In an April 30 video I said that income tax collections have been surging this year due to higher taxes, both from higher tax rates and capital gains payments resulting from sale of assets prior to 2013′s higher rates. The facts I reported April 30 are now coming to light three weeks later. The bullish twist on the news, that deficit reduction means we must have economic lift off has become an overnight feel good phenomena for those fully 100 percent long stocks. Read More
The first time I ever spoke with Alan was February 1970 when I was an MBA student at the Harvard Business School and he answered a collect call from me. Digital Equipment was a Wall Street darling at the time, but I had heard that DEC for the first time was inventorying mini-computers instead of shipping current production. Read More
Warren Buffet says bonds are a horrible investment because prices are artificially high due to the Fed creating phony money. And at some point, says Buffet the Fed will stop. To my way of thinking, that also makes stocks a horrible investment. Read More
After gold prices plunged 15.7% in the first two weeks of April, people in China and India rushed to jewelry stores to buy the precious metal. A friend in Hong Kong even told me that he could not find a gold bracelet as a wedding gift. Everything made of gold was sold out.
As central banks in the U.S., Europe, and Japan are simultaneously engaged in unprecedented quantitative easing, investors are accepting lower yields on risky assets. Consider the equity market. Since the Federal Reserve started QE1 more than four years ago, the dividend yield on broad-market stock benchmarks has been cut in half to 1.9%. Meanwhile, the yields on companies with high dividend payouts fell by two-thirds to 3.2%. A high dividend stock strategy offers investors just 1.3% in additional yield over broad-market benchmarks. In 2007 and 2008, the additional yield averaged 3.0%. Read More
April income tax payments sent in by individuals are surging, up by more than $50 billion over April 2012 and higher by $63 billion year to date. That means to me that year end 2012 income from asset sales and bonuses had to have spiked by around $300 billion to generate that $63 billion in bigger tax payments. I know, this is a lot of numbers and some of you should read the transcript instead of this video. To go back, in other words anticipation of this year’s higher taxes created a one time 10 percent pop in income over those few months the $300 billion became income! Read More
Charles Biderman and Rick Santelli discuss where the new money is going. Also that monetary stimulus, equal to 30 percent of after tax income, is only boosting take home pay by all of 2 to 3 percent; but is boosting stock prices.
My lovely wife, Virginia, says I almost always end these videos with a forecast of gloom and doom. As usual, she is right. However, in my reality, I am very optimistic for both the short and the longer term. It is only about the medium term that I am concerned, very concerned. And while it could get quite bad, my guess is that the bad times won’t last more then a very few years. Read More
Now that Tax Day is behind us, stocks should go up, for at least the next couple of weeks for three reasons. First and most important the Fed key strokes $4 billion of phony money into existence each and every trading day. Second, companies keep buying back shares. Third, billions of tax oriented cash flows into stocks after April 15 each year. Combine these three factors and what you get is moremoney chasing fewer shares. In other words, supply and demand says stock prices are going higher for now. Read More
Vacations, at least for me, sometimes are very insightful. My wife and I just got back from a week vacationing at the wonderful Hotel 1850 in Guanajuato Mexico. In that high desert town it occurred to me that our society and a government based upon Keynesian economics can best be described by the phrase, “Father Knows Best.” I also came up with a solution, which I humbly will call the “Biderman Way:” Simply stated. I am willing to be fully responsible for myself as well as the entire planet, including all the people and the world’s ecosystems. All that means is that all my actions are coordinated around what works both for me and for everything around me, at the same time. Read More
Hedge Fund Industry Underperforms S&P 500 by 71 Basis Points in February
New York, NY — April 9, 2013 — BarclayHedge and TrimTabs Investment Research reported today that hedge funds took in a net $11.4 billion (0.6% of assets) in February, building on an inflow of $4.3 billion in January. The results are based on data from 3,434 funds.Read More