Over the last 10 years (since year-end 2002), profligate spending in Washington has resulted in a staggering $6.9-trillion increase in debt held by the public. That’s $22,000 for every man, woman, and child in America. A family of four is looking at an $88,000 increase in their debt burden. How generous of those folks in Washington to rack up 88 grand in debt on your family’s behalf. Be sure you send a thank-you card. The median family income in the U.S. is about $60,000. That means that in only 10 years, Washington has raised the average family’s debt burden by 146 percentage points … [Read more...]
Employment Picture Brightens: Is it Bullish for Stocks?
The Bureau of Labor Statistics released the monthly jobs report this morning. The headline numbers blew away expectations. Non-farm payroll employment increased by 243,000 in January compared to estimates of 140,000. The unemployment rate came in at 8.3%, 0.2% better than expectations. The big upside surprise in January’s employment numbers is likely related to the Labor Department’s annual benchmark survey and population adjustments, but there is no denying the positive trend in the labor market. Over the last three months, non-farm payrolls have increased by an average of 200,000, while the … [Read more...]
Don’t Let This Mutual Fund Mistake Cost You Thousands
What mutual fund mistake am I talking about? This mistake is so common, chances are you have committed it yourself—before you became a savvy, successful investor, of course. If you have ever purchased a mutual fund solely on the basis of past performance, you have made this mistake. Buying yesterday’s winners—also known as performance chasing—is a time-honored tradition for many investors. No matter how many warnings they hear on the pitfalls of performance chasing, many novice investors continue to engage in this practice. Poll your friends and family who have 401(k) accounts. Ask them how … [Read more...]
Former American Express CEO Harvey Golub on Obama’s Tax Proposal, Deficit
Jan. 25 (Bloomberg) -- Harvey Golub, chairman of Miller Buckfire & Co., talks about President Barack Obama's proposal that the wealthy pay more in income taxes. Golub, speaking with Betty Liu on Bloomberg Television's "In The Loop," also talks about the Republican Party's 2012 presidential candidates and the federal deficit. (Source: Bloomberg) … [Read more...]
The 2012 Stock-Market Outlook
Barron’s released its 2012 stock-market outlook this weekend. In the issue, Barron’s surveyed 10 Wall Street strategists on the outlook for the U.S. stock market. Most of the strategists are the heads of equity departments at Wall Street’s biggest banks. What are the Street’s equity strategists forecasting for the S&P 500 next year? Solid gains, of course. Would you expect anything less from the heads of equities at Wall Street’s big banks? Wall Street earnings and bonuses are highly correlated with stock-market performance. It doesn’t pay to be a bear on Wall Street. If investors don’t … [Read more...]
Balance Sheets Deteriorate: Economy to Suffer
The Federal Reserve released its quarterly flow of funds report last week. The Fed’s flow of funds report is one of the most valuable economic data sets kept by the government. It is a treasure trove of financial information on the household, corporate, and government sectors of the economy. The most recent report includes data through the third quarter of this year. I’ve included three charts on a couple of the more important data points in the report. All three have implications for the medium-term economic outlook. The first chart shows the percentage of equity that households have in … [Read more...]
The Quiet Bull Market in Oil
While the world’s attention has been focused on Europe, the price of oil has risen more than 33% from its October low. West Texas Intermediate Crude is now trading above $100 per barrel. Much of the rally in West Texas crude is due to technical factors as Brent crude, which is more of a global benchmark is only up 14% from its October low. But oil’s resilience in the face of a euro-area economy that is either in recession or about to enter recession is impressive nonetheless. Imagine where oil could be trading in a more robust global economic environment. Scary wouldn’t you agree? … [Read more...]
Eurocrats Cry Wolf
It seems as though the half-life of euro-zone bailouts is getting shorter. It was only a month ago that policy makers announced a bailout plan that was supposed to put an end to the region’s debt crisis once and for all. Admittedly, the details of the plan were vague and it lacked credibility, but that didn’t stop equity markets from rallying in October as rumors and speculation about the plan were leaked to the press. If euro-zone leaders were attempting to boost global equity markets by announcing a plan to make a plan weeks in the future, they succeeded. October was the best month for the … [Read more...]
Are Stocks the Best Long-Term Investment?
The two-decade bull market in stocks that ended in 2000 convinced a generation of investors that stocks are the best long-term investment. Dow 36,000 and Stocks for the Long Run became cocktail-party fodder. There is no questioning that stocks put up some impressive numbers in the 1980s and 1990s. From year-end 1981 to year-end 1999, the index rose at an 18.5% compounded annual rate. At an 18.5% rate of growth, you double your money every four years. Of course, the last decade hasn’t been as kind to investors, but despite a decade with almost no return, the S&P 500 has still earned a … [Read more...]
Not Your Father’s Stock Market
This is not your father’s stock market. Over the last 10 years, the structure of the U.S. equity market has changed drastically. Gone are the days when the NYSE and its specialists dominated stock market trading. Today, as many as 50 different venues in the U.S. trade equities. Now, almost all stock trades are done electronically. The NYSE specialists who were once obligated to make an orderly market by providing bid and offer quotes during periods of market stress have been effectively replaced by high-frequency trading firms (HFTs). HFTs are opportunistic traders that operate with little … [Read more...]
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