Current Events

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Articles: The History of the Department Store and the Modern Day Department Store Destroyer

Two articles that I thought your students might enjoy since shopping seems top of mind for many teens. I think these would be particularly good as a supplement for your investing or entrepreneurship lessons. One article describes the rise of the department store (Inventing the Department Store in Barrons; about 5 minutes reading) and the other describes the modern day Leviathan that is destroying department stores and other competitors too (Amazon: Primed from the Economist (three articles free per week); about 15 minutes reading).

A Q&A follows focused on the key takeaways from the readings.

Some highlights from the Barrons article:

What led to the first department stores being opened in London? 

As affluence increased in the 18th century and the Industrial Revolution made more goods available, shopping began to evolve into what would become the department store. The first ones began by catering to the most common type of shoppers, women. The first real department store, Harding, Howell & Cos.’ Grand Fashionable Magazine, opened in London in 1796. Its four departments carried furs, jewelry, dresses, and hats, and accessories such as lace and gloves.

Who brought concept to US? Alexander Stewart

What was his insight that led to their popularity? 

Interactive: What Do Americans Earn Per Hour?

Simple interactive from CNN shows the percentage of jobs at a given wage range and as you rollover a given wage band you see a list of representative jobs with their hourly wage and annual salary (note that data is from May 2013 from Bureau of Labor Statistics):

Screen Shot 2017-03-21 at 10.25.25 PM

Questions for students:

By |March 23rd, 2017|Career, Current Events, Interactive, Question of the Day, Research|

The FED Raised Interest Rates At Their Last Meeting…How Much Will That Cost Credit Card Revolvers (in Billions)?

Answer (from MarketWatch based on NerdWallet analysis): $1.6 billion

From MarketWatch:

The Federal Reserve raised its target range for federal funds by a quarter percentage point to 0.75%-to-1% on Wednesday, and signaled two more rate increases in 2017. Put another way, this increases how much banks will be charged to borrow money from Federal Reserve banks. (The Fed raises and lowers interest rates in an attempt to control inflation.)

I know some of you are trying to figure out how that decision from the Federal Reserve translates into higher costs for credit card revolvers. Here is the transmission mechanism:

By |March 21st, 2017|Credit Cards, Current Events, Math, Question of the Day|

Investing: What Can Investors Learn from Warren Buffett’s 2016 Letter to Shareholders?

I heard a great conversation today with Roger Lowenstein, former WSJ columnist and Author of Buffett: The Making of An American Capitalist, America’s Bank and When Genius Failed, on the Masters in Business podcast. When asked about how he learned about investing, he mentioned how much he had learned from reading Warren Buffett’s Annual Letter to Shareholders. I thought I would dissect his 2016 Letter and share his often folksy advice in an abbreviated format (the letter is 29 pages long).

I thought you might find these insights useful:

  • Two things to keep in mind during market declines which captures the psychology of investing (not his use of the phrase “sit for an extended period”):

Just Say No To Overdraft Protection!

It’s a $33 billion error that consumers continue to make. From Wall Street Journal:

Banks and other financial firms in 2016 generated the highest level of fees in seven years related to overdrafts on checking accounts, marking a turnaround for a charge crisis-era regulation tried to rein in.

So-called overdraft fees totaled $33.3 billion in 2016, up about 2.5% from 2015 and by 5.4% from 2011, according to Moebs Services Inc., an economic-research firm. Overdrafts occur when consumers make transactions that are larger than their checking-account balance.

Try this tomorrow in your class:

Question: How Many Borrowers Can’t Repay Their Student Loans?

Answer (from Consumer Federation analysis reported by CNBC): In 2016, more than 4.2 million out of 42.4 million borrowers were in default. This is a 1.1 million student increase from 2015.  Default is a condition where the borrower has not made a payment on their loan for 9 months.

What makes this more troubling is that these increases in defaults are occurring at a time when the economic statistics, especially unemployment rates are at historical lows (from Washington Post): 

What’s New With Credit Reports?

Here are a few new developments that we are tracking:

  • Consumers are about to benefit from changes afoot with credit reports (From WSJ [subscription] with hat tip to NGPF Team member, Sonia):

Question: What Percentage of High School Seniors Have A Driver’s License?

Answer (from Pew Charitable Trust): 71.5%, a significant decline from 85.3% in 1996.

See chart below the line: