With this month’s increase in US Treasury interest rates the talk about inflation came up quite a bit in the financial news. But what causes inflation? What are the different types of inflation? How is inflation measured?   Different causes of inflation Cost Push Inflation Demand Pull Inflation Hyperinflation Structural Inflation  CPI Index Hedonic Adjustments to CPI Substitutions in CPI measurement Velocity of Money Productivity Measurements in Economy       Mentioned  in  this  Episode:   What is Velocity of Money and Impact on Inflation? https://brokenpiechart.libsyn.com/does-falling-money-velocity-point-to-lower-inflation   Inflation breakeven 10 year on St. Louis Fed site https://fred.stlouisfed.org/series/T10YIE   Inflation rate US https://fred.stlouisfed.org/series/FPCPITOTLZGUSA   Razor Wealth Management www.razorwealth.com   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547

Recently there have been many discussions on the valuation of the S&P 500 based on forward earnings multiples. But what role do bond yields have in that evaluation? Does the implied P/E ratio of the Baa bond yield or US 10 Year Treasury yield imply that stocks have more room to run? In any case, why not just buy but hedge as a strategy?   S&P 500 Index earnings yield Inverse of P/E ratio is the E/P earnings yield. Baa bond yield to calculate the implied P/E ratio Baa bond yields vs US 10 Year Treasury yields to compare to stock earnings yield How to calculate the earnings yield on stocks How to calculate the implied PE ratio from bond yields Forward PE ratio calculation Earnings estimates vs reality. How earnings estimates and earnings can change Bond yields vs Earnings Yields            Mentioned  in  this  Episode:   Book Buy and Hedge https://amzn.to/3bq8FYM   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547   Razor Wealth Management www.razorwealth.com   Baa Corporate Bond Yields https://fred.stlouisfed.org/series/BAA   JP Morgan Guide to the Markets https://am.jpmorgan.com/us/en/asset-management/protected/adv/insights/market-insights/guide-to-the-markets/   Podcast on Hedged Equity Strategies https://podcasts.apple.com/us/podcast/why-investors-need-a-protective-hedged-equity-strategy/id1432836154?i=1000418366567  

Derek Moore and Jay Pestrichelli team up once again to discuss how probabilities are used to understand where to sell short options to generate premium. Discussed in this episode are who is on the other side of the short volatility trade, how changes in implied volatility impact expected multiple standard deviations of expected movement, and how value at risk VAR impacts option premiums. Plus, they discuss how professional management adds value especially when option spreads widen and volatility increases.   Using probabilities to generate short high probability option positions Expected underlying index moves based on varied levels of implied volatility How large investment banks take the opposite side of the trade looking to reduce Value at Risk (VAR) Difference between being patient for opportunities versus and always in the market strategy What happens to option spreads when markets sell off? Value at Risk VAR impact on institutional hedging as dynamic volatility hedging increases Why sell options on large diverse indexes as opposed to individual stocks Netflix example of implied volatility right before earnings and expected moves Single stock risk using Netflix and Disney examples of over 10% moves down after announcements           Mentioned  in  this  Episode:   Jay Pestrichelli and Derek Moore talk myths of the 60/40 portfolio https://razorwealth.com/discussing-myths-around-the-classic-60-40-portfolio-part-i/   How are options priced and what is short volatility? https://razorwealth.com/how-are-options-priced-and-what-is-short-volatility-podcast/   What implied volatility on options tells us about stock earnings expectations? https://razorwealth.com/what-the-options-market-tells-us-about-expected-stock-moves-around-earnings/   Razor Wealth Management www.razorwealth.com   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547

Lately some high-profile companies have gone public using the IPO process. But how does it work and what are the differences between a traditional IPO listing and a Direct Listing IPO? Is Bill Gurley right when he says companies are leaving too much money on the table?   AirBnB IPO price pop IPO Process – Investment banks and selling syndicate Direct Listing IPO Greenshoe IPO provision Bill Gurley advocates for direct listings IPO price vs trading price Spotify and Slack as direct listing IPOS How do IPOs raise money for early investors and companies? Don’t use market orders on IPOs first day of trading     Mentioned  in  this  Episode:   Derek Moore’s book Broken Pie Chart https://amzn.to/3iKpRcx   Podcast on S-1 IPO filings and Unicorn IPOs https://brokenpiechart.libsyn.com/the-unicorn-ipos-are-coming-what-their-s-1-filings-divulge   Contact Derek www.razorwealth.com

Some investors wonder whether it would be better to have bad returns early or bad returns late? Surprisingly unless someone is withdrawing funds or bringing in money it does not matter. But when does it matter? It can be quite a significant different during the withdrawal stage. Learn about how the sequence of returns comes into play depending on what phase you are in.   Is it better to have bad investment returns early or late? Three main phases of an investor’s lifecycle Contribution Phase, Base Maximization Phase, Withdrawal Phase Dollar cost averaging Retirement and inflation Withdrawal rates in retirement   Mentioned  in  this  Episode:     Derek Moore’s book Broken Pie Chart https://amzn.to/3iKpRcx   Downside Hedging in Portfolios https://directory.libsyn.com/episode/index/show/brokenpiechart/id/7043961     Contact Derek www.razorwealth.com

Viktor Nebehaj guests on the episode to discuss how app-based brokerage Freetrade is looking to help millennials break down barriers and costs to make investing a habit. How technology has reduced friction in helping them get started. Why they and others like Robinhood have been able to acquire investors even though the legacy brokers offer the same or more. How do companies like his make money when commissions are zero?   Freetrade bringing ease of investing to Europe and the world How companies like Freetrade reach non investors traditional brokerage firms don’t How you reduce the friction and make it easier to get started.  How Freetrade derives revenue as a different model from traditional brokerages Different ways of marketing for to find non-traditional investors Opportunity for investors using an always with you investment app How technology is reducing barriers and costs in general Price deflation for consumers and trade offs for now free services like google gmail Fractional share revolution for investors who want to own stocks Owning individual stocks vs index ETFs to build knowledge   Mentioned  in  this  Episode:   Freetrade https://www.freetrade.io/   Derek Moore’s book Broken Pie Chart https://amzn.to/3iKpRcx   Contact Derek www.razorwealth.com

The Wall of Worry pertains to investors always worrying as markets climb higher. So what are some of the bull and bear cases on the markets, valuations, inflation, interest rates, stocks and bonds? Jay Pestrichelli is back on the program to discuss all these and hedging strategies as alternatives.    What is the Wall of Worry for investors? Are Bonds even worth it given such low interest rates? Potentially better portfolio hedges than bonds The bull and bear case for inflation Why higher money supply has not exactly meant higher inflation Money velocity CAPE Ratio, Shiller PE Are valuations high or does prior 20-year growth rate say returns can be good over next 10 years? Being long stocks with no bonds but being hedged? Is gold an effective hedge? What does the President and Senate control say about future stock market returns?     Mentioned  in  this  Episode:   Derek Moore’s book Broken Pie Chart https://amzn.to/3iKpRcx   Jay Pestrichelli’s book Buy and Hedge https://amzn.to/3lvSz2d   Video and articles mentioned on podcast at ZEGA Financial Site https://zegafinancial.com/blog   Podcast reviewing historical market performance by President and Parties https://directory.libsyn.com/episode/index/show/brokenpiechart/id/15806990   Contact Derek www.razorwealth.com

