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What cities owe the provinces

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A friend calls it, with some distaste, the “ring of fire”. He is referring to the counties that encircle London and that have a tense relationship with the place. They are everything the capital isn’t: conservative if not Conservative, full of families, car-oriented, perhaps not swarming with cultural treasures. While far from homogenous — many an Asian household ends up moving out there — the ambient street chatter is not the omnilingual serenade it is within the M25.

The quarrel between the two worlds goes like this. People in the counties can’t believe that urbanites pay a premium to live in a Babel of cramped apartments and phone theft. We in turn view them as rubes who might at any moment order a Sauvignon Blanc that isn’t Dagueneau. Most big cities have an equivalent hinterland: the San Fernando Valley, the bridge-and-tunnel crowd, and so on. If relations are this strained with the commuter fringe, imagine the antagonism between cities and the deep interior of the nation. Except we don’t need to imagine. Brexit and the election of Donald Trump made clear what the heartlands think about us.

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Yet we can’t do without them. I don’t mean something woo-woo here: something about the value of human difference and learning from one another. I literally mean that great cities wouldn’t work as an economic proposition without lots of mildly conservative voters in the rest of the country. What does a global city need? Competitive (though not necessarily super-low) taxes. Non-burdensome regulation. A business-friendly atmosphere. Which way do they vote? Left.

In 2019, it was the Home Counties and the post-industrial regions that averted a Jeremy Corbyn premiership, with all that would have entailed for the City. London, including much of affluent London, voted for him. A decade ago, Paris was entering a rut of ossified cuisine and entrepreneurial torpor. Its current dynamism, its finance and tech boom, owes at least something to the reversal of François Hollande-era costs on business. Who had Paris voted for in 2012? Hollande.

In essence, the provinces bail the metropolis out of its self-defeating politics. They also hold it back in some ways: by supporting Brexit, by opposing immigration. But the trade-off is worthwhile. Cities can withstand these nuisances in a way they couldn’t withstand eternal one-party dominion, as some Californians might attest. The governing climate in which urban life flourishes is a blend of progressive ideas (liberal immigration rules, infrastructure spending) and conservative ones (market incentives, toughness on crime). To the extent that big cities have this balance, it is increasingly because the wider nation provides the second half.

Put it another way: why do so few city states exist? As a mode of government, it has centuries more pedigree than the nation state. A greater share of humanity is urban-dwelling now than in the time of Medici Florence or Hanseatic Hamburg. With cities subsidising the heartlands, there is a casus belli ready to go. Beyond Monaco and Singapore, though, the list of sovereign cities in the modern world thins out. And the clamour for more to secede from their countries is near zero.

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Granted, national feeling goes deeper than liberals as arid me will credit. And defence relies on scale. (Monaco has to look to France for much of that.) But I wonder if another snag is that the politics of an independent London or New York would never work. The demos needs balancing out with a flintier conservatism, at least if the current business model of these places is to survive. This is truer now than when cities had lots of right-of-centre voters, before the partisan “sorting” of people into like-minded communities.

So yes, on a night out, when the city starts to glow, one’s thoughts turn naturally to secession. There could be visa checks at the M25. There could be universal conscription to defend our 9mn-strong republic. And imagine the fiscal surplus. But then I’ll meet another rent-control enthusiast with a Yanis Varoufakis book on their shelf, and wonder. Since the Elizabeth Line was built, there has been a new edge to the snobbery about the ring of fire. The rap is that it brings in too many overdressed outsiders for a night at Hakkasan or wherever. But they don’t just have a right to be here. They have been, when London’s own judgment lapsed, the city’s ultimate guardians.

Email Janan at janan.ganesh@ft.com

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This Ridiculously Cheap Warren Buffett Stock Could Make You Richer

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Investors know what Warren Buffett’s favorite stocks are. He often talks about Coca-Cola and American Express, his two longest-held stocks, and he recently added Apple as a stock he’d never (fully) sell.

