In this issue we turn again to the topic of price inflation. We examine in depth the recent performance of TIPS (page 92), to address the concerns of investors who may be disappointed by the negative returns these inflation protected bonds have generated, even while inflation has been very high. To understand this outcome, one …
News around the world has been bleak and global stock markets have fallen 20 percent. In short, the millions of buyers and sellers in capital markets have concluded that the world has become a riskier place in which to save and invest. Since 2019, the world has endured a debilitating epidemic and ensuing economic shutdown, …
The third quarter, like the second, brought a steady flow of negative news worldwide. Returns plummeted across all asset classes and across the globe. In the face of continued price inflation even cash failed to provide a refuge. Events will always vacillate between good and bad, including extraordinary shocks and unpredictable business cycles. In the …
Since inflation began its ascent in early 2021, gold, despite its reputation, has served poorly as a hedge against rising prices (see Chart 1). During the late 1970s the gold price surged along with double- digit annual inflation. But over the long-term data confirm that the gold price has been far too volatile to serve …
The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. – Friedrich Hayek On August 26, following a speech by Fed Chairman Powell, the S&P 500 plummeted by 3.4 percent. “We must keep at it” declared Mr. Powell, signaling that the Federal Reserve …
The Department of Labor (DOL) has instated new rules pertinent to investors who are considering a rollover of an IRA, 401(k) or other specified account to an account managed by a registered investment adviser (RIA) or broker-dealers (BDs). Rollovers have for decades served as a simple and flexible means of transferring assets held in employer-sponsored …
Jul. 2022 – Rollovers, Regulation, and the Household Investor Read More »
Price inflation is a threat to investors, but it can be managed effectively. To do so, it is essential to screen out the fear-inducing noise in the media, which can encourage impulsive decision-making. Instead, investors should examine the data, inflation’s various impacts, and the opportunities available. As of this writing, it appears likely that the …
Jun. 2022 – Inflation Implications In Perspective Read More »
On May 20, the U.S. stock market had fallen 20 percent from its January 3 peak. The media pounced, reminding investors that stocks had officially entered bear market territory. Talking heads on cable news debated whether investors should expect further declines, or whether this event represented an opportunity to “buy the dip.” As it happens, …
We often caution readers to be wary of investment vehicles that seem “too good to be true.” Occasionally, however, attractive opportunities arise with minimal downside. Currently, U.S. Treasury Series I Bonds fit this description for investors in the right circumstances. I Bonds are U.S. Savings Bonds that earn tax-deferred compound interest adjusted for recent price …
Apr. 2022 – U.S. Series I Bonds, Inflation, and Cash Alternatives Read More »
Economists contend that preferences among individuals are wide-ranging and that, generally, people should be able to make decisions freely. We are skeptical of policies that distort peoples’ choices because a cost is incurred when someone feels compelled to make a choice that differs from his or her preference. Price inflation distorts our choices. During the …
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