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Showing posts from December, 2019

It Really Should Be a Happy New Year!

First, forget about resolutions. A year ago I posted this article that provides insight on what you should be doing, not just at the beginning of the year, but all year long.

10 Life-Changing New Year's Habits

Other reasons to celebrate, especially if you live in the United States.
Democrats peddle doom, but the middle class never had it so good
These days when you listen to the gloom of the media and many of the presidential candidates you have to wonder what country these Debbie Downers are talking about.

Former Vice President Joe Biden recently declared “the middle class is getting crushed … and the working class has no way up.”

Sen. Bernie Sanders stews that President Trump’s policies have brought “handouts for billionaires and hunger for the poor.”

Mayor Pete Buttigieg claims that many working families are struggling so much financially they don’t have enough income to be able to “afford a two-bedroom apartment.”

The Washington Post says that Americans are awash in debt that …

U.S. Economy Better than Ever

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We're being told on a daily basis by Democratic candidates how bad things are, how the middle class is disappearing, how capitalism has failed, and we should embrace socialism. 
But that is not what's really happening. 
From the Washington Times: 2019 was a very good year, despite a dysfunctional Congress. A few weeks ago, a friend said she had noticed that clothing was getting less and less expensive and, in fact, many items seemed to be getting less expensive... In the United States, there are more jobs than workers. Wages for all groups are rising faster than prices. What is particularly remarkable — and a very good sign — is that wages for the lowest income and least skilled are rising faster than other groups... Medical advances are accelerating, with people not only surviving from many ailments that would have killed them a few years ago, but living relatively normal lives after serious cancers, heart operations and accidents. Recovering quicker and better after a medic…

Quotes of the Day

From Justin Haskins at FoxNews and Stopping Socialism:
If you asked our foreign enemies to come up with a plan to destroy the American economy and plunge our country into another Great Depression, they couldn’t come up with anything that would do the job as well as the Green New Deal.Read more.

From Derrick Wlodarz at betanews:
So what has censorship in the modern age for the Facebooks and Twitters of the world devolved into? Siloed decision making by secretive "boards" that have limited diversification of background and worldview, all pushing ever-changing directives out to technical teams which must implement these wishes into algorithms for their respective platforms.  Yes, at a 10k foot view, that's the most common protocol for how censorship is implemented as a matter of policy for the tech giants. If this shadowy process doesn't raise an eyebrow, it darn well should.Read more.
Worst of the Decade: Celebrity Freak-Outs: “One of the things I stopped doing is do no…

Markets Hit Record Highs: Now What?

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So, how did the markets do on Friday (Dec 27, 2019)?

Well, the Dow was up about 23.87 points (0.08%) to 28,645.26. The S&P 500 was unchanged at 3,240.02, but it still managed to lock down a fifth straight week of gains. The Nasdaq slipped 0.17% to 9,006.62. All three averages hit new intraday highs in yesterday's session.

The S&P 500 is set to break a historic record. Right now, it's gained 29.3% this year. If it can achieve the 29.6% (or better) mark, it will be the best year - ever. The last time it hit that benchmark was in 1997.

So now what? If you're invested in equities, do you sell? Or do you continue to hold? Or if you're not invested, do you buy? If you think the answer is to just buy and hold, you're in the wrong place. My philosophy is buy, hold, and sell. See my article Beware Your Broker to get started. The last bear market was a 57% decline and took 6 years to break even. I can't handle that for my retirement, can you?

So we will sell, whe…

A Christmas Gift for U.S. Taxpayers: Government Waste

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Absurd things the U.S. government spends money on. Your money on. And we're more than $23,000,000,000,000 in debt.
The NIH and NSF are spending $1.2 million to study online dating habitsThe State Department is spending $15.825 million on free college for international studentsUSAID is spending $20 million to teach Lao to Laotians.The State Department is spending $2 million to improve TV programming in MoldovThe U.S. gave the Asia Foundation, which is "committed to improving lives across Asia" about $17 million. And $16.7 for international fisheries commissions.The National Science Foundation spent $103,777 to teach social scientists how to apply for grants. The Pentagon sent $2,7 million in surplus military gear to police in Thetford Township, Michigan, population 7,000. The National Science Foundation spend $650,000 to see if STEM majors benefit from a college program based on social justice
The Federal Government also wasted American's tax dollars as it:  Attempted t…

Interesting Reads

Recalling the Battle of the Bulge
Seventy-five years ago, at the Battle of the Bulge (fought from Dec. 16, 1944, to Jan. 25, 1945), the United States suffered more casualties than in any other battle in its history. Some 19,000 Americans were killed, 47,500 wounded and 23,000 reported missing.

Stock Picking is Hard. Deciding What Kind of Investor You Are is the First Step
For new investors, the universe of investing can feel a little like the ancient terracentric paradigm. Daily stock prices are quoted. Big movers are highlighted on television. But why stocks are moving remains mysterious.

