On December 16 the Federal Open Market Committee (FOMC) announced its decision to increase the federal funds target rate from its targeted range of 0.25%-0.50%, to 0.50%-0.75%. The move marked first increase since the previous December. Analysts at the time had predicted that the Fed would follow up with further increases throughout the year and […]
We often hear from readers fearful that ever-increasing federal spending will inevitably increase their future income tax burden. While the recent election suggests that tax policy may change in the near future, the outcome of even near-term legislation is uncertain. Predicting tax rates ten or twenty years down the road is virtually impossible, and as
In all the mayhem of the election, it can be easy for investors to get lost in the moment and lose long-term perspective. This campaign has been especially uninspiring for the electorate at large. If you listened to the candidates talk, you might think our economy was in turmoil. Trump vows to renegotiate trade deals
Nominal interest rates are currently below zero in many countries, including Germany, Denmark, Switzerland, Sweden, and Japan. These levels have turned the common belief that zero is the lower bound for such rates on its head. While negative nominal rates are a relatively new phenomenon, periods of widespread negative real returns across countries have been
Suppose that on July 1st 1992 an investor purchased 100 shares of Starbucks stock at its closing price of $23 per share. What percentage of this initial $2,300 investment in Starbucks does the investor now receive annually in dividends? A. 5% ($115) B. 25% ($575) C. 100% ($2,300) D. 220% ($5,120) Answer: D This example
On June 23 the citizens of the U.K. voted to leave the European Union. Markets were jolted, with the U.S. stock market losing 3.7% the day after the vote. But just a week later the market had rebounded, ending the quarter almost exactly at its level just prior to the vote. The event serves as
AIER’s founder E.C. Harwood studied business cycles and financial markets for over five decades, beginning in the 1920s. Shortly before his death in 1980 he observed: “Neither AIER nor AIS is a run-of-the-mill organization. The striking differences are: Unlike practically all other economic research and educational organizations, AIER does not seek support from major foundations.
Interest in our High Yield Dow (HYD) strategy has spiked recently. While we are not surprised, we are somewhat apprehensive as we suspect this enthusiasm might be driven by HYD’s strong hypothetical performance of late (see page 38). While there are good and bad times to begin investing, these moments are obvious only in retrospect.
Trivia Question: Between 1970 and 2015 the U.S. stock market provided a hypothetical annualized return of 10.2%. During the same period the MSCI developed-market index, which includes 26 countries including the U.S., returned 9.5%. Over this span, in how many calendar years was the U.S. stock market the top annual performer among all countries in
Nearly all investors should hold some level of cash and similar short-term investments (sometimes called cash equivalents) such as CDs, money market funds, and short-term treasuries. This should include an emergency level of cash equivalents over-and-above the dedicated allocation assigned within a long term investment plan. The logic is simple: If an emergency pops up