Wondering how the stock market has climbed so high in the past six years, while the economy sits in the tank? Think low interest, leading to a gusher of borrowed money by corporations (bonds), who are turning around to buy back shares. Bingo. Add margin debt and the generosity of the Fed and here we are. In the past 12 months, companies in the Standard & Poor’s 500 have doled out nearly $1 trillion to shareholders in the form of both dividends and stock buybacks, the highest level since 2007. For years, hedge fund managers have been big proponents of share buybacks, even actively advocating for it. Now, though, they are viewing them with a more critical eye, says Sarah Max writing for Barrons. Worse yet, a handful of well known companies have borrowed over a trillion dollars in the first nine months of 2015--more than the U.S. deficit--and used the money to buy back shares in an attempt to boost their share price or make their slide look less discouraging. QualComm was one of them.Steve and Sinclair review a timely article by Sarah Max of Barrons on the subject. In the Q & A, Steve answers some hard questions on annuities and income planning.
England has already fallen officially in to deflation territory, the USA is on the verge. According to Jeff Cox writing for CNBC.com, the math is pretty simple: A lack of purchasing power for consumers has led to a lack of pricing power for companies. At a time when policymakers are hoping to generate the kind of mild inflation that would indicate strong growth, the reality is that DE-flation is looming as the larger threat. Declining prices often would be treated as a net positive by consumers, but when it gets prolonged and wages keep falling, income weakness is now affecting corporate and small business profits. How will it affect markets?
Though jobs have been added and have lowered the "U-2" unemployment rate, CNBC reports that most of the jobs are service related and not high paying. Restaurant workers, whose ranks have swelled by 376,000 over the past year (according to the Bureau of Labor Statistics), saw real pay declines of 8.9 percent for cooks, 7.7 percent for food preparers and 4.8 percent for waiters and waitresses. Steve and Sinclair review data from the U.S. Treasury, economists at Citi, and analysts at B of A Merrill Lynch. In the Q & A segment, Fox News Contributor and Money Radio talk show host Gary Kaltbaum joins the A-Team.
While most investors have feared inflation for years, the specter of deflation has begun to grip the global economy. England has officially slid into deflation as of last month. Job creation in the United States has taken a suspicious and surprising downturn. In August, the jobs report came in at 147,000. Typically, the number is revised after a month, and has been revised upward for most of the past few years. Analysts at Goldman Sachs have been very accurate on the revision estimates, and published a report predicting the jobs number would be raised to 210,000 or more. Instead, the final revision fell to 137,000, a nearly shocking revelation. Goldman is now saying that the economy is at a fragile tipping point and that the market crisis in emerging markets and Asia is not just a passing trend, but another wave of the 2008 derivative meltdown. Steve and Sinclair review reports from Goldman and Jeff Cox and CNBC. In the Q & A, estate planning attorney Richard Dwornik joins the A-team to review the five key elements of a solid estate plan.
Falling profits and increased borrowing at U.S. companies are rattling debt markets, a sign the six-year-long economic recovery could be under threat, says Mike Cherney writing for the Wall Street Journal. The Journal reports that Credit-rating firms are downgrading more U.S. companies than at any other time since the financial crisis, and measures of debt relative to cash flow are now rising. Analysts expect profits at large companies to decline for a second straight quarter for the first time since 2009. What does it mean to you as an investor, especially in or near retirement? Steve and Sinclair review and discuss the changing bond market, and how an S & P downgrade can cause a loss in a bond fund or Target Date fund, even if interest rates don't go up. In the Q & A, Steve and Sinclair review some of the most frequently misunderstood aspects of annuities--which ones lock up your money, and which ones don't.
Steve and Sinclair bring you up to date on the markets for a Monday.
Nick Grovich and Sinclair dig into the current dynamics of precious metals and consumer tips on dealing with coin dealers.
Nick's company does several million dollars a month in coins and is known industry-wide as one of the 'good guys."
Steve gives some consumer tips on annuities in segment 4.
