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Showing posts from June, 2020

The World Rises Out of Extreme Poverty

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In 1800, 90% of the world's population lived in extreme poverty. In 2019, 10% did. During this 220 year span, 80% of the population of Earth rose out of extreme poverty.
According to the World Bank, people living in poverty have access to shelter, food, clean water, and basic services provided by the government or private entities. On the other hand, people who live in extreme poverty are severely deprived of basic human needs and often do not have access to service aids.
Most of a country's shift out of extreme poverty coincides with its industrialization.
The entire population of the U.S. has been effectively out of extreme poverty since about 1940. 
Most of China's population was stuck in extreme poverty until 1976, after which, the country suddenly began advancing out of it, slowly at first, then much more quickly, as if they had been unnaturally constrained before.

India's rise out of poverty is also impressive, though it started progressing earlier than China and has …

History is Important, But No Longer Taught

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"From this I conclude that the best education for the situations of actual life consists of the experience we acquire from the study of serious history. For it is history alone which without causing us harm enables us to judge what is the best course in any situation or circumstance." -- Polybius, The Rise of the Roman Empire (about 100 BCE).

A survey by the American Council of Trustees and Alumni found that “more Americans could identify Michael Jackson as the composer of ‘Beat It’ and ‘Billie Jean’ than could identify the Bill of Rights as a body of amendments to the U.S. Constitution,” “more than a third did not know the century in which the American Revolution took place,” and “half of the respondents believed the Civil War, the Emancipation Proclamation or the War of 1812 were before the American Revolution.” Oh, and “more than 50 percent of respondents attributed the quote ‘From each according to his ability to each according to his needs’ to either Thomas Paine, George…

Should I Pay Extra on My Mortgage?

If you mean do I pay extra toward my principle, then yes. While many financial advisors — and many “armchair” internet “experts” — will tell you not to do this, because you can get a better return in the market, that’s not always the best case. That you have to figure out yourself.Here’s a couple of reasons to starting paying down your mortgage:You don’t have enough equity (the difference between what you owe, and the home’s value). If you don’t have at least 20%, pay it down.You’re getting closer to retirement, you’re debt free, and you’re saving at least 10 percent toward retirement. Use the extra funds to pay it down. If you hit retirement with a home free and clear, you’re going to be glad you did.Having no mortgage, especially if you’re already retired, gives you the option of using the equity in your home for retirement funds, such as a reverse mortgage. I wouldn’t recommend this for everyone, but it is an option. (Having a sufficient retirement account and income is the best pl…

An Emergency Fund is Not Optional

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There is nothing that will derail your goals of becoming financially independent, or financially solvent, or debt-free, or on track for a great retirement, than not having an emergency fund. 
As the name suggests, an emergency fund is a stash of money set aside to cover living expenses in case of an emergency like a job loss, unexpected medical need or last-minute car repair. But how much money you should have in that fund depends on your income and your financial obligations, especially basics such as rent, utilities and food.
Your emergency fund should be used only as a last resort for real emergencies, once other strategies such as reducing your expenses have been exhausted. Making that commitment will mean you'll have access to this money when you truly need it, something you'll be grateful for.

Your emergency fund should be separate from your regular checking and savings accounts, and it should be filled with money only for emergencies. It's best to put your emergency mo…

Using Stop Orders as Part of Your Investing Strategy

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Update, Jun 11:As I noted below, a danger in stop orders is that if the prices gaps below your indicated sell price, the order will be executed lower than you anticipated. This was the case today for SCHD, the example used below. The stop price was $54.45. However, the market gapped down at opening, and SCHD sold at 53.63. (See chart below). I still kept a profit of $840, but this was slightly lower than I had planned. But if the market continues to sell off, I will have protected at least most of my profit in the position. I have the option of buying back in, if I think the market will reverse.


Have you ever sold a profitable position only to see it advance once again, leaving you in the dust? For example, you buy AMD at $19, then sell it at $32. That's a nice profit, and I'd be happy. But, shortly after you sell, over the next few weeks, it takes off like a rocket and advances to $55.
One method to manage this situation is through the use of sell stop orders. A sell stop order…

Factfulness: Ignorance about global trends. The world is actually getting better.

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From the layman to the elite, there is widespread ignorance about global trends.
Author and international health professor, Hans Rosling, calls Factfulness “his very last battle in [his] lifelong mission to fight devastating global ignorance.” After years of trying to convince the world that all development indicators point to vast improvements on a global scale, Rosling digs deeper to explore why people systematically have a negative view of where humanity is heading. He identifies a number of deeply human tendencies that predispose us to believe the worst. For every instinct that he names, he offers some rules of thumb for replacing this overdramatic worldview with a “factful” one.

In 2017, 20,000 people across fourteen countries were given a multiple-choice quiz to assess basic global literacy. Examples of…

Employment up, market rallies: the takeaway

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Employment stunningly rose by 2.5 million in May and the jobless rate declined to 13.3%, according to data Friday from the Labor Department that was far better than economists had been expecting and indicated that an economic turnaround could be close at hand.

Economists surveyed by Dow Jones had been expecting payrolls to drop by 8.33 million and the unemployment rate to rise to 19.5% from April’s 14.7%. If Wall Street expectations had been accurate, it would have been the worst figure since the Great Depression.
As of 9:00 AM June 5, the DJIA is up about 700 points, and the S&P 500 is up 60+, or 2.5%.
Stocks rally because investors focus on the future... And the latest airline data suggests a slow (but steady) return to normalcy. COVID-19 still has no tangible solution. Trade tensions with China are bubbling. Civil unrest is breaking out nationwide. But the Nasdaq 100 just hit a record high and the S&P 500 is down only 8% from its February peak — all because investors are focus…

CARES Act provides protections to VA loan holders

On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act, Public Law 116-136. The CARES Act protects borrowers with Federally-backed mortgage loans who are experiencing financial hardship due to the COVID-19 national emergency.

The CARES Act provides multiple protections on your VA-guaranteed loan if you experience financial hardship directly or indirectly caused by the COVID-19 emergency, regardless of your loan’s default status. These protections include:A defined forbearance period of up to 180 days, with the possibility for extending it for another 180 daysA foreclosure and eviction moratorium for 60 days starting March 18, 2020Instructions on how mortgage servicers are to report to the credit agencies. For example, borrowers who have requested the COVID-19 Forbearance option are not considered to be delinquent for purposes of credit reporting. A forbearance is a defined time period of one month or longer during which your mortgage ser…

5G. Was it worth it?

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In January 2019 I proposed the following basket of stocks related to 5G as a possible portfolio. 

The initial total investment was $75,000. The value is currently $102,526, for a profit of $27,524.  If dividends are included, the profit is $30,037, for a total return of 40 percent (annualized to 30 percent annually). 
While some of these stocks are near or at 3-year highs, it might be worth investigating the following stocks in a smaller basket: ADI, DLR, GLW, QCOM, T, VIAV, XLNX. These companies also pay dividends, so a play on that alone would be worth an annual yield of 2.9%. 
Do your due diligence. Happy investing.