Thursday, August 20, 2015

How Not to Run Out of Money in Retirement

Jack Otter, the editor of Barron's Online, interviews Texas Tech University Professor, Personal Financial Planning, Michael Finke in this video.  They discuss a new breed of annuity and a new law, that offer a strategy to help retirees guarantee income in their later years:

Putting aside $125,000 from your tax protected retirement fund so that it is not subject to the mandatory withdrawal and guaranteeing an income at age 80 has attractions.

Tuesday, July 07, 2015

King Coal Was a Merry Ole Soul, But No Longer: Natural Gas Now Is the #1 U.S. Electricity Generator

The June 24th Energy Information Agency (EIA) Electricity Monthly Update shows that in April Natural Gas was the number one U.S. source of electricity generated as measured by megawatts of output.  It moved ahead of coals in the standings by generating 31.46% of all electricity generated.

The technological revolution in the oil and gas industry has notched up another new first.  

Over the last few years, the U.S. exported more petroleum products than it imported for the first time in 52 years.  Then it became the world's largest petroleum exporter and finally the world's largest oil producer.

The technological revolution.  

Often the amazing technological revolution that has transformed both America's and the world's energy picture is referred to as the Shale Gas Revolution.  This is increasingly a misnomer.  The same innovations have been applied to the Mississippian Limestone formation here in Kansas and the Permian Basin in Texas, to mention but two examples.  The former has been producing oil since 1915, but the revolution has revitalized recovery from a field thought to be largely played out.  The Permian Basis was first developed in the 1930s.  The new techniques are recovering oil as deep as 10,000 feet from strata of various rock types.  The revolution combines computer technology that I can only describe as three dimensional GPS with engineering that allows horizontal drilling a mile or more sideways miles beneath the surface of the earth and with hydraulic fracturing, a technique first used here in Kansas 67 years ago.  Yet few say "high tech" when they talk about about oil and gas.

This could only have happened here in the U.S. where individuals own the mineral rights, where the rule of law still generally prevails, where independent petroleum companies flourish, and where immigration was once encouraged.

A sobering thought:  

If the various immigration laws of the last ninety five years had prevailed before 1920, the revolution's father, George Mitchell, would have been born in bankrupt Greece not Galveston and would not have studied geology at Texas A&M. The Economist put it well: "Few businesspeople have done as much to change the world as George Mitchell.

What might not have been!

Tuesday, April 28, 2015

Who Needs Horatio Alger, We Have Hamilton!

Peggy Noonan recently reviewed  a hip hop play.  "Hip hop?" you day, "Has she flipped her wig?"

Actually she has tipped her wig figuratively to a Broadway biography of one of our bewigged founders: Washington's right hand man, a triumvir of the Federalist Papers, and our first Treasury Secretary: Alexander Hamilton.

The U.S. economy achieved its takeoff into sustained economic growth by 1840, long before all but two countries in the world.  Yet a betting man or woman in 1780 would have found little to choose among our new fledgling republic strung along the Atlantic compared to Argentina, Canada, Mexico, and Brazil in terms of who would have been economically successful. Richard Sylla, perhaps our preeminent financial historian of U.S. financial markets, makes a compelling case that Hamilton's financial reforms enabled the emergence of a sophisticated financial system.  That financial system financed the young republic's emergence as an economy.  Thus economic takeoff took place here and not somewhere else.

Alexander Hamilton is one of my favorite Founding Fathers.  More to the point he exemplifies what makes America America and nowhere is it better expressed than in this very 2015 Broadway musical, "Hamilton"  Listen to Lin-Manuel Miranda, its playwright and star, as he performs "The Hamilton Mixtape" at the White House Evening of Poetry, Music, and the Spoken Word on May 12, 2009. He is accompanied by Alex Lacamoire:

As always, Peggy Noonan expressed it well: "Why did they weep? Why was everyone so moved?
Because it hits your heart hard when you witness human excellence. Because the true tale of how an illegitimate, lowborn orphan from the West Indies went on to become an inventor of America is a heck of a story. And because it is surprising yet perfect that that story is told in a hip-hop/rap/rhythm-and-blues/jazz/ballad musical whose sound is pure 2015 yet utterly appropriate to the tale."

Miranda read Ron Chernow's biography and wept because he identified with a great story of a great man who overcame all odds, yet a man made with feet of clay. Read it and drink in the story of our country.   

If Americans in 2015 can listen to this tale without a dry eye, then we know the revolution has spent its course and it is time to learn Mandarin. 

Thursday, April 23, 2015

Chian's deceleration: What Should the CFO Worry about?

The Chinese economy grew averaged double digit growth for two decades. Recently that has slowed to 7-8 percent.The Conference Board has identified a set of structural factors that indicate a long “soft fall” to 3 to 4 percent growth. Ethan Cramer-Flood explains what this implies for pricing, credit, and compliance.

Monday, March 23, 2015

Bolloré Is No Mercier

Jean-Marie Messier took a stogy French utility and construction conglomerate and converted it into an unwieldy media monstrosity in numerous related and unrelated businesses including Universal Studios.  During the bubble, he drank the internet Cool Aid and paid fabulous prices for companies whose value evaporated like water spilt on summer asphalt.

As the value of his empire collapsed, he met his Götterdämmerung

Eventually French financier Vincent Bolloré took a dominant position in the company, became Vivendi's chairman, and divested many of its assets to concentrate on content. In the process, Vivendi has piled up €16bn of cash. Lex’s Oliver Ralph and Robert Armstrong discuss whether Vincent Bolloré should return this money to shareholders in this Mar 23, 2015 video:

However, there is nothing like idle cash to attract the wolves.  Bolloré now faces an activist challenge from Wall Street’s quiet professor Peter Schoenfel, the head of the hedge fund, P. Schoenfeld Asset Management.

The inside story of how Clarke’s tenure at Tesco came to an end

Andrea Felsted and Andrew Hill tell "The inside story of how Clarke’s tenure at Tesco came to an end" in the Financial Times, July 23, 2014

Wednesday, February 04, 2015

Tea with Carly Fiorina

Carly Fiorina advises Stamford MBAs on making tough choices and leadership:
Emily Mekinc gives us an interview with Carly Fiorina Landini Brothers in Old Town Alexandria , Virginia. The powerhouse who made HP what it is tells, among other things, the advice Steve Jobs gave her after she was fired. 

Monday, January 26, 2015

The ABCs of Income: MLPs, REITs, and BDCs

Jack Hough and Jack Otter on the best investments for income in 2015, including the benefits of dividend stocks and the pros and cons of Treasury bonds.  MLPs are master limited partnerships, REITs are real estate investment trusts, and BDCs are business development companies.  They suggest there are some which are oversold.