Investment

Remembering That Magic Investments Can Become Curses – Forbes

Published

3 years ago

January 29, 2022

It’s been a number of years of amazing results in many markets. Stock had been up unbelievable—until they started to drop a few weeks in a row. Crypto? How could you go wrong, until it started a wavery slide back in November and is down to just over $38,000 rather than nearly $67,000. Real estate values soared but management consulting firm Kearney says public real estate companies show the biggest percentage of zombie firms. And according to recent research, SPACs pay off for the sponsors, the underwriters, hedge funds, and pretty much everyone but the final retail investors, as John Rekenthaler has written at Morningstar.com.

Most people want to get ahead financially. For most of us, though, it’s pulling out as much money as we can from, if we’re lucky, what’s left after paying for a dwelling and food and clothing and the car, student loans and maybe a meal out and some entertainment.

There are the voices that say cut the coffee, the avocado toast, all the small things because that’s the way to wealth. But it’s not. That’s a con game. There’s never going to be enough when $20 saved a month and put into a 6% return for 40 years you end up with $39,829.81. That’s a retirement timeline that ends up with enough money to keep you for, what, a year or two if you’re exceptionally frugal?

There are many people who want to fasten tight onto the average person and make money from them. It might be those gurus who are raking in large fees from the book sales and media blitzes and whatever else they do to keep the hope hype going.

But at least they do have some points. If you keep putting money on a regulation basis into safe investors, you’ll make more money through the fiscal grace of compound interest. You will eventually have more, although it’s not the same as the days when people got real pensions and the invention of the 401(k) was about adding some additional savings on top, not self-funding one’s golden years.

However, pushing people out onto their own to pocket the money that would otherwise be spent on employees that upper management will never see again after benefiting from their own retirement packages is only one issue. Another is the predatory forces of the financial world. There are too many looking for, lacking a better word, suckers.

SPACs are one area. Crypto is another. Not because there’s something inherently wrong in the concept—and the ideas behind blockchain are far more interesting. But you see so many people trying to tip things one way or another, mostly looking to pump up their own investments. It’s like the old days of online stock discussion groups that touts frequently dominated. Self-interested would-be marketers go on about how nothing else could be better and that they are all in and no intelligent person could entertain a different idea.

Except when the price is stratospheric, what the cheerleaders are doing, if they’re smart and not “true believers,” is trying to employ the greater fool theory. Someone’s got to be dumb enough to believe the hype and let the smooth talkers walk away with cash.

Like so many times before—the dot com fiasco, derivative-driven collapse in 2008, savings and loan crash in the 1980s and 90s, or every other wishful thinking scheme back to the tulip bubble of the 17th century—reality proved that things too good to be true typically are.

It is a dangerous time for investors, especially those looking for magic answers to the experience of falling behind. As painful as it may be to hear, there are no quick solutions. It’s like looking at a multilevel marketing scheme years after the real money went to the early participants and the late comers are trying to figure out how to make it work.

Pay attention to the meltdown stories and look for ways to protect yourself. Warren Buffet has said that when he dies, his wife will have a legacy of index funds hedged by Treasurys. Remember that there is a financial meltdown or disaster every 10 to 15 years and we’re getting overdue for the next one. Caution and prudence might be two good characteristics to nurture. Maybe the various fans will all prove to be right, but it seems unlikely in the fact of history.

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Investment

Tesla shares soar more than 14% as Trump win is seen boosting Elon Musk’s electric vehicle company

Published

3 days ago

November 6, 2024

Anne Joseph

NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.

Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.

“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”

Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.

Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.

Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.

Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.

In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.

The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.

Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.

The stock is now showing a 16.1% gain for the year after rising the past two days.

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Investment

S&P/TSX composite up more than 100 points, U.S. stock markets mixed

Published

3 weeks ago

October 16, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 103.40 points at 24,542.48.

In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.

The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.

The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.

The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.

This report by The Canadian Press was first published Oct. 16, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

S&P/TSX up more than 200 points, U.S. markets also higher

Published

4 weeks ago

October 11, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.

The S&P/TSX composite index was up 205.86 points at 24,508.12.

In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.

The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.

The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.

The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.

This report by The Canadian Press was first published Oct. 11, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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