It is not news that governments give out very generous pension plans. Such generosity was originally considered a trade-off for relatively low wages compared to non-government workers. That may have been a nice gesture then, but there are consequences now. To pay the pensions, governments put aside a certain amount of money each year to be invested in a pension fund for the benefit of…
I like guns and have lots of them. Except when I travel by air, I am never without one. Nonetheless, I believe this Second Amendment cult is stupid. A country like Switzerland was safer, because veterans were encouraged to keep their rifles when they were discharged from military service. A country like the United States is less safe when 99% of people have easy, legal…
Readers will remember my concern in January that a major player in the derivatives market (Glencore) was floundering, which was increasing the possibility of systemic risk — a “Jim Fixx” event of sudden collapse. Fortunately, the commodities giant was able to quickly sell enough assets to reduce their derivatives exposure, and their stock has doubled since then. Now, I’ve become concerned about Deutsche Bank, which…
I never met the man but always knew it would be an honor to simply shake his hand. Long before anybody named Tiger ever picked up a golf club, Arnold Palmer had already popularized the sport of golf. But, he will not be remembered primarily for his golf ability. He will be remembered for his common-man decency to everyone. He was an emotional man, who…
There is a lot of conversation these days about negative interest rates, something that Europe and Japan are experimenting with. So, should the Fed take our interest rates down, like Europe and Japan, rather than up? NO! This reminds me of a situation where you are digging a hole deeper and deeper, while your partner stands on the surface and starts shoveling the dirt back…
As you listen to the presidential debates on Monday, recall the website www.usdebtclock.org — go look at it now! Remember that our national debt is rapidly approaching $20 TRILLION. Remember that our debt-to-GDP ratio is 105% – a traditional “point-of-no-return.” Remember that there are about 4 million fewer workers now, compared to 2000, without assuming that people are simply more lazy now than then. Remember…
I have told this story before but, with less than 50 days until the election, it is worth telling again. One of the most important things my father taught me was at age 13 when I was a paperboy. I had just finished delivering all the newspapers and was pedaling my bike back home, when a truck loaded with walnuts passed by me. In the…
If your stockbroker seems more worried and harassed than usual, show some kindness to him/her. They are stewing in a witch’s brew of increased regulation and decreased understanding of their job. One of the changes in the Dodd-Frank bill was that the SEC was charged with task of developing rules so that stockbrokers could be held to a fiduciary standard, which would require the stockbroker…
Jimmy Buffett – Growing Older But Not Up Lyrics I rounded first never thought of the worstAs I studied the shortstop’s positionThen crack went my leg like the shell of an eggSomeone call a decent physicianI’m no Pete Rose, I can’t pretendWhile my mind is quite flexibleThese brittle bones don’t bendI’m growing older but not upMy metabolic rate is pleasantly stuckSo let the winds of change…
I attended a lecture by a Republican lobbyist yesterday, who said, regardless of who wins the White House . . . America loses. (She did not say how she would vote.) But, she did provide an interesting historical perspective. She started showing graphs of the polarization of Congress, between extreme Republicans and extreme Democrats. Then, she showed graphs of the general population of Americans, and…
Normally, during my all-too-frequent hunting trips for continuing-education-credits, I search out lectures on economics and investing – you know, things I actually care about. However, in the last few years, others have become more interested in the “softer” side of investing, called behavioral finance. It is well known that investors damage their investment performance by selling out when fear is high, which is when the…
When I taught the junior-level Economics of Money and Banking at the University of Texas in Arlington during the last century, I taught that the economic function of banks was to allocate credit across the economy effectively and efficiently. Credit is like any other resource and cannot be wasted. When someone takes bankruptcy and doesn’t pay their credit card or car loan, the lender has to…
Obsession is a defining characteristic of the stock market. Invariably, it finds something to obsess about. Since the global financial crisis of 2008/9, it has mostly obsessed over Fed policy. (To take a break, it sometimes obsesses about oil prices instead.) Right now, Wall Street is obsessing over whether the Fed will raise interest rates in September or December. Last Friday’s plunge started with one…
Most everybody has experienced unrequited love and are probably better people because of it. But unrequited anger is very different and is a cancer on the soul. Maybe, that is the natural long-term consequence of 9-11. That is how I feel about the 9-11 attack on all that I love. Many fellow Americans share this unrequited anger. Fifteen years is a long time to carry…
Describing any given day in the stock market is like reading a recipe. There is a main ingredient, which has been marinating a long time. You add multiple unrelated ingredients and mix together, before slow-baking a whole nano-second and then serving it while blindfolded to perfect strangers in a restaurant. Take yesterday for example – you remember it — the Dow hit an air-pocket and…
“Only employees retire — capitalism is too much fun for the self-employed to retire.” A crusty, old financial planner told me that decades ago, and I never forgot it. He wanted to emphasize that employees generally need more retirement savings than entrepreneurs need. Richard Branson is a 66-year-old serial entrepreneur and self-made billionaire from England. This week, he said he has no intention of ever…
Sometimes, we are prisoners of the things we think we know. I thought that Christopher Newport College in Newport News was just another four-year community college. I was wrong! Helping a client think about a substantial charitable contribution to the school, I was given an “insiders” tour yesterday and left the campus highly-impressed. CNU started in 1960 as a two-year branch of the College of William…
There is nothing so good that it cannot be distorted and used by extremists. For example, take religion. ISIS fancies itself as “religious.” The crazy extremists of Westboro Baptist Church in Kansas, who picket the funerals of our fallen heroes, fancy themselves as doing God’s work. Taken to extremes, Good becomes Bad. As I think about Labor Day, I remember all the good work that…
The Wall Street Journal just reported on a new study that found investment “managers from poorer families tend to beat those from more affluent backgrounds.” As the son of a firefighter, my first thought was “I knew it!” Then, I realized that study made the same mistake I warn investors about, i.e., it ignores risk. Taking a little risk to earn a 6% return is far…
There is no member of the Board of Governors for the Fed that does NOT want to raise or “normalize” interest rates. The question is when. Guessing when has become an obsession on Wall Street. If today’s Jobs Report had showed over 200 thousand jobs were created last month, the Fed would take that as an indication of a strong economy and would be more…