The silly things investors say

David MoonBlog

About once a day I hear an investor (both professionals and individuals) say something completely nonsensical. Here are a few. “It’s a blue chip company; it has to be safe.” (Ask the American Express investors who’ve lost 24 percent this year.) “It’s already gone down 75 percent; it can’t go down much more.” (Wrong; it can go to zero.) “I’m going to wait until it starts going up before I buy any of that stock.” (You’d prefer to pay a higher price?) “They say this stock is going up.” (Who is…“they?”) “This investment guarantees me 8 percent, and I can’t … Read More

Greece has been there before

David MoonBlog

When Greece joined the multicountry economic union, they devised a new system of currency, joining together multiple currencies and economies. Greek overspending and outrageous debt levels, however, soon led to cash shortages, eventually causing the entire geopolitical economic union to collapse. The year was 1868, however, and it was the short-lived Latin Monetary Union, not the European Union. In an eerie foreshadowing of events almost 150 years later, Greece proved itself unable to live within its means and perfectly willing to rely on the work of its partners to subsidize its leisure. Greece was bankrupt in 1893. The Latin Monetary … Read More

Don’t stick with a stupid financial plan

David MoonBlog

When stock price declines create investor anxiety, advisers and commentators often respond with data about previous stock market declines, the futility of trying to time the market, relative valuations, and historical volatility — then punctuate that statistical recitation with the advice to sit tight and remain calm. Having given that advice more times than I like to admit, I have learned that there are at least a couple of problems with that approach. “Sit tight” and “remain calm” are two completely different acts and are sometimes incompatible with each other. The recommendation not to change your investment strategy at a … Read More

Don’t make investment decisions based on headline news

David MoonBlog

Last week’s column ascribing recent stock market volatility to more than just a slowing Chinese economy prompted a number of reader questions about China and how the strength of its economy could deteriorate so rapidly. The Chinese economy actually didn’t begin its slowing all at once. It has been slowing since 2010, but you would never know that by a superficial look at the country’s reported gross domestic product figures. It’s a great lesson in the importance of not making investment decisions based solely on headline news. We were warned. China Premier Li Keqiang has repeatedly said that GDP is … Read More

US has no obligation to protect Sony

David MoonBlog

North Korea versus Sony isn’t just about computer hacking or the nature of the next world war. It is also about taxes. Sony Kabushiki Kaisha is headquartered and domiciled in Japan. Its computer servers that were hacked are located in Europe. We should have never very publicly described, then defended, this as an attack on the U.S. When Hollywood stars began complaining about their emails being stolen and published, the FBI should have referred the company and its employees to the Criminal Investigation Bureau of the Japanese National Police Agency. Sony does employ Americans and operate a number of wholly-owned … Read More

A Christmas story set at Pizza Hut

David MoonBlog

While at my local gas station conducting impromptu economic research interviews, I met “Julie,” a young lady who works at an area Pizza Hut. Julie overheard our conversation about the pleasure of lower gas prices and interjected herself into the conversation. “It doesn’t matter how low gas prices fall, it’s not going to make up for what I’m losing to Obamacare. I hate it.” She explained that her job as a cashier/waitress at Pizza Hut places her into the Department of Labor “Tipped Employee” category. Many of her customers, enjoying the buffet, likely wouldn’t know that their gratuities are expected … Read More

From Apple to Piketty, a look at 2014

David MoonBlog

Yahoo’s “Year in Review” looks back at top stories and trends based on the queries sent through its search engine. According to Yahoo, the most frequently searched finance question of 2014 was “should I buy Apple stock?” Number six on the list was “should I buy Facebook stock?” If you are asking a search engine if you should buy Apple or Facebook stock, you shouldn’t buy Apple or Facebook stock. Time selected Ebola fighters from a list of six finalists as its Person of the Year. It’s hard to take seriously any list that simultaneously includes both Taylor Swift and … Read More

December 7, 2014

David MoonBlog

December 7, 2014 The drop in gasoline prices since June is currently saving US consumers approximately $400 million a day. Other than those lower pump prices, what are the ramifications of lower oil prices? To some extent, the implications of lower oil prices are a function of their cause. Oil is currently experiencing a perfect storm of increased supply and, thanks to weakening economies, softening worldwide demand. Consumption of oil in North America has been in structural decline for 15 years. Economic growth in China is muting, as is its oil consumption. Most of Europe remains weak. And after earlier … Read More

Many US families have debt problem.

David MoonBlog

Of the 250 million Americans over the age of 15, the National Retail Federation projects that 140.1 million of us will go shopping this weekend, spending more than $50 billion over the four days, or $357 per person. Adding the rest of holiday shopping, Americans are expected to spend a total of $804 on gifts this year. Newspapers and magazines this time of year run their obligatory annual “tips to avoid getting into credit card problems” articles. Carry cash. Make a budget. Tie a string on your finger. Boil an eye of a newt and frog toe. No number of … Read More

Gains not enjoyed by everyone

David MoonBlog

The G650 Gulfstream is the latest in luxury for the ultra-rich.  Even at $65 million a plane there is a three-year wait to purchase the 14-passenger aircraft. Apparently there are a lot of people who need to get places at Mach 0.95. The economy has officially recovered. Sort of. The distribution of recovery is one of today’s most controversial and widely discussed topics.  Unless you own a G650 or collect food stamps, most people consider themselves to be some degree of middle class. It is easy to define “rich” as anyone who has more money than I do. There is … Read More