Normally in late autumn lumber prices are falling like the leaves, but it's 2020, and lumber price activity is just as crazy as everything else. Instead of dropping, prices for lumber are climbing. Ryan Dezember reports for The Wall Street Journal: Lumber futures have shot up 24% so far in November, closing Thursday at $616.90 per thousand board feet. That’s a lot lower than the record $1,000 hit this summer during America’s pandemic-induced lumber binge. But it is nearly 90% more than the typical price for boards delivered in January. “By any historical standards, this is just incredibly … [Read more...]
A Small Victory for Free Markets
Late yesterday, Treasury Secretary Steve Mnuchin announced the unprecedented amount of central bank intervention in private credit markets would end on December 31st. The Fed of course announced it was disappointed the Treasury Secretary was taking away one of their abilities to manipulate asset markets, but Mnuchin did it anyway. The WSJ has more. Congress provided $454 billion in March to the Treasury to backstop loans made by the Fed, and Mr. Mnuchin quickly made $195 billion of that money available for five lending programs that will now end on Dec. 31. The Treasury has provided half of … [Read more...]
Apple Bows to Regulatory Pressure to Cut Services Business Fees
Apple is cutting fees at its app store in half for most developers. Developers who produce up to $1 million in revenue from their apps will be charged 15% instead of 30%. This is likely to be the first of the fee cuts at Apple and Google. EU regulators are likely to crack down on what is clearly monopolistic behavior by Apple. As one app developer puts it, “If you’re a developer making $1m, Apple is STILL asking to be paid $150,000, just to process payments on the monopoly computing platform in the US. That’s obscene!” Without a stable source of revenue from services, Apple’s inflated … [Read more...]
Why Your Retirement Survival is No Easy Task
You know how I feel about keeping what you’ve made and perhaps working a side hustle. You Owe it to Yourself to Continue Doing What You’re Good At Keep Working, if You Can How Many “Retirees” Will Keep Working?: Some Just Won’t Stop How Many “Retirees” Will Keep Working?: Today’s Elderly Twice as Likely to Work than in 1985 Your Retirement Life: You Can Keep Working These Americans Are Never Going to Retire You also know the benefits of working with someone who can be unemotional about your money. The entire country is emotional today. My RAGE Gauge, which measures … [Read more...]
An Ugly and Unusual Year for Most Successful Hedge Fund Managers
As we wrote in this month’s letter to our investment counsel clients, it’s been an unusual year. Renaissance Technologies and Two Sigma Advisers, two successful quantitative hedge fund managers would agree. Renaissance is one of the most successful hedge funds in the world. Renaissance's equities fund is down 20% YTD and Two Sigma’s funds are down 11%, 23%, and 2% as of the end of last month. What’s the takeaway? All investment strategies go through rough periods. If the strategy is fundamentally and logically sound, staying the course is the proper action to take. Bloomberg … [Read more...]
How Can You Make Money in Your Sleep? Read on…
"Are you calling to tell me you bought a Treasury yielding five percent?" my client asked. "I wish," I responded. "I remember when they were yielding ten percent," he said. "But then again, inflation was that high too." "Do you guys handle taxable accounts?" He asked. "Yes, we're not picky." "I've got a lot of money in CDs. When they mature, it's just sitting in cash doing nothing." From there, we started talking about quality stocks and bonds and how a combination of the two could work as a long-term source of income. Maybe we don't get all of the income we want and dip into principal. … [Read more...]
Strong Industrial Production Report Points to Continued Economic Recovery
Industrial Production rose over 1% in the month of October. On a year-to-year basis, the industrial economy is still down, but with the real estate market humming along (homebuilder sentiment is at all-time highs) and Boeing’s 737 Max getting recertified, continued recovery in the industrial sector looks likely. Assuming of course that the incoming administration doesn’t choke off business investment with burdensome regulation. David Harrison reports on the industrial production results for The Wall Street Journal, writing: U.S. industrial production rose last month, as output continued … [Read more...]
ESG Funds: You Invest, They Win—Here’s Why
You work too hard to have your savings messed with. You have enough on your plate as it is. Between keeping track of the rules for Roths, IRAs, RMDs, it all adds up. You read about ESG funds that are supposed to be “good” for the environment and wonder, “But, are they good for me?” In my series for you, “You invest, they win,” you wonder. You may also wonder about my concerns with Vanguard being too big. “How do you know if it’s too big?” you ask. “Well, it might be too big,” I respond, “if your phone rep is greener than a recycling bin and working in a room the size of a football field.” If … [Read more...]
S&P 500 Index Funds Double Down on Bubble Stocks
Tesla is being added to the S&P 500. Measured by market value, Tesla is the largest car company in the world and the 10th largest company in the United States. It is also the most expensive car company in the United States by a factor of almost 25 times when measured relative to sales. General Motors trades at .52X sales, Ford at .27X, and Tesla at 13.3X sales. Even if you assume Tesla can double sales by 2023, the stock is still about 12X as expensive as General Motors. Despite the astronomical valuation, funds that track the S&P 500 will make Tesla a top ten holding. Doesn’t … [Read more...]
The Dow’s Fastest Bear Market Recovery in 30 Years
Marketwatch reports here that the Dow just completed its fastest bear market recovery in 30 years. It takes an average of 1,483 trading days for the Dow to hit a new all-time high after suffering a bear market. This time it took only 193 trading days. Trillions of dollars worth of fiscal stimulus and a monetary stimulus program that crossed multiple redlines helped quicken the recovery. Pro-growth regulatory policy was also a likely contributor. The truth is, investors who took on too much risk lucked out in this bear market. Prolonged bear markets are the most destructive variety. Next … [Read more...]
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