Worst. Investment. Ever.

By |2013-12-10T05:33:35+00:00December 10th, 2013|Global Market Update|

Is Microsoft making a comeback? Ever since Steve Ballmer quit the stock has been rallying. Many investors are encouraged by its focus on business solutions and “cloud” applications. But it’s still facing the same competitive landscape: an internet juggernaut—Google—and a host of disruptive devices at Apple. And the recent rally by Microsoft, Apple, and Google are driving the Nasdaq to new highs. But it was only 15 years ago that Apple went cap-in-hand to Microsoft for a $150 million lifeline. With stable funding Steve [...]

Minimum Wage Machines

By |2013-12-09T11:26:36+00:00December 9th, 2013|Global Market Update|

What is a “living” wage? It seems reasonable that anyone working full-time should be above the poverty-line. For a family of four, that would be $23,550. Which, if supported by a single wage-earner, would require a minimum wage of $11.78 per hour. While that would be a significant increase from the current Federal minimum of $7.25, it’s not that far from some proposals. But when Amazon is proposing to deliver packages by drone, raising the minimum wage seems misguided. While many service-sector jobs can’t [...]

All Creatures Great and Small

By |2013-12-06T10:15:40+00:00December 6th, 2013|Global Market Update|

On the same day that we were treated to the details of petty financial forgeries in the Madoff case and insider soap-operas at SAC capital—we also learned that a great man—Nelson Mandela—had passed away. Nelson Mandela worked in the ranks of the African National Congress while free and from prison during its fight against apartheid. The ANC was supported by the Soviets at that time and was regarded with suspicion by many in the West. But when Mandela was released in 1990—shortly after the [...]

Getting Schooled

By |2017-07-17T12:34:36+00:00December 5th, 2013|Global Market Update|

They were the best of schools, they were the worst of schools. Once again an international testing body has evaluated 15-year olds around the world in math, science, and reading and once again the US has come out below average. If an aggressive foreign power did this to our schools, the saying goes, it would be considered an act of war. But people need to stop hyperventilating about tests and ranking. The experts sound like a bunch of preppies obsessing about their SAT scores. [...]

Reform Party?

By |2013-12-04T11:12:26+00:00December 4th, 2013|Global Market Update|

Is the world going sane? The Federal judge in Detroit’s bankruptcy case ruled that pension rights are contract rights. The legislature in Illinois just passed a mega pension reform. What’s next? Congress reforming Social Security? It’s no secret that the US has a pension problem. Under current law, States and cities have underfunded their retirement benefits by about $700 billion, by some estimates. New Hampshire’s gap alone is $3.2 billion, bigger than Minnesota’s. And pension obligations are at the heart of Detroit’s bankruptcy filing. [...]

Inflation Nation?

By |2013-12-03T10:50:12+00:00December 3rd, 2013|Global Market Update|

Whatever happened to inflation? I grew up during a time of accelerating inflation. The ‘60s and ‘70s were a time when price increases moved from 2% per year to around 15% per year. Prices went from doubling every 40 years to every 5. Gas prices went from 30 cents per gallon to $1.50. By the end of the ‘70s, when Milton Friedman said that inflation was always and everywhere a monetary phenomenon, we were ready to believe him. Raising real interest rates in the [...]

Double Trouble?

By |2013-12-02T11:25:39+00:00December 2nd, 2013|Global Market Update|

Should we double the minimum wage? That’s what entrepreneur Ron Unz thinks. He proposes to increase the minimum wage in California $12 an hour. Some other folks want to increase it to $15 per hour. They claim that higher wages will lead to higher spending, and this will stimulate the economy. In addition, companies like Wal-Mart or McDonalds can afford it. Wal-Mart’s net profits were $17 billion last year; McDonalds made $5.5 billion. But those companies’ biggest expense is labor; if the minimum wage [...]

Back in the Black

By |2013-11-27T10:25:48+00:00November 27th, 2013|Global Market Update|

Is Black Friday a good deal? Everybody loves a deal. And Black Friday is the biggest deal-day of the year. With door-busters being touted at Wal-Mart and Target and JC Penney and everywhere, many consumers are already starting to camp out. But is this just retail theater? The common assumption is that retailers stock up on lots of goods in October and then mark down the ones that don’t sell. But that’s not the way it works. That $25 sweater probably cost the retailer [...]

Good and Bad

By |2017-07-17T12:34:36+00:00November 26th, 2013|Global Market Update|

Why do good people do bad things? Recently we’ve been treated to a spate of bad behavior by otherwise successful, sensible individuals. A couple of Credit Suisse mortgage traders intentionally mis-marked their portfolios as the housing market crumbled around them. LIBOR traders systematically manufactured false readings of this key global index in order to help their firms’ derivatives desks. And then there’s Rajat Gupta, the former Chief Executive of McKinsey & Co., who served on the Goldman Sachs Board of Directors. Gupta was convicted [...]

50 Years Ago …

By |2017-07-17T12:34:36+00:00November 25th, 2013|Global Market Update|

50 years ago I was a little boy watching a funeral on TV. The grown-ups were hushed. The images from Washington, DC played to a nationwide audience. 50 years ago there wasn’t a conspiracy industry. There wasn’t a Sixth Floor Museum, dedicated to an assassination. Three presidents prior to Kennedy had been shot, and the crime had been pursued. The Cold War was real, and ever-present. Duck-and-cover drills were part an ordinary elementary school day. 50 years ago the stock market was in the [...]