Biden’s Debt-Fueled Spending Binge and America’s Credit Rating

Since the “temporary” stimulus package of 2009 was enacted by Barack Obama and greased through the system by Ben Bernanke’s Federal Reserve, Americans have faced ever more burdensome budget deficits. After Joe Biden moved into the White House, the dangerous spending reached a new level. Uncontrolled money printing has set America up for some hard lessons as the interest on the federal debt rapidly closes in on $1 trillion a year. This time around, the Federal Reserve isn’t running a bond-buying program while pegging interest rates at zero. Instead, the Obama/Biden-style spending will be forced to face the music on interest. Now, after years of profligate spending, Joe Biden has put … [Read More...]

Fidelity and the Flight to the Suburbs

Originally posted on May 13, 2021. Back in February, I wrote to you about how I started in the institutional research and trading investment business at Model Roland & Co. on Federal St. in Boston in August 1971. Just up the street from Model were Fidelity Investments, and Wellington Management, both of whom I called on from my very first hours on the job. Over five decades ago, Ned Johnson, aka “Mister Johnson,” ran the show at Fidelity. At Wellington, Jack Bogle, “Mr. Mutual Fund,” had not yet left Wellington to start Vanguard.    My focus in the initial going was international research and trading, and remains so today all these decades later.  I still consider Fidelity and … [Read More...]

The Single Worst Market Timing Event in History

Attempting to time the market could be the most popular mistake among market participants. Here’s what I wrote about market timing back in January 1997: Panic!... History has been made. Since the exact summer Dow low of 5346.55, the Dow has soared an amazing 21.9%. Never in stock market history has the Dow added 1,000 points so fast. As a cap to the monster four-month surge, the Dow Jones News Service headlined a lead story with, “November Point Gain Was Largest Ever for the Dow.” To anyone who was foolish enough to sell stocks in front of this tidal wave, the bailout goes down, in terms of points, as the single worst market-timing event in history. How have you fared? With a … [Read More...]

CAT 5: Prepare for Hurricane Lee

Hurricane Lee has strengthened to a Category 5 storm and is barreling through the Atlantic on course to hit America's East Coast. Right behind Lee is Tropical Storm Margot, which is also expected to reach hurricane levels. First Coast News reports: It's very active across the Atlantic basin, but thankfully there are no local threats in Jacksonville within the next week. Remember to stay updated this time of year as the historical peak of the Atlantic hurricane season is approaching. Tropical Depression 13 has formed in the Atlantic, and it is forecast to become a major hurricane by Saturday. We are watching it closely as models suggest it could head towards the Caribbean, or travel just … [Read More...]

Javier Milei: A Light in Argentina’s Darkness?

Argentina has suffered rampant inflation, bad government, and declining freedom for years. Now, according to Daniel Raisbeck at the Cato Institute, Argentinians have the opportunity to elect someone with a real plan to give them back control. Raisbeck writes: “We are all Peronists,” remarked Argentina’s corporatist strongman Juan Domingo Perón in 1972, the year before he assumed the presidency for the second time. His quip turned out to be more accurate for the 21st century than for his own times; in 1976, Perón’s second wife, Isabel, was ousted from power by a military junta that ruled until 1983, when the Peronist Justicialist Party lost the presidential election in an upset. Since … [Read More...]

Inflation Is Improperly Defined

In August 2009 I wrote: I do not believe in cost-push inflation. By example, union pressure to increase wages is not an inflationary event. An economy will adjust for higher wages without a general increase in the level of prices across the economy. Inflation is strictly a monetary event: i.e., too much money chasing too few goods. Milton Friedman was the dean of the monetary inflation fraternity. Whenever you come across an article on M.F., be certain to read with care as you will improve your understanding of a lot of things. Writing for Real Clear Markets, John Tamny echoes my sentiments, and those of Milton Friedman, that inflation is a monetary event, writing: To witness the … [Read More...]

DeSantis Calls CBDC Central Authority an Obvious “Wolf”

In a recent interview with John Stossel, Gov. Ron DeSantis explained that some wolves come dressed in sheep's clothing, so you don't see them until it's too late. Others are obvious. DeSantis says the problems with the central authority granted by central bank digital currencies (CBDCs) are obvious. In his words, "This is a wolf coming as a wolf." Stossel reports: President Joe Biden and the media are excited about something new: a Central Bank Digital Currency, or CBDC. It's a currency like Bitcoin, except controlled by the federal government. Not everyone is a fan. "Sometimes government does things that may appear to be benevolent but really are kind of like a wolf in sheep's … [Read More...]

What Do You Know About Vanguard’s Wellesley Income Fund?

I was recently asked some questions about Vanguard's Wellesley Income Fund by a business associate. Below is a short summary of the questions and my answers.  The first question was, "Who manages Wellesley Income Fund?" The answer is Wellington Management Company, which I have had dealings with from my earliest days in the industry at Model Roland & Co. on Federal St. in Boston, where I began work in August of 1971. Wellington was founded in 1928 in Boston, and is one of America's oldest institutional money managers. The two Wellington managers currently tasked with managing the Wellesley Income Fund are Loren L. Moran, who has been with the fund for six years, and Matthew C. Hand, who … [Read More...]

CBDCs Not “Just Another Form of Money”

At the Cato Institute, Norbert Michel and Nicholas Anthony explain that a "CBDC (central bank digital currency) is not 'just another form of money,' as some of its supporters have claimed." No other form of money gives governments the ability to control what you spend your money on, how much you spend, or even to take money back out of your account at a moment's notice. Michel and Anthony slam the recent defense of CBDCs by Paul Krugman. They write: This April Forbes column describes why central bank digital currencies (CBDCs) are a fundamental issue related to Americans’ freedom and much bigger than just politics. It argues that New York Times columnist Paul Krugman, famous for being … [Read More...]

Successful Investing Is a Mindset

  I wrote in the October 2015 issue of Intelligence Report: As you know, I do not check the prices of my investments daily, weekly, or even monthly. I do an annual checkup only at tax time. When I make a significant investment, I have no intention of liquidation anytime soon. I am in for the long haul. Thus, short- or even medium-term volatility is of zero concern to me, beyond keeping an eye out for a name on my watch list that may have taken a temporary beating due to no particular fault of its own. So, then, successful investing is a mindset based upon a master plan that allows an investor to find comfort through thick or thin. … [Read More...]