A stretch IRA is fairly easy to set up with an insurance company using an annuity, but how do you do it properly with your other investments? Can a trust be the beneficiary of your IRA, and should it be? Federal laws prohibit Individual Retirement Accounts—IRAs-- from continuing on indefinitely after the original owner’s death, which is why the IRS created RMDs, aka Required Minimum Distributions. Some owners of IRAs want to stretch out the payment to beneficiariesafter they pass, to extend the legacy or perhaps their beneficiaries are not equipped to handle the lump sum payout.
To "stretch" an IRA, investors have two viable options: 1) They can create a specialized trust that can be treated as the beneficiary or 2) they can use an annuity for their IRA funding vehicle and have the insurance company create the stretch.
If a trust is used, there are strict requirements. In Segment 2, Steve and Sinclair review the restrictions, issues, and benefits. Then in Segment 3, estate planning attorney Richard Dwornik joins the A-Team to expand on the details. Certified Financial Planner® Murray Titterington with IQ Wealtlh also joins the discussion.
Central banks around the world are selling U.S. government bonds at the fastest pace on record, the most dramatic shift in the $12.8 trillion Treasury market since the financial crisis. Sales by China, Russia, Brazil and Taiwan are the latest sign of an emerging-markets slowdown that is threatening to spill over into the U.S. economy. Previously, all four were large purchasers of U.S. debt.Steve and Sinclair review an incisive article on global debt buying and selling by the Wall Street Journal. In the Q & A segment, investment manager Gary Kaltbaum joins the A-Team to give us a preview of the earnings seasons and what to make of stocks like Amazon and Catepillar.
In the past 12 months, companies in the Standard & Poor’s 500 have doled out nearly $1 trillion to shareholders in the form of both dividends and stock buybacks, the highest level since 2007. For years, hedge fund managers have been big proponents of share buybacks, even actively advocating for it. Now, though, they are viewing them with a more critical eye, says Sarah Max writing for Barrons. Worse yet, a handful of well known companies have borrowed over a trillion dollars in the first nine months of 2015--more than the U.S. deficit--and used the money to buy back shares in an attempt to boost their share price or make their slide look less discouraging. QualComm was one of them.Steve and Sinclair review a timely article by Sarah Max of Barrons on the subject. In the Q & A, Steve answers some hard questions on annuities and income planning.
Over a hundred years ago inventor, Nikola Tesla, had built the Wardclyffe Tower and said he was onto technology that would eventually create “an inexpensive instrument, not bigger than a watch, [which] will enable its bearer to hear anywhere, on sea or land, music or song however distant.”Need we mention the Apple watch?
The Yugoslavian born Mr. Tesla foresaw the transmission of electricity directly through thin air, particularly radio waves. Steve and Sinclair review an article by Christopher Mims in the Wall Street Journal on this technology's rapid progress using chips that re the size of a peel and stick price tag and will eventually charge your phone when you simply walk into the room. In the Q & A segment, real estate Attorney Christopher McNichol joins the A Team to discuss risks and opportunities in the purchase of tax liens as an investment.
Investors love stock splits—at least investors who pay attention to them and study them. Since October 2000, when the Hulbert Financial Digest began monitoring one particular stock split strategy’s performance, it has doubled the Wilshire 5000 index’s annualized return, 10.5% to 5.3%. This 15-year market-beating return matches up with studies conducted by David Ikenberry, Dean of the University of Colorado’s Leeds School of Business. He and two co-researchers found that the average stock that underwent a stock split between 1975 and 1990 outperformed the market by 7.9% over the year following the split’s announcement, and by 12.2% over the three years following that announcement (equivalent to 3.9% per year on an annualized basis).
Stock splits are maneuvers where a company increases the number of shares outstanding – as a way to lower the per-share stock price. Steve and Sinclair review and explore a number of stocks that have split and their performance after the split. In the Q & A session stock split strategist Neil MacNeale joins the A-Team to review principles he has used to outperform the S & P significantly over time.