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Investment Research Since 1978

Europe Seems Bent on Taxing U.S. Ingenuity

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France has just introduced a 3% tax on major tech companies. Those hit hardest will be Facebook, Google and Amazon. These American companies brought their ingenious products to Europe, gaining strong followings. Now, the overly indebted governments of Europe, led by France, are itching to get their hands on tech cash. This isn't the first attempt at taxing tech companies in Europe, and it won't be the last. Elizabeth Schulze reports for CNBC: An EU-backed effort to pass a 3 percent tax on the revenues of big internet companies failed last year amid concerns from countries including Ireland … [Read more...]

You’re in Charge: Act—Don’t React

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Thirty years ago this month, I was working hard to explain to investors like you the simple power of having a plan. An investment plan is the reliable engine that keeps your investment train on its track. I told readers they shouldn’t make investments without consulting their plan, writing: Am I clear on this? Sit back, take a deep breath and repeat after me, “I will have a plan; I will not be a reactionary investor; I will practice diversification.” Still with me? You see, I want you to lower your financial blood pressure. If an idea is sound today, it must be sound tomorrow. I learned … [Read more...]

Your Retirement Life: Don’t Pay Too Much for Your Big Macs

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Since 1986, The Economist has published its Big Mac Index. The index is a lighthearted way of viewing purchasing power across national borders. The theory is that a McDonald's Big Mac uses the same ingredients and labor from one country to another, so when prices are compared in dollar terms, the differences in the purchasing power of money between locations is easy to see. In the latest reading, Russia has the cheapest Big Mac, at only $1.65. Fluctuating currency valuations can have a big impact on the index when dealing with different countries. When comparing the U.S. states, however, … [Read more...]

Will Disney+ be Bigger than Netflix?

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Disney is close to unveiling its new streaming services, Disney+ and ESPN+. Those new services, along with Hulu, which Disney recently acquired a controlling share in, will serve as the platform for Disney's digital delivery future. The question many analysts are asking is, will Disney's services be as popular as Netflix? Barron's Nicholas Jasinski reports: The back story. Disney (ticker: DIS) so far has been coy about providing specific details, other than revealing that it plans to take a three-pronged approach to direct-to-consumer streaming. One service, called Disney+, will include … [Read more...]

Walmart Tells Suppliers to Hurry-it-Up

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In a bid to compete with Amazon, Walmart is telling suppliers they need to accelerate their shipments. Jennifer Smith and Sarah Nassauer report in The Wall Street Journal: The retailer wants suppliers that ship full trucks of products to deliver orders within a specified two-day window 87% of the time, up from an 85% rate it targeted previously. Suppliers that fill part of a truck with their goods must hit a 70% on-time threshold, a significant jump from the previous target of 50%. Walmart also is changing how it penalizes suppliers when they make partial deliveries, an effort to make sure … [Read more...]

Here’s How to Build Yourself a Barricade Against Volatility

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Back in October of 2006, as the crest of the Housing Bubble was forming, I remained doggedly attached to my principled investment strategy of diversification and compound interest. That month I encouraged readers to build a “volatility barricade.” Here’s what I wrote (with updated numbers to reflect the intervening years): Your Volatility Barricade Your portfolio’s fixed-income position does two things for you. (1) It either throws off cash for you to spend at Ace or True Value (not Wal-Mart or Home Depot) in retirement or, instead, allows your interest to compound in an IRA. (2) Your … [Read more...]

The Surge in American Economic Growth Could Pay for Tax Cuts

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Phil Gramm and Michael Solon explain in The Wall Street Journal's Opinion section, that the Trump tax cuts are on their way to paying for themselves with increased economic activity. They writes: For a midterm report card on the economy under President Trump, take a look at two recent government reports. The Commerce Department reported Thursday that real gross domestic product grew by 3.1% from the fourth quarter of 2017 to the fourth quarter of 2018—the largest rise in 13 years. And last month the Congressional Budget Office reported that even if the current surge in economic growth isn’t … [Read more...]

Inflation is Destroying Venezuela’s Economy: Shield Your Portfolio Against It

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Socialist president Nicolas Maduro has run out of other people's money, and so his government is using inflation of its currency to pay its bills. The country's inflation has gotten out of hand, and hyperinflation has ensued. Now, the dropping value of the country's bolivars has decimated its manufacturing industry. The Wall Street Journal reports: Manufacturing’s fall reflects broader economic devastation. Venezuela’s economy has halved during President Nicolás Maduro’s six years in office, and is expected to decline another 30% this year as new U.S. sanctions on oil hit. The country’s GDP, … [Read more...]

Dear Amazon: National Right to Work President’s Open Letter

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When politicians play games to lure companies to their state, it is oftentimes with tax breaks using money they don’t have, as was the case with New York’s tax breaks to Amazon. Amazon was going to pay much more in taxes than they received in tax breaks—by a lot—it was basically New York Prime. The topic came up at a recent lunch with clients. I told them I was torn. I have a real problem when politicians use other people’s money to do their bidding. But I’m certainly not sad to see the backlash Congresswoman Alexandria Ocasio-Cortez will face in 2020. My beef with politicians is, they … [Read more...]

Is Fed Policy Sparking Socialism?

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The Financial Times' David McWilliams makes a convincing case that what has empowered "millennial socialism" is the policies of the Federal Reserve. He writes: Is Ben Bernanke the father of Alexandria Ocasio-Cortez? Not in the literal sense, obviously, but in the philosophical and political sense. As we mark the 10th anniversary of the bull market, it is worth considering whether the efforts of the US Federal Reserve, under Mr Bernanke’s leadership, to avoid 1930s-style debt deflation ended up spawning a new generation of socialists, such as the freshman Congresswoman Ms Ocasio-Cortez, in … [Read more...]