Stock Market Does What It Does

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stocks first part of 2016

Remember when the sky was falling, China was blowing up, and the stock market was going to go straight to zero and there was going to be another super recession? You should. It was only a couple of weeks ago. But, as some of the calmer bloggers, (ahem) and other financial publication that don’t rely on massive waves of panicked clicks, pointed out, the stock market was actually due for a little breather after running almost straight up for a very long time. In fact, in the long run, it was probably much better for everyone (as long as they didn’t panic) for the stock market to pause for a while. As an added bonus it made the Fed stop its blind, headlong rush into raising interest rates because that is what good hawks do, and caused them to look at the actual data instead, which suggested that while the U.S. economy is definitely moving up, the movement isn’t necessarily strong. Most importantly, there are still virtually no signs of inflation and instead, it looks like there are some weak spots hiding in the otherwise decent economy. Stick To Your Plan As always, the worst time to make investment decisions is during …

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Where To Get Free Checking

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free checking graphic

If you know anything at all about personal finance, you know that big banks are financial institutions for big suckers. Right now, with interest rates at, a little bit over zero, everywhere, it isn’t as easy to tell, but big banks have never been good deals for average customers. Big banks are good deals for big money. Are you big money? Here is an easy way to tell. What interest rate do you get on your CDs and other accounts? If you get the posted rates, then you are not big money. If you get a rate negotiated by you and the bank manager because you business is so valuable, then you might be big money. Credit Unions Are Better Than Banks – Always There are numerous studies that show free checking is disappearing from big banks. Everyone already knows this, but until someone goes out and actually crunches the data, you don’t have a news story. Now, we’ve got a story and a money headline. Only 38 percent of banks offer no-strings, free checking. However, nearly 72 percent of credit unions offer free checking. By the way, this story NEVER changes. Credit unions are always better than banks for …

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10 Things That Rich People Supposedly Do

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There is an article over on Marketwatch title 10 Things Rich People Know That You Don’t. It is complete and utter garbage. Articles like this are one of the reasons I started Finance Gourmet. They give the impression that there is a trick to money and wealth, while throwing out meaningless advice. It not only doesn’t help, it makes people feel worse because it feels like they are not rich because of something they are doing, when that isn’t the case. The subtitle is that people don’t become wealthy by accident, and here’s how they do it. That’s a lie too. There is nothing in this article that tells you how people become wealthy, unless you count a guy retiring with a nice 401k as wealthy. But wait! You can stoop even lower for a few extra clicks. The URL for the article ends in 10-habits-of-high-net-worth-women, and it is even LESS about that. First, let’s start with the basic premise that rich people know something you don’t, and that’s why they are rich. This is just not true. We love to think that there is some sort of insider secret, or conspiracy, that if you could just figure it out …

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Fed Telegraphs Slower Rate Hikes

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The Federal Reserve, via its members, is out announcing that the rate hikes everyone was sure were coming this year, after the December interest rate increase are, in fact, on hold, until the markets and the economy stop being so shaky. Fed Members Nudge Wall Street Off of Hike Forecasts The St. Louis Fed President, James Bullard, said in an interview that rate hikes during 2016 were never a sure thing. He is right that the Fed often, and deliberately, said that rate hikes were dependent upon data going forward, but the markets didn’t believe them, pricing in a full 1% interest rate hike over 2016, and every analyst under the sun talking about a steady march up in interest rates. Bullard blames the previous Fed under Fed Chairman Bernanke for “mechanically” raising interest rates 17 straight times from 2004 to 2006 (and likely triggering the nationwide real estate slump that ended up all but crashing the U.S. banking system in 2007). He says that because of that chain of increases, everyone simply assumed that this year would have similar, albeit slower, rate increases. Bullard leaves out that many of the other current Fed members (including himself) could say often enough …

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Stock Market Up to Start Week

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And this week (shakes magic-8 ball) the stock market will start up! The financial news sites are all going with: because oil prices are rising. I keep telling myself I won’t write any more posts about the stock market volatility that’s going on right now, but it’s hard not to when there are so many stories out there telling you why now is the time to buy, or now is the time to sell, or how there is a recession coming, or how there isn’t, and, “Hey, squirrel! Let’s sell and buy!” Today. the U.S. stock market happens to be up. The Dow is up over 200 points, or 1.38 percent. It is still down for the year, but don’t look now, another week or two like this, and we’ll be right back where we started in January. What do they say, “A lot of sound a fury signifying nothing?” As always, daily volatility tends to be a function of computer trading algorithms rather than actual investor sentiment. The truth is that things are still dicey. The Fed doesn’t know if it should or should not raise interest rates again… sooner or later…. For extra fun, the inflation numbers look …

