Personal Finance

The Risks of the War on Cash

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Posted by Wolf Street

on Monday, 04 January 2016 07:27

“Quick and easy is winning the war.”

UnknownOn January 1st, Londoners woke up to a rather perplexing reality: all of the cashless Oyster card readers on the city’s buses, rail and tube stations had stopped working. With cash as good as banished from the London transport system, attendants had little choice but to wave passengers through open ticket barriers and onto buses without paying, until the problem was fixed.

Serious Pause for Thought

.....continue reading HERE



Personal Finance

The Biggest Blunders Investors Make …

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Posted by Larry Edelson - Commodities, Stocks, Technical Analysis

on Thursday, 31 December 2015 09:44

I’m often asked what I think are the most common, most ruinous mistakes that investors make. Unfortunately, there are a lot of them.

There are things such as risking too much money on a single trade or investment … not using protective stops … not using disciplined money management … trading too often … not doing your homework … taking on too big a position in any market … not diversifying enough … and so forth.

But in today’s column, I want to cover what I think is the most dangerous mistake investors make, bar none.

It’s what I call getting caught up in all the “market myths” that are always out there. Or put another way …

It’s having a set of preconceived notions
about what markets can and can’t do.

The fact of the matter is that markets can do whatever they want to do.

Markets are never wrong. Markets are never irrational.

They are what they are and if you don’t understand a market, it’s not the market’s fault, the fault lies instead with your analysis.

For instance, have you ever heard someone say “a market is defying all logic?”

Or that a market is “disconnected from its underlying fundamentals?”

I’m sure you have. I hear those kinds of phrases all the time on shows such as Bloomberg and CNBC.

But the fact of the matter is that …

Markets NEVER defy logic. 
And they never defy the fundamentals.

Only people defy logic. Only people can make such statements about fundamental forces as well, because when a market is allegedly defying fundamentals, what it’s really doing is operating on fundamental forces that the analyst or investor simply hasn’t figured out yet.

I fully realize that what I’m talking about here is hard to grasp at first. But if you take the time to think deep and hard about what I’m saying, you will elevate your trading and investing to a whole new level. Markets are never wrong. Only people are.

Especially dangerous for most traders and investors is
getting caught up in the various “market myths” that are out there.

For instance, how many times have you heard that rising interest rates are bad for the stock market, and that declining rates are good for stocks?

If you’re like the average investor, you’ve heard that theory literally hundreds, if not thousands, of times before. Tune into any media show today, and I’m sure you’ll hear it at least once, if not more.

Most stock brokers, and the majority of analysts and newsletter editors espouse the same causal relationship between interest rates and stock prices.

But the fact of the matter, the plain truth, is that there is no “standard relationship” between interest rates and stock prices. Period.

Consider the period from March 2000 to October 2002, where the Federal Funds rate declined from 5.85% to 1.75%, and the Nasdaq plunged 78%. Put simply, stocks and interest rates went down together! Exactly the opposite of what most would expect.

Or the period from March 2003 to October 2007, where the Federal Funds rate more than tripled and rose from 1.25% to 4.75% …

And the Dow exploded higher, launching from 7,992 to 13,930 — a 74.2% gain! Stocks and interest rates went higher together!

The fact of the matter is that the relationship between interest rates and stock prices varies considerably depending upon a host of factors, including the value of the dollar and where the economy is in terms of its economic cycles.

Screen Shot 2015-12-31 at 8.39.05 AMBut the bottom line is this: Never assume anything and never, ever get caught up in conventional thought about what a market can or can’t do — or you will most likely lose your shirt.

Let’s look at another market myth. Almost everyone believes that gold and the dollar cannot go up together.

And so, they also believe that the dollar and gold can’t go down together.

But that’s completely inaccurate. There have been plenty of times when the dollar and gold have gone up together … and there have also been plenty of periods when they have gone down together.

In fact, in the not-too-distant future we are probably going to see another such period for gold, where it and the dollar go higher together.

Indeed, when the European Union really disintegrates, which is not that far off, that’s probably exactly what we will see: A



Personal Finance

Your Most Important Questions, Answered!

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Posted by Larry Edelson - Commodities, Stocks, Technical Analysis

on Wednesday, 23 December 2015 06:20

larry1For this week’s column, I’m getting so many questions from readers, I decided it would be best to answer the most important ones. So let’s get started!

Q: Larry, you were right as rain about gold again this year. It crashed and came close to one of your targets at the end of November. Is the bottom in yet?

A: It could be, but it’s really too soon to say. By that I mean we have no proof of a bottom. Yes, gold has tested major support at the $1,048 level and it did so at the right time, cyclically speaking. So that’s good.

But, gold has not yet climbed enough above overhead resistance to issue a buy signal that would confirm the low. If it fails to do so, then gold could easily move lower into early January. 

The specific support and resistance levels and buy and sell signals for gold



Personal Finance

What a Fed Hike Means to Your Finances

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Posted by Mike Larsen - Money and Markets

on Friday, 18 December 2015 08:03

So now that we know the Federal Reserve hiked interest rates, what does it mean to your finances?

The short answer is “a lot.” But different products will behave differently now … and how they behave down the road will depend on what the Fed does in 2016.

Screen Shot 2015-12-18 at 6.59.41 AMFor starters, you should understand exactly what the Fed did. When the Fed “raises rates,” it doesn’t single-handedly raise every single rate in the marketplace. It raises the federal funds rate, which is an overnight rate at which banks borrow money from each other. This time it also raised the discount rate, the rate at which banks borrow directly from the Fed on a short-term basis. Both moves were 25 basis points, or a quarter of a percentage point.

Since the funds rate is a very short-term rate, it has the most direct impact on very short-term Treasuries and very short-term yields. The so-called “prime rate” moves in lock step with Fed hikes. And the 2-year Treasury note (not to mention Treasury bills with maturities of one, three, or six months) are particularly sensitive to current and future Fed moves.

Case in point: Anticipation of a Fed move had already driven the yield on the



Personal Finance

6 things you should know about a stock market correction

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Posted by Sean Williams - The Motley Fool

on Monday, 14 December 2015 06:06

635760153774329681-GettyImages-485102512Panic has hit Wall Street and Main Street – or at least that's what the financial headlines would lead you to believe.

Last week the Dow Jones Industrial Average, broad-based S&P 500, and technology-heavy Nasdaq Composite suffered through their worst week in years. The Dow shed more than 1,000 points, the Nasdaq dipped more than 340 points, and the S&P 500 fell around 120 points. Unless you were a noted short-seller of stocks, it probably wasn't a good week.

The closing price for the Dow also signaled its first official correction since 2011. A stock market correction is defined as a drop of at least 10% or more for an index or stock from its recent high. With the Dow sitting almost 1,900 points off its all-time high set back in May, the Dow has now shed 10.3% from its highs, officially putting the widely followed index in correction territory.

What you should know about a stock market correction...read more HERE


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