The $1 Trillion Dollar Economic Injection

Latest posts by EJ Moosa (see all)

• ObamaCare’s Medical Tax: My Prediction From 2010 – May 27, 2015
• How Romney Could Secure My Vote and Win in 2012 – July 27, 2012
• Obama’s Goose Is Cooked – April 18, 2012
• Why Job Growth Will be Turning Negative – April 10, 2012
• Saturday In The Park: Life Lessons I Learned From My Demeaning Below Minimum Wage Job – January 17, 2012
• Principled Versus Winning – November 4, 2011
• The Failure of the Republican Party – November 4, 2011
• The $1 Trillion Dollar Economic Injection – June 2, 2011
• Obama’s Goose is Simmering – May 27, 2011
• Introducing Uncertainty – February 7, 2011
• Know Profits Know Growth Part II – January 25, 2011
• Profit: The Forgotten Objective – July 15, 2010
• It’s Time to Separate Our Federal, State, and Local Governments – June 14, 2010
• Is Gov. Charlie Crist a “Good Conservative”? – March 29, 2010
• State of America – March 24, 2010
• Divide and Conquer – March 23, 2010
• How to Destroy the Private Sector via Health Care Reform – March 22, 2010
• Health Care Reform:The Road to Socialism – March 17, 2010
• Why Isn’t Health Care Reform Socialism? – March 7, 2010
• Economophobia:If This is What Ails Us, What is the Cure? – March 4, 2010
• No Profit, No Growth or Know Profit, Know Growth:The Choice is Yours – January 28, 2010
• US Government Spends 61% More than it Receives in 2010 – January 26, 2010
• Minimum Wage, Maximum Impact – November 3, 2009
• Is the US Medical Crisis a Tax Crisis Instead? – October 27, 2009
• A Libertarian’s No-Nonsense Health Care Reform Proposal – August 20, 2009
• American Health Care Reform:Un-Constitutional From the Start – August 8, 2009
• “Cash for Clunkers”: Success Redefined? – August 5, 2009
• Bashing the “Birthers” – August 4, 2009
• SOS: Senators on SpeedDial – August 3, 2009
• Economic Math in Today’s Economy – August 3, 2009
• When There is Nothing Left to Fight For, Who Will Defend Us? – July 29, 2009
• Invasion of Privacy Part II:2007 Survey of Business Owners and Self-Employed Persons – May 29, 2009
• Michael Steele and the Republican Party:Stuck in Denial – May 16, 2009
• When Will it Be Enough? – May 8, 2009
• Taxation Without Representation in the 21st Century – April 20, 2009
• Modern Day Sharecroppers – April 15, 2009
• Your Bank May Fail-But Let’s Keep That A Secret – April 10, 2009
• Right-Sizing the American Economy – April 1, 2009
• “Atlas Shrugged”:Why has Wikipedia Removed Key Elements? – March 30, 2009
• AIG-A Scape Goat of Massive Proportions – March 19, 2009
• I Want My Money Back – March 17, 2009
• Corporate Profit Growth Percentages Drive the Markets and Employment – March 11, 2009
• Panhandlers:Seize the Broom – March 10, 2009
• Help Wanted: Janitor, Pays $15-16 per Hour – March 8, 2009
• Invasion of Privacy :The American Community Survey – March 2, 2009
• General Motors and their Cash Flow Crisis – February 27, 2009
• Why Wall Street Really Matters – February 23, 2009
• Are our 14th Amendment Rights being violatedregarding the Second Amendmentby the States? – February 17, 2009
• Have We Forgotten the Minimum Wage? – February 13, 2009
• The Stimulus Plan We Should Have Gotten – February 12, 2009
• Misplaced Anger – September 12, 2008
• Will Ron Paul Accept or Reject Bob Barr ‘s Offer? – September 10, 2008
