Considering Our Options (Part 2)

By |2019-03-03T18:40:28+00:00March 3rd, 2019|Global Market Update|

Can we use options to invest? Illustration: Aia Fernandez. Source: Wikipedia. CC-BY-4.0 Options are powerful. And there’s a lot to understanding them. Call options give us the right, but not the obligation, to buy something at a specific price within a certain time. They don’t cost as much as the underlying stock, but they benefit just as much when the price goes up. As a result, there’s a lot of implicit leverage in an option. An option on a $100 stock might cost you [...]

Considering Our Options (Part 1)

By |2019-03-01T05:27:27+00:00March 1st, 2019|Global Market Update|

What are options? Photo: Aia Fernandez. Source: Flikr. CC-BY-2.0 Strictly speaking, options are choices: the choice to buy, sell, or hold; the choice own or rent a home; the choice of what to eat for dinner. Having options means we have the ability to make – or not make – choices about our lives. Financially, though, options have a very specific meaning. An option on a stock or bond is the right, but not the obligation, to buy or sell the security at a [...]

Growing National Income

By |2019-02-28T05:54:00+00:00February 28th, 2019|Global Market Update|

Why are some nations richer than others? Source: Pexels Some countries get rich and stay rich, while others always seem to struggle struggle. Economists have looked at this question and believe that three critical ingredients matter most of all: capital, technology, and well-trained workers. Not raw materials –l just look at Japan. They don’t have oil, minerals, or precious metals. Not access to a major port – consider Switzerland, a land-locked series of mountain ranges. And not any specific culture -- there are wealthy [...]

The size effect

By |2019-02-27T05:58:11+00:00February 27th, 2019|Global Market Update|

Why do small stocks do so well? S&P 500 and S&P Small Stock indices since 1973. Source: Bloomberg If you look at a chart of long-term stock market returns, you’ll see it. Since 1973, small stocks have grown 10.5% per year, while big companies have grown about 1% less. Over time, that adds up. But small stocks are lot more volatile. And that makes sense. Small companies have more potential for growth than large firms, but they don’t have the big bank accounts or [...]

Traffic-Jam Investing

By |2019-02-25T14:55:10+00:00February 25th, 2019|Global Market Update|

Have you ever been caught in a traffic-jam? Photo: Victor Hanacek. Source: Picjumbo It can be excruciating. I was recently on my way to the airport and suddenly there was a swarm of vehicles in front of me, whether because of an accident or construction or some other reason – I really couldn’t tell. All I knew was there was a huge mob, all going where I wanted to go. And nothing – not alternate routes, not smartphone apps, not my frustration – was [...]

Dude, Where’s My Jet-Pack?

By |2019-02-21T10:32:00+00:00February 21st, 2019|Global Market Update|

Have you seen the future? Photo: Bernard Spragg. Source: Picography We used to think it was coming with supersonic flight and high-octane service. The hood ornament to a ’56 Chevy Bel Air had a hood ornament that looked like a futuristic airplane. In fact, when Boeing introduced the 747 fifty years ago, it was considered primarily a freight design. People assumed that the skies would soon be dark with supersonic passenger planes, and we would all have personal jet-packs. Later, we thought the future [...]

Mossy Thinking

By |2019-02-21T05:57:20+00:00February 21st, 2019|Global Market Update|

How do you keep your mind sharp? Photo: Lisa Yont. Source: Morguefile I recently read the reminiscences of Byron Wien, a 60+ veteran of the investment industry. He’s famous for the “Ten Surprises” predictions he publishes each year: ten news events he expects to take place but the market doesn’t. He’s not just famous because he’s been doing this since the mid-‘80s, but because he holds himself accountable each year, keeping track of how well he did. His long-term record is about 50-50, but [...]

The Hucksters

By |2019-02-20T09:36:06+00:00February 20th, 2019|Global Market Update|

How do we avoid investment scams? 19th-century farm scam. Public Domain. Source: Flikr Investment scams are everywhere. From Ponzi schemes to obscure bank instruments to fraudulent crypto-operations, today’s financial landscape seems designed to encourage crooks and criminals 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. To what are they appealing? Is it fear? Greed? Envy? Scam artists usually play to our lowest impulses. Get-rich-quick schemes [...]

The Conversation

By |2019-02-18T22:05:54+00:00February 18th, 2019|Global Market Update|

How do you feel about privacy? Photo:Frédéric Bisson. Source: Flikr. CC-BY-2.0 Back in the 1974, Francis Ford Coppola directed a film called “The Conversation,” a cult classic starring Gene Hackman about a surveillance expert and the moral dilemmas he faces. In the end, the expert becomes the subject of surveillance, receiving a call on his unlisted phone at the close that plays his own conversations back to him and says, “We’ll be listening,” just before hanging up. Hackman tears his home apart looking for [...]

College Cost Blues

By |2019-02-15T07:32:09+00:00February 15th, 2019|Global Market Update|

Why does education cost so much? Photo: Al Mare. Source: Wikimedia. CC-BY-3.0 It’s an important question as students await the “fat envelope frenzy” that accompanies college acceptance and their parents fill out confusing and intrusive financial aid applications. Increases in tuition have long outpaced inflation. In inflation-adjusted terms, tuition is more than three times what it was in the ‘70s. A small, private college in Sewanee, Tennessee made national headlines when it cut its total price tag by 10%. When’s the last time we [...]