Showing posts from 2021

Why We Can't Get Rid of the Internal Combustion Engine

Why are car manufacturers still improving and spending money on combustion engines in the year 2020? Should all development research be going into electric cars and electric vehicle technology? Unfortunate news if you think ICE transportation is going away in the near future to be solely replaced by electric vehicles (EVs). The internal combustion engine is still incredibly relevant today, and can still use further improvements in order to reduce global emissions.  In this video we'll discuss scientific issues facing electric cars, environmental problems with ditching combustion engine research, how cost impacts customer decisions and manufacturer profits, and ultimately how consumer choice plays a large role in this industry. If you've ever wondered why combustion engines are still being developed, this video breaks down all the details.

Buy Now, Pay Later. Is This a Good Idea?

As you may have noticed, “buy now, pay later” (BNPL) options are exploding, with retailers ranging from department stores to airlines allowing customers to pay for goods and services in installments rather than all at once. In fact, in 2021 over half of consumers have used a BNPL service such as Klarna, Afterpay or Affirm to finance their purchases. These plans been around for many years, however, mostly as "buy now, use our card or credit plan, pay no interest for a year", or more. Pay no interest for 5 years! We've all seen them. But that said, there are some significant potential gotchas to think about before you give it a try. Let’s take a look at how BNPL services work—so that you can understand their pros and cons—and make an informed decision about when they may (or may not) be a good choice. BNPL plans work like an old-fashioned layaway plan in reverse. Instead of having the merchant hold on to the item until you complete all your installment payments, you receiv

Peter Lynch's 8 Rules for Investing

In this video Peter Lynch offers 8 investing rules for all beginner investors to follow. They're simple but the hard thing is sticking to them! Peter Lynch is an American investor, mutual fund manager, and philanthropist. As the manager of the Magellan Fund at Fidelity Investments between 1977 and 1990, Lynch averaged a 29.2% annual return, consistently more than double the S&P 500 stock market index and making it the best-performing mutual fund in the world. 1. Small investor's have a huge advantage 2. Know what you own 3. Don't invest purely on others opinions 4. Focus on the company behind the stock 5. Don't try to predict the market 6. Study history. Market crashes are great opportunities 7. You have plenty of time 8. You need an edge to make money I highly recommend his book.  From Amazon:  One Up On Wall Street

Weekly Market Alert: New All-Time Highs

When I wrote on July 19 about the need to avoid a panic , little did I know that my expectation that the market would not plunge into a correct would come true. Stocks rose Friday for the fourth straight session after a rough start to the week, with most major groups moving higher.  The Dow closed above 35,000 for the first time ever, bringing its 2021 gain to 14%, and rising 1% for the week despite dropping more than 700 points on Monday. The S&P 500 rose 2% for the week and the Nasdaq Composite added 2.8%. The 10-year Treasury yield rebounded to 1.29% on Friday, easing concerns about the economy that the bond market sparked on Monday when the 10-year yield fell to a five-month low 1.13%. Still, a 1.29% yield on the 10-year is not very good. The different indexes surged at the bell and held onto the gains as investors looked ahead to what's expected to be blowout earnings from big tech giants next week. The July FOMC Meeting gets underway on Tuesday and market participants wil

Will There Be Another Housing Crash?

As you may know, the housing market seems to be booming with record-low mortgage rates even post-pandemic. But could this surge be faced with a bust in the near future? That’s what I’m going to be discussing in this video. - Phil Town

Some Future Price Predictions

Note: Predictions are more entertainment, in my opinion, than "intelligence" on how to invest your money. But based on these here, I'd be overweight in energy and underweight in financials, which is exactly how I'm invested. Price Predictions Product July 23 Prices Dec 31 Prices Percent Up/Down WTI 73.45 93.15 +26.8% Natural Gas 4.03 3.58 -11.16% 30-Year Mortgage 2.78% 2.60% -06.75% Gold (ounce) $1,802 $1,620 -10.11% Silver (ounce) $25.19 $20.29 -04.90% U.S. Dollar Index 92.94

Peter Lynch: 10 Investing Myths

It can't go any lower (it can go a lot lower) How high can it go? (it can go a lot higher) They Always Come Back (No they don't) How much can I lose? If your neighbor invests $10,000 at $50 and you invest $25,000 at $3 and it goes to $0, who loses the most? Surprisingly, many investors can't answer this correctly, says Lynch.  It's always darkest before the dawn. Don't think the business can't get worse. I will sell after the rebound, after the stock gets back to what I paid for it. (Note: the stock doesn't know you own it.) I own conservative stocks (I don't have to worry). I lost money by not buying. (You actually didn't lose anything) Stock is up, I must be right. Stock is down, I must be wrong. Avoid long shots. They don't work.

