A Common Choice that Could Diminish the Best Years of Your Life…

By Nilus Mattive

Nilus Mattive

This post A Common Choice that Could Diminish the Best Years of Your Life… appeared first on Daily Reckoning.

Are you ready to retire? Don’t be too eager…

On March 9, 2018, the bull market celebrated its ninth birthday. Hopefully your investments have followed right along.

You’ve gone over the numbers. You have a plan in place to make sure you don’t run out of money. You’re sitting pretty.

Now you’re ready for retirement… that point in your life when you can spend as much time as you wish with the family, on the golf course, or traveling.

Time to tell the boss to take this job and shove it… right?

On the surface, it might look like a no-brainer.

But if we look at it from a non-financial prospective, retirement can come with certain risks…

In fact…

Early retirement may be dangerous to your health.

A study published in the Journal of Epidemiology & Community Health found that people who waited one year past age 65 to retire were 11% less likely to die early.

And the Institute of Economic Affairs in the UK reported that retirement increases the chance of getting diagnosed with a physical condition by 60% and suffering from clinical depression by 40%. Plus the chances of requiring medication jumps by 60%.

Another study, this one in the International Journal of Geriatric Psychiatry, revealed that men who take Social Security as early as possible have a 20% increase in mortality risk.

Postponing retirement also delays the onset of Alzheimer’s disease.

But don’t forget…

The Fun Factor

41% of Americans don’t use all their vacation days. And 83% do work-related activities when on vacations.

This workaholic mentality can carry into retirement. And becoming time affluent presents a problem for many.

Consider this: Retirees have more time to have fun — 7½ hours a day compared with working adults, who have only around 4, according to a Merrill Lynch and Age Wave study.

But many are at a loss for how to fill that time, which helps explain why the average retiree watches 48 hours of TV each week, according to Nielsen.

It’s easy to understand how older adults can forget to have fun… they feel guilty!

After all, they’ve worked for 30-40 years to pay off mortgages, putting children through school, and taking care of aging family members. To switch to a mode of having fun and being impulsive isn’t part of their makeup.

Once they retire they aren’t as motivated to stay active. That can lead to overeating, which can result in other problems, such as obesity, diabetes, and arthritis.

And without something to provide mental stimulation they can experience depression and a decline in cognitive function.

Is there a good balance between work and play?

At least one study found that there is…

Researchers at the Melbourne Institute of Applied Economic and Social Research examined 6,500 working adults who were on the job a range of hours each week. They were given several cognitive function tests to do within a set time, including reciting lists of numbers backwards, reading words aloud, and matching letters and numbers.

Their performance improved with every hour of work, until they reached 25 hours a week. That’s when the results slowly started to decline.

At first the decline was very marginal, and there was not much of an effect as working hours rose to 35 per week. Once they passed 40 hours, the decline was much more rapid. Those participants who worked 55 hours or more performed worse than unemployed and retired people.

Are you up to changing course?

Before you make the decision to clock out for the last time, plan for what you’ll do when you retire even more carefully than you did for life leading up to this point.

How will you replace the going out to lunch with coworkers and the daily routine that came from your job?

Non-working retirees in the Merrill Lynch survey said it wasn’t the reliable income they miss the most. It was the social connections.

And 75% of working focus group participants recommended that anyone considering retirement should be open to trying something new… something they truly enjoy… such as turning a hobby into a source of income.

You may find that your new direction will be more flexible, more fun, and less stressful and boring than your job was.

Rather than defining yourself by your work, define yourself by what you do with your newfound leisure time.

You might take a career intermission — a time to relax, recharge and get a feel for what retirement is really like.

Sure, as long as you’re prepared financially, retiring early is attractive. But don’t forget the emotional adjustments that you must make to avoid losing a sense of purpose and satisfaction.

So include a plan to replace the mental stimulation, social contacts and physical activities that are part of your job.

And you’ll be set to enjoy what could easily become the most exciting phase of your life.

To a richer life,

Nilus Mattive
Editor, The Rich Life Roadmap

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From:: Daily Reckoning

[CHART] Can You Guess This Stock?

By Zach Scheidt

name this stock

This post [CHART] Can You Guess This Stock? appeared first on Daily Reckoning.

Pop quiz — Can you name this stock?

I’ll give you a couple hints…

  • This stock is in the red-hot retail industry.
  • The company reported tremendous earnings this week.
  • Strength is being driven by the vibrant U.S. housing market.

Did you get it?

The company is Restoration Hardware (RH), a home furnishing store that has been knocking it out of the park thanks to a convergence of two major trends in the U.S. economy.

If you bought the stock at the beginning of last year, you’d be up 500% on your investment today.

And the best news is that for RH — and so many other retailers in this industry — the fun is just getting started!

Have Money, Will Spend…

This is a great time to be selling luxury products to American consumers.

Ironically, as I write this alert, I’m sitting in my local Starbucks next to a table full of 9 different “entrepreneurs” discussing their business of selling luxury health products to consumers in our community.

With unemployment levels at extreme lows, wages ticking steadily higher, and inflation readings well within a “normal” range, Americans just have money to spend!

That’s exactly why the consumer discretionary sector of the stock market has been so strong, and why retail stocks like Restoration Hardware are on the move.

