Central banks are running this market. It’s not real. It feels like a ghost town. But what are investors to do? Well, you may be aware that pensions are writing puts on volatility. In other words they’re offering downside protection to investors. Nice business in calm markets, but if the markets do go down, pensions will be on the hook. It’s yet another short-sighted view on the part of the so called fiduciaries. Yes, markets are calm. But as we enter the heart of hurricane season New Englanders and those who live on the Eastern Seaboard know it’s better to be wary of the calm and to be ready … [Read more...]
Pensions Should be Fearful
This has a bad feel to me as Ben Eisen and Aaron Kuriloff report on pensions at the WSJ: Some pension funds are seeking to profit from others’ fear. Pension funds in Hawaii and South Carolina are plying an arcane options strategy called cash-secured put writing. In a typical trade, the investor sells a contract, known as a put, to someone who owns stocks and is willing to pay up for protection in case they decline. If, within a certain time, the shares fall below a given price, the investor buys the stocks at that price, or covers their lost value. The upside for the pension funds, … [Read more...]
RIP Roger Enrico
From the WSJ: Born in the small town of Chisholm to Italian immigrants, Mr. Enrico won a scholarship to Babson College in Massachusetts, studying business administration, before enlisting in the Navy. He served in Vietnam, whereas a lowly ensign he said he convinced an admiral to build a fuel pipeline instead of flying in supplies, only for the pipeline to be repeatedly blown up. After a stint as assistant brand manager for Wheaties at General Mills Inc., Mr. Enrico joined chips-and-soda giant PepsiCo in 1971, initially helping market Funyans, an onion-flavored snack. He quickly was … [Read more...]
Tiny Bubbles
Originally posted January 21, 2014. Imagine outgoing Chairman Ben Bernanke joyfully wrapping things up at the Fed while humming “tiny bubbles make me feel happy” from Don Ho’s song Tiny Bubbles. Creating bubbles seems to be a job requirement for a Fed Chair. The Fed is putting on an air of solidarity for incoming Chair Janet Yellen. The broad show of support for Mini “Tapering” is part I. Any concerns about the stock market are cloaked in Fed speak. Take the recent Fed meeting minutes for example. "Several [Fed officials] commented on the rise in forward price-to-earnings ratios for some … [Read more...]
Assets Are Booming
With the Fed creating money out of thin air, real estate prices such as commercial and condos are going up like crazy especially in places like New York City and Miami. My family was in Key West in March and I can tell you restaurants aren’t lowering their prices. And there’s a ton of money in certain pockets. I’ll use the boat racing teams in Key West back in November as an example. There’s no shortage of spending power on toys here. Check out Miss Geico, which won the event. But again there’s deflation too. For retirees it’s a brutal deflationary environment for interest bearing … [Read more...]
Bluefish!
Owen caught this beauty just outside of Newport harbor. … [Read more...]
World in Crisis: Oil Shrugs and Heads below $100
Imagine only 10 years ago, before most Americans had heard of “hydro-fracking” or “horizontal drilling.” Imagine what a war in Iraq (the eighth largest oil producer) and skirmishes on the border of Russia (the third largest oil producer) would have meant to the price of oil? Prices would have skyrocketed. But today, in the face of instability in some of the world’s most vital oil producing regions, the price of oil is headed down. As you can see in the chart below, on July 31 the price of WTI crude dropped below $100 a barrel for the first time since May, and is now at levels not seen since … [Read more...]
Survey Says? Optimism Growing.
The NFIB Research Foundation’s survey of Small Business optimism ticked up this morning, continuing a trend of recovery from some of the worst readings ever. But optimism still hasn't reached its historical mean, and this late in the business cycle, it’s hard to imagine small business owners reporting robust optimism before the economy is tested once again. … [Read more...]
Grateful for Cash
“You ask me where the four winds dwell In Franklin's tower there hangs a bell It can ring, turn night to day Ring like fire when you lose your way” --Franklin’s Tower, Grateful Dead Having a stash of cash outside of your portfolio has always made sense to me. You never know when the lights will go out. And that’s when you realize you need it. … [Read more...]
A Retirement Worth Living For
You don't have to have a ton of money to have a retirement worth living for. I was reminded of this last week while spending time at our log cabin in the White Mountains of New Hampshire. The highlight of our trip ended up being a hike, which was basically free, and not all of the other attractions that drain the wallet and add to the waistline. We did three hikes. Two were pretty easy and one was tough. Mount Jackson was the tough one. It's one of the 4,000 footers in the Presidential Range. The nice thing about this 4,000 footer is you start at around 1,000 ft. What stands above … [Read more...]
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