The Stock Market Crash 2015 – 9 Stock Market Tips to Help You Sleep at Night

 

2015 stock market crash

“We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful”

-Warren Buffett

Stock Market Crash 2015 – Should you be scared?

stock market crash 20152015 has been an interesting year for stock investors. 2015 started out with the S&P 500 opening at 2058.9. From there the index has fluctuated between +3.8% and -4.1%. When investors are accustomed to getting 6 years in a row of positive gains, it is hard to imagine what a down year looks like. In the past week the S&P 500 is down about 10% as of this writing. Should you be scared?

Maybe. But it really depends on what you are invested in and how it is structured. If this recent 10% drop is causing you to lose sleep, then you need help.

Here are 9 tips for helping you bring your portfolio to your sleeping point.

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Inflation Monitor – August 2015

Inflation Monitor Summary – Composite Ranking

inflation monitor summary

 

* The Inflation Equilibrium is a quick summary for the whole data series of the inflation monitor. If you don’t like statistics, this is the chart for you.


 

Inflation Monitor – August 2015 – Introduction

The lazy days of summer are almost over. As the summer ends, the Wall Street traders and money mangers will also be going back to work. If you looked at a chart of the S&P 500 without the dates, you would not be able to tell which days were summer days and which were not. It looks like the traders have been in vacation for the entire year.

The S&P 500 has been fluctuating around 0% all year long. It is kind of refreshing to know that there is another direction other than straight up. The end of the year has a chance to be very interesting considering the speculation that the Federal Reserve will be raising rates. While I have said many times I think the Fed will lock the floating rate of 0%-.25% at .25% as a starting point, this will amount to nothing. This might even be a catalyst for the market to resume its march higher, if the Fed says that they will stop and assess the markets reaction before raising again.

The US stock market is already very overpriced according to a number of metrics, but until there is a better place for investors to put their money, it may remain expensive. The Chinese stock market has been unraveling in the past few months and this may be a catalyst to move global markets. It is too soon to tell. Keep watching Chinese markets as a sign of trouble ahead.

The rise in interest rates has cast some interesting speculation on the future movements of the stock market. I want to dispel some of the myths about the rise in interest rates. In short, historical data suggests that the stock market rises with the rising rates, but what is not explained is that the rates start rising to stop the excessive rise in the stock markets. In fact in recent history, the Fed has raised interest rates until the stock market slows. Inevitably the Fed overshoots the mark and causes the market to decline. The US has had 0% interest rates since 2009. This is a long time with low rates. I am surprised the market is not higher.

This month’s inflation monitor data once again show the US market is experiencing deflation. I have not heard more than a handful of people discussing this deflationary data. I am wondering when more people are going to recognize this fact. I suppose that will be when the markets turn, then everyone will have seen it.

I hope you enjoy this month’s Inflation Monitor – August 2015.

Kirk Chisholm

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10 Top Alternative Investments You Probably Have Never Heard of

 

10 Top Alternative Investments You Probably never heard of

 

“Curiosity about life in all of its aspects, I think, is still the secret of great creative people” – Leo Burnett

Most people are familiar with the stock market. There are TV stations which have the stock market and stock market related information on 24 hours every day. It is hard to escape it. When the stock market crashes, it makes the headlines in every newspaper, news station, and media outlet. When it reaches all time highs, it is on every magazine cover, even the shoeshine boys are talking about it. But what about other investments?

Huh? There are other investments?

Yes there are investments outside of the stock market. There is no rule that says you have to invest in the stock market, pitting yourself against the best and brightest investors in the world. Investors compound this problem by investing in areas that they are not experts in. Do you think that is a good idea?

Maybe there is a better way to invest…

Can You Invest Outside the Stock Market?

Peter Lynch famously said , “Invest in what you know.” While he was referring to stocks, the concept is sound. If you are an expert in technology then why not apply your knowledge and expertise into your investments. Invest in technology. Don’t invest in horses, or diamond mines. That would minimize your advantage with your investments. This does not mean you should not diversify your investments, rather it means you should take advantage of your particular skill set and expertise and ply it to your investments to make good choices.

While the stock market provides investors easy access to a wide variety of companies, it is somewhat limited to publicly traded companies. These companies cover a wide range of investments: technology, timberland, transportation,  real estate, commodities,  health care, etc. , but they are still stock shares in companies run by other people.