Across the board, I’m seeing strength in restaurant stocks, apparel stocks, athletic gear stocks, discount retail stocks, and even auto stocks!

Essentially any investment tied to consumer spending has a very good chance of producing significant gains this year.

Hopefully you’ve already been paying attention to this area and making money on your investments. After all, we’ve been pounding the table about retail stocks for months here at The Daily Edge.

Fortunately, even if you’ve missed out on this ramp in consumer spending so far, there’s still time for you to cash in.

Because today, there’s an additional trend that’s helping to push a specific group of retail stocks even higher.

Compound Your Gains with a Vibrant Real Estate Market

Are you in the market to purchase a new home?

Even if you’re not personally looking for a home to purchase, chances are good that you know someone who is. Perhaps even your children or grandchildren are getting ready to make their first real estate purchase.

The housing market in the U.S. has been on fire lately. And that’s not about to change any time soon.

Demographic trends are pointing to strong demand for new homes as young families start to move out of rental properties and invest in their own homes. With so many of these families delaying purchases following the financial crisis 10 years ago, there’s now a tremendous amount of pent up demand.

Think about your experience the first time you bought a home…

If your family is anything like mine, you probably spent the first year making multiple trips to Home Depot (HD) or Lowe’s (LOW), buying furniture and having it delivered, and stocking up on everything from dishes and kitchen appliances to decorative items.

My wife still insists that these are not discretionary purchases, but actual necessities to make our house a real “home.”

Just over the past month, we’ve started to see investors take a renewed interest in home builder stocks. For a while, these investors were more focused on higher interest rates (and the potential for mortgages to become too expensive) than they were on the supply and demand dynamics in the housing market.

That’s now looking like a big mistake as homebuilder stocks rally.

Which is why I’m still very bullish on these stocks, as well as the retail stocks that will increase sales as more homeowners start furnishing their new digs.

Here’s How to Play It…

We’ve got an abundance of opportunity tied to both the expanding retail market and the recovering housing market.

Today, you can tap into both of these trends by investing in stocks like Restoration Hardware that fit both the retail market and benefit from purchases that new homeowners are making.

Home remodel stores like Home Depot (HD) and Lowe’s (LOW) are in a great environment right now. Not only are people buying tools and fixtures, but more discretionary items like plants, grills, and even luxury appliances are flying off shelves.

When it comes to stocking cabinets and shelves, stocks like Williams Sonoma (WSM) have been booking profits and trading higher. I’d recommend buying any pullback in home decor stocks like this.

And finally, home furnishing stocks offer great value. You may not think of La-Z-Boy (LZB) as a cutting edge retailer, but the company has new product lines that are in line with consumers’ evolving tastes.

Don’t forget the widescreen TVs these new homeowners will be purchasing to watch sports this fall. Shares of Best Buy Inc. (BBY) have been trending higher, and there are plenty of other consumer electronic choices to consider for your investment portfolio.

In short, there are tremendous opportunities in the cross-section between the retail and home buying markets. Picking a handful of stocks in these areas can go far in helping you to build your wealth as the U.S. economy grows.

Here’s to growing and protecting your wealth!

Zach Scheidt

Zach Scheidt
Editor, The Daily Edge

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From:: Daily Reckoning

How to Make Instant Profits from within Your Own Home

By Nilus Mattive

Nilus Mattive

This post How to Make Instant Profits from within Your Own Home appeared first on Daily Reckoning.

Could you use an extra $5,000 to $10,000 or more each year?

Scores of people who have a bedroom to spare are doing just that by sharing their homes with the help of websites like Airbnb. Seniors are cashing in more than most.

Exactly how much are they making?

In Washington, D.C., the average Airbnb host of age 60 or older earned $10,600. In Boston, the average was $13,400. New York: $7,100. And in San Diego it was $11,256.

But it’s not only in the big cities…

Rural areas in Oklahoma, Alabama, and Arkansas have seen a surge in seniors specifically realizing the financial rewards of home sharing.

Airbnb dominates the vacation rental sector and lists a staggering 800,000 properties in 34,000 cities across 90 countries.

In Florida alone, according to Airbnb, more than 45% of its 40,000-plus hosts are seniors who pulled more than $150 million in 2017.

The extra money comes in handy and allows many to age in place while staying socially active.

You can set your own rates, write the house rules, and even blackout days that you might be traveling or have family visiting.

Home sharing can obviously be done at any age. But it’s an absolute dream for seniors who like making money and/or enjoy meeting new people from around the world.

It comes down to the basics of capitalism…

  • Supply – Seniors are likely empty nesters with unused rooms in their homes, making them the perfect hosts for platforms like Airbnb and Expedia’s HomeAway.
  • Demand – Many seniors are healthy with newfound free time… no longer having the responsibilities of jobs or mortgages. Traveling is a biggie on their bucket lists. But they don’t want to pay top dollar for fancy hotels. Plus there are those going solo and looking for friendlier accommodations.

If you choose to have guests rent a spare room in your home, you can be as active as you want with them.

For instance, you could give them a key, a list of restaurants and sites to see, and send them on their way.


