Florida, North and South Carolina faced a massive clean-up on Saturday from the destruction wrought by Hurricane Ian, after one of the most powerful storms ever to hit the U.S. mainland caused tens of billions of dollars in damage and killed more than 20 people, according to Reuters.
Ian, now a post-tropical cyclone, was weakening but still forecast to bring treacherous conditions to parts of the Carolinas, Virginia and West Virginia into Saturday morning, according to the National Hurricane Center.
“Major to record river flooding will continue across central Florida through next week. Limited flash, urban and small stream flooding is possible across the central Appalachians and the southern Mid-Atlantic this weekend, with minor river flooding expected over the coastal Carolinas,” advises the National Hurricane Center.
The Category 4 major hurricane struck Florida’s Gulf Coast near Fort Meyers on Wednesday, with wind speeds of 150 mph, turning beach towns into disaster areas. And after landfall, it brought devastating winds and floods across Central Florida on Thursday.
Ian exhibited a larger wind field and radius of maximum winds than previous hurricanes. And, Ian tracked slowly across Florida after landfall, amplifying the effects of wind and water.
On Friday, Category 1 hurricane pummeled waterfront Georgetown, north of the historic city of Charleston in South Carolina, with wind speeds of 85 mph.
Roads were flooded and blocked by trees while a number of piers were damaged.
Hurricane dangers remain ever after the storm. Watch out for downed power lines and damaged buildings. Avoid floodwaters as they can hide a variety of dangers, and never drive through them, as it doesn’t take much to sweep your car away. #Ianhttps://t.co/e8saA5hi7xpic.twitter.com/3a38D2JSER
Around 1.7 million homes and businesses were without power in the Carolinas and Florida at 8:00 a.m. ET on Saturday, according to tracking website PowerOutage.us.
Investors are far more likely to earn the best returns by investing for the long term in the stocks of great companies.
From 1926 through the end of 2021, the S&P delivered an average stock market return rate of 10.49%. That average annual return includes dividends, but not inflation. If you adjust for inflation, the average stock market return drops to 7.37%.
In the past 50 years, the S&P 500 has gained in value 40 of the past 50 years, generating an average annualized return of 9.4%.
Yet, there’s simply no reliably accurate way to predict which years will be the good years and which years will underperform or even lead to losses. But we do know that, historically, the stock market has gone up more years than it has gone down.
Despite that, only a handful of years actually came within a few percentage points of the actual average. Far more years significantly either underperformed or outperformed the average than were close to the average.
Invest in the stocks of high-quality companies, ideally regularly across every market condition, and hold those investments for many years.
The evidence is overwhelming that investors who try to time the market, who try to trade their way to higher returns with short-term moves or who try to buy and sell based on projections of short-term peaks and bottoms generally earn below-average returns, writes Motley Fool. Moreover, those strategies require substantially more time and effort. They can also result in higher fees and taxes that further reduce gains.
If you’re looking to build wealth, investing for the long-term in stocks is an excellent place to start. Investing is the best way to compound your money.
It is recommended that you invest in a market index fund or you invest in the stocks of profitable and stable companies, and hold them for the long-term. By holding your investment for the long-term — think decades — your invested capital can experience compounding growth.
The lesson for investors is don’t get sidetracked by short-term stock movements and market volatility, which tend to stir up lots of headlines and cause investor panic or fear of missing out. Reasonable and largely stable investment returns will realize you the best returns.
To get the best returns in stock investing, use the method that’s tried and true: Buy the stocks of great companies and hold them for the long-term.
Stocks do offer some limited protection against inflation, as companies can typically raise their prices to compensate for a weakening dollar and loss of purchasing power. But stocks over the long-term have not beaten real estate as a hedge against inflation.
Burton Gordon Malkiel, the Chemical Bank Chairman’s Professor of Economics, has been responsible for a revolution in the field of investing and money management. And he’s also author of the widely influential investment book, A Random Walk Down Wall Street.