But Berkshire Hathaway has a full list of about 45 stocks, and some of them don’t get enough attention. Consider Ulta Beauty (NASDAQ: ULTA). This is a new Buffett stock, and he and his team were likely drawn to it right now because of its cheap price. But obviously, there’s a lot more to the investing thesis than that.

Let’s take a closer look.

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A huge market opportunity

Ulta isn’t a surprising Buffett stock. It fits most of the typical Buffett criteria: excellent management, a dominant position in its industry, a competitive edge, and a cheap price.

It operates a national chain of beauty stores, but it’s differentiated in its model, and customers love it. Ulta bridges the gap between mass brands, traditionally sold in pharmacies and discount stores, and luxury brands, typically sold in upscale department stores. It caters to the beauty enthusiast by housing 600 brands under one roof and on its website.

It also offers beauty services, making it a complete, one-stop beauty shop. The full range of products and services increases overall engagement and loyalty, and Ulta has skyrocketed to the top of the industry.

Beauty is a fast-growing industry with sales increasing 10% year over year globally in 2023, according to McKinsey. Sales surpassed expectations and as well as other industries like apparel. In the U.S., Ulta’s domain, sales were up 9%. McKinsey expects sales to increase at a compound annual growth rate (CAGR) of 6% through 2028.

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Beauty enthusiasts account for 83% of beauty product dollars spent, putting Ulta squarely in the middle of growing trends. Ulta believes there are 70 million such enthusiasts in the U.S., and it continues to attract them to its loyalty program, which reached 43 million last year. They represent 95% of Ulta sales, and this gives the company a huge data pool to meet demand as it grows and changes.

With nearly 1,400 stores and more to come, Ulta should benefit from industry growth. But it also continues to stretch its position with new products, brands, and collaborations, such as Target “stores within stores.”

Still waiting out the economy

The pitfall to offering the kitchen sink of beauty brands is that with inflation and tight pockets, customers are switching down to cheaper brands. However, since Ulta sells both, it’s still getting those dollars. It’s retaining its loyal customers and it’s well-positioned to rebound as inflation cools.

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Total sales increased 4% year over year in the fiscal second quarter (ended Aug. 3), but comparable sales were down 1.2%. Gross margin fell from 39.3% to 38.3%, and operating margin fell from 15.5% to 12.9%. These were continuing trends, but they were worse than expected. Management revised guidance lower across the board.

It’s not surprising that Ulta stock is down 25% this year. However, savvy investors should look at the bigger picture. Every company goes through ups and downs, and Ulta is dealing with strong headwinds right now.

The good news is, it looks like these external factors are starting to lift. Inflation seems to be moderating, interest rates are going down, and the economy might pick up soon. Whenever it does, Ulta could make a quick rebound.

Low price, high potential

Ulta stock trades at an attractively low P/E ratio of 15. Buffett is known to like a good bargain, or at least what he thinks is an undervalued stock. And Ulta is a lot cheaper than some of his favorite ones.

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KO PE Ratio Chart

KO PE Ratio Chart

Buffett knows how to spot a great deal, and Ulta fits the bill. If you buy Ulta stock today, you could benefit from years of long-term gains.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,022!*

  • Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,329!*

  • Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $393,839!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

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See 3 “Double Down” stocks »

*Stock Advisor returns as of October 7, 2024

American Express is an advertising partner of The Ascent, a Motley Fool company. Jennifer Saibil has positions in American Express and Apple. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Target, and Ulta Beauty. The Motley Fool has a disclosure policy.

This Ridiculously Cheap Warren Buffett Stock Could Make You Richer was originally published by The Motley Fool

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Bitcoin ETFs end three-day skid with $254M inflow

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Bitcoin ETFs end three-day skid with $254M inflow


The $254 million inflow day was the third-largest ever on days when BlackRock’s IBIT failed to contribute.



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This Is the One Stock Warren Buffett Keeps Buying, Regardless of Valuation

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This Is the One Stock Warren Buffett Keeps Buying, Regardless of Valuation


While there are a number of prominent money managers on Wall Street, none are followed as closely by the investment community as Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) CEO Warren Buffett.

