Individual Small Company Stocks Versus Index Funds

It is often said that mutual funds that invest in smaller companies can do better than index funds which specialize in similar, so-called smaller cap stocks. At times they have  done relatively well, when trying to outperform the indexes of such companies.

But there is a fallacy here. Few managers can truly evaluate smaller companies, even less than they can evaluate larger companies. Smaller companies are more erratic than those larger, and their corporate fortunes are more difficult to anticipate.

Note:Smaller public companies may do better than larger companies for shorter periods but are more susceptible to business hazards and cycles. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

If You Bother to Read a Prospectus

Most investors never bother to read a corporate  prospectus. That’s one of the reasons why I suggest they don’t  buy individual stocks, but that they instead choose low-cost mutual funds that invest in securities indexes.

But in the event that they do decide to invest in an individual security, the least they can do is look at the company’s 10-K report.

One item of importance is the section called Risk Factors. (It comes after the description of the business.) These are often the points that may negatively affect the company's business. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

If The Dollar Is No Longer a Convertible Currency

What would actually happen if the U.S. Dollar would no longer be convertible into other currencies, as it is today?

Foreign counties would simply not accept it as part of commerce, as they do. They would insist on more stable currencies, such as the British Pound, the French or Swiss franc, the Russian ruble, or the Chinese yuan.

Some currencies, such as the Japanese yen, have not been used widely as international convertible currency, so they matter to a lesser extent. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Importance of the Dollar as a Reserve Currency

The potential loss of the dollar as a reserve international currency is possible. The ability to protect U.S. global interests in the future will be diminished in this process.

Therefore, do not treat unlimited government spending lightly. The repercussions can be extremely serious, in matters of our economic and national security.

Think budget control: The debt ceiling question. Spending below that ceiling resolves the problem.

A budget deficit that cannot be overcome without massive taxation is guaranteed to stifle economic growth, to prevent deficit reduction is thus the major difficulty. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

The Media’s Failure to Fully Understand Free Markets

Few general media reporters, columnists and editors have free market views and, certainly, a full background on financial subjects.

In addition to what basics journalists are ever taught, they receive a modicum of economic and financial training in school.

And certainly not of theory from free-market economists such as Friedrich Hayek, Milton Friedman, Thomas Sowell, Walter E. Williams, among others.Thus you get left-leaning slants in many financial articles. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Our Kids” Constitution Ignorance

I often write about our inefficient schools and how they prove to be a waste of so much of our educational funds. They appear to do more for the welfare of the teachers than they do  kids being taught.

As an example I refer to Prof. Walter E. Williams, in one of his enlightening columns. Professor Williams, is now retired as head of the Economics Dept.of George Mason University but still actively writes and comments about his specialty.

According to one survey, Dr. Williams reports that only 28% of students could identify the Constitution as the supreme law of the land. And that fewer than 25% of students knew that George Washington was the first president of the United States. And that only 26% of students knew that the first ten amendments to the Constitution are called the Bill of Rights.

Years ago, kids did better, when they sat, 30 and 40 to a class, and in one-room school houses. And so did the taxpayers funding their education. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Health-Care Malpractice Solutions

We have special courts for bankruptcies where judges handle creditor and debtor claims, tax liens, and workers compensation..

One of the complications that requires change, and proves costly in health care, is malpractice cost. The problems are primarily due to the huge amounts of lawsuits against providers. And fraud that permeates the system.

The result: The high outlays due to defensive medicine and doctor malpractice insurance premiums.

Yet ObamaCare does nothing to stop this menace.

The practical solution: Arbitration courts made up of judges, trained in science and medicine. That would eliminate awards because of “junk science.”

The courts could eliminate attorney’s cuts of the award proceeds and put a cap on outsized sums that ordinarily come from ignorant jurists. While seeing that patients are compensated for actual malpractice. Courts would be financed from doctor insurance premiums. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)