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The Next Stock Market Collapse: Are we There Yet?

April 4th, 2016

April 3, 2016

It seems that we are entering a decisive period for the stock market. The S&P 500 is right at the top of a channel between 2,100 and 1,920. Although I don’t like technical analysis, it is pretty clear that if it rises significantly about 2,100, then a new bull market will start. Conversely, if it drops below 1,920 a major market crash may follow.

S&P 500 10 Year Chart

S&P 500 10 Year Chart

Although anyone with limited knowledge of technical analysis would come to the same conclusion, I imagine 100,000,000 would-be retirees don’t look at this chart. And even if they did, they would not be able to see its importance.

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Can Trump Defuse the US Debt Bomb?

March 6th, 2016

When I wrote about the US Debt Bomb back in August 2009, it was only(!) about $12 trillion. Since then it has grown to $19 trillion. If it’s difficult to comprehend such a large figure, consider it breaks down to $159,000 per taxpayer!

US Debt Keeps Growing

US Debt Keeps Growing

Unfortunately, this is only a small part of the country’s unfunded liabilities. When you add Medicare and Social Security, the total is about $100 trillion. Many people believe that this is too much for the country to pay off, and that we will never be able to pay it.

How did this happen?

As I have mentioned before, most of the politicians that have run this country for the last 50+ years have not been fiscally responsible. They treat budget spending the same way a teenager uses a credit card. Am I saying that they are bad people?

No. I am just saying that they do not have the skills or inclination to fix the budget problem. They don’t know how to manage money or a business. Even if they did promise to fix the problem, they would never be voted into office. They would have to make massive cuts to Social Security, Medicare, military spending and every other area that people are not willing to cut. The people who depend on all this excessive spending would have to vote for the politician, and they would never do it.

Enter Donald Trump. Although there are many things that are not great about Trump’s proposals, I think that he has the potential to fix problems like this. He’s not a politician. He has so much money and power that he doesn’t have to play politics. And, his confrontational personality seems to be the incompatible with the political process of trading favors.

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Markets go Up and Markets go Down

February 15th, 2016

Although this may seem incredibly obvious, many people say that markets always go up. I remember during the real estate bubble that popped in 2008, agents were saying,

Real estate always goes up.

It’s pretty obvious now that is a lie. But it works for them. The clueless would-be investors that believed them bought up properties like there is no tomorrow. And for them, there wasn’t much of a tomorrow. Most of the properties went into foreclosure and were repurchased by more savvy investors.

Shanghai Composite Index

Shanghai Composite Index 2011 – 2016

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Are you Ready for the Financial Crisis?

January 17th, 2016

A wise man once wrote:

Markets top slowly and bottom quickly.

When I read this and anlyzed some of the major market tops over the last 100 years, I was surprised by the accuracy of this statement. (One major exception was the 2000 Tech Bubble, which was quite different from other market dynamics.)

S&P 500 Jan 2011 - 2016

S&P 500 Jan 2011 – 2016

The theory behind this is that the “smart money” figures out that a market is topping long before the average Joe. I’m not sure if I agree with the theory, but it does seem to me that the “stupid money” gets out way too late, after the market has dropped significantly.

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Chaikin Analytics Review and Free Trial

July 8th, 2014

One of the biggest hurdles that the individual investor faces in trying to create a nimble, smart portfolio is the competition.

Investment bankers, quants, mutual fund companies, and big Wall Street firms are employing Ph.D. researchers with degrees in everything from finance to physics to create model portfolios. They use the latest and most powerful technology to guide their buys and sells.

The little guy doesn’t have a chance.

That’s what I thought, until last week. George and I had a chance to see a demonstration of Chaikin Analytics, probably one of the most complete set of investment tools and stock market model-building technology that’s available for the money. Or at least I’ve ever seen.

The Chaikin Analytics Dashboard

The Chaikin Analytics Dashboard

How does Chaikin level the playing field?

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The End of Everything and the Beginning of Nothing

April 26th, 2014

Zero Marginal Cost SocietyThe predominant economic systems are capitalism and communism. Both have their problems, which seems to explain the existence of mishy-mashy socialism in most countries.

Most futurists debate which economic system will dominate the next century. That’s a mistake, according to some experts, like Jeremy Rifkin. Rifkin recently wrote The Zero Marginal Cost Society that looks at how technology and ideas, like the Collaborative Commons, will re-shape the financial status quo.

Adding sensors to just about everything will move the power of info-centric businesses — think energy and utility companies — back into the hands of individuals. If a person had smart enough algorithms, for example, they could purchase energy much more efficiently, use it efficiently, and save it efficiently. In a very real sense, an individual could run their own utility company.

