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…
The optics make me smile. There is a little, old grandmother with white hair sitting at a table alone, facing off with a panel of men who question, sometimes rudely, everything she has done and everything she plans to do. Those are the optics for the twice yearly testimony of the Fed Head before the separate houses of Congress. The best part is that she…
Recent data suggests that the economy is sputtering somewhat, but I’m not particularly worried about that. It probably suggests the GDP growth rate is slowing from the 3.5 to 4.0% range to a more sustainable 3.0 to 3.5% range. Does that suggest the stock market is slowing? No! Over the last 115 years, the Dow has dropped 30% or more thirteen times. The average bull…
When I joined the Army many decades ago, I knew very little. About the only thing I knew was that I wanted to be the best possible soldier and to make my father proud. So, I applied to become a “Green Beret.” However, it was close to graduation before I realized our proper name was actually “Special Forces.” For many years, we were the only…
For at least ten years, there has been a simmering battle between financial advisors and stockbrokers. The battleground has been fought in the SEC, FINRA (which regulates stockbrokers) and lobbyists from one end of Connecticut Avenue to the other. It has been as exciting as watching molasses ooze. They have been fighting about whether stockbrokers should adhere to a suitability standard or a fiduciary standard.…
I’ve written this before. In fact, whenever the stock market hits a new high, I have to write it again. The S&P 500 was up 13% last year, but your portfolio was not. Should you be unhappy about this? NO! In fact, if your portfolio was up that much, you should consider firing your investment advisor for taking too much risk. Remember, if you took…
Since ISIS or ISIL burst onto the world’s stage last year, I’ve been trying to get my head around the subject of “evil.” To me, it seemed that ISIS had taken the notion of evil to a whole new level. Hitler and Stalin certainly killed more people but in a more mechanical and a somewhat less horrific manner. ISIS seems to relish murder more than…
The staggering drop in oil late last year was universally unexpected. While we have seen drops before, this one is both sudden and severe. My take on it was that North American frackers were so successful in making us energy independent that the world slowly became over-supplied with oil. Then, when questions about the global economy suggested oil demand would fall, the initial drop in…
Negotiations are underway to resolve the Greek Debt Tragedy, version 3.1. Unfortunately, it has become a Greece versus Germany battle. Greece argues that one-third of their debt should be forgiven. After all, one-half of Germany’s debt was forgiven after World War II. In addition, Germany inflicted immeasurable destruction on Greece during that war and never paid a penny of reparations to Greece. In other words,…
We are so accustomed to economic data that contradicts other economic data that we become almost giddy when data does agree. Last week’s Jobs Report was simply great, showing a million jobs created over the last three months, as well as discouraged workers streaming back into the workforce. Yesterday’s JOLTS (Job Openings & Labor Turnover Survey) Report confirms the tightening of the labor force. In…
It is with sweet satisfaction when you learn that something you always suspected is now justified by research. I have never believed that either the body or the mind were machines that simply wear out over time. I have suspected the aging process can be delayed by both physical exercise and mental exercise. Yesterday’s Wall Street Journal details that research — Read it! Both the body…
The January Jobs Report was simply great. Not only were 257 thousand jobs created last month, but we learned last year was even better than we thought, especially the last two months of 2014. For the last three months, including January, we’ve averaged 336 thousand new jobs each month, which is the best since 1997. Democrats were happy to see that average pay was also…
When I took philosophy 101 in the last century, I recall the professor warning us to beware of philosophies that make a great deal of sense and are intuitively logical . . . until you apply them to the real world. I’ve come to believe that is true for objectivism or libertarism. Ayn Rand would be 110 years old this week, and I think I’ve…
When investment nerds die and go to heaven, they wake up in the research department of Goldman Sachs, the legendary Wall Street investment house widely known for their “aggressiveness.” The latest research indicates the following: 1. Our GDP will grow at a 3.2% rate this year, compared to 1.1% in Europe.2. The dollar will continue to rise, with the Euro dropping 4.3% this year to…
Yesterday, when John Boehner was awarding the Congressional Gold Medal to the 40 surviving members of the Devil’s Brigade (predecessor unit of the “Green Berets”), he teared-up. If I had been there with them, tears would have been rolling down my cheeks as well. Quoting from the Associated Press: In 1942, they were lumberjacks, miners, hunters and farmers from the United States and Canada who…
