Financial Tech - The Average Guy Podcast Network: Recent Episodes
Jim Collison
Financial Tech brings you the latest market commentary from the award winning Andrew Hunt, CFP and President of Guide Rock Capital Management, located here in Omaha, Nebraska.
Was it a stutter step or have markets lost their balance? Anybody who knows football can tell you a lot goes into every play. Strategy, practice, game review, and preparation all affect outcomes, as do decisions and execution during games. Many, many factors influence gains and losses on the field. Similarly, numerous issues affect the performance of stock and bond markets – a fact that became abundantly clear when pundits tried to explain last week’s market downturn. Here are a few of the things which may have helped put investors on the defensive last week: · Fears of a China
The People’s Republic of China (PRC) appears to have taken the words of American industrialist Henry Ford to heart. Ford said, “There is one rule for the industrialist and that is: Make the best quality of goods possible at the lowest cost possible, paying the highest wages possible.” Last week, we learned from CNBC China’s annual trade was more than $4 trillion in 2013. That pushed the PRC ahead of the United States and gave it standing as the world’s biggest trader. According to The New York Times, China’s annual trade surplus, in U.S. dollar terms, was the largest since
Like the mother of a bride reviewing flower arrangements and fretting that a brilliantly sunny day could be marred by dark clouds hidden just beyond the horizon, pundits have been parsing the exceptional year-to-date performance of U.S. stock markets and fussing over the future. It’s true. U.S. stock markets look like they may be headed toward a fizzy champagne finish even after retreating a bit last Friday. Through Thursday, the Dow Jones Industrial Index had closed at record highs 50 times this year and the Standard & Poor’s 500 Index wasn’t far behind with 44 record high closes, according to
You really need to take predictions with a grain of salt. Consider these esteemed opinions. “I think there is a world market for maybe five computers.” Thomas Watson, Chairman, IBM, 1943. “Who wants to hear actors talk?” H. M. Warner, Founder, Warner Brothers, 1927. “Everything that can be invented has been invented.” Charles Duell, Commissioner, U.S. Office of Patents, 1899. Listen Mobile: Send your questions or comments to Andrew_Hunt@GuideRockCapital.com It’s an important to remember the fallibility of experts as we head toward a new year and pundits begin pontificating about the events of the past and predicting what may be
Send your questions or comments to Andrew_Hunt@GuideRockCapital.com If every piece of positive news was a petal, then you might say the American economy was in bloom last week. Moving into the holiday season, consumer confidence was at a five-month high. Early in the week, manufacturing showed improvement. On Thursday, the U.S. Commerce Department unfurled the news the American economy grew faster than expected during the third quarter of 2013. The next day, it was reported the unemployment rate was at the lowest level since 2008. Hourly earnings increased, as did the length of the work week. Participation in the work
Send your questions or comments to Andrew_Hunt@GuideRockCapital.com In 2006, Time Magazine’s Person of the Year was ‘You.’ The magazine declared that 2006 was about: “…Community and collaboration on a scale never seen before… It’s about the many wresting power from the few and helping one another for nothing and how that will not only change the world, but also change the way the world changes.” Listen Mobile: Last week, J.P. Morgan named EVERYONE the winner of the “Most Promotional Retailer Award.” While communities across America are very interested in Black Friday sales, these events are less about empowerment and more
After last week’s surprisingly strong employment report, it’s almost possible to picture Ben Bernanke slapping trail dust from his leg, ducking his head, and saying, “Just doin’ my job.” After all, running the economy is as laden with complications and unexpected events as a cattle drive. Richard Graboyes, an economist who was once the Director of Education for the Federal Reserve Bank of Richmond, wrote that driving cattle seems “arduous, but simple – walk some cattle from point A to point B. But, the endeavor is fraught with natural and human risks for both rancher and driver.” Listen Mobile: Clearly,
Contrarians probably are waiting for the other shoe – or, in this case, U.S. stock markets – to drop. If you’re not familiar with contrarian investing, the theory goes something like this: Consensus opinion is often wrong. When the majority of investors have a bullish outlook and believe stocks are going to move higher, the chances are stock values will drop. Likewise, when the majority has a bearish outlook and believes stocks are going to move lower, the chances are stock values will rise. Listen Mobile: Why would Contrarians expect markets to head south? One reason is bullish sentiment is