But, that’s just the beginning. Let’s try to connect all the zero-marginal cost technologies. 3-D Printing has already received lots of hype, but buried deep within this technology are several — forget disruptive — transformative technologies. What if you could 3-D print your own efficient solar cells? What if you could 3-D print your own efficient battery? Let’s go crazy here. What if you could 3-D print a fusion reactor for your home.

So, now you’re going to not only be a smart consumer — a prosumer in Rifkin’s lingo — to a smart producer — or a producer… wait, that doesn’t work. Anyway, what happens when you produce something for almost free and use it so efficiently that you avoid costs. Well, everything becomes nothing. In other words supply increases to near infinity and costs fall correspondingly to near nothing.

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Did Kickstarter donors just get ripped off for billions?

April 5th, 2014

By now, we have all read about the Facebook acquisition of Oculus, the virtual reality company, for $2 billion. That’s billion — with a “b.”

kickstarter

The debate can go on about whether this is a sell-out to Facebook and their slick and sometimes creepy marketing machine, or the next stage in a revolution of virtual reality. Or, both, for that matter. What a lot of people are wondering — especially those who donated money to Oculus through Kickstarter — is whether they got ripped off.

Kickstarter, a crowdsourced donation site, helped Oculus raise $2.4 million for its Rift product back in 2012. In exchange, backers received t-shirts, posters, and prototypes, depending on their level of gift.

So, legally, the answer is “no.” Nobody got ripped off. These people donated, they didn’t actually invest in the virtual reality company, nor were they promised any sort of any financial remuneration from Oculus for their donation, if they were able to sell the company.

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Stocks And Retirement | Should I Keep Holding On To These Stocks?

March 31st, 2014

All retirees end up asking themselves if they should cash in their chips and make a smooth, profitable exit from the stocks game. Having nurtured their portfolios through the years, they sometimes feel uneasy about selling their stock assets. After all, a lot of time has gone by, watching them, believing in them, having them generating income, even if poor at times. Many retirees know that they could generate some extra cushion by unloading their stocks, but they just can’t seem to fathom the act.

Image courtesy

Image courtesy Andreas Poike

It’s important to remember why you started accumulating stocks in the first place. In most cases, it was simply a matter of developing a tangible financial portfolio; something that you created to make life better for the future of you and your loved ones. Well, have your stocks done that? Maybe you took a heavy hit back in 2008. Maybe you’re just recovering – and stock markets are doing just about as good as you could hope for right now. Maybe it is time time to cash them in. You can try the superannuation calculator over at Suncorp, if you need a hand figuring out how much you need to retire.

Should you sell your stocks now that you’re a retiree? Read more…

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Buying a Franchise Business

March 13th, 2014

What exactly is a franchise business?
There may be some slight variations from one situation to another but on the whole, this involves buying what is effectively a license from someone to open up your own business operating under their corporate umbrella and brand. It is a very familiar business model and offers the advantage of you being able to join a winning brand rather than needing to come up with your own business idea and develop it accordingly.

Image courtesy Ed Hart

Image courtesy Ed Hart

What are the main advantages of a franchise?
As touched on above, you are theoretically jumping onto the bandwagon of an existing successful company and that may be worth a lot to you.
Other things that might come as part of the package, though not always so do check, might be: Read more…

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How Can You Avoid the Next MtGox Bitcoin Meltdown?

March 1st, 2014

mtgox

Bitcoin was supposed to be a safe haven — away from the greedy hands of corporations and bankers and far from the idiotic brains of mindless speculators. It was a popular people’s currency.

The evaporation of Bitcoins in MtGox has caused every fan of the crypto-currency to re-think this. And it’s making them ask: How can we avoid putting our Bitcoins in the next MtGox?

Short answer: you can’t. What seemed to be lost in the idealism of Bitcoin — that it’s some weapons that would only be wielded by the good against those who are evil — was the critical idea that Bitcoin, and every other crypto-currency for that matter, is that it’s only a tool. And tools can be misused and crafted into weapons very easily. It all depends on the hands that are using it.

Whether MtGox debacle was one of greed, or one of incompetence, remains to be seen. But just because MtGox went down due to either fraud-or-fuck-up dynamic does not mean it won’t happen again.

While there’s no way you can completely avoid the mess, you can consider some risk-assessment strategies to pull the needle back to your side.

Insist on Transparency
Bitcoin is supposed to be about transparency; its exchanges should be equally transparent. If you believe that the exchange you’re using isn’t completely open, find another.

Remain Cautious
Continually monitor the Bitcoin situation. There were rumors that MtGox was sketchy. Only the smart ones got out in time.

Panic, then Assess
People tell you not to panic. But if you sense that your exchange is faltering, get your Bitcoins out immediately and redistribute them elsewhere. If it is just a drill, you can move them back.

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