My support for the death penalty solidified in 1962. I think it was the now extinct Look magazine that published a full-page photo of the lifeless body of Adolf Eichmann hanging by his neck in Jerusalem. The photo was a relief. I didn’t want to live on the same planet as a person who actually bragged that he was responsible for the murder of five million…
In his iconic 1667 book Paradise Lost, John Milton wrote “easy is the descent into Hell, for it is paved with good intentions.” English professors believe that is the origin for the expression “the road to hell is paved with good intentions.” It also explains how college loans became economic quicksand. Even though it is now less true than previously, it is still commonly believed…
One of my favorite quotes from the Rocky movies was the line by the champ (Mr. T) that “I pity the fool,” referring to challenger Rocky Stallone. Sometimes, economists are as arrogant as the champ. This blog has discussed the problem of a strong dollar quite often. Yesterday’s announcement that GDP growth was only 2.6% in the fourth quarter of last year is proof of the…
For about ten years, investment strategists have been arguing that, since half of the world’s stock is outside the United States, we should invest about that much in foreign stocks. In other words, about 50% of your portfolio should be invested internationally. One way to do this was to buy the stock of large U.S. multinational companies, whose revenue from foreign nations already exceeds 50%…
Last Fall, the CNBC Fed survey of economists and fund managers showed their belief that the Fed would not begin raising interest rates until this June. That didn’t make sense to me, and I suggested it would not happen until much later in the year. Today, the latest survey showed their expectation that the Fed would not begin raising interest rates until this September or…
Imagine a Shangri-La where everybody gets free medical car and everybody retires at age 60 unless they have a hazardous job, like hairdressers who must work with dangerous chemicals, you know, or disc jockeys, who are around electrical equipment, you know. They get to retire at age 55. Imagine a national joke about paying taxes, where he who cheats the most is most respected. Imagine…
Clint Eastwood’s new movie American Sniper is a must-see for every lover of America. It is not about war.It is not about the Iraqi war.It is not even about warriors. It is about one particular warrior in the Iraqi war.It is about one particular American Hero, who deeply loved his country.It is a true story about a genuine “Boy Scout.” It is also about the “warrior code”…
This morning, the European Central Bank announced it would begin quantitative easing (QE) in March by purchasing 60 billion euros or about $70 billion of “bonds” each month until Fall of next year, if not longer. This was more than expected, and almost as much as the $85 billion the Fed was buying before it ended QE last Fall. Dow futures immediately jumped upwards from…
I didn’t watch the State of the Union address last night. It was past my bedtime, plus I already knew whatever the President said would be dead-on-arrival and could already cite the reasons the Republicans would use to explain why everything was dead-on-arrival. But, apparently, the President coined a new phrase — middle class economics. I’ve been scouring the internet looking for a definition without…
A recent editorial in Investment News began with “Despite what one may read in newspaper headlines or see on nightly television news shows, the business of providing financial advice is an honorable one — no less honorable than teaching children, taking care of the sick or keeping criminals off the street. In fact, a person who becomes a financial adviser isn’t making a career choice: he…
I write a quarterly column for Inside Business which is supposed to take both a look back as well as a look forward. The most recent column can be found here: http://insidebiz.com/news/q4-recovery-makes-its-way-main-street Unfortunately, that column was submitted just before the Swiss National Bank unexpectedly allowed their currency to float. That announcement may turn out to be the most significant economic event of this year. It also…
We just watched Melancholia, the highly-existential 2011 movie offering by Lars von Trier, who is seriously-talented as a writer and director but might be sadly-flawed as a person. The movie is a study of two sisters – one who is sensible and responsible and the other who is depressive and socially dysfunctional. During the first half of the movie, the sensible sister tries to help…
Presidents always get too much credit for good economic times and too much blame for bad economic times. After all, the world’s largest economy has its own momentum. And, it changes direction and speed like an aircraft carrier – S – L – O – W – L – Y. In 2007, we were running a huge budget deficit, about 10% of GDP. That was…
In the wee hours this morning, European stock markets went crazy. Unexpectedly, the Swiss National Bank announced it was no longer supporting the cap on the Swiss franc, which immediately jumped almost 20% in value. This was a huge unexpected jump to occur at one time. Remember that Switzerland maintains its own currency and does not use the euro. If the Swiss franc (called the…
