- Worse than the White House, the Fed and the banks…
- … this one factor might pose the biggest threat to your wealth
- A caveat to the “lowest unemployment claims since 1973”
- The biggest winners from the Supreme Court Obamacare ruling
- Rent-a-chicken: Solution to high egg prices?
- How long can the reflated housing market hold on?… a tale of two silver bar videos… why two weeks from today is really important… and more!
What poses the biggest threat to your financial well-being today?
Maybe you’re thinking it’s the president. Or the Federal Reserve. Or the too-big-to-fail banks. If you’re paying heed to our Jim Rickards, you’re anticipating the October meeting of the International Monetary Fund — where the card deck of global currencies might get reshuffled to the detriment of the dollar.
Those are all valid answers. But the biggest threat you face might well be the one you stare at in the mirror. Looked at another way, this threat also manifests itself in the bedroom.
Got your attention, huh?
Before we get too far afield, a quick personal story.
In retrospect, it’s a wonder your editor is here to tell the story.
Only a few months out of college, I was producing the 6 and 11 o’clock newscasts at a TV station in Terre Haute, Indiana. After my shift was over one Friday night, I threw a duffel bag into my Chevy Citation — yeah, I’m dating myself — for a 3½-hour drive north to see my mom that weekend in suburban Chicago.
The last thing I remembered was tooling up U.S. 41 around 65 miles an hour. The next thing I remembered was doing a 360 on the pavement and the shoulder — several times — trying to regain control of the vehicle.
In the interim, I’d fallen asleep.
I landed in the ditch. At least the car remained horizontal the whole time. Heck, I didn’t have a scratch. And the car had minor rear-end damage you could see only if you looked really hard. After the adrenalin rush abated, I returned to the highway, humbled.
No, I didn’t tell my mom upon my arrival. It would have worried her sick.
It was a vivid lesson early in my adult life about the need for quality sleep, and enough of it. It’s stuck with me.
Among the many consequences of poor sleep: It dissipates your ability to make sound financial decisions.
In 2011, researchers at Duke University conducted an experiment with 29 volunteers, average age 22. They had to perform a series of economic-decision making tasks twice. Once was at 8:00 a.m. after a normal night’s sleep. The other was at 6:00 a.m. after a night of sleep deprivation. Their brains were monitored with an MRI.
What the scientists found was fascinating: Sleep deprivation stimulates areas of the brain that anticipate positive outcomes… and it suppresses other areas of the brain that anticipate negative outcomes.
In other words, a lack of sleep can make you overoptimistic when weighing questions about your money.
The researchers say their results bear out what the casino industry discovered by trial-and-error long ago: “Late-night gamblers are fighting more than just the unfavorable odds of gambling machines,” says the study’s lead author, Vinod Venkatraman. “They are fighting a sleep-deprived brain’s tendency to implicitly seek gains while discounting the impact of potential losses.”
In other words, try to think twice about hitting the “buy” button on that hot stock if you’re not well rested.
Of course, poor sleep has any number of other nasty consequences. Only yesterday, news sites were abuzz with results from two new studies.
One, by British researchers, finds poor sleep leads to a higher incidence of cancer in mice. It suggests shift workers are at higher risk than other people.
The other study, performed with human subjects in Sweden, finds that even one poor night of sleep can damage the genes that control our biological clocks. The researchers say their next step is to find out how readily that damage can be reversed.
But you probably don’t need us to tell you how a poor night’s sleep messes up your quality of life. You might be living that reality right now.
Even if it’s a problem you suffer only now and then, you should know about the “sleep gateway” that can make or break a good night’s sleep… and how to pass through that gateway every night, effortlessly.
You can learn all about it in a FREE special report from our friend Brad Lemley. No obligation, no strings attached. Just shoot us your email address and we’ll get it to you right away. Here’s where to sign up.
To the markets: The major U.S. stock indexes are regaining their footing after yesterday’s losses. The S&P 500 is ruler-flat at 2,114. The Dow is slightly in the red, the Nasdaq slightly in the green.
Gold tried to clamber back above $1,100 overnight but as we write is stuck at $1,094.
The big economic number of the morning is first-time unemployment claims. At 255,000 last week, the number is its lowest since 1973. Which sounds nice, but says nothing about the millions of people who’ve given up looking for work ever since the “Great Recession.”
The big merger-and-acquisition news is in the bloated health insurance sector. Anthem, we’re told, is only hours away from wrapping up a deal to buy Cigna for $48 billion. Cigna is the No. 5 health insurer by revenue. Anthem would still be No. 2 behind UnitedHealth once the deal’s done.
It was the health insurance stocks that thrived when the Supreme Court upheld Obamacare in 2012. In contrast, when the court upheld Obamacare subsidies last month, it was hospital stocks that benefited most — jumping as much as 10% the day of the ruling.
“It’s not as if hospitals didn’t already have the wind at their backs,” says our Chris Mayer, teasing out the implications.
“There are 10,000 baby boomers turning 65 every day — and every day for the next 14 years. Older people are heavier users of hospitals, as you’d expect.
“But there’s a certain subset that’s growing faster than full-service hospitals: ambulatory surgical centers (ASCs). These facilities focus on same-day surgical care.” So they’d do laparoscopic surgery on your knee, but not open-heart surgery.
“ASCs are a $35 billion fast-growing industry. The trend is toward more outpatient procedures at ASCs. Twenty years ago, 30% of all surgeries were outpatient. Today it’s 70%.”
