Asset protection
Our friends over at Integrated Wealth Management thought you might enjoy this article. ~Ed.
Ever wonder why you’re going through toilet paper faster (even if your diet hasn’t changed). For those of you alive in the 70’s – did you wonder why all of a sudden gumballs had a hole in the middle? It’s called “shrinkflation” – manufacturers offering less while charging the same price. It’s a “clever” way inflation is killing your purchasing power and probably not reflected in Consumer Price Indices (which we all know are manipulated). Inflation is perhaps the biggest threat to your financial health in the coming years. Make sure to inflation proof your portfolio. This a great article on this phenomenon. ~Sandor Kiss IWM
How will we know if inflation is making a comeback? Most economists are focused on the price of commodities, wages, and other basic goods and services. But history suggests they might want to keep an eye on a related phenomenon that often escapes notice: so-called “shrinkflation.”
This practice became increasingly common in the 1960s and 1970s, when manufacturers confronting runaway inflation tweaked packaging rather than hike prices. At first, the practice attracted relatively little notice: It’s difficult to discern changes in unit prices when they’re camouflaged in different-looking boxes and bags.
In fact, it was the humorist Art Buchwald who was among the first to sound the alarm. In a column entitled “Packaged Inflation” published in 1969, he lampooned the growing tendency to conceal price increases. Tongue in cheek, he praised American industry for “devising new methods to make the product smaller while making the package larger.”
This wasn’t far from the truth. As inflationary pressures rose over the course of the 1970s, manufacturers pursued a number of methods to pass along price increases. The most basic of these was so-called “downsizing” – same package, same price, fewer goods.
In late summer of 1974, for example, Woolworth’s offered a packet of pencils at its back-to-school sale for 99 cents – same price as the previous year. But as a sharp-eyed reporter at The New York Times observed, the packages only contained 24 pencils, six fewer than the previous year. The same strategy affected packets of construction paper (24 sheets, not 30).
This kind of sleight-of-hand became ubiquitous. Everything from cans of tuna fish to jars of spaghetti sauce contained less and less. Advocacy groups like the Consumers’ Union (now Consumer Reports) inveighed against downsizing, but the practice remained widespread…read more.
FINRA suggests Robinhood failed to protect its customers.
The Financial Industry Regulatory Authority (FINRA) announced on Wednesday that it’s fining Robinhood almost $70 million to settle charges over issues it identified with the company’s stock trading service. The authority claims that the financial app company neglected its duty to supervise trades, maintain its own technology, and protect its customers. The fine is the largest in FINRA’s history and Robinhood has agreed to pay.
FINRA says since 2016 Robinhood has periodically provided false and misleading information on topics like whether customers were able to place trades on margin (using credit from Robinhood to buy shares), including displaying inaccurate information in its app on how much cash was in customers’ accounts.
The authority’s announcement doesn’t specifically identify the case, but it does appear to obliquely reference the death of Alex Kearns, who died by suicide after finding a negative $730,000 balance in his Robinhood account from unintentional margin trades. Robinhood was sued following Kearns’ death and ultimately settled for an undisclosed amount.
FINRA also takes issue with Robinhood’s reliance on algorithms to approve customers for options trading and the outages the platform has suffered, locking customers out of their accounts “during a time of historic market volatility.”
For those errors and failing to report customer complaints to FINRA, the financial authority is requiring Robinhood to pay a $57 million fine and $12.6 million in restitution to affected customers. Robinhood hasn’t owned up to FINRA’s complaints or denied them, but it did say in a statement that: “We are glad to put this matter behind us and look forward to continuing to focus on our customers and democratizing finance for all.”…read more
Scott Koyich of Brisco Capital joins Mike to share how he is playing the short term pull back in commodities, with stock recommendations in oil, copper and gold.
Households added $13.5 trillion in wealth – the biggest increase in three decades.
The coronavirus pandemic plunged Americans into recession. Instead of emerging poorer, many came out ahead.
U.S. households added $13.5 trillion in wealth last year, according to the Federal Reserve, the biggest increase in records going back three decades. Many Americans of all stripes paid off credit-card debt, saved more and refinanced into cheaper mortgages. That challenged the conventions of previous economic downturns. In 2008, for example, U.S. households lost $8 trillion.
In some ways, the singularity of the Covid-19 recession—and the recovery—shouldn’t surprise. The scope of the pandemic was unprecedented in the modern era. So was the government’s financial response. The U. S. borrowed lent and spent trillions of dollars to keep the economy from plunging further than it did.
These actions were at the center of the unusual nature of both the recession and the recovery. They have also powered much of the stock market’s unexpected boom. Rock-bottom interest rates lured more investors into stocks; workers stuck at home tried their hand at trading and tech giants gained even more ground during the shutdown.
The stock market, in turn, became the driver of the household wealth gain, accounting for nearly half the total increase.
That has produced a lopsided distribution of the wealth gains, since well-off households are more likely to own stocks. More than 70% of the increase in household wealth went to the top 20% of income earners. About a third went to the top 1%. Click here for full article.