Embracing CHANGE at CH Insurance Your business is experiencing change. Your family and your community are changing. Just like for you, at CH Insurance, change isn’t just inevitable, it’s essential. Building on our first two cornerstones of Conversation and Collaboration, we introduce our third: CHANGE. As we continue to super-serve the communities we live and work in, we understand that embracing change is key to growth and innovation!
Employees, clients and partners can attest, the Team here is committed to ever-adapting and evolving. That includes new technologies, systems, policies, training/onboarding, wellness initiatives, and certainly the products and services we continue to expand. These aren’t just words for us – they’re the foundation for ensuring we’re in your corner… every day, every way.
We’re talking about the four cornerstones at CH Insurance, and Joe today is the third cornerstone, and that cornerstone is really the essence of today’s world: Change. How does CH Insurance embrace change… ensuring it always stays true to its commitment?
Well, I think in all businesses, change is constant. We’ve embrace it as an opportunity to innovate these last few years. We have the marketplace, we have the different changes with regulations, and we have to accept change. And by adapting to cutting edge technologies, it evolves. Our strategies makes us better. We’re always one step ahead by adapting to change. Here at CH, we better support our clients by demonstrating to them we’re in their corner, no matter what shifts or changes come their way in their personal or business lives. Being adaptable in today’s world is the only way we thrive here at CH Insurance,
The four cornerstones allow us to live our promise to you. We’re in your corner every day, every way.
Just 26 sleeps to go until the new government’s first Budget on Wednesday 30 October. And I cannot recall there ever being so much pre-match jitters.
I could have filled the links below with forecasts, evasive action tips, and threats to emigrate. Hardly what anyone would call a honeymoon period, let alone the good vibes of Tony Blair’s 1997 win.
Even those who didn’t vote for Blair admitted the national mood music went up a level overnight. This time the change has been more like somebody coming in, turning the music off and the lights on, and telling everyone to sod off home.
And I say that as someone who has more sympathy than most with the view that the State’s finances are atypically feeble.
There have been worse economic periods, for sure. Seldom did they unfold though while so many in power gaslighted us with tall tales about how great things were – and millions believed them.
(In short: where did you spend your ‘Brexit dividend’, eh?)
Black rod
With that said, Labour made a rod for its own back by waiting so long to hold the Budget.
It’s like sitting outside the headmasters’ office all day before you’re seen. Almost as bad as the punishment!
For my part I haven’t much to add beyond what I wrote in my articles on the potential capital gains tax (CGT) hike and whether CGT fears could be presenting us with opportunities.
Monevator readers added tons of value in the comments to both articles, incidentally. Go read them if you haven’t.
I would also note that in less than four week’s time the picture will be clear.
ISAs
If you plan to fill your ISA, I say get on with it ASAP. It’s hard to see a downside, given the risk of a cut to the annual allowance.
In practice I suspect any new ISA rules would begin from April next year. Still, why risk it?
However I certainly wouldn’t take out ISA money fearing withdrawals could be taxed in the future. I wouldn’t risk shrinking my ISA tax shield on the very unlikely odds of retrospective taxation.
(Exception: if you have a flexible ISA and if you can definitely put the money back in post-Budget Day if required, different story…)
Pensions
Pensions are trickier. There are reports of people cashing in their tax-free lump sums now or maximising their contributions, in case the rules change.
Yet the former might not be tax optimal for you if nothing changes (depending on wildly varying personal circumstances) while if you’re stretching yourself to load up your pension, you could face other day-to-day spending difficulties. Remember, pension money is locked away for the long-term.
This is not to go into the myriad edge cases that dance around on the threshold of pension drawdown and the like. Take care whatever you do.
Calm before the storm-let
Finally beware of excessive panic due to someone else’s political agenda.
The right-wing papers are having a field day – and worries around pensions and the like are a pre-Budget staple anyway.
But usually not too much happens in practice.
Personally I do expect some things to change but not everything. And I’m not going to do anything hugely radical on the back of that.
Have a great weekend.
From Monevator
The Slow and Steady passive portfolio update: Q3 2024 – Monevator
From the archive-ator: Fixing your financial posture – Monevator
News
Note: Some links are Google search results – in PC/desktop view click through to read the article. Try privacy/incognito mode to avoid cookies. Consider subscribing to sites you visit a lot.
Huge shift in interest rate predictions as BoE chief says cuts could be more ‘aggressive’ – Sky
The US added 250,000 jobs in September, defying fears of a slowdown… – Guardian
…but UK economic growth was slower than thought in spring – BBC
New HMRC figures show £1.4bn sits unclaimed in Child Trust Funds – Which
Reeves urged to end panic over pension tax raid… – Telegraph via Yahoo Finance
…while chancellor vows to “Invest, invest, invest” [Search result] – FT
OpenAI raises $6.6bn in largest venture capital round ever – Axios
Record quarterly global ETF flows just topped half a trillion dollars – FT
England urged to bring in minimum price on alcohol – Guardian
The listed companies still adding Bitcoin to their balance sheet – BlockWorks
The Chinese market has suddenly gone vertical – Axios
Products and services
Five big banks cut their mortgage rates – This Is Money
Lloyds Bank offering a £200 switching bonus – Which
Get £100-£2,000 cashback when you open a SIPP with Interactive Investor (T&Cs apply. Capital at risk) – Interactive Investor
How to get a mortgage if you’re self-employed – This Is Money
Supermarket Christmas delivery slots – Be Clever With Your Cash
Nearly one in three who check their credit report find mistakes – Which
Open an account with low-cost platform InvestEngine via our link and get up to £50 when you invest at least £100 (T&Cs apply. Capital at risk) – InvestEngine
eBay scraps fees for most sellers – This Is Money
How to get a free will this month – Which
Homes for sale close to British woodland, in pictures – Guardian
Comment and opinion
Single people feel penalised on prices – Guardian
Bill Bengen: 4% and beyond! [Podcast] – Humans vs Retirement
Perfection versus greatness – Root of All
The S&P 500 is having its best year of the 21st Century so far – Sherwood
As withdrawals surge, five questions to ask before accessing your pension – Which
Retiring smarter – Humble Dollar
Does the bucket approach to retirement income work in practice? – Morningstar
Once again: imports do not subtract from GDP – Noahpinion
Artificial advisor mini-special
Can A.I. turn you into Warren Buffett? – The Hungarian Contrarian
Your next financial advisor will be on an app – Bloomberg via W.M.
Naughty corner: Active antics
New titans of Wall Street: How trading firms stole a march on big banks [Search result] – FT
The beginning’s of a private equity ‘super-cycle’? [PDF] – Dawson
How Manchester United loses money – Sherwood
Even enemies of the US hold dollar reserves – Klement on Investing
A majority of US active bond managers beat the market – II
Kindle book bargains
Failed State: Why Nothing Works and How to Fix It by Sam Freedman – £0.99 on Kindle
Technofeudalism: What Killed Capitalism by Yanis Varoufakis – £0.99 on Kindle
Bad Blood: Elizabeth Holmes and the Theranos Scandal by John Carreyrou – £0.99 on Kindle
Casino: The Rise and Fall of the Mob in Las Vegas by Nicholas Pileggi – £0.99 on Kindle
Environmental factors
Solar boom in China turns energy prices negative – Semafor
UK to finish with coal power after 142 years – BBC
The poachers who could save Mexico’s mini-porpoises – Hakai
Robot overlord roundup
Ray Ozzie on the future of intelligent machines [Podcast] – I.L.T.B.
Chatbots might ease the loneliness epidemic – Freethink
A.I. put my dad out of a job and I’m worried – Financial Samurai
A day in the life of a food delivery robot – Sherwood
The Contentapocalypse is coming – Epsilon Theory
The US dockers strike is a microcosm of Us vs The Machines – Kyla Scanlon
How the steam engine can help us make sense of AI – Morningstar
Off our beat
Even Americans think their anachronistic democracy needs reform – Pew Research
Can liberals be trusted with liberalism? [Search result] – FT
The Gambler’s (non) Fallacy – The Leap
How bad is inflammation, really? – Vox
Evidence of ‘negative time’ found in physics experiment – Scientifica American
What Wall Street’s pioneering women put up with – WSJ [h/t Abnormal Returns]
Living in a material world [Podcast] – A Long Time in Finance
A brief history of Lebanon – Uncharted Territories
Growth means choosing a different kind of pain – Raptitude
And finally…
“If he had learned anything from his parents, he learned that business was a matter of relationships.” – T.J. Stiles, The First Tycoon: The Epic Life of Cornelius Vanderbilt
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Welcome to The Market’s Compass Emerging Market’s Country ETF Study, Week #509. As always, it highlights the technical changes of the 20 EM Country ETFs that I track on a weekly basis and publish every third week. Paid subscribers will receive this week’s unabridged Emerging Market’s Country ETF Study sent to their registered e-mail. Free subscribers wi…
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
More than 100 people have been killed in Nigeria after they rushed to scoop up petrol from a tanker that overturned and then caught fire, police said on Wednesday, as the country’s citizens struggle with a surge in fuel prices.
The incident was the latest fatal tanker explosion in Nigeria, where petrol and other fuels are transported in lorries over long distances and often on poorly maintained roads.
The accident took place late on Tuesday in the town of Majia in northern Jigawa state, nearly 600km from the capital Abuja. Lawal Shiisu Adam, the state’s police spokesperson, said the tanker had been ferrying fuel from Kano, the economic capital of northern Nigeria, to Yobe state via Jigawa when the driver “lost control” of the tanker.
Adam said police cordoned off the area after the crash but were soon overwhelmed by a crowd who rushed to collect spilled fuel. Videos posted on social media showed a fiery inferno. Scores of people were also injured in the blast.
Fuel prices have increased nearly fivefold over the past year following the government’s decision to cut fuel subsidies and a slide in the naira currency, which has lost about 70 per cent of its value against the dollar since June.
Nigeria’s state-owned oil company last week increased petrol prices by more than 15 per cent, marking the second rise in less than a month and the formal end of its costly subsidy programme.
In the absence of an efficient rail network to move goods across the vast nation, fuel is usually transported in tankers over long distances by road. The country has an under-developed road network that is patchy in many areas and traffic rules are not strictly followed or enforced.
Accidents involving fuel transportation in Africa’s most populous nation are frequent, with Nigerians often rushing to accident scenes to salvage fuel in buckets and other containers from the tankers.
Last month, almost 60 people died after a collision between a fuel tanker and a truck containing passengers and cattle in north-central Niger state. Nigeria’s road safety agency reported that more than 5,000 people were killed in road crashes last year, but the World Health Organization estimated the number at closer to 40,000, arguing that many accidents are not reported to authorities.
Africa accounts for 19 per cent of road traffic deaths despite having 15 per cent of the global population and only 3 per cent of the world’s vehicle fleet, according to WHO data.
Sani Umar, a resident who escaped the fire, was quoted by the local Channels TV that the episode was “terrifying”.
Umar added: “People were running in all directions, screaming for help. The fire spread so quickly that many couldn’t escape.”
Whether it’s refining your business model, mastering new technologies, or discovering strategies to capitalize on the next market surge, Inman Connect New York will prepare you to take bold steps forward. The Next Chapter is about to begin. Be part of it. Join us and thousands of real estate leaders Jan. 22-24, 2025.
With less than a month to go until the Nov. 5 election, voters are starting to get a clearer picture of where the candidates in the 2024 presidential race stand on housing issues — although sifting through the rhetoric for the details of actual policies can be a challenge.
Housing policy got short shrift in the Sept. 10 debate between candidates Donald Trump and Kamala Harris, with Harris touching only briefly on a couple of her housing proposals, and Trump providing no insight on his.
Just one example of how the housing discussion often went off the rails: When Harris invited Trump to “talk about our plans” — including her proposal to provide $25,000 in down payment assistance to first-time homebuyers — Trump responded with three assertions that fact-checkers deemed false.
“She is destroying our country,” Trump said. “She has a plan to defund the police. She has a plan to confiscate everybody’s gun. She has a plan to not allow fracking in Pennsylvania or anywhere else. That’s what her plan is until just recently.”
Harris was also taken to task by fact checkers for some of her assertions — including a claim that “Donald Trump left us the worst unemployment since the Great Depression.”