Clean your garage this weekend to find something to sell on EBAY to fund your investment account. Where to go to open an investment account. How to buy fractional shares of companies. Should I buy a fund or individual stocks when starting out? Schwab vs Robinhood?   Schwab and Fidelity stock slices for fractional share purchases How to buy your first stock Dollar cost averaging periodic investment each month Minimums for investments How to find money to put towards investments (clean out your garage) Individual stocks vs mutual funds or ETFs Reducing friction in the brokerage space for new investors Doesn’t Schwab do everything Robinhood does?     Mentioned  in  this  Episode:   Derek Moore’s book Broken Pie Chart https://amzn.to/3iKpRcx   Podcast reviewing historical market performance by President and Parties https://directory.libsyn.com/episode/index/show/brokenpiechart/id/15806990     Contact Derek www.razorwealth.com

Spencer Wright of Halbert Wealth Management joins the podcast to talk through the various Senate and Presidential races. What are the polls saying? What about the hidden Trump vote? Likely scenarios for the electoral college.    Review of key senate races and predictions The electoral college landscape in key states Why Michigan, Pennsylvania, and Arizona may decide the 2020 election   Reliability of polls The Trafalgar Polls vs. everyone else Someone is wrong in the polling world     Mentioned  in  this  Episode:   Derek Moore’s book Broken Pie Chart https://amzn.to/3iKpRcx   Podcast reviewing historical market performance by President and Parties https://directory.libsyn.com/episode/index/show/brokenpiechart/id/15806990   Volatility around elections and the 2000 Bush v Gore market environment https://directory.libsyn.com/episode/index/show/brokenpiechart/id/16298195   Contact Derek www.razorwealth.com

Given the varies stimulus plans in 2020 the national debt has risen to new records. Yet, this political season we’ve heard little to nothing about it. How to understand the national debt, debt to GDP, debt held by the public. Plus, what does the CBO (Congressional Budget Office) say the debt to rise to? Will the interest payments exceed the cost of social security and all of defense before long? • How to see what the US national debt held by the public is • Compare debt held by the public and total debt • How much debt does the Federal Reserve have on its balance sheet? • How much debt does the social security trust fund own? • What is the average interest rate on US treasuries on our national debt? • CBO Congressional Budget Office projections of growth of the US national debt • What is debt to GDP? • Revenues and Expenditures of the United States Government budget • US debt to revenues collected   Mentioned  in  this  Episode:   Broken Pie Chart Book by Derek Moore https://amzn.to/2MibTSk   Interest on national debt annualized https://fred.stlouisfed.org/series/A091RC1Q027SBEA   CBO Congressional Budget Office long term budget outlook https://www.cbo.gov/publication/56516#:~:text=0%205%20Projected-,Debt.,percent%20of%20GDP%20by%202050.   Debt held by public as percentage of GDP https://fred.stlouisfed.org/series/FYGFGDQ188S   Federal Reserve US Treasuries on balance sheet size https://fred.stlouisfed.org/series/TREAST   US Government revenues receipts https://fred.stlouisfed.org/series/FGRECPT

Whether owning a home or owning stocks creates strong opinions on both sides. But what would be a way to evaluate the differences? Historically how have returns of homes vs the S&P 500 Index compared? What homeowners miss about gains in the price of their home.   Historical annualized returns housing vs the stock market Is your house an asset or a liability? How to think about your total true cost of owning a home Your home as a hedge on inflation Rent vs Own Historical median home prices United States     Mentioned  in  this  Episode:   Derek Moore’s book Broken Pie Chart https://amzn.to/3iKpRcx   Historical Median Home Prices US https://fred.stlouisfed.org/series/MSPUS   Pay of mortgage or invest? https://brokenpiechart.libsyn.com/should-i-payoff-my-mortgage-early-or-invest   Contact Derek www.razorwealth.com

Rates jumped 30% in the US Treasury 5-year maturities this past week! Off course they only went from .25% to .33%, but why are some analysts on CNBC saying the next 10 years bonds may not return the same amount? What are the risks in bonds should interest rates rise? Do bonds offer a negative real return after inflation?   End of the Bull Market in Bonds? Bonds sensitivity to interest rate changes 1970s and 1980s inflation effect on bonds total returns The 60/40 portfolio in the future with low interest rates Correlations between US Treasury Bonds and US Stocks Historical interest rates 1694-2016 from Bank of England How negative could interest rates go? Coupon % on bonds as predictor of future annualized returns     Mentioned  in  this  Episode:   Derek Moore’s book Broken Pie Chart https://amzn.to/3iKpRcx   JP Morgan Guide to the Markets: https://am.jpmorgan.com/us/en/asset-management/gim/protected/adv/insights/guide-to-the-markets   CFA institute article on bond coupon rates as predictor for future returns https://blogs.cfainstitute.org/investor/2020/06/25/redefining-fixed-income/     Contact Derek www.razorwealth.com

Your starting to hear about the options market pricing in huge volatility for November. This week, there was talk about the December contract getting bid up in case of a contested election. What does that mean? And how did volatility react during the Bush vs. Gore Florida recount and supreme court decision in the 2000 Presidential Election?   VIX Futures VIX before and after Bush v Gore 2000 election November VIX futures vs October and December How much more volatility is the November futures pricing in? 2000 contested election and volatility How to look up monthly VIX futures contracts     Mentioned  in  this  Episode:   Derek Moore’s book Broken Pie Chart https://amzn.to/3iKpRcx   Podcast reviewing historical stock market returns by presidents and parties https://brokenpiechart.libsyn.com/surprising-historical-returns-by-presidents-senate-and-house-by-party-reviewing-the-13-keys-to-the-white-house-for-2020-predictions-for-the-2020-election-president-and-senate       Contact Derek www.razorwealth.com

As October is here naturally the stories start to appear around volatility and historical market returns. Many people assume October is the worst month for the stock market. Is October the most volatile? What is the average stock market returns by month? In this episode we will review and answer those questions. Plus, is it more important for the market to expect volatility in the “implied volatility” vs historical volatility?   Stock market returns in October Stock market volatility in October Historical stock market returns by month Stock market volatility by month Implied Volatility vs. Historical Volatility Importance of just being hedged     Mentioned  in  this  Episode:     Derek Moore’s book Broken Pie Chart https://amzn.to/3iKpRcx   MarketWatch article stock market volatility by month https://www.marketwatch.com/story/heres-how-stocks-typically-perform-in-october-and-why-you-might-want-to-buckle-up-2020-09-25   Why investors need a hedging strategy to protect portfolio downside https://brokenpiechart.libsyn.com/why-investors-need-a-protective-hedged-equity-strategy   Podcast reviewing historical stock market returns by presidents and parties https://brokenpiechart.libsyn.com/surprising-historical-returns-by-presidents-senate-and-house-by-party-reviewing-the-13-keys-to-the-white-house-for-2020-predictions-for-the-2020-election-president-and-senate   Podcast Episode Robin Hood Option Traders and option pricing and market maker delta hedging https://brokenpiechart.libsyn.com/robinhood-option-traders-vs-the-softbank-whale     Contact Derek www.razorwealth.com

