Think about the concept of retirement for a minute. A person works their entire life, gains massive amounts of valuable experience, becomes extremely productive, and then checks out at the peak of their career. Odd is it not? But given expected life spans, and what it costs to save for the Golden Years, this is how it's done. The problem today is, the Baby Boomer generation is such a big, productive part of the economy, that as these older workers retire, they leave a massive skills and productivity gap in their wake. Research from RAND Corp. says Boomer retirements will even lower GDP … [Read more...]
Millennial Housing Bust
I have written many times here about my initial foray into real estate investing. In my three part series Working Millennials: Rent or Buy Real Estate? (read Part I, Part II and Part III), I encouraged young people to "buy a multi-family type property. It can be a two-family, four-family, you can live in the basement of a brownstone. It doesn’t matter as long as you get in the game. You will unlock the creativity I know you possess. You will beat inertia—a most horrible foe." I want young people to become owners. Ownership is key to the idea of becoming a long-term investor. But of course … [Read more...]
Silver Up 44% in First Half: Investment Demand Booms
Investment demand and sales of silver coins have surged in 2016. The Silver Institute notes that in the first half of 2016, the price of silver has gained 44%. Blanchard writes: Investment demand for silver has been increasing on almost every front. ETF holdings hit a record high of more than 662 million ounces, while net longs in the futures and options markets also are at all-time levels. And in the physical market, coin sales are booming again in 2016, up 29% for the first quarter of this year, growing at “at double digit paces in all the major regions” of the world. The only down spot … [Read more...]
States and Cities Struggle under Pension Weight
Timothy Martin writes at the Wall Street Journal that public pensions in the United States are about to record their lowest long-term returns ever. I've warned about the threat to pension funds posed by low interest rates time, and time, and time, and time again. Now the chickens are coming home to roost, and public employees, and taxpayers will be the ones who pay the price for sustained low interest rates engineered by the Fed. Martin writes: The drop in 20-year annualized returns is significant because officials who oversee retirements for police officers, firefighters, teachers and … [Read more...]
Excise to Excess: States that Make You Pay
The Tax Foundation has released a map displaying the ranking and dollar/citizen each state pulls in via excise taxes. Excise taxes are usually placed on goods that consumers can't avoid, like gasoline, or goods that governments would prefer consumers avoid, like cigarettes or alcohol (also called Sin Taxes). Policy makers are attempting to generate maximum revenue, while also achieving some other goal, i.e. preventing cancer or reducing emissions. The Tax Foundation writes: State and local governments rely on a variety of tax types to raise revenue, one of which is the excise tax. Like … [Read more...]
Velocity, there is None
At one time, velocity, the speed at which the monetary base is spent (measured as GDP/M2), was a reasonably reliable indicator of America's position in the business cycle. More often than not, if velocity was tanking, it was a good bet the country was in recession. Today though, after years of unconventional monetary policy, velocity is no longer a reliable business cycle indicator. If you're not an economist or don't work in the world of finance, you may be asking, "so what?" There are a number of practical reasons you might pay attention to velocity. For one, when velocity ticks up it can … [Read more...]
Avoid “Unpleasant Bumps” in Retirement
The Wall Street Journal's Mia Lamar has written a profile of the high-risk Singaporean hedge fund, Quantedge Capital Pte Ltd. The fund has had wild success, raking in 27% average annualized returns since inception in 2006. No one can scoff at the those Madoff-like returns. But it's something the fund wrote in its August investor letter that stuck out to me. “…Our investment model delivers high returns over time, at the cost of unpleasant bumps along the way.” Investors nearing retirement, or those already enjoying their life after work, don't have the time or tolerance for "unpleasant … [Read more...]
Switzerland: The Drawbacks of Wealth Taxation
Researchers studying the effects of wealth taxation in Switzerland have found that, rather than quelling inequality, the taxes are costly to the economy and generate little revenue with respect to their negative impacts. The Tax Foundation's Alex Durante writes: Many countries in the OECD impose estate or inheritance taxes, two kinds of wealth taxes, on their citizens. Estate and inheritance taxes are levied on the money and property of the deceased and paid by the beneficiaries. However, only a few of these countries tax personal wealth holdings on a yearly basis. Switzerland imposes the … [Read more...]
When the Lights Go Out
Inflicting major disruptions to the electrical grid, whether by humans or natural causes, is not that difficult to imagine. It has already happened which you’ll learn more about in this excellent article, and series, by Rebecca Smith in The WSJ titled, “How America Could Go Dark.” I spent time this week speaking with an engineer at our local utility company. The impression he gave me is the same as in the article: The money is simply not there. It’s not there to protect substations with proper security, and it’s certainly not there to upgrade the grid to bring it into the 21st … [Read more...]
Get Your Survival Training Now
You have plenty of opportunities to get your survival training now. Don’t let inertia slow you down. Here’s what I’ve learned for you. A client told me this week he’s thinking about attending a pistol course through the Surefire Institute. They will be in his town for about ten days offering a variety of coursework such as General Shotgun and General Handgun. I’ve taken similar courses through Sig Sauer Academy in Epping, New Hampshire and I highly recommend both for you and your loved ones. What’s cool about the Surefire Institute is that it has locations in Las Vegas (a nice activity if … [Read more...]
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