• Raising Taxes: The Real Objective – September 8, 2008
• Consider Me Offended – September 4, 2008
• Who’s Afraid of Sarah Palin (And Why) – September 3, 2008
• “My Bible is the State Constitution”-Sarah Palin – September 1, 2008
• The McCain Maneuver – August 29, 2008
• “I am My Brother’s Keeper” – August 28, 2008
• It Takes a Recession – August 28, 2008
• RC Cola and the Libertarian Party – August 19, 2008
• Congratulations, Harrold, Tx! Are you Listening, Atlanta, Ga? – August 15, 2008
• Principled-But atWhat Cost? – August 11, 2008
• The Death Tax We Do Need – Part II – August 8, 2008
• The Death Tax We Do Need – August 5, 2008
• Seniority Rules(and Why Our System Falters) – July 16, 2008
• The Magic Number – July 15, 2008
• The Right to Defend against the Common – March 19, 2008
• Winner Take All Primaries are Destroying The Election Process – March 13, 2008
• Big Brother Was Watching, Elliot – March 11, 2008
• “There is No Way to Make the Irrational Work” – March 10, 2008
• Republican Missteps to Hand White House to Clinton/ Obama – March 8, 2008
• TheTrouble with Inflation – February 21, 2008
• You’re Fired! – February 20, 2008
• The Next Step – February 19, 2008
• Just One Gun – February 15, 2008
• Just Say No-To the Incumbent – February 14, 2008
• Debate:The Lost Art – February 12, 2008
• The Disenfranchised Republican Voter – February 8, 2008
• McCain Vs. Paul – February 7, 2008
• Who is Rand Paul? – February 7, 2008
• Should Ron Paul Stay Just to Speak at the National Convention? – February 6, 2008
• The Republican Party: DOA – February 6, 2008
• Don’t Look – February 5, 2008
• The Tax Rebate Justification – January 25, 2008
• Tax Rebate? Try Welfare Check! – January 24, 2008
• Lil’ Hillary’s Cafe – January 23, 2008
• Weep for Washington D.C, Will We Be Next? – January 18, 2008
• The Politics of Change – January 17, 2008
• Is Fox Coaching the Focus Groups? – January 12, 2008
• One Voter at a Time, One Voter a Week – January 9, 2008
• It’s “We the People”, Stupid! – January 9, 2008
• The United States of Codependency – January 7, 2008
• Illegal Immigration: Victimless Crime? – January 6, 2008
• Winners and Losers – January 4, 2008
• Neal Boortz:Wrong on Ron Paul? – January 3, 2008
• Me Vs. You – January 2, 2008
• The Answer:Fairtax – January 2, 2008
• Who Are These People? – January 1, 2008
• Why Iowa Makes Perfect Sense – December 31, 2007
• Fox News Confirms: “No Need for Paul at Debates” – December 29, 2007
• Thank You Ron Paul – December 29, 2007
• Is Money A Good Substitute for Love? – December 25, 2007
• A Lack of Absolute Faith – December 24, 2007
• Speaking a Different Language – December 23, 2007
• The Wall Street Journal’s Attempt to Diminish Ron Paul’s Campaign – December 22, 2007
• Ron Paul Could Save America and So Could You – December 20, 2007
• Religion and the Constitution:The Real Battle We Face – December 19, 2007
• Is the Fair Tax(Mike Huckabee) Better than No Tax(Ron Paul)? – December 18, 2007
• It’s The Constitution, Stupid! – December 17, 2007
• Constitutional Contract With America – December 15, 2007
• Something Unconstitutional This Way Comes – December 15, 2007
• Let Them Hear the Silence – December 14, 2007
• Do We Deserve this Last Chance Ron Paul is Giving US? – December 13, 2007
• I Want My Rights Back and I Want Them Now – December 12, 2007

