Getting Stung

By | 2017-07-17T12:22:07+00:00 February 29th, 2016|Global Market Update|

How do we avoid investment scams? Poster for The Sting by Richard Amsel. Source: Wikipedia Investment scams are everywhere. From Ponzi schemes to obscure bank instruments to penny stock pump-and-dump operations, the internet and email seem designed to encourage fraudsters to try to bilk us out of our savings. What are some of the signs that someone is trying to swindle you? First, check the pitch. What are they appealing to? Is it fear? Greed? Envy? Scam artists usually play to our lower nature. [...]

Relatively Speaking

By | 2017-07-17T12:22:08+00:00 February 26th, 2016|Global Market Update|

If everything is so great, why does it feel lousy? Salvadore Dali: The Persistence of Memory. Source: MOMA There’s a disconnect in the economy: the statistics generally look pretty good. But if you ask people how they’re doing, you don’t get a lot of positive feedback. There aren’t a lot of layoffs, but people aren’t getting big raises, either. What’s going on? Part of the answer has to do with the time-lags inherent in the economy. The price of oil started falling almost two [...]

Investment Boredom

By | 2017-07-17T12:22:08+00:00 February 25th, 2016|Global Market Update|

Are your investments boring? Photo: Rachel Calamusa. Source: Wikipedia Investing is often portrayed as exciting: the flashing monitors, microsecond algorithms, people at exchanges shouting at each other and running around. That’s what attracts a lot of people to this business: the adrenaline rush of a winning trade, or the gut-wrenching dread of a plunging market. But the best investments are often boring affairs. Philip Morris made billions for its investors by successfully manufacturing and marketing cigarettes; Wal-Mart used sophisticated supply-chain management to lower prices [...]

Bumps in the Road

By | 2017-07-17T12:22:08+00:00 February 24th, 2016|Global Market Update|

There are frost-heaves ahead. Is your portfolio ready? Photo: Kevin Connors. Source: Morguefile At this time of year in New Hampshire we have to deal with frost heaves. Rain and melt-water from winter storms seep into the road-bed, then lift the road when the water re-freezes. How we deal with the bumps says a lot about what kind of people we are. Some folks sail blithely through, figuring that their car’s shocks can handle the stress. That’s fine as long as long as they [...]

Revising the Limits

By | 2017-07-17T12:22:08+00:00 February 23rd, 2016|Global Market Update|

Are we seeing the limits to demand? Copyright: Dennis Meadows. Source: Amazon Back in the early 1970s, a think-tank called the “Club of Rome” published a little book called the “Limits to Growth.” It used a fairly simple computer model to predict that unless people radically changed the way they lived, we would run out of some of the key resources necessary for modern life. They described our expected population growth-path as “overshoot and collapse.” The book predicted that because we were continually increasing [...]

Father of the Financial Crisis?

By | 2017-07-17T12:22:08+00:00 February 22nd, 2016|Global Market Update|

Did David Bowie help cause the financial crisis? Photo: Adam Bielawski. Source: Wikipedia Among the many tributes to musician David Bowie last month after he died was a description of “Bowie Bonds.” These were asset-backed securities issued in 1997 that securitized royalty payments from 25 different albums. Bowie was concerned that the rise of digital music would impinge on music sales, so he “pre-collected” his royalties by using them to secure these bonds. The bonds paid almost 8% interest—about 1 ½% more than Treasuries [...]

Driving, Putting, and Asset Allocation

By | 2017-07-17T12:22:08+00:00 February 19th, 2016|Global Market Update|

“Drive for show, putt for dough.”     Bob Hope putting in the Oval Office. Photo: Oliver Atkins. Source: National Archives. That’s an old golf saying – attributed to Bobby Locke, the South African golfer dominant in the ‘40s and ‘50s. He won the British Open four times in eight years. He was so good that he was banned from the PGA Tour. He didn’t drive the ball very far from the tee, but on the putting greens he was a genius. He had [...]

Did Atlas Shrug?

By | 2017-07-17T12:22:08+00:00 February 18th, 2016|Global Market Update|

What’s holding the market up? Atlas in the Naples Archeological Museum. Source: Wikipedia It’s not what it used to be. From 2012 to 2015, the market was led by Apple, Microsoft, Google, Wells Fargo, and Gilead. Those five mega-cap stocks accounted for over 10% of the market’s 58% move. But since July, things have changed. Microsoft and Google have continued to rise, while Apple, Wells, and Gilead have led stocks downward. Some of this is normal profit-taking. After all, trees don’t grow straight to [...]

Banking on Trouble?

By | 2017-07-17T12:22:08+00:00 February 17th, 2016|Global Market Update|

What’s wrong with the banks? Photo: IvoShandor. Source: Wikipedia So far this year, equities are down about 10%. Shares of financial firms have led the way, down about 15%. And longer term, bank stocks still haven’t recovered from their losses during the financial crisis. What’s wrong with them? You could throw up your hands and attribute it to random price action, but that doesn’t make sense. Even though they’re hard to predict, there’s still some semblance of rationality to stock prices. When oil prices [...]

Wagging the Dog

By | 2017-07-17T12:22:08+00:00 February 16th, 2016|Global Market Update|

Wagging the Dog Where does finance fit into the economy? Photo: David Whelan. Source: Morguefile Time was that the real economy was considered the dog and the financial economy the tail. Except for an occasional bubble, the tail didn’t wag the dog. What people ate and how they dressed was critical; how the saved and where they invested wasn’t. Now it’s not so clear. The world produced about $80 trillion in goods and services in 2015. At the same time, public and private markets [...]