You could also invest in bonds of these companies. This is also an investment strategy many people and institutions use to invest their capital. It is a good strategy to use, but why stop there? What else can you invest in?

There is a whole world of investments outside the stock market that individuals and institutions invest in. There are no limits to these investments except for your creativity.

What are Alternative Investments?

The term alternative investments requires some explanation due to its lack of definition in popular media. The term alternative investments does not actually refer to any specific group of investments. It is only a descriptive term typically used to describe investments outside the stock market. This includes assets that are also available in the stock market, but available individually. The first investment on the list is a good example of that.

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10 self directed IRA tips to help real estate investors maximize profits

 

self directed ira tips
 

“Self Directed IRAs are one of the best laws the US government has ever passed”

Can I invest in real estate with my Self-Directed IRA?

“Self Directed IRAs are one of the best laws the US government has ever passed”, an investor once told me. It is hard to argue that point. In 1974, congress passed the Employee Retirement Income Security Act, often referred to as ERISA, enabling US taxpayers to save money for their retirement in a tax deferred manner. The best part of this program (outside of the tax deferred nature of it) is that they allow you to self-direct your savings.

ERISA established the individual retirement account (IRA) as a staple in many investors toolbox for retirement savings. The IRA allows investors to invest in virtually any investment. While most investors think that they are restricted to stocks, bonds, and mutual funds, the choices are much more interesting. Some ideas that I have seen include: real estate, tax liens, private mortgages, dressage horses, farmland, sports franchises, timberland, physical gold and silver, raw land, private company stock, oil & gas LPs, franchises, and more. With all of these choices and more, you should have already come up with some ideas that could make for interesting investments.

Real estate and real estate related investments is definitely the most common asset type when it comes to self directed IRAs. Whether you are a professional investor or a novice, you probably have at least a basic understanding of how real estate works. Here are 10 self directed IRA tips for investors who want to invest in real estate with the IRA.

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Inflation Monitor – July 2015

Inflation Monitor Summary – Composite Ranking

Inflation Monitor Equilibrium

* The Inflation Equilibrium is a quick summary for the whole data series of the inflation monitor. If you don’t like statistics, this is the chart for you.


 

Inflation Monitor – July 2015 – Introduction

I hope you enjoyed your Independence Day. While Greece may not have the same appreciation of our holiday, they had one of their own… A Bank holiday. While the Greek Crisis in Europe seems to be solved??? The greater problem persists. The Greek people voted a resounding “NO” on the terms and the Greek PM moved forward with it anyway. Apparently Greece is happy kicking the can down the road, and I can’t blame them. They can never pay back the debt they owe and they are getting additional loans to pay the interest in the loans they already have. Europe seems to want to keep them in the EU for other reasons, but the end result is that they eventually will have to deal with this. I’m sure the politicians would rather this problem breaks loose on someone else’s watch. Everyone wins by prolonging this and everyone loses eventually by letting this happen.

The US Markets continue to be quiet with no additional QE and a prospective tightening in the near future. The economy continues to be strong, but some signs are cropping up in small amounts showing that caution is warranted. I have added a few charts to this issue that I found interesting this month.

I hope you enjoy this month’s Inflation Monitor – July 2015.

Kirk Chisholm

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How Self Directed IRAs Can Help Protect You From Stock Market Crashes and Halted Trading on Exchanges

Self Directed IRAs can help protect you from stock market crashes

I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years.   – Warren Buffett

If you were paying attention yesterday, then you probably heard that the New York Stock Exchange (NYSE) halted trading for 3.5 hours and Chinese stock market continue to crash. So much for Wall Street having a lazy summer.

Should you worry about these events?

Yes… and No.

As of today you should not have much to worry about… unless you have money in Greek banks, then you are allowed to sweat. While you may not have much to worry about today, what if these events were more pronounced? What if they impacted your investments in a more direct way? What if the Greek crisis causes stock markets to crash. What if the stock market closed and didn’t reopen for 5 years? Would you be happy with your investments?

Warren Buffett has made a statement in the past that investors should invest as if the stock market would be shut down and not reopen for the next 5 years. What companies would you want to hold in this scenario? Would you want to hold stocks at all?

Lets take that concept a step further. Do you have 100% of your retirement funds in mutual funds, stocks, or bonds? If so, then why? Is it because you want to invest in the stock market? Or is it because you are not aware that you can invest outside the stock market? If it is the later, then you are in good company. More than 80% of the investing public is not aware that they can invest their IRA outside the stock market. Less than 10% is actually investing in alternative investments with their self-directed IRA or self-directed 401k.