Government Mandates and Crummy Dishwashers
American dishwashers used to work. They were wonderful labor-saving devices. They kept our kitchens cleaner. They sanitized the dishes, helping to stop cross-contamination and generally improving health over the iffy process of handwashing. …Then one day they just stopped doing the work. What happened?

In 2020 Climate Science Needs To Hit the Reset Button In a…

The Week Ahead; Dividend Update

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Investors are due for a light period of action with Christmas landing right smack in the middle of the week. The markets close at 1:00 p.m on December 24 before taking a day off on Christmas. Despite the holiday vibe, intriguing economic reports will come in this week on new home sales and durable goods, although the earnings calendar and corporate events schedule are both bare.

Across the Pacific, the latest update on China trade data could be interesting, while Chinese, Japanese and South Korean leaders are gathering in southern China to work on a potential free trade deal. Finally, even if you don't believe in Santa Claus, you can believe in the Santa Clause rally. The S&P 500 Index has posted an average gain of 1.3% during the final five trading days of the year and the first two tradings days of the new year over the last 70 years. 
However, markets in general are overvalued based on the Shiller PE Ratio (chart below), but are no where like it was during the dot.com boom …

The Santa Clause Rally

While spending an interesting week in an advanced futures trading class, we noticed an uptrend in the market (indexes).  The markets frequently rally at this time of year, or the so-called Santa Clause Rally. This week was no different.

U.S. stocks notched another record setting day, as the Santa Claus rally continues. It was more mixed internationally in equity markets. U.S. Treasury yields fell slightly, but the Dollar Index was higher, courtesy of a larger drop in European yields and continued uncertainty surrounding Brexit. Gold and oil were lower. Personal Income topped estimates with Personal Spending matching expectations. University of Michigan Consumer Sentiment hit a one and a half year high. Nike posted upbeat quarterly results, but disappointing margins pressured shares of the athletic and apparel maker, while shares CarMax fell after results fell short of estimates. For the week, the major indexes advanced solidly led by the Nasdaq’s 2.2% gain.

State Tax Changes as of Jan …

U.S. News & World Report Recommendations: Here's My Take

In a recent article U.S. News and World Report recommended 11 stocks that pay "great" dividends.

Here's my take. The whole purpose of this exercise is to illustrate that while a lot of people are making recommendations, only you can do the research and exercise due diligence before investing your own money. My recommendation if you're looking for yield is to search for an ETF that offers decent yield, and can spread the risk among dozens of companies. While you might get a little less yield, you get less risk.

Altria Group (MO)
Current Yield: 6.7%
Besides investing in cigarette brands, its PE is twice the sector average, earning are not growing and its dividend payout ratio is high. Sales and earnings growth is anemic. I would avoid.

Macherich Co. (MAC)
Current Yield: 11%
This is a REIT that invests in malls. That for me says no. There are better REITS out there.

Macy's (M)
Current Yield: 9.9%
At one time, Barron's recommended Macy's when it sold for $35 per…

Most Americans Do Not Trust the News Media

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Most Americans Do Not Trust the News Media A poll by MSN.com. While not statistically valid (the sample was not selected according to survey principles), it is interested that 65 percent out of more than 600,000 responses say the mainstream news reports false or misleading information. 

Asked differently, How much do you trust the news media? 58% out of 250,000 people said not much or not at all. 


Retails Sales Disappoint

Retail sales rose 0.2% in November, below the consensus of 0.5%. Vehicle and gas station sales accounted for most it, up 0.5% and 0.7%, respectively. Excluding these two categories, retail sales were flat.

Part of the disappointing performance was likely due to seasonality. The late Thanksgiving holiday this year left six fewer days in the holiday shopping season than last year. Several retail categories posted notable declines, including apparel, sporting good and hobby stores, and health and personal care stores. Restaurant sales fell for the second straight month and by the most in a year. Those were offset mostly by gains in electronics and online shopping. Measures of discretionary retail sales and its core picked up 0.2% and 0.3%, respectively, both below their historical means.

On a y/y trend basis, retail sales were up 3.5%, which is better than the pace early this year, but worse than the average in 2018. Discretionary retail sales y/y growth and its core have also improved o…

Trump Says Trade Deal Close; Market Jumps

SPY Chart by TradingView. The SPY jumped about 2.5 points on the announcement at 8:35 a.m. via Twitter. The chart here is dynamic and will change as time goes on.



Dividend Safety

I don't normally invest in individual companies -- though I will make exceptions. I'm retired so my days of high-growth investing are mostly over; having said that, I still want some growth in my portfolio. But I want income, and besides bonds, which are pretty boring, I like dividends. 
 But if you're investing for dividends and you're investing in a company, you must insure dividend sustainability. When a company reduces or suspends its dividend, the normal result is the stock will tank, erasing all your gains and creating a loss. 
(This is why I'll invest in an ETF that focuses on dividends, especially if they pay out monthly, which individual companies don't do. This spreads the risk around).
The most important factor is a company’s payout ratio. This is the percentage of net income a company pays its shareholders as dividends. The lower the payout ratio, the safer the dividend payment.
The second factor is the company’s debt-to-equity ratio. The more debt…

Investing Advice and the Four Most Dangerous Words in the English Language

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I took Chris Haroun's finance course at Udemy and found him fun to watch. Here, he provides some insight to investing. Owning stock is like owning a business. Investing is long-term. Day trading is not a sustainable business model.


