Posts by Rick Newman

  • 5 crazy, scary things about China's big military parade

    Rick Newman at Yahoo Finance 14 hrs ago

    China is gearing up for an extravagant, Cold War-style military parade on Sept. 3, with 12,000 troops marching through Beijing. Hundreds of pieces of military equipment will be on view, many of them new weapons meant to counter U.S. naval power and intimidate neighbors such as Taiwan and Japan. “The parade is all about signaling China’s strength and invulnerability,” says Jane’s Defense Weekly. Here’s what is really going on:

    5. Putin will be there. Leaders of several nations have declined invitations to attend, but Russia’s Vladimir Putin will be in the stands, checking out the hardware as it files by. His attendance is fitting, since many Chinese weapon systems are modeled after Russian technology. And Putin, of course, will feel right at home at a parade recalling the glorious May Day parades of the Cold War, which Russia mothballed after the Berlin Wall fell, but started up again in 2014. Are we entering a new Cold War, with China and Russia back in the role of hardcore U.S. adversaries? Putin and Xi may discuss exactly that.

  • It's amateur hour in China

    Rick Newman at Yahoo Finance 1 day ago

    This is the next superpower?

    You’ve got to be kidding.

    Anybody expecting China to dominate the world must be wondering how the Keystone Kops managed to take over the Politburo in Beijing. China has embarked on a long odyssey to prove that capitalism can work within the confines of a communist government. There have been many impressive successes. But the failures—including those we’ve seen on display this summer—reveal that China is nowhere near the global powerhouse it imagines itself to be or some western declinists fear it will become.

    The follies in China’s financial markets during the past two months have mainly been driven by the communist government’s failed effort to manipulate stock prices as it sees fit. Beginning in 2014, the central government began urging people to buy stocks, as a way to divert money from real estate and deflate a dangerous property bubble. People obeyed, and it seemed to work for a while. By June, the Shanghai stock market (000001.SS) had soared by 150% since last summer.

  • Why rich political donors are wasting a lot of money

    Rick Newman at Yahoo Finance 1 day ago

    With Emma Peters

    Sheldon Adelson, the casino magnate, is a self-made billionaire whose knack for business has helped him amass an enormous $28 billion fortune, according to Forbes. His winning percentage in politics, however, is far below his success rate in business.

    Adelson and his wife Miriam have become political megadonors, giving roughly $100 million to federal candidates and groups supporting them during the last two election cycles, including failed presidential candidate Newt Gingrich in 2012. Only 56% of the candidates backed by Adelson won during those two cycles. That’s slightly better than the odds of winning a coin toss, yet it’s far below the reelection rate for incumbents, which exceeds 90%. And the winning percentage of candidates backed by political-action committees Adelson gave money to was just 42%, the worst performance among the 10 biggest megadonors in politics today.

    * Wealthy donors of both parties often back losing candidates, partly because they align themselves with strident left- or right-wingers who have a hard time winning over mainstream voters.


  • How ETF investors messed up during this week’s market scramble

    Rick Newman at Yahoo Finance 6 days ago

    During tumultuous trading on the morning of Aug. 24, the S&P 500 stock index never fell by more than 6%. But some exchange-traded funds meant to mimic the performance of the S&P 500 plunged by 30% or more.

    Something obviously went wrong. And it had more to do with ordinary investors making mistakes than with flaws in the exchanges or technical glitches.

    ETFs have become popular because they let investors purchase a pool of securities, just as mutual funds do, but trade all day at varying prices, similar to the way stocks trade. Mutual funds, by contrast, only price once per day, usually at the end of a trading session. The free-floating prices of ETFs allow active investors to take advantage of price swings and other market dynamics in real time. Americans now hold about $2 trillion worth of ETFs, more than twice the value of just 5 years ago.

    But in a panicky market with heavy selling, there can be major distortions. Bid and ask prices can change abruptly, and the largely automated market makers who match buyers with sellers might create large gaps between the two, to signal a problem and coax traders to chill on the sidelines until prices normalize.

  • It’s foolish to blame Obama for stock-market woes

    Rick Newman at Yahoo Finance 8 days ago

    It’s Obama’s fault.

    Expect to hear that a lot during the next 15 months as Republican presidential hopefuls blame everything imaginable on the president whose party they want to bounce from the White House.