Are traditional investments better than alternative investments…

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Inflation Monitor – June 2015

Inflation Monitor Summary – Composite Ranking

Inflation Monitor Summary

 

* The Inflation Equilibrium is a quick summary for the whole data series of the inflation monitor. If you don’t like statistics, this is the chart for you.


 

Inflation Monitor – June 2015 – Introduction

It is officially summer and most markets are becoming more quiet. This is of course excluding the ongoing crisis in Greece. They must love the attention because they have been dragging out this “crisis” since 2011. Everyone involved in this mess (on both sides) has a reason to kick the can down the road forever, but forever will not last that long. Greece has call for a referendum vote from the people. We will find out what the people want next week.

While the US markets have been quite, there have been some disturbing signs cropping up in some of the economic indicators that we follow. These are: the velocity of money, PPI, and market cap to GDP. While many of the numbers listed above show deflation, these three are especially concerning. One interesting and potentially inflationary sign is a sharp pickup of the Baltic dry Index.

Enjoy this month’s Inflation Monitor – June 2015.

Kirk Chisholm

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Inflation Monitor – May 2015

Inflation Monitor Summary – Composite Ranking

Inflation Monitor Summary

* The Inflation Equilibrium is a quick summary for the whole data series of the inflation monitor. If you don’t like statistics, this is the chart for you.


 

Inflation Monitor – May 2015 – Introduction

 

This month we were a bit slow getting this out due to some website upgrades. We expect that this June version of the Inflation Monitor will be out in 2 weeks so you will get a double dose of information.

May was a month of mixed results. Some data is showing some signs of life with inflation, but others show the decline of inflation continues… albeit slowly. Based on my estimates,2 Q3 and Q4 of this year should start to show some signs of economic slowdown. While we have started to see this in the earnings numbers, due to a lot of the hedging done by large public companies, the earnings may be less impressive when those hedges expire.

The quick rise in the US Dollar and lack of QE in the US may be too much for the US economy to handle. It typically takes a few months before these effects filter down into the economy. But I xpect later this year to see the results of those changes. There are many interesting data points to consider, but the PPI is one of the most interesting this month.

Other issues which are concerning…

The effects of debt have been slowly accumulating in the US over time and have put an increasing amount of weight on the growth of the US economy. It is hard to grow out of a recession when a large amount of your revenues go to paying off interest on your debt. Maybe this can put some perspective on the balance sheet of the US.

According to the GAO, the US has net worth of -17.7T, which is higher than the -16.9T last year. If you include the 42T in unfunded liabilities, this brings the total net worth of the US to -60T. That is not small amount of money to pay back. This is a little over $188,000 per person in liabilities. I think it is unlikely that this will get paid back in anything but inflation. What if the US cannot inflate away their debts like other countries have in the past? That will put the US in an interesting position. The available options are not pretty.

While there is constant discussion about how big of a problem this it… and it is, the reality is that this won’t be a problem until it is. By this I mean that the US, as the world’s reserve currency, has a special position in that they cannot default on their debt unless they choose to. Other countries do not have that luxury.

As long as the US Dollar is desirable to the rest of the world, we can continue to play this charade as long as we want. Then one day that will change and we will be in trouble. Until then, party like its 1999.

Enjoy this month’s Inflation Monitor – May 2015.

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Inflation Monitor – April 2015

Inflation Monitor Summary – Composite Ranking

Inflation Monitor Summary - April 2015

 

* The Inflation Equilibrium is a quick summary for the whole data series of the inflation monitor. If you don’t like statistics, this is the chart for you.


 

Inflation Monitor – April 2015 – Introduction

Spring is finally here and with it comes the warm weather. Unfortunately the warm weather has not been able to thaw out deflation or the wintery economic chill that has gripped certain parts of the US economy and many European nations.

The CPI continues to hit negative territory on an annual basis for the second month in a row. The PPI is well into negative territory as well. This does not bode well for the US economy.

Commodity prices have also continued to show weakness. The bright spot in the US economy is housing which has been climbing for the past few months and started to pick up its pace.