One reason investors gravitate to the Oracle of Omaha is his track record. Though he’s not infallible, Buffett has overseen a nearly 5,500,000% aggregate return in his company’s Class A shares (BRK.A) since becoming CEO in the mid-1960s. On an annualized total return basis, which includes dividends, Berkshire Hathaway has practically doubled up the return of the benchmark S&P 500 spanning six decades.

Warren Buffett surrounded by people at Berkshire Hathaway's annual shareholder meeting.

Berkshire Hathaway CEO Warren Buffett. Image source: The Motley Fool.

The other lure for investors is Buffett’s willingness to be an open book. Whether through his annual letter to shareholders or during Berkshire’s annual meetings, Buffett often shares the characteristics he looks for in “wonderful companies,” as well as offers his take on the American economy.

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But what Warren Buffett might be best known for is his penchant for value investing. There’s little that puts a smile on his face more than being able to put his company’s capital to work in a time-tested company with a sustainable moat at an advantageous price.

Though there are plenty of examples of the Oracle of Omaha nabbing amazing value stocks throughout history, there’s one stock he keeps buying regardless of valuation.

Warren Buffett has a knack for finding amazing deals hiding in plain sight

Despite selling more than 500 million shares of Apple (NASDAQ: AAPL) between Oct. 1, 2023 and June 30, 2024, Berkshire Hathaway’s top holding represents the perfect example of Warren Buffett stumbling on an amazing company at a highly favorable price point.

When Buffett began building his company’s stake in Apple during the first quarter of 2016, the tech giant’s trailing-12-month (TTM) price-to-earnings (P/E) ratio ranged from 10 to 12, which was well below that of the S&P 500. With the exception of the dot-com bubble, Apple’s stock had never been cheaper.

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While its iPhone has remained dominant, in terms of domestic smartphone market share, Apple’s growth has been spearheaded by its Services division. This is a subscription-driven segment designed to keep users loyal to its ecosystem of products and services. It should also improve the company’s operating margin over the long run, as well as lessen the revenue peaks and troughs associated with iPhone upgrade cycles.

Today, Apple is hardly a bargain. As of the closing bell on Oct. 8, Apple’s stock was valued at a multiple of more than 34 times TTM earnings per share (EPS). Although Buffett hinted during Berkshire’s annual shareholder meeting in May that paring down his company’s stake in Apple was done for tax purposes, it’s quite possible valuation also came into play.

Berkshire Hathaway’s No. 3 holding, Bank of America (NYSE: BAC), serves as another example of Warren Buffett pouncing on a time-tested business that was historically inexpensive.

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Following the financial crisis, Buffett invested $5 billion into BofA to shore up its balance sheet and received preferred stock and warrants in return. When this investment was announced in August 2011, Bank of America was trading at less than 38% of its book value. Something of an unwritten rule on Wall Street is to buy high-quality bank stocks at or below their book value and unload them at or near two times book value.

In the years since the financial crisis, Bank of America has been able to put its legal issues firmly in the rearview mirror. What’s more, it’s benefited immensely from being the most interest-sensitive of America’s money-center banks. The 525-basis-point increase in the federal funds rate by the Federal Reserve between March 2022 and July 2023 added billions of dollars in net interest income to BofA’s bottom line.

But with Bank of America stock now trading at a 16% premium to its book value, it’s perhaps no surprise that more than $10 billion in BofA stock has been unloaded by Buffett since mid-July.

The Oracle of Omaha is unwavering in his desire to get a good deal — with one exception.

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A clock whose hour, minute, and second hand line up to read, Time to Buy.

Image source: Getty Images.

This is the only stock Buffett keeps buying, regardless of its valuation

Despite spending a small fortune to build up Berkshire Hathaway’s stakes in Apple, Bank of America, Chevron, and Occidental Petroleum, there’s one stock that dwarfs them all, in terms of the amount of money Warren Buffett has invested.

However, investors aren’t going to find this company listed in Berkshire’s quarterly filed Form 13Fs. This is the filing that provides investors with a concise snapshot of what Wall Street’s brightest money managers have been buying and selling.

