Defined: The acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. Often, the assets of the company being acquired are used as collateral for the loans in addition to the assets of the acquiring company. The purpose of leveraged buyouts is to allow companies to make large acquisitions without having to commit a lot of capital. Read More
There is so much in the news right now, most of it about the impending debt ceiling crisis. Most of what you read, hear, and watch is sensationalized (in my opinion), so in this quarter’s video I basically dissect where we are right now, paying attention to the data points that I think are relevant. Being the contrarian I am, I also address some common, assumed facts or assumptions that I simply don’t believe. A longer than normal video, but let me conclude by saying I’m still optimistic, and not freaked out (unlike pundits on TV). Click on my video ... Read More
With a loose monetary policy over the past 4.5 years, the fears of inflation have been touted endlessly. I, too, have warned about inflation over the years. But where is it? Is the lack of hyperinflation one of the biggest, most incorrect predictions of the past 5 years? It certainly is. With the printing presses going, why hasn’t there been the expected inflation? Perhaps a combination of an oil boom, slow growth in Europe, ongoing reduction in household debt, etc. For a deeper discussion of this, click on the link below The Most Incorrect Prediction of the Past 5 Years ... Read More
Are you tired of reading and hearing about Greece? Me too, but that doesn’t mean it’s going to stop. The most recent Greek agreement is a joke (in my opinion) and makes a significant number of overly optimistic assumptions about the future. As I view it, there is no way the European Monetary Union can survive in it’s current form, and definitely not with Greece in there. Where is the money to be made for investors like us? I continue to advise a higher allocation to the United States and avoid Greece and the whole of Europe for at least ... Read More
For years pundits chastised Americans for not saving enough, but in the past few years savings rates have exploded from negative to positive 5%. An unintended consequence of that plus banks and companies building up their own cash on the balance sheets leads to the “velocity” of money to plummet. Money needs to change hands in a vibrant society in the fair exchange of goods and services. Unfortunately, a liquidity trap can occur and may be occurring now that does not bode well for the economy going forward. Read more about this at the link before. I’ll keep you updated ... Read More
As I mention in my video above, Greece is a fascinating story unfolding. I wish it was only Greece, but we have a few other countries in Europe that will be following it in the headlines over the coming year. This is a good article on a few dissimilaries between Greece and the United States. Why do you care? When you’re at a summer BBQ, some know-it-all guy is going to start getting all apocalyptic on the US. You need the ammo to refute that. America Can Not Go the Way of Greece – Link Read More
There is a significant amount of money being held by corporations at the moment. $1.9 trillion. 7% of their cash. That’s the highest level since 1963. This is rational (from their point of view) due to the uncertainty in the world, including mixed signals from Washington. But as they reinvest in technology, efficiency, and new products, this bodes well for the longer term value of their firms, and ultimately our investment markets. CLICK FOR FULL ARTICLE Read More
You’ll see me in the coming months talk about the bond markets, particularly as the Quantitative Easing (QE2) comes to a close this summer. We have a huge federal deficit. We need people to buy Federal bonds to lend money to the government. With the huge influx of money from the Fed in the past few months, foreign investors were squeezed out. Will they come back? The answer is not as simple as you’d think. I’ll be writing more and more about this as the year goes by, particularly it’s impact on you. CLICK FOR FULL ARTICLE Read More
One of the problems with Ireland is their huge reliance on banking for their economy. How do other countries fair as a percentage of their GDP? Luxembourg 2,461 Ireland 872 Switzerland 723 Greece 141 US 82 Want the full list? CLICK FOR FULL ARTICLE Read More
There is an interesting study that says states that ban texting while driving actually have rising accident claims. Why? They theorize that drivers try to evade police by lowering their phones when texting, which increases the risk by taking their eyes even further from the road and for a longer time. Why do I bring this up? Because the unintended consequences of every action should be taken into consideration. A good think to remember when we’re talking about economic policies–monetary or fiscal. CLICK FOR FULL ARTICLE – CRASH INTO ME Read More
We’re 1/3 done with the quarter, elections were yesterday, and lots left in the year. In this week’s video, I give a little update on the quarter and year so far, plus a discussion about why you have to take the comparison of your portfolio to an unmanaged index with a grain of salt. Listen to my video below to find out more. Read More
This is a quarter you’re going to hear about Quantitative Easing. I hate it. It’s my belief the increased money supply will stay on the books of the banking industry to offset any potential commercial real estate downgrades they’ll be making in the future. From the banks’ point of view, it makes perfect sense. For you and me, not so good. How did QE work in Japan and the UK? Not well at all. CLICK FOR FULL ARTICLE – QE DID NOT WORK IN THE UK Read More
Quantitative Easing ( known as QE 2 amongst friends) is coming this quarter. In my opinion, it’s being priced into the markets already. What is it? A scheme by which the money supply is increased and hopefully starve off deflation and boost the economy. Sorry, I’m not buying it. CLICK FOR FULL ARTICLE – QE1 FAILED, WHY WILL QE2 WORK CLICK FOR FULL ARTICLE – FED’S STRATEGY OF GETTING RETAIL INVESTORS INTO STOCKS VIA QE2 WILL FAIL Read More
The title of the article below is “More Proof That Our Leaders are Clueless…”. I’m sure I’m quite that pessimistic, but I’ve been persuaded by the side of the argument that the additional cash reserves that will probably be released into our system will simply be held by the banks and not accomplish what it’s intended. I’m pretty unimpressed with the Fed. CLICK FOR QUANTITATIVE EASING ARTICLE Read More
If you look back at my 3rd Quarter Preview (here) I mentioned I forecast the 3rd quarter would be up. That’s proving to be a great move (if I do say so myself). But what makes me nervous? This article sums up a lot of my feelings. Does that mean I’m bearish for the 4th Quarter? I guess you’ll have to wait until my 4th Quarter preview in a couple of weeks to find out. Click on this link for FULL ARTICLE Read More
Last week I talked about recommendations assuming we’re in a DEflationary period. This week I give suggestions for how to invest in an INflationary period. Oh yeah, lots of good stuff in my videos (if I do say so myself). Listen to my video below. Read More
At the beginning of the year most economists were predicting an inflationary period. They were wrong. This week I give suggestions for how to invest in a DEflationary period. Next week I take the opposite view and say “how should you invest if it’s actually an inflationary period?”. Hilarity ensues of course. Okay, maybe not. Listen to my video below. Read More
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The Dow Jones Industrial Average is an unmanaged, price-weighted index of 30 large capitalization stocks with dividends reinvested.
The Standard & Poor’s 500 Index (“S&P 500”) is an unmanaged, market capitalization weighted index of 500 widely held stocks, with dividends reinvested, and is often used as a proxy for the stock market.
The Nasdaq Composite is an unmanaged, market capitalization weighted index of stocks listed on the Nasdaq Stock Exchange, and are reported as price return without reinvestment of dividends.
Indexes are often used as a proxy for the stock market and cannot be invested in directly.