Curse of Chucky, Scream 2, Final Destination 5, Freddy vs. Jason… You know Halloween is nearly upon us when you can’t surf channels without exposing yourself to or relishing in a multitude of horror flick sequels. Propagating alarming situations seems to be all the rage in Washington, too. Last week, a last-minute deal raised America’s debt ceiling, saving us from a debt default and ending the government shutdown – until next January. In the meantime, hoping to avoid a sequel just three months down the road, the members of Congress agreed to put their heads together and produce a 10-year
Do world stock markets believe Congress is just offering up some Halloween excitement? Last week, they responded to the government shutdown in the United States and the possibility the U.S. might default on its debt for the first time ever with the bravado of teenagers standing in line for a haunted house. Markets around the globe finished the week higher with some notable exceptions that included Chinese and Mexican markets and America’s NASDAQ. Listen Mobile: It’s also possible market performance could be attributed to the lack of economic data available since the government shutdown. Even private economic indicators sometimes rely
“It’s déjà vu all over again,” Yogi Berra reportedly said as he watched Yankee teammates Mickey Mantle and Roger Maris smack back-to-back home runs for the umpteenth time. Americans are experiencing déjà vu all over again, too. Sure, the prospect of another fiscal showdown doesn’t electrify a crowd like a couple of major league home runs. All the same, investors’ response to the possibility the U.S. government might partially shut down on October 1 was muted. Some U.S. stock markets gave back a little for the week; others moved higher. All remained up year-to-date. Listen Mobile: So, are investors confident
We’re going to do it…We’re going to do it…We’re not going to do it…Yet. Last week, the U.S. Federal Open Market Committee gave stock markets a gift that, on a scale of thrills, might have been on par with Marilyn Monroe singing happy birthday to JFK. On Wednesday, the FOMC announced (without a trace of breathiness): Listen Mobile: “Taking into account the extent of federal fiscal retrenchment, the Committee sees the improvement in economic activity and labor market conditions since it began its asset purchase program a year ago as consistent with growing underlying strength in the broader economy. However,
Confluences are the building blocks of the world’s waterways. When two or more rivers meet, changes in velocity and turbulence tend to result in geologic scouring; erosive activity that may alter the shape of the river and its bed. The action may produce a ‘scour hole’ downstream from the confluence. For a river runner, a hole creates “potential for trouble and the need for deft maneuvers.” America may be heading toward a scour hole that is being shaped by a confluence of factors and events, domestic and global, economic and demographic. Listen Mobile: Several of these factors were highlighted by
Last week was crunch time in the National Football League (NFL). With the 2013 regular season approaching rapidly, NFL teams cut about 700 players from their rosters over the Labor Day weekend. That was a big cut—about a 40 percent drop in player employment—as rosters were pared from 90 to 53 players. However, it’s not likely to have a significant effect on U.S. unemployment data—and that’s really what the week ahead is all about. Last week, markets jittered and slumped on news that Syria was thought to have used chemical weapons against civilians. According to The New York Times, 70
“So much depends / upon / a red wheel / barrow / glazed with rain / water / beside the white / chickens.” Well, the U.S. Federal Reserve’s monetary policy is a lot more complex than the simple tools mentioned in the oft-memorized William Carlos Williams’ poem, The Red Wheelbarrow, but an awful lot is depending on it. In some of those countries that have been affected negatively by changing expectations about quantitative easing, the importance of chickens, wheelbarrows, and other basic tools to a family’s economic well-being has not been forgotten. Listen Mobile: During the past 10 weeks, currencies
Robert Burns, father of fourteen and writer of Auld Lang Syne, once said, “There is no such uncertainty as a sure thing.” Was he ever right! Here are a few sure things: · The Federal Reserve intends to reduce economic stimulus by tapering quantitative easing (QE). · Federal Reserve Chairman Ben Bernanke plans to retire. · Gross Domestic Product (GDP) growth was positive in Europe during the second quarter. Listen Mobile: Here are some of the uncertainties which may arise from them: · When will QE begin to end? How will changes in the program affect world economies and markets?
