As people contemplate retirement, they often go to a bank broker to see if they will be prepared for it, financially. The broker will plug a few numbers into his laptop and tell you the odds or probability that you will be prepared, measured to two decimal places, such as a 72.84% probability, for example. This is called a Monte Carlo analysis, and it is…
Supply-side economists argue that tax revenues will increase if you cut tax rates. Since passage of the Trump tax cut, revenues have indeed increased . . . a whooping 2%. Unfortunately, expenses or spending increased 9%, primarily for federal retirement and health benefits, the military, and interest payments on the national debt. (Notice that only government workers received increased entitlements.) After some accounting adjustments, our…
Every profession has its crooks and charlatans, even doctors, lawyers and Indian chiefs. In financial planning, I trust nobody who deals with offshore asset protection trusts. Originally, they were used to protect assets from ex-wives or creditors or the IRS. Of course, the way to accomplish this was to transfer title or ownership of those assets to somebody else, who was then free to do…
There are many reasons to retire. You might retire for health reasons, or you might retire because you already have plenty of money. You might retire because you want to do charity-work. I think most people retire, because society expects us to WANT to retire. Why do you want to retire? Who told you that? Not all retirements are successful. How will you retire from…
Yesterday’s employment report was considered bad news, as only 75 thousand jobs were created in May, while 180 thousand had been expected. Bad News! So, why did the Dow rise 263 points? Because that increases the probability that the Fed will cut interest rates. Clearly, the market believes that short-term interest rates – the only interest rates directly controlled by the Fed – are too…
We recently noted the unusual under-performance of small-cap stocks, which were getting trounced by large-cap stocks this Spring. Now, we look at the two ISM Indexes and see continued growth in the services sector, as well as employment, but a sudden slowdown in manufacturing. It is still increasing but only barely. Obviously, the new tariffs are one cause, and other causes are not readily apparent. …
Did you notice? A little bi-partisanship has broken out in Congress! It can happen! Dogs and cats can get along, after all. Who knew? The cause is an interesting re-alignment going on. Historically, we have viewed our leaders as “right or left” or as Republicans or Democrats. That may be changing to globalists or nationalists. The new bi-partisan hearings are a joint effort of Republican…
When I was a boy, my parents forced me to wear nice clothes every Sunday morning to attend Sunday School and Church. They taught me the key to life is what you believe. When I was in college, my professors insisted that I learn more about things I care little about. They taught me that key to life is how much you know. When I…
Looking at the global markets this year, there is one anomaly worth pondering. Since the early 1990’s, the benefits of globalization have largely accrued to the large companies. Two years ago, 52% of total revenues for the large companies were derived from international sales. Therefore, one can assume large cap companies would be more sensitive global slowdowns and less sensitive to internal recessions. That ain’t…
Now that my hometown has joined the “Mass-Killing-of-the-Month” Club, I feel the need to comment, both as a native-son and as a “gun-lover”. First, we already have enough guns. We have less than 330 million people, including children and infants, but over 375 million guns. How many do we need anyway? Plus, we manufacture over a million new guns every year. Second, the Second Amendment…
There are seventeen little-known but terribly important minerals known as “rare earth minerals,” which are used for jet engines, missile guidance systems, electric car batteries, antimissile defense systems, satellites, cell phones, lasers, etc. 81% of all rare earth minerals are mined in China, and there is rising concern that China would use our dependence on them as a negotiating tool. Our defense department consumes 9%…
Memorial Day is the most meaningful holiday of the year . . . but I hate it, because it is the only day of the year that I always cry. Yes, it is a colorful day, with red, white, and blue flags and balloons. Politicians preening for votes behind red, white, and blue bunting. Hopefully, they will remind us that America is more than an…
Carl Richards is a long-time financial planner and my favorite columnist for The New York Times. (Truth-in-blogging: I took his course on behavioral finance a few years ago and have been a fan ever since.) In his latest book, he shares an interesting personal story, which I quote: Take my recent experience with my dog, Zeke. He was having some stomach problems (I’ll spare your the…
Kudo, Mr. President! There are two types of immigration: legal and illegal. Looking at legal immigration, there are two main categories. One is family reunification, accounting for 66% of legal immigrants, and the other is “merit-based”, accounting for 12%. The President has proposed the “merit-based” allocation be increased to 57% of legal immigrants, while reducing family reunification to 33%. As usual, the devil is hiding…
In 19th century England, textile workers were threatened by the development of new automated textile equipment. They rioted several times and destroyed many of the new machines. They were called Luddites, which has come to mean anybody who is distrustful of new technology. With respect to technology, there seems to be only two opinions – (1) technology is wonderful and each development must be hailed…
Carolyn McClanahan is both a medical doctor and a CFP(r) Professional. I first met her at a NAPFA (National Association of Personal Financial Advisors) convention some years ago and have been a fan ever since. She recently wrote about the importance of planners helping clients make “The Big Four” decisions. The first decision is when will a client move, into an eldercare facility or a…
