Every time their government puts a new restriction on home buying, Chinese investors put more money in new apartments and homes. Some are certain that the government will prop up housing prices forever, some are scared that if they don't buy now, they may not get a chance later. Investors in China are trapped in a TINA market, as in "There Is No Alternative," to investing in homes. As Pei Zhiyong, a housing investor told the Wall Street Journal, "No other investment is as profitable as property. Stocks are too risky.” Lingling Wei and Dominique Fong report the excesses in the market: With … [Read more...]
This Major American City is Looking at Bankruptcy
I have recently written to you about the possible bankruptcy of the state of Illinois, potentially the first state in the country ever to go under financially. But travel a thousand miles east from Springfield, and you'll land in Hartford, CT a major American city that just had its debt rating cut to junk status. Zerohedge writes: ...on Tuesday afternoon, S&P pulled off the band-aid, and downgraded the city's bond rating by two notches to BB from BBB-, also known as junk, citing "growing liquidity pressures" and "weaker market access prospects", while keeping the city's General … [Read more...]
Sentiment Change Could Flip Yield-Reaching Market on its Head
Low long-term bond yields in the face of a Fed that is hiking short-term rates has helped sustain one of the greatest yield reaching episodes on record. As the WSJ explains, a reversal in sentiment is all it would take to drive yields back to more normalized levels, likely leading to an unwind in the trade. Not a comfortable foundation to build one's retirement portfolio upon. On a related note, stay tuned for a post explaining why investors assuming today's inflated stock market valuations are justified by low long-term bond yields have it wrong. It has been “TINA” for the last seven years. … [Read more...]
Can GE Go Local to Avoid Protectionism?
With protectionism heating up around the world, GE is adopting a strategy of localization. It's building plants and facilities in places it never otherwise would in order to avoid protectionism. Can this strategy work long term? Ted Mann and Brian Spegele write in the Wall Street Journal: In India, GE began to push harder on localization after Prime Minister Narendra Modi was elected in 2014 on a “Make in India” platform. He promised economic development fueled by major investments in India’s infrastructure. GE says it wouldn’t have won its India locomotive deal in 2015 without first … [Read more...]
My Most Popular Post so Far this Year
This year my investment readers, focused on their long-term retirement survival, have been tuning in to one post more than any other. "Why Vanguard GNMA Works for You in 2017" has been a hit. Read it below. It’s time to get your lazy money off the couch and back to work. You know the lazy money I’m talking about. The rainy day fund that’s turned into a big-screen TV, the matured CDs that took a cruise to the islands, and the emergency cash that’s betting on Apple. Let’s not forget where your safe money should safely be employed: At Vanguard GNMA. Did you know that over the last … [Read more...]
Famous Last Words: “This Time It’s Different.”
Howard Gold, a columnist at MarketWatch, explains that Millennials are making the same investing mistakes their parents made. But rather than making those mistakes on a clunky old desktop, they're making them on their smartphones. Millennials' favorite stocks are those without dividends, and instead of trading for value, they're trading the stocks of companies they're familiar with. According to TD Ameritrade, the five stocks most owned by its millennial customers are—wait for it—Apple Inc. AAPL, +0.26% Facebook Inc. FB, +2.39% Amazon.com Inc. AMZN, +1.35% Tesla Inc. TSLA, +1.03% and … [Read more...]
Companies Struggle to Restore Operations after Crippling Cyber Attack
The virus known as NotPetya has crippled operations at companies around the world, including major shipping operator A.P. Moeller-Maersk. The virus has been especially troublesome in Ukraine, but has hit major corporations in many countries. Nick Kostov and Costas Paris report: Companies that reported disruptions included U.S. pharmaceuticals firm Merck & Co., British advertising giant WPP Group PLC and Russian oil producer PAO Rosneft. Rosneft said on Twitter Wednesday that the virus hadn’t affected production, but added that “it is premature to evaluate the cyber attack … [Read more...]
Independent Bookstores are Booming
MarketWatch reports here on a renaissance for independent bookstores. Is this the start of peak Amazon? Print is dead? Long live print! Amazon may have conquered the book-selling market long before it entered the grocery market, but word nerds are finding their way back to indie bookstores, despite massive discounts on Amazon Prime Day July 11. Even as the internet superstore sinks its claws into America’s literary capital with its first brick and mortar Big Apple bookstore this spring, bookworms will tell you that paper books and the community around them are alive and kicking. In … [Read more...]
Despite Falling Prices, Drillers on Pace for Record U.S. Oil Production
Soon, oil companies may pump more crude in America than they ever have before. The U.S. may produce more than 10 million barrels a day by early next year. Bradley Olson and Alison Sider report: Easy Wall Street cash is leading U.S. shale companies to expand drilling, even as most lose money on every barrel of oil they bring to the surface. Despite a 17% plunge in prices since April, drillers are on pace to break the all-time U.S. oil production record, topping 10 million barrels a day by early next year if not sooner, according to government officials and analysts. U.S. crude fell again … [Read more...]
RAGE Gauge: Investors Aren’t Paying Attention
My July RAGE Gauge is in, and four letters come to mind: G-N-M-A. As in Vanguard GNMA. If you don’t have some already, then what are you waiting for? The calm in the markets is unsettling. My RAGE Gauge tells me investors aren’t paying attention. They are getting complacent, with nearly all my favorite indicators showing investors without fear. Don't fall into the complacency trap. Be vigilant with your investments, now more than ever. Here's an indicator that things aren't as calm as they may seem on the surface. Violent protests break out for second day at G-20 summit … [Read more...]
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