You say to-may-to. I say to-mah-to. You have to be a careful reader to keep up with the Federal Reserve these days. Last week, the Fed re-characterized the pace of economic growth in the United States from ‘moderate’ to ‘modest.’ According to Wall Street Journal blog, Real Time Economics, “economic data show that ‘modest’ is a touch weaker than ‘moderate.’” No matter how you parse the difference, it was enough to prevent the Fed from beginning to normalize monetary policy by cutting back on bond buying. Listen Mobile: The Fed indicated that labor market concerns were a key reason for
Singing the earnings song… Each year, in January, April, July, and October, most publicly-traded companies announce their corporate earnings results. These announcements can have a dramatic effect on companies’ share prices – and markets – especially when companies don’t meet analysts’ expectations. Listen Mobile: Unfortunately, as The Wall Street Journal pointed out, financial companies have exceptionally easy year-to-year comparisons. When they were pulled out of the mix, earnings hit a low note: down by almost 3 percent from last year, according to FactSet. That’s worse than analysts expected at the start of the quarter. Earnings were weak relative to expectations,
One of these things is not like the other… If you find yourself humming that old Sesame Street standard when you think about financial markets and world economies, you’re probably not alone. To the consternation of many, the Dow Jones Industrials Average and the Standard & Poor’s 500 Index rocketed to new highs last week just as the International Monetary Fund (IMF) cut its global economic growth forecast for 2013 and 2014. Listen Mobile: Many in the media pointed fingers and announced, “That’s the problem right there!” Of course, the fingers were pointing at Ben Bernanke and the Federal Reserve
The second quarter offered a level of drama often found in homes with teenagers. When investors realized their good friend, quantitative easing, might have an earlier-than-expected curfew, they threw a hissy fit that resounded through global markets. The outburst interrupted the trajectory of Standard & Poor’s 500 Index, which finished June lower after hitting record highs in May. As stocks fell, yields on the benchmark 10-year Treasury bond hit a 22-month high. Listen Mobile: Higher treasury yields and a strengthening greenback proved attractive to investors and capital flowed out of emerging markets during the quarter. As interest rates moved higher,
It was like watching a game of telephone where one child speaks into another child’s ear and that child speaks into another child’s ear and, by the time the last child repeats the original statement, it has transformed into something completely different. Chairman Ben Bernanke stepped up to the microphone at the press conference after the Federal Open Market Committee’s policy meeting and said: Listen Mobile: “As I mentioned, the current level of the federal funds rate target is likely to remain appropriate for a considerable period after asset purchases are concluded. To return to the driving analogy, if the
Like a host at a dinner party, the International Monetary Fund (IMF) put the performance of the U.S. economy on the table last week to be gnawed over by world markets. When the IMF presented its annual review of the world’s largest economy, it stated that: “Despite some improvements in economic indicators, particularly in the housing market, the very rapid pace of deficit reduction… is slowing growth significantly… U.S. growth is expected to slow to 1.9 percent in 2013, from 2.2 percent in 2012. This projection reflects the impact of the sequester ($85 billion of automatic U.S. government spending cuts),
Like a funhouse mirror, investors’ concerns about whether and when the Federal Reserve will begin to end its quantitative easing program contorted market responses to economic news last week. Unexceptional economic reports were treated as good news and pushed stock markets higher; strong economic reports were treated as bad news and pushed stock markets lower. Listen Mobile: Markets headed south mid-week, but responded positively to the U.S. May jobs report. It was a Goldilocks report – neither too weak nor too strong – which showed the Labor Department added slightly more jobs than expected in May. Apparently, investors thought the
The Fed will taper… the Fed will not… the Fed will taper… the Fed will not… Last week, investors and traders obsessed about the Federal Reserve and the possibility it might begin to end its quantitative easing program. The Fed began its first round of quantitative easing during the financial crisis in an effort to prop up the American economy. In general, quantitative easing helps increase money supply and promote lending and liquidity. Investors’ fears about what may happen when the program ends were apparent when, despite abundant positive economic news, major U.S. stock markets lost value last week. Listen