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Ripple Pushing to Launch XRP in Trillion-Dollar Derivatives Market, Unveils New Xpring Investment

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Ripple says its recent investment in Vega Protocol is designed to help spur adoption of XRP in the world of derivatives.

Vega Protocol recently raised $5 million from a number of investment firms including Ripple’s Xpring in order to help build and roll out its decentralized derivatives platform.

In a new blog post, Ripple’s director of strategic growth for Xpring, Vanessa Pestritto, says the San Francisco startup is focused on boosting adoption of decentralized finance, also known as DeFi.

“Exploring this developing industry requires building, partnering with and investing in great teams that are aligned with the future of finance.

As we build out our own engineering team, Xpring will continue to engage with DeFi teams and communities to support the future of DeFi including the derivatives industry – a trillion-dollar market.”

According to Pestritto, Ripple is aiming for its investment in Vega Protocol to lead to the launch of XRP on the platform.

“This premise for collateralizing assets to work in an interoperable environment was most appealing as we explore new use cases for XRP and the future of decentralized finance.

Vega’s vision to create an open and decentralized network will enable the freedom to trade and make capital markets broadly available. Vega will continue to build their network and explore opportunities to add other assets as collateral, including XRP.”

Vega protocol says it’s testing the final version of its trading system, designed to give people a fully automated and decentralized way to trade derivatives.

The Gibraltar-based company says it plans to release a public testnet soon, but has not revealed a target launch date for the official product.

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Pakistan joins the Trillion Dollar Market Club

Shaukat Hussain Butt

Islamabad: Pakistan achieved a key milestone by joining the ‘Trillion Dollar Markets Club’, the only country to do so in year 2017. According to Federal Secretary for Trade Younis Dhagga, Pakistan’s economy is only the 25th economy in the world to have achieved this key milestone.

Pakistan has been made a member of Trillion Dollar Markets Club. Members of the Trillion Dollar Markets Club are countries whose economies, measured by GDP on a purchasing power parity basis in current dollars, have grown larger than one trillion dollars.

The collective purchasing power of consumers in these countries is estimated to be in excess of one trillion dollars. Based on October 2017 IMF/World Bank estimates, Pakistan’s economy is believed to have grown to $1.056 trillion.

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The Trillion-Dollar Fund Company | Kiplinger

The American Funds company is the nation’s largest fund family — and the first ever to manage more than $1 trillion in stock, bond and balanced funds. Yet many investors have never heard of the American funds. Maybe it’s time you took a look.

The company crossed the trillion-dollar threshold last October, followed by the widely familiar Vanguard fund company in April.

That you don’t hear much, if anything, about the American funds is deliberate. Capital Research and Management, which runs the funds, decided many years ago to market exclusively through brokers and financial advisors. “We think it gets the right people into the right funds for the right reasons,” says Chuck Freadhoff, a vice-president of the firm.

But look how big these funds have become. Growth Fund of America has swollen to $184 billion, making it the nation’s largest fund; EuroPacific Growth, the largest foreign fund, has $112 billion in assets, and Capital Income Builder has $100 billion.

These funds must have been doing something right to become so big. Indeed, they have. You hear investment advisers often utter these words: “I’ve never had to apologize for putting a client in an American fund.”

The funds not only hold their own in bull markets, but they often shine in bear markets. If you use a financial professional, these are some of the best funds you can buy. Unfortunately, however, you’ll have to pay sales commissions to buy any of these funds (unless you’re lucky enough to have load-waived versions of them in your 401(k) or other employer-sponsored retirement plan).

The question for the giant Los Angeles-based outfit is whether its funds can continue to put up great numbers despite the phenomenal growth they’ve experienced since the 2000-02 bear market.

Asset bloat is not a new issue for the American funds. “The asset bloat conundrum has been around for years,” says Michael Hirsch who designs fund portfolios for clients at Merrill Lynch. “When a fund’s performance falls into the bottom half of its peer group for an extended period, I’ll begin worrying; not before.” I couldn’t put it better myself.