There are many excuses that have been proposed for these numbers: the heavy snowfall in the North East this past winter, the significant drop in oil prices, the rising US Dollar, and more. These are all valid reasons for the drop in the CPI, PPI, and other economic data. However what I find amusing is the commentators who claim the high oil prices were a good thing for the economy, now say that low oil prices are good for the economy… Well which is it?

The stock market is not the economy”  – Author Unknown

This axiom is more important than any you will learn about the stock market. What it means is that the economy does not always lead or follow the actions of the stock market. While they are obviously related, they are not the same.

The US stock market is currently holding up well considering the negative economic data. While the two are highly correlated, they do not always act in unison. However I do expect the stock market to follow the economic trends in the second half of this year unless we see a sharp reversal in trend of the US Dollar and Oil.

In this months Inflation Monitor I have some very interested charts to share with you. Enjoy.

As always, please contact me to send your feedback on how I can make this monthly Inflation Monitor a better tool and resource for you. Thank you for reading and I hope you enjoy this month’s issue – Inflation Monitor – April 2015.

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Inflation Monitor Monthly

 

Kirk Chisholm

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Inflation Monitor – March 2015

Inflation Deflation Composite Ranking

Inflation Monitor Summary March 2015

 

* The Inflation Equilibrium is a quick summary for the whole data series of the inflation monitor. If you don’t like statistics, this is the chart for you.


 

Inflation Monitor – March 2015 – Introduction

It is March and as of today spring is finally here. It doesn’t feel like spring. I only hope that the weather warms up so I don;t have to wear a winter parka in April.

Boston finally broke the record for snowfall this year with 108.6 Inches. The prior record was 107.9 inches in 1872. This broken record was no reason to celebrate since the Governor had to call in the National Guard to help with the snow. Having experienced prior large snow storms in the City of Boston, I can tell you that the situation this year was mismanaged. There was no reason to call in the national guard.

Boston’s lack of preparedness is much like the financial markets with deflation. Deflation has caught a lot of people off guard. A number of European countries currently have negative interest rates, Germany and Switzerland rates are negative out to 6 and 10 years. What the future holds with negative interest rates is anyone’s guess, but the idea of negative interest rates is a dangerous one if the trend continues lower.

Is the US stock market safe from global deflation?

The S&P 500 and US Treasuries are an anomaly in the global equity and bond markets. The US Treasury has the highest interest rate compared to any other developed country. The S&P 500 continues to rise despite the global deflation effecting countries and equity prices around the world.

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A Visual History of Income Inequality in the US

Income Inequality in the US

 

Income Inequality in America

NPR put out some great images on income inequality recently. They describe the history of income inequality in the US in a way you might not have considered. Many statistics are hard to interpret, but these aren’t. At first glance you might immediately jump to the conclusion that the bottom 90% of income earners have gotten squeezed since 1970. However if you look at the entire chart, it might put things into a different perspective.

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The 2014 Investment Predictions Summarized in One Picture

 
2014 predictions for investments

 

Who would have guessed it? Wall Street’s 2014 predictions for investments proved to be wrong.

2014 was an interesting year for the global stock and bond markets. A lot of large macro events took place which fundamentally changed the landscape of global macro economics and ultimately the performance of markets across the globe.

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Inflation Monitor – February 2015

 

inflation monitor


 

Inflation Monitor – February 2015 – Introduction

It is now February and it is off to a good start with the New England Patriot winning the Super Bowl… Sorry the big game. Even if you were not a fan, it was a great game to watch up until the last play. The win helped warm the city from the cold chill of deflation setting in around the US. It has been a few months since I have started the Inflation Monitor and each of those months has been marked with deflation. I have been saying for the past few years that deflation is in our future despite all the money printing by the Federal Reserve. It appears as if this is now become apparent to everyone else. Although there are many deflation deniers out there who think it cannot happen and wont happen.

I just got back from the TD Ameritrade conference in San Diego. One of the keynote speakers was Craig Alexander, the Chief Economist at TD Bank. Normally this is one of my favorite speakers at the conference each year, however this time I noticed something different…

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Why Does Deflation Scare the Federal Reserve and Economists Alike?

why does deflation scare the federal reserve

Nothing to see here.

I just got back from the TD Ameritrade 2015 annual conference in San Diego. They always put on a high qualify event. At this event was a luncheon hosted by TD, where keynote speaker, Craig Alexander, Chief Economist at TD Bank spoke about his view of the world. I make a point to listen to him each year at the conference and I am always impressed. He is a very smart and accomplished economist. However this year was a bit different. I am still trying to make sense of it. The majority of Craig’s speech was about how the US does not have deflation and will not have it in the foreseeable future.