Jay Pestrichelli co-hosts this episode with Derek where they discuss the continued talk around Robinhood Traders buying deep out of the money options to force market makers to buy stock. Plus, they discuss the reported $4 Billion spent buy Softbank to purchase option positions in some tech names. How do market makers hedge and the challenges with short term deep out of the money call option buying? Plus, why they both hate and love the idea of covered calls.   Robinhood Option Traders buying cheap deep out of the money call options Does call buying really force market makers to buy up a lot of shares? Examining option delta and time decay on short term Tesla call options How the market sometimes makes you pay a tuition as you acquire trading knowledge One of the best trading books Market Wizards by Jack Schwager Examining the reported Softbank option spread positions  Why covered calls sometimes are detrimental to a portfolio How often the overall market is up more than 15% in a year historically What does option delta mean? How does an options delta factor into how a market maker hedges?       Mentioned  in  this  Episode:     Derek Moore’s book Broken Pie Chart https://amzn.to/3iKpRcx   Jay Pestrichelli’s book Buy and Hedge https://amzn.to/2ZQcYGg   Derek Moore and Jay Pestrichelli White Paper on Concentrated Stock Hedging download here https://zegafinancial.com/products/concentrated-stock   Market Wizards by Jack Schwager https://amzn.to/2FUwGcI   Stock Market Wizards by Jack Schwager https://amzn.to/3cbnhK5   (New Book) Unknown Market Wizards by Jack Schwager https://amzn.to/3kuMuSB   Contact Derek www.razorwealth.com

Lately you have probably heard analysts going on CNBC saying given where interest rates are valuations are or are not overstretched. But how do interest rates, and low interest rates, affect stock valuations? How to they affect the cost of capital and the ROIC or return on invested capital? How do you discount down future earnings based on a discount rate?   Why interest rates matter to investors The present value of future earnings Interest rates and the WACC or weighted average cost of capital How low rates may make it easier to achieve ROIC greater than WACC Historical risk free rates in US Treasury Bonds and Bills   Mentioned  in  this  Episode:     US Treasury Bonds Historical Yield Curve Site https://www.treasury.gov/resource-center/data-chart-center/interest-rates/pages/TextView.aspx?data=yield   Warren Buffett Indicator explained podcast and article https://razorwealth.com/the-buffett-indicator-explained/   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

Many people know they should understand what their current net worth is. Many also know they should get a handle on their cash flow versus income. Yet it often seems too complicated. Lets uncomplicate personal finance a bit and see how to come up with your current assets and liabilities quickly and easily. Also, how to compile and work through your expenditures versus income.    The larger expenses matter more than your little Netflix monthly expense Liquid vs Illiquid assets and liabilities Is a house an asset or liability? Your car may not be an asset How to eBay stuff lying around to contribute or start an investment account Building your personal balance sheet What your monthly savings could be worth in 5 years Why budgets do not have to be complicated Now is a good time to see what memberships you no longer need       Mentioned  in  this  Episode:     Derek Moore’s book Broken Pie Chart https://amzn.to/31CDzYP   Contact Derek www.razorwealth.com

The US Presidential election season is in full swing. But does it matter for the Stock Market which party gets elected? Spencer Wright from Halbert Wealth joins Derek to review some surprising historical statistics around market returns and GDP growth. Including some surprising data on some Presidents you might have been better or worse. Plus, they go through Professor Alan Lichtman’s 13 Keys model to try and predict this year’s election.   Historical stock market returns by Presidents and Party in Power President, Senate, and House Historical GDP growth rate by Presidents How often does the President, House, and Senate combinations of Republican or Democrat happen Reviewing the Electoral College Map prospects for 2020 What is the “13 Keys to the White House” saying about the 2020 election Predictions for 2020 election Does the President’s party matter for stock market returns? Surprises within the historical data on returns and GDP growth Link to 97 years of historical returns by president     Mentioned  in  this  Episode:   Historical Stock Market and GDP Growth by President, Senate, and House Party https://razorwealth.com/do-presidents-and-the-congress-really-impact-stock-market-returns/   270 to Win Electoral Map https://www.270towin.com/   Book 13 Keys to the White House by Alan Lichtman https://amzn.to/2G77GPH   13 Keys to the White House 2020 Version https://amzn.to/3b6ST37   Derek Moore’s book Broken Pie Chart https://amzn.to/31CDzYP   Contact Derek www.razorwealth.com

If you listen to CNBC or Bloomberg you probably hear analysts talking about how the Forward PE Ratio is higher than historical averages on the stock market. But how are they figuring these numbers? How does the drop in earnings in the S&P 500 in 2020 due to Covid19 compare with earnings drops in 2008 and 2009? How long did it take them to recover?   What is a Forward PE Ratio? How is the Forward PE Ratio calculated? What is the Earnings Yield? How is Earnings Yield calculated? Drop in earnings 2008 vs 2020 and years to recover Are Forward PE Ratios a good predicter of future returns? Cape Ratio or Shiller PE   Mentioned  in  this  Episode:     Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

For years many have pointed to the end of the 60/40 Portfolio’s reign as a mass recommended asset allocation. But even in 2020, it still worked as bonds rallied and interest rates dropped to record low levels in the US. But with rates this low, do the risks now outweigh any potential benefits? How much more could bonds rally due to changes in interest rates given where they are? How negative could rates go?   What is 60/40 Stock Bond portfolio? Is it realistic to think bonds will have same run as 1981-2020 going forward? How negative can US Treasury yields go? Nominal Returns vs Real Returns after inflation Amount of negative yielding debt around the world More interest rate risk while yields and cash flows are lower Alternatives to the 60/40 Portfolio Bill Gross said rates would have to go to negative -17% to equal last 40 year run in bonds     Mentioned  in  this  Episode:     Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Podcast Myths around the 60/40 Portfolio https://brokenpiechart.libsyn.com/discussing-myths-around-the-classic-6040-portfolio-part-i     Contact Derek www.razorwealth.com

In the recent Covid financial crisis the Federal Reserve “printed” a bunch of money that increased the money supply. This should lead to massive inflation, right? Well, maybe not if we look at the relationship between the velocity of money (how often the same dollar is used) and the inflation rate. See how to figure out the velocity of money. What is the money supply and where to find it?     What is the Velocity of Money? What is the money supply? Difference between MZM, M1, and M2 money supply Relationship between money velocity and inflation Comparing increase in money supply now in 2020 to the 2008-09 period Money supply has increased over 20% since Feb in the US Money as a medium of exchange What happens when the velocity of money goes below 1 (like in Q2 2020)? Japan experience with deflation and low money velocity Where can you find the money supply, GDP, and money velocity charts?     Mentioned  in  this  Episode:   See the graph money velocity vs. inflation here https://razorwealth.com/money-velocity-relationship-to-inflation/   Current Nominal GDP US https://fred.stlouisfed.org/series/GDP   Current Velocity of Money Supply MZM https://fred.stlouisfed.org/series/MZMV   Current Money Supply MZM in US https://fred.stlouisfed.org/series/MZM     Free Chapter from my book Broken Pie Chart https://www.book2look.com/book/YcqUhbCrtN   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