The company’s latest way of dealing with asset growth is as imaginative as it is sensible: It has cloned itself. Really. It has divided its 165 portfolio counselors and analysts into two halves: Capital Research Global Investors and Capital World Investors.

The two terms mean the same thing. It’s akin to splitting into two teams for a pickup softball game. Capital tried to ensure that a sufficient number of growth managers and value managers, tech specialists and foreign mavens ended up on each “team.” World or Globe manages some funds completely, and they share in management of some.

World and Global occupy different floors, and members are discouraged from talking shop with people on the other team even during off hours or in the employee lunch room — the only place their paths cross during working hours. There are even two trading desks. “They don’t hold joint meetings, investment research isn’t shared, and investment decisions aren’t shared,” Freadhoff says.

The American funds are, in essence, now run by two groups, rather than one, and each is responsible for roughly $500 billion — still a huge chunk of change, but easier to handle than $1 trillion.

Freadhoff says the main reason for dividing was that ad hoc groups, which are greatly encouraged at Capital, had become too big. So meetings to discuss high-dividend stocks, for instance, had come to include 30 people, instead of 15. Now, there are two groups, both of more manageable sizes.

This is hardly the first time the American funds have come up with an innovative solution to a big problem. Launched in 1931, the company adopted a flat management structure long before it was popular. Every professional occupies the same size office; there are no big corner offices. Every management official, including the chairman and the president, manage money. Truth be told, titles mean little at the firm.

In addition, the firm long ago split up management of individual funds among several “portfolio counselors.” Most funds have seven or eight counselors, each of whom manages a percentage of the fund. The research analysts, meanwhile, generally manage 25% of each fund. Compensation for portfolio managers depends on how their portion of the fund performs over rolling four-year periods, as well as how the fund as a whole does. At meetings, “everyone will talk about an investment idea, but at the end of the day, everyone makes his or her own decision,” Freadhoff says. “Still, you have every incentive to see your colleagues do well.”

Analysts aren’t considered inferior beings, as they are at some firms. Indeed, many American funds analysts have made careers studying one or several industries. Analysts can get paid just as much as portfolio managers. The only difference between the two is that analysts buy stocks only in the industries they cover.

The company is highly profitable and is owned entirely by its employees. Throw in the flat management structure and you can see why it’s rare for anyone to leave the firm. “In the past 20 years, we’ve not had a portfolio counselor leave other than for retirement or death,” Freadhoff says.

The American funds didn’t invent overseas investing. But they seized on it early — in the 1950s. By the 1960s, many of the funds were including foreign stocks, and today most of the nominally domestic stock funds take a global approach.

The funds don’t make big bets. It’s rare for a fund to invest as much as 4% in a stock. Turnover is also low; only about 25% of a fund’s stocks are traded annually.

As good as they are, I wouldn’t recommend buying an American fund if you have to pay a load to get it. (You can’t buy without using an adviser.) But it’s hard to beat the American funds’ steady performance and low expense ratios — they’re not as low as Vanguard’s, but they’re close.

The best funds? It really depends most on what parts of the market you like best currently. My personal favorite right now is AMCAP (symbol AMCPX for the Class A shares) because it invests in the conservative, proven growth stocks that I think will do especially well over the next few years. Growth Fund of America (AGTHX) is more aggressive and owns more foreign stocks but is also growth oriented. Among foreign funds, EuroPacific Growth (AEPGX) may be the best broker-sold foreign fund on the market.

On the negative side, the American funds really are too big to have a first-rate small-company fund. The stocks in Smallcap World (SMCWX) have an average market value of $1.7 billion; Morningstar classifies more than half the stocks as midcaps. In my opinion, New Economy (ANEFX) is the only really bad pick: Despite focusing on industries in the burgeoning service sector, it hasn’t distinguished itself.

Bottom line: I don’t think you should construct an entire portfolio with just American funds. But for your more conservative money, the American funds are still tops.

Steven T. Goldberg (bio) is an investment adviser and freelance writer.

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