A well-run business in this sector prints money, says Chris: “For any procedure, there are three fees for the patient. There is a fee paid to the physician, billed by physician. There is an anesthesiology fee, billed by the anesthesia provider. And there is a facility fee for use of the facility.”
It’s that last fee an ASC collects, paid by the patient’s insurer. And it’s high-margin. A foot operation can cost as little as $1,000, but the ASC collects as much as $20,000. Little wonder Chris has named one of these outfits for readers of Mayer’s 100x Club.
[Ed. note: We’re only days away from taking the wraps off Chris’ new 100-baggers book — telling all about the companies that can turn every $10,000 invested into $1 million. Watch this space…]
We’re not sure if it’s “a solution to soaring U.S. egg prices,” as the Reuters newswire would have it… but we’re intrigued by the thought of rental chickens.
Jenn and Phil Tompkins started their rental-chicken business in western Pennsylvania two years ago. Since then, “they have rented chickens, either directly or through affiliates, to about 200 customers in 12 U.S. states as well as Ontario and Prince Edward Island in Canada.”
For roughly $400, you get two laying hens over the four-six warmer months of the year — and a coop and a guidebook. The hens produce eight-14 eggs a week. When the “lease” is up, you can return the hens or take advantage of an option to buy.
Reuters says interest has picked up recently thanks to the 85% surge in egg prices last month — touched off by an outbreak of bird flu in the Midwest and West.
But that’s not the Tompkins’ motivation: “It changes the mindset of people when they know where food comes from,” says Jenn Tompkins. “Pretty soon they’ll have tomato plants and be turning the chicken manure into compost.”
Nifty…
“I see the reported figure of $236,400 as the new average home sale price and wonder how long it can last,” a reader writes after yesterday’s episode.
“We have interest rates subsidized by all the savers in this country and by a computer at the Federal Reserve. Prices are up only because interest rates are down, and they are down because the Federal Reserve and the government are conspiring to try to hold them at that level.
“If the Federal Reserve loans money out at zero and then pays 0.25% on the overnight reserves, how can anyone believe this is a free market economy? It’s not, it’s manipulated, and no matter what anyone believes, there will be a price to pay for this manipulation.
“There are other factors that seem to contradict higher home prices also. The labor participation rate is at an all-time low, so who is buying all of these houses? The average wage per worker has stagnated for years, and if adjusted for inflation has actually gone down. So how can the average home price rise by 10% a year? Then realize that 97% of the first-year mortgage payment is applied to the interest charged on a 30-year fixed rate mortgage. This makes the payment on a $236,400 mortgage at 4% almost the same as the payment on a $118,200 mortgage at 8%.
“If mortgage rates are determined by the free market, to which 8% is closer to the norm, what will happen to home prices? If the Federal Reserve and the government continue down their current path, all other goods and services will have to inflate to the same level, and that is a nightmare that is understood by few and prepared for by even fewer.”
The 5: No argument here. Chew on this: U.S. median household income was $51,939 in 2013. That means the average house price is almost 4.6 times median household income. At the peak of the housing bubble in 2006, the ratio was 5.1 times.
Just remember, though, interest rates have stayed far lower for far longer than the “expert consensus” was expecting. During the “taper tantrum” of 2013, the yield on a 10-year T-note zoomed up from 1.6% to 3% in six months. At the start of 2014, “everybody” knew rates could go only higher still. But this morning, the 10-year yields 2.34%.
Right now, “everybody” knows the Fed will start to raise the fed funds rate by the end the year. Janet Yellen keeps saying it herself. That doesn’t make it true…
“The silver bar story got legs in your mailbag,” writes one of our crankier readers (the one who dubbed our trading desk “chart chimps”), “because you misrepresented the situation as someone — Mark Dice — trying to ‘sell’ the bar. And then you say the moron who wrote made an excellent point, when he hadn’t.
“At least you clarified that he was GIVING away a choice of a candy bar or a 10-ounce bar of silver by posting the link, but why then include a note from someone who repeats the falsehood that Dice was trying to sell the bar and his distrust of people trying to ‘hawk’ things on the street?
“It’s clear Dice had received feedback from previous ‘Jaywalking’ outings that he needed to make this a giveaway versus trying to sell something very valuable for almost nothing, because yeah, you don’t know what kind of scam somebody on the street might be working.
“So he changes his MO and offers people a choice of two free things… and you STILL try to invalidate the remarkable responses he got by mumbling some s*** about some creepy guy on the street trying to sell something.
“G**d*** it. Tell the truth.”
The 5: Chill out, buddy. Using the magic of YouTube’s search function, we see Mr. Dice prepared two silver-themed videos within the last month. In the earlier one, he tries to sell a 10-ounce silver bar for $10. In the later one, he offers people a choice of a free candy bar or a free 10-ounce silver bar.
Is it possible — just possible — that the guy who first wrote in and started all this saw the first video and not the second? And how would we know that he was “wrong” in your mind until other folks wrote in referring to the second video? Y’know, we do have things to do around here each day besides keeping up with every viral video that comes down the pike.
Anyway, thanks for furnishing the quality entertainment…
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. Two weeks from today might turn out to be a turning point in U.S. history — as big as the first moon landing in 1969, in fact.
It could be a huge day for NASA, America and YOU…
That day — 46 years and 17 days after Americans heard the words “The Eagle has landed” — we may see confirmation of what could be NASA’s biggest “discovery” ever.
This “discovery” has the power to usher in a new era of prosperity for you and your family.
Click here for the full details on this important date for Americans.
