Author: Roger Staiger

4 March 2019

 

Question: According to MSN: Money, what are the ten (10) golden rules of retiring rich?

 

Portugal premier warns on protectionism – Pg. 2

–          Portugal’s prime minister has warned European partners against misusing new security procedures for screening Chinese investments, saying it could lead to the continent becoming more protectionist

–          The European Parliament last month approved new regulations for screening non-EU investment, amid concerns that China and others are seeking to buy up sensitive technology and infrastructure, or to use investments and contracts to conduct industrial and military espionage

–          Chinese groups have pumped billions of euros into Portugal since the financial crisis.  China Three Gorges owns 23% of Energias de Portugal, the country’s main power utility…

 

Is social status still important at a certain age? – Pg. 14

–          …future life would contain two less things: the first was money…

–          The second loss was harder to prepare for.  My old job came with an unreasonably high level of status

–          …the low status of teachers is one of the reasons they are in such dangerously short supply, ….

–          Becoming a teacher in your 50s, especially when you’ve had a certain amount of success doing something else, seems to be quite different from becoming one in your 20s

–          (Prof Note: The difference, I have found, between the West and the rest of the world is in the West, Status and Position are identify.  The issue with both, when they are derived from an employer, is that neither are “owned”, i.e. they can be lost/taken at any moment.)

 

The allure of financial tricks is fading – Pg. 19

–          …academic research shows that the share of revenues coming from financial relative to non-financial activities in US corporations began to climb in the 1970s and then increased sharply from the 1980s onwards.  This mirrors the rise of finance in the economy itself

–          ….the fact that the Fed was forced into a U-turn by choppy markets is another sign of too much financialization.  Easy money has become a morphine drip that too many companies and investors can’t seem to do without, even though we are nearly 10 years into an economic recovery

–          In fact, low interest rates have papered over myriad political and economic problems not just for 10 years but for several decades.  Total financial assets are now more than triple the size of the real economy.  The corporate bond market is now worth $13tn – twice as much as in 2008

–          Debt is, of course, the lifeblood of finance.  But it is also the biggest indicator of future crises

 

Answer: (1) Spend less than you earn; (2) Start saving early; (3) Make up for lost time; (4) Do not leave free money on the table; (5) Minimize your taxes; (6) Take a little risk; (7) Stay informed about your investments; (8) Break free from the herd; (9) Work longer; (10) Maximize your income potential

2 March 2019

 

Question: What is the latest sport to have a top player suspended for doping with synthetic testosterone?

 

How income inequality affects our mental health – Pg. 8

–          …almost 25% of the US population has suffered from mental stress, while in Australia, the UK and Canada the level hovers around 20%.  In Japan and Germany, the figure is under 10% – well below the US

–          An economist might point to differing commercial incentives: the US, where private sector companies make money by selling antidepressant drugs, there are profits to be made increasing the share of people saying they suffer from “stress” or “depression”

–          …authors show the correlation between mental health and income inequality, with Japan and the US on opposite ends of the chart on both counts

–          They also show a high correlation between patterns of income inequality and problem gambling, childhood behavioural problems, and “self enhancement bias”

 

MSCI hands Chinese stocks a bigger global role – Pg. 13

–          MSCI, the leading equity index provider, took its biggest step yet to integrate China’s domestic stock markets with international capital yesterday in a move that could see an estimated $125bn flowing into the country’s equities this year

–          China’s weighting in the MSCI’s flagship emerging markets index, tracked by $1.9tn of funds, would rise to 3.3% by November from the current level of 0.71%, …

–          The move underscores how China’s government – which aggressively pushed for the increased weighting – has opened its capital markets in spite of growing political and trade tension with the US

–          Chinese stocks listed offshore in Hong Kong and the US already feature broadly in the MSCI Emerging Markets Index with a 31% weighting.  The importance of MSCI’s latest decision is that it creates a stronger link between the domestic Chinese stock market – the second largest in the world – and international capital

–          By November this year, the total weighting in the MSCI index for offshore and domestic Chinese stocks will be about 34.3% – by far the largest country weight

 

Answer: Bridge (Prof Note: I am NOT joking.)

1 March 2019

 

Question: According to MSN: Lifestyle, what are eleven (11) ways to tell if a wine is actually really good?

 

Cohen decides it’s open season against old boss – Pg. 3

–          Mr Cohen provided documents to back his claims, pointed to possible corroborating witnesses and hinted about a hitherto unknown investigation by federal prosecutors in Manhattan (Prof Note: My comments are apolitical…the larger issue here, for me, is attorney/client privilege.  Cohen taped conversations; is providing documents; etc.  I fear the greater issue is the breakdown of attorney/client privilege.)

