What a difference a year makes. The week leading up to Christmas 2018 was the worst for U.S. stocks since the 2008 crash. The market was already in turmoil when Treasury Secretary Steve Mnuchin sent out a bizarre tweet on Christmas Eve to say that he had spoken with the CEOs of the nation's six largest banks and was reassured that there were "no liquidity problems or margin issues." The statement was meant to pacify jittery investors but instead had the exact opposite effect. In what is normally a quiet day for the market, traders fled and sent the Dow… Read More

What a difference a year makes. The week leading up to Christmas 2018 was the worst for U.S. stocks since the 2008 crash. The market was already in turmoil when Treasury Secretary Steve Mnuchin sent out a bizarre tweet on Christmas Eve to say that he had spoken with the CEOs of the nation's six largest banks and was reassured that there were "no liquidity problems or margin issues." The statement was meant to pacify jittery investors but instead had the exact opposite effect. In what is normally a quiet day for the market, traders fled and sent the Dow tumbling 650 points. It was the worst Christmas Eve selloff on record. There was a nice bounce two days later, but the damage had been done. The Dow Jones finished the month with a painful 9% decline, the worst December performance since 1931 when the country was in the grip of the Great Depression. I didn't buy into the doom and gloom. Unlike in 1931, the underlying macro backdrop at the time was quite positive. The following week, I said that "this crisis feels more manufactured than real" and predicted we'd see "a recovery on the horizon once confidence returns."… Read More

Einstein called it “the most powerful force in the universe.” But you don’t need to be Einstein to understand why it’s has also been called an investor’s best friend — or to see how you can profit from it. The modern world’s most celebrated intellect was referring to the concept of compounding — the practice of earning money on what you have already earned. Fortunately, you don’t need to be an Einstein to understand why compounding has also been called an investor’s best friend — or to see how you can profit from it.  Stop me if you’ve heard this… Read More

Einstein called it “the most powerful force in the universe.” But you don’t need to be Einstein to understand why it’s has also been called an investor’s best friend — or to see how you can profit from it. The modern world’s most celebrated intellect was referring to the concept of compounding — the practice of earning money on what you have already earned. Fortunately, you don’t need to be an Einstein to understand why compounding has also been called an investor’s best friend — or to see how you can profit from it.  Stop me if you’ve heard this one: In ancient Greece there was a merchant — let’s call him Demetrios — who had a reputation as a savvy money-handler. An acquaintance brought over a wagon-load of drachmas (coins variously estimated to be worth about $0.19 apiece) and asked Demetrios to put the money in a trust and invest it for 2,000 years. Demetrios kept all of his acquaintance’s money as commission, save for a single 19-cent drachma, which he invested in an Athenian bond paying 3% annually. After 2,000 years of reinvesting the returns from the 3% payout, according to the math, that drachma would have grown… Read More

Here’s a bit of trivia… Did you know there are at least 79 different shoe sizes?  There is even an International Organization for Standardization publication for footwear sizing explaining the conversion of sizing systems and how manufacturers should size their products. Shoes are obviously important, and that level of detail is certainly necessary. And, thanks to detailed formulas included in the standard, we can all be certain to find shoes that fit.  I wish there was a similar publication explaining how to allocate positions in an investment portfolio. But, there’s not. There are some general guidelines. One is the 60/40… Read More

Here’s a bit of trivia… Did you know there are at least 79 different shoe sizes?  There is even an International Organization for Standardization publication for footwear sizing explaining the conversion of sizing systems and how manufacturers should size their products. Shoes are obviously important, and that level of detail is certainly necessary. And, thanks to detailed formulas included in the standard, we can all be certain to find shoes that fit.  I wish there was a similar publication explaining how to allocate positions in an investment portfolio. But, there’s not. There are some general guidelines. One is the 60/40 approach. This is when you allocate 60% of your portfolio to stocks and 40% to bonds. Another approach is to use your age. To determine the allocation using this method, subtract your age from 100 to determine the percentage of your portfolio that should be in stocks. So, a 20-year old would have 80% in stocks under this formula while an 80-year old would place just 20% of their portfolio in stocks. These guidelines are fine, but they don’t tell us very much. Among the things the formulas don’t tell us is how to generate income when interest rates fall… Read More

Interest rate policy can be boring. I’m reminded of this every six weeks as the Federal Reserve meets and Wall Street’s attention turns towards the Eccles Building in Washington, D.C. For years, CNBC has used the building as the backdrop for reporters when the Fed meets — as they were yesterday. Each time the Fed meets, traders anxiously wit to see what happens. Traders watch the news, largely consisting of a reporter standing in front of a building saying things like, “There’s a meeting going on inside.” Analysts will try to explain what members of the Fed were thinking at the meeting. Read More

