Originally published on March 14, 2019
by Catey Hill
Read the Original Article Here

Worry most about the things you can control — but don’t ignore the rest.

That seems to be the advice from J.P. Morgan Chase which recently released its 2019 Guide to Retirement. One of its leading charts, which it notes is a “sound plan for retirement,” is a look at the factors that those planning for retirement can — and can’t — control.

The company reveals that saving and spending are in your “total control,” while market returns and policy regarding taxation, savings and benefits are “out of your control.”

J.P. Morgan Chase’s conclusion from all this: “Make the most of the things you can control but be sure to evaluate factors that are somewhat or completely out of your control within your comprehensive retirement plan.”

So, to make the most of the things that are all or somewhat in your control — saving vs. spending and asset allocation and location, as well as longevity and employment earnings and duration — here are some simple guidelines to help you get started.

Saving vs. spending: Advice varies on how much to sock away, though most experts say aim to save 10% or more of your income. Fidelity has a simple way to do this: The 50/15/5 rule. Allocate no more than 50% of take-home pay to essentials, save 15% of pretax income (that includes employer contributions) for retirement, and save for emergencies by socking away 5% of take-home pay in savings. The rest is yours to do what you will, though paying down high-interest debt if you have it should likely be a priority.

Asset allocation and location: T. Rowe Price offers a simple guide on asset allocation broken down by age to get people started, recommending 90%-100% of your retirement portfolio in equities in your 20s and 30s, with that switching to 80%-100% in equities with 0-20% in fixed income in your 40s. By your 50s, they’re recommending 60%-80% in equities, 20%-30% in fixed income, and 0-10% in short-term investments, then moving increasing amounts into fixed and short-term as you creep up in years.

Longevity. We assume you want to live a longer life — though this does mean you will need to save more for retirement — and to that end, Harvard Medical School has published a list of 10 things that can help lengthen life, including exercise, diet, avoiding smoking, maintaining healthy weight, and having friends. Especially if you’re healthy and don’t have many health issues or risk factors for health issues, talk to your financial advisor about how much more you should save should you live to 100 (or older!).

Employment earnings and duration. Plenty of factors impact your earnings, including career choice and where you live. Another thing: Switching jobs for more money or asking for a raise. Watch an FBI negotiatior give you the tips for landing a fat raise here. And if you don’t have enough to retire at 65, but you’re sick of the 9 to 5 grind, here’s a guide on finding part-time work when you’re older.

Originally published on Big Trends
by Stephen Burns

What if you could read the principles for success for some of the world’s greatest traders? Well you can, here is how author Jack Schwager summed up the the similarities of the ‘Market Wizards’ he spent years interviewing in his second book.

The following is a summarized excerpt from Jack D Schwager’s book, The New Market Wizards. I highly recommend this book for all active traders.

1. First Things First
You sure you really want to trade ? It is common for people who think they want to trade to discover that they really don’t.

2. Examine Your Motives
Why do you really want to trade ? Did you say excitement ? Then don’t waste your money in market, you might be better off riding a roller coaster or taking up hand gliding.
The market is a stern master. You need to do almost everything right to win. If parts of you are pulling in opposite directions, the game is lost before you start.

3. Match The Trading Method To Your Personality
It is critical to choose a method that is consistent with your own personality and conflict level.

4. It Is Absolutely Necessary To Have An Edge
You can’t win without an edge, even with the world’s greatest discipline and money management skills. If you don’t have an edge, all that money management and discipline will do for you is to guarantee that you will gradually bleed to death. Incidentally, if you don’t know what your edge is, you don’t have one.

5. Derive A Method
To have an edge, you must have a method. The type of method is not important, but having one is critical-and, of course, the method must have an edge.

6. Developing A Method Is Hard Work
Shortcuts rarely lead to trading success. Developing your own approach requires research, observation, and thought. Expect the process to take lots of time and hard work. Expect many dead ends and multiple failures before you find a successful trading approach that is right for you. Remember that you are playing against tens of thousands of professionals. Why should you be any better ? If it were that easy, there would be a lot more millionaire traders.

7. Skill Versus Hard Work
The general rule is that exceptional performance requires both natural talent and hard work to realize its potential. If the innate skill is lacking, hard work may provide proficiency, but not excellence.
Virtually anyone can become a net profitable trader, but only a few have the inborn talent to become supertraders ! For this reason, it may be possible to teach trading success, but only up to a point. Be realistic in your goals.

8. Good Trading Should Be Effortless
Hard work refers to the preparatory process – the research and observation necessary to become a good trader – not to the trading itself.
“In trading, just as in archery, whenever there is effort, force, straining, struggling, or trying, it’s wrong. You’re out of sync; you’re out of harmony with the market. The perfect trade is one that requires no effort.”

9. Money Management and Risk Control
Money management is even more important than the trading method. The Trading Plan
* Never risk more than 5% of your capital on any trade.
* Predetermine your exit point before you get in a trade.
* If you lose a certain predetermined amount of your starting capital (say 10 to 20%), take a breather, analyze what went wrong, and wait till you feel confident and have a high-probability idea before you begin trading again.

10. Trying to win in the markets without a trading plan is like trying to build a house without blue prints – costly (and avoidable) mistakes are virtually inevitable. A trading plan simply requires a personal trading method with specific money management and trade entry rules.

11. Discipline
Discipline was probably most frequent word used by the exceptional trades that I interviewed.
There are two reasons why discipline is critical. Understand That You Are Responsible
* It’s a prerequisite for maintaining effective risk control.
* You need discipline to apply your methods without second guessing and choosing which trade to take.
A final word, remember that you are never immune to bad trading habits – the best you can do is to keep them latent. As soon as you get lazy or sloppy, they will return !

