Personal Economics 101

The Dow Jones Industrial Average dropped by more than 1,000 points for just the third time in its long history. Investors shouldn’t care about the points though. The percentage drop, while painful, shows this is far from a market panic. Monday, of course, was a bad day for U.S. investors. There is no ducking that fact. The spread of the coronavirus outside of China spooked all investors. Also see:  Investors Just Turned Gloomy About Stocks. What to Watch for Now. Europe’s FTSE 100 Index dropped 3.3%. Hong Kong’s Hang Seng Index fell 1.8%. The Dow dropped 3.6%. The S&P 500 fell 3.4%. And the Nasdaq Composite dropped 3.7%. The Dow’s 1,032 point decline was the third-largest point drop ever. That sounds ominous, but it isn’t all that bad, historically speaking. Point drops make headlines, but percentage drops are what investors focus on. Looking ahead, the ability to contain and control the spread of the virus will determine the near-term direction of the Dow. Fi...

Over the last few months, I've moved funds from my cash positions into the energy sector. My strategy is to buy quality at low prices while collecting the dividends as my strategy is long-term (3 to 5 years). All in, the oil sector looks like a terrible place to invest today. Unless, of course, the company you buy has the financial strength to keep investing in any environment and the track record to prove that it can and will do just that. Which is where Exxon and Chevron come in. These two industry giants have long histories of navigating the oil industry's ups and downs with relative ease. One place to see that is in their dividends, with each having increased their disbursements annually for more than three decades. Clearly, these companies know how to deal with industry downturns while still rewarding investors. That is largely because they don't focus on short-term gyrations, instead looking to the long-term supply/demand dynamics of the industry . They know tha...

The market in general is expensive. Tips to be prepared for the next cycle. 1. Be prepared 2. Know what typical market cycles look like 3. Be "in-cash" 4. Money market accounts 5. Have a long-term strategy 6. Develop a watch list

By Ryan McMaken, Mises Institute It has become something of a tradition in the free-market corners of social media to express shock and dismay over the possibility that New York Congresswoman Alexandria Ocasio-Cortez (AOC) — an avowed "democratic socialist" — has an economics degree from Boston University. This is how it works: AOC makes a statement that is notably anti-market, pro-socialist, or generally clueless about general concepts from the field of economics. Her critics then post responses questioning whether she actually has a degree, or that she must have not been paying attention in class, etc. But why is it so hard to believe that she has a degree in economics? It seems far too many people have rather inaccurate ideas about what is taught in economics programs nowadays. The truth is there is little emphasis on understanding markets in economics programs, and little emphasis on the value of markets. The emphasis is now on using economics to justify state a...

See Part 1  or See Part 2 . The Democratic presidential candidate and former New York City mayor likes a lot of what he sees in the Golden State and thinks its efforts on climate change, gun control and criminal justice reform sets a benchmark for other states to emulate. “I think that California can serve as a great example for the rest of this country,” Bloomberg told supporters at the opening of his Angeles headquarters in January 2020 . What follows is a sampling of articles that deal with California's decline, something that is not a model for the rest of the country.  Why is liberal California the poverty capital of America? Guess which state has the highest poverty rate in the country? Not Mississippi, New Mexico, or West Virginia, but California, where nearly one out of five residents is poor. That’s according to the Census Bureau’s Supplemental Poverty Measure, which factors in the cost of housing, food, utilities and clothing, and which includes non...

Phil Town always (or mostly) has good financial advice. His money traps to avoid this year (or actually any year): 1. Don't buy a flashy new car. If you need a car, find a quality used car. 2. An expensive house you can't afford. 3. Streaming services. Don't over do it. Watch the small stuff. Stick to a budget. 4. Investing too much money in a 401(k).