Interest rate policy can be boring. I’m reminded of this every six weeks as the Federal Reserve meets and Wall Street’s attention turns towards the Eccles Building in Washington, D.C. For years, CNBC has used the building as the backdrop for reporters when the Fed meets — as they were yesterday. Each time the Fed meets, traders anxiously wit to see what happens. Traders watch the news, largely consisting of a reporter standing in front of a building saying things like, “There’s a meeting going on inside.” Analysts will try to explain what members of the Fed were thinking at the meeting. —Recommended Link— [TRENDING] Weird trade doubles your money in 3 days?​ This is going to be big… Jim fink just released the details of his 310F trade. This “Friday phenomenon” could generate returns of up to 100% or more… in the next 3-10 days… and continue to pay out… week after week. You can get in on the action now by following this link. The Fed’s thinking is nearly impossible to understand, but the Fed’s goals are relatively straightforward. The Fed operates under a mandate from Congress to “promote effectively the… Read More

I hope everyone came back from Thanksgiving feeling fresh and ready to rock and roll. While it’s always good to take a break and catch up with family and friends, I usually find myself ready to get cracking after a few days. The market certainly seemed to feel that way, too. After a couple of volatile days, conflicting reports on a potential trade deal between the U.S. and China, and the ongoing impeachment battle in Washington, the market capped off the week with a blowout jobs number. According to the Labor Department, 266,000 jobs were added to nonfarm payrolls in… Read More

I hope everyone came back from Thanksgiving feeling fresh and ready to rock and roll. While it’s always good to take a break and catch up with family and friends, I usually find myself ready to get cracking after a few days. The market certainly seemed to feel that way, too. After a couple of volatile days, conflicting reports on a potential trade deal between the U.S. and China, and the ongoing impeachment battle in Washington, the market capped off the week with a blowout jobs number. According to the Labor Department, 266,000 jobs were added to nonfarm payrolls in November, smashing the estimate of 187,000. This brought the unemployment rate down to 3.5%, from 3.6%. Speaking of catching up, I recently found myself shooting the breeze with StreetAuthority’s expert analyst Jimmy Butts. When Jimmy lived close to StreetAuthority HQ a couple of years ago, he and I made a regular practice of going to the local watering hole around the corner after work to talk about life, the market, and everything in between. And while it’s always good to have beer and wings with a friend, it’s even better to have a level-headed sounding board. That’s especially true… Read More

The big story last week was the Federal Reserve. The Fed meets every six weeks, and, for the third consecutive meeting, they cut rates. That’s the story. As investors, we need to dig behind the story and look at why the Fed cut rates. Interest rates are one of the Fed’s most important policy tools. They use interest rates to fine tune economic growth. This is based on the theory that excessive growth causes inflation while slow growth creates unemployment. In theory, the Fed tries to ensure interest rates are just right so that we see growth without high inflation… Read More

The big story last week was the Federal Reserve. The Fed meets every six weeks, and, for the third consecutive meeting, they cut rates. That’s the story. As investors, we need to dig behind the story and look at why the Fed cut rates. Interest rates are one of the Fed’s most important policy tools. They use interest rates to fine tune economic growth. This is based on the theory that excessive growth causes inflation while slow growth creates unemployment. In theory, the Fed tries to ensure interest rates are just right so that we see growth without high inflation or unemployment. Cutting rates generally means inflation is low and unemployment is rising. It’s the kind of situation we see before a recession. But this time is different. —Recommended Link— The safest stocks in America Like any other investor, I try to buy low and sell high… but the BIG difference with me is that I buy just one kind of stock. They sell a product that 152 million customers are virtually addicted to. And the kicker is: they are the only type of stocks mandated by law to make a profit. Read More

Warren Buffett’s favorite indicator is pointing to an overvalued market… Should you be concerned? Well, it’s certainly true that Buffett said in a 2001 interview that he believed that his indicator “is probably the best single measure of where valuations stand at any given moment.” And generally speaking, when Buffett says something, we should listen.  —Recommended Link— Want more income? How does $565 per week sound? A former military intelligence analyst has revealed the secret to effortless income generation. Imagine $565.00 per week… every week… for the rest of your life. And your… Read More