12. Whether you win or lose, YOU ARE RESPONSIBLE for your own results. I’ve never met a successful trader who blamed others for his losses.

13. The Need For Independence
You need to do your own thinking. It also means making your own trading decisions. Never listen to other opinions.

14. Confidence
An unwavering confidence in their ability to continue to win in the markets was a nearly universal characteristic among the traders I interviewed.

15. Losing is Part of the Game
The great traders realize that losing is an intrinsic element in the game of trading. This attitude is linked to confidence. Because exceptional traders are confident that they will win over the long run, individual trades no longer seem horrible; they simply appear inevitable.
There is no more certain recipe for losing than having a fear of losing. If you can’t stand taking losses, you will either end up taking large losses or missing great trading opportunities – either flaw is sufficient to sink any chance for success.

16. Lack of Confidence and Time-Outs
Trade only when you feel confident and optimistic.

17. The Urge to Seek Advice
The urge to seek advice betrays a lack of confidence.

18. The Virtue of Patience
Waiting for the right opportunity increases the probability of success. You don’t always have to be in the market.
Guard particularly against being overeager to trade in order to win back prior losses. Vengeance trading is a sure recipe for failure.

19. The Importance of Sitting
Patience is important not only in waiting for right trades, but also in staying with trades that are working. The failure to adequately profit from correct trades is a key profit-limiting factor.
“One common adage .. that is completely wrong headed is : You can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits.”

20. Developing a Low-Risk Idea
The merit of a low risk idea is that it combines two essential elements: patience (because only a small portion of ideas will qualify) and risk control (inherent in the definition). “Open a doughnut shop next door to a police station”.

21. The Importance of Varying Bet Size
It can be mathematically demonstrated that in any wager game with varying probabilities, winnings are maximized by adjusting the bet size in accordance with the perceived chance of a successful outcome. 

22. Scaling In and Out of Trades
You don’t have to get in or out of a position all at once. Scaling in and out of positions provides the flexibility of fine tuning trades and broadens the set of alternative choices.

23. Being Right is More Important than being a Genius
Think about winning rather than being a hero. Go for consistency on a trade-to-trade basis, not perfect trades.

24. Don’t Worry About Looking Stupid
Don’t talk about your position.

25. Sometimes Action is More Important than Prudence
When your analysis, methodology, or gut tells you to get into a trade at the market instead of waiting for a correction – do so.

26. Catching Part of the Move is Just Fine
Just because you missed the first major portion of a new trend, don’t let that keep you from trading with that trend (as long as you can define a reasonable stop-loss point).

27. Maximize Gains, Not the Number of Wins
The success rate of trades is the least important performance statistic and may even be inversely related to performance.

28. Learn to be Disloyal
Never have loyalty to a position.

29. Pull Out Partial Profits
Reward Yourself !

30. Hope is a Four-Letter Word
Hope is a dirty word for a trader, not only in regards to procrastinating in a losing position, hoping the market will come back, but also in terms of hoping for a reaction that will allow for a better entry in a missed trade.

31. Don’t Do the Comfortable Thing
Do what is right, not what feels comfortable.

32. You Can’t Win If You Have To Win
“Scared money never wins”. If you are risking money you can’t afford to lose, all the emotional pitfalls of trading will be magnified. The market seldom tolerates the carelessness associated with traders born of desperation.

33. Think Twice When The Market Lets You Off The Hook Easily
There must be some very powerful underlying forces in favor of the direction of the original position !

34. A Mind is a Terrible Thing to Close
Open-mindedness seems to be a common trait among those who excel at trading.

35. The Markets are an Expensive Place to Look for Excitement
Excitement has a lot to do with the image of trading but nothing to do with success in trading.

36. The Calm State of a Trader
If there is an emotional state associated with successful trading, it is the antithesis of excitement. Exceptional traders are able to remain calm and detached regardless of what the markets are doing.

37. Identify and Eliminate Stress
Stress in trading is a sign that something is wrong. If you feel stress, think about the cause, and then act to eliminate the problem.

38. Pay Attention to Intuition
Intuition is simply experience that resides in the subconscious mind. The objectivity of market analysis done by the conscious mind can be compromised by all sorts of extraneous considerations (e.g., one’s current market position, a resistance to change a previous forecast). The subconscious, however, is not inhibited by such constraints. Unfortunately, we can’t readily tap into our subconscious thoughts. However, when they come through as intuition, the trader needs to pay attention. “The trick is to differentiate between what you want to happen and what you know will happen.

39. Life’s Mission and Love of the Endeavor
Many traders felt that trading was what they were meant to do – in essence, their mission in life.

40. The Elements of Achievements
Faulkner’s list of the six key steps to achievement Prices are Nonrandom = The Markets can be Beat
1. using both “Toward” and “Away From” motivation;
2. having a goal of full capability plus, with anything less being unacceptable;
3. breaking down potentially overwhelming goals into chunks, with satisfaction garnered from completion of each individual steps;
4. keeping full concentration on the present moment – that is, the single task at hand rather than the long-term goals;
5. being personally involved in achieving goals (as opposed to depending on others); and
6. making self-to-self comparisons to measure progress.

Robert Krausz’s basic tasks necessary to become a winning trader.
7. Develop a competent analytical methodology.
8. Extract a reasonable trading plan from this methodology.
9. Formulate rules for this plan that incorporate money management techniques.
10. Back-test the plan over a sufficiently long period.
11. Exercise self-management so that you adhere to the plan. The best plan in the world cannot work if you don’t act on it.

41. In reference to academicians who believe market prices are random, Trout says, “That’s probably why they’re professors and why I’m making money doing what I’m doing.” These exceptional traders have proved that it can be done !

