Charter Trust - Global Market Update

Do durable assets create durable returns? Jason and the Golden Fleece, c. 340 BCE. Source: Wikipedia Gold and silver are often touted as “alternative” investments. That is, their returns aren’t highly correlated with other, more typical, investments. So they have the potential to diversify an investment portfolio while providing return in their own right. Gold and silver served as a monetary standard for millennia. Are they useful investments? It’s hard to evaluate the long-term returns of a […]

Do durable assets make sense as investments? Gold Roman Aureus. Source: Wikipedia Some things have been around a long time: silver and gold were currencies and a store of value for millennia; fine jewelry has always been a sign of status; and housing and land are always in demand—everyone has to live and world somewhere. But do they make sense in an investment portfolio? A little perspective is important. People get very emotional about real investments. We’re […]

Since they can have so many internal issues, why do we have big companies at all? Pabst Brewery, Milwaukee, Wisconsin. Source: American Gardening It’s not a trivial question. In theory, we could all be independent contractors, offering our labor in a great big market, with no bureaucracy. But we would have to devote a lot of time to finding markets for our work, negotiating prices, and getting paid—administrative tasks that aren’t productive. Those kind of transaction costs […]

Is Amazon a monopoly? Source: Amazon A monopoly exists when there is effectively only one supplier of a good or service. They can set the price, and anyone who wants what they’re selling has to pay it. There’s really no alternative. This was the case with Standard Oil in the late 19th century. They were an innovative oil refinery that bought out competitors in the oil products area, the integrated vertically with exploration and production enterprises to […]

Are restrictions on steel imports a good idea? Photo: Třinecké železárny. Source: Wikipedia The Trump administration is considering restricting steel and aluminum imports for national security reasons. It says that the lack of domestic producers could make it hard for us to provide weapons for our armed forces. After all, there’s a lot of steel in a tank division. The larger issue is for the US to maintain an industrial base, that, in times of war could […]

Smartphones are everywhere. Photo: Ben Kerckx. Source: Pixabay Whether it’s for making phone calls or getting directions or buying t-shirts or checking whether we left the stove on, smartphones have inserted themselves into more and more of our lives. They’ve been around for only a decade or so, but the computers in our pockets have become indispensable. We use them to buy and sell stuff, entertain ourselves, and to help find our friends. They’ve altered the texture […]

So how do you decide? Photo: Sebastian Lühnsdorf. Source: Morguefile When a news event occurs, is it a new signal, or is it just noise? The European Central Bank is maintaining a negative inter-bank rate – is it signal or noise? The Consumer Price Index just came out flat from the month before – was that signal or noise? It’s tempting to label all these interim economic reports financial static. And a lot of them are. So […]

Where the Vultures Gather What is vulture investing? Turkey Vulture landing. Photo: Don DeBold. Source: Wikipedia Vulture investing is a way to profit from poor management. A vulture fund typically invests the debt of troubled firms, then seeks to convert that debt into equity. They can also invest in distressed sovereign debt, then use the courts to bring actions against the issuer to force some kind of recovery. The phrase “vulture capital” was originally coined as a […]

We’ve talked about cutting out noise. Can we boost the signal, too? Oscilloscope. Illustration: Brian Elliot. Source: Wikipedia Looking at a signal-to-noise ratio is a good way to understand why we get so distracted. It’s the proportion in our lives of meaningful information compared to irrelevant data that bombards us all the time. It’s like the level of a radio station’s programming above the static background. And there’s a lot of noise in our lives—diversions that make […]

Will education solve our problems? Photo Viktor Hanacek. Source: Picjumbo Economists of all stripes trumpet education as a key to improving economic outcomes. Whether it’s literacy, math skills, or the ability to write computer code, our society has become so technological, they state, that an extensive – and expensive – education is necessary to thrive in today’s world. This is nothing new. Education has been considered crucial to society since Plato wrote The Republic 2400 years ago. […]

Is it ethical to nudge people? Photo: Polar Cruises. Source: Wikipedia “Nudging” is all the rage. A nudge is structuring someone’s choice so they make the “right” decision. For example, putting fruit at eye-level in a cafeteria is a “nudge” towards healthy eating. Banning junk food and sugary sodas is not. That’s coercion. Participating in Social Security – at least paying into it – isn’t a nudge, it’s part of our Federal tax system. But the default […]

We live in an impatient world. Photo: Mariordo. Source: Wikipedia After running our phones down to 1%, we plug them in and expect them to be fully charged in a few minutes. We get frustrated when a webpage takes longer than three seconds to load. We would rather use the microwave than wait for the oven to pre-heat. And if you’re going too slow in the left lane – well – we’re probably not friends any more. […]

Are stock buybacks a good idea? Photo Viktor Hanacek. Source: Picjumbo When companies generate extra cash, they can do four different things with it. They can invest in their own business, through capital expenditures, they can invest in another business, via mergers and acquisitions, they can pay dividends to shareholders, or they can buy back their own shares. Investors tend to like dividends and buybacks. It puts money in their pockets, rather than sitting in the corporate […]

Is the stock market risky? Photo Rhett Sutphin. Source: Wikipedia Of course it is. Anyone who went through the Financial Crisis or dot-com crash or Long Term Capital crisis or ’87 crash has experienced the gut-wrenching feeling of having significanlty less in savings than they had just a few months before. Nobody likes that feeling. And the longer you hold onto stocks, the more likely you are to experience a bear market. These can be caused by […]

Where have all the manufacturing jobs gone? Old shoe factory, Columbus, OH. Photo: Nytend. Source: Wikipedia Since 1989, manufacturing employment in the US has plunged by 6 million workers – over 30%. But this doesn’t mean the US has stopped making things. Employment has fallen, but output – after a setback during the recession – has continued to grow. In fact, the output of stuff made in the US – cars, engines, advanced machinery – is currently […]