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

Wrist slap hurts investors

David MoonBlog

I will never trust a KPMG audit again. Investors are faced with numerous risks and unknowns, but the credibly of a company’s audited financial statements is not supposed to be one of them. We can trust what is reported in an audit. That’s the theory, anyway. The Securities and Exchange Commission (SEC) charged global accounting firm KPMG for failure to properly audit now-bankrupt Miller Energy Resources. In neither admitting nor denying the charges, KPMG promised to try and do better in the future, gave back the fees it charged for the worthless audit and agreed to pay a $1 million … Read More

Geopolitics a poor stock predictor

David MoonBlog

Geopolitics a poor stock predictor Last week’s column about Washington’s often short-term irrelevance in actual economic outcomes inspired a number of disagreeing emails, warning that a lunatic with a nuclear weapon poses a significant risk to the stock market. There are real long-term risks in the stock market today, but war with North Korea doesn’t top the list. The human cost of war is so immense that discussing its investment implications is irreverent, but it doesn’t prevent almost every investor from doing it. The market’s reaction to tragic geopolitical events has been so varied, however, that it almost appears random. … Read More

Washington’s sometimes economic irrelevance

David MoonBlog

It’s difficult to imagine a more apparently dysfunctional White House than the current one. Maybe Richard Nixon’s Saturday Night Massacre or Andrew Jackson’s defiance of the Supreme Court were close. Even rank-and-file Trump supporters joke about the odds of them eventually becoming White House spokesman or Chief of Staff. The most reassuring economic observation, however, is that it hasn’t mattered. Other than half the country experiencing a massive increase in anxiety and a longing for the fantastic things that would have otherwise occurred during the first 200 days of a Clinton presidency, relatively few people can point to tangible ways … Read More

Information overload creates opportunities

David MoonBlog

Although a commonly held belief is that Wall Street is rigged against the small, individual investor, in terms long-term investment performance, the opposite is true. Individual investors can take advantage of a cultural bias toward short-term thinking to improve their investment results, quite possibly outperforming the typical institutional investor. The key is knowing what to ignore and when to do nothing. Thirty years ago, institutional investors had an advantage over individuals because they had greater access to information. By the late 1990s, the Internet had leveled the information playing field, eliminating the institutional benefit of access to information. The ability … Read More

A look at 9 years of recovery; our July 2017 letter

David MoonBlog

The U.S. equity market continued its 2017 rally in Q2, as the S&P 500’s 2.4% return was easily the best performance among broad-based indices of the world’s developed economies. Based on our estimate of the value of the S&P 500, the index is overpriced somewhere between 25 and 30 percent.  Relative value – buying an overpriced stock because it is less overpriced than some other stock – seems a little like a convict celebrating his prison sentence being reduced from 300 years to 200 years. Read more: MCM July 2017 letter