Getting Out of Debt

This is a question I get asked a lot on Quora. "What are the best ways to get out of debt?" Here's my most recent answer: You really must to want to be debt-free. There is no other way. It’s a process, of both knowledge of personal finance, and modifying your financial behavior. But it is something you can achieve, if you create a plan and follow the steps of sound financial planning. I’m going to tell you up front that it will take quit a bit of work and effort on your part, depending on how much debt you have, and what you are willing to do. We had a saying in the military about what needed to be done do accomplish our mission: “Whatever is necessary.” This will be the same kind of thing. So you have to develop the same mindset. Be hungry. Personal finance is 20 percent knowledge, and 80 percent behavior. When I started I had more than $50,000 in credit card debt, had two mortgages (one on a rental house that was actually costing me more than I made in rents), and a cou

It Was Bound to Happen, Though Nothing Has Changed

Note: In the last 30 minutes of trading, the DJIA recovered somewhat, to close at 33,962, or 716 points down.   A sort of panic has set in. As I write this (about 2:20 PM CDT), the DJIA has plunged 900 points.  But that's not even 3 percent. So it's not as extreme as it sounds. In my opinion, markets had gotten ahead of themselves. Prices were too high. But economic indicators have continued showing signs of growth. The Shiller PE ratio is at 37; not an all-time high, but still very high.  While inflation is a concern, investors had that albatross for several months.  Investor (retail) sentiment was at an all-time high. According to some theories, when retail investors get this giddy, it's a sign the market may reverse direction. (In fact, most retail investors are still buying at market highs, and selling at market lows, according to most studies). The energy markets have been beaten down in the last few days. Oil (WTI) futures are down about $10 a barrel in the last five

Dow 35,000!! Now What? Weekly Market Alert

Retirement Planners of America's Senior Retirement Planner Ken Moraif reviews the economy and market events for the market week ending July 16, 2021. Learn more or sign up for RPOA's weekly Market Alerts at​ . #retirementplanning​​​

Cuba: A Role Model of Equality

From International Liberty By Dan Mitchell Nikole Hannah-Jones has said that that Cuba is a role model of equality, largely due to socialism. But she sees the world through the lens of racism, which is like having blinders on. Hannah-Jones is the creator of the  academically shoddy   1619 project . Two years ago, the New York Times unveiled the “1619 Project,” which largely argues that slavery and racism are part of the nation’s DNA. The NYT states that the project “aims to reframe the country’s history by placing the consequences of slavery…at the very center of our national narrative.” The "history" is based on Marxist thinking and Critical Race Theory.  But back to Cuba. It's a disaster. It that's the kind of equality that the left in this country is aiming for, I'll opt out. The two charts below tell the story.  But even if she's right and Cuba genuinely has equality, it's only because socialism has impoverished everyone, including the ruling class. O

Show Me the Money! But There's a Catch to Checks for Kids

The latest round of stimulus checks began arriving yesterday, but you have to be a parent to get one. Your kids also have to be under 18, with $300 per month for a child below age 6 and $250 for those aged between 6 and 17. The expanded child tax credit is aimed at cutting the child poverty rate and was part of the coronavirus stimulus package passed in March. How much will it cost? Uncle Sam is shelling out $105B for the program, which will be sent out monthly for half of this year's subsidy, with the rest to come as a tax refund in 2022. "It's the most transformative policy coming out of Washington since the days of FDR," said Senator Cory Booker (D-NJ). "America is dramatically behind its industrial peers in investing in our children. Even families that are not poor are struggling, as the cost of raising children goes higher and higher." To qualify, a) One must have filed a 2019 or 2020 tax return and claimed the child tax credit on the return, b) Had a m

Market Snapshot from Schwab


The Case for Capitalism, Parts 1 through 5

These are written and published by Daniel Mitchell, is a libertarian economist and former senior fellow at the Cato Institute. He is a proponent of the flat tax and tax competition, financial privacy, and fiscal  sovereignty. His blog is International Liberty. Part 1 This video from Dan Hannan crams 10,000 years of human history into 5 minutes. We learn about the “stationary bandit” of government and find out how our ancestors endured pervasive oppression and misery. But there’s a happy ending to the story. It’s called capitalism. Part 2 Yesterday, in Part I of this series, we enjoyed a video from the U.K.-based Centre for Economic Education, about how capitalism lifted the world from deprivation and oppression (also see videos by Don Boudreaux and Deirdre McCloskey). Today, in Part II of the Case for Capitalism, here’s a video from CEE that explains how markets provide you a cup of coffee. Part 3 Part I of this series featured Dan Hannan explaining how the emergence of capitalism led

