Happy Monday from Your Survival Guy. Hope you had a great weekend. As I mentioned to you Friday, this was boat show weekend in Newport. The weather was beautiful. Wish you were here. And if you are here, it’s still not too late to pop in and see me for a cup of joe. With that said, I thought I’d show some shots from the docks. Become a compounding machine and the choices are far and wide. Action Line: If you want to visit me in Newport, click here to get in touch. Until then, you can get to know me better by subscribing to my free monthly Survive & Thrive letter, where I push you to … [Read more...]
Vanguard Pulls the Plug on Prime Money Market Fund
Vanguard is pulling the plug on its $125 billion Prime Money Market Fund. Prime money funds required a bailout during the COVID collapse just as they did during the financial crisis. Regulations had been put in place to prevent such an occurrence, but with interest rates in the tank, the paltry yield prime money market funds offer isn’t worth the risk. When the reward for sticking around is at best a percentage point of interest, investors in these funds will always bail at the first signs of trouble. That creates a problem for money funds and the commercial paper market as prime money … [Read more...]
Are You Being Financially Vandalized by Low Yields?
Investors looking for yield in their portfolios haven't had it easy in recent years. For many, low yields on every type of asset have made building an income-generating portfolio more difficult than ever. Investors in many European bonds are even receiving negative yields, which is to say that they are paying to lend. As Anchalee Worrachate reports for Bloomberg, that's financial vandalism. She writes: A once-unthinkable collapse in global bond yields is forcing pension funds to buy bonds that offer negative returns -- putting the financial security of future retirees in jeopardy. U.S. … [Read more...]
Storied Gibson Guitar Company Falls to Debt Overload
For nearly a decade it has gone without question that companies would take on debt to finance acquisitions. With interests rates so low, investor groups were practically forcing companies to buy competitors and other businesses to expand revenue streams. Managers were only to happy to oblige. Gibson, maker of guitars and audio equipment, is the latest storied business to fall victim to low rate debt offered by private equity groups looking to cash in on a strong brand. Now, the private equity crowd will take control of Gibson after its bets have gone bad. Becky Yerak reports: Under a … [Read more...]
Net Worth to Income Exceeds Prior Bubble Highs
Here is a chart that should make the Fed uncomfortable. You are looking at the net worth of American households as a percentage of their disposable income. The three lines in the chart are the mean, and plus and minus one standard deviation. What should stand out immediately is how for five decades the ratio moved in a relatively narrow range than then soared and crashed, and then soared again and crashed. Now the ratio has soared again and it has exceeded prior highs. Part of the driver here is that growth in household liabilities has slowed from its historic path, but the biggest … [Read more...]
$25 Million Ain’t What it Used to Be
Barron’s cover story, “Penta Millionaires: The New Rising Class” reports in 2015 there were a record one million households with more than $5 million in investable assets, up 5% from 2014. This should be fun. Let’s guess how much of this new wealth will actually stick. I’m not talking about the Pentas' necessarily. I’m thinking more about the $25 million crowd. Imagine their burn rate—fueling those jets is expensive! What caught my eye is the story of a Mr. Anthony Alves, 54, who sold his New Jersey company, Oasis Foods, putting his net-worth well over $25 million. “It was life-changing,” … [Read more...]