Tom Brady recommended crypto company collapses

David MoonBlog

FTX Cryptocurrency Exchange is a business that allows people to buy and sell digital currencies and other digital assets. Less than two weeks ago, it was a $32 billion crypto behemoth with celebrity endorsers such as Tom Brady (NFL) and Stephen Curry (NBA). Today the company is bankrupt, its founder Sam Bankman-Fried is sheltering in the Bahamas and its customers can no longer withdraw money (either actual money or digital dollars) from their accounts. Several sources report that up to a billion dollars of customer funds are missing. It’s not necessary to understand what a cryptocurrency exchange is to grasp … Read More

Football game highlights common investment error

David MoonBlog

When Alabama lost an overtime football game to LSU last Saturday, sportswriters roundly criticized Crimson Tide head coach Nick Saban for attempting two-point conversions twice in regulation – both of which attempts failed. In criticizing Saban’s decisions, commentator Paul Finebaum said the 71-year-old coach looked lost on the sidelines. Don’t take investment advice from Paul Finebaum. Statistically, each of Saban’s two-point attempt decisions was the correct decision, even though neither resulted in in Saban’s desired outcome. Finebaum is guilty of a fairly common error: equating the quality of a decision with the desirability of the outcome. This type of thinking … Read More

Midterm elections most expensive in history

David MoonBlog

Candidates and their supporters will raise and spend a record $9.7 billion in this year’s mid-term federal elections. Some of that money is almost certainly donated by persons interested in supporting fair and free elections but forgive my overwhelming skepticism. If donors were simply interested in fostering democracy, incumbents wouldn’t receive the overwhelming majority of donations, even those in uncontested races. Senate majority leader Chuck Schumer (D-NY) is expected to beat his Republican challenger by double digits yet has raised more than $40 million to fund his unlosable race – compared to raising only $16 million to fund his similarly … Read More

Yellen warning unnoticed, troublesome

David MoonBlog

Treasury Secretary Janet Yellen was recently answering questions at something called the Second Ministerial Roundtable Discussion to Support Ukraine. I must admit missing the First Ministerial Roundtable, but I suspect I have plenty of company, since Secretary’s Yellen’s comments at the Second Roundtable received such little publicity. That is especially strange – and concerning – given that Yellen’s comments were a warning of something reminiscent of the financial crisis of 2008, but potentially much worse. “We are worried about a loss of adequate liquidity in the market,” Yellen warned in typical economist-speak, noting that the overall supply of Treasury bonds … Read More

Officials flout existing trading laws

David MoonBlog

A recent investigation found that the president of the Federal Reserve Bank of Atlanta violated federal investment disclosure requirements. He also exceeded ownership limits on Treasury securities and placed trades on dates that were prohibited because the dates were too close to a Fed policy meeting. Raphael Bostic has been president of the Atlanta Fed since 2017 – and remains in that position despite the recent discovery of these violations of reporting requirements. He explained that he had merely misinterpreted the policies and never used nonpublic information to make an investment decision. Dr. Bostic, a graduate of both Harvard and … Read More

Wealth researchers confuse correlation and causation

David MoonBlog

Researchers in Spain recently published a paper finding that wealthy people live approximately four years longer than do poor people. The scientists described this as evidence that money allows people to essentially buy additional lifespan. Observers called the findings “groundbreaking,” offering more evidence of an additional hurdle faced by historically disadvantaged groups. I call it a conclusion searching for evidence – another example of confusing correlation with causation. It’s no surprise that wealthy people tend to live longer. Possible reasons might include their ability to purchase more nutritious food or purchase gym memberships. (Since this study was conducted in Spain, … Read More

Researchers saving math right, advice wrong

David MoonBlog

Research recently published in something called The Journal of Retirement recommends that most young people should not save for retirement. Instead, the authors conclude, rational individuals save and spend in an attempt to avoid sharp changes in their standard of living. This means that rational young people should spend all (or more than all) of their income, postponing retirement saving until middle age, when their incomes will presumably be higher. I’m sure the authors have really high IQs and that all the math in their paper is correct, but their conclusions are both wrong and potentially damaging. In their zeal … Read More

2022 Q3 letter

David MoonUncategorized

October 2022 Dear clients and fellow shareholders: Following the worst January-September stock performance in 20 years, worldwide equity indices have clearly entered into bear market territory. The US benchmark S&P 500 is down 25 percent year-to-date, with the Nasdaq Composite down a whopping 32 percent.  (Our stock portfolio has declined approximately 15 percent this year.) The biggest shock to many investors in the third quarter wasn’t the miserable return of the stock market; it was the revelation that the supposed risk mitigating portion of their portfolio – the “safe bonds” – turned out to be not quite as safe as … Read More

Estate planning observations

David MoonBlog

A news article caught my eye recently when it matter-of-factly declared that at some point in life, nearly everyone can benefit from a trust. Although that’s a pretty broad statement, it’s also a bold one, especially from a news organization. Except it wasn’t from a news organization. The “article” was a sponsored placement by a company that provides trust services. I’ve been around way too much death recently, and one of the things I’ve been reminded of is that some estate planning professionals (lawyers, bank trust departments) turn two-dollar problems into hundred-dollar solutions. Simplicity is too rare in an industry … Read More

Fed move is slow window dressing

David MoonBlog

The only anticipation regarding this past Wednesday’s Federal Open Market Committee meeting was how much the Fed would increase rates – with the consensus expectation somewhere around one full percentage point. To me, the Fed’s actions seemed a bit like a 400-pound diabetic guy ordering a Diet Coke at Mr. Gatti’s. The Fed’s attempt at window dressing doesn’t shock me, but the reaction of Wall Street does. The collective wisdom of investors seems to be that inflation really is mostly transitory – even if a bit more persistent than the use of that term originally suggested. That’s the only reasonable … Read More