10 Nov 2014

Mano a Mano with Ben Bernanke

The highlight of last week’s Schwab Impact conference for me was seeing, and then meeting, former Federal Reserve Chairman Ben Bernanke. Initially, Bernanke came to the stage in front of nearly 5,000 attendees and gave a 10-15 minute speech about the Federal Reserve’s response to the 2008 financial crisis. He then did a 45 minute question and answer session with Schwab’s Chief Investment Strategist, Liz Ann Sonders, who did a… Read More

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4 Nov 2014

The Perils of Non-Traded REITs

You may not be surprised to know that there is a steady stream of salesman that come through our doors talking about their mutual funds, exchange-traded-funds (ETFs) and other products that they want us to buy on your behalf. The vast, vast majority of meetings do not sway how we invest your money, but I do like to listen just in case there is something out there that we haven’t… Read More

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31 Oct 2014

GDP Treats Investors

The consensus growth forecast for third quarter GDP was 3.00 percent, so markets responded happily to the 3.55 percent reading from the Bureau of Economic Analysis. The largest contribution to growth came from net exports, which grew at a rate of 1.32 percent and consumer spending added 1.22 percent while inventories were a negative contributor at -0.57 percent. I am always a little confused by how the government reports GDP… Read More

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30 Oct 2014

Federal Reserve Ends Quantitative Easing

During the 2008 financial crisis, Warren Buffet compared the US economy to a heart attack victim lying flat on the floor. Buffet’s analogy has continued to be a useful analogy as the Federal Reserve pumped medicine into the economy in the form of buying bonds on the open market in a program known as quantitative easing, or simply QE. That program came to an end yesterday, so you could carry… Read More

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24 Oct 2014

Anatomy of a Short Squeeze

Although it’s come and gone, I am still thinking about the price spike in the 10-year US Treasury note that occurred last Wednesday. Someone from Blackrock told me yesterday that it was the most volatile day for the 10-year since 1980, which implies that it was more volatile than 99.91 percent of all of those trading sessions. You can see from the chart that all of wilding was in the… Read More

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23 Oct 2014

You Can Be a Stock Market Genius

Years ago, before the crisis, I read a terrific book by investor Joel Greenblatt titled, ‘You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits.’ Usually a title like that is a turn off for me because it implies that investing is easy and that someone’s behind the curtain who knows the secrets to making money that no one else knows. Despite the title,… Read More

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22 Oct 2014

Choosing a Trustee

There are many reasons to establish trusts including the efficient transfer of wealth, avoiding probate, philanthropic commitments, tax reduction, or protecting assets, among other things. Ten years ago, the tax reduction benefits were applicable to more people because the estate tax exemption (the threshold where estate taxes kick in) was $1.5 million. Today, the exemption is $5.34 million and, therefore, affects far fewer people. That doesn’t mean that you don’t… Read More

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21 Oct 2014

Lower for Longer

One of the interesting implications of the recent selloff in stocks and rally in bonds is that investors have quickly shifted gears regarding when they think that the Federal Reserve will begin to raise interest rates. Right now, the market expects the Fed to announce that they will end their bond-buying program, known as quantitative easing, at their meeting on October 29th. There has been some scuttlebutt that the Fed… Read More

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20 Oct 2014

Finding Higher Yield

In any investment, the total return is comprised of the income earned and capital appreciation. The yield on the bond market is relatively low, so it’s been good news for bond investors that interest rates have fallen because that means that prices are higher, providing some capital appreciation in a low yield environment. But that’s also the bad news: we’re in a low yield environment. Last year, when interest rates… Read More

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17 Oct 2014

Are Micro Caps Signaling a Bottom?

There are many interesting things going on right now and one of them, in my view, is the sharp rally in micro cap stocks in the past four trading sessions. I’ve noted in earlier missives that small cap stocks are having a very tough year so far, especially at the end of the third quarter (just in time for your quarterly reports, I’m afraid). The following chart shows the relative performance… Read More

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