Apple released earnings last week but also announced their board authorized a 4-1 stock split. Do stocks splits matter anymore? And would a 4-1 Apple stock split completely shake up the weighting of the Dow Jones Industrial Index?   Effect of Stock Splits Authorized stock split vs. implemented How a stock split affects a company’s market cap What changes around earnings history and price history post stock split? How are companies in the Dow Jones Index weighted? Price weighted indexes vs. market cap weighted indexes How Apple’s proposed stock split will upend the weighting in the Dow Jones Index     Mentioned  in  this  Episode:   Dow Jones Index companies current index weightings http://indexarb.com/indexComponentWtsDJ.html   Free Chapter from my book Broken Pie Chart https://www.book2look.com/book/YcqUhbCrtN   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

Last week we talked about Tesla’s potential to qualify for the S&P 500 Index. Post earnings, some new option traders were surprised by the stock and options prices post positive earnings release. Plus, a paper recently updated called “Day trading for a living?” compile data on day traders trading futures contracts.  The results were not too promising but what did the paper leave out?   Tesla options implied volatility in premiums post earnings release Robinhood traders on Reddit message boards – do they know what they are doing? “Day Trading for a Living?” a paper recently updated sheds light on futures traders What is the trading risk of ruin table? Position sizing and percent of capital put at risk for traders Mini Ibovespa futures contracts in Brazil High volatility of returns cited in day trading paper 97% of traders lose money day trading according to paper What is the risk of ruin?  Comparing risk of ruin across different payoff ratios   Mentioned  in  this  Episode:   “Day Trading for a Living? “ paper https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3423101   How are options priced podcast https://brokenpiechart.libsyn.com/how-are-options-priced-and-what-is-short-volatility   Book: A Trader's Money Management System: How to Ensure Profit and Avoid the Risk of Ruin by Bennett McDowell , Forward by Steve Nison https://amzn.to/32WqJ8W   Free Chapter from my book Broken Pie Chart https://www.book2look.com/book/YcqUhbCrtN   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

Tesla has had a meteoric rise lately. At their recent high their market cap would have put them in the top 10 weighted companies of the S&P 500 Index. But will Tesla have the required consecutive quarters of positive earnings? What are the criteria for a company to be included in the S&P 500 Index? When does S&P do their index rebalancing? Which companies have been added and deleted from the index?    Tesla current market cap What would Tesla’s weighting be if they made the S&P 500 Index Why do investors want their stocks included in indexes? Tesla next earnings announcement Consensus analyst earnings expectations Tesla Which companies were added and deleted from the S&P 500 Index? Can S&P committee stray from the guidelines to add or delete companies? How soon could Tesla be added to the S&P 500 Index S&P 500 Index scheduled rebalancing calendar Tesla and Zoom in the Nasdaq 100 Index Last stocks to be added and deleted from the S&P Index     Mentioned  in  this  Episode:   Fortune article Will Tesla Be Added to S&P 500? https://fortune.com/2020/07/14/tesla-s-and-p-500-index-stock-added/   Historical changes to S&P 500 Index companies additions and deletions https://en.wikipedia.org/wiki/List_of_S%26P_500_companies#Selected_changes_to_the_list_of_S&P_500_components   2020 Trading Calendar showing index rebalance dates and options expiration – trading holidays https://www.nasdaq.net/PublicPages/assets/MyMID/Trade_Calendar_2020.pdf   Nasdaq 100 Index companies by weighting https://www.slickcharts.com/nasdaq100   Criteria for inclusion in the S&P 500 Index https://www.thebalance.com/what-is-the-sandp-500-3305888#:~:text=As%20of%20February%202020%2C%20the,S%26P%20500%20was%20%2424.4%20trillion.&text=To%20qualify%20for%20the%20index,at%20least%20%241%20per%20share.   Free Chapter from my book Broken Pie Chart https://www.book2look.com/book/YcqUhbCrtN   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

Why doesn’t the stock market and economy both go up or down with one another at the same time? How is the market a forward-looking discounting mechanism? How do recessions and earnings expectations play into underlying price of the S&P 500 Index?   Atlanta Fed GDP Now  Comparing historical recessions by examining real GDP declines Great Depression vs. Financial Crisis vs 2020 Covid19 Recession Looking at consensus S&P 500 Index earnings forecasts 2020, 2021, and 2022 How the market does not go up or down equal to change in GDP Are there times that companies write down or take charges to earnings during recessions Uncertainty of S&P 500 Index earnings estimates Intrinsic value of future earnings  How interest rates effect valuations   Mentioned  in  this  Episode:   Atlanta Fed GDP Nowcast https://www.frbatlanta.org/cqer/research/gdpnow?panel=3   JP Morgan on the Markets Guide PDF https://am.jpmorgan.com/us/en/asset-management/gim/protected/adv/insights/guide-to-the-markets   Percent Change Gross Domestic Product Quarterly https://fred.stlouisfed.org/series/CPGDPAI   Free Chapter from my book Broken Pie Chart https://www.book2look.com/book/YcqUhbCrtN   Resource for S&P 500 Index consensus earnings estimates https://www.yardeni.com/pub/yriearningsforecast.pdf   Book Jeremy Seigel Stocks for the Long Run https://amzn.to/3el67tO   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

The Federal Reserve through their SMCCF or Secondary Market Corporate Credit Facility have been buying bond etfs and individual bonds. What have they been buying and how much? Where to find the list of ETFs and Bonds purchased by the Fed. Plus, TIPS or Treasury Inflation Protected Securities (Bonds). How do they work? How do they hedge against inflation? And How are TIPS bonds adjusted along with inflation.   Where to find list of ETFs and bonds the Federal Reserve is buying? What is the Federal Reserve SMCCF or Secondary Market Corporate Credit Facility? The Fed has purchased about $6.8 Billion worth of corporate bond etfs through June 18th The Federal Reserve also has been buying junk bond etfs How much and what individual bonds of corporations has the Fed purchased thus far? How much has the Fed said it will purchase of corporate bonds? What are TIPS bonds (Treasury Inflation Protected Securities)? What year did the US Treasury first offer TIPS bonds? When inflation via the CPI increases, how are TIPS bonds adjusted higher? How does deflation cause an adjustment lower in TIPS bonds? Do the coupon payments on TIPS bonds increase along with the principal amounts? What is breakeven inflation rate? What does the breakeven inflation rate tell us about cash flows of TIPS vs US Treasuries? Where to download excel file with Federal Reserve ETF and Bond holdings? How do TIPS bonds help investors potentially protect purchasing power and leverage inflation?     Mentioned  in  this  Episode:   Download Federal Reserve holdings and trades of ETFs and Bonds (SMCCF Transaction-specific disclosures June 28th, 2020) https://www.federalreserve.gov/monetarypolicy/smccf.htm   10 Year Breakeven Inflation Rate https://fred.stlouisfed.org/series/T10YIE   Derek article showing current Fed holdings of ETFs and bonds https://zegafinancial.com/blog/really-dont-fight-the-fed-federal-reserve-updated-holdings-of-bonds-and-etfs-6182020   Jeremy Siegel talks inflation with Barry Ritholtz https://podcasts.apple.com/us/podcast/jeremy-siegel-on-the-stock-market-under-covid-19-podcast/id730188152?i=1000478723627   Free Chapter from my book Broken Pie Chart https://www.book2look.com/book/YcqUhbCrtN   Book Jeremy Seigel Stocks for the Long Run https://amzn.to/3el67tO   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