What's Holding You Back? You Are

The end of 2019 nears. This is always a good time of year to review your goals and plans and update them for the next year.

It's also a good time to review the basic principals for sound financial planning and maintaining your financial freedom -- and if you've not gained financial freedom yet, continue with your striving for that goal. It's a life changer.

So what has been holding you back? Still living paycheck to paycheck? Or do you have too much debt and maybe having difficulty paying it down? Here are some of the most common ways people are subconsciously (or even consciously) sabotaging their own financial well-being.

1. You don't follow a budget

Following a budget is important for anyone, regardless of their net worth. Without one, you might do more spending than saving. That could lead to debt and it will certainly hamper your ability to prepare for your future.
Study this article on How Do I Create A Budget. Then do it. 
2. You don't set clear financial goal…

Weekend Reads

Quantum EconomicsToday’s economists may think that’s [inductive reasoning] what they are doing, but they often aren’t. They begin with models that purport to include all the important variables, then fit facts into the model. When the facts don’t fit, they look for new ones, never considering that the model itself may be flawed.

Furthermore, as I have shown time and time again, they assume away reality in order to construct models that are in “equilibrium” with themselves. This is supposed to give us insight into the reality that has been assumed away. 
Comparing Capital Gains Tax Proposals by 2020 Presidential Candidates In less than two months, voters will cast their choice in the Iowa caucus to begin the process of selecting the next Democratic presidential candidate. The candidates currently in the top 3 polling positions—former Vice President Joe Biden, Senator Elizabeth Warren (D-MA), and Senator Bernie Sanders (I-VT)—have all proposed sweeping changes to the tax code, especially …

Job Numbers Higher, Unemployment Rate 3.5 Percent

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Nonfarm payrolls (chart) jumped by 266,000 jobs month-over-month (m/m) in November, compared to the Bloomberg forecast of an 180,000 increase. The rise of 128,000 seen in October was revised to a gain of 156,000 jobs. Excluding government hiring and firing, private sector payrolls increased by 254,000, versus the forecasted gain of 178,000, after rising by 163,000 in October, revised from the 131,000 increase that was initially reported.

Note: Job numbers include 50,000 GM workers who returned to work. 

The unemployment rate dipped to 3.5% from October's 3.6% rate, where it was expected to remain, while average hourly earnings were up 0.2% m/m, below projections of a 0.3% increase, but October's initially-reported 0.2% rise was adjusted upward to a 0.4% gain. Y/Y, wage gains were 3.1% higher, versus estimates of a 3.0% pace, and versus October's upwardly-revised 3.2% increase. Finally, average weekly hours remained at 34.4, matching estimates. 
Today's upbeat Labor Repo…

SPY ETF Closing Price

SPY Chart by TradingView

Markets Turn as December Opens

As I write this, the market is down (DJIA) about 325 points, or 1.2 percent. After a loss of 268 yesterday, this is the largest decline in more than two months. The decline is reportedly a reaction to weaker manufacturing data and Trump's remarks on a trade deal.

I've been talking about this possibility for longer than that. See What Do I Do Now, from Sept 24; This Pattern Is Another Warning Sign, Nov 2;  and of course, some advice in general portfolio management for any market: What should my investment strategy be right now if a recession is imminent? or Have a Smart Trade Plan Before You Invest.

Many brokers and advisors and other "experts" on portfolio management prescribe the buy and hold, yet reallocate, method. This involves deciding on a mix of investments, for example 60 percent stocks and 40 percent bonds (or fixed income). Then on a regular basis, you re-balance the portfolio to maintain that ratio.

There are studies that show this is a valid method that c…

Have a Smart Trade Plan Before You Invest

When you buy a stock, it’s likely because you sense an opportunity. But how often do you establish the parameters for making profits? How will you know when to get in or out of a trade?

These are questions you should ask yourself before entering a trade. Creating a step-by-step trade plan—a blueprint for how to build positions and reshape them as conditions warrant—can help you develop a disciplined approach to your trading.

Before beginning any trade plan, perform a quick self-evaluation:
Are you buying a stock for fundamental or technical reasons?Which investing style do you prefer (e.g., growth or value, trend or countertrend)?Determine your view of market sentiment: Is momentum generally tilted up or down? Once you have your bearings, and you’ve identified a list of stocks or exchange traded funds (ETFs) based on your research analysis method—fundamental, technical or both—you’re ready to embark on the actual planning. Here are five key steps to help you create a smart trade plan:

K…