Peter Coy | The Case Against (Some) Buybacks – The New York Times

By Peter Coy

“Commerce Secretary Gina Raimondo is determined not to let America’s tech giants play her for a fool. If they want taxpayer money under the CHIPS and Science Act, they will need to promise not to turn around and give the money to their shareholders through dividends or share repurchases.

I think that makes good sense. On the other hand, sometimes companies should pay dividends or buy back shares. Those are two of the main ways that they reward their shareholders — who are, after all, the owners — rather than sit on excess cash or spend it wastefully.”

How to Invest as a Debt Ceiling Crisis Looms – Jeff Sommer – The New York Times

By Jeff Sommer

Jeff Sommer is the author of Strategies, a weekly column on markets, finance and the economy.

Jan. 19, 2023

6 MIN READ

“Crises are always lurking in financial markets. I’m worrying about a possible recession, rising interest rates, rampant inflation and the continuing economic effects of the war in Ukraine and the Covid-19 pandemic, but I have been for months.

Now, it’s time to add to that list the threat of a catastrophic breach of the federal debt ceiling, which could conceivably come to pass sometime this summer. Even now, with the odds of an eventual crisis clearly rising, it is difficult to accept that it might really happen.

“Breaching the debt ceiling has always been unthinkable,” said Edward Yardeni, a veteran independent Wall Street economist. “Now, I’m afraid we’ve got to think about it.”

Thinking about it doesn’t mean panicking. Even in a crisis, I buy and hold diversified investments in the global stock and bond markets, preferably through low-cost index funds. That’s a well-tested approach for long-term investing. It makes sense as long as you are able to withstand market turbulence and hang on for decades.”

“. . . . .  A panic, however, is exactly what can happen if there is a Treasury default. Some money market funds froze up in the financial crisis of 2008, and bond funds came under pressure in the market panic near the start of the coronavirus pandemic in 2020. Both types of funds could easily be disrupted again.

I hold both, and consider them safe under the rules of the game as they have been played — until now. But if the debt crisis isn’t settled well before “the X date,” I expect to stash more money than usual in a federally insured high-yield online account at a reputable bank.”

Opinion | One of the Hottest Trends in the World of Investing, ESG funds, are a Sham – The New York Times

By Hans Taparia

Mr. Taparia is a clinical associate professor at the New York University Stern School of Business and a former entrepreneur.

“Wall Street has been hard at work on a rebrand. Gone is the “Greed is good” swagger that embodied its culture in the 1980s. “Greed and good” may best summarize its messaging today as it seeks to combine high profits with lofty intentions.

“To prosper over time,” Laurence D. Fink, the founder and chief executive of the investment giant BlackRock, wrote in a remarkable public letter in 2018, “every company must not only deliver financial performance, but also show how it makes a positive contribution to society.”

At the heart of this rebranding is a new industry of funds, created by BlackRock and peers such as Vanguard and Fidelity, that purport to invest in companies that are good corporate citizens — that is, companies that meet certain environmental, social and governance criteria. These E.S.G. criteria are wide ranging, pertaining to issues such as carbon emissions, pollution, data security, employment practices and the diversity of corporate board members.

On the face of it, E.S.G. investing could be transformative, which is why it’s one of the hottest trends in the world of investing. After all, allocating more capital to companies that do good helps them grow faster and lower their cost of capital, creating an incentive for all companies to be more socially and environmentally conscious.

But the reality is less inspiring. Wall Street’s current system for E.S.G. investing is designed almost entirely to maximize shareholder returns, falsely leading many investors to believe their portfolios are doing good for the world.”

Roger Federer net worth: Career earnings, prize money for five-time US Open champion | Sporting News

Incredibly, Roger Federer currently has a net worth of around $550 million (£448.3m) according to website Celebrity Net Worth, making him the second richest tennis player to ever exist after Ion Tiriac, who has made most of his money in business ventures post-retirement.

His status as arguably the greatest tennis player of all time in his peak has cemented this, despite the fact he has not played competitively since the 2021 Wimbledon quarter-finals, where he was defeated by Hubert Hurkacz in three sets.