You could turn their visit into a social event… showing them the places tourists don’t go, taking them on your favorite walking trail, or inviting them to a neighborhood cookout.

An AARP director in Florida said, “Many older Floridians are realizing that sharing their home provides benefits like preventing isolation, which itself is a significant risk to physical and mental health while offering the opportunity to continue to learn and grow by encountering new ideas and cultures that come from interaction with other people.”

This homestay bandwagon has become so popular that there is a now a club strictly for hosts and travelers over age 50. The Freebird Club is based in Ireland and has members around the globe.

How to get started…

It’s easy becoming a host in most areas. You just sign up by providing pertinent information about yourself for security purposes. Then you post details of your home and include photos. You simply go to www.Airbnb.com or www.HomeAway.com and set up an account. It all takes less than an hour.

No charge to get started with HomeAway or Airbnb. Both companies make part of their money from hosts by taking 3% commission of every booking.

Before you advertise your home for vacation stays, though, check out your local laws because there are cities that have cracked down on short-term room rentals…

In New York, for example, you cannot rent out an entire apartment for less than 30 days. It’s the same thing in my neighborhood in Santa Barbara or else I’d already be raking in extra cash.

In New Orleans, short-term rentals in the French Quarter are banned.

In Miami Beach, there are large portions of residential areas where rentals under six months and a day are illegal. Some areas may require you to obtain a business license or special permit.

And some apartment buildings in any city may ban these sorts of rental agreements.

Your home might have to meet certain building and housing standards, too.

And of course, the tax posses from your city, county, and state will have their hands out.

Regardless of some of the potential obstacles, there is no arguing that home sharing can open up a whole new world for you… a new way of generating income while meeting new people as you travel through the next stage of your life.

So whether you have a spare room, a small guesthouse, or even a couple weeks that you’ll be traveling somewhere else, I encourage you to consider turning that vacant space into extra money!

To a richer life,

Nilus Mattive
Editor, The Rich Life Roadmap

The post How to Make Instant Profits from within Your Own Home appeared first on Daily Reckoning.

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From:: Daily Reckoning

Here’s How I “Doubled Up” On Under Armour…

By Alan Knuckman

Alan Knuckman

This post Here’s How I “Doubled Up” On Under Armour… appeared first on Daily Reckoning.

When it comes to the stock market, there are a handful of names that everybody knows, loves and wants to own.

I’m talking about household names like Apple Inc. (AAPL), Boeing Co. (BA), and McDonald’s Corp. (MCD).

These are stocks you can buy and practically forget about because their returns are so dependable.

As I write, Apple’s up 24% in the last year.

Boeing’s boasting a return of 95% over the same period.

And McDonald’s is cooking with a 12% gain in the last twelve months.

But what if I told you that the stocks that can hand you the biggest and fastest gains are actually the market’s most hated stocks…

I’m talking about the stocks that NO ONE wants to own.

I know it sounds nuts…

But I’ve been playing these stocks to the tune of huge profits — reliably — for the last decade.

In fact, if you’re a longtime subscriber of one of my premium services… you’re doing it, too!

For example, if you’re a Dollar Trade Club member, you’ll recall we closed out a monster 43% gain on Under Armour last week in just under two months. (And we booked a 116% on a UA options trade.)

But here’s what you might not know…

When we scooped up these shares, no one wanted to go near them.

The stock was down some 60% from its high in 2016.

And short sellers were pilling on just as fast as they could.

Here’s the thing…

That’s just when you WANT to own a stock like Under Armour.

I mean, Under Armour is a premiere athletic apparel company. Winners wear their stuff.

The negativity around this stock wasn’t bound to last.

Sure enough, when everyone got on one side of the trade (the downside)… the stock shot up like a rocket!

But of course, this strategy isn’t for everyone.

It takes a pretty strong stomach to put on trades like these.

That said, the payoff potential is HUGE.

We did the same thing with Brazilian oil driller Petrobras (PBR) — buying them at the bottom in early January when the short sellers couldn’t get short fast enough.

The company was reeling from a major corruption scandal.

And just a few months later, oil rallied… and stock soared.

We cashed out with a 50% winner.


Trading hated stocks like these is my bread and butter.

And now I’m sharing every detail of my strategy.

If you choose to go further, you’ll learn how to collect $11,000 from a company that’s hated by its own customers…

$21,945 from a biotech firm that was bleeding cash…

Or even $15,315 from a company whose top executives were arrested…

Heck, you may never want to trade a “darling” stock again!

I wouldn’t blame you, either.

These stocks are often cheap as hell, undervalued by nearly everyone, and poised to pop!

If you’re up for the task, click here for full details.

Yours for weekly profits,

Alan Knuckman
Financial Analyst, The Daily Edge

Editor’s Note: A fair warning… This is Alan’s most powerful investing secret to date. This strategy is NOT meant for everyone.

But if you are ready to learn how to profit from the most HATED stocks on Wall Street… Click here now.

The post Here’s How I “Doubled Up” On Under Armour… appeared first on Daily Reckoning.

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From:: Daily Reckoning

The Best Way to Invest in a Bear Market

By Nilus Mattive

Nilus Mattive

This post The Best Way to Invest in a Bear Market appeared first on Daily Reckoning.

