Young Research & Publishing Inc.

Investment Research Since 1978

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Retiring Baby Boomers in the Days of Bubble and Bust

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Are you a Baby Boomer heading into retirement? Chances are 2008 hit you like an anvil. Your pension portfolio and the price of your house plummeted. Together, those investments are probably the majority of your wealth. But according to new research by the Social Security Administration, by 2010 Baby Boomers born between 1948 and 1953 had lost only an average of about 2.8% of their real wealth from 2006 to 2010. “How could this be so low?” you might be asking. In 2006 64.3% of the average Boomer’s wealth was tied up in pensions and housing and real estate. Between 2006 and 2008 housing … [Read more...]

A Winning Stock Policy for You

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Thinking about all the cash Apple is holding on to makes me wonder about its dividend policy. Some of that cash would probably be better off in the hands of stockholders. I’ve been spending some time reviewing my copy of Security Analysis by Benjamin Graham and David Dodd. I’ve had the book since the early ’90s, when I was at Babson College. What Graham and Dodd wrote in the early ’30s on dividends applies just the same today. Here’s what they had to say: Dividend Policies Arbitrary and Sometimes Selfishly Determined. –One of the obstacles in the way of an intelligent understanding by … [Read more...]

Alert: Bernanke’s Sanguine Forecast a Bad Omen

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Stocks sold off a bit on Wednesday and Thursday following the release of the minutes from the Federal Reserve’s last policy meeting. Investors were apparently concerned that Bernanke & Co. may pull the Free Money Truck back into the garage ahead of schedule. The minutes from the last Federal Open Market Committee (FOMC) indicate that more than a couple FOMC members are worried that the Fed is inflating asset bubbles and encouraging speculative excess in financial markets. That asset bubbles and speculative excess are the result of pinning interest rates at zero for years and printing over … [Read more...]

Sequester Cuts? What Sequester Cuts?

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Both parties in Washington D.C. are desperately attempting to avoid the sequester “spending cuts” that they passed with a bipartisan majority only a short time ago. The warnings of coming apocalyptic results should the “cuts” not be repealed are laughable. Each party is defending its sacred cows. But what’s really getting cut? The short answer is nothing. If the sequester ultimately prevails, total spending will increase on average 4.8% for the next eight years, as opposed to 4.9%. Total spending doesn’t decrease in any single year under the sequester framework. Read that last sentence … [Read more...]

Coal Consumption Plummeting in America

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Coal consumption in America is plummeting. During the recent recession the volume of coal consumption fell from a peak of 94.7 million tons in July 2008, to 83.1 million in December 2009. Then, after rebounding briefly, new regulations and low natural gas prices served to crush demand for coal. The trailing twelve month average monthly consumption of coal fell to 74 million tons in October. That’s the lowest volume of consumption since October of 1989. The striking drop is driven by environmental regulations and more importantly by inexpensive supplies of natural gas. With new regs for such … [Read more...]

This Stock Rally Is a Dud

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Investors are not paying attention to the real returns of this stock market. Rich Karlgaard, publisher of Forbes, wrote a spot-on piece recently in The Wall Street Journal. He pointed out that the S&P 500 is up 124% over the past four years, but gold is up 88%, oil 106%, and silver 167%. The broad correlation between stocks and commodities implies that dollar weakness is driving prices higher, not the fundamentals of supply and demand. In light of that, the stocks’ returns aren’t that great in real-dollar terms. Karlgaard also compares this rally to that of the 1974–80 market when the … [Read more...]

America’s Businesses Not Feeling the Love

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With the stock market soaring one would expect businesses to be exploding with optimism. Since the beginning of 2013 the S&P 500 is up 6.4%, that’s explosive growth for such a short period. But rather than confirming the optimism being implied by investors, business owners and management are sounding the alarms. Today’s NFIB Small Business Economic Trends report barely increased, coming in at 88.9, up only slightly from 88 in December. The headline was not a resounding sign of strength, but once you drill into the data, small business optimism looks even worse. Only 6% of … [Read more...]

Like a Rolling Stone

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Japan’s stock market is up 9.3% this year (chart 1). But in US dollar terms it’s up only 0.6% (chart 2). As you can see, attempts at currency debasement are not a road to prosperity. Even with extraordinarily loose monetary policy for decades, Japan has not been able to devalue its currency compared to the dollar to boost its flagging economy with cheap exports (chart 3). It’s a quick fix to an economy with structural problems that will eventually be reflected in the stock market (chart 4). It’s a recipe for an economy that’s like a rolling stone—with no direction home (chart … [Read more...]

Investors Ride Shotgun in Bernanke’s Free Money Truck

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With a strong start out of the gates in 2013, U.S. stocks have now almost fully recovered from the devastating 57% plunge during the last bear market. Both the Dow and the S&P are once again bordering on all-time highs. Investors have long forgotten the dark days of the financial crisis. Fear is no longer the dominant theme on Wall Street. Greed is back in favor. Investors are convinced the next 50% move in stocks will be up rather than down. To some, the strong performance of stocks over recent years seems puzzling. Economic growth is tepid, unemployment is still nearly 8%, and … [Read more...]

Trade Pointing to Recession?

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The BEA today released its report on the trade of goods and services into and out of the United States in the month of December. The trade deficit that has plagued America for decades shrank last month to $38.5 billion worth of goods and services. Optimists have pointed out, and correctly so, that the unexpectedly small deficit will likely cause a revision to fourth quarter GDP estimates that erase the modest reported decline. That’s the optimists’ view. However, there are two ways to read the recent trade release by the BEA. Yes, a revision will likely increase estimated GDP in the fourth … [Read more...]