Category: Risk
-
Novo Nordisk: Time to Sell?
Novo Nordisk shareholders have grown fat even as the obesity drug company’s customers have been losing weight. From relative obscurity just five years ago, Novo Nordisk has become the most valuable company in Europe. The promise of future returns is built into the stock price. In this post, we look…
-
What Would You Pay for an Extra Year of Life?
What would you give up for an extra year of life? Investors, economists, traders, and other people may immediately object that the question is under-specified. Time Preference At the minimum, they would insist on knowing when they get the extra year and the quality of the year. Let’s assume that…
-
The Hidden Risk: Interest Rates and Inflation
This month, the Fed decided not to raise interest rates, and traders responded by driving the Dow Jones Industrial Average to an all-time record.[1] Why? Apparently, the market believes that the next Fed move will be to decrease interest rates, presumably because the Fed believes it has beaten inflation. “Inflation…
-
Hidden Portfolio Risk: Is Sugar the Next Tobacco?
Certain products, notably alcohol and tobacco, have been demonized at various times in American history. These periodic demonizations typically have many “unintended” consequences.[1] So What?When products are “demonized,” trouble can follow. Consumers may shun the products, taxes may cut into sales and margins, and regulations may further restrict or curtail the…
-
Do 95% of Stocks Eventually Lose?
Yes, 95% of stocks do eventually lose. That’s the bad news. But there’s good news too. We’ll explain the above claim, and then will suggest a solution. The stock market has generated incredible wealth for investors over the last hundred years. But if you’re not careful, you can lose big, as shown by…
-
Why is Warren Buffett Looking So Grim?
Warren Buffett has sold about $23 billion of stock since the beginning of the year, including a recent $2 billion trade in a single concentrated position, Chevron.[1] Buffett has built Berkshire’s cash pile to $153 billion! What does he know that the rest of us don’t? Buffett, arguably the most…
-
Can Your Client Actually Make Money By Giving It Away?
Charitable giving, especially through Section 642 trusts, can surprisingly result in substantial tax savings. A high-income client can, instead of selling an asset, contribute it to a Sec. 642 trust and generate a significant tax deduction. Coupled with the current rules for calculating deductions on new 642 trusts which allows…
-
US Debt Downgraded! Does It Matter?
At the end of July, 2023, the financial rating agency Fitch announced that it was downgrading the sovereign debt of the United States. The stock market tumbled. The bond market tumbled. Talking heads talked. But what does the downgrade really mean? “Sovereign Debt Cannot Default”In the aftermath of the Fitch announcement, many pundits…
-
New IRS Life Expectancy Tables Creates “Arbitrage” Opportunity
Recent IRS actions may create an opportunity for your clients to receive a premium price for their charitable remainder trust interests. On June 1, 2023, the IRS finally adopted “new” mortality tables. We place the word “new” in quotation marks because the tables in question are based on 2010 data. The world…
-
Concentration = Risk Free Return
In the United States, the sale of an appreciated stock holding will trigger capital gains taxes. In addition, 41 states tax capital gains, on top of the federal tax. As of this writing, the effective top federal capital gains tax rate is 23.8%. State income tax rates go as high…