42. Keep Trading in Perspective
There is more to life than trading !

Courtesy of http://newtraderu.com/

All third party materials are the responsibility of their respective authors, creators, and/or owners. First Allied is not responsible for third party materials, and the information reflects the opinion of its authors, creators, and/or owners at the time of its issuance, which opinions and information are subject to change at any time without notice and without obligation of notification.

Originally published on Jan 3, 2019 on MarketWatch.com
by Marianne Hayes

The first step toward achieving financial empowerment is accurately tracking your income and expenses. The second is adopting a plan for managing these details. Put them together and you’ve got a successful budget.

Whether you’re new to budgeting (like two-thirds of Americans who say they don’t have a household budget), or you struggle to stick to yours, this step-by-step guide can help you create a plan that you’ll actually follow.

Step 1: Track expenses and income to understand where your money is going.

Do you know how much take-home pay you earn each month? Most people don’t. Even fewer know where it’s going.

It may sound simple, but there’s often a gap between what we think we spend and what we actually spend—and seeing it in black and white can be pretty sobering.

A great starting point is to track your spending. (Apps like You Need a Budget, Mint and Wally can do a lot of the heavy lifting for you.) Looking back on your debit and credit card statements is another easy option. Either way, spending patterns should emerge relatively quickly. From there, group your spending into the following three categories:

• Fixed expenses: recurring costs you pay at regular intervals, like your rent or mortgage, utility bills, car payments and other debt
• Financial goals: money funneled to your emergency savings account, retirement contributions, vacation fund, home down payment fund, etc.
• Variable expenses: flexible costs that cover everything else, like food, entertainment and personal care items

Now run the numbers: At the end of each payment cycle, do you have money left over? Are you breaking even, or even running in the red? No matter where you land on that spectrum, it’s almost always possible to free up extra cash by bringing down your expenses.

Step 2: Reduce your expenses

Now that you’ve got a clear-eyed view of where your money’s going, you can free up some extra cash by dialing down your expenses.

Call your cable company or internet provider to see if you can negotiate a cheaper monthly bill. The same goes for gym memberships, subscription services and even your rent.

Don’t forget your credit cards, too. A whopping 69% of Americans who’ve asked for a lower credit card interest rate have been successful, according to a 2017 CreditCards.com survey—yet only 25% of cardholders have asked.

While you’re at it, consider cutting back on frequent costs that snowball. Grabbing a $10 takeout lunch just three times a week adds up to $120 a month. Pack a lunch just once more per week and you can potentially save $40 a month.

Step 3: Set personal financial goals

Whether you’re talking about beefing up your savings accounts, losing weight or lowering your golf handicap, you’re much more likely to be successful if you set specific and realistic goals. Unfortunately, 34% of Americans have no plans for their financial futures, according to a 2015 Northwestern Mutual study.

What are your goals? Maybe it’s paying for an upcoming wedding or vacation or buying a new home. We all reach our unique goals by adopting the same behaviors: saving, paying off debt and growing long-term wealth via smart investing. But having a specific goal—and, better, a specific target amount—helps to keep us focused and motivated.

Priority number one should be building up an emergency fund. If money is tight, aiming to squirrel away $1,000 is a solid jumping-off point. Once your cash flow increases and your debt is under control, you can get more aggressive about topping off your emergency fund with three to six months’ worth of basic expenses.

It’s OK to be working toward multiple financial goals at once. In fact, it’s recommended. If you wait until you’re debt-free and have a six-month emergency fund to start investing for retirement, you’ll miss out on major growth, thanks to the power of compounding returns. So start small, and don’t feel bad about only contributing a little toward each goal at a time.

You may not be able to max out your retirement account right now, but try to contribute enough to at least recoup an employer match, if one is available to you. (After all, that’s free money!)

Step 4: Find the budgeting style for you

Have you ever taken the time to pick out an outfit that fits your personality and taste? Think of the times when you’ve chosen wall posters or decorations that speak to your lifestyle and preferences. Now imagine going through that process again, but for…budgets.

It’s not as boring as it sounds. Selecting a budgeting method that works for your lifestyle is a good way to suit your particular financial needs, to fit the way your live your life and to prevent you from giving it up after a month.

Another reason why it helps to pick something uniquely suited to your tastes is to avoid being too aggressive and burning out. While you’ll certainly make faster headway on your goals if you eliminate every dollar of “unnecessary” spending, it’s only a matter of time before most of us grow tired of living this way and blow our budget altogether. You deserve reasonable creature comforts (it’s OK to get the extra guacamole), which ultimately makes personal budgeting an empowering, realistic way to manage money.

Here are a few different tried-and-true approaches.

The 50/20/30 rule: Easy to remember and difficult to mess up. This system has you allocate your take-home pay like this:

• 50% for fixed expenses
• 20% for financial goals
• 30% for variable expenses

The 50/20/30 rule makes it easy to identify where you may be overspending so that you can course-correct as needed. Spending 40% of your income on variable expenses like food, for instance, is a sign that you need to dial back on eating out until you’re comfortably within 30%. Similarly, if you’re overspending on fixed expenses, it may mean “borrowing” from your flexible spending to make up the difference.

The values-based budget: People like to do the things that make them happy. Though that may sound obvious, this interesting system operates under the assumption that unless your budget is customized to your individual priorities (i.e., making you happy), you simply won’t stick to it.

After accounting for your most important bills (rent or mortgage, utilities, food, minimum debt payments), along with your financial goals, really think about what brings you joy. This can range from charitable giving to weekly trips to the movies to daily lattes—whatever makes you happy. Prioritize your variable expenses so you can comfortably pay for those costs, and then stop spending on what doesn’t matter.