Inflation Is Still an Issue at 5.4% Annual Rate

By Kelly Evans The Exchange The CPI report out this morning wasn't pretty. Prices are up 5.4% from last June, the most since 2008 (the core yearly gain of 4.5% is the highest since 1991). Put differently, it means your dollar doesn't go as far. The same buck that got you three candy bars in the checkout line last year falls shy of being able to buy the same three bars this year. Okay, but what if you have $1.10 to spend on candy this year because you got a raise? Now you can buy the same three candy bars and have extra change! You beat inflation, right? This is basically the argument playing out on a national level--are wage gains matching, exceeding, or trailing the increase in prices, and what does that tell us about whether these price pressures are "transitory," or not. But lost in all this is the fact that your same dollar still doesn't go as far as it used to, whether you have more money in your pocket or not. Now think about this as it relates to the whole

Notes for Investors: What Markets Indicated This Week

The bond market created fear this week when interest rates on the 10-Year Treasury Bond unexpectedly dropped. The bond market has historically been a fairly accurate predictor of where the stock market is headed. When bond rates decrease, it’s often a sign of recessionary times ahead. I believe investors were frightened by the bond market’s activity, and this caused a sell-off in the market. But is the bond market telling us we're headed toward Bear Market conditions? No, I think this all boils down to the ongoing unemployment issue—specifically, the labor participation rate. Jobs are there, but they aren't being filled because many unemployed people don’t seem ready to go back to work yet. When companies don't have an adequate labor supply, they typically do not make as much profit. Lower profits translate to lower stock prices—hence the sell-off scare we saw this week. While the recovery is not happening as fast as investors would like, I still think it’s happening and th

Treasury Yields Drop; Markets on Hold

Markets were probably a little ahead of themselves anyway. While markets have pulled back from nearly all-time highs (and in some cases, all-time highs), there is no way to tell what will happen (despite some "experts" already speculating about a market "crash".  As you see from this daily chart of the NASDAQ (as of 2:52 PM CDT on July 8), it has a ways to go before getting to correction territory.  In other news, a prolonged drop in U.S. Treasury yields is catching bond and fixed income traders by surprise, as well as other investors in the broader financial markets. The 10-year U.S. Treasury yield dropped below 1.3% on Wednesday, and fell another 7 bps overnight to 1.25%, despite lingering concerns about rising inflation and a gradual removal of Fed stimulus. Treasury yields play an important role in the economy, affecting borrowing costs on everything from mortgages to corporate bonds. While the move has mystified many traders, some are ascribing the reverse to c

No Income Tax? The Taxman Still Cometh

I live in Texas, a state proud to not have an income tax. But they make it up in property taxes. As a retired person, I'd be better off living in Oklahoma, with half the property tax and pensions not included in income taxes (which are pretty low anyway.) Let's look at another example, and compare Arizona and Texas. Assume a taxable income of $75,000 filing joint, and a property value of $400,000. Your taxes in Arizona are approximately $2,687 for income tax and $2,400 for property tax, totaling $5,087 in total taxes. In Texas, there is no income tax, but your property tax on a $400,000 home would be approximately $6,400 .  So Texas brags too much, me thinks. 

Fedeal Spending Burden


Inflation Can Ruin Your Bank and Investment Accounts

I often have a conversation with someone about safety vs. the return on bank accounts and investments. Regardless of your returns, inflation will eat away at these, either reducing your return, or reducing the balance of your investments.  Currently, as I write this, inflation is about 5% or 6%, depending on what source you read. Some say this is a transitory type inflation, and as soon as supply-demand imbalances work themselves out, inflation will go down to "normal," or 2% or less. Others say this inflation will last longer.  Regardless of what the outcome will be -- and no one can accurately predict that -- you need to be aware of what inflation can do to cash or investments. Consider that most quality bond funds pay about 2-3%, high yield bond funds are around 5-6%, and other investments, such as AT%T, will pay a 7% dividend (as least for now). And add in that most banks offer less than 1% -- as low as .05% -- interest, you need to pay attention.  This chart will show yo

Weekly Events: The Big Double-Cross; Capitalism Myths; How Many Genders Are There?