His book, A Random Walk Down Wall Street, first published in 1973, used research on asset returns and the performance of asset managers to recommend that all investors would be wise to use passively managed total market “index” funds as the core of their investment portfolios. An index fund simply buys and holds the securities available in a particular investment market.
There were no publicly available index funds when Malkiel in a Random Walk first advanced this recommendation, and investment professionals loudly decried the idea. Today, indexing has been adopted around the world.
Additionally, Malkiel believes that investors “probably needs to take a bit more risk on that stable part of the portfolio”. One asset class that he recommends, instead of low yielding bonds, is preferred stocks. There are good-quality preferred stocks, which are basically fixed-income investments. They’re not as safe as bonds. Bonds have a prior claim on corporate earnings.
According to Malkiel, investors need some part of the portfolio to be in safe, bond like assets–such as preferred stocks, or what he calls bond substitutes, for at least some part of their portfolio.
He suggest a preferred stock of like JPMorgan Chase. He doesn’t think you’re taking an enormous amount of risk. The banks now have much more capital. They are constrained by the Federal Reserve in terms of what they can do and buying back stock and increasing their dividends. And with a portfolio of diversified, high-quality preferred stocks, one can earn a 5% yield.
And if one wants to take on even a bit more risk, there are high-quality common stocks that also yield 5% or more: a stock like IBM, which has a very well-covered dividend, yields over 5%; AT&T– you can think of basically blue chips and they might play a role.
Regarding diversification, investors do need some income-producing assets in their portfolio. But his recommendation is that you think in the diversification of not simply bonds, but maybe some bond substitutes. However, there is a trade-off; there is going to be a little more risk in the portfolio. And one needs to recognize that there is not a perfect solution.
But part of the solution for an investor, especially a retired investor, must be to revisit their spending rule. If one is worried about outliving one’s money, then the spending rate has to be less. In part, it means maybe a bit more belt-tightening.
There’s no easy answer to this. Malkiel wished there were an easy answer that there’s a riskless way to solve the problem. But there isn’t. In terms of wanting more safety, one ought to be saving more before retirement, and maybe the answer is to be spending less in retirement. Thus, on a relative-value basis, things like preferred stocks, and some of the blue chips that have good dividends, and dividends that have been rising over time, ought to play at least some role in the portfolio.
In this age of “financial repression”, where safe bonds yield next to nothing, an asset allocation of 40% bonds is too high, states Malkiel. Now, of course, there’s not just one figure that fits all. For some people it might be 60-40 would be OK. But, in general, the asset allocations that Malkiel recommended have a much larger equity allocation and a much smaller bond allocation. And if you look at the 12th edition of Random Walk book, you’ll find that he has generally reduced the fixed-income allocation and increased the equity allocation–different amounts for different age groups,
Tropical Storm Ian continues to bring dangerous wind, rain and storm surge conditions to parts of Northeast Florida and is expected to regenerate into a hurricane by Thursday evening,
At 2 EDT, Tropical Storm Ian is located 40 miles northeast of Cape Canaveral, FL, and is located 275 miles south of Charleston, SC. It has maximum sustained winds of 70 mph and is moving north by northeast at 9 mph.
A turn toward the north is expected late today, followed by a turn toward the north-northwest with an increase in forward speed Friday night. On the forecast track, Ian will approach the coast of South Carolina on Friday. The center will move farther inland across the Carolinas Friday night and Saturday.
Tropical Storm Ian continues to bring dangerous wind, rain, flash flooding and storm surge conditions to parts of Florida as it churns in the Atlantic Ocean. Ian is expected to become a hurricane again by Thursday evening and make landfall as a hurricane on Friday, with rapid weakening forecast after landfall. A hurricane warning has been issued for the entire South Carolina coast. A tropical storm warning has been extended northward to Duck, North Carolina.