The flexible budget: This budgeting style is easygoing, with little work required—as long as you’re good about staying consistent with your spending.

First, automate all your monthly fixed expenses and financial goals. Then, whatever’s left in your bank account until next payday is yours to spend, without much additional oversight. This budgeting style is designed for people who rarely overspend, as it’s the most hands-off approach.

The zero-sum budget: At first, this budget might seem more confusing than the rest, but it’s actually one of the most practical once you try it out. The main idea here is to account for every single dollar of income before it’s even spent.

For example, if you take home $2,000 every paycheck, you’ll basically “spend” all $2,000 on paper as soon as you get paid. First, you’ll pay off your fixed expenses and financial goals. Then, you assign all the remaining income to variable expenses until you reach $0. That way, you always know where your money has to go for the month, which should help you decide if you can or cannot afford a splurge purchase.

The trick here is to actually follow your budget once you have it written down. But if you do, it takes a lot of the uncertainty and chaos out of your day-to-day financial decisions.

The envelope system: It doesn’t get more old-school than this. To follow this budget, you visit the bank or ATM after each payday and withdraw cash for things like groceries, eating out, shopping and personal care items. You only withdraw what you need, and you only allow yourself to pay for those things with the cash you’ve withdrawn. Yep, it’s that simple.

It obviously won’t work for every expense—it isn’t so easy paying your rent or phone bill with cash—but it’s ideal for preventing overspending because once that money is spent, it’s gone. According to a now-famous study out of M.I.T., consumers may be willing to pay up to two times more when paying with a credit card versus cash.

Step 5: Check in on what’s working (and what’s not)

Just like it’s healthy to have regular check-ins with yourself as a means of self-care, so too is it healthy to regularly check-in on your budgeting style to make sure it’s working.

Set aside a few minutes every week to take your financial temperature: Did you overspend in any categories? Did any pop-up expenses derail your budget? Have you come into a tax refund or other cash windfall you can direct toward your financial goals?

If something isn’t working, explore where your costs can be trimmed. (FYI, it’s better to shave your variable or fixed expenses than your financial goals whenever you can.) You can also try another budgeting method to see if it works better for your lifestyle.

The bottom line is that your budget isn’t a fixed document that’s set in stone, but rather a living, breathing reflection of your financial life. It can, and should, evolve with you.

All third party materials are the responsibility of their respective authors, creators, and/or owners. First Allied is not responsible for third party materials, and the information reflects the opinion of its authors, creators, and/or owners at the time of its issuance, which opinions and information are subject to change at any time without notice and without obligation of notification.

Originally published on Jan 3, 2019 on MarketWatch.com
by Catey Hill

Get more from your money.

Financial uncertainty is in the air — with some experts predicting a coming recession, more stock market volatility and more consumers defaulting on their debts, among other issues.

And while we don’t know what will happen, that uncertainty makes 2019 a good time to shore up your savings, spend less so you can save more, pay down debt and invest smartly. So we asked experts what money moves they’d recommend taking in 2019. Here are 15 of them.

1. Develop an investment policy statement, which is a document that outlines your investment goals and objectives and the strategies that you’ll use to make them happen, says Mitchell C. Hockenbury, a certified financial planner at Kansas City-based 1440 Financial Partners. It might include information on your asset allocation, risk tolerance and more. He recommends taking Vanguard’s Investor Questionnaire to help you develop the statement, or working with a professional on it.

A statement like this can be very helpful in financially uncertain times, says Hockenbury: “The purpose is to help you when you become anxious with big drops in the market. The last thing you want to do is to make poor investment decisions because of fear or greed.”

2. Rebalance your retirement accounts, says Darren L. Zagarola, a certified financial planner at EKS Associates in Princeton, making sure your asset allocation is in line with the goals from your investment policy statement. It can help to consolidate your 401(k) plans from old companies, which “allows you to get a better handle on your investment strategy and risk level,” says Andrew Westlin at Betterment.

3. Make sure you have 3-6 months of income saved in an emergency fund, says Leanna Johannes, a senior wealth strategist at PNC Wealth Management in Philadelphia. This is a savvy move particularly during uncertain financial times, as it can help protect you in the event of a job loss or other emergency.

4. Pay off your debt like this. Consumer debt hit record highs in 2018 – so make this the year you tackle yours. “The first step of your plan is figuring out the total debt you have, the type of debt and the interest rates on those debts,” says Johannes. “Then look for ways to consolidate your debt or lower your interest rates,” she adds — noting that you should negotiate lower rates if you can.

To tackle debt, consider aggressively paying off the highest interest debt and then the minimum on all others; once that is done, then tackle the next highest interest rate debt; and on and on until you’re debt free. And if you struggle with credit card debt, Priya Malani, the founding partner at Stash Wealth in New York, recommends Tally, an app that consolidates credit card debt from multiple cards into one lower monthly payment.

5. Move your savings online, says Malani. Most savings accounts are paying out very low rates right now so you want to earn as much money as you can. That’s why she likes online banks like Ally and Marcus. “They pay a higher rate of interest on their regular savings account than a typical brick-and-mortar bank,” she says.

6. Freeze your credit – even if you don’t suspect any foul play. This can protect you from people taking out credit cards and loans in your name in the future – and as data breaches and identity theft are becoming more and more frequent, this may be smarter than ever. “All three major credit agencies, Equifax, Experian and Transunion, allow you to freeze your credit file for free. Best of all, it only takes a few minutes to ‘thaw’ when you need to have your report pulled. This is the best way to be proactive in protecting your credit,” says Hockenbury.

7. Change your passwords for important logins like your bank, says Zagarola. This can help protect your accounts from getting hacked. Here’s a guide on creating smart passwords.