This has seen the 41-year-old slip down the ATP world rankings, though it hasn’t affected him from a financial standpoint due to his legendary status that has seen Federer pick up 20 Grand Slam titles from 31 finals, five of which came at the US Open.

Roger Federer career earnings

Federer has accumulated $130.5 million (£111 million) in ATP career earnings across his career on-court, though his vast wealth has come from various high-profile endorsement deals which have seen the right-hander bring in $1 billion (£812.3 million) into the bank, linking up with various companies including Nike, Rolex, Mercedes-Benz across his time as a professional athlete. ”

Source: Roger Federer net worth: Career earnings, prize money for five-time US Open champion | Sporting News

Paul Krugman | Crashing Crypto: Is This Time Different? – The New York Times

By Paul Krugman

Opinion Columnist

“Last week TerraUSD, a stablecoin — a system that was supposed to perform a lot like a conventional bank account but was backed only by a cryptocurrency called Luna — collapsed. Luna lost 97 percent of its value over the course of just 24 hours, apparently destroying some investors’ life savings.

The event shook the crypto world in general, but the truth is that this world was looking pretty shaky even before the Terra disaster. Bitcoin, the original cryptocurrency, peaked last November and has since declined by more than 50 percent.

Here’s one way to think about that decline. Almost everyone is concerned about the rising cost of living; the Consumer Price Index — the cost of a representative basket of goods and services — has gone up about 4 percent over the past six months. But the cost of the same basket in Bitcoin has risen around 120 percent, which means inflation at an annualized rate of about 380 percent.

And other cryptocurrencies have performed far worse. Two cities — Miami and New York — have introduced their own cryptocurrencies, with enthusiastic support from their mayors. MiamiCoin is down more than 90 percent from its peak, and NewYorkCityCoin is down more than 80 percent.”

How a Trash-Talking Crypto Bro Caused a $40 Billion Crash – The New York Times

By David Yaffe-Bellany and Erin Griffith

May 18, 2022, 5:00 a.m. ET

“Do Kwon, a trash-talking entrepreneur from South Korea, called the cryptocurrency he created in 2018 “my greatest invention.” In countless tweets and interviews, he trumpeted the world-changing potential of the currency, Luna, rallying a band of investors and supporters he proudly referred to as “Lunatics.”

Mr. Kwon’s company, Terraform Labs, raised more than $200 million from investment firms such as Lightspeed Venture Partners and Galaxy Digital to fund crypto projects built with the currency, even as critics questioned its technological underpinnings. Luna’s total value ballooned to more than $40 billion, creating a frenzy of excitement that swept up day traders and start-up founders, as well as wealthy investors.

Mr. Kwon dismissed concerns with a taunt: “I don’t debate the poor.”

But last week, Luna and another currency that Mr. Kwon developed, TerraUSD, suffered a spectacular collapse. Their meltdowns had a domino effect on the rest of the cryptocurrency market, tanking the price of Bitcoin and accelerating the loss of $300 billion in value across the crypto economy. This week, the price of Luna remained close to zero, while TerraUSD continued to slide.”

David Lindsay Jr.

Hamden, CT | NYT comment:

It appears to be just a ponzi scheme, and like bitcoin, has a large carbon footprint. Therefore, all these products should probably be banned. I am a successful investor, and one important rule is, if you can’t understand it, don’t invest in it. I did try to understand bitcoin, and it apparently only has anonymous record keeping with an extraordinarily high carbon footprint. It is a haven for gangsters and corrupt officials. What could be worse than owning a share in a high carbon footprint virtual asset, that doesn’t have any oil or gas or coal to sell.

InconvenientNews.net

Farhad Manjoo | BlackRock, Vanguard and State Street Control a Piece of Nearly Everything – The New York Times

By Farhad Manjoo

Opinion Columnist

“. . . .  But the goal of staying out of politics in 2022 is about as realistic as staying dry in a hurricane. Last year, for example, BlackRock, Vanguard and State Street supported a successful effort to shake up the board of Exxon Mobil by installing new members who promised to take climate change more seriously. Was that because of excessive wokeness, as Ramaswamy says, or because Exxon Mobil had been underperforming its peers for several years, and it was woefully ill prepared for the transition to renewable energy that has been transforming energy markets? The move seems well within what the investment firms say is their main goal, looking out for the long-term interest of shareholders. And what if the firms hadn’t backed the climate initiative — wouldn’t that have been construed as a political decision by the activists who have called on shareholders to push corporations to address the climate? (In any case, BlackRock announced this week that it would most likely vote for fewer climate-related shareholder proposals in 2022 than it did in 2021.)