The strongest winds right now from Ian are in northeast Florida (Jacksonville), where some gusts have topped 70 mph in Daytona Beach. Additionally, some gusts over 50 mph have been recorded in Gainesville and Jacksonville, and over 30 mph gusts have worked their way along the coasts of Georgia and South Carolina.
Ian is a large tropical cyclone. Tropical-storm-force winds extend outward up to 415 miles from the center. A WeatherFlow station in New Smyrna Beach recently reported a sustained wind of 69 mph.
Tropical Storm Ian is located east of Orlando and is moving over central Florida toward the east central coast of Florida. Ian has weakened to a tropical storm and is expected to turn north and north-northwest by Friday and Friday night.
At 8 AM EDT, the center of Tropical Storm Ian was located 40 miles east of Orlando and 10 miles west of Cape Canaveral, FL.
Ian is moving toward the northeast near 8 mph. A turn toward the north-northeast is expected later today, followed by a turn toward the north and north-northwest with an increase in forward speed Friday and Friday night. On the forecast track, the center of Ian is expected to move off the east-central coast of Florida soon and then approach the coast of South Carolina on Friday. The center will move farther inland across the Carolinas Friday night and Saturday.
Maximum sustained winds remain near 65 mph with higher gusts. Some re-intensification is forecast, and Ian could be near hurricane strength when it approaches the coast of South Carolina on Friday. Weakening is expected Friday night and Saturday after Ian moves inland.
Tropical-storm-force winds extend outward up to 415 miles from the center. Daytona Beach International Airport recently reported a sustained wind of 60 mph and a gust to 70 mph.
Jacksonville International Airport recently reported a sustained wind of 26 mph and a gust to 41 mph.
STORM SURGE: There is a danger of life-threatening storm surge today through Friday along the coasts of northeast FL, GA, and SC. Residents in these areas should follow advice from local officials.
The combination of storm surge and the tide will cause normally dry areas near the coast to be flooded by rising waters moving inland from the shoreline. The water could reach the following heights above ground somewhere in the indicated areas if the peak surge occurs at the time of high tide…
Flagler/Volusia County Line to South Santee River…4-6 ft
St. Johns River north of Julington…3-5 ft
St. Johns River south of Julington…2-4 ft
South Santee River to Little River Inlet…2-4 ft
Patrick Air Force Base to Flagler/Volusia County Line…1-3 ft
The deepest water will occur along the immediate coast near and to the right of the center, where the surge will be accompanied by large waves. Surge-related flooding depends on the relative timing of the surge and the tidal cycle, and can vary greatly over short distances.
WIND: Tropical storm conditions are occuring in parts of the warning area on the east and west coasts of Florida and should spread northward along the Georgia, South Carolina, and North Carolina coasts today through Friday. Hurricane conditions are possible within the Hurricane Watch area in northeastern Florida, Georgia, and South Carolina through Friday.
RAINFALL: Ian is expected to produce the following storm total rainfall:
Northeast Florida, coastal Georgia and Lowcountry of South Carolina: 4 to 8 inches, with local maxima of 12 inches.
Upstate and central South Carolina, North Carolina, and southern Virginia: 3 to 6 inches with local maxima of 8 inches across western North Carolina.
FLASH FLOODING: Widespread, life-threatening catastrophic flash and urban flooding, with major to record flooding along rivers, will continue across central Florida. Widespread considerable flash, urban, and river flooding is expected across portions of northeast Florida, southeastern Georgia, and eastern South Carolina tomorrow through the weekend. Locally considerable flash, urban, and river flooding is possible this weekend across portions of the southern Appalachians, where landslides will be possible as well. Limited flooding is possible across portions of the southern Mid-Atlantic.
TORNADOES: A tornado or two remains possible across east-central and northeast Florida through this morning. This threat will shift into the coastal Carolinas on Friday.
Government tax laws favor investing in assets over increasing your salary. The more money you earn, the more income taxes you pay. The more assets you acquire, the less taxes you pay.
In building wealth, your first step is to get clarity about your financial and wealth building goals and your purpose for investing.