8. Make a concrete budget. You’ve heard this advice before but that doesn’t make it any less relevant this year. Indeed, experts say this is the best way to get your spending under control, pay down debt and save more. This guide will help you make a budget in seven steps, or consider budgeting software like YNAB to help. “One of the things that trips many people up is the semi-annual and annual payments, Hockenbury says — which might include things like car insurance payments or annual memberships. Take the extra time to think through these types of expenditures,” Hockenbury says.

9. Save with purpose, says Malani. Rather than have one big savings account for everything, you should have different accounts for different goals: “In 2019, put purpose behind your savings. Start by deciding what you’re saving for (i.e. trip to Portugal, new West Elm couch, etc.). Then set up a separate savings account for each thing or experience you’re saving for. Finally, nickname the savings account in accordance with its designated purpose. You’ll be much less likely to ‘borrow’ money from your Portugal vacay account than just a general savings account,” she explains.

And make that savings automatic so you actually end up saving the money, she adds. Set up automatic transfers from your checking to your savings account at regular intervals. To boost savings even more, Malani recommends the app Digit: “it will ‘sneak’ money out of it and save it for you. Promise you won’t miss it and before you know it, you’ll have a few hundred dollars saved up,” she explains.

10. Boost retirement contributions — even if it’s just by 1%. “At the very least, contribute enough to secure your employer’s match, which is typically between 3% and 6%,” says Johannes. Try to boost contributions every six months or so if you can.

11. Get smarter about your credit score. Malani says you should check out your credit score using Creditwise from CapitalOne (you don’t have to be a CapitalOne customer to use it). It shows you your credit score, why your score is where it is, and simulates how decisions like applying for a new loan might impact your score. It also has fraud alerts to let you know if someone is trying to use your personal information. If your score is low, here’s a guide to boost it.

12. Revisit your estate plan, says Zagarola. “Review your wills to ensure that your wishes will be met at your death. Review the beneficiary designations of retirement accounts and life insurance to ensure they marry up with your estate planning wishes,” he explains.

13. Reward yourself. If you always pay off your credit card in full and on time, you should be earning credit card rewards. Use this tool from NerdWallet to get the best rewards card for your lifestyle. Love the idea of rewards but want to play it a little safer? Malani recommends the app Debitize. Use your credit card as you usually would to get rewards, but link it and your checking account to Debitize. Buy something on your credit card, and Debitize will pull the money out of your checking account each day and at the end of the month will pay your credit card bill in full.

14. Shop around for new insurance. This can literally save you thousands this year. On car insurance alone, a good driver could save more than $400 a year by switching companies.

15. Fight overdraft fees. Overdraft fees have been steadily rising, with Americans paying more now than they have since 2009. Here are some tips for fighting those fees. You can also try the free app Earnin, which allows you to borrow up to $100 from your pending paycheck rather than have to wait every two weeks and risk overdraft. The app allows you to pay what you think is fair for the service. Just beware of the potential pitfalls, including blowing your budget and overspending.

All third party materials are the responsibility of their respective authors, creators, and/or owners. First Allied is not responsible for third party materials, and the information reflects the opinion of its authors, creators, and/or owners at the time of its issuance, which opinions and information are subject to change at any time without notice and without obligation of notification.

Originally posted on Jan 3, 2019 on MarketWatch.com
by Alessandra Malito

When there’s talk of a market downturn, it’s easy to panic about future investment returns and the potential to retire one day — but it’s also imperative to know what’s actually happening.

Investing is emotional, and many people tend to let their feelings get ahead of logic when ticker symbols are turning red and terms like “bear market” and “recession” are being thrown around.

“Sometimes I think people go more by how they feel than looking at the numbers,” said Monica Dwyer, vice president and wealth adviser at Harvest Financial Advisors in West Chester, Ohio. “This is dangerous because emotions can lead to bad decisions.”

First, it’s important to define the meaning of the term “the market.” Investors tend to look at two major indices — the Dow Jones Industrial Average DJIA, +0.28%  or the S&P 500 SPX, -0.16%  — when referring to the stock market. Many experts believe a market downturn is looming, but that term often refers to U.S. equities, not necessarily bonds, international funds or commodities. Typically, investment portfolios are diversified among various asset classes (or at least, they should be), which means what is happening in the stock market isn’t necessarily happening across your entire investment portfolio.

Here’s something else investors should know about the investing terms they’re hearing lately: descriptions like pullback, correction, and bear (or bull) market can be applied to specific stocks, assets and indexes. They can also be based on any time-frame — between a day and a decade — which could confuse investors trying to understand how this applies to their own investments.

Here’s a breakdown of these terms:

Pullback: A pullback refers to a share price decline 5% and 9.9% from the price’s peak, said Eric Walters, a financial adviser and president at SilverCrest Wealth Planning in Greenwood Village, Colo. There have been 78 market pullbacks since the end of 1945, according to asset management and investment firm Guggenheim Investments. Comparatively, there have been 27 corrections (with an average decline of 13%) and eight bear markets (with a 27% average decline).

Correction: A correction is a loss of 10% from a recent high. Pullbacks and corrections are more likely than full bear markets, said Abe Ringer, a financial adviser and founder of Breakwater Financial in Needham, Mass. “When we look at today’s market, many are instantly assuming that we are going to get through another dot.com-era bear market, or a financial crisis-era bear market,” he wrote. “When we look at all of the information, and not just the most recent, we know that declines of that magnitude are rare and not the norm.”

Bear market: A bear market is a decline of 20% from a recent high. But investors still shouldn’t panic when they hear the stock market is in a bear market, because most likely their portfolios aren’t entirely invested in these equities, Walters said. There are different types of equities — including large cap, mid-cap and international — and they can each fluctuate in value differently. While some are plunging, others may actually be recovering from their lows. “It also doesn’t mean there is a recession in the economy,” he said.