Much like elementary school children trying to capture the attention of someone they have a crush on, the American economy sent lots of mixed signals last week. Conflicting reports emerged about consumer sentiment during the week. The Conference Board, a non-profit research organization, reported consumers remained somewhat pessimistic about the direction of the economy. In contrast, the University of Michigan’s consumer sentiment survey rose to a six-year high, according to ABC News. The Index moved from 76.4 in April to 83.7 in May indicating consumers are feeling more confident about the economy. Listen Mobile: On the employment front, more people
‘Sell in May and Go Away’ is a trading maxim which, according to Investopedia, encourages an investor to “sells his or her stock holdings in May and get back into the equity market in November…” Traders who adhere to that adage may be pondering averages and exceptions right now. During the first two weeks of the month, the Dow Jones Industrials Average, the Standard & Poor’s 500, and the Russell 2000 Indices all reached new highs. The Dow passed 15,000, the S&P reached 1,600, and the Russell 2000 hit 968. Listen Mobile: Bulls are in the majority among investors,
Like athletes testing their limits, the Standard & Poor’s 500 and the Dow Jones Industrials Indices both hit new highs last week. The S&P closed the week above the 1,600 level for the first time, while the Dow climbed above the 15,000 mark on Friday before closing lower. Strong corporate earnings, gains in the housing market, and good news from Europe helped support last week’s strong performance. Listen Mobile: Corporate earnings season – the period when companies’ managements tell shareholders how well the companies have performed during the previous quarter – is almost over. Seventy-two percent of the companies
If anyone doubted the power of Twitter, their skepticism was laid to rest this week. Early Tuesday afternoon, a tweet from the Associated Press reported President Obama had been injured by explosions in the White House. Stock, bond, and commodity markets fell sharply on the news and then rebounded when the Associated Press communicated that its Twitter account had been hacked. This wasn’t the first time such a thing had happened on Twitter or the first time false and market moving information had been posted. In February, the stocks of Burger King and Jeep moved after a post on each
It was a wild, wild week. Last Monday, bombs exploded near the finish of the Boston Marathon. Not long after, media outlets let the public know letters to President Obama and a senator from Mississippi contained the poison ricin. On Wednesday, the town of West, Texas was flattened by an explosion at a fertilizer plant. By the end of the week, a man had been arrested for sending the ricin letters, the city of Boston had been locked down, the bombing suspects had been captured, and folks were returning to their homes in West, Texas. Listen Mobile: The week’s
Last week, the term ‘Easy Money’ conjured both comedian Rodney Dangerfield and the U.S. Federal Reserve, and no one was certain how much respect either one should get. The Fed accidentally e-mailed its market-moving Federal Open Market Committee (FOMC) meeting minutes to congressional staffers and trade lobbyists on Tuesday at 2 p.m. The minutes weren’t supposed to be released to anyone until Wednesday at two. Once the mistake was realized, the Fed released the minutes early on Wednesday morning. Listen Mobile: Markets enthusiastically embraced the minutes which appeared to focus on the idea quantitative easing will continue. The Dow
U.S. investors puzzled over disparate pieces of economic and world news last week. By the end of the week, major U.S. markets had tumbled indicating investors didn’t like what they’d seen. Under new leadership, the Bank of Japan (BOJ) announced an aggressive stimulus program that will inject $1.4 trillion into its economy over the next two years. The effort is intended to end decades of stagflation. Stagflation is a period of economic stagnation characterized by rising inflation, higher unemployment, lackluster consumer demand, and lack of growth in business activity. Shares in the Japanese market, which closed before U.S. jobs numbers
U.S. stock markets finished the week – and the quarter – on a positive note. The Federal Reserve’s accommodative monetary policy and strong profit growth helped provide the lift needed to propel the S&P 500 Index to a record high. The Dow Jones Industrials Index also finished the week above its previous record close. For the quarter, the S&P 500 was up about 10 percent, the Dow was up about 11.3 percent, and the NASDAQ finished up about 8.2 percent. Listen Mobile: Despite the strong performance overall, markets were somewhat choppy during the week. Concerns about Cyprus and the Eurozone
Like winded runners, stock markets slowed at the end of last week. Since the start of the year, the Dow Jones Industrials Index has risen by almost 11 percent, hurdling past new highs several times. The S&P 500 Index gained 9.4 percent over the same period. The index moved higher in 10 of the past 11 weeks and finished last week just shy of its all-time high. However, the Dow and the S& P’s momentum – and that of some other U.S. stock markets – slowed on Friday as stronger economic data was offset by an unexpected slump in consumer
During periods of strong market performance, like the one we’ve experienced since the end of last year, it’s important to remember that markets ebb and flow over time. Since December 31, 2012, the Dow Jones Industrial Index has gained 9.9 percent and the Standard & Poor’s 500 added 8.8 percent. Last week, the Dow reached highs last seen during 2007, and the S&P 500 ended the week less than one percent from its record high, which was also realized during 2007. While the strong performance of U.S. stock markets has given investors reason to smile, significant economic challenges remain. The
The Markets Like Canadian geese migrating in anticipation of winter, stock markets moved south last week in anticipation of monetary tightening. Minutes from the January Federal Reserve Open Market Committee meeting were released mid-week. After reviewing them, many analysts decided that quantitative easing may begin to taper off before the end of the year. Not everyone agreed with this interpretation; however, it caused major U.S. stock markets, as well as some Asian and European stock markets, to dip lower. Many markets recovered ground before Friday, but in the U.S., only the Dow Jones Industrial Index finished the week with a
Weekly Market Commentary from Guide Rock Capital – February 18, 2013 Stocks delivered mixed performance last week. The Dow Jones Industrials and NASDAQ Indices moved lower while the Standard & Poor’s 500 and Russell 2000 Indices moved higher for the week. Stocks were helped by positive economic news in the United States, including modestly positive retail sales for January, improved consumer sentiment, and a decline in initial jobless claims. However, these positives were offset to some extent by concerns about weakness overseas. Germany reported that its economy contracted during the fourth quarter of 2012. It’s the country’s worst economic performance
The Markets Like a climber determined to reach a peak, stock markets continued to move higher last week. Signs of strength in U.S. and international trade data improved the outlook for economic growth at home and abroad. The U.S. trade deficit narrowed in December, a sign that the economy did better than expected during the fourth quarter of last year. In China, robust domestic demand pushed imports significantly higher while exports grew more than anticipated. In Europe, Germany’s 2012 surplus was its second highest in more than 60 years which is a sign of underlying strength in one of the
The Markets They say that optimism is catching. The performance of markets across the globe last week certainly supported the idea. During the second week of January, there was reason for optimism about the housing market as data showed that housing starts exceeded economists’ expectations and home construction appeared to be on the rebound. Last week, the National Association of Realtors disclosed that very low mortgage rates, falling unemployment, and one of the most affordable housing markets on record helped make 2011 the best year for home sales since 2007. Listen Mobile: In addition, earnings season – the period
The Markets Investors appeared to be as optimistic as a newly-engaged couple last week. Strong housing data, a positive labor report, temporary easing of debt ceiling pressures, and some stronger-than-expected earnings results helped the Standard & Poor’s 500 and the Dow Jones Industrials indices close at five-year highs. Listen Mobile: Commerce Department data showed housing starts climbed by 12.1 percent in December, on an annualized basis, exceeding economists’ expectations. Home construction is expected to continue to rebound, as long as mortgage rates remain low, and experts anticipate sales of new and existing homes will show improvement this week. This
The Markets Last week investors were turning to stocks. Was it the generally strong performance of stock market indices during 2012 or something else? Theories were abundant. Some speculated that the surge signaled: Renewed confidence in the American economy Relief that capital gains and dividend taxes remained constant for middle income Americans Faith in the ability of the American government to get things done Lack of attractive investment alternatives as the average yield on high-yield bonds fell below 6% for the first time ever Listen Mobile: There also was much discussion during the week about the contradictory messages coming from
What’s the latest happenings for Guide Rock and GFCU? We have a learning series March 30th is our 3 class of 10 Investment focused – entry level Tackle one topic each session Focus on an environment where questions are encouraged You are welcome to come, just rsvp to Andrew_hunt@guiderockcapital.com so I know how many bagels to buy! Listen Mobile: Brightscope How do you know if an advisor or if a 401(k) plan is what they say they are? You can look on the sec… but that is kind of cumbersome. You can just trust that they are telling the truth.
