Action Line: Central banks the world over talk about “soft” landings. Listen, I’m not a pilot, I’m Your Survival Guy, government has a history of screwing up landings and cleaning up the wreckage after the crash. I’m not in the prediction business. Prices are what they are. They can go as high as someone else is willing to pay. Prices are essentially a qualitative event. I want you focused on the quantitative. In other words, I want you to get cold hard cash in the form of dividends to be “invested” in the chaos. … [Read more...]
January RAGE Gauge: Free Money for All, and to All a Good Night
Let the parties continue, because the punch bowl is still flowing. Yesterday, when the Fed announced a tighter monetary policy—an end to bond purchases and three rate increases—markets cheered. Because halting asset purchases and raising rates a whopping three times is like moving a few ornaments on your Christmas tree. It’s all for show. And just like the “Jingle Bells” refrain, the Fed’s just another reindeer pulling Biden’s sleigh. It’s free money for all, and to all, a good night. What could possibly go wrong? For serious Americans like you—the savers, entrepreneurs, small business … [Read more...]
Dreaming of Bitcoin in Your Stocking this Christmas Season?
You’re asking me about Bitcoin. I get it. With all the mad money created by the Fed, inflation running hot, and a supply chain rusting away, you want to know my thoughts on Bitcoin. As I’ve written to you before, I’m not buying it. Does that mean I don’t believe in the science? No, not necessarily. I just don’t need to be the first one to find out if it’s wrong. Let me explain. One of the hardest parts about investing is being human. We get excited about stuff. We don’t like to feel like we’re “missing the boat.” That eats us alive inside. It’s nearly impossible to get it out of your mind … [Read more...]
CALLED OUT: Omicron Variant Panic Puts Investors in a Corner
For those of you still working off Thanksgiving dinner, you may have missed the 900-plus-point drop in the Dow Jones Industrial Average. Unfortunately, for some, the decline forced investors to sell their own shares because of margin calls. As the WSJ reports: Markets sold off worldwide on Friday after South Africa raised alarm about the new “variant of concern” that the World Health Organization named Omicron. The panic may be driven more by the fear of new government lockdowns and social distancing than by the variant itself. The Dow fell 2.5% while U.S. crude prices tumbled 13% as the … [Read more...]
ROBINHOOD HACK: Millions of “Users'” Data Compromised
Why would you expose yourself to this? The Hood has a lot of heart saying the matter’s resolved after a million accounts are compromised. Peter Rudegeair and Robert McMillan report for The Wall Street Journal on the recent hack of Robinhood Markets, to the tune of five million users' data breached, writing: Robinhood Markets Inc. HOOD +0.26% said Monday that an intruder gained access to its systems last week and made off with the personal information of millions of its users. The trading app said in a blog post that the incident took place on Wednesday evening and that the breach has since … [Read more...]
Gold Goose Inc. Keeps Banks off Your Farm
Listen, this is how I want you to think about yourself as an investor. Imagine you own a wonderful business. We’ll call it Gold Goose Inc. It pays you a handsome salary, plus annual increases to keep up with the times. You retire with a nest egg worth more than you ever thought you’d be worth, and you need to invest it. What do you do? For Your Survival Guy, the next best thing to Gold Goose Inc. is to invest in a basket of eggs that pay dividends that regularly increase to keep pace with inflation. That’s exactly what Young Research’s Retirement Compounders stocks try to … [Read more...]
Your Key to Happiness Is to Keep On Swimming
On Friday night, Becky and I visited with college friends for dinner at Scales and Shells here in Newport. It was so much fun. It had been a few years since the last time we were together, bringing back some great memories of our time at Babson. With our oldest child now a sophomore in college and our youngest applying, it’s a funny time to be a parent. We’re in sort of a slack tide, knowing day-to-day life will be a lot different this time next year when we’re empty nesters. It’s hard not to think, “Wow, this has gone by fast.” On Saturday, Becky and I felt like college kids taking a … [Read more...]
RISKY BUSINESS: Pension Managers Risking Clients’ Money to Plug Deficits
It never ceases to amaze me how fiduciaries take risks with other people’s money. A case in point is Farouki Majeed, an Ohio pension manager overseeing the investments responsible for the benefits to over 80,000 retired librarians, bus drivers, cafeteria workers, and other former employees. How is he doing it? By adding risk. Not good. “The solution for Mr. Majeed—as well as other pension managers across the country—is to take on more investment risk," reports Heather Gillers at The Wall Street Journal. "His fund and many other retirement systems are loading up on illiquid assets such as … [Read more...]
Investment Advice: Sticking with the Four-Year-Olds
You know Peter Thiel as one of the few people in Silicon Valley who backed presidential candidate Donald Trump in 2016. Thiel was also a co-founder of PayPal with some guy named Elon Musk. And he was an original backer of Facebook. The guy knows a thing or two about startups. Which is why I recently reread his book Zero to One: Notes on Startups, or How to Build the Future. You and I know that technologists tend to think about the future in terms of technology, much like a farmer thinks about the future in terms of farming. It’s what they do. Which is why, as an investor, I found this … [Read more...]
Why You Can’t Afford to Miss the Boat
You can’t afford to miss the boat, especially when it comes to making money. But it happens all the time with investors. They let inertia slow them down, arriving at the docks too late or deciding not to take the voyage at all. They end up doing nothing for years on end. That’s not investing. Countless studies show that simply missing the best handful of days in stocks in any given year can be detrimental to one’s portfolio. Sure, you might feel good missing the latest slide in stocks, but we’ve been in this bull market run for a long time. It’s not a bad thing for stocks to take a breather … [Read more...]
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