Rather, investors will have to dig into Berkshire Hathaway’s quarterly operating results to find evidence of Buffett purchasing his favorite stock. Toward the end of each quarterly filing, just prior to the executive certifications, you’ll find the page that lists Berkshire Hathaway’s share repurchase activity — because the stock Buffett keeps buying, regardless of valuation, is shares of his own company.

Berkshire Hathaway’s share buyback program has evolved quite a bit since the midpoint of 2018. Prior to July 2018, buybacks were only allowed if Berkshire Hathaway’s stock fell to or below 120% of its book value. Since Berkshire’s stock never fell below this line-in-the-sand threshold, Buffett was never able to spend a penny on buybacks.

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On July 17, 2018, Berkshire Hathaway’s board amended the rules governing buybacks to allow Warren Buffett and then right-hand man Charlie Munger (who passed away in November 2023) more freedom to execute buybacks. These simplified new rules allowed for indefinite share repurchases with no end date as long as:

  • Berkshire Hathaway has at least $30 billion in cash, cash equivalents, and U.S. Treasuries on its balance sheet; and

  • Warren Buffett views his company’s stock as intrinsically cheap.

There’s a lot of leeway with this second point, which is what allows Buffett to regularly buy back his company’s stock. Since July 2018, Buffett has spent close to $78 billion repurchasing shares of Berkshire Hathaway, including $345 million during the June-ended quarter.

Additionally, buybacks have been made in all 24 quarters (through June 30, 2024) since these new repurchase rules were enacted. You’d have to go back to 2008 to find the last time Berkshire Hathaway’s stock was as pricey as it is now, relative to its book value… and yet Buffett keeps buying!

BRK.A Price to Book Value Chart

BRK.A Price to Book Value Chart

Because Berkshire Hathaway doesn’t pay a dividend, conducting buybacks is the easiest way for Buffett to reward his company’s shareholders and incent long-term thinking. Steadily reducing the company’s outstanding share count is incrementally increasing the ownership stakes of long-term investors.

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To boot, companies with steady or growing net income, like Berkshire, tend to enjoy an EPS boost with fewer shares outstanding. This can make their stock more attractive to investors.

With Berkshire Hathaway sitting on an all-time record $276.9 billion in cash, cash equivalents, and U.S. Treasuries, as of the end of June, the Oracle of Omaha has every incentive to keep buying back his company’s stock, regardless of valuation.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

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  • Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $20,855!*

  • Apple: if you invested $1,000 when we doubled down in 2008, you’d have $43,423!*

  • Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $392,297!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 7, 2024

Bank of America is an advertising partner of The Ascent, a Motley Fool company. Sean Williams has positions in Bank of America. The Motley Fool has positions in and recommends Apple, Bank of America, Berkshire Hathaway, and Chevron. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.

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This Is the One Stock Warren Buffett Keeps Buying, Regardless of Valuation was originally published by The Motley Fool



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Are Stock Markets Open on Monday for Columbus Day?

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Are Stock Markets Open on Monday for Columbus Day?


<p>Michael M. Santiago / Getty Images</p> The New York Stock Exchange and Nasdaq will be operating normal hours on Monday, Oct. 14, for Columbus Day and Indigenous Peoples

Michael M. Santiago / Getty Images

The New York Stock Exchange and Nasdaq will be operating normal hours on Monday, Oct. 14, for Columbus Day and Indigenous Peoples’ Day.

Key Takeaways

  • Next Monday, Oct. 14, is Columbus Day, a federal holiday.

  • Stock and bond markets typically follow the federal holiday schedule, but the New York Stock Exchange and Nasdaq will operate normal hours Monday.

  • However, bond markets will be closed, along with many banks and government operations like the post office.

This year, Oct. 14 is the second Monday of October, the date that Columbus Day is celebrated in the U.S., meaning you may be wondering if stock markets will be open for trading.

Considering the New York Stock Exchange (NYSE) and Nasdaq largely follow the calendar of federal holidays for closures, it may come as a surprise that both will be open and operating normally on Monday.

