Another warning on private investments, Will tariffs hurt this holiday season? Should you work in retirement? The challenge of creating retirement income & More

Yet another warning on private investments!

I remember hearing about a company by the name of Yieldstreet a few years ago and how it was a new way for smaller investors to get access to private investments and diversify away from stocks. The company promoted their platform with the tagline, “Invest like the 1%.” Unfortunately, it is now coming out that several investors may have lost everything they invested in the platform. One gentleman shared with CNBC how he invested $400,000 in two real estate projects: A luxury apartment building in downtown Nashville overseen by former WeWork CEO Adam Neumann’s family office, and a three-building renovation in the Chelsea neighborhood of New York. Each project had targeted annual returns of around 20%. After three years, Yieldstreet declared the Nashville project a total loss, which wiped out $300k of his funds and the Chelsea deal needs to raise fresh capital or it will face a similar fate.

Unfortunately, he is not alone and CNBC reviewed documents that show investors put more than $370 million into 30 real estate projects that have already recognized $78 million in defaults in the past year. Yieldstreet customers who spoke to CNBC say they anticipate deep or total losses on the remainder. Looking into this platform in more detail, it’s crazy what they were doing. Their portfolio doesn’t just consist of real estate as there is also private equity, private credit, art, crypto, and other less common investments. It appears Yieldstreet makes money by charging a management fee of around 2% on invested funds. The craziest part to me though was in several cases, Yieldstreet went to its userbase to raise rescue funds for troubled deals and told members the loans combined the protections of debt with the upside of equity. But in one case, a $3.1 million member loan to rescue a Nashville project was wiped out after just a few months!

One of the big problems with these platforms is professional large investors are more disciplined when looking at investing in this space and the smaller players may be getting the bad deals that are passed over by the more established players. It’s unfortunate to see people lose money like this, but this is why I avoid the private investment space. There is just not enough clarity and in many cases these platforms seem to be in it for themselves rather than for their investors. I will continue to invest in good, quality equities as I worry, we will continue to hear stories like this from investors who put money into private investments thinking they were investing in a safer asset, just to find out years later there is nothing left.  

Will tariffs hurt this holiday season?

Here we are already at the end of August and before you know it, you’ll be thinking about putting out the Christmas lights and decorating your home. For the past few years, we have seen growth in holiday sales, but this year could be different as it appears from recent conference calls from CEOs at Walmart, Home Depot and Target that they are seeing the tariff increases starting to come through.

During his recent conference call, the CEO of Walmart, Doug McMillon, said that the impact of tariffs has been gradually increasing to protect the consumer, but he also said that the company is seeing cost increases each week as it rebuilds inventories with new products post tariff. He also mentioned that they may not be able to protect the consumer from rising prices much longer. What is also bad about this is that retail sales may rise, but consumers will receive less product to put under the Christmas tree considering sales are not adjusted for inflation. This could be the delayed inflation that Jerome Powell and the Federal Reserve has been waiting for and unfortunately, it may show up when people begin shopping for Christmas gifts. Maybe there should not be an interest rate cut in September after all? 

Should you work in retirement?

When many people are in their working years, they can’t wait to retire so they can do what they want to do. For some people that retirement works out well, but science has shown that there’s health benefits to working in retirement along with financial benefits. The health benefits would include more physical activity as you’re not laying around the house or sitting in the rocking chair on the front porch. Instead, you’re moving around walking places and staying active. Working also helps you stay connected with other people, which has been proven to extend your life. The financial benefits from working in your later years would include taking out less from your retirement accounts to maintain a good lifestyle.

Also, you can hold off on Social Security which means you’d get a larger Social Security check when you do decide to collect. The type of work you do depend on you and some people in retirement have started a second career that is a job that they always wanted to do. Some people just work part time to stay active and involved. If you’re in retirement, you can take a low stress job because you don’t really need all the income to cover your expenses as long as you have the financial accounts/investments to do so.

Financial Planning: The challenge of creating retirement income

For decades, American workers relied on pensions, but today retirement security largely depends on defined contribution plans like the 401(k), where the burden has shifted to the individual saver. The real challenge comes when it is time to turn a pile of assets into a reliable, inflation-adjusted income stream that can last 20–30 years. Some retirees look to CDs and Treasury bills, which are guaranteed and currently pay about 4% interest, but they offer no appreciation to offset inflation and yields will likely decline as short-term rates drop. Corporate bonds may provide a slightly higher return, but they come with interest rate, credit, duration, and reinvestment risks that often outweigh the modest extra yield.