The stock market has had a great run ever since the financial crisis, and if you’ve been following my work for any length of time, you’re probably sitting on some serious gains.

But what if you missed the boat?

Or what if you’re worried that a major drop is imminent and don’t want to put any new money to work?

Or what if you are only just at the point where you have some money to start investing?

I recommend you consider dollar-cost averaging.

The idea with dollar-cost averaging is relatively simple: You buy equal dollar amounts of the same investment on a predetermined schedule.

Please note the italics in that last sentence: Dollar-cost averaging IS NOT buying a fixed number of shares on a regular basis. In fact, it is quite the opposite.

Here’s why…

Let’s say you’ve decided to invest $10,000 in XYZ Corp.

Rather than deploying the entire amount at one time, you might instead opt to purchase $1,000 of XYZ stock on the first day of each of the next 10 months.

What’s the logic behind this approach?

Well, you can expect just about any stock’s price to vary substantially over a 10-month period. So, when the price is higher, your $1,000 will buy fewer shares; when the price dips, your $1,000 will buy more shares.

In other words, buying equal dollar amounts over time allows you to reduce your risk to a stock’s short-term price movements, automatically encouraging you to buy more when prices are lower and less when prices are higher.

It also removes much of the emotion from the investing process. You’ve already committed to buying the stock at regular intervals, regardless of market conditions.

And because you’re doing this automatically, it doesn’t require more than a few minutes of your time (if any at all!).

Based on my research, this approach also works quite well during prolonged market downturns…

Obviously, buying bits of stock as the market continually rises would work just fine… even if it meant you missed out on some additional upside by not putting as much in as quickly as possible.

But what about the other scenario — the one where the market really zigs and zags, moves sideways, or even goes lower over a long period of time?

Well, I looked at what would have happened from June of 2007 through June of 2012 – a period that contained one of the worst drops in market history and ended before the massive rally that began in 2013.

From my chart outlining this period, you can see that, despite huge declines and rallies, the broad U.S. stock market index was still lower than it was five years earlier.

And yes, if you’d had very good timing, you could have clearly been making a fortune during every one of those major moves… but what if you didn’t have perfect timing?

Or worse yet, what if you had bad timing?

That’s where dollar-cost averaging comes in.

If you had simply followed the approach over that five-year period — investing an equal amount of money in the S&P 500 ETF (SPY) at the beginning of every single month – you would have made a total profit of $9,017!

That’s a 14.8% return over the same timeframe that saw the market actually fall 14.7%.

The reason, as I mentioned earlier, is simple:

While you would have bought some shares when the market was at its peak, you also would have forced yourself to buy a bunch of shares when the market was much lower than it is today.

And obviously if you had continued to follow the same strategy through today, you’d be sitting on a HUGE pile of profits.

Now, I continue to believe that careful timing and superior stock selection will give you even BETTER returns than a simple dollar-cost averaging approach with a broad-market ETF.

But it’s worth noting that you can apply dollar-cost averaging to individual shares just as easily as you can with broad-based ETFs.

In addition, you are also using this same general concept whenever you reinvest your dividend payments or make regular contributions to the same funds in a retirement plan such as a 401(k).

The critical part is doing something that gives you a good chance at long-term investment success.

To a richer life,

Nilus Mattive
Editor, The Rich Life Roadmap

The post The Best Way to Invest in a Bear Market appeared first on Daily Reckoning.

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From:: Daily Reckoning

This New Trading System Changes EVERYTHING…

By Zach Scheidt

Zach Scheidt

This post This New Trading System Changes EVERYTHING… appeared first on Daily Reckoning.

Alan Knuckman is the man of the week.

Later today at 1pm Eastern Time, Alan will be unveiling the secret to why stocks go vertical.

I’m talking about stock charts that go “straight up” vertical… All because of fast-money strategies that most everyday folks have no idea even exist.

And although I’m more of a “buy and hold” investor myself, I definitely see the usefulness of this strategy to people like you.

After all, the average retirement savings for families aged 56 to 61 is just $163,577. That’s far less than the $1 million that many experts recommend. And while Social Security can supplement existing retirement savings, the average monthly retirement benefit of $1,329 may not be enough to fill the gap.1

So keep your eyes peeled today at 1pm! You’ll receive an email from my publisher, Matt Insley. You won’t want to miss this!

In the meantime, I called up Alan over the weekend to get more details on his new trading strategy. Can this strategy really help my readers?

You can find out below…

My Exclusive Interview With Former Floor Trader, Alan Knuckman

Zach Scheidt: Hey, Alan. Thanks for taking time out of your weekend to speak with me about your new system. I know you’re a busy man nowadays but I’m excited to get the inside scoop.

Alan KnuckmanAlan Knuckman: Thanks for reaching out, Zach. It’s about time everyday folks got a chance to hear about this. After all, Wall Street traders have been using this strategy to bank reliable profits for decades!

Zach: So let’s get to it. Alan, what’s the secret to how you consistently find stocks that are on the verge of a vertical move?

Alan: A hard hitting question right off the bat — I like it! So here’s what I told Matt (our publisher) the other day…

To start a long-lasting fire you need three things — dry wood, flammable liquid and a burning match. If you’re missing just one of those, you won’t have a long-lasting fire.

