With big-bet strategy, the losses could be equally great
MarketWatch.com Robert Powell’s Your Portfolio Oct. 5, 2011, 12:01 a.m. EDT
Some investors fleeing stocks; companies, executives buying back
By Hanah Cho and Liz F. Kay, The Baltimore Sun 10:21 a.m. EDT, August 22, 2011
Pssst… if ever you have the chance to hear Stuart Varney speak, grab it! Emblematic of the “coat hangers” in our respective mouths, wife Kirby and I were presented that opportunity back in November by way of The Fund for American Studies’ 2010 Leadership Network.
For those unfamiliar with the gentleman, he may be found daily serving as the anchor of Fox Business News’ morning show, Varney & Company… for those of you groaning at the mere mention of the word Fox, relax, Stuart has logged time with both CNN and CNBC. In fact, with Larry King’s recent retirement, Varney may be the dean of cable news hosts, having joined CNN’s Manhattan bureau at its genesis back in 1980. A graduate of the London School of Economics, his coverage of the 1987 stock market crash earned him the coveted Peabody Award for excellence in journalism. (more…)
Does anyone remember this? In May of last year, this gentleman argued on the air that the Dow would reach 5000 by the end of the year- and that wasn’t even his worst scenario! He appeared alongside Jim Hardesty, who rightly argued against his wild “predictions”.
[flashvideo file=http://tuftoncapital.com/media_data/media_v/100517.flv /]The Dow ended the year at 11,577.
The markets had an up week- to varying degrees. Tech was way out ahead, with the Nasdaq up 1.78% for the week. The S&P chugged along heartily, gaining 1.28%. The Dow dragged its feet a bit, ending the week up .25%. The economy continues to show signs of improvement, and Europe seems to be slowly getting its financial house in order.
This week, yields on two-years and longer duration bonds jumped some 25 basis points- devastating on low-yielding bonds bonds’ prices. It’s possible we’re finally seeing the turn in bonds for which we have been calling for some time now.
Next week, we’ll be looking at consumer sentiment, inflation, and housing numbers. And, as always, weekly claims.
This Week’s Factoid: The U.S. is the only country in the Organization for Economic Development and Co-operation to tax money when it is repatriated to this country. Cisco’s CEO, John Chambers, says that there is $1 trillion held by American companies in foreign countries, waiting to be repatriated to the U.S. The companies are hesitant to do that, however, given the 35% tax.
One, two, three, four…
Hrmm!
One, two, (one, two, three, four!)
1966… The Beatles—most of my partners are way too young to remember the phenomenon they were, and the others were on to more serious things. For those of you of a certain age though, do you remember the song to which that count was the opening?
Let me tell you how it will be;
There’s one for you, nineteen for me.
‘Cause I’m the taxman,
Yeah, I’m the taxman. (more…)
Upon picking up my oldest children at BWI for Easter Weekend, it was with some amusement that I listened to both complain on the way home about the amount they were paying in taxes. Proving the apple falls not far from the tree, the oldest son’s observation remains unprintable—let’s just say that the visual equivalent might be akin to sharing one bunk with 3 inmates at the Fallsway Apartments, aka the Baltimore City Jail.
With recent developments emanating from the Augean Stables 35 miles south of here, that inmate number is likely to increase exponentially. In fact, if Einstein is to be believed—the definition of insanity is doing the same thing over and over again and expecting different results—some might conclude the inmates are running the asylum. And if the notion of Einstein intimidates, a highly recommended alternative would be F.A. Hayek’s The Road to Serfdom. But I digress…
Quite simply, we are on an unsustainable path. Matthew Continetti, Associate Editor of The Weekly Standard, had this to say in the lead editorial of magazine’s March 15, 2010 issue:
As it stands, Social Security, Medicare, Medicaid, and debt service constitute more than 60 percent of all government expenditure. The number is set to rise more than 75 percent within a decade. Left unchecked, these four items will consume the entire federal budget by midcentury.
American Enterprise Institute scholar Andrew Biggs estimates the federal government would have to impose an immediate and permanent 30 percent increase on every tax in order to balance its books—in 25 years.
Our 4th quarter letter always presents a bit of a conundrum—it’s the end-of-year issue, yet typically being written as the New Year commences. And that brain-teaser is further amplified by this, our 2009 edition… is it the end of the decade, or do we have another year to go? Here’s one vote for it being the end of the 00’s decade, which certainly lived up to its moniker when viewed through the prism of investment results.