The two remaining holidays on the exchanges’ respective calendars for 2024 are Thanksgiving and Christmas, with additional shortened hours on the day after Thanksgiving and on Christmas Eve.

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However, federal operations like the Federal Reserve and post offices will be closed, as will commercial banks that follow the federal holiday schedule. Bond markets will also be closed.

Read the original article on Investopedia.



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History Says This Vanguard ETF Could Be Your Ticket to a Million-Dollar Portfolio

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History Says This Vanguard ETF Could Be Your Ticket to a Million-Dollar Portfolio


No one financial goal applies to everyone. Financial situations vary so much that what one person strives for could completely differ from someone else’s priorities.

That said, $1 million has long been a recognized mark of financial success. I must admit, there’s something about seeing a second comma in a number that feels validating and comforting.

The good news is that it doesn’t take “hitting it big” or generational returns to make a million-dollar portfolio a reality. In many cases, all it takes is consistent investments in an exchange-traded fund (ETF) like the Vanguard S&P 500 ETF (NYSEMKT: VOO).

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If there’s one ETF to lean on en route to a million-dollar portfolio, it would be this one. Here’s why.

Some sitting on a chair while holding a tablet.

Image source: Getty Images.

A history of impressive and encouraging returns

This ETF was created in Sept. 2010, and since then it has been on an impressive run, averaging over a 12.4% annual return and over 14.5% annual total returns.

VOO Chart

VOO Chart

It’s been repeated plenty of times that “past results don’t guarantee future performance.” However, if this trend continues, here’s how long it would take you to hit the million-dollar mark, averaging 12% annual returns at different monthly contributions.

Monthly Contributions

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Years Until $1 Million

$500

27

$750

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24

$1,000

22

$1,500

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18

$2,000

16

Calculations by author. Years rounded to the nearest whole year.

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You don’t need a lump sum of money to invest to get to a million-dollar portfolio; you need consistent investments over time.

Getting exposure to some of the world’s best companies

I always like to say that investing in an S&P 500 ETF is akin to investing in the U.S. economy. Of course, the U.S. economy runs off more than just 500 companies, but their influence is undeniable considering the size and scope of the companies in the S&P 500 index. Here are the top 10 holdings in this ETF (as of Aug. 31):

  • Apple: 6.97%

  • Microsoft: 6.54%

  • Nvidia: 6.20%

  • Amazon: 3.45%

  • Meta Platforms: 2.41%

  • Alphabet (Class A): 2.03%

  • Berkshire Hathaway (Class B): 1.82%

  • Alphabet (Class C): 1.70%

  • Eli Lilly: 1.62%

  • Broadcom: 1.50%

When you’re trying to build a million-dollar portfolio, the one thing you need is consistency. There will inevitably be ups and downs along the way (no stock or ETF is exempt from volatility), but you want companies with a history of long-term growth leading the way — and that’s what these have proven.

Don’t overlook how much money you can save in fees

An underrated part of this ETF is the low expense ratio of 0.03%. That works out to $0.30 per $1,000 invested annually, and it’s one of the cheapest you’ll find from any ETF on the stock market, regardless of type. Even another S&P 500 ETF, the SPDR S&P 500 Trust ETF, is more than three times more expensive at 0.0945%.

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To give you some perspective, here’s how much you’d pay in fees over 20 years by investing different amounts and averaging 10% annual returns in both ETFs.

Monthly Contributions

Fees Paid With Vanguard S&P 500 ETF

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Fees Paid With SPDR S&P 500 ETF

$500

$1,160

$3,660

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$750

$1,750

$5,500

$1,000

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$2,330

$7,330

$1,500

$3,500

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$10,990

$2,000

$4,670

$14,660

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Calculations by author. Fees rounded down to the nearest 10.

The seemingly slightest difference on paper could save you thousands in fees over time. Don’t overlook it.

Should you invest $1,000 in Vanguard S&P 500 ETF right now?