As PolitiFact noted, unemployment soared to 14.8 percent at the outset of the pandemic. But by the time Trump left office, unemployment had fallen to 6.4 percent.
With economists at Fannie Mae predicting 2024 might be the worst year for home sales since 1995, anyone who tuned in to last month’s debate hoping to hear how the next president plans to turn things around might have been disappointed.
National Association of Home Builders executives Jim Tobin and Paul Lopez devoted the trade group’s weekly podcast to the subject, “Why Was Housing Not at the Forefront of the Presidential Debate?”
Tobin, for one, blamed the lack of substantive discussion on the moderators.
“I’m completely disappointed in the lack of a real policy discussion,” Tobin said. “Certainly, going into this, we were fully expecting housing to at least be one of the main questions. Turns out that the moderators didn’t want to go down that road for some reason. So that was really, really frustrating.”
Vice presidential candidates tackle housing
But the Oct. 1 faceoff between the candidates’ vice presidential running mates — Democrat Tim Walz and Republican J.D. Vance — was widely praised as more substantive. Thanks in part to prompts from CBS News moderator Margaret Brennan, both candidates managed to at least dip their toes into housing policy.
Walz talked up the Harris campaign’s promise to provide tax incentives and government funding with the goal of helping build 3 million homes.
Vance stayed focused on Trump’s claims that inflation and illegal immigration are driving up home prices, and that federal lands could provide cheap land for new housing.
In broad terms, the Harris campaign’s housing platform sees a lack of housing supply as the main problem, and government as the solution, promising “the most significant effort to expand housing supply since World War II.”
Harris and Walz have also cast “large corporate landlords” and “Wall Street investors” as villains, claiming algorithmic price fixing is driving up rents, and that institutional investors are making single-family homes more scarce by buying them up in bulk.
Trump’s platform and campaign rhetoric portray inflation, burdensome regulations, and demand from illegal immigrants as drivers of America’s housing woes — and points the finger of blame for all of those issues at the Biden administration.
Apart from a crackdown on illegal immigrants — if reelected, he has promised to “carry out the largest deportation operation in American history” — Trump’s solutions for housing largely consist of getting the government out of the way.
Although not mentioned in his platform or during either debate, during his first term in office Trump initiated the process of privatizing Fannie Mae and Freddie Mac. The mortgage giants have been seen by Democrats as vital in achieving affordable and equitable housing goals — particularly since they were placed in government conservatorship in 2008.
While former Trump administration officials are once again reportedly formulating plans to remove Fannie and Freddie from government conservatorship, that was seen as too wonky of a subject to delve into during the Oct. 1 vice presidential debate.
Nor was there a discussion of federal policy and legislative issues that are top concerns for housing industry groups like the National Association of Realtors (NAR), the Mortgage Bankers Association (MBA) and the National Association of Home Builders (NAHB).
For housing industry groups, those issues include increasing the capital gains tax exclusion for homeowners who sell their homes for a profit, reducing capital requirements for nonbank mortgage lenders, and converting the mortgage interest deduction to a tax credit.
Housing supply and demand
With candidates at the vice presidential debate asked to address a range of issues in addition to housing, viewers mostly got the CliffsNotes versions of policies outlined by the Trump and Harris campaigns.
Asked by CBS News moderator Brennan where homes might be built on federal land, Vance couldn’t say for sure.
“Well, what Donald Trump has said is we have a lot of federal lands that aren’t being used for anything,” Vance said. “They’re not being used for national parks. They’re not being used. And they could be places where we build a lot of housing.”
“We have a lot of Americans that need homes. We should be kicking out illegal immigrants who are competing for those homes, and we should be building more homes for the American citizens who deserve to be here,” Vance concluded.
Walz made light of the idea, saying federal lands are “there for a reason” and should be protected. “They belong to all of us.”
“When you view housing, and you view [federal lands] as commodities — like, ‘There’s a chance to make money here; let’s take this federal land and let’s sell it to people for that.’ I think there’s better ways to do this,” such as refurbishing existing housing stocks.
Brennan asked Walz whether Harris’ plan to provide $25,000 in down payment assistance to first-time homebuyers might do more harm than good.
“Won’t handing out that kind of money just drive prices higher?” Brennan asked — an assertion also made by the conservative-leaning American Enterprise Institute in an analysis released shortly after the debate.
Walz answered the question in a roundabout way, arguing that the solution to housing affordability is to build more housing by cutting red tape at the local level and providing tax credits and funding.
Pace of home construction 1991-2024
The pace of construction of privately-owned housing units dipped below 1.2 million a year during the Great Recession of 2007-09, and took nearly a decade to rebound. Source: U.S. Census Bureau and U.S. Department of Housing and Urban Development via FRED, Federal Reserve Bank of St. Louis
The Minnesota governor pointed to a program in Minneapolis that provides low-income homebuyers with up to $20,000 in down payment assistance in the form of a zero-interest, 30-year deferred mortgage.
“We get it back from people, because here’s what we know,” Walz said. “People with stable housing end up with stable jobs. People with stable housing have their kids able to get to school. All of those things, in the long run, end up saving our money. And that’s the thing that I think we should be able to find some common ground in.”
Last month, the Urban Institute published a proposal for a comprehensive national housing strategy that noted growth in households of color with less access to generational wealth point to “an increased need for starter homes and down payment assistance.”
Homebuyers in any state can find programs that provide down-payment assistance using services like Down Payment Resource, which makes information available about programs and eligibility requirements through sites such as Zillow and Redfin, as well as through integrations with multiple listing services (MLSs), lenders and agents.
In a 2021 analysis, Urban Institute researchers Michael Stegman and Mike Loftin noted that down payment assistance (DPA) has become “an integral part of the post–Great Recession business model” for state housing finance agencies (HFAs).
In 2019, “nearly three-quarters of the single-family mortgages HFAs funded carried DPA, with the typical agency financing nearly 3,000 loans each carrying about $7,200 in DPA,” their analysis noted.
However, the Urban Institute researchers warned, “It will not be easy to find sufficient revenues to expand DPA at a level that would meaningfully reduce the racial homeownership gap.”
The Harris campaign says it will raise revenues for all of its programs, not just housing, by increasing the corporate tax rate to 28 percent and undoing “huge tax breaks for the very wealthy” granted in the 2017 overhaul of the tax code signed into law by Trump.
