writes the WSJ’s Susan Pinker. Every two … [Read more...]
Big Government and Globalism: Small Town America in Despair
Small-towns are the casualties of globalism. Industries have been shuttered. Big government, meaning both sides of the aisle, have failed America. Just take a look around on your next road trip. Glenn Hubbard, dean of Columbia Business School, explains in the WSJ’s Weekend Interview why he had students visit a failed middle America town: “I wanted the students to go to a place that had experienced industrial decline,” he says. “And they came back with a clear sense that there’s no silver bullet to our problems, but that people there had real points—that a lot of what you read about their … [Read more...]
Is Your State’s Pension System about to Collapse?
Katherine Loughead discusses state pension data from The Pew Charitable Trusts at The Tax Foundation. I've warned many times that states are under-funding their pensions and using unrealistic expected rates of return to hide their malfeasance (read here, here, here, and here). The low funding ratios are starting to bite. She writes: As of fiscal year 2016 (the most recent data available), states reported a combined $1.4 trillion in state pension plan funding deficits. Over the last two years, below-expected returns on investment and insufficient state allocations contributed to widening … [Read more...]
The Big Implications of Blockchain
“We’re quite confident that (blockchain) has big, big implications in supply chain, transportation and logistics. In the area where FedEx makes its living, this could be a big deal.” That's what FedEx CEO Fred Smith told the Consensus 2018 conference in early May. The blockchain technology Smith is excited about was touted by many at the Consensus conference, and could be applied in a range of industries. Steven Norton reports for The Wall Street Journal: Speaking at the Consensus 2018 conference, panelists described how distributed ledger technology could create an immutable data source … [Read more...]
RAGE Gauge: Sell in May?
Sell in May? Not if you have a plan you don’t. Successful investing requires that you have a plan and the patience to stick to it. Being paid to be in the market through dividends from stocks, and interest from bonds, makes the waiting all the more palatable. Risk continues to be high. Stocks continue to feel like a popularity contest, especially the FAANGs. We know how that story ends. Originally posted on Yoursurvivalguy.com. … [Read more...]
Knife Attack: Your Survival Guy in Paris
“Did you hear the gun shots?” a friend asked. “No,” I said. When the knife attack occurred, we, like many other families on a Saturday night in Paris, were out to dinner. In fact, we didn’t learn about the attack until much later. In retrospect, I’m surprised no one at our restaurant told us about it or warned us. Part of me believes they knew the situation was under control and didn’t want to ruin our night or scare us. Or they just didn’t know about it. We learned about the attack back in our hotel room, flipping through the channels on the TV. Seeing the live report brought mixed … [Read more...]
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