Warren Buffett’s favorite indicator is pointing to an overvalued market… Should you be concerned? Well, it’s certainly true that Buffett said in a 2001 interview that he believed that his indicator “is probably the best single measure of where valuations stand at any given moment.” And generally speaking, when Buffett says something, we should listen.  —Recommended Link— Want more income? How does $565 per week sound? A former military intelligence analyst has revealed the secret to effortless income generation. Imagine $565.00 per week… every week… for the rest of your life. And your payouts can start as early as Wednesday. Find out how to claim yours now. The indicator in question is more of a ratio, really. To be more specific, it’s the ratio of the value of the stock market to GDP. It’s also true that this indicator shows the market is overvalued by quite a bit. The chart below shows that the only time this indicator has been higher was in 2000, before the stock market crashed. Source: Advisor Perspectives But there are some problems with this analysis. First of all,… Read More

“Don’t get too accustomed to those big commission checks.” That’s what my old manager at regional brokerage house Morgan Keegan used to tell me. I was less of a cold-calling stockbroker and more of a financial advisor. Still, every now and then I’d field a random call for 100 shares of something or other. That could mean a quick $100 commission just for answering the phone. It was good money — but it wasn’t meant to last. Even then (this was the early 2000s), online trading was becoming a real threat to full-service brokers. It was difficult to justify charging… Read More

“Don’t get too accustomed to those big commission checks.” That’s what my old manager at regional brokerage house Morgan Keegan used to tell me. I was less of a cold-calling stockbroker and more of a financial advisor. Still, every now and then I’d field a random call for 100 shares of something or other. That could mean a quick $100 commission just for answering the phone. It was good money — but it wasn’t meant to last. Even then (this was the early 2000s), online trading was becoming a real threat to full-service brokers. It was difficult to justify charging $100 to buy or sell a stock when an internet site could process the same order for $10. Many investors (particularly the do-it-yourself set) were willing to forgo personalized advice in exchange for thousands of dollars in cost savings each year. Nobody wanted to admit it, but the discount online brokers were poaching customers left and right. The writing was on the wall — adapt or become obsolete. That’s the way of all business. Seeing a downhill slide in commission rates, we began steering clients away from transaction-based accounts toward fee-based platforms that charged fixed annual fees (maybe 1% to… Read More

Have you ever stopped to consider all of the potential risks you could run into during your day? I don’t recommend it; it’s not a pretty picture. Every day, we face an almost infinite number of risks — yet we rarely think about them. It makes sense — if we constantly ran through a list of all the risks we face during our day-to-day activities, many of us would never do anything. For instance, think about letting your kids sign up for a soccer league. There are potential risks associated with driving to and from the field, unknown risks from… Read More

Have you ever stopped to consider all of the potential risks you could run into during your day? I don’t recommend it; it’s not a pretty picture. Every day, we face an almost infinite number of risks — yet we rarely think about them. It makes sense — if we constantly ran through a list of all the risks we face during our day-to-day activities, many of us would never do anything. For instance, think about letting your kids sign up for a soccer league. There are potential risks associated with driving to and from the field, unknown risks from other parents whom you know nothing about, general risks associated with being in public, risks of being exposed to someone who is sick… and we haven’t even gotten to the risks associated with actually playing soccer! Instead of being crippled by fear of risk, we buy auto, home, health and life insurance to protect ourselves from significant risks that are difficult to quantify. But when it comes to investing, few take a similar approach. Rather than thinking about specific risks and setting up safeguards accordingly, many investors are content to just sit on their hands and tell themselves, “I’m focused… Read More

This might be the most unpopular thing I tell people about investing. It doesn’t win me a lot of friends by saying it, but it’s true. A good stock pick really isn’t that hard to find. In fact, sometimes it’s stupidly simple. You heard me right… —Recommended Link— What to Do Before Stocks Sink 57% With the stock market hitting record highs, most people think we must be in pretty good shape. But hold on a minute. According to Yale professor Robert Shiller, stocks are 57% too high. That’s 14,000+ points on the… Read More

This might be the most unpopular thing I tell people about investing. It doesn’t win me a lot of friends by saying it, but it’s true. A good stock pick really isn’t that hard to find. In fact, sometimes it’s stupidly simple. You heard me right… —Recommended Link— What to Do Before Stocks Sink 57% With the stock market hitting record highs, most people think we must be in pretty good shape. But hold on a minute. According to Yale professor Robert Shiller, stocks are 57% too high. That’s 14,000+ points on the Dow. Shiller won a Nobel Prize for his work on stock prices. And if he’s right, millions of investors could be about to see their investment accounts crushed. Don’t let that happen to you. Click here to see how you can avoid the same fate. The fact of the matter is we just tend to make investing too damn complicated. We overthink. We overanalyze. We worry too much over what we can’t control. We try to time everything just perfectly. Therein lies the rub. We’re our own worst enemy. If we can just manage to… Read More