Invest Like an Egyptian

By | 2013-12-16T21:56:41+00:00 January 29th, 2011|Global Market Update|

Amid the sell-off Friday there was one common theme: Egypt. In the short run global stock markets were down as the situation unfolds. Uncertainty is the bane of economic growth. When people don’t know what’s going to happen next, they tend to stay home. Companies pull back on investment plans. But democratic reform in the Middle East would be good for the world economy. Hundreds of millions have lived in abject poverty, as elite leaders have maintained their power through patronage and corruption. Inevitably, [...]

Adult Supervision?

By | 2014-09-11T14:44:19+00:00 January 28th, 2011|Global Market Update|

Call it the arrival of the grown-ups. On Wednesday New York State seized control of one of the nation’s wealthiest and most heavily taxed counties. Local governments around the country face hard choices, but Nassau County has serious problems. It has a large and diverse economy—its GDP is $90 billion, larger than a dozen states, and the County has $2.7 billion in revenues. But their expenses are over $3.0 billion, giving them a 10% deficit. By state law, counties are allowed to run a [...]

2011’s Top Ten (Part 2)

By | 2017-07-17T12:35:17+00:00 January 27th, 2011|Global Market Update|

Number two among my top ten resolutions seems simple: have a plan. It may seem self-evident that financial planning requires a plan, but many people don’t think so. They think that if they just had more money, all their problems would be solved. So they go about maximizing their income and don’t think about all the other stuff. But money comes in many forms: income, capital appreciation, insurance proceeds, even lottery winnings. Your personal situation will determine what’s the best way for you to [...]

Now They Tell Us

By | 2014-09-11T14:35:25+00:00 January 26th, 2011|Global Market Update|

The report of the Financial Crisis Inquiry Commission is due out tomorrow. Will it tell us anything new? The partisan split in the report is old news. The Democrats on the Board fault a lack of regulation in the mortgage market. The Republicans wanted a more vigorous condemnation of Freddie and Fannie, the two mortgage giants. The report is not sparing: two Fed Chairmen, two Treasury Secretaries, the four banking regulators, and the government's inconsistent response--bailing out Bear Stearns but letting Lehman Brothers fail--all [...]

2011’s Top Ten (Part 3)

By | 2014-09-11T14:34:59+00:00 January 25th, 2011|Global Market Update|

Resolution number three in terms of financial planning is to think forward, not backward. You’ve read and heard the disclaimers before: “Past performance does not necessarily indicate future results.” And it’s true. Funds or stocks that are amazing performers rarely repeat those results year after year. But even though we know this to be true, we still behave like it isn’t. That’s because we’re wired to believe differently. The best sports teams seem to repeat their success. The best places to hunt or fish [...]

2011’s Top Ten (Part 4)

By | 2014-09-11T14:34:30+00:00 January 24th, 2011|Global Market Update|

My number four financial planning resolution is to think globally. I’ve said before how it’s a global investment world. If you miss being global, you miss a lot. A good reason for this is global leadership. It’s no longer the case that the largest companies in the world are based in the US. The one of largest clothing retailers in the world is based in Spain. The world’s biggest oil company is in Brazil. So you now have to invest worldwide to be in [...]

Apple’s To Apple’s

By | 2017-07-17T12:35:17+00:00 January 20th, 2011|Global Market Update|

What does Steve Jobs’ announcement mean for Apple? Clearly, his health issues are going to affect things. The man has been fundamental to Apple’s rise from near-death in 1998. iTunes, iPods, iPhones, and iPads have revolutionized consumer electronics. In these products Steve Jobs seemed envision a consumer need and fill it before we even knew that we had it. He didn’t invent them, but he was able to see small markets and understand what it would take to make them big businesses. He’s been [...]

2011’s Top Ten (Part 6)

By | 2017-07-17T12:35:17+00:00 January 19th, 2011|Global Market Update|

Number six among my top ten financial planning resolutions is simple: cost matters. At least, it seems simple. The more money you spend on investments, the less you will have left for the thing you’re investing for—whether it’s retirement, or kids’ education, or a charitable goal. Warren Buffett discovered this when he realized that he had a talent for investing. He understood that if he bought and sold all the time, transaction costs would eat up his profits. Transaction costs are one thing. A [...]

2011 Top Ten (Part 5)

By | 2017-07-17T12:35:17+00:00 January 18th, 2011|Global Market Update|

Make it fun. That’s resolution number five. Let’s face it. For most people, money matters are boring. They involve budget issues and trade-offs between savings and spending that frustrate the tar out of most mortals. So in order to encourage yourself to deal with all the unpleasantness, set up some kind of incentive. For example, estate planners say that your will should be updated every three years or so. So think about what would be a special treat—like eating at a favorite restaurant, or [...]

2011’s Top Ten (Part 7)

By | 2014-09-12T10:51:35+00:00 January 17th, 2011|Global Market Update|

Among my top ten financial planning resolutions, number 7 is to determine how much risk you can handle. Risk and return are linked: the higher the potential return, the greater the risk. Treasury Bills and Notes have almost no risk to principal; corporate bonds and junk bonds have more; stocks still more. It all has to do with where the investment lies on the cash-flow food chain. The government (almost) always gets paid; then debts get paid; finally owners get what’s left over. But [...]