The Misery Index

The Misery Index used in the 1970s combined the unemployment and inflation rates, reaching a high of 22 in 1980.

It confronted Ronald Reagan when he got into office, replacing Jimmie Carter, during what was the worst recession since the Great Depression of the 1930s.

The media does a poor job of relating this bit of news. A few years from now when inflation takes hold because of our huge budget deficits, the Misery Index will no doubt be back in vogue.

The media then will probably fail to provide the basic reasons for its conception and rebirth. But perhaps use the real unemployment rate, not the understated one of about 9% used today. ( See the Earl J Weinreb NewsHole® comments.)

Insider Securities Purchasers

Insider securities purchasers have been one of the close to 1,600 investment strategies, along with their advantages and disadvantages, that I have studied over the past several decades.

This is where top executives or the companies buy their own securities in the open market. It’s supposed to be a bullish sign for outsiders to do the same. After all, the insiders must know what they’re doing.

In real life, corporate execs buying more stock may mean little, if they’re exercising stock options or getting too close to the forest to see the trees.

As for corporate buy-backs of company stock, this is often done to boost stock values and the cost per share has often proved relatively high. ( See the Earl J Weinreb NewsHole® comments.)

Investing For Income

Money market funds and bank deposits yield so little when Federal Reserve policy sees that funds in the banking system are kept artificially low.

What does it do for those who need investment income today and are trying to invest for tomorrow in an economy where corporate earnings are being stifled by high corporate taxes and federal regulations?

The financial media does a poor job answering this because they fail to educate the public on the proper use of corporate bonds.

And in doing so, they never fully discuss the use of duration, which helps overcome the risks of upcoming inflation and future higher interest rates. ( See the Earl J Weinreb NewsHole® comments.)

House Buying Ratios

Buy a house when your family needs tell you one is required and the economics of owning are better than those of renting.

Those economics are sometimes expressed as a house’s price, times its annual rent.

House times rent ratios right now are 5.6 in Detroit, to 10.4 in Chicago, to 15.1 in Los Angeles and 17.6 in New York

The figures come from statistics by Zillow,com of family homes, co-ops, condos and single family homes. ( See the Earl J Weinreb NewsHole® comments.)

Are Stocks Better Than Bonds?

The constant dilemma among average investors: Are common stocks a better investment than the ownership of bonds?

There’s no definitive answer and anyone who gives you one without further detailed explanations is inexperienced and wrong.

Just generally speaking, there are less erratic, less sharper downturns with bonds, so you have smoother returns. And bonds do produce more income than do common stocks.

Moreover, the use of duration principles and reinvested dividends in a low-cost bond mutual fund or ETF will help take care of erratic interest rate effects on bond holdings.

While stocks produce potential growth of principal over the years, this is not a simple goal for older investors, or any investors who are faced with a hyper-inflated economy. ( See the Earl J Weinreb NewsHole® comments.)

Hedge Funds in the Recession

Apart from the fact that many funds have folded because of disastrous financial returns, the glamour of the industry has only somewhat faded. Hedge funds are still attracting big investors.

Invested funds are now easier to remove. Investors have more leeway with management and can be more particular with regard to investment withdrawal terms.

However, hedge fund charges are not much lower. Management fees generally are still set at 1½% of managed assets and 20% of the profits generated. Sought-after funds charge even more, as before.

Hedge funds operate in different ways with varying objectives. They have a tougher row to hoe in this economy and principals may face higher taxes.

But they remain a factor because only they in the investment industry, have the speculative funds and freedom to operate these days, when political eyes are more focused on commercial and investment banks. ( See the Earl J Weinreb NewsHole® comments.)

Wall Street’s Relations With It’s Regulatory Agencies

Wall Street has been often called too close to its regulatory agencies. The question comes up when financial calamities occur.

That’s because officials of major brokers and investment bankers are often recruited to become regulators.

But who has the needed experience?

Unfortunately, we often have bureaucrats and politicians in Washington who enact or supervise what affects business operations. Yet, they have never successfully operated a business or financial entity on their own.

You have an example the way banks were pushed to accept subprime loans in order to have folks get homes they never could afford. ( See the Earl J Weinreb NewsHole® comments.)