Balance Sheet Reduction By Paper Cut

The weekly Market Update is posted at Alpha Baskets and includes the following; The Government Pension Fund of Norway, the country’s sovereign wealth fund, recently surpassed $1 trillion in AUM. The fund was established in the 1990’s as an investment pool for revenue accrued from oil. The fund owns an average of 1.3% of every publicly traded company on the planet. The country’s GDP is only $370 billion. If they paid out every citizen, all 5.2 million of them, everyone would get $192,000. While WTI just took back the $50 level for the first time in a while, fracking has created a strong argument for lower prices making Norway’s decision to create and fund the SWF very shrewd. Please click through to read the entire update. Bandelier National Monument Pojoaque, NM Fire and Rescue, heavily filtered Piece of petrified wood in Petrified Forest National...

Serious Retirement Downsizing

Whenever I write about retiring in another country or in a tiny/small house as a way to save money or otherwise makeup for a smaller than maybe needed portfolio to cover retirement expenses, someone invariably will mention that there are some very inexpensive places to live along the Gulf Coast and other parts of Texas. Last week we went on a road trip through New Mexico and spent a little time in McKinley County (my wife runs an animal rescue here in Prescott, AZ and they get a lot of dogs from the reservation near Gallup) which fits the bill of being very inexpensive. The area, broadly speaking has some socio-economic challenges but there is plenty of beautiful scenery including El Morro National Monument and El Malpais National Monument which are very close by in Cibola County. There is some very cheap acreage here, very cheap, like 5-10 acres for $15,000-$30,000. Most of what we saw online has been on the market for a few years and so while that price range might be low in nominal terms there very well could be some favorable negotiations to be had. Some of what we looked at had no structures and some did have a structure that could have been the start of something inhabitable but weren’t there yet. New Mexico allows for tiny houses on property, the state is going through a legislative process to figure out how to tax them which is looking relatively unfriendly based on a bill that recently passed the lower chamber of the state legislature. As we’ve talked about in previous posts, despite what you...

Planning Advice From True Experts

My latest post for Alpha Baskets is published and includes the following; He makes fun, rightly so, of the question that invariably shows up on risk assessments that asks what you would do if the market crashed; sell a lot, sell a little, buy along with a couple of other answers that put the client in the position of assuming how they might react to some future event. This really becomes about working with the client to head off emotional responses before they happen. One way is simply reminding them that at some point there will be a bear market that will scare a lot of people. The bear market will end after some period of time and then the market will go up again. The only variable as I always say is how long it takes to play out. Please click through to read the entire post. A roadside “museum” of all kinds of petroliana in various  states of condition between Taos and Santa Fe. A neat fire house near El Morro National Monument Unusual back end for a fire...

James Altucher is Right, Retirees Shouldn’t Own A Home

Actually, I don’t know if he is right but he may have a point. If you are unfamiliar with James he is an investor turned investment writer turned lifestyle guru turned social media star. James and I overlapped and if I am remembering right, had a little bit of interaction at The Street.com (both alumni of the site). James was also kind enough to mention my blog in one of his earlier books. Our paths cross every so often on social media, he seems to like a lot of my pictures on Instagram as an example. The tone of James’ writing is to take positions on issues that are very contrarian like not going to college, quitting your job today and not buying a house. He also doesn’t believe in renting, he stays in some combination of Airbnbs, hotels and maybe with friends too. He explains his reasoning very articulately. The things he writes about in the outlandish idea category are not for me but I believe there is tremendous value in reading someone with very different ideas from your own, you either learn to think about your beliefs differently or they can solidify your beliefs. Last week we went on a road trip to New Mexico (we live in Northern Arizona) and as is often the case when we travel we stayed at Airbnbs.  We spent one night in a tiny town near Gallup that cost $99 plus a $25 cleaning fee and three nights in Santa Fe for $108 per night plus a $50 cleaning fee. While sitting in the husband zone of some store my wife...

“You’ll Be Stone Dead In A Moment”

This week’s Market Update is posted and includes the following; The title of this week’s update is a play on Monty Python and the Holy Grail describing the retail group which had been given up for dead. But when measured by one of the large industry ETFs,  it has actually done quite while over the last month gaining 450 basis points more than the S&P 500. Last week the space got something of nudge when it was announced that one of the large, high end retailers was considering going private. We’ve gone over the creative destruction underway in the space and while the digital e-tailers appear to have the upper hand, it makes sense to think there will be at least a few “old line” retailers that figure out the internet to the point of being very competitive. Please click through to read the entire update. We took a quick road trip over to New Mexico to visit Santa Fe, Taos and a few other things including a couple of great national monuments. The Taos Pueblo Los Alamos County Fire Department Station 3 in Wind Rock. For fire truck nerds, this is actually a type 4 despite looking like just about every type 3 I have ever seen. Stunning rig. We bought a highway sign from North Dakota that lends itself to doing some very neat things. The white and black in the upper left is the original...

Rock You Like A Hurricane

Markets were lower across the board last week with the Dow Jones Industrial Average falling 0.84%, the S&P 500 giving up 0.59%, the NASDAQ slid 1.13% and the Russell 2000 dipped 0.97%.   Congress managed to get together to kick the can down the road on the debt ceiling buying three more months by lifting the limit. Oddly, President Trump appeared to side with the democrats on this issue to the frustration of quite a few in the GOP. Trump campaigned on politics not as usual and while his success in this regard is debatable, the debt ceiling would seem to fit the bill of not at usual. This news was not enough to lift equity prices perhaps for the simple reason that every politician with a microphone told us there was no way there would be a shut down and they were right. With the back to back hurricanes and we might as well throw in the wildfires out west and the 8.2 magnitude earthquake in Mexico, the $90 billion catastrophe-bond market has drawn a lot of attention. The simplified explanation is that in the face of a catastrophe, these bonds which are issued by insurance companies have the principal forgiven, meaning investors are wiped out, in the face of a catastrophe like a hurricane. Here’s a story of a hedge fund that specializes in cat bonds. We are not aware of any ETFs that own catastrophe bonds but this provides a great example of the importance for advisors and individual investors to look through to fund holdings to know what they own and while you may not...