Charter Trust - Global Market Update

There’s a prize for that. Photo: Douglas Tengdin Increasingly, organizations are using prizes to encourage innovation. Know of a way to improve smartphone voice recognition? There’s a $10,000 price for that. Design a delivery drone? $50,000. Got a solution for how to repurpose carbon emissions to reduce the potential for global warming? That’s worth over $50 million. If you can think of a persistent, society-wide problem, there’s probably a prize associated with it. McKinsey & Co. estimates […]

How can we help people save more? Source: Economic Policy Institute Baby-boomers are the wealthiest generation in history. But they are one of the most unprepared generations ever when it comes to retirement. The median family now has about $100,000 saved up. And half of all families have no retirement savings. At a time when fixed pensions are going the way of the Edsel and People’s Express Airlines, It’s not that people don’t want to save. It’s […]

We all love rags-to-riches stories. Like the story of Seabiscuit—a short horse with an old trainer and a history of injury—we’re captivated by the turnaround. The Apple Computer that Steve Jobs brings back from near bankruptcy, so he can introduce the iMac, iPod , iPad, and iPhone. Apple has been so successful that almost every active manager is now under-weight the stock. Or a plucky emerging market company, like Infosys, that markets its outsourcing services to an […]

Trust, Trusts, and Family Who do you trust? King Lear and his daughters, by Benjamin West (1793). Source: Folger Shakespeare Library When people make an estate plan, they need to decide what to do with their money. One of the most important decisions is choosing a trustee. Because a trustee will control the assets, usually for a long time. So making the right choice will have far-reaching consequences. Shakespeare writes about this kind of decision in King […]

What good are dividends? Public Domain. Source: PD Photo It’s a good question. Dividends can limit a company’s options, forcing them to cough up cash that could be used to run the business. If they money flows out of the company, they might have to increase their borrowings. Ford paid a big special dividend in 2000—they called it their “Value Enhancement Plan.” Management probably wished they still had that cash a few years later during the financial […]

Why is free trade so hard to understand? Source: Moeconomics Blog The idea is simple: when everyone does what they do best, we’re all better off. Like a Mark Zuckerberg giving up coding to run Facebook. He knows how to code, by all reports he’s a good coder. But it wasn’t a productive use of his time. His time was better spent acting as Facebook’s CEO—managing his sector leaders, understanding where the business is moving, working out […]

Is the market suffering from a case of mistaken identity? Public Domain. Scene from “Great Expectations.” Source: Wikipedia In Charles Dickens’ novel “Great Expectations,” his main character Pip is a poor orphan who suddenly starts to receive money from an unknown source. He thinks his mysterious benefactor is the cold and eccentric Miss Havisham. Miss Havisham is wealthy but mysterious, and she had taken Pip on as a companion for herself and her adopted daughter, Estella. In […]

Why do people start new companies? “Wisteria” by Claude Monet. Source: Claudemonetgallery.org At the heart of capitalism is the start-up—a new project founded on an idea and some hustle that creates a business out of nothing. If the idea catches on, the founders can make a lot of money. If it flops, the founders learn what doesn’t work and move on. Many folks fail in their first attempts. It’s a costly tuition. That’s because there are so […]

What makes some companies thrive while others struggle? Photo: Lexcelsior. Source: Animal Photos We see lots of examples in the marketplace: Facebook created the dominant digital social network, while other platforms—MySpace, Friendster—never took off. Costco has grown as a discount club while Wal-Mart struggled. Johnson & Johnson has succeeded across a range of health-care businesses, while others faltered—brought down by scandals or shrinking markets. What’s the difference? It comes down to management. Successful companies need visionary leadership—leaders […]

Why is the economy growing so slowly? Source: St. Louis Fed Since the Great Recession, the economy has never gotten back into high gear. We’ve always seemed to be teetering on the edge of another downturn. Quarterly economic growth has averaged 2%, while a normal recovery is usually above 3.5%. Why? First, the workforce is changing. We are now entering the period where baby-boomers are beginning to retire. Like most things the boomers have gotten involved with, […]

What’s wrong with bubbles? Photo: Michelle DiNocola. Source: Morguefile Sir John Templeton once famously noted that the four most expensive words in the English language are, “This time it’s different.” It’s easy to get caught up in the excitement of the moment, to believe that the latest innovation will lead to a new era. But human nature doesn’t change. That’s why it’s so fascinating. Before the first documented financial bubble—the tulip crisis in 17th century Holland—there were […]

Can the market for apples teach us about money management? Like many people, I grew up with the saying, “An apple a day keeps the doctor away.” Apples are supposed to have all kinds of health benefits—from helping your digestion to reducing cholesterol to improving your memory. And—unlike a lot of healthy foods—they taste pretty good. But I was never really keen on apples. You see, when I was young, pretty much every apple looked and tasted […]

Insiders and Outsiders What’s wrong with insider trading? Photo: Massimo Mancini. Source: Unsplash Insider trading strikes most of us as deeply unfair. If a banker passes along a tip about an upcoming deal to his cousin, and the cousin uses the information to make a bundle, we know in our guts that this is wrong. But who’s the victim? If the banker didn’t receive any compensation for leaking the information, where’s the crime? Some legal scholars have […]

“A cynic knows the price of everything and the value of nothing.” Lady Windemere’s Fan, Oscar Wilde Photo: Napoleon Sarony, 1882. Source: Metropolitan Museum of Art Full disclosure: I am a financial professional who manages money. So my comments are slanted. After all, where you stand often depends on where you sit. And I sit where I can manage individual and institutional portfolios, using—mostly—individual stocks and bonds. I avoid using mutual funds because of the conflicts that […]

What effect does trade have on our economy? Diagram of US trade flows. Author: Tony Cohen. Source: Wikipedia Of all the issues raised in the current political season, surely the most overrated has been free trade. To hear the candidates talk about it, you’d think the worst issue affecting our economy has been bad trade deals with Canada, Mexico, and China. While these three countries happen to be our biggest trading partners, trade just isn’t that big […]