Semi co-host Jay Pestrichelli joins the program to discuss all things VIX Index, what it measures, how stocks and markets each have their own volatility, and how implied volatility in the options market can determine probability of future moves.   What does the VIX Index represent? What is implied volatility in the options markets? What is the difference between implied volatility and historical or realized volatility in markets? How implied volatility helps calculate current market-based probabilities Jeremy Siegel now calling for some inflation Options pricing around stock earnings Reminiscing about CNBC after hours earnings options action appearances  Options speculation vs hedging     Mentioned  in  this  Episode:     Jay Pestrichelli’ s book “Buy and Hedge” https://amzn.to/2UEk12c   Realized vs Implied Volatility March 2020 https://zegafinancial.com/blog/strategy-update-4-2-20   Why investors need a hedged equity strategy podcast https://podcasts.apple.com/us/podcast/why-investors-need-a-protective-hedged-equity-strategy/id1432836154?i=1000418366567   Jeremy Siegel talks inflation with Barry Ritholtz https://podcasts.apple.com/us/podcast/jeremy-siegel-on-the-stock-market-under-covid-19-podcast/id730188152?i=1000478723627   Free Chapter from my book Broken Pie Chart https://www.book2look.com/book/YcqUhbCrtN   Book Jeremy Seigel Stocks for the Long Run https://amzn.to/3el67tO   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

Often younger or newer investors just starting the process of saving and investing ask what the best strategy to build wealth quickly? The power of compounding and starting early are key, but periodically investing each month and making it automatic can build wealth surprisingly well. In this episode we talk about key areas in what younger investors should be doing including 401k, systematic investing, and how dollar cost averaging lets you buy more lower over time. Plus, surprising statistics reviewing 120 years’ worth of decades and each of their compounded annual growth rates in the S&P 500 Index.    What was the compounded total return for the S&P 500 Index by decade back to 1900? What is dollar cost averaging? How does compounding accelerate your wealth building? What is dividend reinvestment? Between Schwab, Vanguard, TD Ameritrade, and Fidelity investors have plenty of tools and resources to start investing Accumulation and Distribution phases of investing plus the extra base maximization phase 10 years prior to retirement Why you should not try and get rich quick using options or futures and thus leverage What is an automatic investment plan moving money each month from bank accounts to brokerage accounts? Explaining Charles Schwab’s new stock slices to buy fractional shares of S&P 500 stocks     Mentioned  in  this  Episode:   Free Chapter from my book Broken Pie Chart https://www.book2look.com/book/YcqUhbCrtN   Charles Schwab fractional shares https://www.schwab.com/fractional-shares-stock-slices   Charles Schwab investing basics 101 FAQs https://www.schwab.com/how-to-invest/investing-basics#panel--text-29676   Book Jeremy Seigel Stocks for the Long Run https://amzn.to/3el67tO   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Stock compounded total returns by decade https://zegafinancial.com/blog/where-did-the-2010s-rank-for-total-return-on-sandp-500-index   Contact Derek www.razorwealth.com

Quasi co-host Jay Pestrichelli, CEO of ZEGA Financial, is back on to discuss whether the lower interest rates for longer crowd is on to something. Plus, while interest rates may cause home price inflation, the data points to other reasons car prices have continually risen. What is the real inflation rate? The Federal Reserve doing “whatever it takes” to keep rates down and buying bond funds. Plus, risk to bonds in a low rate period and what alternative strategies that use synthetic options to replicate a bond yield.   Jay Pestrichelli re-releases Amazon bestseller “Buy and Hedge Book” Lots of talk around the lower interest rates for longer idea Does the CPI represent real inflation? Chapwood alternative inflation index Comparing Japan and Europe’s negative rate experiment with the current US landscape Have risks in bonds ever been higher if interest rates rise? Low interest rates leading to housing inflation or just readjusting for lower rates? Lower rates do not impact car prices moving higher quite as much as extending loan durations Option spreads to create a synthetic bond replacement strategy How a stocks dividend is embedded in a put option Low bond yields tough for early retirees     Mentioned  in  this  Episode:   Jay Pestrichelli’ s book “Buy and Hedge” https://amzn.to/2UEk12c   Chapwood alternative inflation index https://chapwoodindex.com/   Are bonds riskier with low rates podcast https://podcasts.apple.com/us/podcast/are-bonds-riskier-with-low-interest-rates/id1432836154?i=1000465096378   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

Graniteshares CEO William Rhind joins Derek Moore on the podcast to discuss how technology disruption is causing some companies to adapt and thrive while others falter.  Can you focus on eliminating companies who are likely not positioned for the future while keeping those that are? How the Covid-19 crisis may have sped up many technology innovations while zombie companies face pressures. Value vs Growth debate. Was Dominos a tech company all along? Plus, European Football relegation and promotion and much more.   Growing vs faltering companies What traits do growing companies possess that those likely to be disrupted lack? Dominos vs Google – Both 2004 IPOs yet surprising which would have highest cumulative growth rate Dominos – a pizza shop or stealthy tech company? Value vs Growth debate  Did companies like Apple an Amazon live up to their value? Netflix vs Blockbuster Video – obvious now but in the moment? Will inflation and interest rates be lower for longer? Zombie Companies – how Covid-19 sped up some of their declines Walmart growth over the year’s vs Amazon XOUT ETF strategy overview Risks of rising interest rates to US Treasuries Negative Yielding TIPS auctioned off 60/40 portfolio with bonds vs gold     Mentioned  in  this  Episode:   Graniteshares https://www.graniteshares.com/   Forbes piece on William Rhind https://www.forbes.com/sites/baldwin/2018/08/30/this-guy-is-taking-on-blackrock-and-state-street-with-cut-rate-gold-and-commodity-etfs/#25ce004b750d   Contact Derek www.razorwealth.com   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr

How does the social security administration estimate what your monthly benefits? How do they adjust prior earnings for inflation? You can look up your earnings history and monthly benefit estimate at the social security site, but how do they come up with their numbers? How do they determine the cost of living adjustments? How much difference is there in taking social security at age 62 vs full retirement age? What are some considerations in that decision?   How social security uses your highest 35 inflation adjusted earnings years to figure benefit How does social security adjust your prior earnings for inflation? What is the breakeven point in taking benefits at 62 (early) vs 67 or 70? What are the bend points to determine how much your monthly benefit will be at full retirement age? The CPI-W index used to determine COLA or cost of living adjustments How to find out what your earnings history and benefit estimated monthly number is     Mentioned  in  this  Episode:   Bend points in social security used to calculate monthly estimated check https://www.ssa.gov/OACT/COLA/piaformula.html   CPI for Urban Wage Earners and Clerical Workers https://www.ssa.gov/OACT/STATS/cpiw.html   What is the amount up to you pay social security taxes on? https://www.ssa.gov/OACT/COLA/cbb.html   National Wage Index for Social Security (to inflation adjust your past earnings) https://www.ssa.gov/OACT/COLA/AWI.html   Create My Social Security account and see what your earnings history and benefit estimation is https://www.ssa.gov/myaccount/   Contact Derek www.razorwealth.com   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr