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Fed Thoughts Economy and Interest Rates

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Every six months, the Chairman of the Federal Reserve Board testifies before Congress. For the most part, the interesting, fact-based, information comes out in the Chairman’s open statement to Congress. After that, as all things Congress do, the hearing dissolves into a politically motivated bit of staged theater in which various Congressmen “ask questions” that end up being a lot more political posturing than actual questions. Still, there is often a lot of information in that opening statement, which is helpfully posted on the Fed’s website, if you want to read the whole thing without seeing it through the lens of the media. (or on a former financial advisor’s personal finance blog 🙂 The U.S. Economy and Interest Rates The Fed raised interest rates for the first time in many years in December. Since then, the employment picture in the U.S. continues to improve with the unemployment rate dropping to 4.9 percent in January. The economy is growing as well, with the real gross domestic product estimated to have increased about 1.75 percent during 2015. If that was the whole picture, then the rest of this talk would have been about inflation and raising interest rates. But, of course, the …

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Dow Down 300 Points for Today and…

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5 year dow chart

Your daily reminder of what this morning’s 300 point drop in the Dow Jones index looks like on a 5-year chart. Remember, your time frame and risk tolerance are what matters. If those have changed, talk to your financial advisor, or re-evaluate your current asset allocation. If you are currently investing for a shorter time frame, you should know, and accept that this kind of volatility is very likely to continue while the stock market shakes out its “too fast” run up from the Great Recession to now, as well as global instability such as the American election, structural issues in China’s economy, and whatever is going on in Europe this month. Also, this is the first time in a generation the oil industry and the economy in general has seen oil prices this low. It’s no wonder people aren’t really sure what to do. And, last, but definitely not least, don’t forget that most of this is computers trading amongst themselves. Stay smart and keep sight of your goals. Don’t overreact to short-term market news and events.    

Find the right financial advisor (in under 200 words)

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Once, in the USA Weekend  there was what may have been the shortest article I have ever seen on choosing the right financial advisor. This article is the perfect example of why I started the Finance Gourmet. The article is by Sharon Epperson who is the author of a book called The Big Payoff which I haven’t come across yet. Every word is true and accurate. But can you use it to find a financial advisor? Ms. Epperson offers three big steps to finding the right financial advisor. The first is to gather recommendations, for which she lists four places to look. The second big step is to dig deeper than websites and brochures.  Then, she suggests asking about certifications, naming specifically the CFP and the ChFC designations. She points out that firms should be registered with the SEC (and then throws in the confusing and/or state securities regulator), and even suggests requesting the firms’s full Form ADV. I’ll point out here that the Form ADV is one of the documents a firm is required to give you and have you sign it, so you can rest assured you will be getting one.  The question is will you read it (see …

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What Happens When My Stock Goes Down?

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waterfall falling stock price

Yesterday I wrote about how Apple stock could be considered a dividend stock by some investors. Later that day, after the stock markets closed, Apple reported its first quarter results. (Apple, like many companies uses a fiscal year, instead of a calendar year. The first quarter for Apple runs from October to December.) The results were met with disappointment by the markets and the stock is down this morning. This triggered an email from someone asking if Apple was now a bad stock to own or buy, and that felt like the beginnings of an article I’ve been meaning to write for a while. Remember you should not be buying individual stocks until your retirement plan, college plans, and savings plans are fully funded and on track. What Happens When a Stock Price Falls? One of the most difficult things for non-professional finance people to grasp is the difference between actual losses and paper losses. An example can be helpful. Apple stock was trading at about $100 per share yesterday when I published the post about the dividend yield moving past the psychological 2 percent dividend yield mark. Although I didn’t buy any stock on that day, let’s pretend I did. …

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Buy Apple Stock for Dividends?

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Well, here’s an article I never thought I would write, but is Apple a dividend stock now? Apple’s stock price has been drifting down as of late while investors worry that the company doesn’t have any new amazing products up its sleeve. This worry is particularly curious considering the products the company does have are still market leaders in most categories. And, that those very same products, are almost religiously upgraded by a large number of users every time a new one comes out, especially the company’s most important product, the iPhone. This could be worrying to shareholders if the company was overvalued and priced to perfection, but with a P/E of 10.85, it’s not out of line with other successful technology companies by any stretch of the imagination. Of course, a lot of the concern is simply that the company has grown as much as it can and that there are no more world’s to conquer. This is always and odd fear to me, but I suppose to some it matters. In other words, maybe Apple isn’t a growth stock anymore. And, to a certain kind of investor, the only stocks worth investing in are growth stocks. Apple Dividend Here …

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