The nonpartisan, research-based Penn Wharton Budget Model (PWBM) projects that across the board, the Harris campaign’s tax and spending proposals would grow the national deficit by $1.2 trillion over the next 10 years.
But PWBM projects that policies outlined by the Trump campaign would increase the deficit by $5.8 trillion over the same period, due to a protracted drop in tax revenue.
Immigration claims
Walz took a jab at claims by Trump and Vance — who have faced criticism (and a lawsuit) for spreading unsubstantiated rumors that Haitian migrants in Springfield, Ohio, were eating pets — that immigrants are to blame for rising home prices.
“We can’t blame immigrants for the only reason [home prices are rising] … that’s not the case,” Walz said. “That’s happening in many cities. The fact of the matter is we don’t have enough naturally affordable housing, but we can make sure that the government’s there to help kickstart it, create that base.”
Many of the Haitians who have moved to Ohio and other parts of the country are in the U.S. legally, and real estate industry groups including NAR and the National Association of Hispanic Real Estate Professionals (NAHREP) view legal immigration as a healthy driver of growth.
Vance has disputed that Haitians who have been granted Temporary Protected Status to live in the U.S. are here legally. But he said he’s not opposed to legal immigration — and blamed Harris for a surge in illegal immigration.
“We don’t want to blame immigrants for higher housing prices,” Vance said. “But we do want to blame Kamala Harris for letting in millions of illegal aliens into this county, which does drive up costs, Tim. Twenty-five million illegal aliens competing with Americans for scarce homes is one of the most significant drivers of home prices in the country.”
According to the nonpartisan Pew Research Center, there were an estimated 11 million unauthorized immigrants living in the U.S. in 2022, down from 12.2 million in 2007.
Although Pew researchers also recognize that attempts to enter the country illegally surged last year — the 249,741 Border Patrol apprehensions in December were the most ever recorded in a single month — such “encounters” have dropped by 77 percent, to 58,038 in August.
Walz pushed back on the claim that Harris is to blame for illegal immigration, noting her support for what he characterized as “the fairest and the toughest bill on immigration that this nation’s seen” — a reference to the bipartisan border agreement negotiated by Republican Sen. James Lankford of Oklahoma that was scuttled after Trump came out against it.
“I know him,” Walz said of Lankford. “He’s super conservative, but he’s a man of principle, wants to get it done.”
Research by the nonpartisan Congressional Budget Office (CBO) and Harvard University’s Joint Center for Housing Studies (JCHS) does support the premise that immigration — both legal and illegal — contributes to demand for housing.
Immigration boosts US population growth
Net international migration jumped from less than 500,000 in 2019 to 2.6 million in 2022 and 3.3 million in 2023. Source: JCHS tabulations of Congressional Budget Office data, “The State of the Nation’s Housing 2024.”
But according to Pew’s research, 77 percent of the 48 million U.S. residents who were born in another country are here legally. As of 2022, 49 percent were naturalized U.S. citizens, 24 percent were lawful permanent residents and 4 percent were legal temporary residents. “Unauthorized immigrants” constituted an estimated 23 percent of the U.S. foreign-born population.
Vance promised after the debate he would share “a Federal Reserve study” that he said “really drills down on the connection between increased levels of migration, especially illegal immigration, and higher housing prices.”
But what Vance ended up posting on the social media platform X were brief remarks by Federal Reserve Governor Michelle Bowman about the potential for immigration — she did not specify whether legal, illegal or both — could impact rents.
“Given the current low inventory of affordable housing, the inflow of new immigrants to some geographic areas could result in upward pressure on rents, as additional housing supply may take time to materialize,” Bowman said in remarks she delivered in May at the annual convention of the Massachusetts Bankers Association.
Inflation as a driver of housing costs
Inflation is another hot-button issue with voters. The Federal Reserve’s efforts to head off a recession during the pandemic by buying up mortgage bonds and government debt and slashing short-term interest rates to zero helped bring mortgage rates to historic lows — fueling demand for housing and sending prices climbing.
Affordability challenges got even worse when the Fed started raising rates to combat inflation to the highest level in more than 20 years, sending mortgage rates climbing back up over 7 percent. With inflation descending toward the Fed’s 2 percent goal, mortgage rates have retreated closer to 6 percent.
But Vance said that following Trump’s call to “Drill, baby drill” for domestic oil could help bring down housing prices — claiming that assuming the cost of energy is “one of the biggest drivers of housing costs, aside from illegal immigration.”
“Think about it: If a truck driver is paying 40 percent more for diesel, then the lumber he’s delivering to the job site to build the house is also going to become a lot more expensive,” Vance asserted. “If we open up American energy, you will get immediate pricing relief for American citizens not just in housing, but in a whole host of other economic goods, too.”
According to the National Association of Homebuilders (NAHB), a four-fold spike in the cost of lumber in 2021 added more than $30,000 to the price of an average single-family home, and the cost of building materials remains 38 percent higher since the pandemic.
But in releasing a 10-point plan in May to ease the housing affordability crisis, NAHB blamed faulty supply chains and called on federal policymakers to end tariffs on Canadian lumber shipments and building materials from China.
Trump has proposed a 60 percent tariff on Chinese imports and a universal tariff of 20 percent on goods coming from everywhere else. The Tax Foundation, a nonprofit think tank that advocates tax policies that promote economic growth, has criticized Trump’s proposed tariffs as a “narrowly targeted consumption tax” that would bring tariff rates to levels not seen since the Great Depression.
A deeper dive into housing policy
While the presidential and vice presidential debates didn’t get deep into the weeds on housing policy, the Harris campaign’s 82-page platform devotes 10 pages to housing.
To expand housing supply, the Harris platform proposes to:
Expand the existing Low-Income Housing Tax Credit (LIHTC) to provide developers the incentive to build 1.2 million rental homes
Create a new “Neighborhood Homes Tax Credit” to support the construction or rehabilitation of more than 400,000 owner-occupied homes in lower-income communities.
Create a tax incentive that rewards builders who construct affordable homes for first-time homebuyers
Provide $40 billion to state and local governments and private developers and homebuilders through a “results-driven” innovation fund
In addition to expanding housing supply, the Harris campaign is backing legislation targeting corporate landlords and single-family home investors.
