Thursday, July 26, 2018

Learning some basic economic principals

This little play list on YouTube will help you get acquainted with some economic principals in a very short time. Each is about 5 or 6 minutes in length and covers the Budget Process, Debt and the Deficit, Impact of the Economy on the Deficit, Benefits of International Trade, Composition of Gross Domestic Product and Understanding the Unemployment Rate. 

He does not cover Supply and Demand, which is basic to all economics, but I will find a good course soon for that. 

Enjoy.

Econ-1 with John Taylor

Monday, July 23, 2018

How to dodge the debt train

Debt is a problem, and it will come calling home sooner or later. Be prepared. It could cause massive upheavals in global financial systems, and result in large moves down in markets. See my previous post on debt.

But do not be afraid, just be prepared. I subscribe to a free weekly newsletter from John Mauldin called Thoughts from the Frontline.  You should subscribe. It's worth your time.

In the July 20 issue, he provides this advice to small investors. 
If you are early in your investing career or still consider yourself small, the most important things you can do are:
  1. Simplify your lifestyle and save more money. That’s not particularly fun, but in the long-term will pay huge dividends.
  2. Get out of debt. Do not carry debt on credit cards. Pay your credit cards off as quickly as possible. Saving is easier when you aren’t paying 18% interest. You’re not going to get 18% on your investments.
  3. There are a whole host of options for how to save. For small investors, there is not much magic. Some of you are going to roll your eyes, but I suggest reading some books by my good friend Suze Orman, or (if you have a more religious bent) Dave Ramsey.
  4. Move as much money as possible into tax deferred accounts. Taxes are the #1 killer of investment returns... 
Where to invest? Now I’m going to talk out of both sides of my mouth. For smaller accounts, use low-cost index funds or ETFs. But consistent with my philosophy, you do not want to buy and hold forever. You need some kind of risk management rule. If nothing else, use the web to run a 200-day moving average on whatever index funds you choose. Check once a week and if your fund goes below the moving average, then rotate into a short-term Treasury fund. Jump back in when it crosses above.
I couldn't agree more.

Debt: It's a problem

The global debt level is reaching shocking new heights. The Institute of International Finance recently estimated the current total world debt is roughly $247 trillion—a truly unprecedented figure.

But as frightening as the global debt has become because of the dangers it poses to the world’s economic stability, Americans should be far more terrified of what this problem might mean for them, especially if the globe endures another major financial collapse before the United States can get its fiscal house back in order. Put simply, America is on the verge of experiencing an absolutely catastrophic period of economic change, and it’s due mostly to its skyrocketing debt, which is the result of decades of reckless government spending—by both political parties.


Full story here.

Friday, July 20, 2018

Update on Economic News

Texas to become 3rd largest producer of oil?

The shale oil boom has brought a gold rush mentality to the Lone Star State, which is home to not one but two massive oilfields. If it were a country, Texas would be the world's No. 3 oil producer, behind only Russia and Saudi Arabia, the investment bank said. See full story here.

Unemployment claims

The latest data on new filings for unemployment insurance suggest the labor market remains tight. Data from the Employment and Training Administration within the Department of Labor show initial claims for unemployment insurance fell to 207,000 for the week of July 14, the lowest reading since 1969. The weekly result is down from a revised 215,000 in the prior week. Using a four-week average to smooth weekly volatility, the latest average came in at 220,500, down from 223,250 in the prior week. A level of claims below 300,000 is considered consistent with a strong labor market. 


Federal Reserve Report on activity

Economic activity continued to expand across the United States, with 10 of the 12 Federal Reserve Districts reporting moderate or modest growth. The outliers were the Dallas District, which reported strong growth driven in part by the energy sector, and the St. Louis District where growth was described as slight. Manufacturers in all Districts expressed concern about tariffs and in many Districts reported higher prices and supply disruptions that they attributed to the new trade policies. All Districts reported that labor markets were tight and many said that the inability to find workers constrained growth. Consumer spending was up in all Districts with particular strength in Dallas and Richmond. Contacts reported higher input prices and shrinking margins. 


Thursday, July 19, 2018

The Ultimate List of the Year's Worst Scams

Don't get caught in a scam, or con. Always verify offers. Always question. And know what scams are out there. Experian just published a list of the most common, but there are a lot. 

The Ultimate List of the Year’s Worst Scams

Wednesday, July 18, 2018

Universal Basic Income

Chicago may become one of the first U.S. cities to implement a universal basic income program. The proposal, introduced by Chicago Alderman Ameya Pawar, would provide 1,000 families with a $500 monthly stipend - no strings attached. The bill already has the backing of the majority of city lawmakers, and Pawar hopes to soon work with Mayor Rahm Emanuel to implement the pilot program.

This was reported at Seeking Alpha this morning. So is Universal Basic Income a good idea? To a socialist, nothing could be better. 

Only problem? Who pays for it? For a city that has been struggling to balance it's budget, I find it absurd. 

(Is $500 a month for 1,000 people "universal" and "basic income?" I try not to be cynical, but sounds like buying votes to me.)

As Margaret Thatcher once said: "The problem with socialism is that eventually you run out of other people's money."

Those interested in expanding their knowledge of the subject will find these articles worth their time:

Why Socialism Doesn’t Work, as Learned by a Waiter


Monday, July 16, 2018

Update on the SPY

Last month, on June 22, I noticed some weakness in the market. This has changed, which put me back in the market over the last couple of weeks. Best to do it gradually.  




13 Lies Keeping You Poor

A good read at Lauren Greutman's blog. These are points you need to consider seriously. 
1. You need to make car payments.
2. You need a bigger house.
3. There's no point in budgeting when you don't make much money.
4. You can't invest.
5. Your kids will be emotionally harmed if you don't take them to Disney every year.
6. You kids will be emotionally harmed if you don't get them an iPhones.
7. You need to buy all organic or your family will be unhealthy.
8. Once you get a raise, everything will be fine.
9. You can start saving for retirement later.
10. You can't afford to give to charity.
11. You are stuck in your current financial situation.
12. Your job sucks.
13. Your home is a good investment. 

Read the full article by Lauren Greutman at her blog.

Sunday, July 15, 2018

Denzel Washington's Life Advice

It's important to learn from successful people. 



Bits of Wisdom for the Stock Trader

Trading is simple, but it ain't easy. If you want to stay in this business, leave "hope" at the door and stick to your stops. 

When you get into a trade, start looking for signs right away that you are wrong. If you see them, then get out before your stop is hit. Trading should be boring, like factory work. If there is one guarantee in trading, it is that "thrill seekers" get their accounts ground into parking meter money. 


Amateur traders turn into professional traders when they stop looking for the "next great technical indicator" and start controlling their risk on each trade. 


Professional traders only place a small portion of their assets into 1 position. Or if they take on a large position, then they strictly limit their risk to 1-2% of their current equity. Amateurs typically place a large portion of their assets into 1 position, and they give it "room to move" in case they are actually right. This type of situation creates emotions that ruin accounts, while professionals are able to make decisions and cut losses because they strictly define their risk.


Professional traders focus on limiting risk and protecting capital. Amateur traders focus on how much money they can make on each trade. Professionals always take money away from amateurs.

Why Are You Not Successful?

Time is more valuable than money.

Poor thinking habits keep most people poor. 

It may not be New Year's, but this is important any time of the year. 




Weekend Reads

Quantum Economics Today’s economists may think that’s [inductive reasoning] what they are doing, but they often aren’t. They begin with m...