Young Research & Publishing Inc.

Investment Research Since 1978

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Be Fully Loaded for Retirement

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If you’re thinking about retirement, make sure you’ve got a plan to get out of debt. The best case scenario would be to retire without any debt and to keep it that way. If you’re still working and you have debt, then try to work it down to nothing if you can. Once you retire, getting out of debt is a daunting task. Believe me when I tell you that unexpected costs come up and you end up spending more than you had hoped to spend. “I worked my whole life for this” seems to justify a lot of expenses in early retirement. If you do find you’re struggling to get out of debt and you’re already … [Read more...]

Don’t Make this Mistake

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In this low-yield market, it’s easy to be thrown off your game. You know money markets are paying nothing, and your dollars are rotting away via inflation. So when you read or hear about annuities guaranteeing 6% or 8%, it’s hard not to listen up. Well, that’s a mistake. Do not buy variable annuities and the promises they make. Once you venture down this road, you’re likely to end up with an expensive product you shouldn’t own. It’s hard to resist the bells and whistles like inflation protection. But that and other add-ons tack on costs well beyond what you may have bargained for prior to … [Read more...]

Bond Risk

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Insurance companies manage risk—their own risk. When it comes to insuring new-issue muni bonds, the only game in town is Assured Guaranty Ltd. They’re staring down the barrel of a ratings downgrade by Moody’s Investors Service. Risky muni-bond investing is about to get riskier. Check out The Wall Street Journal’s For Muni Bonds, Less Assurance: The last remaining insurer of new municipal-bond issues is bracing for a fall that could bring its industry to a new low—and possibly increase borrowing costs for some small local governments. Moody’s Investors Service warned in late March that it … [Read more...]

The First U.S. Pension Fund Bankruptcy

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The Northern Mariana Islands pension has filed for bankruptcy protection. Since it’s a U.S. territory, it technically is the first U.S. public pension to seek bankruptcy protection. The fund reached this point by offering exceedingly generous benefits and not receiving adequate contributions from employees or the government. The fund suffered huge losses in 2007. It had 75% of its assets invested in stocks. Most pensions have around 60% in stocks. If it were my pension, I’d have even less in stocks. The fund got into this position because it started reaching for better performance. Too much … [Read more...]

The Age of Turbulence

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The Federal Reserve wrapped up its two-day Open Market Committee meeting last week with Chairman Ben Bernanke reaffirming that “keeping interest rates low is still appropriate for our economy.” But what if he’s wrong? His second term as chairman ends January 31, 2014. Will he be reappointed over and over again like the former chairman, Alan Greenspan? It is sad when individuals believe they can take the helm of such a huge economy and guide it peacefully into port. These guys believe they can. And as you see in the video below, it’s never their fault if they’re wrong. … [Read more...]

Why Stocks Go Up

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Stocks have been wild lately. They swing up; they swing down. Listen to the boys and girls on CNBC and you hear, “You bet this market’s got some legs—it should continue up.” Then the next morning Spain has trouble selling bonds, and stocks fall 100 points at the open. You could have had a better night watching Modern Family. For my money, it’s the increase in dividends that makes a stock go up. You buy a stock, it pays a dividend, and then next year it increases that dividend. What’s not to like? If a company increases its dividends for a loooong time, then it becomes one of the dividend … [Read more...]

The Riches Your Family Deserves

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If you know how compound interest works, you’re in good company. Einstein referred to it as the eighth wonder of the world. Compound anything at 10% for 60 years and you have 300 times more than what you started with. Do that with your money and you’re a genius. Time and money are the key ingredients in this magical formula. Unfortunately, you usually don’t have money when you’re young, and you have less time when you’re older. Compounding for 20 years—a long time, no doubt—at 10% gives you just over 6X your money. But it’s not until years 40 (45X at 10%) and 50 (117X at 10%) when … [Read more...]

Hearts of Gold

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Kids are sponges. They remember what you tell them about saving money. They’re also like jukeboxes when it comes to singing back songs. But they might not always understand what they’re singing about—take, for example, “I made enough money to buy Miami / But I pissed it away so fast” from Jimmy Buffett’s “A Pirate Looks at 40.” Understanding some scenarios comes with age. Imagine if you never lost money in the stock market. When kids save money, they’re not worried about the market—they’re too busy counting their cash. They count it again and again and again. Then they tell you how much … [Read more...]

Record Junk Bond Yields

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Low interest rates have understandably pushed investors into junk bonds. More money has flowed into junk bonds this quarter than any quarter since 1980. The average yield is 7.98%, another record—the lowest since 1980. Investors can blame the Fed’s zero-rate policy, thanks to which a 10-year Treasury yields 2.18%, for pushing them into junk bonds. While they’re being pushed into lower-quality bonds, investors are also being forced to look toward longer-maturity bonds to pick up yield. But wait until interest rates go up. The word to remember is duration. A bond’s duration is an … [Read more...]

Silver Store of Value

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Cash is king. So have a stash for your disaster preparations. Like you, I don’t like losing money. That’s why I bought some silver, gold, and Canadian dollars to back up my U.S. dollars. All three should provide ample backup in the case of U.S. dollar debasement—the government’s way of taxing you more without raising rates. Now, I’m not talking big numbers here. I’m using less than 1% of my investable assets. This isn’t investment advice with speculative hopes of selling at a higher price down the road. This is more along the lines of stocking up food and water. Consider this “survival … [Read more...]