“Large corporate landlords have increasingly used private equity–backed price-setting tools to dramatically raise rents in communities across the country,” the Harris campaign alleges in urging passage of legislation that would make “algorithmic price fixing” illegal under antitrust law.
The Harris platform also targets large institutional investors “who have bought thousands of single-family homes during recent downturns,” calling on Congress to remove tax breaks for corporate investors that buy properties in bulk by passing the Stop Predatory Investing Act.
Trump’s platform — and Project 2025
The Republican Party’s 16-page platform summarizes the campaign’s housing goals in a single sentence:
“To help new home buyers, Republicans will reduce mortgage rates by slashing inflation, open limited portions of federal lands to allow for new home construction, promote homeownership through tax incentives and support for first-time buyers, and cut unnecessary regulations that raise housing costs.”
For more detailed insights into what some of Trump’s supporters would like to see him do if reelected, the Heritage Foundation and an advisory board of more than 100 conservative organizations have put together Project 2025, a 922-page policy document they hope the next Republican president will embrace.
Although Trump has distanced himself from Project 2025 — in his debate with Harris, he claimed not to have read it, and has called some of the ideas it lays out “abysmal” — its authors include officials from his first administration, including former Office of Management and Budget Director Russ Vought and Chris Miller, who Trump appointed as acting defense secretary six days after the Nov. 9, 2020, election.
The chapter outlining Project 2025’s approach to the Department of Housing and Urban Development (HUD) was authored by Ben Carson, who served as Trump’s Secretary of Housing from 2017 to 2021. It calls for a “reset” of HUD, “to include a broad reversal of the Biden Administration’s persistent implementation of corrosive progressive ideologies across the department’s programs.”
Carson advocates putting an end to HUD’s efforts under the Biden administration to address climate change issues and combat appraisal bias, for instance, and initiating a HUD task force “consisting of politically appointed personnel to identify and reverse all actions taken by the Biden Administration to advance progressive ideology.”
[Climate change is seen by Fannie Mae and Freddie Mac’s federal regulator, the Federal Housing Finance Agency (FHFA), as “an emerging and increasing threat to U.S. financial stability.” Climate change “poses a serious threat to the U.S. housing finance system,” FHFA Director Sandra Thompson said in 2022, and Fannie and Freddie “have an important leadership role to play in addressing this issue.”]
More broadly, Carson proposes raising mortgage insurance premiums on FHA loans, and eliminating the Biden administration’s Housing Supply Fund, aimed at providing grants to state and local governments to build more affordable housing.
Ben Carson
“Housing supply does remain a problem in the U.S., but constructing more units at the low end of the market will not solve the problem,” Carson wrote in his Project 2025 chapter. “Investors and developers can deliver at more efficient cost new units that will allow for greater upward mobility of rental and ownership housing stock and better target increased construction of mid-tier rental units.”
Similarly, Project 2025’s plans for the Treasury Department are grounded in the assumption that under the Biden administration, there’s been a “drift into a ‘woke’ agenda.”
“Under the leadership of Treasury Secretary Janet Yellen, the department has made ‘equity’ and ‘climate change’ among its top five priorities,” Project 2025 authors William “Bill” Walton (a private equity investor), Stephen Moore (an economist) and David R. Burton (a lawyer) complain.
Walton, the founder and chairman of private equity firm Rappahannock Ventures LLC, served on Trump’s 2016 transition team as co-head of economic issues for federal agencies.
As chairman, president and chief executive officer of Allied Capital Corp., Walton famously tangled with short seller David Einhorn and in 2007 settled a four-year investigation by the Securities and Exchange Commission into Allied’s valuation practices without admitting to or denying agency allegations, The New York Times reported.
“Regulators possess a great deal of unilateral and, too often, arbitrary power,” Walton told Bloomberg when he was named to Trump’s transition team. “So in addition to Mr. Trump’s call to reduce the number of regulations, I believe we need to rethink how the regulatory process should work.”
Project 2025 advocates that the Treasury Department wind down Fannie Mae and Freddie Mac “in an orderly manner” and move toward “privatization of these massive housing finance agencies. This would restore a sustainable housing finance market with a robust private mortgage market that does not rely on explicit or implicit taxpayer guarantees.”
Harris claimed at a campaign in August that privatizing Fannie Mae and Freddie Mac could add $1,200 a year in additional interest costs to the typical American mortgage.
Experts consulted by PolitiFact said that “although privatization would likely affect mortgages, it’s difficult to parse out with certainty how profound the changes would be.”
The Harris campaign told PolitiFact that the $1,200-a-year estimate was based on a 2015 analysis by Moody’s Analytics and The Urban Institute.
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Palantir is trading at 27x forward revenues, nearly 5x the median publicly traded tech company and double the top ten median.
The stock is up 141% year to date, thanks in part to the AI wave, and has almost quintupled since 2022. And last week it officially made it into the S&P 500.
Palantir’s financials are really solid. Their Rule of 40 is 57%, and their revenue is actually expected to accelerate next year.
But the valuation they’re garnering goes above and beyond the numbers – it’s about people (namely retail investors) buying into their narrative.
And this allows Palantir to pull the future forward.
CEO Alex Karp right now
Palantir’s CEO Alex Karp has a cult-like following. And the way he tells the company’s story, shrouded with a heavy dose of mystery, enables him to walk the line between cheap capital and a combustible valuation.
Palantir is getting credit for revenues far out into the future. Instead of looking 12 months out, investors are theoretically pulling forward their revenues from a distant far off land, perhaps more than three years out.
Make no mistake – this wouldn’t be possible if Palantir was not already crushing it. They’re putting numbers on the board, and have long term contracts with government agencies who aren’t going anywhere. And then, on top of that, they layer in the power of narrative. The best CEOs leverage this as a super power to pull the future forward.
Prof. Scott Galloway recently commented on this:
“As a CEO you’re trying to tell a story such that you can pull the future forward, right…
That ability to raise capital at a cheaper price than your competitors gives you the ability to pull the future forward and maybe grow into that stock price.
