There is a more than an even chance that the Federal Reserve Bank hikes interest rates at least 25 basis points by the end of March 2022. Several analysts expect another three hikes by the end of the year. As an equity investor, this should concern you. This week, both the Consumer Price Index (CPI), and the Producer Price Index (PPI) came in as expected. But “expected” does not mean anything like good on the inflation front. On a year-over-year basis, CPI was up 7%, while PPI hit 9.7% for all of 2021. And while economists debate whether inflation and…
Insights & Advice
The Retired Investor
My dog’s medical bills are higher than mine
On the surface, it was a good year if you were in the veterinary business. Year-over-year sales grew by 9.1%, while patient visits increased by 3%. For pet owners, however, not so much. Owners found that the cost of keeping their pets healthy jumped by about 10%. Some of that price increase was due to higher fees, but consumers were also purchasing more products and services. My chocolate Labrador Retriever, Titus, is now 13 years old. The rule of thumb: every year of a dog’s life equals seven years of my life. That would put Titus’ age at 91, versus…
Climate change is costing billions
In 2021, worldwide, the costs of the ten worst disasters caused by climate change totaled more than $170 billion. It was the fourth time in the last five years that we have suffered that level of damages. Scientists expect next year to be even worse. Insurance companies, like Zurich-based Swiss Re, bear the brunt of the costs of extreme weather. During the last decade, losses have been rising 5-6% per year, according to Swiss Re’s recent analysis. They expect at least one $10 billion catastrophe, such as severe flooding, a winter storm, or a massive wildfire will be part of…
Is it time to hire an investment advisor?
Individual investors have had a decade or more of gains, compliments of a stock market that has gone up with few interruptions. But as we enter a new era of tighter monetary policy, the road ahead may be a bit rockier than most investors expect. As such, it might be time to enlist a little professional help to preserve those profits. There is a saying on Wall Street that just about anyone can make money in a bull market. That may be a bit harsh. I don’t want to denigrate the efforts of so many who work hard at managing…
Has labor found its mojo?
Workers in America are rethinking who they are and what they want. For the first time in decades, the stars have aligned to give the labor movement a much-needed lift. Will this prove to be a flash in the pan, or something more lasting? The share of American workers who claim union membership has been declining for years. There is a myriad of reasons for this decades-long decline. U.S. legislation and the court system has created enormous challenges to forming unions. The transfer of jobs to low-paying countries overseas has also devastated union membership. Labor membership can also be expensive…
The billionaire taxes
This week, the Democrats unveiled a new plan to finance President Biden’s “Build Back Better” legislation. That proposal, along with a 15% corporate minimum tax, has politicians scrambling to line up for or against the idea. Does it have a chance to pass? Credit for the idea goes to the Senate’s top tax expert, Finance Chair Ron Wyden (D-OR). His plan is to target only people with $1 billion in assets, or who are earning more than $100 million over three consecutive years. This group would be required to pay capital gains taxes each year on the appreciation in the…
Barbie gets better with age
Despite this new age of video games, electronic toys, and diminishing attention spans, children are returning to a toy that is almost as old as me. Mattel’s Barbie doll is back and at the top of many holiday shopping lists. Some of the credit for Barbie’s new-found popularity can be attributed to the pandemic. The lockdowns and the subsequent search for things to keep children occupied had mothers remembering their own fascination with all-things Barbie. Buying a Barbie, however (at least until recently), had parents wrestling with several negative stereotypes. Leading the list was the doll’s image of a whites-only…
Golf continues to grow
In 2020, during the midst of the pandemic, golf made a comeback. More than 24.8 million people discovered outdoor refuge on the links last year, and the popularity of the sport continues to grow. Golf, as many have discovered, is an outdoor activity that has proven to be an almost perfect answer to the limitations of the pandemic. Players can get outside, exercise, and at the same time, socially distance themselves from one another. Last year, the U.S. saw the largest increase in golfers (2%) in 17 years. This year, the number of rounds played was up 16.1%, compared to…
Out of gas
