Here’s why I don’t follow the meaningless price or market capitalization stock market averages, especially the likes of the Dow and S&P 500. The S&P 500 Index: only 50 of the biggest cap names account for more than 50% of the total S&P500 Index. The Dow 30: only 10 of the highest priced stocks account for more than 50% of the total Dow Jones Industrial Average. No thanks to index investing in either the Dow or the S&P. Dick Young's Investment Rules Why savvy investors saving for a long and comfortable retirement should always follow RCY’s guide in crafting balanced … [Read more...]
October RAGE Gauge: Stocks Down Over 33% Thrice this Century
With stocks down more than 33% three times now this century, it’s clear that investors have a short-term memory problem—forgetting how bad they felt in March 2001/2008/2020—which is why my RAGE Gauge continues to signal my highest risk level. The new normal we’re living with is a manmade China virus and manmade chaos created by blue state government. Schools are a mess as lawyers lick their chops, ready to pounce with class-action suits, and parents seethe because they want their kids in the classroom where they belong. Anecdotally, at my son’s school, a positive test (kid feels fine) means … [Read more...]
Regulators Zoom in on Blank Check Firms (SPACS)
Special-purpose acquisition companies (SPACS), also known as blank check firms, have become a bit of a fad lately. The excitement around SPACS has drawn the attention of the SEC, which is giving them some new scrutiny. Dave Michaels and Alexander Osipovich report for The Wall Street Journal: Blank-check companies that have raised tens of billions of dollars to acquire hot startups are under the microscope at the Securities and Exchange Commission. Such companies, also called special-purpose acquisition companies, or SPACs, are shell-like entities that go public in order to raise cash for … [Read more...]
European Auto Consumers Don’t Want What their Governments Are Selling
Like drivers in the U.S., Europeans prefer SUVs over tiny cars with no speed or cargo space. Those understandable preferences though are bumping up against strict goals the EU has set for lowering automobile-generated emissions of CO2. William Boston and Andrew Barnett report for The Wall Street Journal, writing: In the early years of Europe’s effort to curb emissions, manufacturers were able to rely on growing engine efficiency as well as regulatory exemptions and loopholes to cut emissions. But as the goal became more demanding, pressure rose to develop new technologies, especially electric … [Read more...]
You Invest They Win, AGAIN
Let’s file this one under You Invest They Win shall we? Unprecedented monetary policy intervention by the Fed has done what all unprecedented interventions by the government do, create winners and losers. In this case, the winner is BlackRock. The Fed picked the firm to handle its corporate bond buying program. Of course, BlackRock's share of the corporate bond market grew, and the big got bigger. As one investment professional told the Wall Street Journal “The unprecedented actions taken by the Fed during Covid-19 just accelerated the trend where the biggest products get … [Read more...]
Like a Monkey with a Shotgun: Retail Investors Find Derivatives
There are perhaps fewer things in investing more terrifying than retail investors armed with derivatives. It's like giving a monkey a shotgun in a crowded room. The influx of retail investors into the market at the onset of COVID-19 shutdowns has added an unpredictable element to the market. An abundance of naked call buying has unbalanced things, and could lead to trouble. The Economist explains: Who bears most responsibility for the volatility? First, small-trader flow is much larger in size, although it was likely dispersed among more listed companies. Second, and more importantly, … [Read more...]
The World Gets Back to Buying Clothes, but Online
Nike's online sales boomed in the second quarter, increasing by 82% compared to the year before. The Wall Street Journal's Khadeeja Safdar reports: Nike Inc.’s sales rebounded in the summer quarter after slumping earlier during the coronavirus pandemic, as rising digital sales offset declining revenue at traditional stores. On Tuesday, the sportswear company said revenue was $10.6 billion in the quarter ended Aug. 31, down 1% from the prior year. Digital sales increased 82%. “These are times when the strong can get stronger,” Chief Executive John Donahoe said on a conference call with … [Read more...]
Are You Working with Sound Investment Counsel You Can Trust?
When it comes to your money, one question you must be able to answer is: Are you working with investment counsel you can trust? Are you working with a counselor who adheres to the fiduciary rule—someone who, by law, makes investment decisions that are best for you, not them? Are you working with someone who’s seen it all? Yes, stocks do crash. That at least puts you at the starting line. Next, you and your counsel need to develop trust. This comes in many ways. The idea is to get to a level where you can ask your counsel anything, knowing you’ll have an answer with the truth you deserve. … [Read more...]
NYC Hotels’ ‘Temporary Shutdown’ Turns into Permanent Closure
Since the beginning of COVID-19 shutdowns in March, New York City has been suffering. At the top of the list of those businesses worst affected is the hotel industry. What were planned to be only temporary shutdowns have turned into permanent closures for many locations. Patrick McGeehan reports for the New York Times: Many of New York City’s biggest hotels closed their doors in March when the coronavirus wiped out tourism and business travel. The shutdowns were supposed to be temporary, but six months later, with no potential influx of visitors in sight, a wave of permanent closures has … [Read more...]
Americans Make Peace with Shopping Online for Groceries after COVID-19
Americans quickly embraced the idea of shopping online for most things. First books launched Amazon, and then inexpensive MP3s launched Apple's iPod. The hardest in-store shopping habit to give up has been groceries. That is changing now, thanks to people avoiding grocery stores to keep away from COVID-19. Teresa Rivas writes in Barron's: Americans can be very picky about their avocados. That was one of the reasons often cited by experts to explain why people were happy to buy almost everything except groceries online. E-commerce penetration of the food and beverage sector, which includes … [Read more...]
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