Bezos’ self-serving call for higher taxes

David MoonBlog

Don’t be impressed that Amazon CEO Jeff Bezos favors an increase in corporate tax rates. Now that Amazon is a trillion dollar behemoth with $66 billion of annual cash flow, it can afford to pay increased taxes. For many smaller competitors without economies of scale, already struggling with razor thin margins, a few percentage points of higher business, personal or payroll taxes will be the final nail in their business coffin. For Amazon, those increased taxes would flow back to corporate headquarters, as the company might be the single biggest beneficiary of a boost in infrastructure spending. Amazon has done … Read More

Home prices and toilet paper

David MoonBlog

If you’re wondering how the residential real estate market could surge in a year the unemployment rate doubled, you only need to understand the Great Toilet Paper Crisis of 2020. For two weeks last April, more than half of the nation’s grocery stores were out of toilet paper for part of each day. Small, but abrupt shifts in purchases from commercial buyers to consumers quickly upset a supply chain that was designed to provide a significant percentage of the nation’s TP to institutional customers, while also allowing grocery stores to reshelve residential paper three times a day. When any complex … Read More

First quarter 2021 letter

David MoonClient

April 1, 2021 Dear clients and fellow shareholders: Only 13 months ago, the U.S. stock market was trading at all-time highs, unemployment was lower than economists once thought was possible, small business formation was at record levels and inflation was running at less than 2% annually.  We had just been introduced to the strangely self-contradictory term “social distancing.”  Most of us didn’t use the word “asymptomatic,” nor had we used “zoom” as a noun. Bernie Sanders appeared on his way to securing the Democratic nomination for president – which was irrelevant – because Donald Trump was a virtual lock for … Read More

Picassos or tulip bulbs?

David MoonBlog

In March, Mike Winkelmann’s sold a piece of art titled “Everydays – The First 5000 Days” at a Christie’s auction for $69.3 million.  Even Winkelmann was shocked at the price, tweeting a happy expletive not suitable for publication to a family-oriented website. Unlike old fashioned art that resides on canvas or is chiseled out of marble, “Everydays” is a JPEG file composite of 5,000 tiny memes (yes; that’s really it) that Mr. Winkelmann (@beeple in the digital world) has created over the past 14 years. The lucky buyer, Vignesh Sundaresan, gets something called a non-fungible token (NFT).  An NFT is … Read More

Why tax at all?

David MoonBlog

Rather than debate how much the rich should pay in taxes, perhaps a more appropriate question is why any individual should pay income tax at all? In the past 12 months the U.S. Treasury has borrowed $4 trillion to fund various COVID-relief programs. The new relief package (signed into law on March 11) will add another $1.9 trillion to the national debt. Using the magic of central bank open market operations (don’t even try to understand this), the Federal Reserve has created another $3.4 trillion in COVID-related stimulus money. And this week the Biden administration announced plans for a $3 … Read More

Do rising rates threaten stocks?

David MoonBlog

After recently writing that the recent increase in interest rates did not present a threat to the stock market, the chief equity strategist for Goldman Sachs spent the next couple of days on television making the case that investors needn’t worry about higher rates. Goldman’s expert, David Kostin, was very clear. “Investors ask whether the level of interest rates is a threat to equity valuations. Our answer is an emphatic ‘no.’” Strangely, however, writing only a few weeks earlier, Mr. Kostin admitted that stocks prices “appear stretched based on virtually every standard metric,” but that looks are deceiving. “After taking … Read More

Advice for Zoom University students

David MoonBlog

Lockdowns have caused many people to relax their disciplines and standards, creating opportunities for those willing to intentionally avoid the path of least resistance. This is especially true for college students who can use the dysfunction of the past year to differentiate themselves and gain an edge over their classmates. It is easy to sit in a dorm room or apartment full of empty beer cans and coast through Zoom University. Grades (Bs, anyway) come easily, cheating is rampant and too many students are missing the most valuable part of a student’s academic life: engaging with professors. Effective communication is … Read More

Buffett on Pilot, Clayton and more

David MoonBlog

Warren Buffett published his annual letter to the shareholders of Berkshire Hathaway on February 27 and, as always, the letter is great reading for anyone interested in business, investing, human nature or the U.S. Here are a few items of note from this year’s missive. Buffett apparently thinks earnings are still relevant to the value of businesses. The word “earn” or “earnings” is used 25 times in the 13-page epistle. There isn’t a single reference to bitcoin, Trump, Biden, taxes or China. The only mention of COVID-19 is related to the record sales last year of Berkshire subsidiary National Furniture … Read More

Understanding crypto-craziness

David MoonBlog

Author and self-styled investment diva Kiana Danial was recently asked by a television interviewer about her expectations for bitcoin over the next 12 months. She replied, “I don’t give price predictions,” after which she predicted that the price would triple in the next year. Never let logical or linguistic consistency get in the way of a good story. The price of bitcoin, the most well-known of cryptocurrencies, has almost doubled this year, attracting attention from both serious investors and Uber-driving bartenders. What is bitcoin and how does it work? No matter how painful or boring it might be, it is … Read More

Can money buy happiness?

David MoonBlog

For years, conventional wisdom has held that increases in a person’s income result in increased levels of happiness, but only to a point. In 2010, a psychologist and economist published a study finding that happiness and income are correlated, but only up to $75,000. This concept was more succinctly described than could be illustrated by any academic theorist in 1969, when American sculptor and Kinetic Sculpture Racing founder Hobart Brown quipped, “Money doesn’t always bring happiness. People with $10 million are no happier than people with $9 million.” (Google Kinetic Sculpture Racing and you will more deeply appreciate Brown’s creative … Read More