In late 2018, a few months before his death, John C. Bogle, the visionary founder of Vanguard who developed the first index fund for individual investors, published an extraordinary article in The Wall Street Journal assessing the impact of his life’s work. The index fund had revolutionized Wall Street — but what happens, he wondered, “if it becomes too successful for its own good?”

Bogle pointed out that asset management is a business of scale — the more money that BlackRock or Vanguard or State Street manages, the more it can lower its fees for investors. This makes it difficult for new companies to enter the business, meaning that the Big Three’s hold on the market seems likely to persist. “I do not believe that such concentration would serve the national interest,” Bogle wrote.

Bogle outlined several ideas for limiting their power, but he pointed out problems with a number of them. For example, regulators could prohibit index funds from holding large positions in more than one company in a given industry. But how then would they offer an index fund that invested in all companies in the S&P 500, one of the most popular kinds of funds?

Coates, of Harvard, argues that policymakers will have to move carefully to manage the dangers of concentration without limiting the benefits to investors of these firms’ low-cost funds. “No doubt getting the balance right will require judgment and experimentation,” he wrote.”

Short and Long Positions explained – Univ of Nebraska-Lincoln – business.unl.edu/

The Short Position – Sell High, Buy Low
The Short Position is a technique used when an investor anticipates that the value of a
stock will decrease in the short term, perhaps in the next few days or weeks. In a short
sell transaction the investor borrows the shares of stock from the investment firm to sell
to another investor. Investment firms normally have a large inventory of stocks on hand
or can borrow stock from another firm to loan to the investor. Of course, the investor
must eventually return the stock they borrow. The intent is to borrow the stock for sale
at a high price, then buy them back later at a lower price to and return them to the
stockbroker.

Click to access The%20Long%20or%20Short%20Position.pdf

Larry Fink’s Letter to CEOs Says Stakeholder Capitalism Is Not ‘Woke’ – The New York Times

https://www.nytimes.com/2022/01/17/business/dealbook/larry-fink-blackrock-letter.html

By Andrew Ross Sorkin and Michael J. de la Merced

Jan. 17, 2022

“Laurence D. Fink, the founder and chief executive of the investment giant BlackRock, has become one of the most influential voices in business over the past decade in pushing corporate leaders to think beyond profits, to their social purpose.

Mr. Fink has delivered his words in annual letters that have drawn remarkable attention, but also criticism from all corners: that he is beholden to politically correct antibusiness activists, or that he is co-opting these issues for marketing purposes.

On Monday night, he used his latest letter to corporate America to clarify — and defend — his approach.

“Stakeholder capitalism is not about politics,” Mr. Fink wrote to the chief executives of businesses that BlackRock has invested in. “It is not ‘woke.’ It is capitalism.” “

What (the F) is NFT? Non-fungible tokens explained – CNN

“New York (CNN Business)Non-fungible tokens, or NFTs, are the latest cryptocurrency phenomenon to go mainstream. And after Christie’s auction house sold the first-ever NFT artwork — a collage of images by digital artist Beeple for a whopping $69.3 million — NFTs have suddenly captured the world’s attention.

So what are NFTs?

In the simplest terms, NFTs transform digital works of art and other collectibles into one-of-a-kind, verifiable assets that are easy to trade on the blockchain.

Although that may be far from simple for the uninitiated to understand, the payoff has been huge for many artists, musicians, influencers and the like, with investors spending top dollar to own NFT versions of digital images. For example, Jack Dorsey’s first tweet sold for $2.9 million, a video clip of a LeBron James slam dunk sold for over $200,000 and a decade-old “Nyan Cat” GIF went for $600,000.”

Source: What is NFT? Non-fungible tokens explained – CNN