To calculate the shareholder yield, pick up the annual report for a company you are interested in (preferably a non-financial company), and turn to the Statement of Cash Flows. In the Statement of Cash Flows, move down to the section labeled - Cash Flows from Financing Activities. For most companies, this is the last section of the Cash Flow Statement. To calculate shareholder yield, you have to determine the total amount of dividends that were paid to shareholders, the net amount of stock that was repurchased, and the net amount of debt that was repaid. Before you get started, remember you … [Read more...]
Houses Built By Robots are the Next Big Thing in Construction
Hotels, mansions, and affordable homes are being built by robots today. You may not be able to tell as you drive by your neighbor's house, but a shortage of skilled labor in the construction market has left home builders relying on machines to produce more and more of each house. Inside the factories where the robots, with help from both skilled and unskilled humans, make the homes, conditions are controlled. There's no down time caused by foul weather, and every nail driven by a robot ends up right where it's meant to go. And perhaps most essential to the growth of the prefabricated … [Read more...]
This is Where Active Management Reigns Supreme
With the craze over index-based investing continuing to gain momentum, there is one asset class where active management still reigns supreme. That is in the fixed-income space. Barron’s reports that according to a recent PIMCO study (yes there is a conflict there) the majority of actively managed bond funds have beaten their passive peers over the past one, three, five, seven, and ten years after fees. A full 63% have outperformed over the past five years. There are many reasons indexing shouldn’t be viewed as your first choice for bond investing, but one of the reasons cited by PIMCO, for … [Read more...]
These Are the Weak Spots in the Economy
Despite strong sentiment in surveys, a stock market that won't seem to quit, and overall decent data, there are some weak parts of the economy. Two of the most concerning are the declining growth rates in automobile loans and commercial and industrial loans. … [Read more...]
Is China the Linchpin to the Global Outlook?
The FT reports that China may be as important to the global investment outlook as the pro-growth reforms that Trump administration is trying to put into place. In the case of Donald Trump, expectations that the US president would act swiftly to push though tax reforms, deregulation and bold infrastructure investments are starting to ebb as signs of administrative delays proliferate. For China, an ebullient first quarter of GDP growth is giving way to anxieties that the world’s second-largest economy may have peaked. This belief has already depressed the prices of key commodities, upon … [Read more...]
This is a Terrible Way to Invest in Commodities
Investing in commodities can be a profitable endeavor, but unlike the stock market where a passive investment in a broad-based index can yield average results, passive investment in a broad-based commodities index suffers from many problems. The Wall Street Journal highlights some of the challenges passive commodities investors face. If you are going to invest in commodities, stick with an active approach. Commodity indexes haven’t provided that same kind of “significant persistent level of return over time,” says Amanda Agati, an investment strategist at PNC Institutional Asset Management in … [Read more...]
This is a Disturbing Trend for Mutual Funds
Exchange traded funds are a booming business today. Brokers, advisors, and everybody’s mother has been moving assets from actively managed funds into ETFs, but now even actively managed mutual funds are buying ETFs. I guess since many investors now recognize that actively managed funds are nothing more than high-fee closet index funds, the “portfolio managers” of these funds feel they can just openly buy index based ETFs. Marketwatch reports that in 2016 1,222 mutual funds held an ETF as a component in their portfolio. The median size of the ETF holdings were 4.5% of the portfolio. In … [Read more...]
Why the Border Tax Needs to Die Now
The centerpiece of the House Republican tax reform plan is a border-adjustment tax (BAT) that would tax all imports and exempt all exports. The revenue generated from this new tax would be used to fund a reduction in the corporate income tax. Supporters of the BAT tax contend that it levels the playing since many countries already exempt their own exports and tax import via the value-added tax, but Dan Mitchell and Veronique de Rugy dispel that myth in a recent Wall Street Journal piece. The plan calls for dropping the top corporate tax rate to 20% from 35%, while exempting exports and … [Read more...]
Are Emerging Market Stocks Headed for a Fall?
After a flood of inflows that have driven up valuations, some investors are concerned that emerging market stocks have gotten ahead of themselves. Yield-seeking investors have poured money into emerging market stocks keeping share prices elevated in the face of geopolitical tensions. Should inflows and sentiment reverse, some investors are worried emerging market stocks could be headed for a fall. Saumya Vaishampayan and Ira Iosebashvili report: With European elections looming and tensions spiking between the U.S. and North Korea, “there is elevated political risk on too many different … [Read more...]
This is How you Preserve Generational Wealth
One of the lines in the chart below is the purchasing power of the USD, and the other is the purchasing power of an ounce of gold. Both series are rebased to one in 1913, the year the esteemed Federal Reserve was created. Since the Fed was created, the U.S. dollar has lost 96% of its purchasing power while gold has gained purchasing power. That’s no coincidence. Gold is a store of value. A wealth preservation vehicle. Gold won’t make you rich, but it won’t make you poor either. Gold is a currency. It can’t go bankrupt, lose its value because of poor management, accounting fraud, … [Read more...]
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