Not Turning Japanese?

By |2017-07-17T12:22:11+00:00January 14th, 2016|Global Market Update|

Japan. The Vapors Cover Art. © United Artists. Source: Wikipedia. That’s the market that should scare all the investors, financial planners, asset managers, and market mavens out there. The Japanese stock market has been in a bear market for the past 25 years—down 2% per year, even after dividends. By contrast, the US has grown 9% per year. And Europe is in the middle: the UK is up 4%; Germany is up 7%; France has grown 3% per year. Source: Bloomberg The divergence is [...]

Powerball Scrooges

By |2017-07-17T12:22:11+00:00January 13th, 2016|Global Market Update|

Is Powerball a humbug? Source: Of course it is. We know this. The states use it as a revenue source. If they didn’t make money—and if we didn’t lose money, on average—they wouldn’t have state lotteries. But people still line up to buy tickets, especially when the jackpot is ginourmous. $1.5 billion would change anyone’s life. Yes, I know the payoff would be cut by taxes, and would probably have to be shared with another winner, and I would get friend-requests from everyone [...]

The Curse of Plenty

By |2017-07-17T12:22:12+00:00January 12th, 2016|Global Market Update|

Why are resource-rich countries so poor? Photo: Walter Siegmund. Source: Wikipedia “All that glitters is not gold,” Shakespeare wrote. And it’s true: countries endowed with abundant natural resources–like gold, oil, or diamonds—grow more slowly than countries that don’t seem to have these natural gifts. There are three reasons. First, a commodity-based economy is tied to a boom-and-bust cycle. We’re seeing that now, with oil. In the flush years, extra cash leads to malinvestment, wasteful spending, and too much debt. In the bust years, financial [...]

The Con Artist

By |2017-07-17T12:22:12+00:00January 11th, 2016|Global Market Update|

Why are we so gullible? Photo: Annie Spratt. Source: Life of Pix We’ve all gotten them: emails from a Nigerian price, offering us unimaginable riches if we will facilitate a cash transfer. Or someone we know has gotten a phone call from the grandchild in Mexico who is in trouble and needs money. Or we’ve gotten a call from the IRS telling us that we’ll be charge with tax-evasion if we don’t pay a past bill with a credit card. We love to listen [...]

Think Different

By |2017-07-17T12:22:12+00:00January 8th, 2016|Global Market Update|

Think Different Why does getting married affect your finances? Photo: Dave Meier. Source: Picography A great deal of research documents that married people are financially better off than singles. Apart from having a lower tax rate for “married, filing jointly,” married people enjoy other advantages: pooled living expenses, shared shelter, greater employment benefits, lower insurance rates, and so on. But one significant advantage is psychological. In most relationships one partner tends to think long-term and the other short-term. Long-term thinking entails planning for retirement [...]

Values and Valuation

By |2017-07-17T12:22:12+00:00January 7th, 2016|Global Market Update|

Does valuation matter? Photo: Carspotter. Source: Car Pictures Many analysts consider the stock market expensive right now. They look at high-flyers, like Facebook, Netflix, and Tesla—with their eye-popping PE ratios, and conclude that the market has gone crazy. Other folks note that these companies are new, and that they’re priced for significant future growth. If you look at the rest of the market—with pedestrian names like Exxon, Apple, and Caterpillar—valuations are far more reasonable. Which is it? The market has always been an amalgamation—some [...]

Migration Economics

By |2017-07-17T12:22:17+00:00January 6th, 2016|Global Market Update|

What does migration do to an economy? Photo: Villes. Source: Animal Photos There are a lot of folks that are being forced to move right now. The Syrian Civil War has generated over 4 million who have fled their country. In 2014, the UN estimated that almost 60 million people were forcibly displaced from their homes—by war, persecution, or other trouble. Of these, only a fraction sought refuge in the developed world. But that number has been going up, and will be a record [...]

Fiduciary Duty Ditties

By |2017-07-17T12:22:18+00:00January 5th, 2016|Global Market Update|

Are you a fiduciary? Photo: Gabor. Source: Morguefile Many of us are without realizing it. Parents are fiduciaries for their children. Teachers are fiduciaries for their students. Adult children can be fiduciaries for their parents, if the parent becomes disabled in some way. A fiduciary is anyone in a position of trust, who is supposed to act on behalf of someone else—making the decisions that they would make, if they had the fiduciary’s knowledge and capabilities. Fiduciary duties are a common-sense approach whenever someone [...]

Looking Forward, Looking Back (Part 2)

By |2017-07-17T12:22:18+00:00January 4th, 2016|Global Market Update|

So what is the lesson of last year? Source: Wikipedia Janus was the god of new beginnings, of transitions and portals. He had two faces: one looking forward, and one looking back. We’ve noted some of the surprises of 2015. What does 2016 have in store? In many ways, 2016 will look like 2015. Oil and other commodity prices should remain weak, held down by global oversupply. But prices can’t stay down here forever. We’re not replacing the oil and iron ore we’re taking [...]