It’s the same with these vertical moves. For a stock to move straight up, like Matt’s UA position did, you need a hated company, a shortage of sellers and a near-term catalyst.

If you don’t have all three, the odds of a vertical move fall dramatically.

Zach: So your system identifies stocks with these characteristics before they go vertical, correct?

Alan: That’s right. And that’s why I’m urging readers of all income levels to tune into my event today at 1pm. Because that’s when I’ll be revealing it all.

Really this is a culmination of my decades of trading experience. For years I’ve done VERY well in the markets. And for the most part, these strategies that I’ve recently shared with readers have also done fantastic!

But what I’ll share at 1pm is altogether different. It’s a way to turn “hated” companies into BIG market moves. Really this is a professional way of thinking. It’s going to be groundbreaking.

Zach: Great, I’ll be sure to let my readers know. Now let’s take a step back and talk about the broader market. Do the characteristics of today’s stock market set up well for your strategy?

Alan: Today is an ideal time to use this strategy, Zach. Let me explain.

It all comes back to psychology. Obviously supply and demand fundamentals determine market prices. But what determines whether or not a Wall Street trader or an individual investor saving for retirement wants to sell their stock?

The answer is psychology. My dad, by the way, is a psychologist. So I guess you can say I’m highly qualified to talk about this!

All kidding aside, in today’s market there is an endless supply of news stories that send investors on an emotional rollercoaster of sorts. One day everyone is terrified of inflation, North Korea or a trade war and the next day they’re buying stocks hand over fist because yesterday’s news is now deemed to be overblown.

Investors today are more short-sighted than ever. Then throw on top that the bull market is raging on with no stopping in sight, and today’s market really does set up perfectly for this strategy.

Zach: I completely agree, Alan. That’s actually a topic I’ve touched on with my readers before. These short-term dips are excellent buying opportunities for investors looking to take long-term positions. In the past I’ve recommended holding cash to take advantage of these occurrences, but now I might even recommend that they should follow your strategy instead.

Alan: And remember, this strategy is available to all income groups. No worries if some investors don’t have thousands of dollars available to buy a large lot of dividend paying stocks in order to collect a 2-5% dividend.

The majority of the vertical candidates I’m seeing today can be purchased in full for less than $500 — and the upside is massive!

That’s why I’m so excited to share the news at 1pm.

As you know, it’s all about risk and reward. And simply put, I think my new strategy knocks this metric out of the park.

From what I hear on the street, every day folks are always interested in ways to hunt down HUGE market moves.

And the ability to do that on a shoestring budget can really help people get caught up in their retirement accounts.

But there’s one big problem. And I hope your readers will understand this…

The key to this system is to have an open mind — just like the pros do. Because like I said before, these big moves happen in out-of-favor stocks. I’m talking about names like AK Steel, Twitter, Under Armour, Etsy, Hewlett Packard, Walgreens, Bank of America, CSX and more!

My point is simple. Most market watchers overlook these companies, because at times the market has written them off.

But that’s a big mistake.

This is a powerful, professional strategy. I truly believe THIS is the key fundamental behind life-changing gains. And I’ll reveal the “secret” to my strategy at 1pm. You won’t want to miss this.

Zach: Absolutely, risk and reward is key. Alan, thanks for talking …read more

From:: Daily Reckoning

“Oil Shock!”

By Brian Maher

Chart 1

This post “Oil Shock!” appeared first on Daily Reckoning.

Is the economy in for a jolting “oil shock”?

Today we wander out to the tail end of the bell curve… look around for black swans… and raise scandalous questions.

“Judging by internet searches for the term,” says Bloomberg commodities analyst David Fickling, “an oil shock is the last thing anyone should be worried about.”

It is true — “oil shock” is an orphan term, unloved, unwanted — and unsearched:

We would be “shocked” if the search term “oil shock” drew any attention at all these past few years.

After nicking $115 in June 2014, oil slid all the way down the greasy pole to $26 in February 2016.

It has been rebuilding steam for the past two years — but quietly.

Oil has since taken a long, meandering route to last month’s $72… before retracing a few steps.

Today a barrel of West Texas Intermediate Crude fetches $66.

That nonetheless represents a 170% increase over the past two years.

And UBS economists claim the 46% spike over the past year alone is the 11th largest of the past 70 years.

Pretty handsome, you say.

But hardly suggesting oil “shock.”

This is not the oil shock of the 1970s when OPEC put the squeeze on us.

But must it be that extreme to disrupt?

Economist James Hamilton of UC San Diego has drilled into the history of oil shocks.

To truly shock, he finds, oil prices need not rise dramatically.

Oil prices need only rise above their peak for the previous three years.

That is, they needn’t return to 2014’s $115 to constitute a shock… or even $100.

The threshold is much lower.

Recall, today’s price is $66.

Before last November, oil had not cracked the $60 mark since June 2015 — precisely three years ago.

Today’s $65–72 range thus exceeds the peak price over the past three years.

By this narrow definition… we are witnessing an oil shock.

To illustrate, take some liberty and extend the analysis a year or two…

Bloomberg columnist David Fickling notes that oil prices averaged roughly $30 in the mid-1980s before falling to an average $20 until decade’s end.

