There is an odd dynamic in the bond market that Wall Street can’t seem to figure out. Long-term Treasury yields are falling despite an economy that is showing signs of life. It is an apparent conundrum to many. Some analysts are attributing the move down in yields to the recognition by investors that there is a new lower speed limit for the U.S. economy. Others claim that yields are falling because pensions, endowments, and insurance companies are now flush. These investors are believed to be cashing in their equity chips and investing the proceeds in bonds. Still others believe that low … [Read more...]
The Investment Idea that made Warren Buffett Billions
Last week E.J. posted part I in his series on Benjamin Graham’s The Intelligent Investor. You may have heard this from us before, but it is worth repeating for the benefit of those who have not. The Intelligent Investor truly is the best investment book ever written. It is a timeless classic that remains as relevant today as it was when it was first published over six decades ago. Not a single investment book comes close to providing the fundamental insights that Graham so masterfully delivers in The Intelligent Investor. If you don’t yet have a copy, order one today. It will be the best … [Read more...]
Who’s the Sucker?
This story doesn't have a happy ending. You see this often in the late stages of a bull market. After missing the bulk of the rally in the stock market from the prior bear market lows, the general investing public gets greedy. Those investors who couldn't find a thing to like about the investment climate become the biggest cheerleaders for a permanent prosperity. The regret of missing most of the bull market gains pushes many to make up for lost time by getting too aggressive. Stocks with questionable business prospects that most wouldn't touch during the prior bear market become the most … [Read more...]
The Global Imperative
Check out this chart on oil demand. The black line shows oil consumption of major developed markets. This is basically the U.S., Japan, and developed Europe. The grey line is oil consumption of the rest of the world, which is dominated by emerging markets. Up until about 15 years ago, if you were interested in the oil market, you focused on demand in the world’s largest economies. But in recent years, developed market demand has become a marginal influence on prices. The most important driver of global oil markets today is demand from the rest of the world. The U.S., Japan, and … [Read more...]
Catalyst for a New High
The S&P 500 closed at yet another new high yesterday. The market was flat until about 2:00 pm. What was the catalyst that drove prices higher after 2:00? The nation’s esteemed and astute Federal Open Market Committee announced the results of their latest policy meeting. Despite building evidence that inflation is accelerating and that the labor market is tightening, Yellen & Co., said inflation is still too low. They also told us that even though the unemployment rate has come down faster than the Fed expected, the labor market is actually worse than the headline unemployment rate … [Read more...]
Birth of a Crisis
In the aftermath of the last financial crisis, the Federal Reserve somehow managed to come away with its reputation mostly intact. Big commercial and investment banks took most of the blame for the mayhem. And rightly so. But the impetus for the crisis was born of a prolonged period of Fed engineered ultra-low interest rates. Bernanke & Co., held rates far below normalized levels in an attempt to ward off the deflation Bogeyman (just as Yellen & Co., are doing today). Investors responded by reaching for return. There was an insatiable demand for yield. With rates so low, every basis … [Read more...]
Are You Saving Enough for Retirement?
A basic rule of thumb in retirement investing is that you should save at least 25X your desired retirement income. Using the rule of 25, an investor who needs $100,000 in income from her portfolio must save $2.5 million to retire without the threat of running out of money. Younger investors will need to account for inflation in this calculation. Assuming a 3% inflation rate, an investor planning to retire in 30 years will need $243,000 to buy what $100,000 buys today. That means instead of saving $2.5 million to retire, this younger investor must save $6.1 million. Calculating how … [Read more...]
Here’s How Not to Invest
In Chasing Yield, Investors Plow Into Riskier Bonds, Tom Lauricella and Katy Burne of The Wall Street Journal highlight the dangers of the current investing environment in one succinct opening paragraph. To wit: “Large investors are rushing into the riskiest corporate bonds, frustrated by low interest rates on safer investments and convinced that even companies with shaky finances are in little danger of default.” At Young Research we regularly council investors to keep emotions out of their investment decisions, never to reach for yield, and to demand a margin of safety. If this Wall … [Read more...]
This is Criminal
Reuters is reporting that former Fed Chairman Ben Bernanke is holding $250,000 speaking “dinners” where he gives hedge fund managers (and others willing to pay), the inside track on the Fed’s plan for interest rates. It was only a couple of months ago that Bernanke was the Chairman of the world’s most powerful central bank. He undoubtedly has some insight on the Fed’s future plans and thinking on interest rates that hasn’t yet been shared with the public. How can the regulators allow this? If Bernanke was a recently retired CEO he would have been locked up months ago for passing insider … [Read more...]
Feldstein Dismantles Piketty’s Socialist Tome
In yesterday's Wall Street Journal Martin Feldstein elegantly dismantles Thomas Piketty’s Das Kapital for the 21st century. Piketty is a French economist whose book “Capital in the Twenty-First Century” has made the NY Times best seller list. In it, Piketty highlights growing income inequality in America and offers as a solution, confiscatory taxes. Piketty has long advocated for an 80% marginal tax rate and a tax on wealth. Feldstein calls out Piketty for “a flawed interpretation of U.S. income-tax data, and a misunderstanding of the current nature of household wealth.” Mr. Piketty's … [Read more...]
- « Previous Page
- 1
- 2
- 3
- 4
- 5
- …
- 30
- Next Page »