Everybody knew that our GDP would drop badly in the second quarter, following a 7% annualized drop in the first quarter. Estimates were that our GDP would drop 30-35%, and it dropped 32.9% – the biggest drop in history, by a factor of three times. The lockdown from mid-March to Mid-May was costly indeed. Estimates for the third quarter are a huge improvement – up…
From my first investment course many years ago, I’ve known Warren Buffett as a legendary investor. I learned he was clearly one of the best investors of all time, if not the best. However, from 2009 through last month, he has under-performed the S&P by 4.4% each year. More recently, that under-performance was even worse from 2017 through last month, when he under-performed by a…
Even before 2002, when former Vice President Cheney famously said “deficits don’t matter”, economists have begged the question of whether deficits actually do matter. Out of that discussion, a new isolationist school of thought has emerged, i.e., Modern Monetary Theory (MMT). It has also been widely popularized by Democratic Rep. Alexandria Ocasio-Cortez of New York. A new book by Stephanie Kelton called the Deficit Myth: …
Given my love of the outdoors, nobody was surprised when I volunteered for the infantry in the Army. Backpacking with a buddy in the Appalachian mountains as a boy eventually led me to the majestic Muir Woods north of San Francisco as a man, where I developed great respect for John Muir, the iconic founder of the environmentalist Sierra Club. Following approval of Central Park…
One would not immediately think that the coronavirus would impact Social Security, but it will. Here’s the good news: From near bankruptcy in 1980, the Social Security Trust Fund now has $2.9 TRILLION. (Yea, Congress!) Here’s the bad news: This is the year – 2020 – that cash flow turns negative. From now until 2035, the trust fund will shrink, at which time benefits must…
I live in a perfect world, don’t you? Whenever you look out the window, don’t you see rainbows and lovely unicorns? In fact, at ground-level, little girls throw pretty flowers from their little baskets and sing pleasant little songs. It is a perfect world, indeed! One characteristic of this perfect little world is that shareholders actually control big corporations. Technically, yes – but actually, no. …
There is an anti-mask rally in Dallas today. People, who feel they have a right to spew water droplets on other people, will mass and swarm into various retail stores, overwhelming the store policy about wearing a mask. This is sick! Having been raised in an area with many Revolutionary War memorials . . . and having family members who hated Yankees during the Civil…
I love capitalism! Government can never be as resilient as business. As an example, with fewer people going to malls, there are many large parking lots being ignored. Brookfield Properties is turning those unused assets into pop-up drive-in movies with great success. (Can you believe that many people are too young to remember drive-in movies?) Social distancing is easy. You can eat in your car. …
My hero is dying. Over the last forty years, I have admired him and prayed for him, which makes it so painful to watch him now, crippled with arthritis and writhing in pain. Before he graduated, his professors adored him, especially his mathematical ability. Sadly, at his graduation, on January 1, 1994, he was shot in the leg, shattering the bone. My hero walked with…
YOU – yes, YOU – need a Certified Financial Planner! Nobody else can coordinate and synthesize the myriad advice thrown at people. I should know – after all, I was a CFP over 30 years. When I voluntarily relinquished that certification earlier this year, some friends thought I was retiring, which is not true. Some friends thought I had simply outgrown it, which is also…
Traditional conservatives (as opposed to Trump Republicans) tend to support the Austrian school of budgeting, largely based on the economic teachings of F.A. Hayek. He often pointed to the problem of economists and other scientists in predicting the future, particularly with quantitative models that presume human behavior. He called it “an ambition to imitate science in its methods rather than in its spirits.” I remembered…
For many years, I have enjoyed writing a quarterly column for Inside Business, the business journal of southeastern Virginia. My latest column can be found here: https://www.pilotonline.com/inside-business/vp-ib-expert-flinchum-0713-20200710-y7nfhs2dzjczbbtweon2lfou7q-story.html
For many years, I would buy or sell stocks only when the market opened at 9:30 each morning, because that was the only time of day that I could predict the market price, as indicated by the futures market. The world has changed. Futures are no longer a reliable indicator of market action. They flop constantly all night. A few years ago, I attended a…
Despite being crushed by the pandemic, the stock market just enjoyed one of the best quarters in 22 years, with the S&P 500 rising a whopping 20.54%. Before popping champagne corks, let’s look a little deeper. One of the most useful ways to look at stocks is the distinction between value stocks and growth stocks. Basically, value stocks use their profits to pay dividends to…