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To The Fiscal Cliff…And Beyond

November 8, 2012 by Jon

Fiscal CliffThe markets came back to reality this week.  Many blamed it on the election results.  Despite your political leanings, there’s been this fiscal cliff to deal with all year.  And apparently Europe still has problems too.  The concern going forward lies with the possible effects of expiring tax cuts.  You can read all about the potential tax rate changes here.

This fiscal cliff, as it stands, leaves a big question mark on our economic future.  Actually, it’s pretty specific about what happens.  What throws a wrench into things is Congress and the President are finally addressing it now.  And the market, in its infinite wisdom, can’t survive long on predictions and hearsay.  The market needs facts.  And this fiscal cliff is a big steaming pile of uncertainty as it stands today.

The Fiscal Cliff

The biggest concern is taxes and how much you’ll owe next year.  So I’ll clear it up now.  You will still pay taxes.  How much is the question.  So what exactly does the market and investors need to know?

The fiscal cliff currently stands to raise taxes across the board and enact forced budget and spending cuts by the government to reign in debt.  Overall it looks something like this: Continue Reading…

Bond Market Forecast: The Interest Rate Paradox

November 6, 2012 by Jon

Interest Rate ForecastFor the past four years investors have been on a quest for higher yield as the Fed has pushed rates lower to spur economic growth.  It’s been a double-edged sword.  With savers being gouged by lower rates, investors have thrown risk out the window in search of higher yield.  Since 2007, over $1 trillion has poured into bond funds.

That’s a healthy sum of money.  And investors have been rewarded, thanks to Fed policy.  But how long will it last?  Is now the best time to continue that trend?  At some point interest rates will rise.  Maybe next month.  Or next year.  The 30 year bull market in bonds will eventually end.  And savers will rejoice in higher interest rates.  That’s if their bond over allocation doesn’t hurt them in the process.

Until then, should investors really keep putting good money into an overpriced asset?  When bond prices and yields move in opposite directions, common sense would tell us no.

The Bond Market Flood

Nothing has fueled bonds more than fear in the stock market.  Since the financial crisis, more money has poured into bond funds than equity funds.  Call it the great equity exodus. Continue Reading…

Happy Hour: Mickey Meet Darth And Only 5 More Days

November 2, 2012 by Jon

Welcome to the end of the week and another edition of Happy Hour!  Just sit back, relax, and enjoy your end of the week roundup of all things interesting in the land of money.

Mickey Meet Darth

Disney pulled off a big purchase this week buying Lucasfilm.  It’s the company behind the Star Wars franchise and a few others.   If you thought George Lucas was good at merchandising, you haven’t seen anything.  Disney has turned licensing into an art form.  Just look at what it has done with the Marvel acquisition.  Which has been its focus over the past several years.

It’s no secret Disney has looked for quality assets with a built-in fan base to drive profits.  ESPN anybody.  The bigger story might just be the changing TV model.  The consumers ability to unplug from the cable subscription model and still access programming will only get easier.  Something Disney is actively pursuing.

Having the Star Wars franchise just increases Disney’s potential for long-term success.  For all you Disneyland purists, get ready for a Darth Vader invasion. Continue Reading…

Can You Trade If The Stock Market Closes?

November 1, 2012 by Jon

Market ClosedThe stock market doesn’t close unexpectedly very often. If anything, it’s consistent in only closing on the weekends and federal holidays.  But every once in a while, it has to make a rare, unexpected closure.

Hurricane Sandy was one of those rare occasions where the stock market closed due to weather.  Amid all of this, earnings reports continued as usual.  But investors couldn’t move on the news.  Unless you had access to a foreign exchange you were just out of luck, forced to wait until the market eventually opened later in the week.

But what about regular trading days?  On days when the market is scheduled to open, there are ways to trade even when it’s closed.

After Hours Trading

The stock market (through the NYSE and Nasdaq) has regularly scheduled trading hours from 9:30 a.m. to 4:00 p.m. Eastern Time.  However, trading outside that timeframe is known as after-hours trading.  It was originally limited to the wealthy and institutional investors. Continue Reading…

Happy Hour: Election Spending And Not Voting

October 26, 2012 by Jon

Welcome to the end of the week and another edition of Happy Hour!  Just sit back, relax, and enjoy your end of the week roundup of all things interesting in the land of money.

Election Spending

The amount of money spent to attract your vote is mind-blowing.  The political spending inflation has skyrocketed over the past several decades according to CNBC.  With $1.6 billion dollars spent already by the two presidential candidates alone, it’s a wonder how they both don’t get elected.

Since election day (November 6) around the corner, you can expect even more money being thrown away.  And you can follow along at home thanks to the New York Times Money Race.  When everything is said and done, we’ll be looking at over $2 billion spent for the presidential seat.  It’s a dollar or two more than necessary.

So my question is, how does a losing (or winning) candidate rationalize spending that amount of money?  Maybe that should have been a question for the debates. Continue Reading…

Higher 401k Contribution Limits For 2013

October 25, 2012 by Jon

401k Contribution Limits 2013The IRS increased the amount you can save for retirement with a slight boost to the 401k contribution limits for 2013.  Every year the IRS must calculate cost of living adjustments for the 401k and other retirement related plans when the CPI (Consumer Price Index) hits a certain threshold.

This year the CPI was high enough to call for an adjustment to some, but not all the 401k limitations.  The only change was in the maximum contribution limits.

Maximum 401k Contribution Limits

Starting in 2013, the IRS will increase the 401k and Roth 401k contribution limits to $17,500.  That’s a $500 increase over the 2012 401k contribution limits.  Which is about $42 more per month you can put away for retirement. Continue Reading…

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