College football and investing similarities

David MoonBlog

Near the end of this college football season, many schools will fire their coaches and clamor over a handful of hot young coaches who have enjoyed 1 or 2 successful seasons. Most of those hot young coaches will be replaced with other hot young coaches in 3 or 4 years. When much-ballyhooed health technology company Theranos was discovered to be a fraud, I was reminded of Kevin Sumlin, Charlie Weiss and Larry Fedora. (Unless you’re a passionate college football fan, you don’t know these former hot coaches – which is exactly the point.) If you don’t – or can’t – … Read More

Student loans by the numbers

David MoonBlog

As you listen to politicians discuss the issue, keep in mind that “student loan” is an overly broad term, suggesting a homogeneity that simply doesn’t exist. There are massive differences between traditional public colleges vs. for-profit schools, graduate degrees in medicine vs. fine arts and students who complete school vs. those who don’t. Here are some actual figures, however, offered with as little commentary as possible. Forty-four million Americans owe a total of $1.5 trillion in student loan debt, or an average of $34,000 per borrower. (Both the average wedding and a used, 2017 Ford F-250 pickup truck cost about … Read More

Don’t blow smoke up your portfolio

David MoonBlog

At least once a week, someone asks me about investing in marijuana. Three years ago, if someone had even hinted at investing in pot I would have considered it a joke. I still consider it a joke, even though the questions are never intended as such. Observers tell us that full-fledged marijuana legalization is coming. The libertarian in me is reluctantly ambivalent about it, while the investor in me sees it as another avenue for scoundrels to separate people from their money. Presumed smart people project annual marijuana sales in 2025 to be as much as $150 billion. Given that … Read More

“Best Interest” regulation creates more investor confusion

David MoonBlog

The key to understanding almost any human interaction is to understand the incentives at play. Whether it involves a disagreement between spouses, buying a car, trying to increase church attendance, treating drug addiction or preparing a football team to play, if you can identify the reward structure and preferences for each person or group, you can avoid mistakes and reach better outcomes. Financial news programs, for example, don’t sell investment advice; they give that away for free. They are in the business of selling viewers – that is, you – to advertisers. They only need to keep viewers engaged with … Read More

Some interest rates declined as Fed raised rates

David MoonBlog

The closer we get to the next Federal Open Market Committee meeting on July 30 and 31, the more fixated investors becomes on what the Federal Reserve will do with interest rates. A month ago, traders debated whether the Fed would cut rates a quarter or a half a point. A reduction in rates was considered inevitable – the only question was how much. That was until July 5 when the Labor Department announced strong June employment figures. (Actually, the figures showed a smaller-than-expected slowing in the rate of positive employment growth. Read that sentence a couple of times and … Read More

Reparations aplenty

Harold Black, PhDBlog

Every year that John Conyers (D-MI) was in Congress, he introduced a bill calling for reparations for black Americans as a compensation for their ancestors being enslaved. The argument being that enslaved blacks contributed to the wealth of the nation without being adequately compensated for their labor. Now that Conyers is no longer in Congress, the mantle has been taken up by Sheila Jackson Lee (D-TX). This is the same Jackson Lee who wondered in a congressional hearing if the Mars lander could go over and take a picture of the flag planted by Neil Armstrong. Nevertheless, the bill which … Read More

Experts lacking expertise

David MoonBlog

It seems like so long ago, but the end of 2018 was miserable for the stock market. The S&P 500 dropped almost 20 percent. Misery dominated the financial press, as public prognosticators turned markedly bearish. The January 4th Wall Street Journal headline screamed that the first two trading days of 2019 were the worst since 2000 – the beginning of a bear market that saw the S&P 500 collapse 49 percent.  Many investors – even people who get paid to know better – simply assume that the near future will look a lot like the recent past. It’s a great … Read More

The national debt doesn’t matter – until it does

Harold Black, PhDBlog

Who would have thought that the announced candidates for president could make Donald Trump seem normal? Consider the following positions that these candidates have endorsed:     Free college Forgive $1.6 trillion in college debt Green new deal Decriminalize illegal border crossing Reparations Medicare for all regardless of citizenship status (elimination of private insurance) Abolish the electoral college Increase the size of the supreme court Bash the rich (increase marginal tax to 70%, add wealth tax, financial transactions tax on Wall Street) National legalization of marijuana for both medicinal and recreational purposes Universal childcare Guaranteed jobs Breakup big tech companies … Read More

In defense of socialism

David MoonBlog

It pains me to admit it, but I am a socialist. For the past nineteen years my family has operated as a pure socialist, centrally planned monarchy: from each according to his ability; to each according to his needs. All assets have been controlled by the central government (that is, my wife), for the benefit of the collective group. (That is, my wife, kids and me.) For the most part, I made all the money and my wife spent most of it on our children. This has not been democratic socialism. We didn’t vote on how many pairs of shoes … Read More

Might Trump’s actions depress stock prices?

David MoonBlog

A number of my football teammates in college regularly prayed for victory. I always assumed that God didn’t care if we beat Auburn, but in hindsight, I realize that Reggie White was simply connecting two topics about which he was both knowledgeable and passionate – then ascribing some causality between the two. Investors do it every day, connecting their beliefs (about politics, not prayer) to their expectations (about investments, not football.) In the eight years following Barack Obama’s election, the S&P 500 increased an average of 12 percent annually. Since Donald Trump’s election, the S&P 500 has increased 12 percent … Read More