Market Memo

June 2024 – By Bob Veres

We’re starting to see private equity firms make short-term investments in companies all across the American business ecosystem.  At best, they’re looking to make a quick buck; at worst, they’re looting the companies they ‘invest’ in and leaving others holding the bag.  One recent example is the Red Lobster bankruptcy, which closed locations around the country and laid off 36,000 workers.  A private equity company firm called Golden Gate Capital basically financed a takeover by selling the real estate under 500 of Red Lobster’s restaurants for $1.5 billion, and the purchasing company then charged premium lease prices from the restaurants.  By 2023, the rents totaled $200 million a year—amounting to 10% of total revenues.

Planning Article

June 2024 – By Tom Rueger CFP^®

Credit card debt has increased to a record level of more than 1.12 trillion dollars. The average credit card balance is around $6,000 and a New York Fed report shows that 1 in 5 cardholders are “maxed out,” using 90% or more of their credit card limit. According to Bankrate, roughly 44% of borrowers carry credit card debt from month to month with the average interest rate topping 20%. This means it can take nearly 2 decades to pay down the debt if only the minimum payments are made.

Market Minute

June 2024 – By Bob Veres

If you’re ever curious about what professional economists with access to huge troves of economic data think about the U.S. economy, you can turn to the Beige Book.  The Beige Book is published by the Federal Reserve every couple of months, and summarizes the state of the economy, overall and in each region.

Planning Article

May 2024 – By Tom Rueger CFP^®

The tax code provides some favorable provisions for homeowners, one of which is the exclusion from taxation on the gain on some or even all of your primary home. However, as the price of homes continues to rise at a fairly substantial pace, more homeowners are or could be finding themselves in a situation where they have to pay tax on some of that gain when they sell their homes. An exclusion from taxation of gains was passed back in 1997 and the intent was to not have people that lived in their homes for a long time have to pay a potentially sizable tax when they finally did move out. However, unlike a lot of other provisions in the tax code, the exclusion has not been indexed to inflation and the gain in value of the home could now cause a tax liability.