"World Economy Stronger; recovery uneven"

Some cautiously good news from the IMF as far as the global recovery is concerned.  Click here for article.



Nevertheless, I'm a slightly concerned about the volatility in the stock market amidst rising food, clothing, and

fuel costs in the US.  These costly headwinds are immediately felt by families who are sticking to a budget (my family), and/or considering whether or not to spend money on possibly a new car or home.



Price stability is a responsibility of the Federal Reserve (hidden within their "dual mandate" of  effectively promoting maximum employment and moderate long-term interest rates) and their record has not been a good one.  My question to the Fed is "how can they have the responsibility to effectively keep prices stable - yet at the same time pursue "inflation targets", and quantitative easing schemes to "promote maximum employment"?



I don't know about you, but in the last 20 years it seems:

• things have become more expensive, 
• more individuals need to have 2 or more jobs, 
• less people can comfortably retire, 
• college tuition is projected to be over $200,000 per child in 17 years from now according to The College Board SOURCES: The College Board, Annual Survey of Colleges; NCES, IPEDS,
• and families are becoming smaller (birthrate has declined).

All of the aforementioned items can be directly or indirectly linked to price instability, and minimum employment with possibly lower wages and longer hours.  The rich get richer as they say...and the poor stay poor.  But ask yourself - am I rich or poor today?  Today, I am neither.



So in 5 years from now (2019) - am I putting myself on the path to be richer?  Or poorer?  Because if I'm going to be richer in 5 years, then there's a good chance I'll be richer in another 5 years after that (2024)...because, as they say, the rich get richer.  However, if I'm going to be poorer 5 years from now (or at least not doing anything to make myself richer) in 2019, then there's a good chance I'll be even poorer in another 5 years (2024) unless I stop the cycle.



I need another vehicle soon, and I don't just want any other vehicle - I want a nice 2014 F-150 FX2 truck with dual exhaust or maybe a sport sedan like the Dodge Charger SRT8.  But I know this is creating a monthly payment (liability) for myself and a monthly income (asset) for whatever car company I buy from.  In addition, I want to take a chance and buy some rental property (even before I buy my own house) - this way, once rented, I create a monthly income for myself and a liability for someone else.  The potentially smart thing to do is buy a rental property, but what I want to do is buy a new vehicle.  My family tells me "you only live once"...which may be true - but do I also want to be richer or poorer in the long run given the economic trend of low wages, job uncertainty, and constant increase in prices?  Which would you choose?



BE FREE

Invest Now? Or Wait?

I've been doing some market research and came across this chart for the S&P 500 (I added some graphics to highlight certain points):

If history is any indication of the future, based on this chart, we're due for a market correction between 2014 and 2015.  The green arrows represent the market at it's highest point (with the exception of the last "high" arrow), and the red arrows represent the market at its lowest.  The yellow circles at the bottom represent the time period of a typical 6-7 year cycle of the market.

Sometimes you have to know where you've come in order to know where you're going.  

Additionally, the economy seems to be slowly gaining traction thanks to the central banks pumping liquidity into the system and interest rates remaining low.  Corporate earnings are excellent including several M&A activity (mergers and acquisitions), stock buy back programs, and today's CEO annual salary resembling that of professional athlete contracts.  

Historically, it looks like the market needs to correct itself.  But with the Feds and every other central bank keeping it afloat...the market may just keep climbing - unless:

• there's some type of war
• or civil unrest
• or perhaps a looming "bubble" pops
• or a systemic credit default occurs

If you think something will happen - be ready with cash on hand to jump in and pick up some great bargains on stocks (as there will plenty!).  If you're more optimistic - there are plenty of deals to be had now in the market as American manufacturing, durable goods, consumer confidence, etc. ticks up higher.  

But as for me, I'm cautiously optimistic...for now.  Therefore, I'm looking to go long with a little protection in case there's a downside.  

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The Big Taper

There are a ton of signals saying the market will go higher...and on the contrary, just as many signals

saying the market will go lower.  Chairwoman Yellen gave an interesting press conference earlier this week (for those of us geeks who listened!) and mentioned that the Fed will be tapering off completely sometime this fall which temporarily sent markets low.  This should also be the signal/premise that interest rates will creep higher (which could also signal a decline in the bond market).

Nevertheless, the market is flush with cash (thanks to the Feds) and decent corporate earnings which is sending the stock market to record highs.  Plus, an unemployment rate that is slowly declining isn't a bad thing as well when it comes to helping investors find good investments on the cheap.

Investors are searching for answers in all the right places, but can't find a solid answer.   The talking heads on TV (CNBC, Bloomberg, WSJ, etc). are arguing back and forth about the direction and outlook of the economy.   And this is normal, because when it comes to investing...or even the outlook of the economy...nothing is an exact science.  Nothing one can make an exact or totally accurate prediction of the future.

What do you do???  Where do you invest?  How do you invest?

The best strategy would be to research and consume tons of market & economic data, map out a plan for successful trading, and make a few tweaks here and there along they way.  We don't have to necessarily get our information from the reporters on TV (they're usually better at reporting on what's in hindsight).  Do your own research & attend learning events (webinars, conferences, talk to industry leaders, etc.).  This way you avoid the short term "noise" that could throw you off course when it comes to your investing.

PS - It feels good to be back in the blog-o-sphere!  I've been away on other projects.  Thanks to the readers who contacted me and asked about the blog.  It was great feedback that I needed to hear.  I've been doing a lot of research and ready to deliver some new and potent content.

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Healthcare Costs

http://www.fa-mag.com/news/as-obamacare-hikes-medicaid-bills--insurers-shift-cost-to-taxpayers-16927.html?section=114