The apple of our eyes

Go into just about any supermarket right now and what do you see? Bins and bins of gorgeous red, green, and golden apples. The harvest is overwhelming, but some apples are worth more than others. If you are like me, an average consumer, it takes about 23 minutes to do my grocery shopping, according to Proctor and Gamble. During that spate of time, I buy an average of 18 items out of maybe 30-40,000 choices. I have little time to browse and, most of the time, I don’t even check the prices, which brings me back to the apple cart. You see, I value my fruits and vegetables. The more local, the better, because to me, the taste is everything. Until recently, I was partial to certain kinds of apples depending on whether I was baking, cooking, or just chomping down on one freshly picked from a local orchard. That’s until I encountered the Honeycrisp. If you have sampled one, you know what I mean. They are everything an apple should be: crisp, with an electrifying mix of acidity and tangy sweetness. It is an apple worth buying, even if the price is two or three times the cost of the next best thing. Why is the Honeycrisp worth so much more than the Fuji or Gala? Is the taste really that different, or is it all a clever marketing gimmick? To understand the difference, let’s look at the apple business in general. This year the industry expects a nationwide apple crop of 256.2 million, 42-pound bushels of apples. That is about 6% lower than last year’s crop. Washington...

Mid-term results take investor focus off Washington

True to form, the opposition party regained control of the House, while the ruling party, in this case the GOP, retained control of the Senate. If history is any guide, this means that little in the way of legislation will be coming out of Congress for the next two years. In the past, investors and the stock market alike did better than you might expect under this kind of political paralysis. That’s because financial markets abhor the unknown. Given the unpredictability of politics and legislation, investors are far more content with inaction than action, unless of course, those actions are favorable to the markets or the economy. Take for example, the tax cut of 2018. That sent the markets higher because most investors expected the cut would fuel additional growth in the economy. In turn, that would generate higher earnings for public companies and provide a reason to bid the stock market up even higher. While expectations for any additional tax cuts over the next two years are remote, there could be some surprises. There is some conjecture that the Federal government could undo parts of the tax cut. They could reinstate, for example, the federal tax deductibility of those states with an income tax. In exchange, the corporate tax rate might be raised a few percentage points. Of course, it’s early days and any quid pro quo negotiation on taxes between the two houses and the president could drag out until 2020. The unfolding disaster that is the Affordable Care Act (ACA) over the first two years of Republican rule was not lost on voters. Health care was...

Time to check your risk tolerance

It is a good time to take a reality check on how aggressively you are invested. The 6.9% decline in the S&P 500 Index over October was gut-wrenching. But entirely within the realm of probability given the historical data. Here are some questions to ask. Did you find yourself checking your investment portfolios every day? How about every hour? Did you have trouble focusing on other, possibly more important, things like your job, or your family and friends? Was it more difficult to sleep at night, or did you lay awake worrying about the markets? How much time did you spend checking the averages and listening to the talking heads on television or in the print media? Did you call your broker or investment advisor and, if so, how many times? Did you want to blame someone for the market’s decline? Did you need that money for something immediate? If you answered yes to any of the above questions, you are probably invested too aggressively. That’s not to say that a sell-off is in any way pleasant. Everyone feels the disappointment, the pain of losing money, and the fear that tomorrow will bring more of the same. And even though your losses are only on paper, you still feel some anxiety. The question is how you handle it. By now, most of my readers understand that the stock market is not a one-way street. Investors should expect at least three declines of around 5 percent and one decline of 10% per year in the stock market. That’s on average. There have been plenty of times when the averages have...

The “Fortnite” Addiction

Chances are, if you are over 50, you have probably never heard of “Fortnite,” a video game that boasts over 40 million players worldwide. Those with children, however, may not only know it, but are playing it themselves. Epic Games, Inc., the creator of “Fortnite,” and its most recently released version, “Fortnite: Battle Royale,” is raking in the money. That’s a remarkable trick, given that anyone can download and play the game digitally for free on a variety of different devices. It is so accessible that anyone can play it on their PC, iPad, smartphone, Xbox, or PlayStation. So, what exactly is the Fortnite game about? Picture yourself in the air, along with another 99 players, approaching a small island. There is a rush to deplane. You run for cover. Bullets snap and whiz by your ear. You hunker down in the dirt, desperate for protection. The object is to eliminate all the other players before they get you. Hidden around the island, which shrinks every few minutes of play, are all sorts of weapons and items that you can use to defend yourself and build forts, traps or whatever else you might need to survive and go on to be “the last man standing.” While the game is free, the player can purchase a Premium Battle Pass, which gives you access to exclusive clothing and other items. You can also earn points, or just buy them in the store, but none of the money spent will give you an advantage in playing the game. The add-ons are just “cool,” like getting the latest pair of Nikes, only in...

How to Avoid Recession, Immigrate to Australia

“Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore. Send these, the homeless, tempest-tossed to me, I lift my lamp beside the golden door!” Statue of Liberty poem This “land down under” has escaped an economic recession for 26 years in a row. An open immigration policy in a nationalist world that demands just the opposite is one of the key drivers to their success. An abundance of natural resource wealth has also helped. Readers would need to go back to the late 1980s, early 1990s, to find two quarters of negative growth (the definition of an economic recession) in Australia. Back then, Australia was noted for its boom and bust economy. Throughout their 160-plus year history, mining booms in gold, gas, sheep and other commodities left investors rich and confident for a couple of years, only to be followed by devastating shocks to the economy as commodity demand declined, throwing workers on the streets and companies into bankruptcy. This writer has a special fondness for Australia. Early in my career, I spent years investing in Western Australia’s iron ore and Queensland’s coal. Following in my footsteps, my daughter also spent a couple of years in Australia as an exchange student. Back then, the government tightly controlled the exchange rate. Today, the central bank is free to set interest rates without political interference and the exchange rate is no longer fixed. Investments in industries outside of the mining areas were also encouraged. Aided by the government, businesses were encouraged to seek out new, non-mining investments, thereby reducing Australia’s...

Italy’s crisis threatens financial markets

A political crisis in the fourth largest economy in Europe has spilled over into the financial markets. Global stock exchanges greeted Italy’s present political dysfunction by registering major declines–and the crisis may just be getting started. Back in 2010 through 2012, readers may recall a similar eurozone calamity. Greece was at the center of that maelstrom and, at its worse, threatened the viability of the European Union and its currency, the Euro. This time around, many of the same issues are now bedeviling Italy. The country has the third largest debt load in the world after the U.S. and Japan. It still suffers from double-digit unemployment while their economy continues to stagnate. At times like this, voters usually look for something to blame. Most Italians have focused on their membership in the EU as the cause for all of their woes. After an inconclusive election several months ago, Italy has been in a no man’s land of political inertia. Two opposing parties: a far-right party (The League) and a populist party (the Five Star Movement) share power. They recently proposed a new government to break the deadlock. The problem was that their candidates presented a threat to those who still wanted to maintain membership in the EU. Their proposed finance minister, for example, was a confirmed foe of both continued membership in the EU and the Euro. He scared the bejesus out of officials throughout the EU. As a result, Italian President Sergio Mattarella vetoed the appointment and instead appointed a technocrat, whom he hoped would reassure the financial markets and the rest of Europe. Both opposition parties are...