Young Research & Publishing Inc.

Investment Research Since 1978

Disclosure

Muni Debt Trap

By

You know how hard it is to be retired on a fixed income these days, especially with a risk-free rate (three-month T-bills) at less than one-tenth of one percent and with an historical expansion of government almost assuredly set to increase taxes next year. Caution: You don’t want to be like other investors who are reaching for yield and snapping up municipal bonds. Investors are not paying attention to the inherent risks they are buying. That’s why your smartest income move right now may be to avoid or reduce your exposure to these so-called “high-quality” credits. Little Rhode Island may … [Read more...]

Housing Starts Look Weak

By

Housing starts released today came in far below consensus estimates.  Government efforts to stimulate the housing market have once again failed. The federal tax credit for home buyers simply pulled demand forward. We are now seeing the giveback. … [Read more...]

A Troubling Trio of Economic Indicators

By

In over four decades in the investment business, I have found that the most reliable economic indicators are not those released by government statistical agencies, but those that are available real-time in the stock, bond, and commodities markets. Three charts I have been monitoring regularly to gauge the strength of the economic recovery are Young Research’s Moving the Goods Index, lumber prices, and copper prices. Young Research’s Moving the Goods Index is a market-cap-weighted, non-airline transportation index. If the Moving the Goods Index is in a bull market, chances are the … [Read more...]

Simple Arithmetic Vital to Your Investment Success

By

My arithmetic of portfolio losses chart shows the return necessary to break even after incurring a loss. The horizontal axis shows the assumed portfolio loss incurred. The vertical axis shows the portfolio gain required to break even. My chart clearly illustrates that the bigger the loss you take, the harder it is to recover. You can recover from a small loss. If your portfolio drops 10%, you only need a gain of 11.1% to get back to even. But if your portfolio drops by 50%, you need a gain of 100% just to get back to even. And if you take a loss of 70%, you need a staggering 233% return … [Read more...]

A Strategy for Picking ETFs

By

Since the first ETF was launched in 1993, assets under management have increased to $830 billion as of April 30, 2010. Over the last 10 years the compound annual rate of growth in ETF assets has exceeded 30%. The remarkable success of ETFs is grounded in their many advantages over actively managed open-end mutual funds. ETFs offer intraday liquidity; open-end funds can only be purchased once per day at the closing price. ETFs disclose their entire portfolio daily; open-end funds are only required to disclose their portfolios semi-annually. Through the use of in-kind transfers, ETFs are able to … [Read more...]

The Crash

By

The Regional Economist from the Federal Reserve Bank of St. Louis is a must-read for any serious investor. The quarterly review provides business and economic commentary for the states in the eighth Federal Reserve District—which are “central to America’s economy.” I’ve been studying the most recent review and want to discuss with you a table in the cover story, “Economic Hangover: Recovery is Likely to be Prolonged, Painful ,” by Bill Emmons. I’ve customized the table to help illustrate that easy money and out-of-control government spending lead to reduced stock-market returns. The crash was … [Read more...]

A Gift from Greece

By

The debt crisis that started in Greece and is now engulfing Europe has acted as a catalyst for a sell-off in global risk assets. Investors are liquidating stocks, risky bonds, and commodities and loading up on U.S. Treasury bonds. The 30-year Treasury yield has fallen from a high of 4.84% in early April to a low of 4.05% earlier this week. If you own long Treasury bonds, you have just been given an opportunity to liquidate your position before prices collapse. And collapse they will. Investors are flocking to long Treasury bonds because they perceive them to be risk-free. That’s a farce. … [Read more...]

The European Crisis Crusade

By

Treasury Secretary Geithner is on a crusade to prevent the debt crisis in Europe from spinning out of control. The Wall Street Journal reports that Mr. Geithner is chiding European leaders on their crisis response. He apparently believes he has a better strategy for Europe. Geithner wants Europe to pile on more debt to solve a debt crisis and conduct bank stress tests. Can you believe the nerve of this guy? This is the same Treasury secretary who, 16 months ago, exacerbated the financial panic with a disastrous communication strategy and half-baked policy prescriptions. Mr. Geithner came … [Read more...]