Before being crushed by the falling sky that they always predict, American neo-conservatives were the only ones predicting an orgy of violence and death in Iraq after the withdrawal of U.S. forces. However, nobody predicted the Arab Spring, when the governments of several Arab governments including Tunisia, Egypt, and Libya collapsed suddenly into bloodshed. And, NOBODY foresaw an epic clash between Sunni Islam and Shia…
One of the most useful concepts in economics is that of “opportunity cost,” which means that everything has two costs, i.e., the dollar cost and the opportunity cost. An example is that a man’s suit might cost $300, which is the dollar cost. The opportunity cost might be a man’s suit costs three ladies’ dresses and a pair of ladies’shoes. The classic example is that…
When I was a young economics student in the last century, a GDP growth rate of 4% was good but not extraordinary. It was at this rate the economy could grow without igniting inflation. By the beginning of the Global Financial Crisis (GFC) in 2008, that maximum growth rate was close to 2.8%. Today, it is probably only 2.2%. So, why has this maximum safe…
The first President Bush once joked that the best thing about being president was that he didn’t have to eat broccoli anymore. Late night comedians promptly had fodder for a variety of jokes about “negative goals.” You know, the goal for your kid is that he or she grows up and becomes a non-politician. The goal of athletes is to NOT win, and all that.…
I feel qualified to discuss economics, investing, and financial planning. However, I feel unqualified to discuss religion . . . which I will now discuss. For convenience, let’s assume everybody on Earth is either a Christian, a Jew, a Hindu, a Buddhist, or a Muslim. That’s five major religions. Yet, a disproportionate share of world disorder involves Islam. While all religions have zealots or “true…
Every “C” student in every Economics 101 course in every college in every state of this country knows that a national economic policy has both a monetary policy and a fiscal policy. Monetary policy are those actions taken by the central bank (Fed) to affect the economy. Fiscal policy are those actions taken – or not taken – by the central government to affect the…
Several times in the last few days, I’ve been asked what’s wrong with the stock market? I guess it must be “wrong” not to set a new record high every other day? We’re only a few percentage points from all-time highs, but that was a month ago – ancient history, I guess. Yes, volatility in the stock market has increased, but that is a normal…
There has been a book, a song, and a play entitled “Eat the Rich.” It plays into a very basic human jealously, but it has been emotionally reinforced by the belief that the rich benefited unfairly during the Global Financial Crisis (GFC) of 2008/9 . . . while others were suffering. It is often reported that the rich got richer during the GFC. Yes, it…
It sounds like “inside baseball” or too hopelessly arcane to be interesting or important, but it is. Do you believe a stockbroker should tell you the total fees he is charging you? Or not? Do you believe that a stockbroker should tell you when he has a conflict-of-interest with you, such as selling you a mutual fund that sends he and his wife to Hawaii…
The Fed was created by an act of Congress and could theoretically be terminated by Congress. So, the Fed has to be respectful of Congress. Prior to the creation of the Fed, our economic policy consisted fiscal policy alone, i.e., controlling the economy with the Federal budget and regulation. The purpose of the Fed was to manage monetary policy, i.e., controlling the economy with the…
Instead of another droll economist, yesterday’s luncheon speaker was a Washington “insider.” He made some interesting comparisons about our Presidents. For example, both Clinton and Obama sustained large losses in the first mid-term election of their first term. However, President Clinton is a person who wanted to be “liked” and changed his policies. Today, he is a popular former President. Even some Republicans respect him.…
Probably, the least known part of my job is the never-ending pursuit of continuing education (CE) hours. As a Certified Financial Planner (R) certificant, as well as a Certified Investment Management Analyst (R) certificant and a NAPFA-Registered Financial Advisor, I have to “feed” all three organizations with an unending flow of CEs. Therefore, I attend far more conferences than the average person, because I am…
While everybody was watching winter’s last fury for this year (I hope), the Fed released a little-noticed report on its annual “stress-tests” of the 31 largest banks in the United States. The good news was that all 31 have passed and with relative ease. The better news is that the test was actually severe enough to match the Global Financial Crisis of 2008/9. We are…
My favorite professor at Wharton – the brilliant but affable Dr. Jeremy Siegel – enjoys a reputation for being an accurate forecaster as well as a “perma-bull,” i.e., someone who always thinks things will get better. Yesterday, he pointed out that the PE ratio for the S&P 500 is now 19 times last year’s earnings per share. This is significantly above the long-run trend of…
Here, at the corner of Good Planning and Good Living, where I practice, I usually feel an obligation to teach my clients whenever possible, or at least, to help them see a wrinkle in their perspective that might be helpful. Quite often, they teach me. Recently, I was visiting a client and discussing the requirement that he begin taking minimum required distributions from his IRA…
