In Banking-Finance

Republican presidential candidate Rand Paul is cautioning that a stock market crash may be advancing on the grounds that the Federal Reserve has kept interest rates from fluctuating, “Individuals say, ‘Gracious, we can simply do that eternity,'” the Kentucky representative said, “I don’t think so. I think there’ll be a moment of retribution.” Paul’s family has a long history of Fed feedback. His dad, previous congressman and three-time presidential applicant Ron Paul, composed a book entitled, “End the Fed.” The more youthful Paul, who has not gone so far (his battle mantra is “review the Fed”), made his remarks while crusading in Sioux City.

He likewise opined that the lodging emergency of the late 2000s was more like the Fed. The national bank’s approach of keeping premium rates “near to zero” may have been the greater element, Paul proposed. Presently, the representative foresees another emergency in the offing. “The blast isn’t in lodging this time, yet it may well be a blast in the share trading system,” Radio Iowa cited Paul presently. “What happens when individuals go to the acknowledgment that we’ve possibly over-swelled stocks once more?”

The largest budgetary emergency since the Great Depression hit America in 2008, and the U.S. government and the Federal Reserve did whatever is necessary to spare the economy from ruin. The administration placed cash into private “too huge to come up short” companies and acquired trillions of dollars to help stimulate the economy.

The Federal Reserve did its share by making four noteworthy moves to “spare the economy no matter what.” While the Federal Reserve has pulled back on its cash printing, the harm has been done. By keeping the cash “conduits” open for so long, five years now, we accept the Fed has unintentionally made a securities exchange bubble (Tamny, “The Fed Is Not…).

The Dow Jones Industrial Average moved from 6,440 in March of 2009 to more than 17,000, which is inherently a bubble at this point. However, take the rising securities exchange out  and all the sudden, the economy does not look that extraordinary.

Actually, current monetary insights are becoming even more unfortunate. Corporate profit development has fallen back to the most minimal pace following 2009.

Keeping in mind the administration gives us a controlled “authority”, the unemployment rate seems like it is enhancing while the genuine unemployment rate, when you incorporate individuals who have surrendered searching for work and who have low maintenance occupations however need full-time employments, has been sitting at more than 10% as of July 2015 (Amadeo, “What Is the Real Unemployment Rate?”).

Individuals subjects to government gifts now dwarf individuals with private-area employments in eleven states. The quantity of Americans on welfare is currently higher than the quantity of Americans who have full-time employment (Amadeo, “What Is the Real Unemployment Rate?”).

Social Security covers 43.5 million Americans who now live underneath the destitution line. Yes, destitution in the U.S. has come to a 50-year high (United States Census Bureau). When we observe whatever is left of the world, even major economies have been crippled. Japan is back in retreat. China’s economy is developing at its slowest pace in years. Numerous European Union nations such as Greece are in crisis mode, defaulting and failing as we speak. A stock market crash is encroaching.

Because of these warning signs, the Americans are advised to invest carefully or maybe not do anything at all.  Sometimes not making any moves is the right move to make.  Here are my recommendation based on what is happening now:

  1. Now is not the time to invest your life savings in the stock market. If you are going to invest, then be conservative and do your research.  If you insist on buying stocks, the real buy opportunity is not now but after the correction.    Buy real estate!  Great properties to consider purchasing are two to four unit residential buildings.  The financing terms are better when you are buying less than four units, and it is easy to have cash flow.  Cash flow is king.  If you have cash flow, you can weather most financial storms that may come.   If you want to buy a single family home, remember that your down payment and purchase price should result in a monthly payment that is 80 to no more than 100% of the currents rents for the same property in the neighborhood.  You need an exit strategy when buying any property.  Structure your exit strategy upfront. Change can happen over night. Your American Dream could become your rental if you lose your job or find yourself in a predicament that makes paying the mortgage difficult.  Get out and rent it while continuing to build wealth until you get back on your feet.  You can always move back in.
  2. Check your employment status at work.  Always leave on a high note.  Do not get fired quit and find a better job if things are not working out.  Always keep looking for a better opportunity to make more more money and/or to move up in your profession.  You owe nobody anything but your hard work for as long as they are treating you right and paying you right.  Take care of yourself and your family.  Do not be a victim of all corporations who see you at a tool production because that is what you are.  Be ready to move and  always have other opportunities lined up.  Be in control.  Do not be a victim.
  3. Check the company you are working for.  If your company is publically traded, then  read their latest 10k and all of their press releases.  Look at their profitability.  Do not wait for them to tell you layoffs are coming.  Find another job, a part-time job, or start a home based business.  Do something.  Do not just sit there and be a victim.  Companies go out of business every day, and you will be the last person to find out.  Luckily there are signs in the 10k or press releases.  CEO’s  leaving the company is a big red flag.  Small companies are at risk as well.  Go with your gut and look for signs.  You can tell when things are not moving in the right direction.  Trust your instincts.
  4. Start saving more of your paycheck if you can afford it.  If you are saving 10% at time, then start to save 50%.  You may be living on your savings if this all comes crashing down again.  If you can get loans against your 401k, then do it now. You will not be able to access your 401k at all if you are terminated, or you may with be able to with significant penalties.  Check your 401k plan and understand your options as you make your plan. The extra money will keep you afloat when the correction in the market causes a spike in unemployment.

This is the short list.  Want to know more? Go to www.thepowerisnow.com and join the buyer’s and seller’s club for free to get  free support, consultation and information from me and my team. You have the power to change your life now because The Power Is Now.

 

Eric Lawrence Frazier MBA

President & CEO

 

References:

Amadeo, K. (2015). What Is the Real Unemployment Rate? Formula, Examples. Retrieved July 20, 2015.

Tamny, J. The Fed Is Not Printing Money, It’s Doing Something Much Worse. Retrieved July 21, 2015.

United States Census Bureau. (2013). Poverty Line. Retrieved July 21, 2015.

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