A terrible idea.

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It sounds so enticing on paper. If we have a federal balanced budget, and only spend exactly what we take in, all should be wonderful, economically speaking. Not so simple.

Look at two things taught in elementary macroeconomics classes that are being ignored. (1) The fallacy of composition, and (2) an annually balanced federal budget is not economically neutral and actually worsens the economic situation.

The fallacy of composition is the error of concluding that what is true for an individual is true for the group as a whole. For example, saving is good for the nation. As the nation…


These indicators are all positive.

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Enough gloom and doom! Sure P/E ratios are out of whack, and the bears are growling on Wall Street. I’m not growling.

There are some who have missed this great bull market for all kinds of reasons and preach doom ahead. They point to over-exuberance and other signs that it’s coming to an end. But the indicators below have been reliable in the past and right now they point to a rising stock market in no uncertain terms.

A yield curve inversion means that shorter-term bonds are providing a higher return than long-term bonds. …


An unusual combination of factors earned it the nickname, “the start-up nation.”

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Macroeconomics teaches that there are four factors of production or economic resources. They are land, labor, capital and entrepreneurship.

Land is defined as any natural resource.

Labor is the effort of people.

Capital refers to the machinery and equipment used in production..

The entrepreneur is the leader and risk-taker who puts the three other resources together to produce a product or service. The entrepreneur is the catalyst who energizes inert resources and combines them to produce something of value. …


Another tool for stock market traders.

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There are all sorts of methods used to determine when to buy or sell a particular stock. Stated another way — when is a stock overbought or oversold. These methods fall into two main categories: value investing and technical analysis. The former, also called fundamental analysis, is based on the work of Graham and Dodd and practiced by Warren Buffett, Peter Lynch and others. It involves an in depth analysis of a company’s financials — balance sheets, income statements, cash flows and others. Using this as a base, proponents prepare a forecast of the future success or failure of the…


After a long resistance, I joined the crowd.

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I have absolutely no faith in cryptocurrencies. Looking at bitcoin (BTC) for example, here are some reasons why I think it’s a bad investment or speculation.

· Unlike gold it has no basic value. (What backs it is discussed below.)

· Its high price drives savers and investors away.

· It has too much volatility to be a store of value, a hedge against inflation or a possible candidate for being included in an investment portfolio.

· It’s used by criminals so it could be shut down by governments at any moment.

· Hacking is a threat for BTC holders.


Why do we penalize successful entrepreneurs with income taxes?

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Back in the 1600s, Jean-Baptiste Colbert is said to have offered this comment on the perfect tax system: perfection of taxation consists in so plucking the goose as to procure the greatest amount of feathers with the least possible amount of squawking. Ever since that observation, governments have struggled with how and what to tax.

Why taxes? Throughout history, the main need for taxes was to pay for wars and the extravagances of rulers.

Not surprisingly in the United States, after the Revolutionary War, our founders wrote into the Constitution that Congress had the power to levy taxes. Initially states…


You can get into the game with very little trouble.

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Bitcoin, of course, is the star of the show and the most popular of the many virtual currencies. It increased in value more than 300% in 2020 and has more than doubled in price this year. Now you can buy bitcoin or any of the other cryptocurrencies via your traditional brokerage account. The drawbacks are: (1) the costs are steep, and (2) the tax man wants a piece of the action (discussed later).

An exchange is very simply a place for buyers and sellers to meet. Just like the New York Stock Exchange (NYSE) deals with stocks, there are many…


What can we learn from a successful billionaire hedge fund manager?

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As the word “fund” indicates, this is a pool of money. A hedge fund typically uses high-risk, complicated trading schemes and risk management techniques to achieve above-average performance. Some of these techniques and financial instruments are:

Short selling — Anticipating a decline in the price of a stock, the short seller sells now with the hope of buying later at a lower price. The “buy low sell high” method for profit is done in the reverse order.

Leverage — A leveraged trade uses borrowed money to execute a trade. The hope is to make a profit on the borrowed money…


What are the pros and cons of this popular approach?

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Buy and hold is one way to use the stock market to try to protect yourself against inflation and build a nest egg for your future. Many famous and successful investors claim this is the way to go. They include the current king, Warren Buffet, who learned from the godfather, Benjamin Graham. Graham wrote two well-known books: Security Analysis (1934) and The Intelligent Investor (1949). He stressed value investing — buying low-priced bargains. Many of today’s professionals still study and practice his teachings.

You have two choices when it comes to investing in the stock market. The first is to…


Includes a look at three popular momentum indicators.

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Technically the term momentum shouldn’t be used with stocks. A strict definition of momentum requires a body with weight and motion, and stocks have no weight. But the term momentum trading is used with regard to stocks, and we can define that.

Momentum stock trading, also called momentum investing, looks at the strength, power — momentum — of a stock move. Momentum traders try to take advantage of short term powerful upticks in stock movements by buying stocks that are going up rapidly and selling them when they start slowing down or stopping or reversing. Momentum trading takes “buy low…

Joseph Liebreich

Been writing articles here and there for 15 years. I like to write about a variety of topics.

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