The threat of a bear market is brought up a lot on Wall Street and in the media, said Ian Weinberg, chief executive officer of Family Wealth & Pension Management in Woodbury, N.Y. “When we saw the market go up and down 1,000 points the other day and we have a 5% swing, does that mean it’s a bear market?” he said. “It’s very open to interpretation and I think the term causes investors to behave badly.”

Recession: Recession is a broader term that refers to the country’s overall economic performance, not just investments. A recession can cause the stock market to fall, but the reverse can happen too, where a financial crisis can spark a recession. Real estate bubbles and the collapse of the subprime mortgage industry helped fuel the 2008 financial crisis, and some argue that the 2008 stock market crash exacerbated the Great Recession.

The country is in a recession when there are two consecutive quarters or more of negative growth in Gross Domestic Product growth — the total value of all goods and services produced in the country. Some economists believe the next recession will happen around 2020 (which would also mean the current expansion the U.S. is experiencing would be the longest recorded). For many Americans, the most worrisome part of a recession is the possibility of job loss — unemployment often increases during recessions as consumers slow their spending and companies cut costs.

Realized vs. recognized losses: There are a few other ways investors can gain perspective during market volatility, advisers said. Investors should understand the difference between “realized” and “recognized” losses. Realized losses means the amount of money a person actually lost, whereas recognized losses refer only what’s been lost on paper. For example, if an investor’s portfolio were to drop $1,000, but that investor didn’t sell his stocks, it is a recognized loss. If the investor were to pull his portfolio out of the market after experiencing that loss, it would be a realized loss.

Points vs. percentage drops: Market drops can sound dramatic, but pay attention to what’s being described. The media usually refer to market movements on a points-basis, such as an index dropping 1,000 points. That could sound like bad news for your portfolio, but investors should look at what those points mean in percentages, said Eric Freckman, managing partner of advisory firm Guillaume & Freckman in Palatine, Ill. When his clients ask him about these point fluctuations, he translates it into actual portfolio changes — a 500-point drop in the Dow Jones Industrial Average, for example, might equate to just 0.7% drop in a client’s diversified portfolio. “We try to bring it back to reality,” he said.

All third party materials are the responsibility of their respective authors, creators, and/or owners. First Allied is not responsible for third party materials, and the information reflects the opinion of its authors, creators, and/or owners at the time of its issuance, which opinions and information are subject to change at any time without notice and without obligation of notification.

Originally posted Jan 7, 2019 on MarketWatch.com
by Michael Brush

For anyone who owns stocks, the holiday season was pretty grim. But that’s behind us, and now it’s time to deploy the rest of any buying power you may have. Or put on a little margin if that’s the only way to increase exposure to stocks at this point.

The reason: The bottom is in, and 2019 will bring a 15% rally in the S&P 500 — or better.

How do we “know” the bottom is in? Of course, no one can know this for sure. But that’s what the weight of the evidence suggests. Here are five reasons why.

1. We saw capitulation

Once a selloff gets momentum, the key is to wait out capitulation. If you follow just one sentiment measure to gauge when the collective mood of investors hits extremes, make it the Investors Intelligence Bull/Bear ratio.

Whenever this survey of investment professionals falls below 1, it’s a sign negativity has peaked and it is time to buy. Following the market train wreck in late December, this sentiment gauge fell to 0.86. Bingo.

(Conversely, when this gauge rises above 5, it is a time to trim positions and be careful with stocks. It was above 5 last summer, one reason I was telling subscribers of my stock newsletter Brush Up on Stocks to be cautious on stocks.)

Two other measures I track also signaled capitulation. The VIX volatility index recently spiked above 35. And the Cboe Options Exchange 10-day put/call ratio rose above 1. Both suggest that negativity probably peaked.

2. There’s no recession around the corner

While these signs say the selling peaked, you should never arrogantly write off big stock-market selloffs. The stock market represents the collective wisdom of every person who is smarter at economic forecasting than me (and probably you). That’s why economists say the stock market is a good leading economic indicator.

But we also know that investors routinely lose their heads and sell, or buy, to extremes. So the stock market isn’t perfect as an economic forecaster. In fact, since World War II it has been no better than that coin in your pocket. Near-bear markets or worse (declines of 19% or more) have predicted 14 of the last seven recessions since then, according to FactSet.

It’s unlikely we’ll see a recession soon, says James Paulsen, Leuthold Group’s chief investment strategist, because few of the typical signals have popped up. The yield curve hasn’t inverted. Junk bonds haven’t sold off enough relative to safer forms of debt. We don’t see the kind of overheating that typically precedes recession. Inflation and interest rates remain subdued. Consumer and business confidence are solid but not at extremes. And there are few signs of excesses in the economy — like massive debt loads or the housing bubble that foreshadowed the financial crisis. Paulsen expects U.S. GDP growth to fall below 2% this year, but not turn negative.

3. Insiders are very bullish

The men and women with the front row seats on the economy — corporate insiders — turned steadily more bullish as the stock market declined late last year. They continue to buy more of their own company stock than they sell. This is rare and very bullish, according to Vickers Stock Research, which tracks insider activity.

4. Stocks look cheap

S&P 500 stocks traded as high as 24 times trailing earnings last year, putting them the top fifth of the valuation range since 1990. Recently, they fell to the bottom fifth of that range, or about 16 times trailing earnings, points out Paulsen.

“The stock market is back to a level which offers some potential upside again,” he says.

This assumes inflation and interest rates stop rising and the economy avoids a recession — his baseline forecast.

