A wonderful Christmas tradition

 Dave Barry's Year in Review.  

“Your 401k Isn’t Drowning"

Twitter exchange worth noting:

Debbie B 
So much for hubby retiring soon...our 401 is drowning

DelzioEdward
Don’t look at the balance, look at how many more shares it buys at double-digit discounts when it automatically reinvests your Q3 dividends next week.

Your 401k isn’t drowning, it's diving for treasure.

Old Wall Street’s Preserved Fish

What early New York financier’s name described pickled herring, finnan haddie and other storable seafood?

That was the question posed by WQXR’s Know-It-All New Yorker contest this week. Answer: Preserved Fish.

Born in 1766, Preserved (a Quaker name, properly pronounced “Pres-ser-ved”) left the farm to become cabin boy on a whaling ship. By age 21 he was a ship’s captain. By his 40’s, whale oil had made him rich enough to move to New York, where he and a cousin started a shipping company. Preserved helped found the New York Exchange Board (forerunner to The New York Stock Exchange) and in 1829 became president of the Tradesman's Bank of New York. 

More on Preserved Fish here.

Some People Have Big Bezzles

 Today’s Axios Markets pointed me to a Felix Salmon column where I learned a new word. Here’s the gist:

When markets turn, more investors tend to want to take their money out. That's when victims of fraud find out the money has disappeared. The Bernie Madoff fraud is a prime example — it couldn't survive the downturn of 2008, since the higher Madoff marked his clients' positions, the more likely they were to want to cash out.

Until the point of discovery, the money is gone, but the victim feels no loss. Economist John Kenneth Galbraith, writing in 1955, named this "net increase in psychic wealth" the bezzle, and explained that it invariably increases in bull markets, only to shrink when "money is watched with a narrow, suspicious eye.”

As John Mills wrote in 1867: "Panics do not destroy capital; they merely reveal the extent to which it has been previously destroyed by its betrayal into hopelessly unproductive works."

No, Salmon’s column does not mention NFTs.

Bitcoin: Thumbs Up or Thumbs Down?

THUMBS UP

Later this year, the 23,000 companies that use Fidelity to administer their retirement plans will be able to offer Bitcoint as as investment option.

“There is a need for a diverse set of products and investment solutions for our investors,” says a Fidelity spokesman. “We fully expect that cryptocurrency is going to shape the way future generations think about investing.”

THUMBS DOWN

Years ago, tech writer Glenn Fleishman thought cryptocurrency might be among the most exciting and important innovations in technology and finance. His thinking has since evolved to provisional cynicism.

"Cryptocurrency is on everyone’s lips,” he writes, "but it should be in no one’s virtual pockets. An overhyped form of imaginary value storage, it has all the disadvantages of cash, suffers from all the volatility of an overhyped penny stock, and consumes more power than a mid-sized European nation. Although it has been vaunted as untraceable, anonymous, and beyond the reach of governments, none of that is true. Law enforcement agencies have used cryptocurrency to take down crime rings, stop people from exchanging child sexual abuse material, and seize massive amounts of Bitcoin and other currencies."

Personally, I think NFTs are a speculative fad that possess useful features. Bitcoin is a speculative fad that ...?

“Take that, Exxon! Shove off, Chevron!”

Last summer Yale issued a list of fossil fuel stocks in which it would no longer invest. Conspicuously absent: Exxon and Chevron. Since then, shares in the two largest oil companies have produced significant gains for investors. This apparently inspired divestment activists to redouble their efforts, for both Exxon and Chevron have now been added to the list of stocks in which the Yale endowment must not invest.  

Exxon and Chevron shares are to be shunned because the companies fail to give enough support to climate-change regulations and climate-change science.

Disaster Insurance for Billionaires

What will happen if the crazies take over and inflation goes hyper, turning dollars into pennies?  A few billionaires are worried enough to go long on bitcoin. Some choose other cryptocurrencies. Even if worst comes to worst, they figure, bitcoin and the like might be tradable for goods and services. 

Billionaires are ideal cryptocurrency investors – they can afford the risk. As for the rest of us, we do well to heed a warning issued on CNBC by Robert McCauley: Investing in crypto is worse than investing with Madoff.

McCauley's reasoning: Eventually Madoff’s victims have had most of their losses returned to them. If bitcoin bites the cosmic dust, there’ll be nothing left but unpaid electric bills. 

Food for thought

 From the TaxProf, reporting on the Tax Foundation new study.