The “Credit Cardholders’ Bill of Rights” and You May 21, 2009
Posted by Jordan Chin in : Off Beat , add a commentJust yesterday Obama signed into law what has been dubbed as the “Credit Cardholders’ Bill of Rights”. This law in effect claims to “restrict credit card practices and eliminate sudden increases in interest rates and late fees that have entangled millions of consumers.” So what exactly does this mean for financial savvy consumers like you? MSN and CreditCards.com investigates…
* Limited interest rate hikes
* More time to pay monthly bills
* Highest interest balances paid first
* Limits on over-limit fees
* No more double-cycle billing and lower subprime fees
Prepare for Inflation May 20, 2009
Posted by Andy Robinson in : Uncategorized , 2commentsIn attempting to fix our economic problems of debt and over-consumption, the US government is flooding the country with dollars raised by more debt. The Fed maintains that it will turn off the liquidity spigot at the first sign of inflation, but the political reality is that they will keep rates too low too long for fear of us slipping back into a double-dip recession just when we are starting to emerge from the woods. Although we are likely 6 months away from seeing many tangible signs of inflation (although food prices have spiked recently), now is the time to take active steps to protect one’s purchasing power.
Bear Rally versus New Bull May 11, 2009
Posted by Andy Robinson in : Uncategorized , add a commentSince March 9th we have witnessed an explosive 37.5% rally in the S&P 500 index on renewed optimism that economic indicators are declining at a slower pace, and that the US is poised to return to growth before the end of 2009. While this may in fact may pan out to be true, the dramatic rally has increased the inherent risk in owning stocks by making them no longer cheap. Historically, we see price to earnings multiples in the high single digits when a bear market has run its course during a recession. Based on analysts’ current earnings projections of $57.17 for the S&P 500 in 2009, we would currently be paying 16 times earnings for the index (which is about the historical average). Buying stocks at an average multiple for what looks like below-average growth potential for at least several years to come appears foolhardy.
No Panicking! January 23, 2008
Posted by Andy Robinson in : Market Research , add a commentNow is the time when normal investors get fleeced. Warren Buffet once said, “Be fearful when others are greedy and greedy only when others are fearful.” Unfortunately individual psychology tends to move along with the pack. When the stock market was skyrocketing in the 90’s, most investors didn’t have the willpower to trim tech positions and reallocate to bonds, cash and defensive equities. The same is true now. It takes willpower to not sell out of the stock market and to keeping adding new positions. The key to investing success is to have the right portfolio mix between different asset classes, which is determined by length of time until retirement and financial goals. I am young and completely in equities. Although this bear market is painful in the short term, I am confident that the stock market will soon find a bottom after a bit more volatility, and that the second half of the year will be marked by a strong rebound as soon as it becomes clear that the worst of the turmoil is behind us.
Investing for Income November 28, 2007
Posted by Andy Robinson in : Market Research , add a commentTraditionally one thinks of using bonds as an income source in retirement, but with yields on the 10 year Treasury note dipping under 4% recently and inflation still a strong concern, other options need to be found. One option that seemed great until six months ago is trading debt quality for higher yields. In an effort to beat treasury returns, financial institutions bundled together lower-quality mortgages and individuals bought high-yield bond funds. In this environment, we still need to shun low quality debt because it loses a lot of value in an economic downturn. I agree with this WSJ article that investors seeking income need to consider picking up value stocks. The recent pullback has given many companies, particularly financials, a much more attractive yield than treasuries. And over time, dividend-paying stocks offer protection against inflation because, as a company’s income rises, so generally does its dividend.
Keep your focus long-term November 8, 2007
Posted by Andy Robinson in : Educational , add a commentThe article Don’t Be Fooled by Randomness reminded me that I, like many other investors, tend to start thinking too short-term with their investments. This is particularly true during volatile and exciting times. When it comes right down to it, the fact that the market is down 4% since I glibly proclaimed myself “all in” is meaningless to my long-term financial well-being. The best way to gain and preserve wealth is to find valuable companies and invest in them for a long time (forever if the fundamentals stay as good as when you first bought them). I will stay the course with my 100% allocation towards equities. This allocation is not suitable for those anywhere near retirement age, but I would recommend taking some profits on government bonds and reallocating towards a heavier equity exposure at the moment.
Economic Fundamentals Improving November 7, 2007
Posted by Andy Robinson in : News , add a commentAnother little piece of news that confirms my burgeoning optimism is the Labor Dept report on productivity and wage growth. It hasn’t moved the market this morning, but the surge in productivity (4.9% last quarter) is crucial to avoiding recession. Equally important is that labor costs have eased slightly, which will help calm inflationary fears and allow for more easing if necessary.
Commodities Rally Getting Tired November 6, 2007
Posted by Andy Robinson in : Market Research , 1 comment so farI think we’ll touch $100/ barrel oil, but simply because the traders are hyping that benchmark like it’s a foregone conclusion. Therefore money will chase crude until it reaches that mark then sell off steeply. But what does this mean for normal investors? Simply that now is not the time to load up on energy funds or commodities ETF’s. If you’ve owned them for long enough, take some of the gains off the table. I am still long-term very bullish on silver (the exchange traded fund has increased in value 33% since I recommended it August 23rd), but over the next 6 months it will give back some of its gains along with most other commodities. Gold in particular is near the end of its spectacular run.
Job Growth Strong November 2, 2007
Posted by Andy Robinson in : News , add a commentThe October payroll numbers were released 20 minutes ago and support the bullish argument for this quarter. Payrolls grew by 166,000 and unemployment stayed the same as last month at 4.7%. This bodes well for consumer spending, which has softened slightly due to the decline in housing prices, but will still thrive as long as jobs and wage growth remains strong. I don’t think we need to be unduly worried by the big stock market drop yesterday. Fundamentals are fine and there’s a lot of money sitting on the sidelines waiting for the 4th quarter rally. Once it looks like it’s starting, we’re going to move up fast because the fund managers and hedgies don’t want to be left behind. This is a good entry point to deploy any cash (if you have any on the sidelines). I’ve been all in for about two months.
Market trips on earnings and consumer spending November 1, 2007
Posted by Andy Robinson in : News , add a commentWith the Dow down over 230 points (as of 10:20 am) investors might get spooked about today’s grim headlines. But consumer spending only softened a tiny bit (0.3% growth rather than the expected 0.4%). Also Exxon missed profits and Citigroup and Bank of America got downgraded. With a time horizon of even 3 months, and mine is considerably longer than that, today’s dip has got to be considered a boon to investors. Although it may annoy me to see Bank of America (which I own) to tumble nearly 4% today, I am not concerned about analyst downgrades. Downgrades tend to be more reactionary to current market conditions than an accurate look into the future. Warren Buffet did not make his fortune buying stocks in favor with Wall Street. He bought names when they were cheap and everyone else was a seller.