Money For the Rest of Us

#220 How to evaluate cash savings options at banks, credit unions and brokerage firms. Why are yields on cash savings so much higher than a few years ago. How to tell if your bank or credit union is in experiencing financial difficulties. Thank you to Blinkist for sponsoring this week's episode.For show notes and more information on this episode click here.[0:10] All about banks, credit unions, and the pros and cons of cash savings[4:47] How can banks and credit unions become financially unstable?[14:25] The Federal Reserve is setting a new short term interest rate target[15:55] What tools does the Federal Reserve have to keep short-term interest rates in line with its target?[19:20] There are other options for investing your cash savings[25:49] Is it really worth pursuing multiple investing options for your cash savings?See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#219 How fewer publicly traded companies, less stock shares outstanding and more intangible assets have led to higher earnings growth for U.S. listed companies and ultimately stronger stock market performance. Thanks to Circle Invest for sponsoring today's episode.For show notes and more information on this episode click here.[0:08] Observations on the current state of the US stock market[4:01] What if there’s something going on within the US market that suggests continued outperformance is coming?[7:23] Why the number of publicly listed companies, particularly small companies, is shrinking[14:52] The impact of intangible assets within small companies[18:21] Increased amounts of buybacks are leading to a shrinking stock market[20:38] Multiple factors are contributing to higher shareholder profits, yet lower wages for employees[26:05] What are the investment implications of low wages due to monsopony?See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#218 What are the headwinds facing China that could slow economic growth, but still could lead to China growing faster than the U.S. Also, what is going on with Turkey and are other emerging market countries vulnerable to the same plight? Thanks to Circle Invest for sponsoring today's episode.For show notes and more information on this episode click here.[1:07] Is China or the US more vulnerable to economic downturn?[4:55] Why have emerging markets done so poorly recently?[8:51] The concept of balance of payment is reviewed and examined in a case study of Turkey[16:20] Emerging markets are doing better than in previous years[20:35] The 3 reasons why China is more vulnerable than the US[22:25] What China has to do in order for their economy to continue growing quicklySee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#217 Which rebalancing strategy is best or should we even bother rebalancing? Should we just exit stocks completely, especially given how overvalued the U.S. stock market it is? And why do companies split their stocks? In this episode, we answer these and other listener questions. For show notes and more information on this episode click here.[0:30] Why this episode of Money For the Rest of Us is a bit different than previous ones[2:15] Is rebalancing your portfolio really necessary?[12:43] Can you use valuations for timing the market?[23:17] Is it possible to use exiting stocks as a way to increase revenue?[33:39] The idea behind doing investing on a sector neutral basis rather than a capitalization weighted basis.[36:20] What factors do companies consider when doing stock splits?See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#216 Why peer-to-peer lending on platforms like Lending Club and Upstart is no place for individuals to invest given higher defaults, lower returns and competition from institutional investors. Thanks to Circle Invest for sponsoring today's episode.For show notes and more information on this episode click here.Episode Chronology[1:04] There are a lot of issues going on with the global P2P lending market[5:34] How the P2P lending environment has changed over the past few years[11:24] Why advertised returns are higher than actual returns[15:35] How are these P2P lending platforms surviving?[21:26] How these 3 credit enhancements impact the P2P lending market[25:51] Individual investors don’t do as well in P2P lending environments - here’s why[30:00] Here’s the bottom line on why you should avoid P2P lending investmentsSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#215 Will stagflation cause the dollar to crash and be a bottomless pit when the next recession hits? That is what Peter Schiff is predicting. We look at where he is right and where he seems to be off the mark when it comes to the U.S. economy and a dollar collapse. Thanks to Haven Life and Wunder Capital for sponsoring today's episode.For show notes and more information on this episode click here.Episode Chronology[0:33] Is a dollar collapse imminent? [3:07] Economic expansions don’t die of old age[5:22] How tariffs and imports impact the US economy[10:44] If the dollar has to crash, it does so relative to other currencies[14:01] The relationship between the Federal Reserve and interest rates[19:11] Bank deposits, savings, loans, and interest rates all contribute to the US economy today[24:29] The relationship between money supply and inflation is essential to understand[33:08] Why David doesn’t believe a dollar crash and economic ruin are on the horizonSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#214 How the foreign exchange market works and how George Soros made more than a $1 billion shorting the British pound in 1992. Why currency trading today is more like gambling than when Soros made his billions. Why trading closed end funds can be more profitable than currency trading. Thanks to Wunder Capital and Blooom for sponsoring todays' episode. Use code DAVID on Blooom for your first month free.For show notes and more information on this episode click here.