Listen to the Audio: So you got a year-end bonus… now what? End of the year boosts are nice on multiple fronts but the variable income, if not planned for, can slip right between your fingers if you are not careful! Listen Mobile: Here are a couple of great options for putting that money to good use: Spend the bonus on paper first for 1 time bonuses Pay down debt Get rid of credit card and charge card debt Make an extra payment on your mortgage Save Emergencies Major Purchases Wealth Building On-going variable income How much can you count
Where we spend our money is a reflection of our interests, values and priorities. Does your bank statement reflect what you value? If a stranger were to look at your last monthly statement what would they assume you love to do? So how do I get my bank statement to reflect what I value? Listen Mobile: · Conduct a self audit Where is your money going Is that where you want it to go? · Establish your true values Spend on what you love Cut out the things you don’t love You can’t love everything! · Then re-evaluate Use Mint.com
Most of us are involved with the securities markets on some level, for most of us it is simply within a 401(k). So how can we reconcile the extreme swings in the market with our own personal savings goals? Listen Mobile: Ask yourself a few questions: · How long is my time horizon · How long can I stomach a depressed portfolio balance · Can I afford to buy more So what’s going on? Why is the market so volatile? So as a 401(k) participant what can you do? · Revisit your investment allocation · Evaluate your objectives · Measure
Keeping up with Jones’… Are you sure that’s what you want? http://finance.yahoo.com/news/How-to-Avoid-Money-usnews-930915813.html?x=0 Listen Mobile: Why do we find the need to compare ourselves to our neighbors? · A big part of our culture is based on competition · We have an inherent need to further ourselves · If you are not careful it feeds the “rat race” and leads to a dissatisfied life We tend to overestimate other people’s financial positions · We exaggerate there income · We minimize their spending habits · We assume they are better than we are What is the secret to finding satisfaction within your
Insurance is often discussed as something that is complicated and difficult to understand… Let’s fix that! Remember what insurance is for: Risk Transfer! Listen Mobile: When you think about the things you could insure, several things might come to mind: Home, auto, life, and personal property. There are different types of risk associated with each of these. Some risk you might want to: · Retain (the risk is infrequent in occurrence and minimal in scope) · Avoid (the risk is frequent in occurrence and the significant in scope) – ex. lifestyle choices such as smoking that leads to premature death
Jim and Andrew are together again for next installment of the Financial Tech Podcast! Jim just had a child graduate from high school – for many people this means college is next. So how do you pay for it? We have blogged about this back in February so check that out. Listen Mobile: Andrew quizzes Jim who is going through it right now. What has has experience been? How was the big bad FAFSA – done online www.fafsa.ed.edu. Were you able to find aid for all of the cost of Government loans, Grants, Scholarships, Private loans and out of pocket
Andrew Hunt and Jim Collison are back for another episode of the Financial Tech Podcast. Andrew updates us on what is currently keeping him busy. We also spend some time discussing the benefits of using Mint.com as well as answer some questions submitted by you, the listener. To submit your questions, email podcast@theaverageguy.tv Listen Mobile: Comments submitted by a listener. “One of the things I see all the time is when a new management employee signs up for the stock program, they almost always start at the maximum payroll deduction we allow of 10%. Then a few months later, sometimes
Jim Collison and Andrew Hunt are together again for the April Fools edition of the Financial Tech Podcast. In a jam packed podcast, we cover some tips and tricks to winning the lottery without ever playing it! This could be the best 30 minutes of your day. Listen Mobile: “Once I win the Lottery…” I think we have all heard it said before: “Once I win the lottery, then I can do…” Wouldn’t that be great!? Winning the lottery – wow that would be cool. · The odds of winning the Powerball: 76,275,360 to 1. · The odds of getting
The financial tech podcast is back and this week Jim Collison and Andrew Hunt walk thru the basics of a spending plan. Oh, so you are talking about a budget? Nope, listen and hear how a spending plan is different and why you need to have one! So is it possible to create a Spending Plan that Works? Listen Mobile: When you sit down to budget spend every single dollar “on paper.” Includes – Spending, Saving and Sharing. A Zero balanced budget leaves no room for slush money, you are way less likely to fudge when every dollar is accounted