Others consider annuities, which can create a pension-like income stream, but these require handing over principal, and because they are designed by insurance companies, the terms typically favor the provider rather than the investor. High-dividend stocks can also be appealing, but they may be a trap, as struggling companies often have elevated yields due to falling stock prices, which can be compounded further if the dividend is cut. On the other end of the spectrum, broad market indexes like the S&P 500 and Nasdaq have been popular for growth, but their dividend yields remain low, around 1.2% and 0.8% respectively, forcing investors to sell shares for income, and poorly timed sales can shorten portfolio longevity. Even dividend aristocrats, known for steadily increasing payouts, currently only yield about 2% to 2.5% on average.

There is no simple solution, but one truth stands out: accumulating assets is very different than generating income from them. Retirees need a clear income plan before leaving the workforce in order to maximize both security and enjoyment in retirement.

Why Bitcoin could never be a world currency

One of the reasons that Bitcoin and cryptocurrencies increase in value is because of the thought that they will become a world currency someday. Let me explain one of the many reasons why that will not happen. As an example, let’s take a look at the Euro and how difficult it was to get the European countries to adapt to just one currency and let’s not forget about Brexit, where Great Britain dropped out of the European Union and the Euro? Think about this, the European Union is just 27 countries but there’s 195 countries in the world. There are many different income gaps, difference cultures and let’s not even talk about the differences of opinion on politics.

There is currently an attempt at a global currency of sort known as the International Monetary Fund, better known as the IMF, which introduced the SDR, which are special drawing rights. There is problems with this already where it requires the United States to re-dominate its treasury bills into SDRs for any foreign central bank that asks and make a legally binding international agreement to reduce the US deficit whenever it is deemed excessive or to increase it whenever it is deemed insufficient. That’s what will put an end to the SDR‘s before it gets very far. What large government would want to be controlled by the world let alone have no control over a currency like Bitcoin?

Who benefits from private investments in your 401(k), not you!

 I keep seeing more and more of a push to allow private investments in credit, equity and real estate into your 401(k). Let me give you a list of who the big benefactors are if private investments are allowed in your 401(k) and yes, it is the big fat cats on Wall Street. There are six main players: Apollo Global, KKR, Carlyle Group, Blackstone, Ares and Blue Owl Capital. These companies rake in high fees with Morningstar estimating them around 2.5% on average. I was disappointed on August 7th when President Trump signed an executive order that instructed the Department of Labor and the Securities and Exchange Commission to make it easier for company plans to offer private assets.

A spoke person from the White House, Taylor Rogers, said the intent of the order is to reduce the regulatory burdens and litigation risk that impede American workers from achieving a competitive return. Considering the return for equities of the last several decades, I believe nothing could be further from the truth when looking at that statement. On August 12th, the Department of Labor rescinded a Biden era statement that said most companies are not likely suitable to evaluate the use of private equity investments. It’s a shame that has been reversed because most the business owners that I know don’t have the time to analyze investments enough to make decisions to allow them in the 401(k).

Ultimately, employers have a fiduciary responsibility to their employees to make sure their retirement is safe and I worry if employers get to loose in allowing these into 401k plans, they could open themselves up to lawsuits down the road. There is hope as there’s an advocacy group called Americans for Financial Reform that says without strong guardrails, ordinary savers will pay the price of diminished resources in retirement and will more than likely be left holding the bag with these expensive private investments.

I do hope the Department of Labor is opposed to making a quick issue on guidance and hopefully they will take their time in drafting formal rules. This could take months and after that it could take employers years to do the due diligence on these investments. Hopefully by that time, people will come to their senses as we may see another liquidity crunch like the Blackstone BREIT had in 2022 and 2023 or even potentially a collapse in some of the popular private investment funds. 

Why is the union trying to get into JPMorgan Chase?

I would not have believed it unless I read it myself but yes, there’s a union called JPMC Workers Alliance that is trying to unionize the 300,000 employees at the big bank. I see no benefit at all for the employees and instead see it as more of a fee generator for the unions to collect union dues. It is doubtful this will go anywhere since employees overall are very happy at the bank and view it as a great place to work with good work/life balance and opportunities for advancement. The union‘s big gripe is in January all employees were required to go back to the office five days a week.

The United States finance industry has the least amount of unions of any private industry. According to the Bureau of Labor Statistics, unions in the financial industry for the US is less than one percent at 0.8%. There are currently about 200 people that formed a private group about unionizing, but they have a long way to go to get the union into JP Morgan Chase. Well known CEO, Jamie Dimon, is defending his five-day work week in the office saying that when you work from home it is hurtful to younger generations and that virtual meetings are really nothing more than a bunch of distracted colleagues. He has said before, that before the return to office change, on Fridays he couldn’t get a hold of people by phone. It seems people these days feel like they deserve the freedom to choose when and for how long they are in the office.