Then Saddam Hussein moved on Kuwait in 1990.

In the five months leading up to Operation Desert Storm, oil prices spiked to an average $30.84.

Prices had only reverted to their mid-’80s average, in other words.

But that spike, Fickling concludes, was sufficient to trigger the recession of the early ’90s — at least in part.

Do not focus on the dollar price we are asked to conclude… but the current price compared with recent peaks.

And by that measure, Hamilton argues we are presently witnessing the largest oil shock since 2008 — when prices shot to an obscene $144:

Chart 2

Incidentally… many analysts project the highest gas prices in four years this summer.

Maybe this is some sort of quiet oil shock, you agree grudgingly.

But the big deal is what precisely?

The economy is in swell shape, you say.

Unemployment is at multidecade lows… tax cuts are fattening the national purse… markets are regaining their bounce after February’s correction.

And mainstream consensus dismisses the possibility of an oil shock.

Bank of America Merrill Lynch is typical when it says it doesn’t expect higher oil to produce “a material slowdown in growth.”

But we would remind you that mainstream forecasters are perpetually in the mists.

IMF economist Prakash Loungani revealed the results of a recent study…

These results demonstrated that the professional wiseacres missed 148 out of 153 world recessions — a nearly imperfect record.

Why should now be any different?

And let the record show…

Substantial oil increases have preceded 10 of the previous 11 business cycle peaks since World War II.

Moreover, they approach on cat’s paws… and pounce without warning.

The aforesaid David Fickling:

Oil shocks are prophets — not partners — of economic downturns. This means that one shouldn’t expect to see other signs of weakness until the shock has already taken root.

So unless supplies surge and prices ease sharply, and in the very near future to offset what has already been a remarkable “oil shock,” the next downturn may already be a foregone conclusion.

Is the next downturn a foregone conclusion?

We do not pretend to know.

But few are taking any note of an oil shock right now — which we find worrying.

The bullet that gets you is often not the one you hear… but the one you don’t…


Brian Maher
Managing editor, The Daily Reckoning

The post “Oil Shock!” appeared first on Daily Reckoning.

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The 5 Things You Need to Change to Keep from Going Broke

By Nilus Mattive

Nilus Mattive

This post The 5 Things You Need to Change to Keep from Going Broke appeared first on Daily Reckoning.

Budgeting isn’t fun.

But that doesn’t mean you can keep avoiding having one. What you need to know is there are right ways to budget and terribly wrong ways to budget.

Today I want to run through a few budgeting missteps I see a lot of people make. If you’ve ever struggled sticking to a budget, likely it’s because of one of these.

Budgeting Trap #1: You Have No Goal

You’re probably thinking, give me a break. Spending less money every month is my goal. If it wasn’t, why would I be reading this? The problem with having a goal like “I need to spend less” or “I need to start saving more” is they’re too vague.

Your goal should follow the classic mnemonic SMART.

Your goal needs to be…

Specific: How much are you going to let yourself spend on dining out this month? Is it $200? $250? Set specific spending limits for each of your monthly expenses.

Measurable: What gets measured gets managed. In order to measure your budgeting efforts effectively, you first need to establish a baseline.

Look at your bank and credit card statements from the last 6 months to a year. Figure out how much you spend each month. That’s your baseline. Now work out your specific spending limits based on that baseline number and your income.

Attainable: If you typically spend $900 on rent and $200 on utilities, don’t fool yourself thinking you’ll keep a budget under $1500 this month.

Budgeting is like steering a ship. You do it gradually and your finances will start to shift in the direction you want.

Relevant: Remind yourself why you’re budgeting in the first place. Are you trying to save for a trip? Retirement? A new car? Write down your goal for having a budget on a sticky note and place it somewhere you’ll see every day.

Time-bound: All good goals have an end date. Yours will likely be at the end of each month. Keep the end in mind so you pace your spending.

If going through all these steps seem like too much work, just do two. Make sure your budget goal is measurable and attainable. If you get these two right, you’ll receive 80% of the benefits.

Budgeting Trap #2: You Tried the Envelope Method And Blew All Your Food Money in Week One

Don’t get me wrong, the envelope method works for some people. What is it? The envelope method is when you pull out cash each month and allocate this money to specific expense categories (separate envelopes). Once you’ve spent all the cash in a particular envelope, you can’t take out more on that expense.

You can imagine how well this works for someone with unattainable budgeting goals…

The fix here is to be flexible. Understand that prices will fluctuate. Gas might be expensive this month, but groceries are on sale. Give yourself some cushion but keep a hard stop on the final monthly total.

Budgeting Trap #3: You’re Anchoring Yourself Into Overpaying for Things

One of the first questions salespeople like to ask is “what’s your price range?”

Most likely, you have a range in mind. The danger here lies in the fact that humans are bad at sticking to their range, and sometimes their range is too high to begin with.

According to a study published in the Journal of Marketing Research, shoppers who set a budget for an individual item are more apt to choose an item at the top of their budget instead of a lower-priced item with the same features.

“Setting a budget puts the focus only on the price of an item,” says Jeff Larson, assistant professor of marketing at Brigham Young University and co-author of the study.

