The Online Investing AI Blog

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Taxation with representation turns out to be pretty bad, too. And Investors and traders have enough to worry about in the taxation categories. They also have enough to complain about.

There’s capital gains tax and income tax for starters.

Then, there’s the ever-controversial double taxation of dividends.

According to an article from Yahoo, governments are just getting warmed up and while investors won’t necessarily bear the brunt of most of these taxes, they won’t escape them either.

In the ever-expanding need to buoy struggling governments, politicians are discovering some weird ways to bring in money.

Read more…

Business Strategy, Investing, Money, Online Investing AI, US Economy depression, Great Depression, income tax, Money, recession, revenue, taxes, wealth

The Great Depression was not a singular event.

In fact, it was a brilliantly destructive ballet danced by the incompetence of both government and industry.

Most people see it as a super drop in stock prices followed by massive unemployment. That’s really not the case. As the chart from Smart Money shows, it had a “W”-shape path out of the dire economy.

According to the Wall Street Journal, the economy was pulling out of the Depression in 1933, but a series of policy blunders sunk the powerful recovery and created a “W” shape.

By 1937, the economy slid back into a deep depression.

Could this happen again?

Read more…

Business Strategy, Investing, Money, Online Investing AI, US Economy depression, economy, Great Depression, Money, stock market, wealth

As the Madoff debacle grows and receives more and more media and investor attention, all of the focus is on what the SEC should have done to protect investors. It would be great if the SEC had detected a Madoff’s fraud and shut down his operation before he took in $50 billion of investor money. But it didn’t happen that way.

Perhaps the SEC really isn’t to blame it all. Because even without Madoff’s massive fraud, most of the so-called investors would have lost a large portion of their money anyway because of the market downturn. What the media fails to tell you is that even the mutual fund investors who are not defrauded are getting a terrible deal.

Why? Because most mutual funds lose money over the long term. The so-called investor takes on 100% of the risk in the mutual fund. And for taking on the entire risk she only gets 20% of the returns. The remaining 80% is taken by the mutual fund company as fees. So what’s really happening is the mutual fund investors are paying the high salaries of the so-called “experts”. If you think about it, it’s not so different from Madoff’s Ponzi scheme.

The SEC was created after the Great Depression to protect investors. And perhaps it did. But the challenge is that it created a massive mutual fund industry that allows totally clueless “investors” to give their money away. Hopefully, after the Madoff scandal, SEC rules will be revised to allow anybody to participate in investments that are better than mutual funds.

Investing, Money Great Depression, Investing, Madoff, mutual funds, ponzi scheme, SEC

My grandfather was raised in the depths of the Great Depression and, to be honest, in the rust belt of central Pennsylvania, the economy never actually sizzled during his eight decades of existence.

The Depression taught my grandfather painful lessons on personal finance. He was incredibly thrifty. OK. He was cheap. He saved every penny and held onto things long after most folks would have tossed them on the junk heap.

He also was so cautious with this money that he never invested in the stock market. He stayed away from company stock plans. He tucked every penny into CDs and a federally-insured bank account, missing the market’s long upswing. The moderate savings he squirreled away in those accounts would have been worth millions had his ideas of investments not been colored by fear. While he worked hard for his money, his money didn’t work hard for him.

But, you didn’t get through the depression with hind sight.

As far as technology went, there wasn’t a wave that my grandfather caught. His brother, on the other hand, was a radio engineer, fixing radios when that wave swamped the nation and just as fluidly became a television repairman when the Age of Television dawned. The risky swings of those fleeting technological fads were beyond my granddad’s comfort zone, which stretched a few blocks from the sprawling paper mill that dominated his life and my home town.

The Depression was a tough teacher and what he drew from its lessons did not always serve him well. However, my grandfather had productive instructions from the experience.

The worst economic downturn in our national history taught him to have multiple revenue streams before that was even a buzz word. He worked a full-time job at the paper mill, served as a custodian for a church during his time off, rented apartments in his home’s top floors, and even sold stuff at the Depression Era’s version of eBay… the flea market. My grandfather never believed that a job was forever, so you hedged your bets.

He was no one’s sucker, either. You wouldn’t see him falling for scams and schemes and, while he was the picture of a perfect worker, he made sure he was compensated for his time and trouble. He never owed a corporation or an institution undue loyalty; he saw too many wither away in the rustle of ticker tape.

As we face our own troubled economic times, I hope we can learn balance from the lessons the Depression taught my grandfather.

• When times get tough, the tough get smart and new waves of innovation can be the direct result.
• Keep your eye on the future.
• Hedge your bets, but always bet some money on hope.
• Be cautious, but courageous.
• Don’t be a sucker, but don’t be a cynic.

Accelerating Technology, Business Strategy, Investing, Money, Online Investing AI depression, economy, Great Depression, invest, Investing, personal finance

To paint a picture for you, when the Great Depression was at its height, more than 30 percent of the country was out of work. Today, it would be like 60 million people would be out of jobs.

Industrial output crashed that on today’s levels would leave cities barren.

Commodity prices fell so far that, if it happened today, mass starvation would result.

Most economist debate the exact cause of the Great Depression, but they do pinpoint the core of it: confidence. People gave up and, in the light of a continual bombardment of negative messages and perpetual stream of bad economic reports, who could blame them?

Interestingly, there are indications that the economy was beginning to pull out of the Depression a year or so after the crash. The stock market returned to near 1929 levels. Business spending was returning. Wages held. Interest rates were low and credit limits zoomed.

But the people were shaken and shaken people do shakey things. The government, acting in the best of intentions, increased taxes and exacted protective tarrifs, while strictly limiting spending. The results were disastarous and just fed into the negative thinking spiral.

Shaken people tend to find scapegoats and around the world, some people turned to national socialism and communism, and the face of an economic downturn turned evil in the form of Hitler and Stalin.

Are these the cards in our economic deck? Could be. We certainly have the fear and pessimissm that was rampant in the Great Depression and its being pushed by a massive negative-thinking bulldozer called the mainstream media. The cries for protectionism and vague forms of economic justice are just as loud now as they were in the Depression.

It doesn’t have to go down like that, though.

The other possibility is that we are going through a dramatic (and painful) economic reboot, as Change Wave investor Toby Smith terms it. He estimates the economy could return to 1997 levels.

Whether its a Great Depression Redux or a needed economic boost, most of the outcomes starts and ends with us. The key, in keeping with the theme of our business, is technology and positive, independent action.

Quite simply, we have tools that those living through the early 20th century could only imagine.

Today, you could start a business for pennies. And, not just an apple-selling stand outside the soup kitchen, we’re talking about a business that can reach billions of global buyers.

The computational power in your cell phone is more powerful than the computational power in most towns during the early 20th century. Massive computational power means massive productivity and, as a sign of this, productivity–decimated in the 1930s–continues to improve, although certainly not as robustly.

You also can use technology to make better spending decisions and increase competition for your money. Using shopping search engines and doing your own comparison shopping has never been easier.

Eventually, we will have investment systems that use advanced technology to smarten up your investment funds, too.

In short, when you’re at the edge of a cliff, you can do two things: you can ponder the the grandeur of the view, or you can jump off.

I’ll take a picture, turn it into a post card and sell in on Zazzle.

Accelerating Technology, Business Strategy, Investing, Money, Online Investing AI confidence, depression, Great Depression, Money, positive attitude, poverty