So what this guy’s done is absolutely, I think he’s being a great fiduciary. His employees are getting rich and he’s now gonna have access to cheaper capital to build out infrastructure technology, hire better, brighter, faster, smarter people and make investments his competitors can’t keep up with and sort of pull away with it. And that’s kind of the job of a CEO.”
-The Prof G Show on Spotify
In 2020 and 2021, every tech CEO got to pull the future forward (even the not so credible story tellers).
Most are still growing into that future they mortgaged.
The question becomes how far is too far? When have you lost the plot? When have you jumped the shark?
Palantir seems to be teetering on the edge. They trade a full eight turns higher than the next highest EV / NTM Revenue company, Samsara, at 18.9x.
Keep in mind – traditionally anything over 10x forward revenue is considered a “premium” valuation.
This newsletter is not about picking stocks. I have a team of monkeys throwing darts in the back room who shoulder that burden.
This newsletter is an exploration of metrics, business models and strategic narratives. Palantir operates at the nexus of all three. And the ingredients they’re working with are fascinating.
For operators out there working on their own stories, watch this one to see how much is too much before the recipe spoils.
TL;DR: Multiples are DOWN week-over-week.
Top 10 Medians:
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Revenue multiples are a shortcut to compare valuations across the technology landscape, where companies may not yet be profitable. The most standard timeframe for revenue multiple comparison is on a “Next Twelve Months” (NTM Revenue) basis.
NTM is a generous cut, as it gives a company “credit” for a full “rolling” future year. It also puts all companies on equal footing, regardless of their fiscal year end and quarterly seasonality.
However, not all technology sectors or monetization strategies receive the same “credit” on their forward revenue, which operators should be aware of when they create comp sets for their own companies. That is why I break them out as separate “indexes”.
Reasons may include:
From a macro perspective, multiples trend higher in low interest environments, and vice versa.
Multiples shown are calculated by taking the Enterprise Value / NTM revenue.
Enterprise Value is calculated as: Market Capitalization + Total Debt – Cash
Market Cap fluctuates with share price day to day, while Total Debt and Cash are taken from the most recent quarterly financial statements available. That’s why we share this report each week – to keep up with changes in the stock market, and to update for quarterly earnings reports when they drop.
Historically, a 10x NTM Revenue multiple has been viewed as a “premium” valuation reserved for the best of the best companies.
Companies that can do more with less tend to earn higher valuations.
Three of the most common and consistently publicly available metrics to measure efficiency include:
CAC Payback Period is measured as Sales and Marketing costs divided by Revenue Additions, and adjusted by Gross Margin.
Here’s how I do it:
Sales and Marketing costs are measured on a TTM basis, but lagged by one quarter (so you skip a quarter, then sum the trailing four quarters of costs). This timeframe smooths for seasonality and recognizes the lead time required to generate pipeline.
Revenue is measured as the year-on-year change in the most recent quarter’s sales (so for Q2 of 2024 you’d subtract out Q2 of 2023’s revenue to get the increase), and then multiplied by four to arrive at an annualized revenue increase (e.g., ARR Additions).
Gross margin is taken as a % from the most recent quarter (e.g., 82%) to represent the current cost to serve a customer
Revenue per Employee: On a per head basis, how much in sales does the company generate each year? The rule of thumb is public companies should be doing north of $450k per employee at scale. This is simple division. And I believe it cuts through all the noise – there’s nowhere to hide.
Revenue per Employee is calculated as: (TTM Revenue / Total Current Employees)
Rule of 40 is calculated as: TTM Revenue Growth % + TTM Adjusted EBITDA Margin %
A few other notes on efficiency metrics:
Net Dollar Retention is another great measure of efficiency, but many companies have stopped quoting it as an exact number, choosing instead to disclose if it’s above or below a threshold once a year. It’s also uncommon for some types of companies, like marketplaces, to report it at all.
Most public companies don’t report net new ARR, and not all revenue is “recurring”, so I’m doing my best to approximate using changes in reported GAAP revenue. I admit this is a “stricter” view, as it is measuring change in net revenue.
Decreasing your OPEX relative to revenue demonstrates Operating Leverage, and leaves more dollars to drop to the bottom line, as companies strive to achieve +25% profitability at scale.
The most common buckets companies put their operating costs into are:
Cost of Goods Sold: Customer Support employees, infrastructure to host your business online, API tolls, and banking fees if you are a FinTech.
Sales & Marketing: Sales and Marketing employees, advertising spend, demand gen spend, events, conferences, tools
Research & Development: Product and Engineering employees, development expenses, tools
General & Administrative: Finance, HR, and IT employees… and everything else. Or as I like to call myself “Strategic Backoffice Overhead”
All of these are taken on a Gaap basis and therefore INCLUDE stock based comp, a non cash expense.
Want to build your own comp set?
Illustrative
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A broad segment of the industry invests based on established factors such as value, momentum, and low-risk. In this post, we share the key results from our study of out-of-sample factors over a sizable and economically important sample period. Using the longest sample period to date — 1866 to the 2020s — we dispel concerns about the data mining and performance decay of equity factors. We find that equity factors are robust out-of-sample and have been an ever-present phenomenon in financial markets for more than 150 years.
Data Mining Concerns are Real
Why did we conduct this study? First, more research on factor premiums is needed, especially using out-of-sample data. Most practitioner studies on equity factors use samples that date back to the 1980s or 1990s, covering about 40 to 50 years. From a statistical perspective, this is not a substantial amount of data. In addition, these years have been unique, marked by few recessions, the longest expansion and bull market in history, and, until 2021, minimal inflationary episodes. Academic studies on equity factors often use longer samples, typically starting in 1963 using the US Center for Research in Security Prices (CRSP) database from the University of Chicago. But imagine if we could double that sample length using a comprehensive dataset of stock prices. Stock markets have been essential to economic growth and innovation financing long before the 20th century.
Second, academics have discovered hundreds of factors—often referred to as the “factor zoo.” Recent academic research suggests many of these factors may result from data dredging, or statistical flukes caused by extensive testing by both academics and industry researchers. A single test typically has a 95% confidence level, implying that about one in every 20 tests will “discover” a false factor. This issue compounds when multiple tests are conducted. It is critical given that millions of tests have been performed in financial markets. This is a serious concern for investors, as factor investing has become mainstream globally. Imagine if the factors driving hundreds of billions of dollars in investments were the result of statistical noise, and therefore unlikely to deliver returns in the future.
