How to Be Richly Rewarded Following the Big Crash

Posted on April 8, 2014 by MN Gordon

Something utterly unforeseen and unexpected is taking place.  Recent highfliers of Wall Street’s technology space are now dropping like flies.  Can you believe it?

Take Facebook, for instance.  On February 19th, the top social media service bought text messaging application, WhatsApp, for $19 billion.  Shares of Facebook closed out that day at $68.06.  We noted it as a possible signal of a market top…calling it the Mark Zuckerberg Indicator.

At first it appeared Facebook would continue its march onward and upward.  But on March 10th, stock shares peaked at $72.03.  Since then, they’ve dropped 21 percent…falling into the statistical bear market range.

However, Facebook’s not the only technology company whose stock is flaming out.  Not by a long shot.  Many others are slumping over like a half empty commercial grade flour sack.

For example, Tesla Motors, Twitter, and Netflix are down 15 percent, 20 percent, and 25 percent, respectively, over the last month.  Alexion Pharmaceuticals is also down more than 15 percent over the last month.  What’s going on? Continue reading →

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The Three Stooges Debunk myRA

Posted on April 4, 2014 by MN Gordon

The Three Stooges Debunk myRA
By Dennis Miller, Editor, Money Forever

A little skit ran through my head the other day…

The house lights dimmed and the bright American flag glistened in the background.  The crowd hushed as a tall man in a strange costume strode confidently onto the stage.

Curly turned to Larry and Moe and exclaimed, “Oh my, that’s our favorite—Uncle Sam, our boyhood hero.”  Moe put his finger to his lips as if to say “Shhh!”

Uncle Sam rapped the microphone with his fingernail and the sound echoed throughout the hall.  He then bellowed out, “Hello, my fellow Americans!” and the crowd cheered wildly.

He continued, “Today I want to announce the deal of a lifetime.  We all know that IRAs and 401(k)s are tools greedy rich people use to save for retirement.  I’m here to announce a new retirement program for every day, ordinary people.  Everyone should have the right to retire safely and with dignity, and that is what we are going to do for you.” Continue reading →

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Forecasting for Dummies

Posted on April 1, 2014 by MN Gordon

Peter Zoellner is Head of the Banking Department at the Bank for International Settlement (BIS).  He holds a PhD from Vienna University of Economics and Business Administration.  Over the weekend, he told the ACI Financial Markets Association congress in Berlin that the dollar’s share of central bank reserves may fall by 10 to 15 percent in the years’ ahead.

Yet not to worry about a thing, assures Dr. Zoellner.  The reduced use of the dollar by central banks as foreign exchange reserves won’t threaten its world reserve currency status.  This is a remarkable insight, indeed.

“It could happen that the percentage will go slightly down with the reserve currency from between 65 and 70 maybe to between 50 and 60 percent,” said Dr. Zoellner.  “But the relative dominance of the United States dollar I do not believe that this will change for the next 10, 20 years.”

So how does Dr. Zoellner know what will happen over the next 10 or 20 years?  In short, he doesn’t.  We suppose he’s merely predicting tomorrow’s weather based on how sunny it was yesterday. Continue reading →

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How to Achieve Honest Banking

Posted on March 28, 2014 by MN Gordon

How to Achieve Honest BankingToday we take pause from the markets to bring you a brief review of new research by economists at the New York Federal Reserve.  On Tuesday, they published a special Economic Policy Review series.  It includes 11 research papers, providing analysis of the big banks.

One of their key findings:  The five largest banks, which include Bank of America and JPMorgan Chase, enjoy a “too-big-to-fail” advantage in financial markets.  The study also found that large U.S. banks can borrow at about 0.31 percent less than smaller banks.  Why is that?

The Fed’s research didn’t identify the exact reason.  But, perhaps, the big banks can borrow more cheaply because investors know the U.S. government would bail them out in a financial crisis.  While the Fed economists didn’t give this reason, they did note that the big banks can take bigger risks.

“The new research shows ‘it is improper to ask the taxpayer to underwrite the non-commercial banking operations of a complex bank holding company,’” said Dallas Fed President Richard Fisher.  This only seems fair. Continue reading →

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