Before you buy stock in Vanguard S&P 500 ETF, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Vanguard S&P 500 ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

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Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $826,130!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

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*Stock Advisor returns as of October 7, 2024

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Stefon Walters has positions in Apple, Microsoft, and Vanguard S&P 500 ETF. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Berkshire Hathaway, Meta Platforms, Microsoft, Nvidia, and Vanguard S&P 500 ETF. The Motley Fool recommends Broadcom and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

History Says This Vanguard ETF Could Be Your Ticket to a Million-Dollar Portfolio was originally published by The Motley Fool



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China says will ‘significantly increase’ debt to revive economic growth

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China says will 'significantly increase' debt to revive economic growth


By Kevin Yao and Joe Cash

BEIJING (Reuters) -China said on Saturday it will “significantly increase” government debt issuance to offer subsidies to people with low incomes, support the property market and replenish state banks’ capital as it pushes to revive sputtering economic growth.

Without providing details on the size of the fiscal stimulus being prepared, Finance Minister Lan Foan told a news conference there will be more “counter-cyclical measures” this year.

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“There is still relatively big room for China to issue debt,” said Lan.

The world’s second-largest economy faces strong deflationary pressures due to a sharp property market downturn and frail consumer confidence, which have exposed its over-reliance on exports in an increasingly tense global trade environment.

A wide range of economic data in recent months has missed forecasts, raising concerns among economists and investors that the government’s roughly 5% growth target this year was at risk and that a longer-term structural slowdown could be in play.

Data for September, which will be released over the coming week, is expected to show further weakness, but Zheng Shanjie, the chairman of the National Development and Reform Commission (NDRC), China’s state planner, said he was “fully confident” that the target will be met.

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Fiscal stimulus measures in China have been the subject of intense speculation in global financial markets after a September meeting of the Communist Party’s top leaders, the Politburo, signalled an increased sense of urgency about mounting economic headwinds.

Chinese stocks reached two-year highs, spiking 25% within days since that meeting, before retreating as nerves set in given the absence of further details on the government’s additional spending plans.

Reuters reported last month that China plans to issue special sovereign bonds worth about 2 trillion yuan ($284.43 billion) this year as part of fresh fiscal stimulus.

Half of that would be used to help local governments tackle their debt problems, while the other half will subsidise purchases of home appliances and other goods as well as finance a monthly allowance of about 800 yuan, or $114, per child to all households with two or more children.

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Separately, Bloomberg News reported that China is also considering injecting up to 1 trillion yuan of capital into its biggest state banks to increase their capacity to support the economy, primarily by issuing new sovereign bonds.

Additional debt issuance in China is typically subject to formal approval by its rubber-stamp parliament, which is expected to meet in coming weeks.

STIMULUS STEP-UP

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The central bank in late September announced the most aggressive monetary support measures for the economy since the COVID-19 pandemic, including numerous steps to help pull the property sector out of a multi-year slump, including mortgage rate cuts.

However, while the measures have lifted Chinese share prices, many analysts say Beijing also needs to firmly address more deeply-rooted structural issues such as boosting consumption and reducing its reliance on debt-fuelled infrastructure investment.

Most of China’s fiscal stimulus still goes into investment, but returns are dwindling and the spending has saddled local governments with $13 trillion in debt.

Lan said Beijing will support local governments to resolve their debt issues, adding that they still have a combined 2.3 trillion yuan ($325.5 billion) to spend in the last three months of this year, including debt quotas and unused funds.

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Local governments will be allowed to repurchase unused land from property developers, Lan said.

Low wages, high youth unemployment and a feeble social safety net mean China’s household spending is less than 40% of annual economic output, some 20 percentage points below the global average. Investment, by comparison, is 20 points above.

A private report by recruiting platform Zhaopin showed that average pay offered by recruiters in China’s 38 major cities fell 2.5% in the third quarter from the second.

Swedish furniture retailer IKEA, whose 39 stores in China have felt the spillovers from the property crisis, urged Beijing on Thursday to deploy further stimulus.

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(Reporting by Joe Cash, Kevin Yao and Ellen Zhang; Writing by Eduardo Baptista and Marius Zaharia; Editing by Kim Coghill)



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