Latest Newsletters

Monetary Policy at a Crossroads

How Now Goes the Fed? For nearly a decade, the Federal Reserve was largely on the sidelines. After reducing interest rates to close to zero in the wake of the Great Recession, they were reduced to less powerful weapons. In this period they adopted “quantitative easing,” where the numbers are big but the effect less clear. Now the Fed is back. They have repeatedly declared that the economy is sound and it’s time to “remove the punch bowl” before the … Continue reading

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Hamilton’s Blessing

Interest in the U.S. national debt seems to have diminished. Its importance has not. Even with extraordinarily low interest rates, interest on the debt takes up one out of ten dollars of federal expenditures. If rates rise to more normal levels, even if the debt stabilizes, interest on the debt could easily double or triple. Recently we came across a book titled Hamilton’s Blessing about the history of America’s debt going back to the founding fathers. It’s instructive that in … Continue reading

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The Stock Market and the Election

Don’t Jump to Conclusions The markets taught us a big and powerful lesson last week. Most pundits and financial professionals  — regardless of political leanings — believed that if Donald Trump were elected President, stock markets would plunge. Many expected markets to mimic the reaction after the Brexit vote — a short, strong decline followed by a quick recovery. Prior to the election, as odds of a Trump victory rose, the markets declined for an unusually long nine straight days. … Continue reading

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The U.K. Returns to Being an Island

Last week we had the referendum heard round the world. Voters in the United Kingdom turned their backs on the Continent after 43 years. Investors worldwide were fearful and fled equities in droves. In two days the Dow Jones Industrial Average fell 871 points. And then a strange thing happened. Investors decided that perhaps the sky was not falling after all. Counting a one day run up before the vote, in just four trading days, the Dow had nearly returned … Continue reading

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The Danger of Market Timing

The Three Dangerous Times The three particularly dangerous times for investors: when markets go up, when they go down and when they are flat. For the last two years, U.S. markets have been in a narrow trading range. Some days the market is up a lot, some days it’s down big. But overall, for two years the broad market is close to flat — up 3 percent a year — a third of the long-term average. During a long flat … Continue reading

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Savings and Tax Time

In a month, personal income taxes are due. You still have time to fund a Regular IRA or a Roth IRA for calendar year 2015. IRAs are a good way to save for retirement and everyone who can afford to fund an IRA, should consider doing it. There are different eligibility rules for each and which one you should use depends on many factors. Among the key factors for picking between an IRA and a Roth are your current and … Continue reading

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Big Changes to Social Security

This fall two Social Security “aggressive claiming strategies” were eliminated. This is the biggest change in Social Security in more than a decade. These changes will affect when many couples should claim their retirement benefits. For people who turned 62 by Dec. 31, the major strategy is still available. For those older than 66 by the end of April, another strategy remains available until April 29. While both strategies had been on the books for at least 15 years, they … Continue reading

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The Sun Will Shine Again

The U.S. stock market is off to its worst start ever — down nearly 12 percent in just three weeks. Standard & Poors searched records back to 1897 and couldn’t find anything worse. While the market has been drifting lower since summer — including a brief but scary decline in late August — this drop has seemingly come out of nowhere and is unremitting in its furor. Yesterday, the Dow dropped 550 points by midday before rallying sharply. While there … Continue reading

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A Dark and Dangerous World?

For years I’ve felt like a lonely optimist in a dark and dangerous world. In 2007, the U.S. economy was booming. House prices soared, unemployment was rare and anything seemed possible. Then came the Great Recession, stock market collapse and the world financial system’s near failure. No one knew what to do. Since that scary winter of 2009, the U.S. economy has rebounded. Car sales have doubled and housing starts quadrupled. The unemployment rate is half the recession peak. Anecdotally, … Continue reading

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The Sun Doesn’t Always Shine

We now have a solar roof and it takes care of our electrical needs on sunny days but the sun doesn’t always shine. At night, our panels rest. During storms and very cloudy days, the panels aren’t at peak efficiency. Yet when it comes to personal finances, I generally come across people whose planning assumes that the sun will always shine. Many of these people are do it yourselfers where one partner in a couple handles the finances and does … Continue reading

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