Author - Marc Schindler, CFP®

1
What the World Would Be Like Without the 1%
2
Should I Invest in Gold?
3
Why the U.S. Debt Downgrade is Rightly Justified
4
How Warren Buffett Would Reduce the Public Debt
5
Why the Stock Markets Are Overreacting

What the World Would Be Like Without the 1%

The media mentions the Occupy movement in the same breath as the Arab Spring activists when they talk about important events in 2011. However, the two don't seem to have much in common beyond the ability to draw crowds to public places.

The Arab Spring has a very clear objective: out with the old dictators, in with a democratic government. The Occupy movement does not seem to have any objectives other than turning city parks into campgrounds. Their closest thing to a demand is an aversion to income inequality, but even that seems to stop at 'We don't like it!'… Read More

Should I Invest in Gold?

Gold is useless

This week GLD, a gold ETF, surpassed SPY, an ETF tracking the S&P 500, to become the largest Exchange Traded Fund. Gold prices also set a new all-time high. This should ring the bubble klaxon!

Gold is a useless asset. It does not produce earnings, it does not pay dividends or interest, and it has few industrial uses. The only thing it does well is look pretty.

So why is everybody buying it instead of stocks, bonds, rental properties, or anything else that does produce an income stream? There are two possible answers: Gold is undervalued even …

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Why the U.S. Debt Downgrade is Rightly Justified

S&P downgraded the US long-term debt last Friday. Stock markets have sold off world wide in response, and investors scrambled to buy the freshly downgraded US treasuries.

The stock market response is natural. The downgrade increases uncertainty, which normally causes investors to dump more volatile assets in favor less volatile ones. When the shock wears off, this process normally reverses.

The demand for treasuries makes some kind of sense. According to a friend of mine, the US is 'the best horse in the glue factory.' This is mostly due to the size of the treasury market. Large investors, for example …

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How Warren Buffett Would Reduce the Public Debt

It is good to see that our politicians managed to find a way to raise the debt ceiling. It is less comforting to see that they only managed to do it when the walls had closed in so much that they had to take turns breathing in.

Needless to say, the deal to raise the debt ceiling does nothing to correct our unsustainable debt trajectory. It simply makes our public debt explode at a slightly slower rate. With the debt ceiling out of the way for now, it is time to focus on debt reduction.

We have all heard the …

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Why the Stock Markets Are Overreacting

The last few months have been tough for the stock market. We had the Debt Ceiling debacle, the European debt crisis, a slowdown in the world economy, rating agencies looking to downgrade treasuries, and countless other problems. It is no wonder that equity markets have sold off sharply as a result of the accumulated fatigue.

While the factors listed above are real problems, history suggest that markets tend to overreact to both good and bad news. The reaction to bad news normally involves declining stock prices and, among other things, rising gold prices.

Bloomberg published a chart recently that shows… Read More

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