Part 1 here . On Leaving the Golden State Guest Post by NicklethroweR . Posted on the Burning Platform. The fabled Ventura Highway is all that separates my artist loft from the beach where surfing first came to the United States. Both my balcony and front patio face the freeway at about eye level and I could easily smack a tennis ball right on to the ever busy 101. Access to the beach and boardwalk is very important to a Tourist Town such as mine and I can see one underpass from my balcony and another underpass from the patio. Further up the street are two pedestrian bridges. Both have been recently remodeled so that people can not use it to kill themselves by leaping down into traffic. The traffic, just like the spice, must flow and the elites that live here do not like to be inconvenienced as they dart about between Malibu and Santa Barbara. Another feature of living where I live would have to be the homeless, the insane and the drug addicts that wander this particular...

Downtown San Francisco: Taken over by the homeless. California's path is unsustainable The Democratic presidential candidate and former New York City mayor likes a lot of what he sees in the Golden State and thinks its efforts on climate change, gun control and criminal justice reform sets a benchmark for other states to emulate. “I think that California can serve as a great example for the rest of this country,” Bloomberg told supporters at the opening of his Angeles headquarters in January 2020 . California is a place unlike any other. It boasts perhaps the greatest natural resources of any state along with shining high-tech industries. However, like many good economic stories, government policies threaten its future. Indeed, its government has made California unsustainable. Of course, it wasn’t always this way.  As the 1960s came to a close in California, it had a population of nearly twenty million. In the decade before, its economic strength afforded...

First a few comments. Democrats want to go after the "greedy billionaire class." No matter there are only 621 billionaires in the United States (163 live in California). You could tax all their wealth at 100% and still not pay for all the "free" stuff promised by the Democratic Party. The desire to increase your own wealth isn't viewed as virtuous by certain politicians; but they have become millionaires serving in Congress. (Sanders and Warren come to mind). Here's my quote of the day, from Ben Shapiro at Townhall: ...the problem for Democrats isn't Bloomberg's spending. The problem is that the Democratic Party now treats wealth itself as an indicator of immorality. This week, Sanders tweeted, "Together, we are going to end the greed of the billionaire class." Never mind that creating tens of billions of dollars in value via voluntary exchange, employing tens of thousands of people, and providing goods and services to millions is far l...

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The census report ten days ago revealed workers’ earnings increasing at 3.4 percent annually, a rate not seen since the best of the Reagan years, and the poverty rate has declined to 11.8 percent, the best figure that has been recorded since the end of the Clinton administration and still resolutely proceeding in the right direction. Unemployment is at its lowest percentage since the Lyndon Johnson administration more than 50 years ago (and the numbers then were helped by having 545,000 conscripts in Vietnam). Minority groups are the principal beneficiaries of the Trump economy; this isn’t trickle-down, it’s surge-up. Average income for female-led single-parent households jumped 7.6 percent last year, well ahead of gains in higher income groups. Democrats claim wages have stagnated. Data show otherwise. The poverty rate among female-led households fell 2.7 percent for African Americans, and 4 percent for Hispanics. Industries largely populated by women (and, historically, expl...

Was 2017 really the "worst year ever," as some would have us believe? In his analysis of recent data on homicide, war, poverty, pollution and more, psychologist Steven Pinker finds that we're doing better now in every one of them when compared with 30 years ago. But progress isn't inevitable, and it doesn't mean everything gets better for everyone all the time, Pinker says. Instead, progress is problem-solving, and we should look at things like climate change and nuclear war as problems to be solved, not apocalypses in waiting. "We will never have a perfect world, and it would be dangerous to seek one," he says. "But there's no limit to the betterments we can attain if we continue to apply knowledge to enhance human flourishing."

With the new tax laws passed in 2017, 2018 and 2019, the standard deductions are now $12,200 for an individual and $24,400 for a married couple. You might now have enough in homeowner deductions, which need to be over those limits to be of benefit, but you should know the rules regardless. For some homeowners, itemizing simply may not be worth it. So when would itemizing work in your favor? As one example, if you're a married couple who paid $20,000 in mortgage interest and $6,000 in state and local taxes, you would exceed the standard deduction and be able to reduce your taxable income by an additional $2,000 by itemizing. Mortgage Interest Homeowners with a mortgage that went into effect before Dec. 15, 2017, can deduct interest on loans up to $1 million. However, for acquisition debt incurred after Dec. 15, 2017, homeowners can only deduct the interest on the first $750,000. Property Taxes This deduction is capped at $10,000 for those married filing jointly no mat...

