Personal Finance

Pay Down Your Mortgage

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Posted by Jared Dillian - The 10th Man

on Thursday, 16 November 2017 16:05

The-Best-Strategy-To-Pay-Off-Your-Mortgage-EarlyThe latest issue of Street Freak came out on Tuesday. Street Freak is a bit of an aggressive stock-picking newsletter, where we come up with a new idea every month. I try to keep the ideas a secret—if you want them, you have to subscribe! But I’m going to let you in on this month’s idea for free. Are you ready? Here it is:

Pay down your mortgage.

Yes, that’s a bit unorthodox for a financial newsletter. But people spend too much time thinking about the next get-rich-quick idea and not enough time thinking about their overall financial well-being. I’m willing to bet that in addition to having a successful portfolio, many investors reading this also have a lot of debt.

Going into what might be a downturn, I’m uncomfortable having a lot of financial leverage. If you think the market is going to go down, then you should stop thinking about buying inverse VIX ETNs and start thinking about how to deleverage in a smart fashion.

Better Risk-Reward

Paying down your mortgage is part of that. It is part of an overall exercise in balance sheet repair, which includes—

  1. Building a cash position
  2. Paying off debt:
    1. Margin debt
    2. Credit card debt
    3. Car loans
    4. Mortgage debt

Financial leverage cuts both ways. It can help you on the way up, and it can hurt you on the way down.



Personal Finance

Don't Leave Me This Way

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Posted by Brent Woyat

on Thursday, 26 October 2017 18:04

For those wondering "how long" the US equity run can continue - this is a very insightful piece of analysis from our in-house team. ~ Brent Woyat

As the great and the good in the world of economics and policy-making gather for the joint IMF and World Bank annual meetings in Washington this weekend, you may think they would be in a congratulatory mood given the synchronized positive growth in the global economy. Ahead of the meetings, the latest IMF economic projections point to a pick-up in global economic growth to 3.6% for this year and 3.7% for next, from the 3.2% growth in 2016. Moreover, the current global economic acceleration is broad based with all major regions and countries projected to grow this and next year. There are no signs of this economic expansion coming to an early end.

Even though the macro back-drop keeps improving, we can’t help but notice the polarization of views about equity markets. Notably, the focus on market valuation, sentiment and whether or not an equity market correction is overdue given the strong rally since 2009. We highlighted in previous Strategy Notes that equities are not cheap anymore, but they are not prohibitively expensive either. Indeed, investor sentiment indicators seem evenly balanced between bullish and bearish, and net mutual fund and ETF flows this year have favoured bonds over equity – hardly a signal of complacency. So what of the possibility of a market correction? Well that would seem likely at some point, we’ll probably see a few before the peak of this cycle, but the possibility of a major bear market does seem remote right now.
That is, the bigger picture here is that most bear markets in the US have coincided with a US recession – at least when looking back over the past fifty years. We don’t see the excesses in the economy that indicate a recession is likely in the short term. Indeed, most recessions in the US have occurred as a result of an over tightening of interest rate policy by the central bank. At the moment, the US Federal Reserve is approaching policy normalization in a cautious manner. The other two major causes of a US recession have been the oil price hikes in the 1970s and a bursting of a credit bubble in 2007. Presently, we do not foresee the price of oil rising to such a level or a severe credit event which might cause a recession. In addition, the strong US and global purchasing managers surveys point to a continuation of the positive economic momentum in the near term.

Given the economic and market uncertainties, a dilemma for some investors is either to participate in what they view as an over-extended stock market or wait for a more opportune time to invest. We would highlight that it is difficult to pinpoint the top of the market and crucially, that most bear markets take time to manifest themselves. This presents opportunities for investors. Provided the next recession is more than three months away, typical returns over the next six months would be positive, based on our analysis of US equity market returns over the past 50 years.

Figure 1 highlights the 7 bear markets in the S&P 500 Index over the past fifty-five years. We have defined a bear market as a fall of more than 20% or more in the Index based on weekly data. Most bear markets have coincided with a recession with the exceptions of 1966 and 1987.


Figure 2 highlights that most bear markets take time to correct. On a median basis, bear markets last 18 months with the shortest being 7 months (excluding the 1987 bear market) and the longest 21 months. Moreover, while the eventual percentage drop in a bear market is substantial, they are often accompanied by volatility in the initial period and thus take time to develop.


