Graduates Face Tidal Wave of Debt As another crop of students graduates from colleges and universities across America, they face uneven job prospects and the reality of massive student loan debt. You can see below that student loan debt has reached $1.23 trillion dollars, and while delinquencies have come down somewhat from their peak in 2013, they're still very high historically 11.5% of loans more than 90 days late on payment. 40% of Borrowers Aren't Making Payment Survey Says....One in Five Students Not Responsible with Loan Money The website StudentLoanHero.com surveyed students … [Read more...]
Existing Home Prices Red Hot
The average prices paid in sales of existing homes is nearing it 2006 high (12 month moving average). Historically low Federal Reserve rates and unprecedented quantitative easing have nearly achieved creating a complete rebound in existing home prices. The 12 month moving average of the sales price measure is only 1% below its all-time high. … [Read more...]
Sorry, The Game is O-V-E-R for these 2 Mutual Funds
The game is over for the Putnam Capital Spectrum and Equity Spectrum funds. Sorry to be so harsh. But that’s simply the way I see it. Not to pat my own back but I’ve pointed out in the past how Putnam has been guilty of being more of a marketing machine than a Prudent-Man oriented asset management firm. After reading this excellent blog by Jason Zweig in his WSJ Intelligent Investor column, I feel even stronger about Putnam's focus on marketing over Prudent-Man-type asset management. Zweig points out that these funds hold close to three-quarters of their assets under management in their top … [Read more...]
Looking Back at a Random Walk Down Wall Street
Burton Malkiel has released a new edition of his book A Radom Walk Down Wall Street. In it he recommends substituting a part of a bond portfolio with high-yielding stocks. This is rotten advice and will likely get his followers into some trouble down the road. Yes, bond yields are low, but bonds should always be in your portfolio. I’ve called out Mr. Malkiel in the past on his tendency to offer up poor recommendations while talking up his book. For example when he talks about China: But, a couple of years ago, in late 2010, Malkiel recommended overweighting China. The following year, … [Read more...]
Pensions in a Load of Trouble, Part II
The state of Rhode Island has been a big-time investor, through its pensions, in hedge funds. Retired teachers who depend on this money for retirement should not be invested in hedge funds. It’s as simple as that. Unfortunately in the world of public pensions big committees and chest thumping rule the day. Egos and resume building cloud judgement. And performance takes a hit. It’s no surprise that hedge funds are coming under attack. Assets are heading out the door. This could have been avoided. Read more here on Pensions in a Load of Trouble Part I FLASHBACK: RI Pension … [Read more...]
How I Built My Survival Cache. It’s Never Too Late to Start Building Yours
No one likes to lose money. That’s why when I started building my survival cache over ten-years ago I started with gold. Back then, I spent little time (same as I do today) worrying about where I felt the short-term price of gold was headed. What I wanted to do was build a physical hedge for my cash. Cash is king! Try selling that one to your spouse. But cash is pretty powerful. You never know when you’ll need it. Like when there’s a Wi-Fi outage that shuts-down businesses. No Wi-Fi, no credit cards. No Pizza. Cash is powerful to an empty stomach. But predicting an outage is as … [Read more...]
The Monday Melee: Saudi Treasury Holdings Exposed
Saudi Treasury Holdings Detailed for the First Time in Decades After four decades of secrecy, the Treasury Department has released a report including Saudi Arabia's holdings of treasury securities. Bloomberg reports: The stockpile of the world’s biggest oil exporter stood at $116.8 billion as of March, down almost 6 percent from a record in January, according to data the Treasury disclosed Monday in response to a Freedom-of-Information Act request. The tally ranks Saudi Arabia among the top dozen foreign nations in terms of holdings of U.S. debt, and compares with China’s $1.3 trillion … [Read more...]
Dividends are Back!
Dividends are back. “The humble dividend is reclaiming its rightful place as the arbiter of stock-market value. In three of the four biggest developed markets, shares offer a higher yield than the longest-dated government bond, and in the fourth—the U.S.—the dividend yield beats even a 20-year bond,” writes James Mackintosh at The WSJ. But offering higher yields than the longest-dated government bonds is like jumping over a candle stick. “The low returns on the longest-dated bonds are extraordinary: 0.3% on Japan’s 40-year government bond, 0.9% on Germany’s 30-year bund, 2.1% on Britain’s … [Read more...]
These Stocks are Crushing the Competition
For dividend focused investors, the last three years have been a tough row to hoe. From year-end 2012 through year-end 2015, the speculative NASDAQ took a big lead over the more conservative and more Prudent-Man-centric Dividend Achievers Index. This seemingly long run (3yrs does not make an investment cycle) for speculative shares encouraged many to jump ship for what were believed to be greener pastures. Investors who had neither the ability nor willingness to ride out the wicked downturns that accompany such speculative portfolios allowed greed and relative performance comparisons to drive … [Read more...]
“We Are in the First Innings of a Washout in Hedge Funds”
“There is no doubt that we are in the first innings of a washout in hedge funds,” said Dan Loeb of Third Point LLC in a quarterly letter dated April 26. $15 billion has been withdrawn from hedge funds in the first quarter and a lot more is headed that way. Why? The 2 and 20 game seems to have rubbed investors the wrong way—an arrangement where they collect a 2% management fee and 20% of the profits leaving you with the letters e, t, and s of your assets. Then you pay taxes. What’s the word on the street as this dreadful group gathers in Las Vegas for the SkyBridge Alternatives conference … [Read more...]
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