Why Bitcoin Reels In Young Professional Men

Over the past several months to a year, exchanging U.S. dollars for Bitcoin has been such a fruitful endeavor that the purchase of cryptocurrencies have entered the public consciousness and many young men in their 20s and 30s have been profiled on CNBC as well as the largest financial websites to publicly disclose their newfound wealth.

Most of the analysis focuses on whether Bitcoin is the real deal–i.e. will Bitcoin become a store of value analogous to gold or hard metals, and then appreciate against other currencies due to a projected lower inflation rate?

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The Mirage of High-Yield Dividend Stocks

My entire investment writing career has occurred in the context of the United States thirty-year treasury yielding 4.5% or less, often dramatically less (think 2% to 3%). Similarly, a stock market boom has also accompanied most of the past decade.

This has meant that certificates of deposit have yielded 1-4%, depending on the amount and length of time that the money must be locked up until maturity. Corporate bonds haven’t yielded much higher, unless they had weak earnings or a credible risk of impending bankruptcy. The stock market isn’t much compared to the corporate bond landscape.

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Target Stock’s Extended Share Repurchase Plan

Target Corp. does not, and has not, grown its profit. This year, it is expected to make about $2.4 billion. That is the same amount of profit that Target earned in the recession year of 2009. As recently as 2015, Target was earning $2.9 billion per year in profits. These downticks in profitability are even more concerning when you consider that Target is perpetually opening up new stores—the implication being that the same-store sales profits are declining at a greater rate than the amount of new profit generated by the new locations.

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Investment Lessons From Stein Mart, Inc.’s Fall

When I reviewed Stein Mart’s business model in recent years, I was unimpressed on both quantitative and qualitative grounds. Quantitatively, I thought it was embarrassingly poor that Stein Mart only managed to earn $27 million in net profits at its cyclical high over the past five years. For a company with 300 stores that consume gobs of square feet, a net profit figure of only $80,000-$85,000 was terribly insufficient.

And the above-referenced numbers refer to Stein Mart’s 2016 highs. When Stein Mart’s profits evaporated and turned to an $11 million loss this year, it was clear that the business model was seriously defunct.

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Municipal Bonds Contain New Investor Risks

For nearly all of its history, municipal bonds have been regarded as one of the safest investments that one could make. After all, general obligation government bonds are backed by the taxing power of a given jurisdiction. If you buy a United States bond, your likelihood of being paid interest and later your principal is based on the ability of the United States government to tax over 300 million. If you buy a bond issued, say, by the state of Texas, your likelihood of being repaid is determined by the Texas state government’s ability to tax 27 million people.

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