Posts Tagged ‘market’

“As the Financial Times reported yesterday, more than 1 million U.S. consumers are ‘at least two months behind on car loan repayments,’ noting that the delinquency rate in the $1.1 trillion market hit its highest level since 2009. And that’s not just limited to subprime borrowers. That figure includes everyone with a U.S. car loan….

The financial Times also cites, ‘Delinquencies on credit cards also rose by about the same amount over the period to 1.79% – the highest since 2011. The rise in bad loans comes despite persistently low borrowing costs and unemployment levels – suggesting lenders may be letting consumers take on bigger debt burdens than they can handle.

Lending to consumers with weak credit scores has been one of the fastest-growing parts of the industry. Still, the increased delinquency levels follow a period of rapid expansion and could be a natural consequence of that growth. Separate figures published on Thursday by the New York Federal Reserve showed the total amount of debt held by American households rose last year at the fastest clip since 2007.'” -Porter Stansberry

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“Research firm Dalbar publishes an annual study on investor behavior called the Quantitative Analysis of Investor Behavior (“QAIB”).  Every year since 1994, the QAIB has compared stock market returns over the previous decades with returns earned by real investors.  The result is always the same: The market beats the investor.

For the 30 years ended December 31, 2015, the S&P 500 returned 10.4% per year, on average.  Equity mutual fund investors earned an average return of just 3.7% per year.

To make plenty of money in stocks, you must behave better than the vast herd of investors.  A single behavior – refusing to sell at market bottoms – would have multiplied profits nearly tenfold.” -Dan Ferris

Financial-research firm FactSet explains exactly what’s driving this market forward, despite all of the economic warning signs.  So far this year, 41 different companies have spent more than $1 billion buying back their own shares.  So far this year, U.S. corporations have spent a total of $166 billion on share buybacks.  That’s a 15% increase over last year… and sets a new record annual pace for share buybacks.” -Porter Stansberry

“The Fed (Federal Reserve) and the government have created a false boom.  It’s not sustainable.  The last boom—from 2003 to 2007—was a false boom, too.  So was the one before that.  By manipulating interest rates, the Fed injects adrenaline into the economy and stimulates it.  But this doesn’t allow the market to cleanse itself of the sins of the previous boom (which the Fed’s stimulation also caused).  So, the malinvestment builds up and compounds.  And the issues that caused the crises never get addressed.” -Tom Dyson

Useful Money

Posted: September 17, 2015 in Money Matters
Tags: , , , , , ,

“Money is only useful when it represents buying power. It’s a claim on the available goods and services in the market.” -Bill Bonner

“The historical reality does not diminish the ease with which…fans of government spending can point to innovations like the internet and the inter-state highways and say ‘you didn’t build that’. We can only speculate on what might have been produced had the market been allowed to function. Likewise, we can still see the pyramids today and marvel at the innovation that went into their construction, but unfortunately, the wealth and labor stolen from ordinary Egyptians to build them has now been long forgotten.” –Peter Klein

“In a free market economy, money gets allocated to where it’s treated best.  But when you introduce the government, you get a business cycle.  You get a boom… which should be followed by a bust.  But that’s not what happens in our economy… Booms are followed by government intervention.  It’s done to prevent the busts from fully occurring.  But it just causes another—more extreme—boom and bust cycle.” -Tom Dyson