Insights & Advice
Tag: Berkshire Money Management
What is in the Stimulus Package?
Well, I got that one wrong. Fortunately. Yes, we got a stimulus package! I had said on November 30 that, “I am investing as if we’ll see something in the range of a $500 billion stimulus package announced by early February. (For comparison, JP Morgan is expecting a $1 trillion stimulus in March 2021.)” Fortunately, what that has meant for me is that I had been targeting a full allocation of equities for my growth-oriented portfolios. On December 27, 2020, President Trump signed into law the $908 billion COVID-19 relief bill. That is good news for the economy and should support an overextended…
Brexit at last
After four years of squabbling, and nine months of last-ditch negotiations, the United Kingdom (UK) and the European Community (EU) have come to a compromise agreement. The deal is much more an economic partnership than a true parting of the ways. The new economic system covers large areas of bilateral trade, including autos, industrial materials, manufacturing, the pharmaceutical sector, as well as professional services. It also allows the UK freedom to set new standards in areas like the environment and labor laws, as long as any changes do not overstep European standards by too much. The idea is to maintain…
Stimulus bill vaults stocks to new highs
A much-needed fiscal stimulus bill is expected to pass at the eleventh hour by lawmakers in Washington. Investors greeted that news by taking all three major averages skyward this week, with more gains in the offing. As I wrote last week, politicians are waiting until the very last day before passing a $903 billion stimulus bill. Thursday was supposed to be the deadline, and then Friday; talks may well stretch through the weekend at this point. In the meantime, another important piece of legislation, an extension of the government budget, had to be signed by Friday, December 18th to keep…
Markets are in a tug of war
The number of COVID-19 cases and deaths are surging way beyond the totals earlier in the year. That promises tough going for the economy over the next two quarters. On the other hand, two highly effective coronavirus vaccines have been announced, but won’t be widely distributed until next year. In the middle sits the stock market. What are investors to do? We know that financial markets are discounting mechanisms that cause investors to buy or sell stocks based on what may happen in 6 to9 months from now. At that time, so the story goes, at least two vaccines will…
Small town America is in vogue
The on-going coronavirus pandemic has boosted consumer demand for small town real estate. Whether that trend will continue with a vaccine on the horizon is anyone’s guess. In the meantime, it could be a godsend for those looking to retire and possibly downsize during this period. The obvious driver in this trend change has been the safety factor. The devastating carnage that occurred in the nation’s large cities during the first surge of the coronavirus convinced many families to pull up stakes and find dwellings as far from the mayhem (and people) as possible. Home listings in small towns jumped…
Purpose as a competitive advantage
Once upon a time, the sole purpose of a business was to make the owner rich. Today, it’s considered “mainstream” for a company to also have a more humane purpose. If done authentically, doing so will make the owner even more wealthy. Purpose is motivation, and motivation is a competitive advantage. A corporate purpose explains how its team makes a difference in the world. It also gives your employees meaning and gets them to dive into projects with more energy and enthusiasm. Purpose attracts and inspires employees. You can’t invent a corporate purpose. It already exists, and you need to…
Markets have already picked the winner
The nation spent most of the week wondering who won the presidential elections. While lawsuits, protests, and dueling press conferences occupied the airwaves and internet, global stock markets spent the time discounting the results. Have markets already picked the winner? A Joe Biden win, with a Democrat House, and a GOP-controlled Senate was the conclusion reached by the markets on Tuesday. The “blue wave” that investors had expected and believed would unleash trillions of dollars’ worth of stimulus, run up the national debt, and cause long-term interest rates to rise, was off the table. Instead, we would face at least…
The polling business takes a body blow
There has been one clear loser thus far in the outcome of the 2020 presidential elections and it is not the candidates. The polling industry has gotten it wrong twice in a row. Can the industry survive that kind of mistake? As votes across the nation continue to be counted, the pollsters and the media, which count on those polling results, are asking how Vice President Joe Biden’s 10-point lead nationwide could have evaporated in the blink of an eye. Political polling is a type of public opinion polling, which in the past (when done right), is a fairly accurate…
The market’s Halloween fright
This has been the worst presidential, pre-election week for stocks—ever. But the worst may be over. October has come to an end. Now all we need to do is get through a presidential election and its aftermath, and hope that Americans come to their senses in dealing with this pandemic. That is a lot to hope for. Prior to this week, the sharpest pre-election market decline on record dates back to 1932. Given the apocalyptic campaign predictions of what will happen if the other guy wins, who could blame investors for getting spooked? But the real impetus for driving markets…
Politicians play cat and mouse with investors
It was a week of will they or won’t they. Both parties claimed to want another stimulus deal done before the election, but the proof is in the pudding and as of Friday, the plate is empty. Investors may be coming to the conclusion that the latest negotiations between the Democrats, led by House Speaker Nancy Pelosi, and Republican U.S. Treasury Secretary Stephen Mnuchin, and White House Chief of Staff Mark Meadows, was simply an election ploy. A way to set up the other side for failure, while making their own position look both caring and, at the same time,…
The pandemic has been good to the pet industry
Sales are increasing wherever you look in the pet sector. Toys, beds, grooming products, leashes, day care, you name it; the pet industry is experiencing double-digit increases in revenue. Better yet, there are few signs that consumer spending in this area will slow down anytime soon. As readers are aware, the retail sector has been one of the hardest hit as a result of the coronavirus pandemic. The pet care industry is an exception to that rule. In the past, I have written extensively about how recession-proof the pet industry can be. In both the 2001 and 2008 recessions, pet…
Few businesses sell
The goal for many business owners is to sell their company and retire with confidence. If that wasn’t a consideration of yours last year, it might be today. According to a Baker Tilly survey, as a result of the pandemic, 31 percent of business owners will accelerate their sale to a nonfamily buyer, and 24 percent will accelerate ownership to the next generation. Some readers probably won’t quickly sell their company, because they have failed to take the critical steps necessary to make it transferable. Selling isn’t enough — you need to attain maximum value first. Surveys by the Exit…
Riding the Blue Wave
Dalton, Mass. — A few weeks ago, I vetted the probabilities of how the upcoming U.S. presidential election could play out. The most likely scenario was that Vice President Biden would win the White House and Congress would stay the same (Republican Senate and Democratic House). The third most likely scenario was the proverbial “blue wave,” in which Biden wins, the Democrats keep the House and take the Senate. Online betting odds suggest that a blue wave is more likely than I had considered at the end of September. Those odds say that there is a 60 percent chance of a…
Investors reduce risk as stimulus talks fail
Hope springs eternal, but even the most strident bulls threw in the towel this week. American politics took precedence over the country’s economic well-being once again, as both political parties refused to compromise on a stimulus deal. But it wasn’t only politics that spooked investors. Across the Atlantic, investors watched as COVID-19 outbreaks escalated across Europe. Germany, Austria, the Czech Republic, and Italy reported new records in infections, while France announced a curfew in order to stem their own skyrocketing cases. In the U.K., Londoners are now banned from mixing with other households indoors. In this country, despite denials by…
Markets feel the heat
First, the good news: there is only one more week until the end of the month. The bad news, however, is that October may not treat investors any better than did September. As my swabbie friends would say, is it time to “batten down the hatches.” Let me say, I take no joy in being right. During the last few weeks of writing, the volatility I predicted has come home to roost. This kind of correction is especially painful because in these times of great uncertainty, we could have at least pointed to the stock market, and our investments accounts,…