 

US growth begins to weaken in fourth quarter – Pg. 3

–          The US economic rebound lost some of its vigour in the final months of 2018 after consumers reined in spending growth and residential investment shrank for the fourth quarter in a row

–          GDP rose at an annualized pace of 2.6% in the fourth quarter – a solid reading but slower than the 3.4% and 4.2% clocked in the previous two.  The full-year growth rate of 2.9% undershot the 3% target touted…

–          Consumer spending, accounting for about two-thirds of the economy, grew at an annual rate of 2.8% in the fourth quarter, compared with 3.5% in the third and the 3% analyst had forecast

–          Residential investment shrank at a 3.5% pace in the final quarter of 2018

–          The housing market..was held being held back by affordability problems and the impact of past interest rate increases

 

Leveraged loan managers cut fees to pep up business – Pg. 19

–          Managers of leveraged loan vehicles are cutting fees in an attempt to get new deals over the line, as the market struggles to rebound from a sharp selloff at the end of last year

–          Some of the largest managers of so-called collateralized loan obligations, which bundle leveraged loans together that are backed by slices of debt and equity, said they had found raising investor capital more challenging, even if they had not had to offer discounts

–          The market for leveraged loans – issued to low-rated or heavily indebted companies across the US – has struggled to regain its footing after a downturn in prices in December when investors began to fret about the outlook for the global economy

–          CLOs work by passing repayment on risky loans through to bond and equity investors.  Equity investors, who stand first in line to take losses if the underlying loans default, receive any cash left over after paying bondholders.  They are also responsible for paying management fees to CLO structurers such as Barings

 

Answer: (1) What does the bottle look like?; (2) Where does the wine come from?; (3) How does the cork smell?; (4) How does the wine look in the glass?; (5) Does it smell bad?; (6) Does it smell good?; (7) How’s the mouthfeel?; (8) How does it taste?; (9) Is it well balanced?; (10) How much does it cost?; (11) Do you like it? (Prof Note: I cannot stand being given a wine “book” at a restaurant. I do not know what is good, I can barely tell the differences between the different types AND I prefer to spend my $$$ on other things, e.g. travel, than understanding wine.  If that is your thing, great, but I am so thankful for age now and the ability to say, “I will have Scotch.  Gets me where I want to go more quickly and efficiently and effectively!”  Also, Scotch does not change from year-to-year…)

28 February 2019

 

Question: According to MSN: Money, what 18 things should you do if you want to retire early?

 

Cohen declares Trump a racist, cheat and conman in testimony – Pg. 1

–          (Prof Note: Am I the only one that sees the real crime here, in my opinion?!  That one’s lawyer is turning on his/her client publically?  Personally, I have always considered attorney/client privilege sacrosanct.  Has the U.S. Congress completely obliterated attorney/client privilege?  Personally, I considered this more important than HIPAA, religious law, etc.  How is this even happening?  How is Congress allowing it to happen?  What is next, public display of medical records???)

 

Eurozone slowdown helps keep Draghi’s dissenters in line – Pg. 1

–          The bank’s guidance so far has been that it will keep interest rates on hold “at least” through the summer – but officials, including the hawks, are sounding increasingly comfortable with market expectations that rates will stay on hold until the middle of 2020

–          What first appeared to be a temporary blip in growth risks becoming more prolonged.  The Eurozone expanded in the fourth quarter by just 0.2%, its lowest level in four years, and signs so far this year are that the economy will remain sluggish

 

China – Pg. 9

–          Chinese consumers spent $4.7tn in 2017 on everything from pet care to cinema tickes and cars….

–          Consumption levels have risen since the 1970s as the economy expanded

–          …share of consumption in China’s GDP increasing to 54% in 2017 – from less than half in 2011

–          Consumption growth has outpaced exports and investment for the first time since the 1980s, with consumption of goods and services accounting for 76% of new economic activity in China last year, up from 47% in 2013

–          With its housing and industrial sectors mired by overcapacity, greater production of consumer goods and services should provide a more sustainable basis for economic growth in China

–          Median individual disposable income grew more than 9% annually between 2011 and 2017, …

–          As of 2015, the top 10% of Chinese owned more than 65% of household wealth, with the bottom 50% owning less than 10%

–          The IMF has warned about the shortfall between household income and consumption, seeing room for growth

 

Libor’s death is a ‘Defcon 1’ litigation bonanza for lawyers – Pg. 22

–          At issue is Libor, the benchmark borrowing rate that is embedded in everything from floating rate debt to derivatives and mortgages.  The rate touches the most sophisticated hedge funds and the average homeowner.  But the order has come down from on high: Libor must die

–          …likely replacements for Libor, a so-called “term” instrument that locks in prices for three or six months at a time, are generally overnight rates.  This is an effort to cram square pegs into round holes

 

Answer: (1) Define what retirement means to you; (2)  Increase your current career worth; (3) Live below your means; (4) Start a side hustle and invest the money; (5) Understand the numbers (Prof Note: you need to know what it will take to support the lifestyle desired); (6) Start cutting expenses now; (7) Start building passive income streams; (8) Buy rental properties; (9) Pay off your mortgage early; (10) Get rid of debt; (11) Enroll in an employee-sponsored 401(k) plan; (12) Enroll in a DRIP; (13) Move somewhere cheaper; (14) Reduce transportation costs; (15) Eat right and exercise; (16) See new money as found money; (17) save, Save, SAVE; (18) Follow FIRE blogs