Congress flouts trading rules

David MoonBlog

One of the tenets of a free market is that all participants simultaneously have access to the same information. When investors profit from inside information, they are stealing from market participants who abide by the rules. Because this principle is so sacred the federal government goes to incredible lengths to send people like Martha Stewart to prison. It would be nice if the federal government demonstrated such concern for similar actions by members of Congress. In 2012, Congress passed a law purporting to ban members of Congress from trading on inside information. Late on a Friday afternoon a year later, … Read More

A quick three decades

David MoonBlog

About 5:30 pm 30 years ago today, I was sitting in a Merrill Lynch conference room with about 25 stockbrokers, huddled around a small conference table, listening to some presumably wise man in New York on the squawk box. The brokers, practically elderly men already in their 50s, were mostly chain smokers – and they all looked panicked. One now-deceased gentleman at the table walked away before the conference call ended, saying “I’m done. The market is never coming back and I can’t take this any more.” The Dow Jones Industrial Average had just dropped 508 points (23%) that day, … Read More

“Don’t confuse me with facts”

David MoonBlog

This column will not change your mind about anything. However, perhaps it will explain the connection between global warming, Donald Trump, the Pope, Tesla and your investment decisions. When running for president, Donald Trump famously claimed he could stand in the middle of 5th Avenue, shoot someone and not lose any voters. Trump proved to be prescient. A recent Monmouth University poll found that 61 percent of people who approve of President Trump’s performance as president couldn’t think of a single thing he could do that would change their mind. Among those who disapprove of Trump’s performance, 57 percent said … Read More

Tax rate cuts misunderstood

David MoonBlog

The effect of tax cuts on deficits isn’t simple, but it doesn’t prevent people from acting as if it is. As Republicans propose individual federal income tax reform, two predictable tax cut camps emerge: those convinced that tax cuts, especially on “the wealthy,” increase deficits and those who believe cuts spur enough economic growth that tax revenues increase. The evidence from previous rate cuts show that the relationship between rates and revenue isn’t as simple as either group suggests. Since 1950, the U.S. passed significant reductions in the top marginal individual income tax rates in 1964, 1981, 1986 and 2001/2003. … Read More

Unintended consequences of Fed actions

David MoonBlog

The most influential factor in causing ten years of unnaturally low long-term interest rates has been the Federal Reserve’s ballooning balance sheet, now comprised of $4.5 trillion of U.S. Treasury and agency bonds. Although there was no precedent for the Fed’s massive bond purchasing program, there was no question that it would drive interest rates lower. We are about to find out what happens when the Fed attempts to reverse course and shed those bonds from its balance sheet. Like the Fed purchases, we have no historical precedent for a single investor liquidating a $4.5 trillion bond portfolio, either. Logic, … Read More

Reacting to the Equifax debacle

David MoonBlog

Equifax reports that up to 143 million Americans had their names, addresses, Social Security numbers, birth-dates and perhaps even driver’s license numbers stolen in a security lapse that began in March. Don’t bother using the Equifax tool that purports to help you determine if your information was accessed. Not only have people reported problems with it, there are fake websites masquerading as Equifax in an attempt to steal your personal information. Just assume you are among the 143 million victims and use this breach as motivation to do some things that you should be doing anyway. The three major credit … Read More

Worse than Monopoly money

Garrett ArmsBlog

Before a company is taken public through an initial public offering (IPO), it goes through a lengthy disclosure and review process with the Securities and Exchange Commission.  Financials are assembled and audited, outlining a track record–something investors who are contemplating buying the offering can evaluate.  Using these financials, investors that buy securities can examine things like the company’s capital structure or the cash flow of the underlying business. A new twist on the traditional IPO is the initial coin offering (ICO).  Purchasers of these offerings are not buying stock in a company, rather, they are purchasing digital coins from the … Read More

Happy Birthday HP-12C

David MoonBlog

On the 10th anniversary of the first iPhone, Apple released the iPhone X, a thousand dollar handheld computer with enough processing power to launch 1,000 Apollo moon missions, in addition to placing calls. Samsung, only a year after selling 2.5 million exploding phones, will begin selling the Galaxy Note 8 on September 15, with prices starting around $950, twice the cost of a Samsung 50-inch television set. The smartphone is an amazing device, with each year bringing better cameras, longer lasting batteries, more memory, faster CPUs and better screens. But the smartphone doesn’t even compare to the most impressive electronic … Read More

401(k) Rollover risks

David MoonBlog

If someone advises you to move your 401(k) assets into a rollover IRA, be wary. There are plenty of legitimate reasons it might make sense to do so, but it’s not appropriate in all situations. Many so-called financial advisors, who do not care what is in the best interest of anyone but themselves, regularly and inappropriately advise people to roll their 401(k) assets into IRAs at their first opportunity to do so. When a person retires from a company, he generally has the option of leaving his money in his company’s 401(k) or rolling the assets into an IRA. Other … Read More

NCAA pimp season begins

David MoonBlog

The NCAA is among the three most morally corrupt organizations on earth. I’m not even talking about paying college athletes; no one with an opinion on that subject is going to change his mind. Instead, consider the plight of Donald De La Haye, a (now former) University of Central Florida kicker. His YouTube channel attracts hundreds of thousands of viewers, generating ad revenue for the young entrepreneur. NCAA rules, however, prohibit a student-athlete from personally benefiting from activities “that references his status as a student-athlete or depicts his football skill or ability.” He’s barely a football player; he’s a kicker. … Read More