I received an "urgent" notice in the mail this week. It was addressed to those of us who have VA mortgages. With rates as low as 2.75%, no cash up front, no processing fees, among other promises, I thought, maybe I should investigate. My current mortgage rate is 3.75%. I could lower my monthly payment nearly $200, based on their information, if it was true. Turns out the facts speak differently. First thing I did was go to Bank Rate and Barron's magazine to check the national average for 30-year fixed mortgages, As of this writing, it was 3.685%. This made the "rates as low as" offer suspicious. I then reached out to a trusted source, my mortgage broker, Mary Kennedy at PrimeLending , for my current VA mortgage. Here's what she said: "Throw all those away!!! You are good at 3.75 %!! Those advertisements have you paying lots of fees and points and they add it all onto your loan amount but they make it sound so good!! I don’t think it will ever b...

Reprinted from Experian Credit scores play a large part in determining interest rates and terms when you apply for a loan or credit card—and even whether you'll be approved at all. So the new FICO® credit scoring models announced January 23, 2020, may have you wondering how your credit scores will be affected. What's Different About the New FICO® Scores? Fair Isaac Corp., commonly known as FICO®, has built a new suite of scoring models that will be available from all three credit reporting agencies (Experian, TransUnion and Equifax) to lenders by the end of 2020. The new models will treat late payments and debt more severely, but will also now consider historical information about your credit card balances and payment amounts. Your FICO® Score will likely change as a result. The FICO® Score 10 Suite, which includes the FICO® 10 Score and the FICO® 10 T Score, is the first redevelopment of the company's credit scores since 2014 when it released FICO® Score 9. And while...

The markets never seemed to factor in any of the impeachment bull shit.  Constitutionally the show is over and there is no crisis. President Trump has forever been acquitted of the Articles levied by the House Democrats. Their objective was to (1) remove President Trump from office, overturning the 2016 Presidential election, (2) protect Democrats from exposure and prosecution, and (3) deny President Trump due process. American’s watched and listened to Democrat’s rig impeachment hearings with their “fact witnesses”, being deliberately misleading, and forever exposed themselves as spreading rumor, supposition, office gossip but proving nothing. Decrying “what the President should have said” and “what he should have done” which are policy issues; the President sets policy not bureaucrats. Democrats unconstitutionally demand the President be subordinate to bureaucrats. Democrats invited President Trump to testify though denying him the opportunity to cross examine his accusers...

Several economic indicators have been disappointing over the last two months: the ISM Manufacturing Index, Durable Goods Orders, Retail Sales, Leading Economic Indicators and Existing Home Sales have all been lower or below expectations in December and early January. Individually, each of the economic reports noted above would not normally be a sign that a recession is coming soon. Yet collectively, they are worrisome, especially since these are some of the first indicators to weaken ahead of recessions. And this was all happening before the coronavirus became a global concern over the last few weeks. The Fed repeated its argument last week that “the economy is doing well because consumer spending and the labor market are strong.” And they are right – for now. Real personal consumption is growing at a reasonably healthy 2.4% (annual rate), and the 3.5% unemployment rate is near a 50-year low. Yet the problem is that these are often the LAST segments of the economy to falter historicall...

I think if you did a survey or poll, you'd find most people believe the minimum wage, at least in the United States, is too low.  The idea of raising the minimum wage is noble and commendable, but many of the arguments rely upon raw emotion and neglect sound economic ramifications that will adversely impact the same people it's trying to help. In some respects, minimum wages are price controls. Historical and empirical evidence strongly suggest that price controls mandated by government has negative economic consequences. In 2008, economists David Neumark and William L. Wascher surveyed two decades of research into the effects of minimum wage laws. They focused on five areas: the effects of minimum wages on employment, minimum wage effects on the distribution of wages and earnings, the effects of minimum wages on the distribution of incomes, the effects of minimum wages on skills, and the effects of minimum wages on prices and profits. Here is what they say about the pol...