Personal Economics 101

While it's true that I keep a journal of trades, so I can go back and look at what I did, especially the mistakes, this is only a learning tool. I do not wallow in misery over missed profits, missed trades, or any such thing. I get Jeff Clark's Market Minute newsletter every morning. Today he repeated an essay that I think every investor or trader should take to heart. I repeat it here. “Don’t look back.” That was the advice the angels gave to Lot and his family as they led them out of the city of Sodom, just before it was destroyed by the wrath of God. Whatever happened to the city after he fled was no longer Lot’s concern. It was no longer any of his business. He couldn’t do anything about it. So, “don’t look back” was the angel’s way of saying, “Look forward. There’s nothing to gain by watching what happens behind you. Focus on your future and what is ahead of you.” As the Bible tells us, Lot’s wife wasn’t all that good at following directions. She couldn’t res...

Probably nothing but watch closely, at least your weekly charts. Many of my investments have already stopped out (for gains) this week, as the market weakened a bit, and has been kind of sideways like.  With recession concerns lingering as soft global economic data is countering relatively upbeat domestic reports, Schwab’s Chief Investment Strategist Liz Ann Sonders offers her latest article, Take Me to Your Leader: Analyzing the Latest Leading Indicators , noting that leading indicators are at a record high, but in a relatively flat trend over the past year.  Liz Ann adds that manufacturing remains weak, while services/consumer remains healthy; with confidence/employment likely defining whether the divergence persists. She concludes that Citi’s Economic Surprise Index has shot up, but Bloomberg’s Economic Surprise Index of Leading Indicators has not confirmed. As of this morning, the consumer confidence index had been showing exceptional strength but did fall back un...

I thought that headline would be sensational enough to get your attention. But it has some truth to it. Update Sept 25: Warren and Sanders now want to tax wealth (assets) not just income. Watch your pocketbooks. You might not realize it yet, but all the "free" programs that are being promised by Democratic presidential candidates all come with a price tag. And you may also not realize it, but the "rich" don't have enough money to pay for it all. So who does? Dr. Daniel Mitchell, an economist and Chairman of the Center for Freedom and Prosperity, says: "Lower-income and middle-class taxpayers need to realize that they’re the ones with bulls-eyes on their back." The plans laid forth by Warren, Sanders, Harris and others use what Mitchell calls "sloppy math." During an "interview" with Stephen Colbert on the Late Show, Elizabeth Warren said this when asked How was she going to pay for "Medicare for All." “...

The Shiller PE ratio and the Buffett Indicator are two measures to indicate whether markets are over valued. These are not indicators to time the market. They just provide general indicators of value. Markets can certainly go higher -- if over valued -- or down -- of under valued. But they are useful as a gauge whether you should be watchful and cautious. The Shiller can be found here . The Buffet Indicator here .  The Shiller PE is first, the Buffett Indicator is second. Both show overvaluation.

I use the flowing ETFs, more or less; some I don’t pay attention to on a daily basis): SPY (S&P index) DIA (DJIA index) (QQQ) (NASDA 100)’ IWM (Russell Small Caps) Though you could just do SPY and be close to market trends, I also do the QQQ because of its tech weighting) AGG (Agreegate Bond Market) GLD (Gold) HYG (Hi-Risk bond market,mostly incorporates) QLD (Corporate Investment Grade Bonds) RXE (Real Estate) TLT Treasury Bond). Even on most day’s that too many. Pick what you want to specialize (6 maybe) in and follow those more closely. I have two stock lists. The overall markets, and 6 or 7 stocks (or an ETF or Mutual Fund) I’m really interesting right now. I’m not a professional trader, so I don’t get paid to track these markets. In fact, most professional traders focus on one or two asset classes. They must know something. And do yourself a favor. If your watch list is larger than 20, pare it down. Humans tend to handle categories and process info...

Forget all the analysis (There' a Recession Coming! There's a Reason Coming!)* and all the “mix” of ideas depending on your “circumstances’) and / or rationalization or reasons behind savings counts or investments or burying your gold coins in the back yard. There is a very basic principle (which has been around since at least the invention of writing) that most people don’t follow. And it's so simple. Forget recessions and all the super analysis by talking heads and financial reporters. And especially those who want a recession because they think it will make Trump lose an election (pathetic humans who wan to see millions suffer because they hate one guy). Most economists, like weathermen, are wrong on predictions, especially when it comes to your money. The number 2 requirement of any financial plan is to have a saving accounts with emergency fund. (Number #1 having a budget). Forget the rest of the stuff for now -- if you don’t have this emergency account, in a sav...

