U.S. less divided, not more

David MoonBlog

Your Facebook feed notwithstanding, we live in the most socially and culturally unified period in our country’s history. With brief exceptions following national tragedies, America has never been more unified, peaceful and genteel as it is now. The U.S. is certainly less divided today than it was in my childhood. In just my lifetime I have seen a Ku Klux Klan rally and attended a school with white and colored water fountains. I also witnessed the election of the first black U.S. President. In the first 20 years of my life, a president and U.S. senator were assassinated, a presidential … Read More

Annuity warnings

David MoonBlog

Based solely on information from radio ads and free dinner sales presentations, one could assume that annuities are very simple safe and predictable investments. Of course, that is the goal of the ads. In reality, annuities are very complex investment vehicles that few investors understand before purchasing – sometimes effectively permanently committing their capital into an illiquid vehicle that increases your total tax bill, when they believe they are doing exactly the opposite. Before purchasing any type of an annuity, read every document you are asked to sign. Do not rely on summaries or sales brochures. You can avoid most … Read More

When a loss isn’t a loss

David MoonBlog

Berkshire Hathaway, the much-admired investment vehicle of legendary investor Warren Buffett, reported losing $1.1 billion in the first quarter of 2018, compared to a $4 billion reported gain in the same period a year ago. Cash on hand fell by $8 billion during the quarter and the value of its public investments and derivatives declined $6.4 billion. Some people might see the reported figures and infer that something is amiss at the company. They would be wrong. Berkshire’s first quarter loss offers one example of why Buffett regularly advises that most investors should own a low-cost index fund, not individual … Read More

Berkshire Hathaway annual meeting summary

David MoonBlog

Yesterday, May 5, Berkshire Hathaway held its annual shareholders’ meeting. As we have done in years past, we are sharing  Adam Blum’s notes from the meeting.  (Here is Adam’s bio.)  Adam does a great job; his notes are virtually a transcript of the six-hour Q&A. We highly recommend them. Adam Blum’s notes from 2018 Berkshire Hathaway annual meeting

How to lie with statistics

Harold Black, PhDBlog

President Trump has said repeatedly that “We lose $800 billion a year on trade”. Excuse me? If that were the case, we would not trade. Apparently, the president is equating a trading deficit to a loss. Others would opine that we actually are better off having that trade deficit. Moreover, the president has stated that we are running a trade deficit with Canada. However, Canadian data show that the US is running a trade surplus with Canada. But are trade deficits good or bad? It depends. A search of the web will show evidence that supports both views. The same … Read More

Schools should have taxing authority

David MoonBlog

The Knox County Board of Education should have its own taxing authority. I am not advocating for a tax increase. That’s a separate issue. But the system of education governance in Knox County is dysfunctional. Under the current system, the Knox County Commission determines the amount of local tax revenue allocated to the school system. Although the Commission has no legal input into how it is spent, 60% of Knox County’s budget – approximately $480 million – goes to schools. That is, the people responsible for taxing the citizens don’t even control how more than half of that tax money … Read More

China can’t afford trade war

David MoonBlog

Most of talk about a trade war with China is just that: talk. The U.S. and China are not going to engage in a full-scale trade war. And if the two countries do, the impact to the overall U.S. economy would be marginal. The link between international trade, economic policies and electoral politics is complex. China purchases 30% of all U.S.-grown soybeans. The federal government provides approximately $2.5 billion of annual soybean subsidies to American farmers, or 21% the value of our soybean exports to China. Forget free or fair trade; why do U.S. taxpayers pay for Chinese food? Hint: … Read More

Fortunes and Friends

David MoonBlog

In 1987, a few months after I finished graduate school, my wife and I bought our first house. Although the small, vinyl-sided starter-home was the nicest place either my wife or I had ever lived, she wanted a swimming pool. I wanted to pay off the mortgage. After reading a Dear Abby letter from a widow whose newly-retired, workaholic husband died just before they took their long-awaited, trip-of-a-lifetime to Italy, I agreed to the pool. So we built a $20,000 pool in the backyard of our $76,915 house. In percentage terms, it was the worst financial investment of my life. … Read More


David MoonBlog

In 2008, new Duke head football coach David Cutcliffe was watching his squad workout for the first time. After 30 minutes, he abruptly cut the session short, gleefully announcing to the team and staff that he was watching the fattest football players he’d ever seen. “This is fantastic. We can add four wins just by getting you in shape.” Over the next three months, the Blue Devils lost a cumulative 500 pounds. That quarter-ton wasn’t spread equally across 90 players. Far from it. The vast majority of that weight was lost by only a handful of players: the fat ones. … Read More

Thieves in sheep’s clothing

David MoonBlog

When the Republic of China lost the civil war with the upstart Communist Party in 1949, the newly installed communist Chairman, Mao Zedong, enacted a law refusing to honor all pre-1949 Chinese obligations, including both currency and bonds. The bondholders were completely wiped out, including the U.S. Treasury, which had purchased bonds to help finance the war. The bonds have zero investment value. Buying the bonds hoping to collect 70 years’ worth of accrued interest is as silly as doing the same with bonds issued by the Confederate States of America or Saddam Hussein. Yet that is exactly what the … Read More