Jay Pestrichelli, ZEGA Financials’ CEO joins Derek Moore to walk through how this bear market compares to the 2008 Financial Crisis, 1997-1998 Asian Contagion, and 2000-2001 Dotcom crash. Are all these bear markets the same? Jay explains his rule of 3 showing the catalyst in each and how they are different. Plus, Derek describes how this last sharp decline resembles the trading action in August of 1998. What lessons can we take out of bear markets with regards to how sectors and regions tend to revert to the mean?   Discuss Charles Schwab commercial adding perspective to long run history in markets Speed of this bear market compared to previous ones Personal recollections of the last couple bear markets Surprising data from the 1997-1998 bear market in emerging markets vs US equities Trading halts and curbs The case again for using hedges in building portfolios Discussion of various catalysts behind previous bear markets Not all bear markets have a recession as well Reversion to the mean in historical sector returns   Mentioned  in  this  Episode:   Jay Pestrichelli previous podcast appearances https://zegafinancial.com/in-the-news/podcast   Callan Periodic table of investment returns by sectors https://www.callan.com/wp-content/uploads/2020/01/Classic-Periodic-Table.pdf   Older Time frames Callan Periodic Table of returns including emerging markets https://www.callan.com/wp-content/uploads/2017/02/Callan-PErTbl_Collection_2017-1.pdf   Contact Derek www.razorwealth.com   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr

Watching the financial news, we have been seeing some people make predictions of a deflationary period. At the same time others point to growing debt levels and Federal Reserve money printing as precursors to inflation. But what if deflation could be both good at the same time? Falling prices can happen by technological innovations or falling demand. One is better than the other. But for indebted countries, individuals, and companies’ deflation can increase the real value of debt. That is potentially bad!   What is deflation? What is inflation? Formula to inflation adjust prices using CPI Index Examples of how deflation raises the real value of debt How inflation can deflate the value of debt Massive inflation in textbooks but deflation in the price of TVs.  Demand falling off can hurt margins and equal bad deflation Adjusting the price of a 10-minute-long distance call from 1982 to 2020 dollars. Deflation doesn’t mean consumers will always put off purchases to later day     Mentioned  in  this  Episode:   Chart showing various inflation or deflation in consumer goods 1997-2017 https://s.marketwatch.com/public/resources/images/MW-GD574_CPICha_NS_20180212131601.png   CPI Index https://fred.stlouisfed.org/series/CPIAUCSL   What are Zombie Companies https://podcasts.apple.com/us/podcast/what-are-zombie-companies/id1432836154?i=1000473428395   Payoff mortgage early or invest periodically https://podcasts.apple.com/us/podcast/should-i-payoff-my-mortgage-early-or-invest/id1432836154?i=1000467130109   Inflation erodes purchasing power of US Dollar https://podcasts.apple.com/us/podcast/how-purchasing-power-dollar-is-eroding-plus-why-inflation/id1432836154?i=1000433222599   Contact Derek www.razorwealth.com   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr

2011 saw the release of Margin Call, a movie staring Kevin Spacey, Jeremy Irons, Demi Moore, Stanley Tucci and more. A very strong acting performance from the whole cast. But what was the problem they pointed to with their (Var) or Value at Risk Formula? What did the junior analysts figure out that the firm did not? Margin call was focused around 24 hours at an investment bank on the verge of a problem with their mortgage backed assets. Learn about another good finance movie plus an explanation of the (Var) Value at Risk theory and its good and bad.   What is VAR? What is Value at Risk formula? What type of data does VAR utilize? Speculation on what investment bank Margin Call Movie is based on Volatility based risk estimates 95% and 99% confidence levels and VAR Simplified explanation of probability and confidence levels Discussion on historical data and normal distribution to predict future returns Implied Volatility to show expected single and multiple standard deviation moves Implied volatility around earnings releases for momentum stocks like Netflix or Tesla     Mentioned  in  this  Episode:   Credit Default Swaps explained through the Big Short Movie https://podcasts.apple.com/us/podcast/the-big-short-movie-credit-default-swaps-explained/id1432836154?i=1000465683509   Contact Derek www.razorwealth.com   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr

In the 1990’s the term “Zombie Company” originated out of Japan during their lost decade. Today though we are hearing more and more about Zombie Companies in the U.S. Zombies are companies that only make barely enough net income to cover their annual interest costs on debt. Or, they may not even make enough to cover their annual debt and must borrow more money. What are Zombie Companies? Why are Zombie Companies bad? And how can you determine if a company is a Zombie Company or not?   What are Zombie Companies? What percentage of companies in U.S. are considered Zombies? Calculation used to identify Zombie Companies What is the Interest Coverage Ratio? Example of EBIT and Interest payments indicating Zombie Company Status Assets minus Liabilities on balance sheet indicate net income number of quarters to pay off debt Why Zombie companies are bad How Zombie companies cannot grow or reinvest capital How the Fed and low interest rates fueled Zombie Company creation Economic and interest rate risks to Zombie companies     Mentioned  in  this  Episode:   Podcast: Earnings Multiples, Valuations, Revenue, Net Profit Margins, Stock Buybacks and other Explanations http://brokenpiechart.libsyn.com/earnings-multiples-valuations-revenue-net-profit-margins-stock-buybacks-and-other-explanations   Podcast: How low interest rates benefit corporations http://brokenpiechart.libsyn.com/how-low-interest-rates-can-benefit-corporations   Paper titled Rise of Zombie companies: causes and consequences https://www.bis.org/publ/qtrpdf/r_qt1809g.pdf   Contact Derek www.razorwealth.com   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr

On April 20th, the price of a WTI (West Texas Intermediate) futures contract representing 1000 barrels of oil went to negative -$37 a barrel. How is it possible that you could theoretically be paid to buy oil? How do oil futures work and how storage of oil works with regard to the futures market? The quick answer is, no you cannot buy a single barrel of oil and store it in your garage. Plus, using a silly Ikea couch example to explain why people would pay you to take their oil.     How did the price of oil go negative? What is the difference between WTI and Brent Crude Oil? Storing oil in Cushing Oklahoma Size of 1 oil futures contract (1000 barrels) Problems with trying to store an oil barrel Difference between taking physical delivery of oil and speculation USO exchange traded product methodology Contango vs. Backwardation in futures market Rolling front month contracts forward to next month When does USO roll their front month contracts     Mentioned  in  this  Episode:   Bloomberg funny article “That Time I Tried to Buy an Actual Barrel of Crude Oil” https://www.bloomberg.com/news/articles/2015-11-03/that-time-i-tried-to-buy-some-crude-oil   WTI Oil Futures Prices by Month https://www.marketwatch.com/investing/future/crude%20oil%20-%20electronic   Contact Derek www.razorwealth.com   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr

