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Archive for September 2016

The Fed Crossed The Line

THOUGHT FOR THE WEEK SYNOPSIS • The Fed’s decision to drastically cut interest rates prevented the financial crisis from deepening, but it has remained in place for far too long. • Low interest rates do encourage consumers to spend more money, but there is a point where the drawbacks outweigh the benefits to the economy.…

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Has the Fed Lost Its Credibility

THOUGHT OF THE WEEK SYNOPSIS • The Fed once again chose to keep interest rates at current levels, which is frustrating given how far we have come since the depths of the financial crisis. • Unemployment and inflation have dramatically improved, so many investors were expecting to see the Fed adjust interest rates accordingly throughout…

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The Alchemy of Structured CD’s

THOUGHT FOR THE WEE SYNOPSIS • A structured certificate of deposit pays a portion of the return of a benchmark instead of a fixed interest rate, and the principal is guaranteed from loss. • Although such an investment sounds attractive, any structured product must be approached by investors with heavy skepticism. • The risk/return relationship…

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I Wager That Pascal Would Agree

THOUGHT FOR THE WEEK SYNOPSIS • Blaise Pascal was a brilliant mathematician and philosopher, and his “wager” can be used as a proxy for gauging investment risk against expected return. • Long-term government bonds have been on a tear, but the lessons from Pascal tell us to proceed with caution. • Speculators should focus more…

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Hitting Home Runs

THOUGHT FOR THE WEEK SYNOPSIS • Several stocks experience catastrophic losses at some point, and many never recover. • Despite so many stocks delivering investors such bad losses, the overall equity market is up dramatically since 1980. • Diversification is the only way to reap the rewards from “home run” stocks without owning all of…

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