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Investment Research Since 1978

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Raise Taxes to Lower Inflation?

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After jamming an unneeded stimulus program through congress and turbo charging inflation, Biden and his allies on the left have come up with a plan solve the inflation problem they helped create. They want to raise your taxes. The WSJ points out the folly in such an approach. The same policy wizards who brought you soaring inflation are now offering what they claim is a solution to inflation: Raise taxes. Our advice is to consider the source and the economic record their previous advice produced. Democrats are desperate to salvage something from their Build Back Better agenda after Joe … [Read more...]

The Dangers of a Federal Reserve Digital Currency

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At the Cato Institute, Norbert Michel explains how central bank digital currencies (CBDCs) are about control. He writes about the dangers of such a creation: As a starting point, I want to distinguish between a wholesale CBDC and retail CBDC. With a wholesale CBDC, banks can electronically transact with each other using a liability of the central bank. Because that is essentially what banks do now, transact and settle (electronically) using reserve accounts held at the Fed, there aren’t very many new and interesting wholesale CBDC policy issues. (Basically, the Fed has had a wholesale CBDC … [Read more...]

Who will be the next FAANG to fall?

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The FAANG stocks have dominated market headlines and driven a significant portion of the return on the S&P 500 over the last five years. But the sheen finally appears to be wearing off. The first signs of a change in sentiment started with smaller growth firms or the ARK Innovation ETF type stocks. Think Zoom, Docusign, Teledoc, Roku, etc. The ARK Innovation ETF peaked in February of last year. It fell sharply in the second quarter of last year and today it sits 67% below its all-time high. The FAANGs were spared in the early stages of the technology / high growth bust and some … [Read more...]

Young’s Retirement Compounders Clearly Dominate!

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Two decades ago, I developed the Retirement Compounders (RCs) as a portfolio to hold through thick and thin.  Concentration is on dividends and on compound interest. Expectations are justifiably modest. The Prudent Man Rule overrides all. This year, 2022, has caught most investors unprepared. The results have been pretty horrifying. Here is what I mean: The S&P 500 Total Return: -12.0% YTD. The NASDAQ: -20.0% YTD. By contrast the RC’S have held steady .The story line here, as it always is, Dividends. The Retirement Compounders (dividends/compounding-based): … [Read more...]

The IRS Wants to Count Your Pennies

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Did you sell those old baseball cards on eBay? How about those crochet designs you've sold on Etsy? What about those cheesecakes you've been selling to your neighbors on Venmo? If you made more than $600, they'll be sending your name to the IRS. Laura Saunders reports at The Wall Street Journal: Now that your 2021 taxes are done—or at least under way—it’s time to focus on a key tax change for 2022 affecting millions of Americans making money through platforms like eBay, Etsy, Airbnb, Venmo and Uber. This change, which is beginning to ripple through e-commerce, tightens the tax reporting on … [Read more...]

BMW Sticks to Familiar in EV Transition

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BMW is sticking with its existing models in the transition to EVs. Unlike some competitors, BMW will offer existing models powered with electric, hybrid, or internal combustion engine. Competitor Mercedes is using an entirely new chassis for the electric version of its flagship S-class sedan. The FT has more. The two identical BMW saloons driven slowly on to a stage in Munich last week were met with confusion from the assembled crowd. Until an executive at the launch event pointed to them individually, it was unclear which car was electric, and which carried a traditional petrol … [Read more...]

The Anti-ESG Movement Has Begun

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You have read here, here, here, and elsewhere from Your Survival Guy about the dangers posed by ESG investing. Now a movement of investors is working hard to push back against it. An initiative fostered by the Job Creators Network Foundation, the Free Enterprise Project, and Second Vote, has created The Boardroom Initiative "to defend shareholders, employees, and communities from “woke” policies at corporations and ensure corporate accountability." In a press release they explain: By increasingly wading into the culture wars, companies threaten shareholder returns and retirement security for … [Read more...]

Is Cash Still Trash?

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The Wall Street Journal reports that soaring interest rates and volatile equity markets are causing investors to reassess the value of cash. The chart below shows the YTD performance of the three major asset classes, stocks, bonds, and cash. Cash is measured by the performance of 3-month T-bills. Cash, with a 0.05% return, is the best performing major asset class YTD.   The WSJ has more on Wall Street's newfound love of cash. Rick Rieder, managing director at BlackRock Inc., said the world’s largest asset manager is increasing cash holdings by more than 50% in many portfolios … [Read more...]

BIDEN BLAME GAME: Inflation Is Everyone Else’s Fault

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You may have seen Joe Biden's pathetic blame game tweet this week where he wrote "Let’s be absolutely clear about why prices are high right now: COVID and Vladimir Putin." Really? It doesn't have anything to do with the Federal Reserve's low rates or the federal government's massive spending? It doesn't have anything to do with Biden's restrictions on oil and gas drilling and transportation? Here's Biden's tweet in full: I know that families are still struggling with higher prices. I grew up in a family where if the price of gas went up, we felt it. Let’s be absolutely clear about … [Read more...]

Can the World Economy Keep Growing in the Face of Mounting Problems?

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War, sickness, famine. The problems facing the global economy are beginning to sound apocalyptic. Given the adverse events facing the global economy, it's reasonable to ask if it can still grow. Tom Fairless analyses potential global economic growth in The Wall Street Journal, writing: Economic growth is slowing in large parts of the globe as businesses struggle to navigate a looming slowdown in China and surging prices aggravated by Russia’s war in Ukraine. Surveys of purchasing managers conducted over recent weeks point to weakening growth in major economies such as Germany and the U.K. … [Read more...]