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Investment Research Since 1978

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Food Inflation: Largest Increase Since Sep ’11

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According to the latest report from the Bureau of Labor Statistics, inflation is under control. But for those of us who like to eat it's worth noting that food inflation had the largest increase since September 2011. String together a few months of the reported 0.4 percent increase in the food index and it will hurt at the check-out counter. But in reality any increase in inflation hurts more than it should. That's because the Fed has left savers defenseless with it's pathetic zero percent interest rates. Consumer Price Index Data for February 2014 Food The food index rose 0.4 percent … [Read more...]

Jeremy Grantham’s Wise Words

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It's always a good idea to pay attention to Jeremy Grantham. Jeremy Grantham's interesting words from a Barron's interview. What else are you seeing in terms of sentiment? There is a high level of enthusiasm from the financial professionals, hedge funds in particular. This time you have a very high level of confidence from the professionals—but not a very high level of confidence from the individual investors. The individuals are a bit more down to earth. They felt the pain of 2009 longer than the institutions did, and they have been slow to come back into stocks when you look at net … [Read more...]

The Rich Man

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Your approach to this market needs to be like that of my favored prognosticator: the rich man. You see the rich man, as Dow theory legend Richard Russell says, doesn't need the markets. RULE 3: RICH MAN, POOR MAN: In the investment world the wealthy investor has one major advantage over the little guy, the stock market amateur and the neophyte trader. The advantage that the wealthy investor enjoys is that HE DOESN'T NEED THE MARKETS. I can't begin to tell you what a difference that makes, both in one's mental attitude and in the way one actually handles one's money. The wealthy investor … [Read more...]

Federal Reserve on the Right Track

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The Federal Reserve's taper is the right move for the economy and eventually the markets. It moves capital away from the well-connected and towards those who need it most, small businesses. The big dogs on Wall Street, the well-connected, don't like it. What a surprise as David Malpass writes in his WSJ editorial: The evolution in Fed policy may be enough to finally break the economy out of slow growth. The magnitudes are certainly large enough to move the needle. On the current tapering path, the Fed will cut its new bank borrowing in half to $500 billion in 2014 and $0 in 2015. The … [Read more...]

Investing to Win the War

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In my close to 20 years working with investors I have found gauging one's risk tolerance is more art than science. There are models galore that will give you an "appropriate" allocation for your age, income needs etc. But often times that's thrown out the window when times get tough. And tough they have gotten, for example, in the 2000 tech bust and the recent crisis in 2008. It's amazing to me how quickly the rough times have been forgotten. In the good times, most investors feel they're thick skinned and can handle the volatility in the market. That is until they start losing some serious … [Read more...]

Thanks for the Investment and Good Luck!

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Some of the big dogs in private equity are selling. Good luck to those who stick around. The WSJ reports: Shares of private-equity firms are soaring, and buyout barons are selling. Top executives at three publicly traded private-equity firms have sold more than $500 million of their firms' stock over the past year, according to securities filings. The most recent sellers are Carlyle Group LP co-founders co-Chief Executive William Conway and Chairman Daniel D'Aniello, who have sold between $39.6 million and $48.9 million of stock apiece, according to a securities filing Thursday. The … [Read more...]

Who’s Watching Your Money?

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There are a lot of charlatans out there that have been trusted with the management of other people's money. It's shocking how many get away with it. According to this WSJ analysis there are many red flags that go unnoticed by clients: In less than two years, stockbroker Marcos D. Leiva racked up a personal bankruptcy, a tax lien, a court judgment for unpaid debt and a criminal guilty plea relating to a false report to law enforcement. Each should have been promptly disclosed to investors. None was. Mr. Leiva is one of more than 1,600 stockbrokers whose records failed to disclose … [Read more...]

How to Make $175,000

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Making money and saving money is hard. But if you have some money and some time then you can do some amazing things like compounding your money or what Albert Einstein referred to as the 8th wonder of the world. But compounding can work both ways. Carrying credit card debt at predatory rates month after month is reverse compounding. Not knowing you've become that little mouse running on a wheel at Petco is painful. The average hedge fund, for example, charges 2% per year on your assets per year and then take 20% of your profits. The average mutual fund charges 1.33% on assets, according to … [Read more...]

The 8th Wonder of the World

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Saving money is hard. But the earlier it's started, the easier it gets. I was stacking quarters the other night to explain the concept to my kids. Saving money early helps to bring time into the equation. The result is compounding money–a phenomenon Albert Einstein referred to as the 8th wonder of the world. … [Read more...]