5. There will be progress in the war on trade

Back in late November when investors were sinking deeper into despair, I wrote that shocks from two chest paddles would bring their sentiment back to life and revive stocks: Reversal by the Federal reserve of its aggressive 2019 plans to raise interest rates, and progress in the war on trade.

Last week, we got a definitive signal from Fed Chair Jerome Powell that he’s abandoning aggressive 2019 rate hikes for now. This sparked a big rally. Next, we’ll see definitive progress in the U.S.-China trade tensions. The threat of tariffs has distracted many business managers from their regular jobs, because they’ve had to plan supply-chain contingencies if tariffs hinder access to Chinese factories. This hurts the economy.

Indeed, tariff threats have contributed to a significant economic slowdown in China and the U.S. Chinese leaders feel the pressure. So does President Donald Trump. The 2020 presidential election has already begun, and Trump needs a strong economy and stock market to help fight off contenders like Mitt Romney and Elizabeth Warren, who are already sniping at him.

Yes, Congress is now split so Trump has less leeway. But the president has a lot of power in terms of influence and regulatory reform that can bolster growth ahead of a major election. This explains why the third year of the presidential cycle is normally the strongest for stocks, with a median return of 14% since 1900, according to Tobias Levkovich, Citigroup’s chief U.S. equity strategist.

The bottom line

All of this adds up to a 10%-15% rally from here, suggests Paulsen. His logic? The S&P 500 recently traded at a price earnings multiple of about 16. Assuming earnings are flat but optimism returns because inflation and interest-rate pressures ease, it’s not unreasonable to think the market P/E could expand to between 18 and 20. That suggests the S&P 500 could rise to between 2,800 and 3,000.

Citigroup’s Levkovich is on the same page. His panic/euphoria sentiment model recently went into “panic” mode. The average market advance from that point is 18%.

What to buy?

You could simply buy the S&P 500, the Dow Jones Industrial AverageDJIA, +0.44%  or the Nasdaq Composite COMP, -0.54% But you are better off focusing on the cyclical names, believes Paulsen. This makes sense. They are the ones that got hit the hardest. They tend to rebound the most when investors get more bullish. And corporate insiders definitely agree. I track their activity daily for my stock letter, and they have decidedly favored economically sensitive cyclical stocks in the pullback since early October. Here are the key cyclical areas to favor, according to Paulsen and some of the stocks that insiders currently favor in each group.

• Energy insiders have been big buyers at Matador Resources MTDR, +2.01%  and Encana ECA, -0.65% among many others. Another way to go here is to buy the energy exchange-traded funds. Bear Traps Report author Larry McDonald, who is currently bullish on the energy sector, suggests Energy Select Sector SPDR Fund XLE, +0.47%  and VanEck Vectors Oil Services OIH, +0.36% Others to consider: Vanguard Energy Index Fund VDE, +0.46%  and SPDR S&P Oil & Gas Exploration & Production XOP, +0.30%

• Industrials insiders have been big buyers at Air Products & ChemicalsAPD, +2.04% Univar UNVR, +0.89% and Eastman Chemical EMN, +0.65% For ETFs, consider the Industrial Select Sector SPDR Fund XLI, +1.33% Vanguard Industrials Index Fund VIS, +1.16% and Fidelity MSCI Industrials IndexFIDU, +1.13%

• Financials insiders have been very bullish at Century Bancorp CNBKA, -0.97%B. Riley Financial RILY, +0.42%  and Greenhill GHL, -0.75% Also consider the Financial Select Sector SPDR Fund XLF, -0.06% Vanguard Financials ETFVFH, -0.05% and SPDR S&P Regional Banking ETF KRE, +0.32%

• Technology insiders have been significant buyers at Intel INTC, -0.48% AppianAPPN, +0.03%  and SS&C Technologies SSNC, -0.86% Here are some ETFs to consider: Technology Select Sector SPDR XLK, -0.63%   Vanguard Information Technology VGT, -0.71%   and iShares U.S. Technology IYW, -1.02%

What to avoid

Be wary of the FAANGs since many of them have problems that will persist. Regulators are now looking at Facebook FB, -2.04%  and Google parent AlphabetGOOG, -0.43% GOOGL, -0.54% which is never a good thing. A slowdown in sales growth at Apple AAPL, +0.42%  suggests it may be done riding the innovative wave set in place there by the genius of Steve Jobs years ago.

Use rallies to get out of defensive names in sectors like utilities, consumer staples and big pharma, says Paulsen.

Also, avoid thinking of cyclical names as long-term buy-and-hold stocks, says John Normand, head of cross asset fundamental strategy at JPMorgan Chase. Though cyclical stocks will see continued strength from here in 2019, we are in the late stages of this expansion. When economic cycles end, that is invariably bad for cyclical names.

At the time of publication, Michael Brush had no positions in any stocks mentioned in this column. Brush has suggested MTDR, ECA, APD, UNVR, EMN, CNBKA, RILY, GHL, INTC, APPN, SSNC, FB, and GOOGL in his stock newsletter Brush Up on Stocks. Brush is a Manhattan-based financial writer who has covered business for the New York Times and The Economist Group, and he attended Columbia Business School in the Knight-Bagehot program.

All third party materials are the responsibility of their respective authors, creators, and/or owners. First Allied is not responsible for third party materials, and the information reflects the opinion of its authors, creators, and/or owners at the time of its issuance, which opinions and information are subject to change at any time without notice and without obligation of notification.

Originally published on Jan 19, 2019 on MarketWatch.com
by Brett Arends

Financial advisers can do a lot of good.

