Pennyfarthing Investment
  • What We Do
    • Priorities
    • Design
    • Ethics
    • Strategy
    • Integrity
  • Impact Investing
  • What You Do
    • Investing 101
    • Resources
    • Glossary
    • Toolbox
    • my Penny Dashboard login
  • Build Your Savings
  • Newsletter
    • The Derailleur
    • Ford Focus Electric Blog
    • Press Releases
  • About
  • Contact Info
    • Address, Phone & Email
    • Directions

THE derailleur

​THE DERAILLEUR IS ON HIATUS BUT THERE'S BEEN A BIT OF A RETURN WITH OUR BLOG BELOW OR IF YOU FOLLOW TWITTER.  INVESTMENT MANAGEMENT HAS BECOME THE FOCUS OF OUR TIME AND THIS OUR MUCH-LOVED PUBLICATION HAS UNFORTUNATELY SUFFERED FOR IT.  DURING ITS RUN, THE DERAILLEUR WAS A VALUES-BASED INVESTMENT NEWSLETTER -- THE ONLY ONE OF ITS KIND IN THE UNITED STATES SUPPORTED BY PAID SUBSCRIBERS!

2021 Fourth Quarter Commentary

1/13/2022

0 Comments

 
With one daughter off at college, studying illustration the next three years in England, and another daughter who began her graduate studies in public health, in Paris, my son remains at home, on the cusp of finishing high school….

My dependents have become less dependent.  In contrast to my kids, the investment markets’ price levels are generally the highest in history and cry out for continued support from the U.S. Federal Reserve and the world’s other central banks.  Government spending, tax cuts, wealth are all dependent upon the central bank’s support.

The Fed is buying U.S. government debt at a rate of $120 billion in bonds per month, which depresses interest rates, stimulates credit and supports prices in asset markets.  So many young people can’t afford the high price of a new home even though mortgage rates are low.

The Fed’s economic modeling anticipates inflation running above 3% through the end of 2024.  In financial history, after the Fed’s creation, rising inflation and reversals of easy, excessive credit have preceded stock market declines.

Since 2008, each time the Federal Reserve has reduced its bond purchases, markets have stumbled.  Will inflation, global economic imbalances and supply bottlenecks trip up this market?  Wealth has certainly inflated.

What about those left behind?  Read Fiona Hill’s recently released memoir There Is Nothing For You Here for thoughts about that issue.

These days the Fed’s Chairman Jerome Powell hints at gradual action, hesitantly calming investors’ worries about whether the Fed might reduce its bond purchases, too much, too early -- those kids have too much anxiety to move out.
0 Comments

2021 Third Quarter Commentary

1/13/2022

0 Comments

 
Arif Naqvi liked to say, “Today’s peacock is tomorrow’s feather duster”, an apt phrase for a man who was once an impact investing celebrity, targeting social equity and economic growth in emerging markets.  He was charming, generous, attractive, but also bullying and narcissistic.

Naqvi’s hedge funds, foreign entities run out of Dubai, became the Middle East’s largest.

Investors included the Gates Foundation and World Bank.  If Bill Gates is investing, others thought, they should, too.

The funds had been audited and favorable opinions issued.  Despite this, as private funds, and this is a very important point to be aware of, the funds’ fraudulent financial practices were hidden from investors for years.  Private funds lack the heightened oversight and financial controls of publicly regulated entities.

Naqvi, with his connections to the rich and politically powerful, his 154 foot super-yacht and along with his fellow fund managers pocketed the funds’ cash in secret bank accounts.  Turns out, investors eventually noticed they had been duped.  The Gates Foundation raised questions.  Wall Street Journal journalists Simon Clark and Will Louch dug in.  Whistleblowers came forward.

Give me your money to invest, Naqvi said, and we’ll reduce poverty and improve public health.  Instead, he has been charged with stealing $780 million.

