- - Page 10 of 15 The Finance Gourmet

Avoid IRS and Tax Scams

March 7, 2016 by Finance Gourmet

The IRS is used as a way to scam Americans out of money every year. Some the tax scams are very sophisticated. Others, seem like they would defy common sense. This year, the IRS put out a list of the Dirty Dozen tax scams for people to look out for. Here are some of them. Promises of Big Refunds – This is where the complexity of the tax code bites the unwary. Yes, there are a lot of deductions, and tax credits out there, and yes, some of them can be pretty unknown, but don’t believe that you’ve been way overpaying your taxes all these years, if only you’d known about a tax loophole. Research and be sure you understand before you sign your name to any weird forms. IRS Phone Call Scams – Remember, the IRS is legally required to send you notifications of most actions before you get some phone call. Ask them to put it in writing. Also, IRS agents don’t threaten to arrest people out of the blue. Arrest, garnishment, and property forfeiture all require a court proceeding. Real IRS agents won’t tell you that this is your last chance and that you have to send money …

Stock Market Does What It Does

March 4, 2016 by Finance Gourmet

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 …

10 Things That Rich People Supposedly Do

February 26, 2016 by Finance Gourmet

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 …

Fed Telegraphs Slower Rate Hikes

February 25, 2016 by Finance Gourmet

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 …

Stock Market Up to Start Week

February 22, 2016 by Finance Gourmet

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 …

Fed Thoughts Economy and Interest Rates

February 10, 2016 by Finance Gourmet

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 …

Dow Down 300 Points for Today and…

February 8, 2016 by Finance Gourmet

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.

Stock Market Reality Check and When To Panic

January 25, 2016 by Finance Gourmet

I’ve written a few articles recently about the start of the year stock market freak out and about not panicking when the stock market makes sudden moves. In response I’ve heard from people about if there ever is a time to panic, and if there isn’t, if there is ever a right time to sell. The problem is that there is some knowledge missing from these questions. So, here is a reality check on the current stock market situation, and some advice on when to panic and when to sell your stocks. Long-Term Diversified Portfolio Let’s start from the beginning. There are a lot of different kinds of investing. When people forget this fact, it often causes them to make incorrect decisions. Remember, every decision you make should be consistent with your investing strategy and financial plan. So, for those of you investing for the long-term, particularly for retirement, with a decade or more to go, your reactions should be very different from someone who is investing for other reasons, or for a shorter time frame. As a long-term retirement investor, your strategy should be to construct a well diversified portfolio that matches your return needs with your risk tolerance. …

Market Volatility Continues as Beginning of 2016

January 15, 2016 by Finance Gourmet

I’ve written a few articles now about the volatility in the U.S. stock market, especially as it pertains to reacting to China’s stock market (and the time before that too). A few years ago, the trouble was Greece, if you can remember that far back. Sometimes, it seems like last month is ancient history to market watchers. I’ve also written about how overreacting to bad news isn’t wise, but, what is really going on with the stock market, and what should real investors think? America vs The World Stock Market First, it is important to notice the difference between the American stock market reacting to news about the U.S. and the American economy, and reacting to the news and stock markets of other economies. While world economies are more intertwined than ever, the circumstances in China are not the same as they are here. While the Chinese economy is stuck in a tricky place thanks to ongoing government intervention, and rising debt loads, the U.S. economy actually could probably use a bit of government help. The markets don’t like uncertainty, though, and a lot of what you are seeing in the stock market today, and other days, is nothing more than …

China Stock Market Panic – Take 2

January 7, 2016 by Finance Gourmet

The stock market in China is in a free fall. Everyone panic! Wait. This seems familiar. Maybe, it’s because I wrote about this same thing just a few months ago during the August Chinese stock market crash. History. Learn. Repeat. Mistakes. Bad News the U.S. Economy I wrote a nice well-reasoned article recently about how you shouldn’t let bad news force you into making rash investment decisions. Here is another way to look at it courtesy of this repeat bit of stock market news. This time we have a nice little confluence of factors. There is, of course, the plunging China stock market, but this time around we have a little extra fear in the form of a nuclear test that North Korea claims is a hydrogen bomb test. (Last time, it was Middle East instability.) Well, that doesn’t sound fun? As if that weren’t enough, oil prices are falling again, and for some parts of the stock market, that’s bad. But, should we panic? George Soros isn’t helping. He’s in the news comparing today to 2008, you know when major U.S. banking institutions were failing and the Fed had to rush in to keep the whole American economy from seizing …