Americans who don’t have specific financial and wealth building goals are unlikely to have much success managing their money, building wealth over the long-term and achieving financial freedom.
Americans are conditioned from an early age to equate asset diversification with investment risk mitigation.
Mutual funds are deemed safer than single stocks.
A portfolio of stocks is considered safer than real estate.
A real estate portfolio is thought to be safer than a single business venture.
As the proverb says, “Don’t put all your eggs in one basket.”
If you aren’t educated and don’t thoroughly understand about a specific asset class, investing heavily in that single asset can be incredibly risky. But if you take the time to learn and become knowledgeable about the sector and the specific markets and properties in which you plan to invest, you can make much of that risk disappears.
The Four Benefits of Real Financial Education
Four things happen when you focus on increasing your education and increasing your knowledge of a specific investment asset:
You increase the level of control you have around the investment. More knowledge allows you to be a wise and active participant in managing the asset.
Your rate of return typically increases. Wise investors use their knowledge and control to make decisions that will improve performance.
Your taxes go down. What most people have learned about taxes is wrong. Taxes and tax laws are essentially a framework for what kind of money is taxed and at what rates. If you do precisely the same thing when it comes to money, you will pay the same amount of tax. But the tax law is packed with incentives the government has created to encourage people to do specific things with their capital. The more knowledge you have about those incentives, the less you’ll pay in taxes. One of the first things you’ll learn is that the government favors investing in assets over increasing a salary. The more money you earn, the more taxes you pay. The more assets you acquire, the less taxes you pay.
Your risk goes down. When you combine a high level of control with higher returns and lower taxes, you will have greatly reduced the risk associated with a specific asset class. Compare your average mutual fund to a multi-family housing property that you control in a market you know like the back of your hand and that generates a high rate of return with additional tax benefits. Which one feels like the bigger risk now?
The real key to a successful retirement investment strategy—or any investment strategy—is financial education that includes proven systems for building wealth over the long term and, reducing taxes and expenses.
Hurricane Ian, a powerful a Category 4 storm with winds just shy of Category 5 strength, will soon make landfall on Florida’s western coast. The hurricane’s eyewall is starting to move onshore now.
At 11 AM EDT, the eye of Hurricane Ian was located 45 miles West-Northwest of Naples, FL. Ian is moving toward the north-northeast at approximately 9 mph. This general motion with a reduction in forward speed is forecast today, followed by a turn toward the northeast on Thursday.
On the forecast track, the center of Ian is expected to move onshore within the hurricane warning area in a few hours, move over central Florida tonight and Thursday morning and emerge over the western Atlantic by late Thursday. Ian is forecast to turn northward on Friday and approach the northeastern Florida, Georgia and South Carolina coasts late Friday.
Maximum sustained winds remain near 155 mph with higher gusts. Ian is a category 4 hurricane on the Saffir-Simpson Hurricane Wind Scale. Ian is forecast to make landfall on the west coast of Florida as a catastrophic hurricane. Weakening is expected after landfall, but Ian could be near hurricane strength when it moves over the Florida East coast tomorrow, and when it approaches the northeastern Florida, Georgia and South Carolina coasts late Friday.
Hurricane-force winds extend outward up to 45 miles from the center and tropical-storm-force winds extend outward up to 175 miles. A Weatherflow station on Sanibel Island recently reported sustained winds of 58 mph with a gust to 75 mph.
The estimated minimum central pressure is 937 mb (27.67 inches).
This graphic shows an approximate representation of coastal areas under a hurricane warning (red), hurricane watch (pink), tropical storm warning (blue) and tropical storm watch (yellow). The orange circle indicates the current position of the center of the tropical cyclone.
The dot indicating the forecast center location will be black if the cyclone is forecast to be tropical and will be white with a black outline if the cyclone is forecast to be extratropical. If only an L is displayed, then the system is forecast to be a remnant low.
