Trade with China both simple and complex

David MoonBlog

It is almost unanimous conventional wisdom that the U.S. has the economic upper hand in a tariff or trade war with China; that is, China needs the U.S. much more than we need China. From a conventional economic and political sense, that’s very true. But China is not conventional. Its leaders are motivated differently than ours, meaning that we are using two different sets of rules, to fight two different kinds of wars – that just happen to be occurring on the same economic field of battle. It is without question that China cheats. It steals from American companies, which … Read More

Stories from Berkshire Hathaway shareholders’ meeting

David MoonBlog

Somewhere among the 42,000 people at the recent Berkshire Hathaway shareholders’ meeting were members of the Grant Group, a Knoxville investment club. Club members Diana Condon, Jeannie Dulaney, Kathy Hamilton and Karen Pershing were each making their first pilgrimage to the Woodstock for Capitalists, and they were kind enough to share their experiences with me. Each year, much is written about the Q&A with Berkshire’s Chairman Warren Buffett and Vice Chairman Charlie Munger. I was more interested in hearing about their overall adventure. On Friday before the meeting, the ladies joined thousands of others in Shareholders Shopping Day, where shareholders … Read More

Partisanship clouds economic assessments

David MoonBlog

Americans are so illogically politically partisan that they will distort the descriptions of their own economic well-being based simply on the outcome of an election, without any corresponding change in any underlying economics. A February 2019 Gallup poll found that 50% of Americans reported being better off financially than a year ago – the largest percentage since 2007. Since Gallup began conducting this poll in 1977, only once have Americans been more optimistic about their personal finances. But the averages hide an illogical and emotional partisan difference. Twenty-six percent of people describe their financial condition as worse than a year … Read More

How not to fix student loans

David MoonBlog

Last spring, 69% of college graduates left school with an average student loan balance of $29,800. In total, there are 44 million Americans who owe $1.5 trillion for student loans, preventing many young people from starting families, buying homes and enjoying even a modest economic standard of living. Yet the average car loan for Millennials is $22,600 and the average cost of a wedding is $25,000. Why is no one lamenting the social burdens of growing matrimony or transportation crises? Millennials are hamstrung by a $393 student loan payment, but not their $426 average car payment? (In a perverse irony, … Read More

Tips on choosing an adviser

David MoonBlog

I have lost count of the number of Knoxville-area self-described “financial advisers” who, in the past year or so, have been arrested, gone to prison, been sued, practiced without proper licensing or been implicated for their role in Ponzi schemes. Many of their victims could have avoided injury by reversing the order of the steps they took to select an adviser. The AARP has a very simple, short questionnaire to use when interviewing a potential financial adviser. It’s a good starting point to evaluate an adviser’s conflicts and background, assuming his answers are truthful. There is more to successfully selecting … Read More

Tax that fellow behind the tree

David MoonBlog

If you sell an asset for a gain, the IRS taxes you on your profit, but only after you sell the asset. Oregon Senator Ron Wyden has proposed perhaps the goofiest and most impractical tax idea of all time: taxing individuals based on unrealized capital gains, that is, gains they may or may not eventually have. Ignore the motivation for such a proposal; how would it even be implemented? If unrealized capital gains are taxable, would unrealized losses be deductible? If a taxpayer’s unrealized losses exceed his taxable income, would he get a check from the IRS? In 2018, would … Read More

Advice for young job-seekers

David MoonBlog

As the end of the year approaches for colleges and high schools, new graduates and would-be interns scurry to find jobs that will propel them to their fortune. Consider passing these tips along to those young people in your life. Have an English teacher proofread your resume and any cover letter you plan to re-use. Employers look for reasons to discard resumes. Inconsistent verb tense is an easy “no.” Assume the reader is going to read one line of your resume; put the most important thing there. If you want a computer programming job and you won something called the … Read More

The Perils of micro-targeted advertising

David MoonBlog

The US Department of Housing and Urban Development (HUD) recently announced charges against Facebook for serving ads that violate fair housing laws. The implications of the case could extend well beyond housing. Facebook allows its advertisers to very specifically target the people who see – and don’t see – their ads. Until recently, Facebook advertisers could exclude certain races from seeing their ads. This allowed real estate advertisers to almost certainly violate the Fair Housing Act of 1968. Enacted in 1968, the Fair Housing Act made it illegal for property owners to refuse to sell or rent to someone based … Read More

$10,000 worth of fine print

David MoonBlog

Humira is a prescription pharmaceutical used to treat, among other things, arthritis and ulcerative colitis. I’m not familiar with ulcerative colitis, but it doesn’t sound very pleasant. You know what else doesn’t sound very pleasant? The last half of a one-minute Humira television ad in which an announcer very quickly recites a list of possible side effects, including a lowered ability to fight infections, tuberculosis, nervous system problems, cancer and heart failure. Suddenly ulcerative colitis sounds less miserable. Whether or not they actually provide useful information to patients, those disclaimers ostensibly give drug makers 30 seconds of CYA cover when … Read More

Munger’s Wisdom; more local losses

David MoonBlog

On May 4, as many as 40,000 people will gather in Omaha, Nebraska to listen to Warren Buffett offer his folksy wisdom on almost any subject posed by a shareholder. Sitting next to Buffett will be his senior partner, 95-year-old Charlie Munger, Berkshire Hathaway Vice-Chairman and straight man to Buffett’s Mark Twain routine. Munger’s wit and wisdom are no less sharp than Buffett’s, but he delivers them without the simple parables, analogies and political correctness of Buffett. A month ago, Munger sat in a room with fewer than 200 people – several of them billionaire investors – to answer questions … Read More