Coronavirus Infects Stock Market: Part XLIX A new client of mine is consolidating his eight-figure fortune with Fidelity. What’s shocking is how easily he decided to leave Vanguard. “Why?” I asked him. “E.J., I haven’t heard from anyone at Vanguard in over a year,” he said. “They’re letting a quarter of a hundred million dollars walk out the door,” I thought to myself. “The front door.” That is shocking. “I’ve read your father-in-law Dick Young for over 30-years,” he said. “I miss him.” “Welcome home,” I said. When the late Vanguard founder Jack Bogle released Bogle on … [Read more...]
These Numbers are Staggering
Many Americans have wondered why the stock market has bounced so much in the face of an unemployment rate exceeding 20% and economic growth that may fall at the fastest rate on record in the current quarter. Fiscal stimulus is one reason, but as has often been the case over the last decade a Federal Reserve that views its primary job as supporting asset markets is likely a larger cause. Below we present the annualized weekly increase in the Fed’s debt monetization program as a percent of total stock market value. The numbers are truly staggering. In the early weeks of the COVID … [Read more...]
Coronavirus is Amazon’s Cleanup Crew
After Amazon set about decimating retail competitors across America, coronavirus has come along and helped it finish the job. Suzanne Kapner and Sarah Nassauer report in The Wall Street Journal: Amazon. AMZN 0.68% com hurt many retailers. Coronavirus will finish some of them off. Even as malls and stores begin to reopen, the Covid-19 pandemic has taken a toll on an industry already battered by the shift to online shopping. More than two million retail jobs disappeared in April as many stores closed. The damage will be clear Friday when the U.S. government reports what is expected to be one … [Read more...]
Is the S&P 500 Still Relevant?
Did you know the 5 biggest stocks in the S&P 500 accounting for 22% of the index offer investors an average dividend yield of 0.44%? Only two of the five even pay a dividend. S&P puts them in different buckets, but all five are technology businesses. To meet the SEC’s diversification definition, a fund cannot hold more than 5% of its assets in any one issuer. The two largest stocks in the S&P 500 now account for more than 5% of the index. The index doesn’t even qualify as a diversified fund according to the SEC’s definition. Does that sound like a benchmark anybody in or … [Read more...]
Here Comes the Milkman
Customers eager for delivered products are driving a resurgence in a long-dying business, milk delivery. Rachel Feintzeig reports for the Wall Street Journal: The glass bottles are gone. The cream-topped milk of yore has been replaced by oat milk, almond milk and even a Snickers-flavored drink. But the milkman is back, summoned by customers eager for home delivery in a world changed by pandemic. At Wade’s Dairy in Bridgeport, Conn., the novel coronavirus has turned demand on its head and opened the door to a new—old—business idea. Wade’s had previously spent a century offering home … [Read more...]
Where to Live in Retirement? I Got You Covered Baby!
Coronavirus Infects Stock Market: Part XLVII You worry about where you live in retirement. I get it. You hate the idea of leaving your kids behind. I’m here to tell you: Don’t despair, they’ll visit! But if social distancing is your concern, consider snowy Maine or New Hampshire in January. You might see a bear or two, but they’ll be back asleep before you know it. You’re going to love your new-found freedom. Thumbing through my 2020 copy of the Traveler’s Guide to the Firearm Laws of the Fifty States, Maine stands up strong. Want to drive a gun to your home? Fine. Just be sure to leave … [Read more...]
Oil Demand Recovery as the World Reopens
The Wall Street Journal reports that oil demand is rising again as the world reopens after its coronavirus induced shutdown, writing: Oil consumption is rising again in those parts of the world emerging from coronavirus lockdowns, helping to alleviate a global glut and rebalance a market stymied by months of low demand and a devastating rout that saw prices drop as much as two-thirds this year. Green shoots of an oil recovery are sprouting with regions of China attempting a semblance of normal life as lockdowns are eased and parts of Europe and the U.S. allow businesses to reopen. “We … [Read more...]
Investors Flock to Chinese Distribution Facilities
The Nikkei Asian Review's Taizo Wada reports that investors are putting money into Chinese logistical real estate, writing: As China shakes off the economic impact of the coronavirus outbreak, investors have flocked to funds focused on logistics facilities there and elsewhere in Asia, anticipating that growth in e-commerce will drive strong demand even after the pandemic. Singapore-based GLP last month closed a $2.1 billion fund with a portfolio of 34 properties across 18 Chinese cities. Participants include seven Chinese institutional investors, six of which are new clients of the … [Read more...]
An Alternative Approach to Investing when Markets are Down
In 2008, when investing seemed like an exercise in futility to many investors, I explained an alternative approach. This approach has worked for me now for over five decades. I learned this method from the teachings of Ben Graham, and have successfully employed it my entire career. Here’s what I wrote: Concentrate on Shares, Not Price... The stocks and funds you own pay you dividends based on the number of shares you own, not on the price of those shares. Unless you are fortunate enough to be Gandalf redux, it is likely that the price of most of the shares you own in 2008 is down hard, to … [Read more...]
You Owe it to Yourself to Continue Doing What You’re Good At
Coronavirus Infects Stock Market: Part XLVI Clients of mine on the West Coast, we’ll call them Rock and Tess, sold their business a number of years ago. They were in their early 50s. Rock could care less about money. Tess handles that. Rock fixes things. Rock can fix just about anything mechanical. Rock is still working. He doesn’t need to. But Rock loves his work. He continues to do what he loves to do. In speaking with Tess this week, I remind her that a j-o-b is one of the most valuable assets in the world today. If “retirement” can wait, why not let it? I tell her … [Read more...]
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