The Standoff in Washington

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It makes sense that investors would react positively to Thursday’s news that the Obama administration and House Republicans are willing to trade a short-term debt limit increase for “separate negotiations” on a number of other budget issues, a small step in the showdown between the two sides. After all, the government was closed and (sarcastic […]

STANDOFF: CBS vs. Time Warner Cable

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Today (Monday) marks the 11th day of hostile retransmission negotiations between cable network operator CBS (NYSE: CBS) and Time Warner Cable (NYSE: TWC). Because the two sides could not reach an agreement on how much TWC will pay CBS (per subscriber per month) for access to CBS programming, today also marks the 11th day that […]

Easy money no more

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The days of loose monetary policy are officially coming to an end. We don’t know exactly when, or to what extent, this will occur, but it’s safe to say that QE3 (or, as some call it, “QE-Infinity”) will be scaled back within the next year, according to Fed Chairman Ben Bernanke. Since November 2008, the […]

Cyprus: The rule or the exception?

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To avoid the collapse of its banking system, European Union member nation Cyprus has begrudgingly accepted an unprecedented plan from the EU to raise bailout money. Normally a bailout would come in the form of the government purchasing Cypriot sovereign debt on the open market, but Cyprus is a rare case because its financial sector […]

The pot calling the kettle black

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It’s no secret that the Chinese have taken measures over the years to keep the Yuan cheap against other currencies worldwide. In his debates against President Obama, Mitt Romney even went so far as to accuse China of being a “currency manipulator.” So it comes as somewhat of a surprise that the president of China’s […]

M&A Activity in 2013

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We knew US companies weren’t going to sit on their hands (or in this situation—piles of cash) waiting for a magical uptick in sales forever, and they have finally begun taking action. While there is no hard and fast rule about M&A (mergers and acquisitions) and its effect on the overall economy, it is no […]

QE4 by a different name?

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The Federal Reserve cleverly announced QE4 (the fourth round of quantitative easing) yesterday without actually calling it that. Over a year ago, the Fed embarked on “Operation Twist,” in which it purchases $45 billion per month in long-term Treasury securities and simultaneously sells $45 billion in short-term securities. By buying long-term bonds, the Fed puts […]

Financial Reform Red Tape

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On July 21, 2010, President Obama signed the Dodd–Frank Wall Street Reform and Consumer Protection Act (aka Dodd-Frank) into law. The main purpose of the law, enacted in response to the 2007-2008 financial crisis, was to improve financial regulation sufficiently to avoid another such crisis in the future. The major provisions of Dodd-Frank require more […]

Iran in Trouble

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Sanctions against the Iranian government by the US and the European Union have created big problems across the country. The Iranian currency, the rial, has fallen by about -40% over the past week, partly because of economic sanctions that prevent Iran from exporting oil and limit access to its central bank, which it supposedly uses […]

QE3: The ship has sailed

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Yesterday, the US Federal Reserve announced what is commonly called “QE3,” which stands for “quantitative easing, round 3.” This is an unconventional form of monetary easing in which the Fed buys longer-term bonds on the open market, either Treasuries or US Agency securities. For this particular round, the Fed says that they will buy $40 […]

FREE MONEY: 401(K) Matching

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Don’t look a gift horse in the mouth When companies offer their employees a 401(k) or similar retirement plan, they usually match employee contributions up to a certain percent of salary (typically 3% to 6%). Say you make $200,000/year and your company matches up to 3% of your salary. If you contribute $6,000/year (3% of […]

LIBOR-FIXING SCANDAL: Bigger than Barclays

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Barclays plc (NYSE: BCS) has been having a tough time lately amidst charges that bank directors and employees intentionally manipulated the London Interbank Offered Rate (LIBOR) between 2005 and 2009 by submitting borrowing rates (for reporting purposes) lower than what they were actually paying. So far both the CEO and chairman are out, and there […]

The New Investment Tax: How can we (legally) avoid it (for as long as possible)

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With the Supreme Court’s affirmation of Obamacare, wealthier taxpayers will face higher taxes on long-term capital gains and dividends. To help fund increased health insurance coverage, the new law increases the tax on the net investment income for certain taxpayers. For couples with an adjusted gross income (AGI) of more than $250,000 ($200,000 for single […]

The Twelve Rules of Investing, Rule #11: Don’t trade on the basis of widely-known information

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Information that is widely known—and this basically means all information you can legally obtain—is already reflected in stock prices by the time it reaches you. This means that news you hear on CNBC or read in the Wall Street Journal is useless for making short-term investment decisions. (This doesn’t mean that all information is worthless, […]

The Twelve Rules of Investing, Rule #10: Understand the difference between income and cash flow

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“Income” is the interest and dividends generated by investments. “Cash flow” is the money that you need for living expenses. Many people mistakenly believe that you should get all your needed cash flow only from income and never touch the principal. How this myth began is a mystery, but modern finance says that there’s no […]