[0:35] David introduces the listener question for this episode, “Should You Trade Foreign Currencies?”[2:24] Why David would never invest in Forex strategies [6:56] How trading works on platforms such as Darwinex[8:43] Investing through trading currencies is like gambling[11:40] The George Soros story and how governments can balance the economy through interest rate control[24:20] Betting against the exchange rate of foreign currencies isn’t reliable[27:50] The benefits of investing in closed-end fund marketsSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#213 How health insurance isn't really protection against a catastrophic illness but prepayment of routine healthcare consumption, leading to overconsumption of healthcare and over treatment by medical professionals that drive up costs. What would it take to reform the health insurance marketplace so it is more fair and functions more like life insurance or homeowners insurance. Show notes and links can be found here. Thanks to Circle Invest for sponsoring today's episode.For show notes and more information on this episode click here.[0:57] Why pay $20 for a doctor’s visit, when health insurance is $36,000 a year?[4:03] Digging into the fundamental flaw in health insurance[9:10] Why does health insurance pay for “routine maintenance” on our health?[13:20] The pros and cons of employer-based health insurance policies[19:35] Health insurance is a mess because it doesn’t primarily insure against a catastrophic health event[21:42] The current setup for health insurance limits healthcare choices and encourages overconsumption of services[24:50] Health insurance is an artificial market[27:00] The over-consumption drives the cost of health insurance[29:02] Here’s why you can’t figure out what medical procedures actually costSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#212 How a complex global trade system has reduced poverty, raised incomes, increased productivity, and lowered prices while a trade war will reverse those trends. You can find show notes and links here. Thanks to Blooom and Wunder Capital for sponsoring this episode.Episode SummaryPresident Trump recently unveiled new tariffs on trade with China, and many fear this decision could lead to a trade war. This 25% tariff on $34 billion worth of Chinese imports into the U.S. and an additional $216 billion of announced tariffs will change the trade landscape in the coming months. On this episode of Money For the Rest of Us, David explains why trade wars tend to increase the prices of goods and the poverty rate. He discusses the consequences attached to global trade tariff decisions and outlines why healthy global trade is successful in reducing poverty. To hear informed information about the complexities of tariffs and global trade, be sure to give this episode your full attention.Why does the US run such a large trade deficit with China? In 2017, China exported over $500 billion worth of goods to the US. In that same year, the US exported $130 billion to China, resulting in a trade deficit of $375 billion. Why is this figure so high? There are three main reasons why the US has such a large trade deficit with China:China has a lower standard of living and pays workers lower wagesTechnology and the internet has reduced the risk to US businesses when importing from ChinaAt times, the Chinese yuan is too weak relative to the US dollarHealthy global trade reduces poverty - here’s whyCountless economists and writers have examined why healthy global trade reduces poverty. In 1981, the percentage of the world’s population living in extreme poverty was holding at 42%. Since then, the number of people living at that level of income has fallen by 1 billion. And in 2013, the most accurate data puts the world’s population living in extreme poverty was 10%. This figure has fallen so dramatically because of trade, specifically because China has significantly ramped up its manufacturing capabilities and exports, increasing household income through higher wages.From 1820 to 1920, in Great Britain the percentage of the population in extreme poverty fell from 40% down to 10% from the 1820s to 1920s. From 1870 to 1970, Japan did the same - taking their poverty population from 80% down to nearly 0%. China is on course to reduce extreme poverty even faster. To hear more about the relationship between poverty and trade, don’t miss this episode of Money For the Rest of Us.Global tariffs can lead to unintended consequencesTrends show that both the US and China are wealthier because of trade. However, trade wars have the power to reverse those trends and increase the level of global poverty once more. There are 2 types of unintended consequences: those that are positive and natural, and those that are negative and disruptive. Positive consequences include developing powerful and beneficial global relationships between countries producing various goods. However negative consequences could destroy a complicated global supply network that has been slowly