To get around this, you need to go shopping with the mindset of “what features am I looking for?” Then narrow your options to the ones that meet your must-have features. What you’ll find is you end up paying less for something you actually want and need.

Budgeting Trap #4: You’re Relying on Willpower

You’ve heard this before. We all have limited willpower in a day and you have to recognize when you’re running on empty. The reason why is because that’s when you start to make irrational choices with your money.

At 9am you don’t want fast food. But after a long day making decisions at work and for your family, a burger and fries sound pretty good… and not having to cook sounds even better. This kind of behavior adds up over time.

The best way to beat your irrational mind is to take advantage of automation software. For example, if you set up auto-transfers to a savings account whenever your paycheck hits your bank account, you don’t have to think about saving. At the end of the month, when you’re stressed about how much money you have left in your bank account, you don’t have to try and force yourself to save.

To beat your self-indulgent impulses like settling for fast food over a healthy home cooked meal, you need to plan ahead. Meal prep for the week so you don’t have to make a tough decision. You simply pull out a healthy meal, heat it up and stay on track with your budget.

Budgeting Trap #5 – You’re Trying Too Hard Says Cornell University

This last one is a bit disheartening. A study out of Cornell University found that you’re more likely to fail when you try harder to budget.

Researchers watched grocery shoppers make their purchases. Some participants tried to calculate the exact amount they’d be spending before checking out, whereas others ballparked it. The group that tried calculating every item, ended up spending 19 percent more than the other group!

“Those who try to calculate the exact total price almost always do worse than those who just estimate approximate prices,” says Brian Wansink, co-author of the study paper.

The researchers also found that the most accurate shoppers rounded up to the nearest dollar when a price was between $.50 and $.99. “When people don’t …read more

From:: Daily Reckoning

Are You The Fish?

By Zach Scheidt

Zach Scheidt

This post Are You The Fish? appeared first on Daily Reckoning.

There’s an old saying in poker that if you sit down at a table and you can’t figure out who the fish is, that means YOU’RE the fish!

The basic idea here is that you need to know your opponents. You need to understand their strengths and weaknesses. You need to know what type of edge you have over them.

And if you can’t figure out what advantage you have over the other players… Or if you can’t figure out who the weak players at the table are… Then you’re in big trouble!

In markets there’s a similar dynamic…

If you’re going to be successful in the market, you often have to be different from most other investors.

You have to know what your strategy is for making money. You have to know why it works. And you have to know who you’re making money from. (Because every time you buy or sell a stock, there’s someone making the opposite trade on the other side.)

Now, I’m not saying you need to know the actual person or institution that’s buying or selling from you.

But it’s healthy to understand what perspective is causing someone to take the other side. And understand why your perspective is more likely to pay off over the course of your trade.

I bring this up because there are a lot of conflicting opinions swirling around about this market right now. And if you listen to the media, you’ll probably come away with the opinion that our economy is on shaky ground right now, and that our market could fall at any minute.

But that’s not what the data shows!

If you look at the cold hard facts, you’ll see that the job market is very strong. That companies are growing profits and are likely to continue that trend for some time to come. You’ll see that inflation is coming back into the market — but at a healthy level. And you’ll see that the Fed is gradually raising interest rates. And those rates are still at a very low level compared to historical trends.

(So there’s not much to worry about with higher rates right now — despite the hand wringing you’ll hear on CNN or CNBC).

I say all of this because I know sometimes I sound like a Pollyanna when I talk about the markets and how things are going really well right now.

My promise to you is that I will always shoot straight with you.

If there are problems on the horizon, we will talk about them. I’ll let you know when I see risks in certain areas and when it makes sense to sell more of your positions and hold more cash.

And at the same time, I’m not going to go with the mainstream media’s “worried bias” right now — even if it IS popular to bash this market. Because until the risks start to affect profits and stock prices, our job is to make money from the best opportunities the market has to offer us!

Right now, I have my eye on several stocks that are attractively priced and should benefit greatly from some long-term trends already in the works.

The first comes from the energy sector. Energy Transfer Partners (ETP) is a stock that we talked about two weeks ago during “Oil Week.” A wider spread between the price of WTI crude (the measuring stick for U.S. oil prices) and Brent (the measuring stick for global oil prices) makes selling oil abroad more attractive to U.S. producers.

This is welcomed news for ETP, whose pipelines will be working around the clock (and charging higher prices) to transport oil to coastal shipping ports.

Another stock attractively priced today is Abercrombie & Fitch (ANF).

This teen apparel stock is showing a lot of resiliency!

After falling post earnings — even though their numbers beat expectations — the stock spent the next few days climbing back and has since recouped all losses. This tells me that any pullback for this retailer (and many other retailers with similar business models) will be met with heavy buying from institutions.

If you’ve already purchased your shares of these two companies than great for you! You should be sitting on some nice profits by now. However, if you haven’t, it is not too late because the trends pushing these stocks higher are still in full swing!

Here’s to growing and protecting your wealth!

Zach Scheidt
Editor, The Daily Edge

The post Are You The Fish? appeared first on Daily Reckoning.

