Time Well Spent – A Couple Hours with The Wall Street Journal

A starting point for becoming knowledgeable about business and finance is simply to read The Wall Street Journal everyday.  If you just do that, you’ll find your knowledge and understanding growing all the time and you’ll be way ahead of everybody else. 

For instance, just consider some of the interesting and educational stuff in today’s edition:

The front page of the “Money & Investing” section had a fascinating article (subscription required) on the consequences of increasing life spans and historically low long term interest rates.   Thomas Hess, chief economist at the world’s largest re-insurer, Swiss Re, said:

Low interest rates, together with growing longevity, are a big problem.  It means individuals have to rethink how they will finance their old age, and it’s an issue for institutions and the whole society.

Long term bonds are a staple in the portfolios of pension funds, insurance companies, individuals and governments in their attempt to meet their long term medical, retirement and life insurance obligations.  With increasing longevity and low long term rates, however, this makes it very difficult for them to generate the kinds of returns they need to meet these obligations.

One consequence of low long term rates has been a shift by these institutions away from bonds and towards equities.  Another is an increasing use of alternative investments like hedge funds and private equity:

One study projects that the amount of money institutional investors sink into hedge funds will grow to more than $1 trillion by 2010 from $360 billion last year, with roughly two thirds of the increase coming from retirement plans.

Every Wednesday, in the “Marketplace” section, The Wall Street Journal has “The Property Report”.  Today’s included an interesting article: “Amid Slump, Real Estate Agents Hang Up Their Blazers: Housing Downturn Leads to an Industry Shakeout; Seeking Alternative Careers” (subscription required). 

David Lereah, chief economist of the National Association of Realtors and real estate perma-bull, predicts a 6-8% decline in membership, which reached a record of 1.4 million in 2006, in the trade group this year. 

Also in “The Property Report” was an interesting article on the real estate market in Bakersfield, CA (subscription required).  Bakersfield has seen a surge in population and alot of new single family homes built in the last few years.  Now they are expecting commercial development to catch up: “We have the rooftops.  Now we need to focuse more on the commercial side”, said Richard Chapman, chief executive of Kern Economic Development Corp. (Bakersfield is a part of Kern County). 

Finally, the front page had an article about how the San Francisco Planning Department finally approved a use for its long vacant Armory Building on the edge of the Mission District: making porn movies (subscription required).  After turning down turning it into a church, apartments or using it for storage the Planning Department finally found a use that matched up with it’s zoning for “heavy commercial” use:

Real estate developers need special permission to build, say, condos or a church.  Making films – even dirty movies – is OK.  Tim Frye, a city planner who helps oversee the Mission neighborhood, says he found no reason to block the sale of the Armory to Kink.  ‘Film production is a very sympathetic use’ of the building, he says. ‘What happens in there is a private matter.’

The previous owners two year effort to convert it into condos kept hitting roadblocks:

Mr. Badiner [a city planning official] and other officials who signed off on the plan say it’s hard to imagine a better proposal than this one.  Amit Ghosh, director of the city’s Planning Department, has publicly said, ‘The planning code …. is not really worried with moral propriety.”

Maybe Bill O’Reilly is onto something when he sneers at “San Francisco values”!