Given the recent Coronavirus selloff in the markets, I thought it might be interesting to view investor actions through the prism of the 2008 crisis in this replay of an earlier podcast episode. Recently I found several different research pieces showing how at the very lows of the Great Recession in 2009 the percentage of funds in money market funds was at its highest. In 2009 the fund flows to bonds were greater than the previous 5 years combined. So why with equities so cheap did people stay in cash or bonds? Wouldn’t they want stocks when they were cheaper? This highlights how investors who panic an make rash decisions can do so at the very worst times.      Why do investors panic? How does fear guide investor decisions? Percentage of funds in money markets spiked at time of March of 2009 lows Why investors didn’t rebalance out of bonds and into stocks during the great recession 2009 fund flows were a record year for bonds How using Buffered or Hedged Equity Strategies can help reduce fear and irrational choices Benefits of staying invested while hedged Why now is a good time to be hedged     Mentioned  in  this  Episode:     Contact Derek www.razorwealth.com   Morningstar Bond Fund Flows 2009 Chart https://morningstardirect.morningstar.com/clientcomm/2009.pdf   Dalbar Quantitative Analysis on Investor Behavior Report https://www.qidllc.com/wp-content/uploads/2016/02/2016-Dalbar-QAIB-Report.pdf   Podcast talking about markets within 3% of all-time highs 36% of time https://podcasts.apple.com/us/podcast/fear-investing-surprising-data-points-to-markets-near/id1432836154?i=1000443860686   Why diversification fails https://podcasts.apple.com/us/podcast/ep012-does-diversification-alone-reduce-systematic/id1432836154?i=1000423615813   Buffered Equity Strategies https://podcasts.apple.com/us/podcast/adding-downside-buffers-to-investment-portfolios-using/id1432836154?i=1000419699076   Why investors need a hedged equity strategy https://podcasts.apple.com/us/podcast/why-investors-need-a-protective-hedged-equity-strategy/id1432836154?i=1000418366567   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr

Recently you’ve probably heard a lot of financial news media referring to the widening of spreads. Specifically, the High Yield Spread has widened above 1000 basis points. But what does it mean when the high yield spread increases? Get an overview on spreads widening or tightening. Plus, see how differently rated parts of the bond fixed income market see their spreads widen or narrow compared to US Treasury Bonds.      What is the High Yield Bond Spread?  What does it mean when bond spreads widen? Comparing High Yield Bond yields to yields on US Treasury Bonds Bond spreads as indicator on stock market Explaining difference in credit rating on bonds What rating is considered junk bond status What did high yield spreads do in 2008 crisis? What is the Option Adjusted Spread or OAS spread? Callable bond features Comparing yield spreads in investment grade bonds, CCC bonds, BBB bonds  Default rates as risk factors Probability of bond defaults   Mentioned in this Episode:   Current High Yield Option Adjusted Bond Spread https://fred.stlouisfed.org/series/BAMLH0A0HYM2   Podcast explaining bonds for investors and corporations http://brokenpiechart.libsyn.com/explaining-bonds-for-investors-and-corporations   Current CCC High Yield Bond Spread https://fred.stlouisfed.org/series/BAMLH0A3HYC   Current BBB Bond Yield Spread https://fred.stlouisfed.org/series/BAMLC0A4CBBB   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

It’s official, we reached a bear market in stocks. But when and how long will a pending recession last? How do you know an official recession has been declared?     What is a recession? Two consecutive quarters of negative GDP growth NBER vs GDP 2 quarters decline Calculate GDP C + I + G + (X – M) Annualizing GDP quarterly growth rate Cyclical, Structural, or Event Driven Bear Markets Supply Shocks vs Demand Shocks  Recoveries: U Shaped vs. V Shaped vs. L Shaped     Mentioned in this Episode:   Percent change real GDP growth rates https://fred.stlouisfed.org/series/CPGDPAI   Historical recessions from the NBER  https://www.nber.org/cycles.html   HBR Harvard Business Review economic shocks of coronavirus https://hbr.org/2020/03/understanding-the-economic-shock-of-coronavirus   Forbes on bear markets https://www.forbes.com/sites/greatspeculations/2020/03/17/keep-calm-bear-markets-are-temporary/#388b279230ba   Podcast deconstructing GDP and Inflation  https://www.stitcher.com/podcast/broken-pie-chart/e/56922114   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

An official bear market has occurred and now down over 20% from recent highs. The speed of the 2020 decline only took 22 days to happen. How does that compare with previous bear markets? How long does it take to recover on average? And when do they officially call recessions? Get a sense of the numbers behind previous downturns.     What is a Bear Market? Average Time from Peak to Trough in Bear Markets? Average Time from Trough to Peak recovery? What is the HY Yield spread and why it matters Does every bear market accompany a recession? How does the speed of 2020 decline compare to other periods? What are fundamental analysts trying to figure out on 2020 earnings? What multiples at different earnings estimates theoretically might mean? Intra year market lows versus final full year performance Length of previous recessions GDP historical growth rates     Mentioned in this Episode:   Percent change real GDP growth rates https://fred.stlouisfed.org/series/CPGDPAI   Historical recessions from the NBER https://www.nber.org/cycles.html     Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

People have been getting into arguments at grocery stores hoarding toilet paper, hand sanitizer, and bacterial soap among other things. News outlets have reported on Amazon and eBay pulling listings trying to “gouge” prices. But would price gouging create a market where items like this actual get rationed due to adjustments in demand? In this episode Derek goes over elasticity of prices and arguments for and against charging higher prices that would adjust supply and demand back to equilibrium.     What is price gouging? What is elasticity of price? Arguments that laws prohibiting price gouging are bad Why have price gouging laws created opportunities for third party sellers to inflate prices? What is retail arbitrage? Examples of raising prices to ensure supply comes into an area Supply vs Demand in marks Would rising prices cause people to only buy what they need? (self-rationing) Ideas for you to study the issue and make up your own mind How airlines adjust prices to spur demand Airlines execute “price discrimination” charging business travelers more Incentives to increase supply     Mentioned in this Episode:   Someone stuck with 20000 bottles of hand sanitizer after Amazon removed listings https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html#commentsContainer   Forbes article that laws against price gauging are bad economics https://www.forbes.com/sites/jeffreydorfman/2016/09/23/price-gouging-laws-are-good-politics-but-bad-economics/#425d325a64d3   Stossel video on price gouging https://www.youtube.com/watch?v=IqMFBdWkfo0&feature=youtu.be   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

The Federal Reserve just announced an emergency 50 basis point cut in the fed funds rate. What does cutting interest rates mean? What are the differences in the fed funds rate, discount rate, and IOER or interest on excess reserves? How does a fed rate adjustment effect my mortgage rate? Plus, how do they figure what the probabilities are that the Fed will move rates at future meetings?     What is the Fed Funds Rate? What is the Discount Rate? What is the IOER or interest on excess reserves? What is the prime rate? How does the Federal Reserve Fed funds rate affect mortgage rates on 30-year and 15-year terms? How Treasury Bond Yields are linked to interest rates on mortgages How interest rates affect the present value of future cash flows and earnings Other ways the Fed can impact money supply such as altering bank reserve requirements How to calculate the probability of a Fed interest rate change based on Fed Funds Futures When does the fed meet and schedule? Fed funds current target rate range     Mentioned in this Episode:   Federal Reserve Meeting Dates https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm   Federal Reserve Bank New York daily effective funds rate EFFR https://apps.newyorkfed.org/markets/autorates/fed%20funds   CME Fed Funds Rate Probability Tracking Tool https://www.cmegroup.com/trading/interest-rates/countdown-to-fomc.html   Fed Funds Futures monthly prices https://www.cmegroup.com/trading/interest-rates/stir/30-day-federal-fund.html   Should I Pay off my mortgage early? https://podcasts.apple.com/us/podcast/should-i-payoff-my-mortgage-early-or-invest/id1432836154?i=1000467130109     Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