The letter inside the dot indicates the NHC’s forecast intensity for that time:
D: Tropical Depression – wind speed less than 39 MPH
S: Tropical Storm – wind speed between 39 MPH and 73 MPH
H: Hurricane – wind speed between 74 MPH and 110 MPH
M: Major Hurricane – wind speed greater than 110 MPH
When confidence is high, the ten-year treasury bond’s price drops and yields go higher because investors feel they can find higher returning investments and do not feel they need to play it safe.
The 10-year treasury bond is a debt instrument issued by the government of the United States. As its name implies, it matures in ten years. Over the course of that time, investors holding 10-year treasury notes, earn yields. The 10-year T-notes are issued at a face value of $1,000, and a coupon specifying a certain amount of interest to be paid every six months.
The importance of the ten-year treasury bond yield goes beyond just understanding the return on investment for the security. When confidence is high, the ten-year treasury bond’s price drops and yields go higher because investors feel they can find higher returning investments and do not feel they need to play it safe.
Like other types of investments, commercial property investors follow the,10-year treasury bond yield trends because it serves as a proxy indicator for things like mortgage rates. Put another way, as the 10-year treasury bond goes, so goes mortgage rates.
The 10-year treasury bond is important to commercial property investors because it acts as a strong indicator of how the macroeconomy will move in the short-term. The 10-year note price is determined by four factors: the face value, the dollar price, interest rate, and yield, writes Forbes.
Face value, also referred to as “par,” is the price the government agrees to pay out at maturity.
The dollar price is the amount paid for the bond, relative to its face value.
The interest rate is the amount of interest paid over the life of the note.
And, the yield, is a combination of the dollar price and the interest rate.
The 10-year treasury bond’s performance, as mentioned above, is a strong indicator of how the U.S. economy is currently performing and is forecast to perform in the future. Which means, since the 10-year note is a proxy for mortgage interest rates, that’s a very important metric to commercial property investors.
After all, if mortgage interests rates rise, the long-term cost of buying commercial property goes up. Meaning the ROI might shrink. However, if the forecast is for mortgage rates to fall, then commercial property investments become more lucrative over the long-term.
Changes in the 10-year Treasury yield tell us a great deal about the economic landscape and global market sentiment, professional investors analyze patterns in 10-year Treasury yields and make predictions about how yields will move over time. Declines in the 10-year Treasury yield generally indicate caution about global economic conditions while gains signal global economic confidence.
It’s the action in the secondary market that determines the yield. This is important to note because it’s this rate that people refer to when they’re talking about Treasuries. The coupon rate, while technically the interest rate you will receive in relation to the Treasury’s face value, will likely be different from the effective yield you end up getting. If you pay less than face value, your effective rate will be higher; more and it will be lower.
Prices (and therefore effective yields) change for bonds almost constantly. That’s because a bond’s price is inversely related to yield: When demand is high and Treasury prices rise, yields fall—conversely, when demand is low Treasury prices fall and yields rise. This ebb and flow ultimately creates the Treasury pricing market as people flock to (and then from) Treasuries based on the economic environment they find themselves in.
The 10-year Treasury yield serves as a vital economic benchmark, and it influences many other interest rates. When the 10-year yield goes up, so do mortgage rates and other borrowing rates. When the 10-year yield declines and mortgage rates fall, the housing market strengthens, which in turn has a positive impact on economic growth and the economy.
Bond market volatility is usually a sign of a weakening economy. The recent U.S. Treasury yield fluctuations have given market strategists reasons to be concerned about looming economic issues. Studies and empirical evidence show a volatile U.S. Treasury note market is not good for foreign countries holding U.S. T-notes and dealing with significant debt issues, writes Bitcoin.com. That’s because when U.S. T-notes are leveraged for restructuring purposes and a resolution tool, “sudden and sweeping daily swings” can punish countries trying to use these financial vehicles for debt restructuring.
