Technology that makes investing in non-tradable securities easy isn’t a sure way to make money. In China, a million companies have used loose regulations on internet investing to fund risky ventures. This isn't all bad, but there are drawbacks to investing in such opaque ventures. In just one corner of the booming online finance sector, more than 5,700 firms are registered with the Association of Shanghai Internet Financial Industry, a quasigovernmental group, to match small lenders and borrowers. Not every company is registered, and more than half of those that are have had repayment … [Read more...]
Are Investors Sick and Tired of Buybacks?
Over the last few years of bull market excess, companies have been spending less on capital, and more on buying back stock. But Justin Lahart reports that non-financial companies are slowing down their stock buybacks and doing more capital spending compared to their cash flows. But the data also suggest a shift is underway. In the fourth quarter, nonfinancial companies bought back a net $323 billion in equities, at a seasonally adjusted annual rate, half as much as in the previous quarter and the lowest amount since the second quarter of 2014. And unlike the third quarter, companies’ … [Read more...]
Can You Trust a Robo-Advisor with Your Money?
Yesterday the S&P 500 dropped by over 29 points (about 1.2%), the largest single day decline so far in 2017. Meanwhile, Olivia Oran explains at Reuters that Goldman Sachs is preparing to put people's life savings in the hands of a computer. Are investors going to rely on this advice when stocks crash? Will they put their financial survival in the hands of an algorithm? We shall see. Goldman isn't alone. Oran writes: Goldman has for years grappled with how to tap into the mass affluent segment, broadly defined as those with less than $1 million in investable assets, without diluting the … [Read more...]
No Good: Only 41% Try to Make a Retirement Plan
At Bloomberg, Suzanne Woolley writes that only 41% of workers have attempted to determine how much money they'll need to save to retire comfortably. Of those who took a crack at figuring out how much they'd need, 37% say a million dollars or more. Take a look at my chart of the Savings Rate below. You can see that Americans are saving nearly 3% below the long term average today. You can bet most who need a million dollars aren't anywhere near that goal today. Woolley writes: EBRI [the Employee Benefit Research Institute] doesn't have data on how many people actually wind up retiring with a … [Read more...]
When You Think Risk is Gone You’ll Get Really Hurt
You read here and here about the decline in Nascar’s ratings where I wrote: “The danger is gone. Or at least it’s not what it used to be. It reminds me of the decline of fights in hockey. Fighting is part of the game. Drivers have a way of self-regulating. They don’t need rules committees telling them the right way to drive.” There used to be unwritten rules in sports that didn’t need refs to regulate them. When hockey fights were an accepted part of the game there were consequences. There were consequences for taking cheap shots at star players. Ironically, when self-regulation is taken … [Read more...]
It’s Only ‘Safety First’ That Will Make You Money: Part III
Billionaire investor Warren Buffett, on the heels of releasing his annual report, said, Monday, that the stock market isn’t in a bubble and “measured against interest rates, stocks actually are on the cheap side compared to historic valuations.” In the same interview, he also warned “That doesn’t mean the stock market can’t go down 20% tomorrow.” A buying opportunity he’d welcome with open arms. It’s good to be Warren. Retirees and savers have carried the burden of low interest rates. Many are simply increasing risk without proper adherence to their own margin of safety. Brian Hershberg … [Read more...]
It’s Only ‘Safety First’ That Will Make You Money: Part II
Billionaire investor Warren Buffett, on the heels of releasing his annual report, said that the stock market isn’t in a bubble and “measured against interest rates, stocks actually are on the cheap side compared to historic valuations.” In the same interview, he also warned “That doesn’t mean the stock market can’t go down 20% tomorrow.” A buying opportunity he’d welcome with open arms. It’s good to be Warren. Believe me when I tell you that I appreciate the methods Warren Buffett deploys to make money. One big one being that at the core of his methods he’s America's #1 stockbroker. Between … [Read more...]
How to Invest at Peak Investor Complacency
If you follow the markets closely, you know that investor complacency has been heightened. Volatility is low, up days are bigger and more frequent than down days, and the few down days the market experiences have closed off of their lows. Bloomberg reports that investor complacency is near a two-decade high and reminiscent of past major market tops. Is that a reason to panic? No, but it is a faint voice among the cacophony coming from the bulls to approach the markets with caution. If you're an equity investor and feel like things can't be this good, you're probably right. On Thursday, the … [Read more...]
Portfolio Strategy: When Hope and Reality Collide
Since the election, markets have seemed to trade on hope and improved sentiment the new administration will enact a pro-growth agenda that will be bullish for American business. The U.S. stock market is up 9% since the election and some sectors which would presumably benefit the most from President Trump’s proposed policies are up much more. But now that Trump and many of his key cabinet members have been sworn in, the honeymoon is nearing its end. Markets will no longer be able to trade on the hope of the best possible policy outcome, but on the reality of what can actually get done. That … [Read more...]
Practical Plans Lead to Sensational Retirement Years
Don't put pressure on yourself to do everything you've ever dreamed of doing during your retirement. Believe me, you will be able to do a lot, but you'll also find you've never been busier. Take a deep breath. Make a plan for the big trips like Paris and don't stress out about not doing enough. That's how you can guarantee your retirement will be short lived. Brian Hershberg writes at Moneybeat: Retirement—for better and worse—will change your life more than you anticipate. That’s the consensus of those who should know best: retirees themselves. In the latest Journal Report on Wealth … [Read more...]
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