Once you have your financial house in order, as explained in my article Critical Financial Steps When Buying a Home , it's time to actually buy a home. These tips are generally for the buyer of existing homes, but can apply to purchasing a newly built home.   1. Hire a real estate agent An experienced real estate agent can be the key to help you find your dream home and negotiate with the seller on your behalf. This person should be on your side, helping you make informed decisions and refer you to other professionals like home inspectors, contractors (if needed), appraisers and title companies. That said, you should still shop around and compare fees from other professionals, too. Before hiring a real estate agent , find out about their track record, knowledge of your desired neighborhood and what their workload is like (some agents may be over-scheduled). An agent with knowledge of an area can also tell if your budget is realistic or not, depending on the features ...

In my lifetime, I have bought six houses, and sold five. I currently live in the sixth, which was new construction, which was an adventure unlike purchasing an existing home, But the principles of buying a home are the same, whether you are purchasing a new home, or an existing home. 1. Understand why you want to buy a house Purchasing a home is a major decision that shouldn’t be taken lightly. It’s important to define your personal and financial goals before proceeding. Think about factors such as whether you’re craving more stability, whether it makes sense financially and whether you’re prepared for the responsibility of maintaining a home. You should explore some resources on Renting vs. Buying before you make the decision. I posted a article with a couple of good videos on this subject, and bankrate.com as an informative article here .  2. Dig Into Your Credit Reports and Credit Scores Your credit score and history are the first things all lenders will look...

No one knows when the next bear market will occur, but as you may know, the yield curve recently inverted. Historically, every single bear market over the last 50 years has been preceded by an inverted yield curve, so it's a very strong indicator. When the curve does come before a bear market, the market usually drops a year later on average. Though every bear market has been preceded by an inverted yield curve, every inverted yield curve has not signaled a bear market. Why do I believe this bear market could be a bad one? According to a May 2019 report by the Federal Reserve, tens of millions of American families are on the edge of economic oblivion based on the following: Many families struggle to save for retirement and unexpected expenses. In fact, 39% of the 11,000 adults surveyed would have to either borrow or sell something to cover a $400 emergency. Three in ten adults experience financial strain due to family income that varies from month to month, and one in ten stru...

Using your time wisely is key to success. Focusing on what's important. Don't mistake movement for achievement. Don't mistake courtesy for consent. Concentration is important. Learn to say no. Don't play at work. Jim Rohn: Habits of the Wealthy  (15 min)

A short, but great video, on YouTube by Dave Ramsey on how to fix your financial situation. Get motivated. It's 20 percent knowledge and 80 percent behavior. I did it (more than 200,000 in debt and now debt free, except my home, 6 month's emergency fund and retired comfortably).

Article from schwab.com Individual Retirement Accounts (IRAs) can be a great way to save for retirement because of the tax benefits they can provide. If you’re eligible, you can choose a traditional IRA for an up-front tax deduction and defer paying taxes until you take withdrawals in the future. Or, if eligible, you might opt for a Roth IRA and contribute after-tax money in exchange for tax-free distributions down the road. So, what's the catch? There are a few. If you run afoul of some of the IRS rules surrounding these accounts, the penalties can be quite stiff—all the way up to a disqualification and taxation of your entire account. Ignorance of the law is no excuse, and with few exceptions, the IRS isn’t very forgiving of mistakes. Knowing the rules can help you navigate the many potential IRA tax traps you might encounter on your way to retirement. Keep in mind that when we discuss taxes and penalties, we’re referring to those at the federal level. In most states...

I was asked this question on Quora.com. Here's the answer I provided: I assume you mean the purchase of individual companies, rather than a Mutual Fund or Exchange Traded Fund (ETF). The strategies are different. I’ll explain what I look out for when buying stock in a company. Do I understand the business? I tend to invest in telecommunications, information technology and/or energy stocks because I understand these markets. Is the company earning money? Are earnings growing? What are the prospects for the future (though this is sometimes just guessing)? Are revenues increasing? Does the company offer a service or product(s) that will be used for years to come? Is the company financially sound? Does it manage its debt well? Does it have a sound Return on Equity? A company with too much debt or doesn’t invest its earnings well will not have a sound future. Is the stock priced fairly? I don’t want to buy a company when the stock price is already inflated. I use technica...

Luke Skywalker to Yoda. "I'm not afraid." Yoda to Luke: "But you will be. You will be." If you pay attention to the news, it's hard not to be a little bit fearful, or at least concerned. But the world has always been a dangerous place. So don't think things are worse today than in the past. In many ways, they are much, much better. But we still have problems. We still need to attend to our surroundings. Here's why Warren Buffett's record $122 billion cash pile could be a worrying sign for stock markets Warren Buffett's mountain of cash may be a warning to investors that stocks are overvalued and that a crash is around the corner. MANDATORY TEACHER TRAINING DENIGRATES CHRISTIANITY, EXALTS ISLAM Christian scriptures described as “corrupted” while the Koran contains the “pure” word of God. To take back America, we need to take back the schools The fact that socialists are openly running for public office in America — that social...