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From:: Daily Reckoning

The Federal Reserve Gets Behind Marijuana

By Ray Blanco

This post The Federal Reserve Gets Behind Marijuana appeared first on Daily Reckoning.

As new Fed Chairman Jerome Powell was taking his seat at the head of America’s central bank amid a market meltdown earlier this year, a big decision in favor of the marijuana industry got buried in all the noise.

Turns out the Fed greenlighted a new marijuana business.

The Federal Reserve approved a master account for Fourth Corner Credit Union, a new Colorado-based financial institution that will cater specifically to cannabis-related companies.

It’s been a long road for Fourth Corner. In total, the firm had to lobby the Fed for some 40 months before finally getting approval for a master account, the tie-in to the Federal Reserve that banks need to operate.

The Federal Reserve Bank of Kansas City had barred Fourth Corner from getting a master account, but a federal judge overturned the order, forcing the Fed to greenlight the credit union’s status. Some concessions had to be made…

While Fourth Corner had hoped to provide much-needed banking services to dispensaries in Colorado, the credit union won’t be able to serve plant-touching businesses. At least for now.

Instead, it will cater to companies that provide ancillary services to the legal pot industry, businesses that have had trouble opening accounts at mainstream financial institutions due to federal banking regulations.

But this was the first time the Federal Reserve has acknowledged the legality of banking for the cannabis industry.

Up next, Fourth Corner will need to get deposit insurance before it can open for business. The firm received approval from Colorado state regulators back in 2014.

There’s still a long way to go before we see full-blown federal approval of banking for every corner of the cannabis industry. But this story out of Colorado is an important first step.

Importantly, it could help drive upside in pick-and-shovel-type ancillary businesses that support the legal pot market. I’ll continue to keep a close eye on this emerging trend. But the marijuana story is much larger…

The U.S. marijuana market is really heating up in 2018. In fact, today, June 7, marks a crucial date for the marijuana industry around the world. Click here to see why and how profitable today’s event could be for you personally.

Last year, Canadian pot proved to outpace the U.S. version with more lenient restrictions on the drug. But in just the last month or so, major news has fueled U.S. cannabis.

While still illegal on a federal level, many U.S. states continue to put marijuana legislation on the ballot as we enter midterms.

Last month, Missouri’s House voted to legalize medical marijuana by November. Michigan has approved cannabis legalization for that same month. And as many as a half dozen additional states may have ballot initiatives this fall that either legalize cannabis or expand its allowed uses.

And in a move that totally shocked me, former House Speaker John Boehner, an adamant opponent of marijuana legalization, joined the advisory board of cannabis company Acreage Holdings.

Money talks, doesn’t it?

It only proves what you and I have known for years — there’s hundreds of billions of dollars to be made in this emerging market. And that realization is not lost on politicians…

The National Governors Association descended on Washington a few months ago to meet with each other and the federal government. In total, 42 governors made the trip to D.C. for the conference.

And for many of them, getting clarification on Jeff Sessions’ pot policy was a top priority.

Sessions tried his best to avoid the governors from cannabis-friendly states.

Colorado’s Gov. John Hickenlooper tried asking Sessions about his anti-weed stance at the attorney general’s sole Q&A appearance to the group, but he couldn’t get called on.

“He only took about six questions. There were probably 40 governors in the room,” Hickenlooper told Rolling Stone.

But U.S. governors have made it clear that they’re pushing forward with pot, federal policies be damned.

The push toward legalized cannabis is progressing all over the world. Without a doubt, it’s going to drive windfall gains to investors who can see the trend emerging. As I’ve said before, we’re still in the early innings.

Not a week goes by that we don’t see some major political or business progress for legal cannabis companies. I’m keeping a very close eye on a short list of opportunities for my readers.

Major strides continue to be made in the market for legal pot. Currently, recreational weed is legal in every state along the West Coast — California, Oregon, Washington and Alaska all have laws allowing personal consumption of pot.

Despite very different political leanings, each of those states has agreed that adults over the age of 21 should have the choice to use marijuana.

Now, that same choice is spreading to the East Coast.

Connecticut Public Radio has reported that the state is being pressured to join the fray due to the legalization of recreational pot in Massachusetts. Recreational weed becomes legal in Massachusetts this July — it will become the first state east of the Mississippi to OK pot.

And predictably, lawmakers in neighboring Connecticut are getting antsy about lost revenue.

Massachusetts is expected to generate upward of $82 million a year from taxes in the next fiscal year, a good chunk of which will likely come from Connecticut residents making a trip to the other side of the state line to do a little bit of “herbal tourism.”

Similar laws in Connecticut would go a long way in plugging a hole in the state’s projected $260 million deficit.

Unless state residents give their money to businesses in Massachusetts, that is. Four bills are in the legislature in Hartford to try to change the laws in Connecticut.

Meanwhile, just a little further south, similar efforts are underway in New Jersey. Gov. Phil Murphy got elected in part on a pro-legalization campaign. And he’s pledged to get recreational pot legalized in the Garden State by the end of this year.

“We’re proceeding apace, again, beginning to make sure we get the medical piece right, because it’s life or death,” newly installed New Jersey Gov. Phil Murphy told the magazine.

“And …read more

From:: Daily Reckoning