Winter approaches and with it a potential natural gas crisis. Areas of Europe are already scrambling to find the energy required to heat homes and continue their economic rebound. Could the U.S. be next? Over the last year, prices for European natural gas have jumped by almost 500%. Natural gas prices on this side of the pond have also spiked by more than 100% this year. But it isn’t just countries in the Northern Hemisphere that are feeling the scarcity. Parts of Asia, which are importing liquified natural gas (LNG) at record prices, are being forced to switch to coal…
Weather worsens global trade
Changes in climate are impacting a global economy that is fighting to recover from a pandemic. Supply chain bottlenecks continue to worsen as continuous weather-related catastrophes close ports and snarl land, sea, and air transportation routes. Can it get any worse? Yes, and it probably will, according to climate experts. Nearly all actively publishing climate scientists agree that humans are causing global warming and climate change. The less than 2% of experts that disagree have published contrarian studies that either cannot be replicated or contain errors. I’ll go with the consensus on this issue. Here in the U.S., we receive…
Moderates winning on tax debate
For months, wealthy U.S. taxpayers and corporations have been living with the specter of higher taxes under the Biden administration. It is a pretty good bet that taxes will go up, but not as much as you might expect. Throughout the week, Democrats in the House and the Senate have been horse-trading over the amount of spending, versus the amount of taxes, necessary to pay for President Biden’s $2.3 trillion budget plan. Republicans are already on record that they will oppose any new tax hikes at all. Since the Democrats hold such a slim majority in both the House and…
Japan is worth a look
It has been 30 years since the Nikkei 225 last touched the 30,000 level. However, many investors look beyond this island nation and focus instead on its Chinese neighbor. That may prove to be a mistake. To some investors, it is the epitome of value investing. Warren Buffet’s Berkshire Hathaway made some sizable bets on several Japanese trading companies last year. Japan’s stock market is cheap compared to many other markets. But deservedly so, say the bears, since investors have had to put up with years of sluggish growth and perennial deflation. Japan is home to many well-known companies (think…
Non-fungible tokens come of age
NFTs are digital assets. For those like me, who are old enough to be grandparents, and may still read the newspapers, the concept of a digital asset may not be all that intuitive. “Non-fungible” means that it is a unique asset that can’t be replaced with something else. NFTs are bought and sold online (usually with a cryptocurrency), and stored and encoded in the same way. The difference is that cryptocurrencies, such as Bitcoin, are fungible and can be traded, or replaced, with another bitcoin. These digital assets can include everything from original art, videos, and music, as well as…
Corporate activism comes of age
For decades, corporations stuck to their knitting, while letting Washington and American voters decide how to deal with social and political issues. But times are changing as companies become bigger and more powerful. Corporations are speaking out on issues from LGBTQ+ rights to gun control. To some politicians, managements and their boards are throwing their weight around in ways that make elected officials uncomfortable. At first, I dismissed much of their actions as simply rhetoric, or just good public relations, but more companies are speaking out—frequently—on many issues. Take the gun control issue. U.S. politicians on both sides of the…
The back-to-school season
It is not an easy decision. On one hand, consumers want to go out and shop for their children’s upcoming school year. But at the same time, they are concerned that if they do, they might catch the coronavirus. There is no easy answer. The 2021-2022 school year was supposed to usher in a new beginning. As such, retailers are still expecting sales of clothes, school supplies, and college dorm décor items to increase by 5.5% from last year’s depressed Covid-levels. Even so, that still won’t match 2019’s 6.7% increase, but it is getting close, or was until the Delta…
Buy now. Pay later.
When does a loan not feel like a loan? That is the idea behind one of the more exciting new concepts being floated by the financial technology community. It is an idea that is just catching on here in the U.S., but it could challenge traditional credit cards over time. Are you really going into debt when you buy something and pay it off in a set number of installments? Technically, yes, but it doesn’t feel that way, especially if you are paying 0% interest on the installments. That’s evidently what Square, a leading financial service, digital payments company believes…