The first quarter (Q1) of GDP was surprisingly strong at 3.2%. This was higher than expected, due to two things. One, imports dropped considerably, showing the impact of tariffs. Two, inventories increased more than expected, also reflecting the build-up before tariffs took effect. Only one person thought that growth rate was sustainable. The early second quarter (Q2) data is substantially weaker. Retail sales and factory…
Recently, I attended a lecture by Raghuram Rajan, formerly chief economist of the IMF and the central banker of India and currently at the University of Chicago. He spoke about his new book The Third Pillar, which argues a strong, long-lasting nation needs three pillars. The first is efficient, effective government, along with a growing, prosperous business pillar, the second pillar. The third pillar is…
As we sit here, waiting for the next school shooting, it might be useful to consider the NRA’s deepest fear – allegedly – which is that the slippery-slope of responsible gun ownership leads to total confiscation of our weapons by “the” government. Okay, let’s suppose that’s true and that gun ownership is outlawed. There are already 360 million guns in America for 340 million Americans. …
Larry Kudlow is my favorite Supply-side economist. A long-time CNBC contributor, he is a gentleman, in the finest sense of the word. He is a master at disagreeing agreeably. I like him and respect him! Today, he is the President’s principle economic advisor and must help advance the President’s economic agenda. Last weekend, he admitted that tariffs are just additional taxes on the consumers. To…
As I write this, the Dow is down about 700 points. One of my favorite market sages pointed out this morning that “we’re only one tweet away from a new high!” Yes, the market is just that volatile now and could turn around quickly (which means it is dangerous to short anything). Obviously, the market is “freaked-out” about the China negotiations or lack thereof. Are…
Efficiency is a good thing, right? Is increased efficiency a good thing? Depends on the price, of course. Blockchain is a digital platform where buyers and sellers can separately enter information, confirming each other’s info. It will increase efficiency and reduce accounting costs, especially with international trade finance. Therefore, “good guys” like it. It is also a distributed ledger of all transactions, which cannot be…
There were three interesting takeaways from my recent class on brain health. One was, if a person is very concerned about approaching brain disease such as dementia, make sure they have completed their financial and estate plan BEFORE getting the medical diagnosis. If they do have onset of brain disease, they may lack the ability and will certainly lack the confidence to complete their financial…
I have been a financial planner since dinosaurs roamed the land. Okay, maybe not that long, but I have watched the evolution of financial planning for a very long time. In the early years, our focus was on rationalizing or making sense of a person’s financial assets and coordinating that with their estate plan. With the death of pensions, our focus became retirement planning. No…
Back in 1972, I worked through the math supporting the economic Law of Comparative Advantage, which explained how globalization increased GDP, and I have been a “globalist” ever since, even now when it is an unpopular position. In fact, most economists are still globalists, even if they won’t currently admit to it. But the globalization we have witnessed since the mid-1990’s is not our first…
William Weld was the governor of Massachusetts and is now a candidate for the Republican nomination for President in 2020. I made a donation to his campaign this morning and urge others to consider doing likewise. Go to: https://www.weld2020.org/donate
In case you missed it, my last quarterly column for Inside Business argues that the debt ceiling does more harm than good. The column can be found at: https://pilotonline.com/inside-business/news/columns/article_fecaf2c0-5ace-11e9-a648-33d438ae14b0.html
Neither economic cycles nor market cycles have a brain. They don’t know if they are young or old. They just keep going . . . until they stop. Strategists are fond of saying bull markets never die from old age – they are killed by some exogenous event, usually by the Fed or a bubble, like mortgages in 2007. Since 1949, the average bull market…
I was raised in a gun-friendly family and received my first rifle at age 13. It is not surprising I qualified as an expert marksman in the Army. Further, infantrymen develop an almost intimate relationship with their weapon, especially when they realize that weapon may save your life. I still love guns! When I was discharged, I naturally joined the National Rifle Association. After all,…
One Sunday when I was a boy, I was attending a Sunday School class, when the teacher told us that a bad thought and a bad deed were equally bad. When I objected, the teacher informed that, in a most patronizing voice, that men, older and smart than any little boy, had already decreed it, and I should just accept it. As the internet age…
Most Republicans will agree that the President has a different standard of truth, chuckling as they say “Trump’s just being Trump.” I understand that and normally chuckle myself. The problem is that many Americans, not just Democrats, assume everything the President says is untrue, which is not true. That was the case when he said there is a crisis on the southern border. Automatically, I…
While I have agreed with my Republican friends many times, they are dead wrong on the subject of the Fiduciary Standard. For years, there have been two types of financial advisors. One are the Registered Investment Advisors (RIAs). They are held to a fiduciary standard, which requires the advisor to always act in the best interest of the client. That doesn’t mean they can’t make…
I always assumed that I would become an armed guerrilla, if I ever found myself living in a non-democratic country. However, during recent years, we have been in three countries ruled by dictators — China, Cuba and Egypt. To our surprise, we never saw any resistance nor any desire to resist their dictators. We never heard an unkind word about their dictators. Indeed, the people…