Figure 3 highlights the median losses in the initial periods following the start of the bear markets. The median losses were -4.7% and -7.7% after three and six months respectively. Moreover, if we consider the returns including the three and six months prior to the start of the bear market, then the losses tend to be minimal. The median return was -1.9% for the period between the 3 month prior and 3 month after the start of the bear market. On the six month window either sides, the median return was actually positive at 1.6% over the period.


So what does all this mean for the investment decision today? Essentially we believe that investors should be positioned for growth in a well-diversified portfolio. In the words of the Communards, “don’t leave me this way.” It is too early to capitulate, based on our assessment of markets and the economic cycle.

Brent Woyat, Canaccord Genuity



Personal Finance

Top Ways To Avoid Losing Money In Forex Trading

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Posted by Marc Faber - Gloom Boom & Doom Report

on Thursday, 26 October 2017 05:55

"Forex Trading" is increasingly gleaning a lot of attention off lately, and one of the primary reasons behind this is that it lets people earn a handsome income. With some research and comprehension of how trading works, one can generate a steady flow of second income by spending a few hours on trading every day. But, as "Forex Trading" involves speculation of the price movement of the foreign currency pairs, a certain amount of risk is always involved in it.
The traders who don't follow the right strategies or trade wisely may even lose the money in this type of trading. Thus, here we have listed some of the best Forex trading best practices that can help you in minimizing your losses and maximizing the profits.
Treat Forex Trading As A Business
One of the key strategies for achieving success in Forex trading is to treat it as a business. Always remember that the short term wins and losses don't matter, but, how your trading business performs in the long run is important. 
Like any other business, profits and losses are a part of the business, and it takes a lot of planning, staying organized, setting realistic goals and learning from both, failures and losses will ensure a long and successful in the forex trading.
Finding Entry and Exit Points 



Personal Finance

You’re On Your Own

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Posted by Robert Gore

on Monday, 09 October 2017 07:02

p03xsw49Within a twenty-four-hour span the Catalonian people voted 90 percent in favor of secession from Spain, despite the Spanish government’s effort to violently squelch the referendum, and a man in a Las Vegas hotel room opened fire on a concert, killing fifty-nine and wounding over 500. There’s no tangible connection between the two incidents, but they illustrate incipient forces still gathering steam that are transforming the world.

No government, military force, or intelligence unit has figured out how to stop those determined to kill large numbers of people if the killers are willing to forfeit their own lives. Nor will they. Individuals and small groups have the capability to amass and use large amounts of lethal weaponry, killing military and civilian targets in a guerrilla war, or victims on the deadly end of their random bullets or bombs.

Arguments that this can stopped by limiting access to weaponry are specious, serving only as cover for further expansion of government and curtailment of individual liberty. The trend towards cheaper, more widely distributed killing power stretches back to the invention of gun powder. Guns can now be manufactured at home with 3D printers. The cows left the barn long ago.

Standing in opposition to the forces of decentralized violence are the forces of centralized violence, governments....

....continue reading HERE


Personal Finance

Global Retirement Reality

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Posted by John Mauldin - Mauldin Economics

on Monday, 02 October 2017 08:29

Global Shortfall
UK Time Bomb
Swiss Cheese Retirement
Pay-As-You-Go Woes
Lisbon, Denver, Lugano, and Hong Kong

Today we’ll continue to size up the bull market in governmental promises. As we do so, keep an old trader’s slogan in mind: “That which cannot go on forever, won’t.” Or we could say it differently: An unsustainable trend must eventually stop.  


Lately I have focused on the trend in US public pension funds, many of which are woefully underfunded and will never be able to pay workers the promised benefits, at least without dumping a huge and unwelcome bill on taxpayers. And since taxpayers are generally voters, it’s not at all clear they will pay that bill.

Readers outside the US might have felt smug and safe reading those stories. There go those Americans again, spending wildly beyond their means. You are correct that, generally speaking, we are not exactly the thriftiest people on Earth. However, if you live outside the US, your country may be more like ours than you think. Today we’ll look at some data that will show you what I mean. This week the spotlight will be on Europe.

First, let me suggest that you read my last letter, “Build Your Economic Storm Shelter Now,” if you missed it. It has some important background for today’s discussiion, as well as a special invitation to attend my Strategic Investment Conference next March 6–9 in San Diego. With so much change occurring so quickly now, next year’s conference is an event you shouldn’t miss.

Global Shortfall



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