News

Federal Reserve – Data Driven?

Janet Yellen pulled the markets offside with a hard count yesterday.  Instead of a hike, we heard about global weakness that suddenly warrants the Fed’s attention.  The market reacted as though there was a hike – you could say we’ve been in the red zone the last two days (I can’t help myself).  Most concerning is that the Fed continues to move the goalposts (last one, I swear).  Janet Yellen has insisted that under her guidance, the Federal Reserve will be data driven, but so far this hasn’t played out.  The first bogey was unemployment.  When unemployment recovered quicker than expected, they kept lowering the target, delaying a possible rate hike.  These delays were understandable as there was certainly room for improvement in the economy.  Now, however, the US economy is looking quite robust.  Unemployment has vastly improved and GDP looks good.  Inflation is low, but some top-of-mind costs (school tuition,…


ARPKD

Saturday, September 19th is the Northeast Ohio Walk for PKD.  Please take a minute to read about a cause that is near to my heart. My son, William, has ARPKD (autosomal recessive polycystic kidney disease).  This is a genetic disease that led to complications after he was born and ultimately shut down his kidneys.  William went on dialysis and was lucky to have a kidney transplant when he was 2 years old.  He needs to take about a dozen medications every day to manage the transplant and everything that goes along with that. The great news is that William is doing incredibly well now.  He is going to kindergarten and doing all the other things a boy his age does such as sliding down the stairs on his butt, riding the dog like a small horse, and sneaking downstairs early in the morning to eat ice cream for breakfast. If you’d…


Wild Monday

So what happened to the market on Monday? I don’t know and anyone who says they do know is full of it.  Because investing involves lots of numbers and math, it is easy to assume that there are clear answers to questions like this.  Math is constant.  2+2=4.  Investing is not constant.  2+2= whatever the next guy is willing to pay for it and that person might value 2 differently than you or I.  Increasingly, the next guy isn’t even a person at all, it’s a computer.  Math serves more as a frame of reference in investing than as an absolute. Ok, that was a boring non-answer.  I’ve found that people asking about investing don’t actually want an update on the reality of the markets so much as a quick story  – the more outrageous, the better.  We want someone to blame when the market goes down and we want someone to tell us…


Fiduciary

There is a silent struggle over the word Fiduciary in the financial services industry.  I am biased not only because the firm I work for has a Fiduciary duty to its clients but because I think it’s the ethical thing to do.  One of the most frustrating things is discussing investing with a friend or relative and slowly realizing that they are being sold the investment product of the month by someone they think they can trust.  They are convinced that investing is about making timely trades in and out of asset classes, sectors, or even individual securities and that “their guy” has an edge.  This edge never seems to be quantified as their client statements don’t show returns or benchmarks in any meaningful context and there is no master plan that includes both their taxable and retirement accounts. The Fiduciary battle is important and is something all investors should be aware…


No Picture

Greek Crisis Translated

2001 Greece:  Hey can we join the Eurozone? Europe:  How is your economy? Greece:  I’d say strong to um… quite strong? Europe:  Welcome aboard! 2010 Greece:  Hey Europe!  We’re having a tough time with the financial crisis.  Could you lend us some money? Pundits:  CONTAGION!!!  PIIGS!!!  RINGWALL!!! Europe:  Sure, this should cover you for the next three years or so.  Try to cut back on expenses since times are tough, ok? 2012 Greece:  Ok, this is kind of embarrassing, but do you think you could spot us some more cash?  We’ll use that to make payments on the money you loaned us three years ago and we’ll definitely pay you back this time. Pundits:  GREXIT!!! Europe:  Ok, but you’ve really got to cut back on expenses this time. 2014-2015 Greece:  I was going to pay you back, but ummm Europe:  Hey I did some digging and your economy wasn’t ‘quite strong’ in…


Selling Greece

Photo by Eastlaketimes As has been the case for every Monday over the last X weeks, Greece is the financial headliner.  It was dragged kicking and screaming back to the negotiating table this weekend.  Little negotiation was had.  A deal was made… but not really.  Basically, Europe scolded Greece and everyone decided to give Greece a little more time (72 hours) to get their act together before negotiations begin in earnest.  This sounds like another silly kick of the can down the road, but this time Europe might really take action beyond a strongly worded letter.  They have attained concessions from Greek Prime Minister Alexis Tsipras (dubbed the ‘AGreekment’ *groan*) that go beyond the previous negotiating round’s demands.  This sounds odd since Tsipras fought these demand tooth and nail just a couple of weeks ago, the Greek people voted against these demands last week, and it seems like part of the demands…


Leaving the Gyro

It is important to note that in this post I am pronouncing the word gyro as “yee-ro”.  This is critical because no one is allowed to pen commentary on the Greek situation (I almost typed ‘tragedy’) without at least a little halfhearted wordplay. The odds of a Grexit keep going up, but before Greece can leave the Euro, Europe must allow Greece to default by not extending a last-minute unearned bailout.  In other words, Europe must leave the Gyro.  It looks like Greece has run out of road to kick the can down and we’ll finally get to see the next act of this tragedy (I can’t help myself) soon. What does this mean for investors?  We’re seeing red numbers all over financial television in between ‘man on the street’ spots of reporters interviewing Greeks standing in line at banks or ATMs.  People are speaking in urgent tones on TV, this…


Wooden Nickels

When I was younger, my parents would tell me not to take any wooden nickels.  I always wondered what that meant.  Are there actual people out there trying to pass off wooden currency?  Would I really be tempted to accept this fake money?  What kind of monster is prowling the streets looking to swindle ten-year-olds out of five cents?


Technology Buried Peak Oil

Just before the financial crisis, peak oil was a hot topic.  The theory was that demand for oil had permanently outstripped supply and that the commodity would only increase in value going forward as supplies dwindled.  Talking heads raced to plant the highest price target as it shot up to over $130/bbl.  There was a steep drop, then stabilization around $90/bbl.  As is par for the course, those who get paid to predict things they cannot possibly predict based a long term outlook on the extreme short term history – $90 oil forever. The shale revolution initiated a massive paradigm shift as OPEC handed the world’s production reigns to the US.  The price of oil went down as demand was still diminished from the financial crisis and due to the removal of some degree of political risk in the oil supply away from the Middle East.  All of a sudden, though, wells where…


Grexit, Graccident, Groverload

The silver lining in the European financial crisis is how the names of the various countries involved lend themselves so well to plays on words.  Portugal, Italy, Ireland, Greece, and Spain were collectively PIIGS.  Greece has had the highest profile of all the PIIGS, but I’m not sure if that’s because they are truly in deeper trouble than the others or if it’s more due to marketing.  A possible Greek break from the Eurozone has been dubbed the Grexit.  That’s catchier than Spanic (Spanish Panic) or Quitaly.  Mohamed El-Erian is worried about a Greek economic accident – a Graccident.  I guess the only way to stand out from the other eight talking heads that are all brainstorming doomsday scenarios on live TV is to create a strong apocalyptic brand.  Although maybe things will get better – a Grecovery?     Photo by Denis Bocquet