Yesterday I asked readers Do You Know this about Vanguard Wellington and Wellesley Funds? I explained that we have not soured on the funds, but that their effective maturities are longer than we'd like. I also wrote that at Young Research we recommend laddering bonds. One of the reasons we favor laddering bonds is to help strip-out interest rate risk. When you own a bond outright you have control over your holding period. Duration measures a bond’s sensitivity to interest rates. For example, a bond with a 15-year duration will decline by 15 percent with every one percent increase in … [Read more...]
Can Amazon Get Groceries Right?
Amazon is working hard to make its purchase of Whole Foods pay off, but it turns out translating groceries in ecommerce is more difficult than many imagined. Spencer Soper reports for Bloomberg: Amazon.com Inc. continues to struggle in the $840 billion grocery market, more than a year after it spooked the industry with the $13.7 billion acquisition of Whole Foods. The number of Amazon Prime members who shop for groceries at least once a month declined in 2018 compared with 2017, according to the results of an annual consumer survey released Wednesday by UBS analysts. The drop was … [Read more...]
Your Questions, My Answers: Custodial Accounts and Gifts to Minors
Considering a monetary gift for your grand-kids for Christmas? They will certainly be happy, but you should read through this piece I wrote back on November 16, 2018 first. Your Question: My mother is planning on gifting my children some money this year. Since there is enough in their 529 accounts, I thought I would open custodial accounts for them to take care of this money, and start them on the road to retirement saving and learning about investing. In your opinion, is a custodial account the best option in this situation and if so, is Fidelity a good place to do it? My Answer: Yes. I … [Read more...]
Do You Know this about Vanguard Wellington and Wellesley Funds?
As you know our concerns about Vanguard continue to mount. Yesterday, a reader wrote: “[Dick] used to be big on Wellington and Wellesley, given their longevity and resistance to tail risk over time. Also, it seemed to me that Wellington Management's fixed income expertise would be an asset in this part of the cycle. I'm wondering why he has soured on these funds.” The quick answer is no we have not soured on Wellington and Wellesley with two distinctions. First, Vanguard has nothing to do with the management of Wellington and Wellesley. Vanguard has outsourced those management … [Read more...]
Can Facebook Survive Accountability?
This week Krista Gmelich and Sarah Frier reported for Bloomberg that Facebook "said a software bug gave outside developers broader access to the photos of millions of users, another privacy misstep by the world’s largest social network." The question is, how can a company that makes its money by selling access to its users' data remain profitable if rising calls for accountability over privacy force it to alter its business model? Is there a path forward for Facebook? The reporters continue: As many as 6.8 million users and up to 1,500 apps were involved, according to a blog the company … [Read more...]
Can You Afford a 50% Loss?
Can You Afford a 50% Loss? That’s the question I asked readers in March 2014. I wrote: Can You Afford a 50% Loss? It’s impossible to have it all ways. In order to craft an investment portfolio that can act as an all-weather armadillo, you must be willing to forgo potentially substantial upside rewards to balance against the horror of a downside wipeout. If you are retired or saving for retirement in the not-too-distant future, you can easily get a knot in your stomach when you look at the basic math of downside portfolio protection. By example, when you lose 50% on an investment, you must … [Read more...]
Fidelity is Boston and Boston is Fidelity
When you’re an intern at a start-up, you have certain responsibilities. For me, it was to go pick-up lunch when the founders ordered out. But what was cool about being the intern was that I had a seat at the table. I was privy to all their war stories. It was fun (for them) to talk about how hard it was when they were my age—broke, jobless and about to graduate from college. As they looked back it was the road not the destination. Easy for them to say. One of the stories I liked best was when the CEO would talk about how he decided to work in Boston. He said, “I knew it was going to be hard … [Read more...]
Apple’s Biggest Failure Today
Apple is failing dismally in the world’s most important growth market for smart phones. India is the largest untapped market for smart phones in the world. There are 1.3 billion consumers in India and only 24% of them own an iPhone. There is lots of potential for smartphone makers in India. So how is Apple doing in this must-win market? Apple’s market share in India is a whopping 1%. And to add salt to the wound, that number is down about 50% over the last year. What is Apple doing wrong? Price is a major problem. After Apple’s latest price hike, its base iPhone Xs is offered at … [Read more...]
Vanguard GNMA and a Winter of Political Polarization
Anyone who tells you politics has nothing to do with investing is simply not paying attention. In this winter of political polarization—a deep freeze—politics matter. Case in point. Look at Vanguard GNMA. For most of 2018, Vanguard GNMA has been sledding from a peak of $10.45 in January. Guess when the trough, or bottom was hit? November 6th the day of the midterm elections. Since then, as you’ve witnessed, stocks have been twitching like a desperate squirrel working through that last nut for the winter. Not Vanguard GNMA. It has been steady, up close to two-percent, closing at … [Read more...]
Will Amazon Finally Cut the CRaP Products?
For years Amazon has operated its retail business with little or no profit. A big reason for that has been what Amazon insiders refer to as CRaP products. The acronym stands for "can't realize a profit." Now Amazon may attempt to trim some of those products form its sales. Laura Stevens, Sharon Terlep and Annie Gasparro write for The Wall Street Journal: Now, as Amazon focuses more on its bottom line in addition to its rapid growth, it is increasingly taking aim at CRaP products, according to major brand executives and people familiar with the company’s thinking. In recent months, it has been … [Read more...]
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