The Big Double-Cross President Joe Biden Supposedly, a bi-partisan group of Democrat and Republican Senators reached an agreement with President Biden on a $1.2 trillion "infrastructure" package. But an hour later, Biden changed the conditions of the agreement, saying he would not sign the bill, if passed, unless he also received a bill that would include everything else he wanted, some $3 trillion in other "infrastructure" programs.  Republican senators are now threatening to sink a the compromise after President Joe Biden said that its adoption was conditioned on the passage of a complementary bill containing top Democratic priorities. Multiple senators who took part in bipartisan negotiations during the bill’s creation have already said that they may now withhold their support, jeopardizing its passage given the 60 votes necessary for it to overcome a potential filibuster. “No deal by extortion!” South Carolina Republican Sen. Lindsey Graham said Friday. “It was

Treasury Inflation Protected Securities (TIPS): What You Should Know

From Charles Schwab, Inc. Inflation continues to be a concern these days, and many investors are looking for investments that can keep pace with, or hopefully beat, the rate of inflation. As a result, Treasury Inflation-Protected Securities, or TIPS, have become a popular investment option. But investing in TIPS isn't always straightforward. They have many unique characteristics that can make the investing experience a bit confusing. Here are answers to some of the most frequently asked questions about the TIPS market: 1. What are Treasury Inflation-Protected Securities? Treasury Inflation-Protected Securities, or TIPS, are a type of U.S. Treasury security whose principal value is indexed to the rate of inflation. When inflation rises, the TIPS’ principal value is adjusted up. If there’s deflation, then the principal value is adjusted lower. Like traditional Treasuries, TIPS are backed by the full faith and credit of the U.S. government. Although there are many measures of inflatio

U.S. Coportate Tax Rate About Average Among OECD


Fed stands pat, but raises inflation expectations

From Schwab Market Insight The Federal Open Market Committee (FOMC) concluded its two-day monetary policy meeting today, opting to leave its stance and interest rates unchanged, as was widely anticipated, and there was also no change to its asset purchases. However, the Committee sharply raised its expectations for inflation this year and pulled forward the timeframe of when it could begin to raise interest rates, surprising the markets. In its statement, the Committee said, "Progress on vaccinations has reduced the spread of COVID-19 in the United States. Amid this progress and strong policy support, indicators of economic activity and employment have strengthened." On inflation, it noted that prices have risen, but it still deems it as "transitory," while it also continued to reiterate its intentions to aim for an average of two percent over time, and that longer‑term inflation expectations remain well anchored at two percent. However, in the updated economic proj

Job Openings Hit New Records in April


Market Snapshot from Schwab Investing

Liz Ann Sonders shares her perspective on the U.S. stock market and economy in this monthly Market Snapshot video. Subscribe to the Charles Schwab channel:

JOLTS, a Sleepy Economic Indicator, Jolts Awake

By Kelly Evans, The Exchange, CNBC Well, JOLTS certainly lived up to its name yesterday. This is typically one of the sleepiest economic indicators, despite its acronym (for the Job Openings and Labor Turnover Survey). It comes out way after the fact--yesterday's release was data for the ancient month of April--and it's not usually a headline-grabber. Until now. My eyes certainly bulged when I saw the number. Nine-point-two million job openings?! I've never seen it that high before. It jumped by a million openings in just a month. This is truly bizarre. Not in the sense that I don't believe it--but in that the data are confirming something really, really different is going on out there. Why so many job openings? It's peculiar to reflect upon. In the 2001-2007 expansion, there were never more than about five million in any given month. By 2010, after the great recession, openings had collapsed to fewer than three million and it took more than five years for them to r

New Leak of Taxpayer Info Is (More) Evidence of IRS Corruption

by Dan Mitchell International Liberty I sometimes try to go easy on the IRS. After all, our wretched tax system is largely the fault of politicians , who have spent the past 108 years creating a punitive and corrupt set of tax laws. There is plenty of IRS behavior to criticize. Most notably, the tax agency allowed itself to be weaponized by the Obama White House , using its power to persecute and harass organizations associated with the "Tea Party." That grotesque abuse of power largely was designed to weaken opposition to Obama's statist agenda and make it easier for him to win re-election. Now there's a new IRS scandal. In hopes of advancing President Biden's class-warfare agenda, the bureaucrats have leaked confidential taxpayer information to ProPublica, a left-wing website. ProPublica has obtained a vast trove of Internal Revenue Service data on the tax returns of thousands of the nation’s wealthiest people, covering more than 15 years. ...ProPublica un