I don’t know where some of these people in their group get their information, but I’m sure many of them have never run a business. I know myself; I can’t count the number of times I needed to go to one of my employees in the office to speak about something right then and there and many times needed to actually see what they had. 

Waymo’s autonomous taxi services will now be available in New York City

Waymo, which is owned by Alphabet, received approval to test up to eight autonomous vehicles in Manhattan and Brooklyn through late September, but at this time they are required to have a trained AV specialist behind the wheel at all times. If you’ve been to Phoenix, San Francisco, or Los Angeles, you may have seen these weird looking vehicles scooting around the streets. Waymo has now completed over 10 million rides in five major US cities and they claim to have a very strong safety record.

New York City is not the end or the last city for Waymo as the company did say earlier this year, they plan on being in 10 new cities, which includes Las Vegas and San Diego. It seems we’re getting closer and closer to having autonomous driving taxis as a more normalized option. If you have not done so already, you may soon be getting into a car and there will be no one in the front seat. That will be kind of weird don’t you agree?

Ivy League schools don’t appear to be the best investors

You may beat yourself up over some investment you did that lost money. That investment may have been sold to you because of no market fluctuation and it sounded like a great idea. It appears the Ivy League endowment funds are pretty much in the same boat. Because of the excitement around private investments, endowments are really short on liquidity if they need money. Endowment funds have been moving sometimes over 50% of an endowment into non-liquid investments like private equity, private real estate, and private credit.

Maybe the managers are younger and forgot about the 2008 Great Recession and how important it was to have liquid investments in the portfolio. They have really gotten away from the standard portfolio of 60% stocks and 40% bonds, which has brought investors a decent return in the long term. In fiscal year 2024, the National Association of College and University Business Officers revealed that endowments with over $5 billion in assets only held 2% in cash or money markets, 6% in bonds, 8% in US stocks and 16% in international stocks. If you do the math, you’ll see that only 32% of the portfolio was liquid, which means the other 68% was in non-liquid assets.

Because of the investments in non-liquid assets, the endowments have had to borrow money to pay obligations. Brown with a $7.2 billion endowment borrowed $300 million in April and $500 million in July. Northwestern borrowed $500 million and Harvard borrowed $750 million in April. Also, in the spring of 2025 Harvard had to sell $1 billion of private equity funds at a 7% discount to the stated value. If the economy does hit a slow period or a recession, it could really wreak havoc on these endowment funds. I would say, don’t invest like the Ivy League funds, instead find good quality equities that are trading at reasonable prices and that pay nice dividends. I believe you’ll be far better off than the Ivy League folks.

Europe is far behind in their economy

500 years ago, European nations conquered and ran as much as 80% of the planet. They shaped the globe as their wars killed millions of people and surprisingly it was the birth place of modern capitalism and the industrial revolution. Over the last 15 years though, their economy has essentially been treading water. Their share of the global economic output was 33% 20 years ago and as of 2024 it was only 23%. It is estimated to be their lowest portion of the global economy since the Middle Ages. Household wealth growth has also been a problem for Europe as it has grown by a third as much as Americans since 2009.

Per capita GDP in the US is about $86,000 a year versus $56,000 a year for Germany and only $53,000 for the UK. You may think Europe is a great place to live, but Americans have a far higher standard of living. Here in the United States, we have over 50% more living space on average per person and four out of five Americans have air conditioning and clothes dryers at home. This compares to Europeans, where the numbers range between one-fifth and one-third. The high tax revenue needed to finance their welfare-spending could be causing problems. I was blown away by the fact that Europe’s welfare states account for half of the planet’s welfare spending. Looking at tax revenue as a share of economic output shows problems. It is currently around 38% in Germany, 43% in Italy, and 44% in France. The US is only at 25%. Their politics subsidize vacations, back to school equipment for children and public transit is free for everyone. A big problem is their workforce is at risk of declining due to an aging population.

The average European is nearly 45 years old, compared with 39 for the average American, and the continent’s working-age population is predicted to fall by nearly 50 million by 2050. The question is who will pay all the tax revenue if there are less people working and more people collecting? We have our problems here at home in the US, but I worry Europe is on a troubling economic path. I was just in Europe, a couple weeks ago and what I saw of Spain and Portugal, I was not that impressed. It seemed every single piece of blank space new and old was covered with graffiti and I also noticed at the airport in Munich it was really dark as they appeared to only use half the lights to save energy. One may like to visit places in Europe for the history, but I believe over the next 10 years they’re going to have a meeting with reality that you cannot keep giving your citizens free stuff as less and less people work.