Happy Friday! There are more good news articles, commentaries, and analyst reports on the Web every week than anyone could read in a month. Here are eight fascinating ones I read this week.
What goes around comes around
China is managing its demographic crisis in peculiar ways, writes Bloomberg:
From July 1, parents in China can sue their kids who don’t visit often enough, under a broadened law mandating children take better care of the aged. With China’s elderly population forecast to more than double to 487 million in the next 40 years, the government needs to try and limit the cost of caring for seniors.
Harder than it looks
Sam Ro cites data from LongBoard Asset Management on the return of 3,000 stocks from 1983 to 2007:
- 39% of stocks were unprofitable investments.
- 19% of stocks lost at least 75% of their value.
- 64% of stocks underperformed the index.
- 25% of stocks were responsible for all the market’s gains.
The Wall Street Journal reports on the bleak state of American savings:
Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes, according to a report to be released Tuesday by the Employee Benefit Research Institute. Only 49% reported having so little money saved in 2008.
The survey also found that 28% of Americans have no confidence they will have enough money to retire comfortably -- the highest level in the study's 23-year history …
Only about half of the 1,003 workers and 251 retirees surveyed said they were sure they could come up with $2,000 if an unexpected need were to arise in the next month.
Fits and starts
Former Treasury secretary Larry Summers writes about the life of a financial crisis:
There is a striking difference between financial crises in memory and financial crises as they actually play out. In memory, they are a concatenation of disasters. But as they play out, the norm is moments of panic separated by lengthy stretches of apparent calm. It was eight months from the South Korean crisis to the Russian default of 1998, six months from Bear Stearns’ demise to Lehman Brothers’ fall, and there were several 30 per cent stock market rallies between 1929 and 1933.
Other side of the trade
For years, it was assumed that investing overseas would protect you from a falling dollar. But now, a rising dollar is threatening profits:
U.S. companies that sell goods and services abroad are bracing for a big hit in the current quarter, as the beaten-down yen and euro threaten to take big bites out of sales.
Large U.S. companies disclosed more than $50 billion in losses related to currency swings last year, compared with $22 billion in gains the previous year, according to data from FiREapps, a currency-risk-management consulting firm.
Philip Morris International (NYSE:PM) and Corning (NYSE:GLW) are two companies taking a walloping, disclosing currency losses of $284 million and $27 million, respectively, last quarter, the article writes.
Note: You can bypass most of these hits by investing in a low-cost, commission-free ETF through Vanguard in a tax-sheltered Roth IRA.
Even more interesting than the growing Prime ranks is what Prime seems to do to subscribers. A 2010 Businessweek story stated that Amazon Prime broke even within three months of launching, not the two years predicted by its creators. That’s because customers spent as much as 150% more at Amazon after they became Prime members. Subscribers not only ordered more often, but after paying the $79 fee, they started buying things at Amazon that they probably wouldn’t have in the past. Since shipping was always speedy and free, members saved themselves a trip to the store for things like batteries and coffee beans.
In another sign of economic strength, Calculated Risk shows that hotel occupancy is nearing pre-recession levels:
Enjoy your weekend.
Morgan Housel owns shares of Philip Morris International. The Motley Fool recommends Amazon.com and Corning. The Motley Fool owns shares of Amazon.com, Corning, and Philip Morris International. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.