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Stephen Yu, CFA's  Instablog

Stephen Yu, CFA
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Stephen Yu is a CFA Charterholder and a registered investment adviser. From October, 1997 through March, 2014, discretionary, unlevered portfolios returned an average of 11.3% annually after fees vs. 6.02% for the S&P 500. The portfolios are long-only and volatility is below that of the... More
My company:
Lumen Funds
My blog:
  • Double dips are very rare!
    It is strange.  I first heard one person say that double-dip recessions are very rare about a month ago, and now I read and hear it everywhere.  Well, if we've have learned anything in the housing bubble is that rare events do occur more often than many think - black swan anyone!  Back in 2005, realtors told us that home prices never fell and guess what, they fell.  I'm not saying that we are or are not going to have a double-dip, but just because it is rare doesn't mean it won't happen! 
    Jul 21 6:58 PM | Link | Comment!
  • Has the U.S. reached the point of no return?
    By some estimates, total U.S. public debt, including unfunded liabilities such as Social Security, Medicare, etc. is between $80 and $100 trillion.  Even at a meager 1% interest rate, annual interest payment is close to $1 trillion.  The 2008 U.S. GDP was about $14 trillion.  So suppose average tax rate is 25%, tax revenue amounts to $3.5 trillion.  In other words, at 1% annual interest rate, nearly 30% of our tax will go to service interest alone.  This does not include principal payment!  If, like home mortgages, we amortize the national debt over 30 years, the annual debt service is $3.86 trillion, or about 110% of tax revenue!  If we stretch out the amortization period to 50 years, annual debt service comes to $2.54 trillion, still almost 75% of tax revenue!  If the U.S. is a corporation, its debt would already be rated junk.  And still the government is piling on more debt.  Is there a way out of this other than higher taxes and debasing the dollar?
    Dec 06 2:42 AM | Link | 1 Comment
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