The first thing that popped into my mind was this clip from the movie Naked Gun. There is nothing to see here. Move along.

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144 Products Made From Petroleum And 4 That May Shock You

products made from petroleum
 

What products and uses does Petroleum have outside of Gasoline?

an April 2007 nationwide online survey revealed that 72 percent of the American public does not know that conventional plastic is made
from petroleum products, primarily oil. This is not surprising

According to the US Energy Information Administration (EIA), this is a list of petroleum products and their share of total US petroleum consumption in 2013.

  • Gasoline 46%
  • Heating Oil / Diesel Fuel 20%
  • Jet Fuel ( kerosene) 8%
  • Propane / Propylene 7%
  • NGL / LRG 6%
  • Still Gas 4%
  • Petrochemical Feedstocks 2%
  • Petroleum Coke 2%
  •  

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Inflation Monitor – January 2015

 

inflation monitor
 

Inflation Monitor January 2015 – Introduction

I hope you had a pleasant holiday season. Now that the eggnog has run out (although probably more likely the rum), your trees and menorahs have been put away until next year, and you are getting back to work in this cold weather (what else is there to do when it is this cold except work). Lets see what the new year has brought for us as a present. In this month’s issue I will mainly be discussing oil prices and the US Dollar. The two areas which are generating the most interest.

To start the year I am going to play around with the format a bit to see what works best for people. In this months issue I am planning on breaking the bottom section of the Inflation Monitor into separate excerpts through out the month based on thoughts or ideas that I have had rather than wait until the end of the month. I will try to spread this out a bit more a see if this is a more desirable setup. While this might be a bit scatterbrained, it might get back to what this section was supposed to be: inflation monitor data, then some ideas, not a lengthy dissertation. This month was difficult to focus on much else since oil has played such a large part of the public’s interest. So we will focus more on oil and the US Dollar.

This is the first issue of the Innovative Advisory Group Inflation Monitor in 2015. We continue to receive a lot of positive feedback on our first few issues of the Inflation Monitor. As you will notice, we have taken some of this feedback and make some minor adjustments to our issues each month. As always, please contact me to send your feedback on how I can make this monthly Inflation Monitor a better tool or resource for you.

Thank you for reading and I hope you enjoy this month’s issue – Inflation Monitor January 2015.

Kirk Chisholm

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Worried About Fraud with your Self Directed IRA? SEC says, Ask a Financial Advisor

self directed ira fraud

In their September 2011 Investor Alert, Self Directed IRAs and the risk of fraud , the SEC outlined typical fraud risks when using a self directed IRA.

If you are worried about the risks of fraud when using a self directed IRA, then do as the SEC recommends in their Fraud Alert, “Ask a professional”.

The top three fraud risks with self directed IRAs that they focus on are:

  1. Misrepresentations regarding custodial responsibilities
  2. Exploitation of tax-deferred account characteristics
  3. Lack of information for alternative investments

While these may be common fraud risks that the SEC sees with their enforcement efforts, the risks attributable to alternative investments inside self directed IRAs expand beyond just fraud risks. There are other risks which are important to consider when using a self directed IRA. Investors should also consider:

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Where is the Price of Oil Going?

 shale vs sheik

US Shale vs Saudi Sand?

For Christmas I asked Santa to get me a crystal ball. He rarely disappoints. Hopefully after reading this post you will have some insight into my thoughts and the future direction of oil prices.

Commodity prices in general have been declining for years. According to the Rogers International Commodity Index, the commodity super-cycle peaked in Jun 2008. While it is still possible that we could break those all time highs, it is highly unlikely given the deflationary forces at play in the global markets. If you have been reading the inflation monitor for a number of months you know which side of the inflation-deflation fence I sit on. The future of commodity prices will most likely continue on the path that they are currently on. There does not seem to be inflation on the horizon of commodity prices.

Investing in a commodity is a difficult task since it produces no cash flow. So how do you price a commodity? Many smart investors have raised this point before. You cannot say what is the correct price of a commodity unless you have a free market determining the price based on supply and demand. This is basic Economic 101. While reality should be driven by data and facts, in some cases it isn’t. One of these cases in Oil.

Oil the “Political Commodity”

Oil is what I would call a political commodity. What this means is…

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