The writer was reminded of an earlier piece, penned back in the 2nd quarter of 2006, at which time there were indications that the “00’s were shaping up to be the worst decade since the 30’s,” according to Ed Hyman of International Strategy & Investment. Well, with the results almost in by December 20, 2009, Tom Lauricella of WSJ.com felt confident enough to lead with this sub-header: “Since End of 1999, U.S. Stocks’ Performance Has Been the All-Time Clunker; Even 1930s Beat It.” Lauricella further notes that, “Many financial plans assume a 10% annual return for stocks over the long term, but over the last 20 years, the S&P 500 is registering 8.2%.” (more…)
Hardesty Horizons is now in its 10th year of publication, which means there have been roughly 40 opportunities to face a blank palette and put words to paper. That large sigh of relief resulting from the completion of another communiqué, is quickly followed by the fear and trepidation of what to come up with next. Unlike the other entries which appear, The French Quarter is not a ”set” piece, nor was it ever intended as such… the raison d’etre—as the ”sales & marketing arm” of Hardesty Capital Management, so to speak—is nothing more than a ”shout out,” as the au courant phrase goes, an attempt to avoid being ”outta sight, outta mind.” And implicit therein, the goal might be to provoke or entertain, not leave indifferent (b/t/w, for those keeping count, the French tongue has been employed three times so far, justifying the byline…). (more…)
The headline on Jay Hancock’s December 10, 2007 blog for The Baltimore Sun reported: “Harvard Uses $35 Billion Endowment to Cut Tuition.” By way of Bloomberg, Hancock went on to say that,
“These families [making 120k to 180k] will pay just 10 percent of their yearly earnings to send a child to Harvard, the Cambridge, Massachusetts university said today. The payments decline on a sliding scale, with those making less than $60,000 attending for free. The school also eliminated student loans, saying students will get additional grants as needed.”
The Boston Globe reports that Harvard intends to continue its 2007 financial aid initiative, despite suffering a decline in its endowment (see March 16th issue of Forbes). Without such resources, however, judging from anecdotal conversations we’ve had with other educators and various school trustees, there is palpable fear when it comes to affordability issues in this brave, new economy. And worry they should, for educational costs have skyrocketed over the past quarter century, far in excess of normal inflation. (more…)
One of the last acts of the recent Congress, the “Worker, Retiree, and Employer Recovery Act of 2008” that was signed into law by President Bush on December 23, 2008, included a temporary one-year waiver of required minimum distributions (RMD) from IRAs and most defined contributions plans offered by an employer. These include traditional individual retirement accounts (IRAs), simplified employee pension (SEP) IRAs, savings incentive match plan for employees (SIMPLE) IRAs, inherited IRAs (including inherited Roth IRAs), defined contribution plans (401(k) plans, profit sharing plans, and money purchase pension plans), as well as 403(b) custodial accounts. In general, there is no distribution requirement for non-inherited Roth IRAs. The special waiver is in effect only for distributions that would have been required for 2009.
At the outset, the reader might be cautioned that there’s rarely anything drier than a missive throwing around retirement acronyms, age thresholds, calendar dates and tax consequences… it can become quickly confusing, to the point of inducing narcolepsy. “Forewarned is forearmed,” as the saying goes… we’ll give it our best shot in explaining the current landscape. If you’re still “in the dark” thereafter, the fault rests with us, not you—by all means, give us a call and we’ll attempt to clarify. (more…)
New Year’s Day… taking our cue from David Letterman, “It’s so cold today that Bernie Madoff is actually looking forward to burning in hell.” The still-unfolding Madoff scandal reminds me of having to sit through the inane movie, Weekend at Bernie’s, with some of my children almost 20 years ago.
For those of you unfamiliar with the film, a few words of advice: keep it that way. The ironies, though, abound. A quick check of The Internet Movie Database (www.imdb.com) reveals this: “A lively comedy about a guy who isn’t.” Drilling down a little further, Wikipedia’s plot description notes that, “Larry and Richard uncover a fraud involving multiple life insurance payments.” In the interest of full disclosure, Mr. Madoff’s sons—the ones who turned him in—are named Andrew and Mark… if it’s true that a ripped-off party in daddy’s $50 billion scam included a Russian oligarch, they may find life imitating art. (more…)
A random thought, or two, as April 15th approaches…
Thanks to Larry Kudlow for pointing out that those IRS tax rebate notices everyone recently received cost us taxpayers a “cool $42 million.” And speaking of government waste at the local level, kudos to Comptroller Peter Franchot for initially sending out Maryland’s quarterly vouchers, for this year, with “2007” printed on them… wonder how much that cost us in re-printing and re-mailing costs?
As for these rebate checks, talk about an idea whose time has definitely not come… oh, and by the way, those who comprise the top 5% of taxpayers and pay 60% of all personal income taxes, will find their rebates either reduced or completely phased-out. This brings to mind Thomas Jefferson’s observation—“A government big enough to give you everything you want, is big enough to take everything you have.” (more…)