Schwab Market Update: Stocks end higher after a choppy session as the markets await this week’s Fed monetary policy decision; the yield on the 10-year Treasury note hit 3.5% for the first time since 2011. Our latest Market Update: https://t.co/0dvcQ5REf2pic.twitter.com/Xdh0if9QLF
The 10-year Treasury yield also impacts the rate at which companies can borrow money. When the 10-year yield is high, companies will face more expensive borrowing costs that may reduce their ability to engage in the types of projects that lead to growth and innovation.
Higher 10-year Treasury yields should help cool down the economy and bring down decade high inflation in the long run.
The 10-year Treasury yield can also impact the stock market, with movements in yield creating volatility.
Rising yields may signal that investors are looking for higher return investments but could also spook investors who fear that the rising rates could draw capital away from the stock market. It can also means that borrowing is getting more expensive.
Falling yields suggest that corporate borrowing rates will also decline, making it easier for companies to borrow and expand, thus giving equities a boost.
All U.S. Treasury securities are regarded as relatively risk free—since they’re backed by the full faith and credit of the United States government, which has never defaulted on its debts. When investors get worried about the economy and market risk, they look for safe investments that preserve capital, and Treasuries are among the safest investments globally.
Hurricane conditions are expected along the west coast of Florida within the Hurricane Warning area on Wednesday morning, with tropical storm conditions possibly beginning by late today, according to the National Weather Center (NWC).
Tropical storm conditions are expected in the Tropical Storm Warning area along the southwest coast of the Florida peninsula by this evening, and along the west coast north of the Tampa Bay area and along portions of the east coast of Florida on Wednesday.
Hurricane conditions are possible in the watch area beginning on Wednesday.
Tropical storm conditions are possible in southeastern Florida in the Tropical Storm Watch area beginning this evening. Tropical storm conditions are expected in the Tropical Storm Warning area on the east coast of Florida beginning early Wednesday, spreading up to Georgia and South Carolina on Thursday. Tropical storm conditions are possible in the Tropical Storm Watch area in the Florida Big Bend area on Wednesday into early Thursday.
Residents in the Hurricane and Storm Surge Warning areas should rush all preparations to completion and follow the advice and evacuation orders of local officials, states the National Weather Center.
Life-threatening storm surge – one of many expected hazards with Hurricane Ian – along the west coast of Florida has prompted evacuation orders for some communities. Ken Graham, Director, National Weather Service, urges those residents to heed directions from officials!
Residents safety is at the heart of these tough decisions.
STORM SURGE: The combination of storm surge and the tide will cause normally dry areas near the coast to be flooded by rising waters moving inland from the shoreline. The water could reach significant heights above ground if the peak surge occurs at the time of high tide.
“A margin of safety is achieved when securities are purchased at prices sufficiently below underlying value to allow for human error, bad luck, or extreme volatility in a complex, unpredictable and rapidly changing world.” ~ Seth Klarman
Margin of safety is one of the most essential principles of investing*. For investors to remove the uncertainties and reduce the risk associated with investing in the stock market, they should buy a stock when it is trading, its market price, at a deep discount to their estimate of intrinsic value.
Margin of Safety helps ensure that any uncertainties were factored into the purchase price. No matter how much time one spent evaluating investments, it is impossible to remove all of the uncertainties.
Billionaire investor Warren Buffett, CEO and Chairman, Berkshire Hathaway, compares margin of safety to driving across a bridge:
“If you understood a business perfectly and the future of the business, you would need very little in the way of a margin of safety.
So, the more vulnerable the business is, assuming you still want to invest in it, the larger margin of safety you’d need.
If you’re driving a truck across a bridge that says it holds 10,000 pounds and you’ve got a 9,800 pound vehicle, if the bridge is 6 inches above the crevice it covers, you may feel okay; but if it’s over the Grand Canyon, you may feel you want a little larger margin of safety.”
Companies with high profit margins, above average returns on invested capital, growing free cash flow and strong balance sheets have their own margins of safety, which might be worth considering when one is investing in businesses.