built, year by year, into the powerhouse that it is today.Companies and industries are adaptable when tariffs are imposed. However, there’s only so much flexibility a company can handle before having to make sacrifices. Moving production facilities, cutting wages, or increasing prices when faced with steep tariffs. These consequences should never be overlooked when considering new tariff plans and laws.Trade wars aren’t the solution to unfair trade practices - but THIS is Trade wars caused by broad based tariffs are not the solution to unfair trade practices. In order to remain globally competitive and productive, US companies need trade deals that recognize the strength that comes from global operations and supply chains. Trade wars are a complex subject, and this need-to-know info is best understood by listening to this podcast episode. Check it out! Episode Chronology[0:42] The Trump administration's recent tariffs could lead to a trade war, increasing prices and poverty[2:24] Why does the US run such a huge trade deficit with China?[6:47] Historical data on tariff rates across the decades[8:38] Trade reduces poverty - here’s why![11:12] Measuring the wealth of a nation is important in the trade wars discussion[15:51] Reducing trade deficits cannot be solved through trade wars[19:08] There are 2 types of unintended consequences[23:30] Companies will adapt to trade tariffs, no matter the circumstances [28:24] Broad-brush trade barriers don’t work![33:40] So what is the solution to unfair trade practice?See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

#211 Why housing bubbles can last such a long time and what to do if you really want or need to buy a house in a frothy market. More information, including show notes, can be found here.Episode SummaryNavigating a housing bubble is often on everyone’s minds. With changing family needs, balancing multiple incomes, and varying environmental factors, finding a great house is a struggle most families face. On this episode of Money For the Rest of Us, David responds to a listener’s question of how to navigate a housing bubble. He explains the idea of “economic gravity,” outlines factors that are influencing the global housing market, and offers solutions to the housing bubble crisis.A housing bubble cannot break free from economic gravityDavid discusses the idea of “economic gravity” on this episode. Simply, over the long-term housing prices can't be disconnected from the ability of households to service a level of mortgage debt - to successfully make those payments every month. Nobel prize-winning economist Milton Friedman explains, “When (corporate) earnings are exceptionally high, they don’t just keep booming - they can’t break loose from economic gravity.” The same concept applies to home prices. When prices are high, they can boom for an exceptionally long time. But they cannot break free from this underlying economic concept.Factors that are driving up the global housing marketHousing bubbles are being created across the globe because of a few major factors. Low interest rates, offshore demand for domestic property, influxes in immigration, and interest only loans are all contributing factors to the housing bubble discussed in this episode of Money for the Rest of Us. David draws many parallels between the US housing market and those in Australia and Canada.Housing markets don’t always align with growing family needsJoe, the Money For the Rest of Us listener that submitted the question for this episode, is seeking different housing for his family as it grows and shifts. But he’s finding that unfortunately, housing markets don’t always align with growing family needs. Better school districts, larger homes, easier commutes, etc. are all factors that millions of Americans are seeking for their prospective homes. David encourages listeners to consider what type of housing their family can reasonably afford and still maintain the type of lifestyle they desire. You never want to purchase a house that you cannot comfortably afford. To hear more about the housing market in the US today, data on current housing prices across the country, and even more great information, don’t miss this episode.3 ways you can respond to rising house pricesAfter considering all the data related to the housing bubble and overall market in your area, you essentially have 3 options:You can stay putYou can move to a cheaper localeYou can buy, while being patient and prudentIn order to make the most of the housing opportunities for your family, David encourages every listener to consider their personal affordability and examine their ability to handle unforeseen financial stress (loss of a job, medical emergencies, etc.) Navigating a housing bubble is challenging, but this episode of Money For the Rest of Us can help you make sense of all the angles. Be sure to listen.Episode Chronology[1:05] A listener poses a question about how to handle a housing bubble in his area[6:47] Current data on the American and international housing bubbles[10:02] Is the current housing bubble starting to break?[10:57] What factors are driving the home prices in Australia, for example?[12:41] Comparing the Canadian housing bubble to Australia’s[15:45] So what should you do during a housing bubble?[18:09] Housing markets don’t always align with growing family needs[21:36] How to combat the factors driving up housing pricesSee Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.