Diversification and patience are essential to long-term investment success. Put all your chips on one stock and you risk financial ruin if that stock ends up being the next Enron or AIG. Buy without providing time for the investments you select to work out and you may experience the same outcome. A diversified portfolio that includes stocks and bonds is ideal for retired investors and those approaching retirement. Balanced portfolios are less volatile and less risky than all-stock portfolios. Balanced portfolios also help those investors who no longer have the safety net of a regular … [Read more...]
Fed Turns Non-QE into QE
From the Federal Reserve Bank of New York: Statement Regarding Treasury Reserve Management Purchases and Repurchase Operations March 12, 2020 The Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York has released a new monthly schedule of Treasury securities operations and has updated the current monthly schedule of repurchase agreement (repo) operations. Pursuant to instruction from the Chair in consultation with the FOMC, adjustments have been made to these schedules to address temporary disruptions in Treasury financing markets. The Treasury securities … [Read more...]
Coronavirus: What’s the Latest?
We continue to monitor developments in the outbreak of the COVID-19 coronavirus. Traders, speculators, and even some investors who have taken on too much risk are clearly in panic mode. Panic and portfolio management are like ammonia and bleach. Mix them, and you create a toxic brew. Preparation is the key to keeping calm during a market rout. Investors with balanced portfolios are in much better shape than those who are leveraged and long all-stock portfolios. We continue to monitor the coronavirus and the corresponding economic fallout carefully. We aren’t doctors or virologists, … [Read more...]
Bitcoin: A Store of Value?
We hear a lot about Bitcoin being the new and improved "digital gold." Bitcoin is a store of value the bulls contend. Maybe, but since the market peaked on February 19th, Bitcoin is down more than 30%. For the year, Bitcoin is down 14%. How about that old barbarous relic, gold. Gold is up 7% on the year. … [Read more...]
Margin of Safety Still Matters: High-Yield Bond ETFs Crater
For much of the last five years, junk bonds have outpaced short-term investment-grade bonds. Ultra-low interest rates, quantitative easing, and a central bank set on rescuing investors during every episode of market turbulence emboldened investors to reach for yield in high-yield bonds. We advised against such a strategy. Risk must always be evaluated before return. Turns out, easy money can’t cure coronavirus. The iShares High-Yield Bond index just gave up more than 5-years worth of return advantage over the Vanguard Short-term Investment Grade fund. It only took a couple of weeks for … [Read more...]
Russia & Saudi Arabia Blow up OPEC Coalition
Yesterday’s market rout was made worse by a collapse in the OPEC+ oil coalition. Saudi Arabia wanted to cut production by 1.5 million barrels per day to deal with falling demand resulting from the coronavirus. Russia didn’t like the idea, complaining that the cut would be a gift to U.S. shale producers. Without participation from Russia, Saudi Arabia decided to reverse course and pump oil all-out into a market where demand is collapsing. Anticipating more supply and much less demand, traders shaved 25% off of the price of oil on Monday. Neither country’s decision makes a lot of economic … [Read more...]
This Billionaire is Buying up the Energy Sector
While most investors are retreating, billionaire Sam Zell is buying up the energy sector. Shawn Langlois reports at MarketWatch: That’s Chicago billionaire Sam Zell talking to CNBC “Squawk Box” on Thursday about how he’s navigating his investments in the coronavirus scare. The founder of Equity Group Investments said he has added to his ownership stakes in a couple companies, including one in the beaten-down energy sector, which was under heavy selling pressure even before the recent drop in the broader stock market. The S&P 500 energy sector is the only sector in an outright bear … [Read more...]
UPS Hopes Self-Driving Trucks Can Deliver
UPS has announced an investment in TuSimple, the world's largest and most advanced self-driving truck company. Sean O'Kane reports for The Verge: UPS has had autonomous trucking startup TuSimple hauling cargo for it between Phoenix and Tucson, Arizona, since May as part of a newly publicized partnership between the two companies. The delivery giant made the announcement today alongside the news that its venture arm is taking a minority stake in TuSimple. Terms of the deal were not disclosed. TuSimple had previously run a partnership with the United States Postal Service in May, where … [Read more...]
Bigger is Not Better According to Europe’s High Court
On Tuesday, the European High Court gave a green light to tax laws that discriminate against big business. In Europe, that will have a disproportionate impact on the foreign Tech businesses, many of them American, which dominate the continent. Bloomberg Tax reports: Opponents of European digital services taxes may have lost one avenue of attack after Europe’s highest court ruled that progressive revenue taxes aren’t discriminatory. The Court of Justice of the European Union ruled Tuesday in two cases—involving Hungarian subsidiaries of Vodafone Group Plc and Tesco Plc—that … [Read more...]
Here Comes the Tax Man for Amazon’s Third Party Sellers
Amazon sellers are being hit with tax bills for merchandise they may have sold over a decade ago. Tripp Baltz reports for Bloomberg: Steve Jenson of Logan, Utah, thought he had a good business selling books through Amazon.com Inc.—then he got hit with a $200,000 tax bill from the state of Washington, alleging he had failed to collect and remit sales taxes from customers dating back to 2011. It was a rude awakening for Jenson, who, like many other Amazon sellers, says he wasn’t even aware that he was supposed to collect the tax in the first place. He is now paying off the bill at a rate of … [Read more...]
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