Vince Lombardi, the legendary American football coach, famously stated, “Winners never quit and quitters never win.” This suggests that winners persevere to achieve their goals, while those who quit fall short of success—an idea that resonates commonly.
This quote might serve as a motivating reminder for a first-time marathon runner at the grueling 20-mile mark. Murmuring those words could prompt them to push through the fatigue and cross the finish line.
However, what about those who persist yet still miss the mark? Does that label them as losers, or simply make them determined individuals?
And what if someone clings to their pursuits, even without a clear goal in mind? Could they be considered lost, confused, or something entirely different?
It’s likely there’s no definitive answer to these questions. They are subjective and shaped by individual experiences and beliefs. Regardless, this serves as the foundation for today’s thoughts. Continue reading
The yield on the 10-Year Treasury note is plummeting toward zero. Currently, it hovers around 1.56 percent. For income investors, such a yield may as well be nonexistent.
To illustrate: investing $1,000 in government bonds at this yield means you’d gain only $156 over the span of ten years, translating to a mere $15.60 annually. Clearly, this isn’t an attractive proposition.
Furthermore, inflation will likely diminish the purchasing power of the initial principal. According to the government’s inflation calculator, $1,000 today is equivalent to approximately $842 in 2006. Thus, a nominal return of $156, combined with the eroded principal of $842, results in a real loss of about $2.
However, diminishing principal isn’t the only issue. Investing in U.S. Treasuries may pose greater risks. As noted by Michael Hasenstab, who manages the Templeton Global Bond Fund, investors in U.S. Treasury bonds may face significant capital losses. Continue reading
Understanding the complex web of economic relationships and forecasts is nearly impossible to achieve accurately. The variables are overwhelming, and the connections are often unpredictable.
In truth, tracking this vast amount of data surpasses human capability. Even the federal government, with all its resources, struggles to assemble a coherent picture of the current economic landscape, let alone anticipate future shifts.
The economy is constantly adapting and transforming in subtle ways that are difficult to detect in advance. Causal relationships are seldom as straightforward as a balance scale; when one factor decreases, its counterpart may simultaneously increase.
For instance, one might expect that as incomes decrease, apartment rents follow suit. Lower incomes should lead to diminished competition and, logically, reduced rents. However, in locations like Sacramento, California, the exact opposite has been observed. Continue reading
“Read the directions and directly you will be directed in the right direction.” — Lewis Carroll
American consumers are back in action. After a seven-year break, they are once again indulging in what they do best: shopping.
The Commerce Department reports that personal consumption expenditures (PCE), the main indicator of consumer spending on goods and services in the U.S. economy, saw an increase of $119.2 billion in April. This marks a 1 percent rise, the largest one-month jump since August 2009—almost seven years.
Consumers are indeed the driving force behind U.S. economic growth. Without their spending, GDP contracts; and in a debt-driven economic system, a decline in GDP can lead to serious financial instability.
While we don’t endorse this consumption-driven model, we acknowledge that we would prefer a system based on honest hard money, where savings and investment spur growth rather than borrowing and overspending. Yet, such preferences do little to change the reality we face. Continue reading
