Remarkable events are unfolding right before our eyes. The yield on the 10-Year Treasury Note stands at a mere 1.58 percent, while gold, despite a recent dip, remains above $1,700 per ounce. This signals a simultaneous expectation of both deflation and inflation among investors.
In the stock market, opinions vary widely. One analyst predicts a downturn, while another believes we are on the verge of a significant upward trend. Interestingly, both viewpoints can coexist, reflecting the current unpredictability of the market.
It’s worth noting that the S&P 500 is currently trading below its levels from the turn of the millennium. Back then, it was a widely held belief that stocks would always appreciate in value over the long term. However, today’s perception of “long term” has shifted, leaving many to wonder just how lengthy it truly is.
Japan provides a noteworthy case study in this regard. On January 29, 1989, the NIKKEI 225 closed at a staggering 38,916. Fast forward almost 23 years, and it has plummeted to 9,545—a decline of over 75 percent. Continue reading
A troubling aspect of the upcoming tax hikes involves the intended increase on dividend income. Since 2003, the tax rate for dividends has been capped at 15 percent. Under President Obama’s proposal, however, dividends would be taxed as ordinary income, leading to a top tax rate of 39.6 percent for high earners.
This change comes at a time when dividends are crucial for managing and preserving capital. The Federal Reserve’s policies of zero interest rates and quantitative easing have driven the yield on the 10-Year Treasury Note down to just 1.61 percent—now lower than the inflation rate reported by the Bureau of Labor Statistics. This renders government debt a certain wealth destructor.
Consequently, high-dividend stocks are increasingly essential for those saving for retirement. Unfortunately, President Obama’s reforms threaten to undermine this vital source of investment income. To what end? Continue reading
The insatiable desire of politicians to spend money they do not possess knows no bounds. There’s always a seemingly legitimate program in need of additional funding, and every politician is eager to please their constituents with promises of financial rewards.
Using taxpayer money as a means to garner votes has become a common practice. Constituents often reward officials who bring home federal funds with their support at the polls, leading to the misconception that they can attain something for nothing.
The ongoing fiscal cliff debate exemplifies this trend. Discussions typically center around how much taxes will increase and who will shoulder the burden, rather than addressing meaningful spending cuts that could reduce federal expenditures from the current 25 percent of GDP back to the 18 percent level of the 1990s.
Even that figure appears excessive. Why not consider reducing government spending to a mere 5 percent of GDP? Such a drastic cut would undoubtedly minimize bureaucratic complexities.
The core issue lies in government spending. Hence, raising taxes isn’t the real solution. Continue reading
Southern California enjoys a remarkable climate, particularly along the coast. The sun shines brightly each day, humidity is low, and a gentle breeze from the Pacific adds to the pleasant atmosphere. It’s hard to find a better place to be.
However, alongside these advantages, there are undeniable challenges. Traffic congestion, high living costs, and urban decay contribute to the less-than-ideal reality of life in Southern California.
Nevertheless, it’s important to recognize that many regions are worse off. The state government, high taxes, and general public sentiment often result in policies that penalize hard work by redistributing wealth through ineffective and wasteful expenditures, such as on bullet trains and public pensions—ultimately eroding wealth rather than creating it.
It’s hard to find a place in the world, except maybe France, where bureaucratic inefficiencies thrive with such zeal. Continue reading
