A Thanksgiving list of irritations

David MoonBlog

Gratitude is one key to a happy life, but too many columns this week are self-serving, syrupy recitations of life’s blessings. That’s nice. That’s sweet. In the interest of balance, however, here is my annual list of some things that irritate me. Jon Gruden. I’m already over Gruden and the members of his cult. #FireGruden. When I leave the house and forget to take my cell phone. When I leave the house and remember to take my cell phone. Facebook posts of people’s food. Facebook posts by hypochondriacs. The spelling of Treasury Secretary Mnuchin’s last name. Pat Sajak needs to … Read More

Tax benefits or special interest loopholes?

David MoonBlog

A recent USA TODAY NETWORK – Tennessee headline warned that the “GOP tax plan could cut many current benefits.” The article was an outstanding analysis of the Tax Cuts and Jobs Act approved by the House Ways and Means Committee on November 9. The plan, which went to the full House for consideration this past week, calls for the elimination and reduction of a number of deductions and tax credits – items that are often described and generally accepted as benefits. What neither the article nor the headline noted, however, is that one man’s benefit is another man’s special interest … Read More

Superficial selection of jocks and stocks

David MoonBlog

In 2011, the University of Houston football team finished 13-1, winning more than 11 games for the first time in school history. The team’s head coach, Kevin Sumlin, immediately became the “must hire” coach. However, anyone who had worked on a staff with Sumlin or prepared a team to play one of his teams could have told you that Sumlin’s squads were talented, but undisciplined and unfocused. His practices were unorganized and he made downright bizarre in-game decisions. Texas A&M “won” the Sumlin lottery and most A&M fans now regret it. But it was a great, exciting introductory press conference. … Read More

Popular Morningstar ratings flawed

David MoonBlog

If you have ever researched a mutual fund or paid someone to do it for you, there is a good chance that you’ve seen fund ratings from Morningstar. Much of the information on a Morningstar report is useful, but a recent study by the Wall Street Journal found that Morningstar’s much-heralded and quoted fund star ratings are of no help in predicting which funds will perform well in the future. The shortcomings of the Morningstar star ratings system arise from its reliance on something called the Capital Asset Pricing Model (CAPM), a flawed academic theory. CAPM produces a statistic known … Read More

Differentiate by how you communicate

David MoonBlog

You read newspapers, or digital versions of them, almost guaranteeing that this piece is not for you. Please forward it to someone who gets his news from Snapface, Crackbook or some other truncated source of Hollywood gossip. Learn to communicate, both verbally and in writing. If you want to distinguish yourself in business or even a job search, pry the exclamation point key from your keyboard. In business, a person probably needs no more than ten exclamation points in his entire life. If you use one exclamation point in a job search email exchange, I might overlook look it. If … Read More

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