Bern Factor. Weekly Letters

By Mark Bern, CFA Rising interest rates will have both short-term and long term impacts as well as positive and negative.   Some industries benefit from rising interest rates while others suffer.   Even within industries there are potential winners and losers.   Losers Those companies with heavy debt burdens will receive a double whammy.   First, the new tax law limits how much interest can be deducted for tax purposes.   Those paying interest expenses in excess of that threshold will no longer have the tax benefit they once enjoyed meaning that the tax cut savings will be far less and, in some cases, companies could end up with a higher effective tax rate than before tax reform.   Second, companies in industries that generally pay a relatively high dividend will begin to lose the appeal with investors looking for yield.   They will be affected in two ways: as bond yield rise some investors will switch from riskier stocks for the more traditi...

By Mark Bern, CFA ·         North Korea denuclearization. ·         Trade negotiations. ·         U.S. pulls out of Iran Nuclear Pact. ·         New services coming soon! North Korea President Trump may not get everything he would like but it appears likely that he will get more concessions from North Korean leader Kim Jong Un than any previous president has obtained.   He has created more leverage and leaned on China effectively for help.   Kim may not give up all of his nuclear ambitions but it is very likely, in my humble opinion, that he will give up testing and development of long-range missiles that could endanger the U.S.   The hope of regional U.S. allies, of course, that North Korea is willing to give its bombs as well.   The biggest uncertainty that looms in the air presently is the apparent discord betw...

By Mark Bern, CFA Artificial Intelligence (AI) is advancing at a rapid pace and will change many industries over the next decade.   This will make investing for the long term much more difficult than it has been at any time in history.   According to McKinsey, a highly respected global consulting firm, we are at the early stages of the Fourth Industrial Revolution.   Over the next two decades most industries will change dramatically creating new jobs requiring a whole new set of skills while displacing many low skill jobs in the process.   Many in the workforce will need to be re-trained in order to adapt and prosper in the new economy.   But many of those whose jobs will be automated will be highly educated, white collar workers in staff and mid-level management positions.   Most of these people will be capable of adapting and learning the new skills that are to be needed.   Unemployment will remain low throughout the transition and wages wil...