Strong opinions exist on each side of this debate. Some believe plowing money to pay off the mortgage early is better. Others would rather step up their periodic investments and keep a low rate mortgage? In this episode Derek walks through how interest rates affect mortgage monthly payments. Key things to consider when evaluating which is better pay off early or invest. Also, what percentage of your monthly payment goes to principle and to interest depends on where you are in the loan and current rates.      What should you consider when evaluating whether to try and payoff your mortgage early? How does inflation make your payment lower over time? The present value of your mortgage payments equals your loan amount How paying off your mortgage rather than investing the funds might overweight real estate Considerations should you need to pull money out for emergencies Will you do better over time investing periodically or paying down mortgage early? How to calculate when you will pay more in principle than interest Key assumptions that you will increase 401k contributions or investments monthly  Understanding how interest rates change the calculus on the decision to payoff mortgage or invest Does the FIRE movement and Dave Ramsey get this question wrong? Return on paying off mortgage early vs. potential investing returns Liquid vs. illiquid investments   Mentioned in this Episode:   4% withdrawal rate and retirement considerations https://podcasts.apple.com/us/podcast/is-the-fire-movement-doable-and-the-4-withdrawal-rate/id1432836154?i=1000461766880   Inflation and purchasing power of the dollar https://podcasts.apple.com/us/podcast/how-purchasing-power-dollar-is-eroding-plus-why-inflation/id1432836154?i=1000433222599   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

Tesla stock it seems is always in the news. Between it’s CEO Elon Musk and the latest price action, it has been commented on ad nauseum. Lately, the terms short squeeze and short interest ratio have been mentioned as CNBC commentators talk about those who have been betting against the stock and taking some losses of late. So what is short selling and what do the terms short interest ratio, days to cover, and short squeeze really mean?     What is short selling? Borrowing shares to sell short What is the short interest ratio? What does Days to Cover ratio mean for share held short? What is a short squeeze? Tesla short interest ratio and days to cover Risks of short selling How do short sellers make or lose money? Where to find short interest ratio? Where to find days to cover ratio?       Mentioned in this Episode:   Tesla TSLA stock info at marketwatch https://www.marketwatch.com/investing/stock/tsla   Tesla TSLA days to cover short interest Nasdaq site https://www.nasdaq.com/market-activity/stocks/tsla/short-interest   Free Chapter Broken Pie Chart: https://www.book2look.com/book/YcqUhbCrtN   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

With the new decade came prediction after prediction trying to call what the next decade’s compounded growth rate will be. Many have said investors need to prepare for lower returns based on the numbers. But what if other prognosticators have a different view that is more bullish? We can’t predict future market returns, but we can talk through what they are looking at valuation and return wise to help you see both sides of it.     Why are CNBC and FOX Business guests saying to expect lower future market returns? What is the CAPE Ratio? What does the previous annualized 20-year return say about the next 10 years? What role do interest rates have in stock valuation? Just be long the market but be hedged or buffered What is the equity risk premium? What is the CAPM Capital Asset Pricing Model Where are we currently valuation wise according to the Forward PE Ratio?       Mentioned in this Episode:   Of Dollars and Sense “Investors Fallacy” comparing past 20 year returns with subsequent 10 year returns https://ofdollarsanddata.com/the-investors-fallacy/   JP Morgan Guide to the Markets https://am.jpmorgan.com/us/en/asset-management/gim/protected/adv/insights/guide-to-the-markets   Free Chapter Broken Pie Chart: https://www.book2look.com/book/YcqUhbCrtN   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

Recently I’ve been asked by several people about the FIRE movement. Financial Independence and Retire Early. This strategy relies on increasing percentage of salary in savings, reducing expenses, and assuming a compounded rate of return. Then when they have 25 times their desired retirement salary, they achieve the FI. So, does the math add up? Does the 4% rule still work? And what might they and aspiring retirees be missing? Sequence of returns may play a larger part plus the 10 years prior need to achieve the right compounded growth rates.     What is the FIRE movement? Using 25 times desired retirement income to determine assets needed What is the 4% withdrawal rate mean? Is 4% still doable given lower intertest rates Different stages including accumulation, base maximization, and distribution How does inflation affect the 4% withdrawal strategy? Sequence of returns comparison Is it better to lose early or late once in retirement? Mistakes aspiring FIRE movement might overlook How to calculate future values with compounded growth rate and deposits Are medical costs underestimated by FIRE followers?     Mentioned in this Episode:   Free Chapter Broken Pie Chart: https://www.book2look.com/book/YcqUhbCrtN   CNBC How social security benefit amounts are calculated  https://www.cnbc.com/video/2020/01/02/how-social-security-benefits-are-calculated-on-a-40000-salary.html   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com

Watching financial media, you hear terms like PE and Forward PE multiples, revenue, margins expanding or contracting, and share buybacks. So, what does it mean for a stocks price when multiples increase or decrease? What is the attribution for earnings increasing or decreasing? How do you calculate net profit margin? Earnings releases can be more complicated than they need to be. In this episode, Derek Moore explains scenarios in detail so you can gain a better understanding of all these terms and what it means for stock valuations and earnings growth.     How to calculate the market cap of a stock How to calculate the earnings per share (EPS) How to calculate the PE Price to Earnings Ratio Using net income and revenue to figure out the net profit margin Difference between multiple expansion and earnings growth for stock prices What are key determinants of a stock’s earnings (Revenue, Margins, Share Buybacks or Issuance) How share buybacks effect earnings per share Difference between market cap and net income versus per share earnings How earnings per share can growth with changes in share count, revenue, and net profit margins What is a PE ratio? What is net profit margin? What is a stock’s market cap?       Mentioned in this Episode:     Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Contact Derek www.razorwealth.com   J.P. Morgan’s Guide to the markets https://am.jpmorgan.com/us/en/asset-management/gim/protected/adv/insights/guide-to-the-markets

Recently a JP Morgan analyst highlighted how wrong stock market predictions would have caused investors to lag the markets by up to 60%. What were some of the since disproven predictions? Why do people read and follow some of this stuff? Although analysts also have predictions that prove true, if you have a hedged portfolio strategy why should you even care what people are saying? Discussed in the episode are some calls by Elaine Garzarelli , Nouriel Roubini, Jeff Gundlach, Peter Schiff, Carl Icahn, Paul Krugman, Marc Faber and more.     Summarizing recent JP Morgan analyst report on Armageddonist Comments costing investor money Why does the financial news media continuously offer up various expert predictions on market direction? Prediction that Blockbuster would take market share from Netflix Credit Default Swaps are low risk for AIG 1987 crash predicted by Elaine Garzarelli In fairness, predictions were a point in time by their authors Doomsday stock market predictions probably get mouse clicks Historical lookback at actual annual return for S&P 500 despite 1987 crash Reviewing various historical long-term cycles in the Dow Jones index 1982 to 1999 magical run for stocks Instead of following every prediction just be long the market but be hedged Hedgers opportunity to buy at market bottoms        Mentioned  in  this  Episode:     Contact Derek www.razorwealth.com   Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr   Elaine Garzarelli calls 1987 crash https://www.garzarelli.com/downloads/WSJ-Crash.pdf   Marketwatch article showing doomsday predictions that were wrong and would have cost investors https://www.marketwatch.com/story/heres-the-price-to-be-paid-for-listening-to-armageddonist-predictions-2019-11-13   JP Morgan Guide to the Markets https://am.jpmorgan.com/us/en/asset-management/gim/protected/adv/insights/guide-to-the-markets   Hilariously wrong predictions from Netflix to Credit Default Sways https://www.dividend.com/how-to-invest/10-hilariously-wrong-bullbear-calls/