You may have heard of home bias in investing. If you haven’t, home bias is the tendency of investors to own a large amount of domestic securities, despite the vastly greater number of opportunities available in foreign markets. The U.S. stock and bond markets only account for about two-thirds of the global total, but U.S. investors allocate almost 75% of their portfolios to the U.S. Favoring domestic versus foreign markets isn’t the only bias among investors though. According to J.P. Morgan, there is also a regional bias in investing. A regional bias? Indeed, the chart below from J.P. … [Read more...]
Warren Buffet’s Dishonest “My Secretary’s Tax Rate Higher than Mine”
The problem with “the problem” many pundits are having with Donald Trump’s taxes, or non-taxes, is that they are talking about a tax on “income.” And living off “income” does not fit with those who do not live off “income,” but rather live off assets, explains Francis Menton in Manhattan Contrarian. What is considered “income” is relatively easy to figure out. You work for a year; you get paid in cash for a year. That’s your income for that year, of which you are required to pay the stated proportion of it in taxes. But many people who are neither rich nor wealthy do not live off income. … [Read more...]
Is the British Pound a Good Buy Today?
The biggest casualty of the Brexit vote thus far has not been the stock market or the bond market as many predicted, but the market for British pounds. The pound sold-off yesterday and is now trading at a more than two-decade low. Technical analysts would likely tell you that charts don’t offer much in the way of support for the world’s former premier reserve currency. Based on the charts, a move toward parity looks possible, though we wouldn’t say probable. For some perspective, I’ve included a long-term chart (yes really, really, long) on the pound / dollar exchange rate. The pound is … [Read more...]
Liberty Media Outflanks Warren Buffet’s Berkshire Hathaway
Barron’s informs readers: Few people have made more money for investors over the past three decades than John Malone. The billionaire cable-TV investor and operator parlayed a small group of cable systems, originally assembled in the 1970s, into Tele-Communications Inc., before selling it to AT&T in 1999 for $48 billion. Starting over with a handful of former TCI assets, Malone has, through an often mind-bending series of financial maneuvers, built another cable and media empire, Liberty Media. And together with Greg Maffei, Liberty’s CEO since 2005, he’s still building. Investors … [Read more...]
Are the Days of Walking into Your Local Bank Ending?
Swissinfo.ch warns readers that the days of over-the-counter banking are in permanent descent, and that other trends are quickly emerging. Being able to walk into a bank and speak to someone over a counter is a disappearing service in Switzerland. The number of branches has almost halved from around 4,500 at the beginning of the 1990s to some 2,500 today. The reason for the 20% annual drop in branches is that more and more people are using e-banking: paying bills and keeping track of their finances online. Geneva: doing business post-banking secrecy … [Read more...]
Alert: Buy Ratings to the Highest Bidder
This is a disturbing trend. Bloomberg BusinessWeek reports that some companies are now paying brokerage clients to cover them. This is similar to the credit rating agency model that has been criticized so often for the conflicted advice it produces, but this is worse, much worse. Here’s more from BusinessWeek (emphasis is mine) With brokers increasingly unable to subsidize research with indirect payments, France’s Natixis SA is pioneering a novel approach: charge clients for coverage, a model that has proved fraught with conflicts for debt-rating companies. Analysts Jean-Jacques Le Fur and … [Read more...]
Government Investment in the Stock Market?
What do you do when after years of insisting that bigger stimulus and more government intervention for more time are the exact recipe for economic success, only to discover that your cherished theories have come up short? Cue the esteemed former Treasury Secretary (and possibly future Fed Chair) Mr. Lawrence Summers. This is the same Mr. Summers who contends that the disappointing rate of economic growth for the last number of years is a problem of secular stagnation and not a problem of poor policy and burdensome regulation. Seems a little convenient coming from one of President Obama’s … [Read more...]
America’s Annual Trade Surplus from 1870 to 1970
What kind of government structure would allow our country to outsource its future? Exactly what has happened to turn America into a world trade banana republic? Pat Buchanan offers gory details: America’s allies are cheating and robbing her blind on trade. According to the WTO, Britain, France, Spain, Germany, and the EU pumped $22 billion in illegal subsidies into Airbus to swindle Boeing out of the sale of 375 commercial jets. Subsidies to the A320 caused lost sales of 271 Boeing 737s, writes journalist Alan Boyle. Yet even as Europeans collude and cheat to capture America’s … [Read more...]
Are You Taking Advantage of Your RMD?
You know that if you’re over 70 1/2, and have a tax deferred account, this is the time of year that the IRS required minimum distribution (RMD) can sneak up on you. I’ve already had a number of conversations over the last few weeks with clients of our money management business. (Even if you're not a client, you can sign up here for our free monthly client letter). You don’t want to wait until the last minute to discuss your RMD. This piece should help you as you ponder your options. You saved for years to get to retirement—contributing to a traditional 401(k) or IRA. Now it’s time to dip … [Read more...]
The Future of the Car is Here: It is Electric
MIT Technology Review offers the exciting view from Paris. As the doors open at the Paris Motor Show, one thing is being made abundantly clear about the future of the automobile: it’s electric. It’s been widely reported that many automakers are starting to skip big car shows. Ford, Volvo, Rolls-Royce, Aston Martin, and Lamborghini are among the manufacturers who, Bloomberg claims, would rather skip the French spectacle and spread word of new cars on social media or at more exclusive events. But for those that are in Paris, it’s clearly tres chic to be showing off an electric … [Read more...]
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