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Investment Research Since 1978

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The Truth Behind The Very Hungry Caterpillar by Eric Carle

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You know the name Eric Carle if you have kids or grandkids. His books were a big part of our book collection when my kids were little. That’s why this article caught my eye. And how moving I found this quote from the article about a book I read out loud a thousand times: The Very Hungry Caterpillar. Jeffrey Trachtenberg reports on Carle's view of why The Very Hungry Caterpillar has been such a hit with kids for so many years. He writes: In a YouTube video released in January, Mr. Carle said it took him a long time to understand why the title has sold so well before he concluded that “children … [Read more...]

Who’s your Most Trusted Financial Advisor?

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The WSJ featured a piece last Friday on the debacle that has been WeWork. WeWork is a real estate company that owns no real estate. The core of WeWork’s business model is subletting. WeWork leases large spaces in buildings, transforms them in a specific style, and then sublets the space to individuals and businesses at a higher price. Who might be interested in leasing space from WeWork? Freelancers, startups, and other businesses who desire short-term lease agreements and flexibility. WeWork’s tenants, or members as they are sometimes called, sign leases that last an average of … [Read more...]

Here’s What to Look for As Markets Enter an Election Year

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Election years have historically been good to stock market investors. It is now one year away from Election 2020, and market participants are hanging on every word from the candidates. Here’s what I wrote about election year markets back in November 1991: Remember Tom Mix? All the great old black and white Western movies of the 1950s, like Tom Mix, featured patented three-part bank robberies that went something like this: Scene 1: The bank is robbed. Bad guys ride out in a cloud of dust and the chase is on. Scene 2: Bad guys split—one-half to an arroyo or cottonwood grove; one-half to a … [Read more...]

Young People Can’t Afford Homes: Is the Fed to Blame?

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Young Americans are increasingly priced out of buying homes. Along with their high levels of student debt, low levels of family formation, and lack of housing supply, a big part of what may be holding them back is a Federal Reserve monetary policy that regularly seeks to boost asset prices by holding down interest rates. Reade Pickert reports for Bloomberg: Faced with higher property prices and piles of student debt, Americans are getting older and older before they buy a home. The median age of first-time home buyers has increased to 33, the oldest in records dating back to 1981, … [Read more...]

Stock Investors: Set it and Forget it!

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You can read until you’re blue in the face about how the current high level of cash is a bullish signal. That investors, fearing they’re missing the boat may begin to pile into the stock market. That may be the case, but does it mean you should increase your allocation to stocks? It depends. Do you have the patience to hang in there if they fall in value by say 20 percent? Or are you hoping for a gain of 20 percent to make life “easier?" I think you’d be wise to remember what my father in law Dick Young says, “Hope is not a strategy.” You can also read about how the investment committees of … [Read more...]

Are You Saving the Right Way?

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How much is your bank paying you on your savings account? If you have a savings account at Bank of America, you’re likely getting paid $5 for every $10,000 you have deposited. That’s 5 basis points or .05%. Do you know how long it would take to double your money at a .05% rate of return? Almost 1,400 years. BofA’s savings account yield makes Schwab look generous with a .10% cash yield. And Fidelity looks like an absolute saint, offering investors a yield of 1.5% on their core cash account. Who do you have to thank for the paltry interest you are earning on your savings … [Read more...]

Does Big Government Create Poverty?

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Perhaps the best thing about suggestions by candidates like Bernie Sanders and Liz Warren to a welfare model closer to those seen in Europe is that there are years of evidence about what that could mean for Americans. Despite the candidates' cherry-picking of old and debunked data, there is a lot of evidence in Europe that legislating wealth equality will, in fact, have the opposite effect. My friend Chris Edwards of the Cato Institute writes about a new study by Pirmin Fessler and Martin Schurz that suggests welfare programs are making wealth inequality worse, not better. Fessler and … [Read more...]

New Update! Ken Fisher Won’t Take No for an Answer

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“We ended ours a long time ago. It was a disaster from day 1,” a reader wrote to me recently. Then there’s this: “The hard-selling was relentless, even infuriating, prospective customers said,” explains Janet Lorin at Bloomberg. “Marketers called homes, spammed work email and impersonated friends, colleagues, and government officials.” The Bloomberg article continues: “CALLS REPEAT EVERY DAY. I SUBMIT A COMPLAINT EVERY DAY. NO CORRECTIVE ACTION TAKEN. WHAT CAN I DO???????????????????,” a resident from Waterford, Pennsylvania, wrote in a July 2016 email. Would-be clients were … [Read more...]

There are Two Ways to Avoid Investor Overkill

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I wrote in March 1991: Listen to me and listen to me hard as I tell you that investors miss the boat over and over because (1) they insist on timing the market, (2) they insist on investing with emotion keyed to events of the moment, and (3) they steadfastly refuse to buy when news is bleak. It’s the old buy-high-sell-low game again and again. Most investors regularly equate action with profits. But you don’t want a lot of action in your portfolio and you only need to follow a handful of indicators and a handful of investments. Most investors simply cannot help themselves, and that leads … [Read more...]