They can stop you making stupid decisions. They can stop you panicking. They can pressure you to budget better, get the right insurance, make and stick to longer-term plans, and do important things like keeping an up-to-date will. At their best, they’re both a trusted counselor and a personal trainer. Yes, they can also help you with investing.

But only up to a point.

Earlier in my career I took a series of postgraduate finance courses at several U.S. colleges, of the kind that is standard for most of the qualified financial planners working today. I was partly interested in what I would learn about finance. But I was also interested in what I would learn about planning and about planners. The industry is a key factor in moving markets.

The good news: Financial planners are all taught sound financial theory based roughly upon something called the Efficient Market Hypothesis and something else called the Capital Asset Pricing Model.

The bad news? They are all taught financial theory based roughly upon the Efficient Market Hypothesis and the Capital Asset Pricing Model.

To put it simplistically, your planner has been taught that it is impossible, or next to impossible, to beat the stock indexes because stock prices are so good at reflecting all the fundamentals. And, also putting it simplistically, he or she has been taught that history tells you the likely returns and risks from each asset class, and that the “riskier” the asset the higher the return.

Sounds good, right?

Well, yes, OK. It’s not crazy and it mostly works most of the time.

But as the Dow Jones Industrial Average takes a roller coaster ride these last few months, and you dial up your financial adviser for some calming words, here are 10 things he or she didn’t learn in school and may have trouble explaining.

1. If stock prices reflect fundamentals so well, why are they so volatile? Why did the S&P index double between 1995 and 1998, and again between 2010 and 2014, and halve between 2000 and 2002, and again from 2007 to 2009? Did the true, underlying value of U.S. industry really double, halve, double and then halve again during those short periods?

2. U.S. stocks sport a notably higher “average historic return” today than they did nine years ago, as well as notably lower historic volatility. That’s because during that time the S&P 500 has trebled in price. Does this mean stocks today are a more attractive investment, at three times the price, than they were then?

3. If you can’t beat the market, how did Warren Buffett do it? What about Sir John Templeton? Julian Robertson? George Soros?

4. Does gold have a value? If so, why? If not, why is it trading at $1,200 an ounce?

5. The U.S. accounts for less than a third of the global economy. So why should I have most of my stock portfolio in U.S. stocks? On what basis do you believe stocks in countries like Britain, Germany, Japan, Australia or Singapore are “riskier” than the U.S.?

6. Why are emerging market bonds considered to be “riskier” than, say, high yield U.S. debt, even though U.S. corporations have defaulted at similar or even higher rates?

7. If U.S. Treasury bonds are “low return,” why have they produced much better returns than stocks during several long periods, including from 2000 through 2015? And if they are also are “low risk,” why did their owners actually lose money in real terms during most of the 1960s and 1970s?

8. Should we expect similar annual returns from 10-year Treasuries today, when they yield 3.1%, as people got in the past, when 10-year Treasuries yielded 6% or 10% or even more? If so, how? If not, how useful is their historic return and risk data?

All third party materials are the responsibility of their respective authors, creators, and/or owners. First Allied is not responsible for third party materials, and the information reflects the opinion of its authors, creators, and/or owners at the time of its issuance, which opinions and information are subject to change at any time without notice and without obligation of notification.

Originally published February 6, 2016 on Fool.com
by Morgan Housel

We are in the golden age of financial information.

There is more high-quality financial writing today than ever before, written by a more diverse group of writers than has ever existed.

But there is far too much to read. The volume of financial information could drop by 99% and you still couldn’t read a fraction of what’s out there.

Everyone needs a filter, which requires having a curated list of go-to writers.

Here’s a list of people I go out of my way to read (I know I’m forgetting many — sorry).

Ben Carlson (A Wealth of Common Sense)

• Who he is: Portfolio manager at an endowment fund
• What he writes: Investing observations that seem like common sense until you realize you had never thought about investing that way before reading his article.
• Why you should read him: He bats pretty close to a thousand in terms of quality. Every article is worth reading.

Sam Lee (Morningstar)…

Read the rest of Morgan’s go to reading over at Fool.com

All third party materials are the responsibility of their respective authors, creators, and/or owners. First Allied is not responsible for third party materials, and the information reflects the opinion of its authors, creators, and/or owners at the time of its issuance, which opinions and information are subject to change at any time without notice and without obligation of notification.

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Originally Published on Yahoo! Finance
by Eric Rosenbaum

How about that 550-point intraday dive last week in the Dow! Did that finally get you to sell?

Or was it one of the many headlines about the trillions of dollars that have been wiped out of the stock market in the worst start for the Dow in history — since 1897! And worst start for the S&P 500 since the Great Depression began in 1929.

Oh, c’mon, that was “so last Wednesday.”

Surely, when all the major indices ripped higher on Friday, and stocks registered their first positive week of the year, and that diving-Dow had two straight days with triple-digit gains, you had plowed right back into the stock market and banked all those big gains.

Right?

It seemed like the panic and the paranoia were over — until the Dow dropped by another 200 points on Monday.

Vanguard Group CEO Bill McNabb said on Monday that investors should expect the volatility to last longer — and expect less from stocks for up to a decade.

And so far in January, investors have yanked near-$7 billion from U.S. stock funds, according to Thomson Reuters Lipper data. Investors have also put more than $3 billion into money market funds — the market’s under-the-mattress cash equivalent. But the more alarming data comes from last month, when investors pulled $48 billion from stock funds. That is eerily similar to 2008, as the financial crash hardened: Investors took $49 billion out of stock funds in Sept. 2008 and $55 billion out of stock funds in October 2008.

Kudos to investors for the great timing. Except for the fact that from 2008 to 2012, the S&P 500 generated a cumulative return of 8.6 percent.

Here’s the problem…

Read the rest on Yahoo! Finance

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