Common Cents Archive

Common Cents for October 28th 2012

November 1, 2012, by John Norris

By now, you have probably heard something about the so-called ‘fiscal cliff,’ which we are due to fall off on January 1, 2013. Simply put, taxes are set to increase, and mandatory government spending cuts are due to take hold. Oh, the humanity! Not surprisingly, a lot of people are worried about the economic impact of this fiscal cliff, with some of the more hyperbolic among us forecasting rack & ruin. However, we need to...

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Common Cents for October 12th 2012

, by John Norris

Last night, I watched the Vice Presidential debate until I couldn’t take it any longer. If that was a debate, I don’t know what an argument is. While I understand Joe Biden’s desire to be assertive, and even aggressive, at one point during the proceedings, a scene from “This is Spinal Tap” came to mine: “This one goes to eleven.” Certainly, members of either party will applaud their candidate’s performance, and deride their opponent’s; however,...

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Common Cents for October 5th 2012

, by John Norris

Frustrating; that was the word a client used this morning to describe the United States and its economy today. Things aren’t lousy, and things aren’t great. Things are frustrating, largely because so many people in our society don’t understand how the world actually works. One of the best things about starting Oakworth, and working for a small, but growing firm, has been the light bulb that went off and continues to burn. I get it;...

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Common Cents for September 28th 2012

, by John Norris

If you read the news enough, you could conclude the world increasingly doesn’t understand the very basic risk/reward paradigm. Essentially, the amount of reward you receive is commensurate with the amount of risk you take. To businesspeople, this makes perfect sense; it is how it should be. That is how you create wealth: you take risk. It helps if you are insanely brilliant and devilishly attractive, but, where the rubber meets the road, the common...

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Common Cents for September 14th 2012

, by John Norris

Yesterday, the Federal Reserve another round of what it calls ‘quantitative easing.’ This is an academics way of saying: “buying bonds with money the Fed created as though out of thin air.” Obviously, the former sounds a little more sophisticated and mysterious than the latter. Shoot, if Larry the Cable Guy were to describe quantitative easing, he would say something along the lines of: “You see, it’s when these guys buy up all this stuff...

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Common Cents for August 31, 2012

September 4, 2012, by John Norris

I don’t like politics, and haven’t for some time. So, I hadn’t planned on watching any of the Republican convention, and wouldn’t have if my mother-in-law weren’t staying with us this week. This ambivalence on my part frustrates the stew out of my father-in-law, and I understand why; poor civic responsibility and all of that. Still, I know how I am going to vote in November, and nothing the Republicans said this week or whatever...

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Common Cents for August 17, 2012

August 28, 2012, by Shelley deClerk

Last Thursday, I took my son on a ‘party boat’ to presumably fish for sharks. Having been on this particular vessel before, I knew the tackle, and understood we wouldn’t be catching Jaws or any of his brothers and sisters. Still, my 10-year old had fantasies, if you can call them that, of landing a really big fish, and was simultaneously thrilled and nervous about the prospect. For my part, I had a feeling we...

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Common Cents for August 3, 2012

August 6, 2012, by John Norris

Around this time last year, the markets were struggling with the potential downgrade of US Treasury debt. Investors were wringing their hands and gnashing their teeth about the potential ramifications. Just what would happen if the ratings organizations took the Treasury from AAA down to AA+? The general consensus, as fueled by the broadcast media, was it couldn’t be good. Those of us who have been in this industry long enough know a downgrade of...

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Common Cents for July 20, 2012

, by John Norris

Is leverage a good thing? In the aftermath of a major financial crisis brought about by ‘too much debt,’ the answer isn’t as clear as it once was. Couple that with Europe’s fiscal unraveling, and you could very easily conclude leverage is a bad thing, or at least something to avoid. However, debt, in and of itself, is innocuous. The issue is how the borrower uses it. If they take out massive loans to finance...

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Common Cents for July 13, 2012

, by John Norris

One of the biggest stories in the financial world is the perceived scandal surrounding Barclay’s PLC and its supposed manipulation of LIBOR rates. As you may know, LIBOR stands for ‘London Interbank Offered Rate,’ and is essentially where British banks estimate they can borrow money for various time periods leading out to one year. To make things a little simpler to understand, let me just give you the paragraph from Wikipedia which describes the calculation...

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