China Threat Misunderstood

David MoonBlog

In 2014 and 2015, concerns of a weakening Chinese economy prompted a number of 1,000-point daily declines in the Dow Jones Industrial Average (DJIA), including a 2,200-point drop in August 2015. The irony today is that the U.S. market is experiencing similar price swings because of fears that the Chinese economy is strong – so strong that it would “win” a trade and tariff war with the U.S. Some people don’t have enough to worry about. You already know that within a decade China will supplant the U.S. as having the world’s largest economy. By itself, however, that ominous-sounding warning … Read More

Literary Christmas gift suggestions

David MoonBlog

Regardless of your preferred Winter Solstice celebration, there is a good chance that you’re buying gifts for someone this month. If your friends are readers, consider gifting some of these books. If your friends are not readers, consider getting some new friends. I have two recommendations for the doom-and-gloomers on your shopping list. “Factfulness” is a well-documented study of worldwide living standards, finding that by almost every objective measure, worldwide quality of life is improving. Along those same lines, “21 Lessons for the 21st Century” explains why it seems the world is going to hell: our tolerance for suffering and … Read More

Beware the Bear

David MoonBlog

October’s nearly 9% decline in stock prices demonstrates that a lot can happen during a single month, but if the stock market finishes December anywhere near the level it finished in November, the current bull market will have reached its 118th month – setting another record for the longest period without a 20% decline. We will have another bear market, eventually. Historical data suggests it would have already occurred, but history doesn’t exactly repeat itself; it only rhymes. But, as economist Herb Stein so eloquently noted, something that cannot last forever will eventually stop. Bull markets – not even this … Read More

Equality vs. prosperity

David MoonBlog

The number of millionaire households in the U.S. increased by 700,000 in 2017, bringing the total to more than 11 million. Something very strange happened while hundreds of thousands of people were getting rich. Poverty in the U.S. dropped for the third consecutive year. Poverty declined for people without high school diplomas and for those with graduate degrees. It declined for foreign-born, naturalized U.S. citizens and for non-citizens. Poverty declined for blacks, whites and Hispanics.  It declined for singles and for families – whether headed by one or multiple parents, a single mother or a single father. But what about … Read More

A Different Twist on Thanksgiving Week

David MoonBlog

Rather than bore you with a syrupy, Thanksgiving week list of things for which I’m thankful (family, friends, blah, blah, blah), I continue my holiday tradition of sharing a (partial) list of things that irritate me. People who use their religion for business purposes. I’m guessing God doesn’t want you to buy an annuity, anyway. Football announcers who use the phrase “dial up a play.” Those stupid interviews with the football coach as he runs off the field for halftime. “Coach, what do you need to do in the second half to cut into Alabama’s 42-point lead?” Any football player … Read More

October reputation undeserved

David MoonBlog

The S&P 500 declined almost 7% in October, the largest monthly decline since September 2011. October has a bad investment reputation. The three largest percentage daily declines in U.S. stock market history all occurred in October. The largest Dow Jones Industrial Average (DJIA) percentage decline occurred in an October. Four of the ten largest DJIA point declines occurred in October, almost five times what would be expected from a random outcome. Both the Motley Fool and Investopedia have entries discussing the “October Effect” for stocks. Even Mark Twain took an investment swipe at October in Pudd’nhead Wilson. Despite some pretty … Read More

Sears and Amazon: History Repeating?

David MoonBlog

Earlier this year, e-commerce giant Amazon invested in Plant Prefab, a manufacturer of prefabricated homes, planning to speed the adoption of its Alexa smart home device technology in homes. Maybe it is a fantastic business move. Or maybe it is simply history repeating itself. Or both. Amazon is not the first leading retailer to sell prefabricated homes. A hundred years ago, the iconic Sears catalogue offered houses in kit form. For $2,215, a customer could purchase the materials needed to build The Pennsgrove, a beautiful French country home with exposed, rough-sawn oak ceiling beams, a back terrace extending the width … Read More

Preexisting Condition and the Cost of Prescription Drugs

Harold Black, PhDBlog

In this very strange political season pollsters tell us that the most important concerns of the electorate are immigration and healthcare. When I saw that healthcare was a concern, I thought that it meant poor outcomes, or poor access, or lack of services, inadequate care or improper diagnoses and medications. But no. The concerns were not with healthcare but rather with health insurance. Obamacare (the “Affordable” Care Act) mandated that everyone purchase health insurance. The result was a decrease in the number of uninsured from 44 million to around 28 million. Obamacare lead to predictable results: a lessening of choice … Read More

Fine Print is Not So Fine

David MoonBlog

A couple recently invested $100,000 into an annuity that, among other fantastic features, is guaranteed to at least double in value over ten years, at which point the annuity would provide a 5% income stream for the husband’s life. That is, ten years from now the couple expects that their initial $100,000 investment would begin producing annual income of $10,000. (Five percent of $200,000, the guaranteed doubling of the original investment.) Except there is no guarantee that their investment will double in value. Nor will there be $10,000 in annual income. Instead, the investment may be worth as little as … Read More

Trump exposes tax system flaws

David MoonBlog

Depending on one’s political inclinations, the recent New York Times analysis of Donald Trump’s father’s estate planning was an example of either massive personal corruption or a well-executed plan. The Times estimates that Fred Trump’s use of “tricks” allowed him to avoid $500 million in estate and gift taxes, while transferring more than a billion dollars of assets to his children. Regardless of your opinion of the president, the biggest takeaway from Fred Trump’s estate and wealth planning is that our tax system is a needlessly complex farce. The elder Trump established shell companies to funnel money to his children’s … Read More