The takeaway here is that, even when a fund’s purpose is noble, be diligent and trust, but verify.
0 Comments

2021 Second Quarter Commentary

1/13/2022

0 Comments

 
Italian artist Salvatore Garau last month sold an invisible sculpture in the form of a stamped certificate of ownership for $18,000.  Too bad, if the sale had granted ownership via digital non-fungible token (NFT), I’d speculate it’d have fetched at least $180,000.  One can only imagine….

What’s the investment most opposite from an invisible sculpture and can be purchased at an incredible bargain today?  US Series I savings bonds, among the safest of investments, currently yielding 3.6% annually (cannot be redeemed in the first year, a three-month penalty applies within five years of purchase).

I-bonds’ interest rate varies.  It is a fixed rate, 0% for newly issued bonds, plus inflation, which is currently 1.8%.  Get this...an I-bond will earn you 3.6% annualized until October 31, a rate that will change with inflation semi-annually.  Compare that with other interest rates: short-term Treasury bills, 0.1 to 0.5%; high-yield savings accounts, 0.6%; and CDs, 0.2 to 1.0%.

I-bonds’ interest is also state and local income tax-free.  If redeemed to pay for college expenses of immediate family members, I-bonds’ interest could be federally tax-free depending on income level, $97k for a single, $123k for a joint tax return.

You can buy or receive up to $15,000 in I-bonds per year via the US Treasury Direct web site or with your federal tax refund.  If you buy as a gift for others, with the intention to pay for college, be sure to buy in the parent’s name, due to financial aid eligibility and the above tax advantages.
​
Right now, I-bonds are the superior low-risk investment … or, you can always buy yourself an invisible sculpture?!?
0 Comments

2021 First Quarter Commentary

1/13/2022

0 Comments

 
There’s more money circulating than ever, expanding at an all-time record.

Remember baseball cards on paper?  There’s a new digital spin on them.  It’s called NFTs, non-fungible tokens, aka digital rights.

I could take a photo of this page and, if recent transactions are any guide, receive thousands of dollars from someone who bought the right to enjoy the view.

After selling this page as an NFT, I could send you this letter, you could still read it and then you could do whatever you wish, dropping it into the trash or your filing cabinet.  The whole time, our letter’s NFT owner could be enjoying it all.

As they say, the kids just love it.  The National Basketball Association (NBA) has offered digital trading cards  through their partner Dapper Labs.  They’re booming, issued as limited quantities in potentially limitless editions.  Turns out, the fine print states buyers own nothing but a moment they view on the issuers’ digital platform, the app experience.  It’s the right to enjoy the view, for hundreds or even thousands of dollars apiece.

More money boosts speculative demand, driving up prices.  Spend wisely, or not.  When will it end?
0 Comments

    eRIC w. bRIGHT, cfa

    Archives

    August 2024
    June 2024
    February 2024
    January 2024
    August 2023
    March 2023
    August 2022
    July 2022
    January 2022
    March 2021
    January 2021
    August 2020
    March 2020
    August 2019
    February 2019
    September 2018
    June 2018
    December 2017
    August 2017
    June 2017
    March 2017

    Categories

    All

    RSS Feed


​Schedule In-Office or Phone/Online Meeting (complimentary for advisory clients and no charge for initial consultations)

​Integrity.  In conversation.  Prudent values.

​© Pennyfarthing Investment Management, L.L.C.
Picture
Form ADV Part 2 disclosure brochure
and Form CRS written in plain English
​Table of Fees for Services
  • What We Do
    • Priorities
    • Design
    • Ethics
    • Strategy
    • Integrity
  • Impact Investing
  • What You Do
    • Investing 101
    • Resources
    • Glossary
    • Toolbox
    • my Penny Dashboard login
  • Build Your Savings
  • Newsletter
    • The Derailleur
    • Ford Focus Electric Blog
    • Press Releases
  • About
  • Contact Info
    • Address, Phone & Email
    • Directions