The Centers for Disease Control estimates there are 3.2 million Americans with chronic Hepatitis C, 17,000 of whom will die this year as a result of the infection—a number that exceeds the annual deaths from HIV/AIDS in the US. Fortunately, Gilead Sciences produces a new breakthrough drug, Sovaldi, which has proven to cure 90 percent of all Hepatitis C patients. The drug costs $1,000 a pill, or $90,000 for the typical three-month treatment. The cost of 90 days of Sovaldi treatment for the estimated 12,000 infected TennCare enrollees would be one billion dollars a year. Combined with the $300 million … Read More

This past week Dollar Tree announced it was acquiring rival Family Dollar in a deal worth $8.5 billion. Selling stuff for a buck is obviously profitable. The transaction is a perfect example of the Moon Affordable Small Packages Fallacy and Moon Paradox of Poverty, both of which I created this week. The Affordable Small Packages Fallacy describes the inverse relationship between the size of a product’s package and the gross margins it provides a retailer. That is, pizza is more expensive by the slice. And a one-dollar, 24-ounce bottle of ketchup is more expensive than a four-dollar, 114-ounce tub. For … Read More

How much do you really know about money? The word “money” derives from the Romans. They made their coins in the temple of Juno Moneta, their goddess of marriage and women. The earliest banks were ancient religious temples where people stored grain or precious metals they used as money. The dime is smaller than the cent and nickel because, at one time, each coin contained an amount of metal approximately equal to the face value of the coin. The dime was originally spelled “disme,” based on the Latin word “decimus,” meaning one-tenth. The five-cent piece is the only US coin … Read More

This past week, Rupert Murdoch’s 21st Century Fox offered to acquire Time Warner, theoretically posing the prospect of the same entity controlling both CNN and Fox News. Time Warner was previously the target in what is routinely described as one of the worst corporate marriages in history. When AOL purchased venerable Time Warner Communications in 2001, it seemed a bit like Derek Dooley taking control of a storied SEC football program—and with similar results. AOL effectively paid $165 billion for Time Warner, using soon-to-be almost worthless stock as currency. Today AOL is little more than a very expensive footnote in … Read More

From 1,700 to 17,000. That’s where the Dow Jones Industrial Average (DJIA) has travelled during my seemingly brief investment career. During this 1,000 percent gain in stock prices, we’ve experienced three major price cycles, each commonly defined by the price collapse that preceded or followed it. And each of those price declines is commonly mischaracterized in some way. In 1987 we had The Crash. From August to October that year the DJIA dropped 1,000 points. On the October 19 afternoon of Black Monday, I sat with a group of really old stockbrokers (probably about 45 or 50 years old) and … Read More

I spent the late summers and early falls of 1977 and 1978 walking through seemingly millions of acres of cotton fields, using a hoe to remove a specific weed that crop duster herbicide couldn’t kill. My compensation included the $2.65 an hour minimum wage and the motivation to do almost anything other than chop cotton as an adult. Measured by the consumer price index, my 1978 earnings lost a third of its purchasing power in the ensuing 35 years. Since 1968 the federal minimum hourly wage has increased 353 percent, compared to a 583 percent increase in the CPI. Numbers … Read More

Some advice for the winner of last week’s $259 million jackpot: You, Inc. is now a quarter-of-a-billion-dollar business, so act like it. Make a plan. Then work the plan. Decide where you want to be 20 years from now. Work backwards from there. If you were at that place today, what would you have been doing ten years ago? Then look back another ten years. What would you have been doing then? That’s what you should be doing now. When you identify your long-term goals, set aside specific buckets of money and other assets to fund each goal. Take a … Read More

Inflection points are places in life where our direction can change—sometime dramatically and sometimes only slightly. Even small changes at an inflection point can eventually accumulate into a significant difference over a long enough period. Where you are today is, in part, a function of your decisions at life’s inflection points. Retirement is an inflection point. Small changes in your trajectory at the beginning of your retirement years will be magnified over time. To successfully manage the financial part of retirement requires that you consciously reconcile three things: your balance sheet, goals and fears. By the time you see the … Read More

There is a battle occurring between regulators in the investment industry and most individuals are completely oblivious to both the proposed processes and the problems with the current patchwork system of financial industry oversight. For years I’ve written about the different ways in which people who hold themselves out as investor-helpers are regulated. Stockbrokers, financial planners, investment advisers, trust department employees and insurance salesmen are regulated by a number of different—and competing—organizations, each with its own requirements. Each regulatory authority thinks its systems and processes are better than the others. Under the guise of improving overall regulation and seeking consistency, … Read More

Thousands of youngsters across the US are attending football camps this month, many because their parents believe that proper instruction at a young age could lead to college scholarship offers, the NFL and vast riches. If a parent’s goal is to begin training a future millionaire (a questionable goal, at best,) football camp is the wrong place to be. His kid should be in biosciences or business camp, not quarterback or kicker camp. Last year’s 32 opening-day NFL rosters listed 80 quarterbacks, with an average salary of $1.9 million. That’s a bunch of money, but it’s less than what the … Read More