Chinese tax hike on stock market may signal end of bull run May 30, 2007
Posted by Andy Robinson in : Market Research , add a commentCurrently the Chinese government levies a tax on the buyers and sellers of stocks called a “stamp duty.” Yesterday they made it their policy to “cool” China’s ballooning equity markets by tripling the stamp duty to 0.3%. As a result, the Shanghai Composite Index fell 6.5% overnight. For about a year I have been leery of the China stock market party due to the lax accounting and lending standards currently practiced in their economy. However, it is hard to ascertain when a speculative bubble is going to pop. This article entitled, China Raises Stamp Duty to Cool Stock Market takes an interesting historical look at previous times since 1990 that the government raised or lowered the tax. It seems a likely precursor to a Chinese market slump.
Generation gap? About $200,000 May 21, 2007
Posted by Jenna Robinson in : Uncategorized , add a commentFrom USA Today:
The growing divide between the rich and poor in America is more generation gap than class conflict, according to a USA TODAY analysis of federal government data. The rich are getting richer, but what’s received little attention is who these rich people are. Overwhelmingly, they’re older folks…. Older people have always been wealthier than younger ones. What’s changed is the disparity between the generations. Old people have been racing ahead, helped by government retirement benefits. Young people are running in place, partly because they’re delaying careers to get more education…. The financial shortfalls of Social Security and Medicare over the next 75 years are so large $340,000 per household that they dwarf the wealth of every age group. This hidden debt will make it a challenge for young people to accumulate as much wealth late in life as their parents have.
Top 10 Retirement Mistakes May 18, 2007
Posted by Andy Robinson in : Educational , add a commentAs a follow-up to my last post, read over the article Don’t Retire Poor - Avoid these 10 pitfalls. Some of the mistakes are repeats, but some are worth mentioning. For example, if you have kids forget about a college fund until your retirement is fully funded. There are many options available for financing education, but only one viable option for funding your retirement - YOU. Social Security? Don’t kid yourself! Over the next few decades taxes will increase while benefits decrease (not a recipe for a luxurious retirement).
Keys to 401k Success May 17, 2007
Posted by Andy Robinson in : Educational , add a commentCheck out this article 7 Ways to mess up your 401k that MSN Money has featured today. The main point that I’d like to bang home is that we cannot afford to put off making retirement contributions until later. The longer you wait the less time your money gets to grow. Also, make sure you are getting every penny of the company match that your plan offers! This is free money and can make a substantial difference to your standard of living later on in life.
Housing Supplies Still Rising May 16, 2007
Posted by Andy Robinson in : Market Research , add a commentIn what appears to be very bad news for home builders, today’s number for housing starts surprised investors with a 2.5% increase for the month of April (Starting to defy logic - reality check). Especially at a time where the numbers of existing homes on the market are at record levels, the continuing construction of new homes will ensure that this correction in the housing market will not bottom out soon. The more supply we have of homes on the market, the more downward pressure it puts on prices. I wouldn’t own any home building companies for the foreseeable future, as profits are likely to continue to suffer as supply excesses will lead to more order cancellations.
Long-term trends favor metals companies May 14, 2007
Posted by Andy Robinson in : Market Research , add a commentAlthough the US economy is slowing and domestic residential construction has recently taken a hit, economic growth worldwide is projected to remain strong. The high pace of infrastructure construction in emerging markets has ensured that supplies of commodities will remain tight. The Investor’s Business Daily article, Metal Stocks on Solid Ground, gives a good overview of the state of the metals market. I think that global demand will more than offset any weakness in the domestic market. Countries like China and India, even though I am leery of their stock markets at current levels, will maintain economic expansion at levels that will be benefit commodity companies for the foreseeable future.
Bearish and Fully Invested! May 11, 2007
Posted by Andy Robinson in : Market Research , add a commentIt’s notoriously difficult to time a market correction. I had believed (or maybe it was just hoped) that we would experience a solid 10-15% pullback when the market started dropping late February. Being in my twenties, I have a negligible portion of my money in bonds (although I am building up some cash on the sidelines). Jim Jubak’s article For bears, being right still hurts nicely sums up why we should maintain a consistent portfolio strategy regardless of perceived market conditions.
Dow run helped by market jitters May 10, 2007
Posted by Andy Robinson in : Market Research , add a commentIn this time of slowing growth, investors are diverting their domestic equity holdings into companies with the most stable cash flows. The Dow Jones Industrials are a good representation of established companies with solid earnings, and from a valuation standpoint, they appear more attractive in these current market conditions than smaller-cap names. A Reuters opinion article, Dow records aside, big is still better makes the case that the Dow still has much more room to run as only 9 of the 30 Dow components are at lifetime highs. Personally, I’m starting to wonder if this rally has much more left in it, but I am still mostly invested in equities, and currently favor the larger names for their added safety.
Allies again? May 7, 2007
Posted by Andy Robinson in : News , add a commentThe victory of French presidential candidate Nicolas Sarkozy is tremendous news for Americans, investors, and the French people. Like the new German Chancellor Angela Merkel (who also holds the revolving EU presidency), Sarkozy favors repairing ties with the US and will be more supportive of free trade and a tough international stance with Iran than his socialist opponent.
Wealthy Americans see excessive risk in domestic equity markets May 7, 2007
Posted by Andy Robinson in : Market Research , add a commentThe financial institution US Trust conducted a survey to gauge the views of affluent Americans concerning the domestic economy and where they see the best investment opportunities. I pay attention to the views of the rich because, even assuming that they aren’t making smarter decisions than the rest of us (which is debatable), their financial decisions move markets.