Figure 1 illustrates one of the motives behind our study. It shows the test statistics for portfolios of size, value, momentum, and low-risk factors over the in-sample and out-of-sample periods within the CRSP era (post-1926). Consistent with earlier studies, most factors exhibit significance during the in-sample period. However, results look materially different over subsequent out-of-sample periods with several factors losing their significance at traditional confidence levels. This decline in the performance of equity factors can be attributed to multiple reasons, including limited data samples, as discussed in the literature. Regardless, it underscores the need for independent out-of-sample tests on equity factors in a sufficiently sizable sample. In our research paper, we tackle this challenge by testing equity factors out-of-sample in a sample not touched before by extending the CRSP dataset with 61 years of data.
Figure 1.
Source: Global Financial Data, Kenneth French website, Erasmus University Rotterdam
Stock Markets in the 19th Century
Before diving into the key results, let’s outline the US stock market in the 19th century. In our paper, we collect information from all major stocks listed on the US exchanges between 1866 and 1926 (the start date of the CRSP dataset). This period was characterized by strong economic growth and rapid industrial development, which laid the foundation for the United States to become the world’s leading economic power. Stock markets played a pivotal role in economic growth and innovation financing, with market capitalizations growing more than 50-fold in 60 years — in line with US nominal GDP growth over the same period.
In many ways, 19th- and 20th-century markets were similar. Equities could be easily bought or sold across exchanges via dealer firms, traded via derivatives and options, purchased on margin, and shorted, with well-known short sellers. Major 19th century technological innovations such as the telegraph (1844), the transatlantic cable (1866), the introduction of the ticker tape (1867), the availability of local telephone lines (1878), and direct phone links via cables facilitated a liquid and active secondary market for stocks, substantial brokerage and market-making activities, quick arbitrage between prices, fast price responses to information, and substantial trading activities. Price quotations were known instantly from coast to coast and even across the Atlantic. Much like today, investors had access to a wide range of reputable information sources, while a sizable industry of financial analysts provided market assessments and investment advice.
Further, trading costs in the 19th century were not very different from 20th century costs. Market information and academic studies reveal transaction costs on higher-volume stocks and well-arbitraged NYSE stocks to be around 0.50% but have traded at the minimum tick of 1/8th during both centuries. Further, in the decade prior to World War I, the median quoted spread at the NYSE was 86 basis points and a quarter of trades took place with spreads less than 36 basis points. Moreover, share turnover on NYSE stocks was higher between 1900 and 1926 than in 2000. Overall, US stock markets have been a lively and economically important source of trading since the 19th century, providing an important and reliable out-of-sample testing ground for factor premiums.
The Pre-CRSP Equity Dataset
Constructing this dataset was a major effort. Our sample includes stock returns and characteristics for all major stocks since 1866. Why 1866? It’s the start date of the Commercial and Financial Chronicle, a key source also used by the CRSP database. You may wonder why CRSP starts in 1926. While the exact reason remains speculative, it seems arbitrary, ensuring the inclusion of some data from before the 1929 stock market crash.
In our paper, we hand-collected all market capitalizations — highly relevant to study factor premiums and stock prices. In addition, we hand-validated samples of price and dividend data obtained from Global Financial Data — a data provider specialized in historical price data. Unlike CRSP, we focused our data collection on all major stocks traded across the key exchanges. This includes not only the NYSE, but also the NY Curb (which later became the American Stock Exchange, AMEX), and several regional exchanges. You can imagine the amount of work this has taken and the tremendous amount of research assistants’ time we utilized at the Erasmus University Rotterdam. But the results have been worth the effort. The result is a high-quality dataset of US stock prices from 1866 to 1926, covering approximately 1,500 listed stocks.
Out-of-Sample Performance of Factors Are Eternal
So, how do the out-of-sample results from the 1866-1926 pre-CRSP period look? Before we discuss, please recall that this period has not been well-studied before and hence it allows us to conduct a true out-of-sample test to equity factor premiums.
Figure 2 summarizes the key results from our research. It shows the alpha of the established equity factor premiums over the longest CRSP sample possible (in grey) and the pre-CRSP out-of-sample period (in black). Interestingly, the out-of-sample alphas for value, momentum, and low-risk factors are very similar to those observed in the CRSP sample. In fact, differences between the two samples are statistically insignificant. The 150+ years of evidence on factor premiums (the black bars) confirm this conclusion, showing attractive premiums that are both economically and statistically highly significant. Overall, the independent sample confirms the validity of key equity factor premiums such as value, momentum, and low-risk.
Figure 2.
Source: Global Financial Data, Kenneth French website, Erasmus University Rotterdam
These findings allow for several strong conclusions. First and most importantly, factor premiums are an eternal feature in financial markets. They are not artifacts of researchers’ efforts or specific economic conditions but have existed since the inception of financial markets, persisting for more than 150 years. Second, factor premiums do not decay out-of-sample but tend to remain stable. Third, given their enduring nature, factor premiums offer significant investment opportunities. These results should give investors greater confidence in the robustness of factor premiums, reinforcing their utility in crafting effective investment strategies.
-Lived an hour further outside the city than my parents would have preferred -Went to a sit down restaurant ~1x / month -Was a latch key kid starting in 3rd grade with two working parents -Never would have even contemplated the…
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What’s the secret to building long-lasting wealth in the stock market? Check out three household names that could boost your portfolio in the decades ahead.
There are many ways to make a million dollars in the stock market, but one method is more reliable than the rest.
History shows that patient investors can build a million-dollar portfolio with the help of modest annual returns over a long time. This is a good description of master investor Warren Buffett’s strategy, and an even better fit for index fund legend John Bogle. So if you’re looking for a million-dollar investment idea, you should really search for companies and stocks that can stay relevant and financially healthy for decades to come.
On that note, I’d like to introduce you to three tenacious stocks that can carry that heavy weight. Amazon(AMZN 0.08%), International Business Machines(IBM -0.98%), and Buffett’s Berkshire Hathaway(BRK.A 1.26%)(BRK.B 0.59%) should at least match the stock market’s average returns for the foreseeable future. Making steady investments in these robust stocks could make you a millionaire over time.
