Watching Sausage Being Made: The $3.5 Trillion Budget Reconciliation Package
Otto Von Bismarck, the man credited with uniting various fiefdoms into what is today Germany, once said there are two things the public must never see: one is sausage being made; the other is how legislation is passed into law. The $3.5 trillion reconciliation spending bill before Congress this week is already known for its […]
Bernie Madoff Redux: The Case of Southport Capital
Investors were told that their monies were invested in government debt and real estate projects that would produce a return of 6-7 percent per annum..
Riding the Chinese Tiger: How Changes in Chinese Securities Laws Will Impact US Investing
There is an old maxim in China: “He who chooses to ride the tiger goes wherever the tiger goes.” This has gained relevance for investors after China decreed over the past weekend that private schools set up to tutor Chinese students will have to become non-profit in order to continue operating.
The Zombies Among Us: How COVID Has Affected Some Companies
Data shows that companies borrowed around $11 trillion to stay afloat during the time that revenues declined or disappeared. The repayment of this sum, along with the interest it generates, will impact profits and cash flows for years.
Inflation is Coming: Are You Ready? Are You Sure?
For a generation of investors, inflation is something read about in history books but never experienced. This is about to change. The combination of relaxed COVID restrictions, forced savings to be spent, fiscal stimulus, and an inability to match labor with demand are all resulting in higher prices. In this case, “higher prices” means higher […]
How Indexes Mislead: Performance of the S&P 500 Relative to Other Benchmarks
As of last Friday, the Standard & Poors Index, the basis for index funds under the same banner, had recorded a year-to-date appreciation of 11.29 percent. While this is a commendable number, it was attained entirely (and then some) on Price/Earnings multiple expansion. A year ago, the index had an average P/E ratio of 20.34. […]
How Avoiding Risk Can Create Risk: A Primer on False Risk Avoidance
Students of finance become acquainted with what is taught to be the “risk-free rate.” This is the return that can be obtained by investing in securities of the United States Treasury. Usually, the five-or ten-year treasury yield is counted as the benchmark rate, with potential returns taken as some increment of this rate.
GameStopped: Revenge of the Internet on the Hedge Funds
Today, we are witnessing another transition. Through the internet, hundreds of thousands of unversed speculators are being harnessed to focus on a few stocks.
On the Eve of Inauguration: Does the Stock Market Care Who Is President?
The financial press is awash in predictions as to how the stock market will perform under a Biden presidency. Implied in these predictions is a belief that who occupies the Oval Office will impact the stock market. The record of this is more one of coincidence than causality.
After 2020: Ready for 2021? Insights for the New Year
This year will be best recalled as one where the economy went down, and the stock market went up. After suffering a 30 percent contraction in March and April, the GDP came back forcefully in the summer, only to fade out in the closing months of the year.
