Defensive industries have been leading more speculative sectors in the S&P 500 this month. Akane Otani writes in The Wall Street Journal: This month, the biggest gainers in the S&P 500 include firms focusing on telecommunications services, consumer staples and utilities—so-called safe sectors whose steady dividend payouts have long made them investor favorites when markets are volatile or declining. These shares typically lag behind major indexes during rallies, in part because they are perceived to offer limited potential gains. But in September, telecom shares are up 3.1%, consumer … [Read more...]
Augmentation and Replacement: The Future of Robot Workers
Robots are coming to the workplace in ways they have never done before. Automating backroom tasks could eliminate many jobs, but will also augment the productivity of others, leading to greater incomes and larger economies. The World Economic Forum recently released its Future of Jobs 2018 report, and Sara Castellanos explains the results here: The Future of Jobs 2018 report, released Monday, predicts that by 2025, more than half of all current workplace tasks will be performed by machines, as opposed to 29% today. But the impact of machines and algorithms on the entire workforce will … [Read more...]
When Governments Compete, Citizens Win
One of the less touted but possibly most significant outcomes of the Trump tax reform was forcing states into greater competition over taxation. States with already high taxes had the sheet pulled off their ugly policies. The tax reform bill stripped those high taxing states of the federal deductions that had masked their inefficient policies. With all states now competing on an even playing field, citizens are getting a first hand look at just how badly their states have been bilking them. At the Cato Institute, Chris Edwards writes that high income earners, who were already fleeing high … [Read more...]
The One Mistake Some Investors Never Learn From
One of the investing mistakes that some make in high growth glamour stocks is extrapolating today’s growth rates and profitability forward without accounting for future competition. High growth markets with high returns on capital attract competition. And too seldom is the impact of increased competition accounted for in future results. Tesla is the largest car company in America even though it produces a fraction of the cars that Ford or GM produces. That is partly because investors aren’t baking enough competition into their calculations of future profits. The same scenario appears to be … [Read more...]
Americans Still Shopping Like it’s 2009
Despite nearly ten years since the market lows of the Great Recession, Americans are still looking for deals when they shop. With a changing landscape, there may never be a return to "normal," for American retailers. Lauren Thomas reports at CNBC: "Fundamentally, as prices have come down in retail, that has squeezed out many retailers," Meyer said. "My sense is that is still true today." Shoppers still have a higher sense of price value, he said, and apparel is less of a focus when shoppers think about their budgets. That's really weighed on apparel companies. Shares of Ralph Lauren have … [Read more...]
My Personal View on Fidelity Investments for You
Ned Johnson was CEO back in the mid-90’s when I worked at Fidelity Investments. Today the CEO is his daughter Abby. What hasn’t changed at Fidelity is its commitment to invest in technology to help give it an edge. John Tlumacki writes for the Boston Globe: Johnson said that when her father, Ned Johnson, launched FCAT in 1999, the goal was to help clients and employees explore emerging technologies that could help spur Fidelity’s growth. Among FCAT’s more recent initiatives: a virtual reality experiment known as “Cora” — created in partnership with Amazon Web Services — that could provide … [Read more...]
Coca-Cola Getting Back to its Roots
In the early days of Coca-Cola, there were trace amounts of the drug cocaine in the drink. Once the drug was found to be unsafe, the company removed it. Today though, the Coca-Cola Co. is exploring adding a new drug to its drinks, cannabis. James Fontanella-Khan and Alistair Gray report in the Financial Times: Coca-Cola is exploring entering the budding cannabis drinks business, as the iconic beverage company seeks new opportunities to offset slowing soda consumption. The world’s largest beverage group by revenue is “closely watching” the cannabis drinks sector, which uses the … [Read more...]
Hydrogen Trains on the Rails in Germany
Is hydrogen power the next evolution of railroading? In Germany, hydrogen powered locomotives are taking to the rails . Stanley Reed reports in The New York Times: In a breakthrough for a green fuel, two hydrogen-powered trains are expected to go into commercial service Monday on a rail line in northern Germany near Hamburg. The trains, which will serve cities including Bremerhaven and Cuxhaven, will be powered by hydrogen fuel cells that generate electricity through a chemical reaction. The trains are being promoted as a cheaper alternative to stringing wires on rail lines that are not … [Read more...]
How to Diversify Your Portfolio the Right Way
Diversification is a must, but there is a right way to diversify and a wrong way. Loading your portfolio with eight different stock ETFs may minimize stock-specific risk, but in a nasty bear market, all eight of your ETFs are likely to get bludgeoned. The right way to diversify is to include assets that tend to zig when others zag. Counterbalancing is key here and the all-time counterbalancing champion is Treasury bonds. As a measure of the powerful counterbalancing force of Treasury bonds, consider that in 22 of the 24 bear markets since the 1920s, intermediate Treasuries have risen in … [Read more...]
Your Retirement Life: “The Cheapest Health Insurance There Is”
Tom, a friend of mine, recently sent me an email about what he called the four pillars of health: "Sleep, eating, movement and stress management." The email was in response to my post on the importance of exercise, Your Retirement Life: Do Something. Tom attached to the email an article from The New York Times about how exercise is the closest thing there is to a wonder drug. What struck me most of all was when he called a pair of shoes and regular walking "the cheapest health insurance there is." Earlier this year Fidelity estimated that the average retired couple would spend … [Read more...]
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