The secret sauce of durable winners
The most important quality in long-term business empires is flexibility. My three picks are very different examples of this trait:
IBM has been around for more than a hundred years. What started as a maker of punch-card calculators evolved into a mainframe computing powerhouse and a PC systems pioneer. Now, IBM is leaning into the big-ticket opportunities of cloud computing and artificial intelligence (AI) services.
Berkshire was once a large manufacturer of fabrics. Buffett liquidated its textile mills to finance takeovers in various fields. Today, it’s a giant of the insurance, manufacturing, transportation, and consumer goods industries with deep interests in other areas. iPhone maker Apple(AAPL 1.10%) has been Berkshire’s largest holding since 2018.
Amazon started as a pure online bookseller, managed in founder Jeff Bezos’ garage. The company added more products to its catalog until it became synonymous with the concept of e-commerce in North America. Amazon is expanding its operations around the world, adding a world-class shipping network and a massive cloud computing system along the way, and always hunting for the next big idea.
These companies are always ready to change with the times. You will often find them in the vanguard of the next marketwide sea change. That’s exactly what I want to see in my long-term investments.
Smart ways to invest like a future millionaire
Past performance is no guarantee of future results, but these three companies have proven their ability to stay ahead of the times.
Berkshire has built a cross-sector conglomerate for the ages, managed by some of the world’s best business minds. Big Blue is turning decades of AI research into a terrific near-term growth driver, surely to be followed by another unexpected strategy shift that will be helpful in the 2040s and beyond. Amazon has been around for 30 years but is still acting like a hungry little upstart with tons of unexplored markets and business ideas.
You can pick any combination of these stocks to power a diversified investment portfolio in the long run. Getting started with a robust investment today is a good start, but you’ll do even better if you commit to building on that investment for years to come. With a dollar-cost averaging strategy, you can buy more shares when they’re cheap and fewer when they’re not, averaging out market volatility along the way. Automating the process with weekly, monthly, or annual stock buys can help you stay on track.
And don’t forget to enable a dividend reinvestment program (DRIP) for IBM, where the generous dividend payments make a big difference to your long-term returns:
IBM Total Return Price data by YCharts
There you have it: IBM, Berkshire Hathaway, and Amazon can help you make a millionaire over the next few decades. They may not get the job done quickly, but truly wealth-building investments always take time. You’ll follow in the footsteps of Bogle, Buffett, and many other investing geniuses. They should always be a part of a diversified portfolio, but these ultra-flexible companies are almost single-ticker index funds on their own.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Anders Bylund has positions in Amazon and International Business Machines. The Motley Fool has positions in and recommends Amazon, Apple, and Berkshire Hathaway. The Motley Fool recommends International Business Machines. The Motley Fool has a disclosure policy.
An essential aspect of being a successful landlord is being strict with your tenants. Letting tenants walk all over you can lead to a multitude of problems, and it’s crucial to enforce your rules and leases diligently. Here’s why you need to be strict and how it can actually benefit your business and your tenants in the long run.
Video: Why Landlords Must Be Strict
The Importance of Enforcing Lease Agreements
One of the key reasons to be strict with tenants is to maintain order and respect for the lease agreements. For example, I allowed tenants to temporarily park in a car wash area while it was out of order.
However, they took advantage of this leniency, started performing car repairs, and left paint all over. This incident highlights the old adage: if you give an inch, they’ll take a mile. It’s vital to adhere strictly to lease terms regarding parking, property use, rent payments, and late fees to prevent such issues.
Top 5 Mistakes Landlords Make
Addressing Issues Promptly and Firmly
When tenants violate lease agreements, addressing the issue promptly is crucial. In the case of the car wash situation, we posted notices and warned the tenants about towing their cars.
Despite initial verbal and written warnings, it wasn’t until we took the more severe step of posting tow stickers that the cars were finally moved. This approach applies to other issues such as late rent and property misuse.
The Role of Property Managers
If you find it challenging to be strict, hiring a property manager can be an effective solution. A property manager can enforce the rules impartially, citing you as the authority behind the decisions.
This arrangement helps avoid personal conflicts and ensures that tenants understand the seriousness of their violations. It’s okay to recognize if you’re not naturally strict and find someone who can handle this aspect of the business for you.
How to Find a Great Property Manager
Protecting Your Investment and Other Tenants
Being strict is not just about maintaining order; it’s about protecting your investment and ensuring a peaceful living environment for all tenants. In another instance, cars parked illegally blocked trash collection, causing significant issues. We left notices and sent letters, and we posted no parking signs. The tenants did not get the message until their cars were towed. That also sent a message to other tenants that we were serious and we have not had that problem since.
How I Made 2 Million Dollars From a Single Rental Property
Dealing with Late Rent and Evictions
Late rent payments are a common issue, especially post-COVID, with some tenants expecting continuous assistance. It’s imperative to address late payments immediately by issuing notices and charging late fees. Allowing tenants to pay late without consequences can lead to a cycle of non-payment, ultimately hurting your business.
In Colorado, for example, you cannot evict tenants for not paying late fees, only for not paying rent. This underscores the need to act quickly and enforce payment rules strictly.
Screening Tenants Thoroughly
Properly screening tenants before they move in can prevent many issues. Conducting background checks, credit checks, and verifying references are crucial steps. Even with these precautions, about 10% of tenants might still cause problems, but without screening, this number could be significantly higher. Relying on gut feelings instead of data can lead to poor decisions and long-term headaches.
What is the Best Way to Screen Tenants for Rentals?
Understanding and Adhering to State Laws
Finally, always ensure that your actions comply with state laws and regulations, which are constantly evolving. Consulting with attorneys and accountants can help you navigate these complexities and avoid legal pitfalls.
Tools like DoorLoop, which is the property management software I use, can help.
Conclusion
Being a landlord is not just about owning property; it’s about managing it effectively and maintaining good relationships with your tenants. Being strict with your tenants is essential for the smooth operation of your business and the well-being of all your tenants. It might not always be fun, but it is necessary. By setting clear boundaries and enforcing them, you can run a more efficient and successful property management business.
Have you had a bad situation with a tenant? Let me know in the comments below!