    Recent turmoil in the stock market, for instance, is Obama’s fault, according to Republicans Donald Trump, Scott Walker, Chris Christie and others. Trump, for instance, said of China, “they’ll bring us down. We have nobody that has a clue.” Then he said President Obama should cancel the upcoming state dinner with Chinese president Xi Jinping and give him a double Big Mac instead. Walker argued that “We need to see some backbone from President Obama on U.S.-China relations." And Christie said the stock-market sell-off resulted from “a history of failed policies by this president.”

    Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman .

  • 5 reasons to stay calm as the stock market quakes

    Rick Newman at Yahoo Finance 9 days ago

    Okay, so it’s not the best way to end the summer. August is usually a dull month on Wall Street, but this year it’s an all-hands event as stocks plunge and investors brace for more. So far, the S&P 500 stock index (GSPC) has fallen by about 9% for the month and 8% for the year.

    But that doesn’t mean end times are nigh or we’re facing another recession. A falling stock market usually damages consumer confidence, as investment accounts fall in value and scary headlines dominate the news. But the market doesn’t always reflect what’s happening in the real economy, and most ordinary people aren’t harmed by short-term declines in the stock market. Here are 5 reasons not to worry too much about the latest market gyrations:

    Stocks are still up sharply over the last 6 years. The bull market rally began in March of 2009. The S&P 500 is still up 187% since then -- a huge rally. In that context, the 8% decline we’ve seen this year is a tiny squiggle on an otherwise upward line.

  • Ashley Madison needs way more women

    Rick Newman at Yahoo Finance 13 days ago

    Infidelity may be big business, as the founder of cheating site Ashley Madison used to insist. But a glimpse at its customers’ activity shows that the business depends heavily on men with unrealistic expectations—bordering on fantasy—of what they’re likely to get for their money.

    Since hackers posted records on roughly 36 million Ashley Madison customers, with more possibly to come, the world has been gorging on titillating insights into the habits of cheaters. The data, however, may highlight disappointment more than anything else. The real product Ashley Madison is selling may be the hope of sexual excitement, rather than excitement itself.

    Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman .

  • Donald Trump’s first 100 days as president

    Rick Newman at Yahoo Finance 14 days ago

    What if the political-media establishment is wrong? What if Donald Trump really is electable? What if donkeys fly and Trump actually wins the White House in 2016?

    What then?

    We studied economic and social policies Trump has endorsed--and applied a bit of imagination--to conjure this rendition of how President Trump’s first 100 days in office might go:

    January 20, 2017: In his inaugural speech, Trump assures the nation it now has a “dealmaker in chief” who will renegotiate all the lousy agreements from the last two administrations. He singles out Iran, Iraq, South Korea, China, Mexico, Rosie O’Donnell and Heidi Klum by name. Stock markets fall 4% on fears of trade wars and global tension.

    First full day in office: After his first close-up glimpse of Air Force One, Trump decides to fly on his own 757 instead because the presidential jet is "too dumpy." "Leave it to the govenrment to build a piece of crap like that," he tells reporters in a kickoff press conference.

  • Here are the politicians Donald Trump has 'bought'

    Rick Newman at Yahoo Finance 26 days ago

    Donald Trump has given more than $1 million to politicians during his multifaceted career. But he’s not as generous as he made it sound during the first debate among leading Republican presidential candidates.

    During the Aug. 6 debate, Trump said of his nine fellow candidates: “Most of the people on stage, I've given to. A lot of money.” But state and federal donation records show Trump has only given to three of those nine candidates, and not in very large sums. He’s donated to just one of the other seven GOP candidates who weren’t included in the debate. And Trump has also given to Hillary Clinton, so of the 22 major declared candidates of both parties, Trump has donated to five of them.

    Here’s a breakdown:

    Mike Huckabee. In 2012, Trump gave $2,500 to the former Arkansas governor’s political-action committee, known as Huck PAC. As donations go, that’s a fairly small one.

  • How to get rich by running for president

    Rick Newman at Yahoo Finance 28 days ago

    The year 2008 was great for Mike Huckabee—but not as a politician. The former Arkansas governor bailed out of the presidential race in March of that year after losing steam in the early primary elections. But simply running for president elevated Huckabee to the status of celebrity, while helping him build a devoted following among southern and Midwestern evangelicals. Huckabee has since converted the renown that comes with running for national office into a business enterprise that has made him wealthy, with a palatial beachfront home, access to private jets and other perks of the 1%.

    Figures in most cases are for the 15 months ended March 31 of the year in question.

    Sources: Federal Election Commission, Center for Responsive Politics