March 29, 2014: Failure Is Not An Option

After a short rant about politics in general, we talked a little foreign affairs, then got into a discussion of options. From my perspective, options are the most flexible tool a trader can use, but they also require the most education. We start that process in this show, check it out!

Listen Here: 

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If you would like to submit a question to the show, or to give us feedback, please send an email to: phoenix@tradingacademy.com. Also, check out our sister show, “The Right Side Of The Trade” on the following stations:

◾550 KFYI: Sundays at 4am

◾960 The Patriot: Noon Saturdays and 8pm Sundays

◾1510 Money Radio: Tuesdays 9am

◾1100 KFNX: Thursdays at 4pm

March 22, 2014: “Why is Always Boris?”

 

Today was “Wild Speculation Saturday”, well, not really. We investigated the following idea, “What happens to our economy and stock market with oil at $150 to $200 a barrel?” Now you may say, “Why would you spend time on this? The world economy appears to be slowing. Oil prices will likely fall, if anything.” That may be accurate, but there is another perspective. Russia’s economy is suffering right now, both their stock market and currency have been weakening. The best thing for their economy is for oil prices to skyrocket. I agree that demand may well weaken, so if I’m Russia, I need to focus on supply. What would happen if I started selling lots more weapons into the Middle East? Could I destabilize some major oil producers? At a minimum I could make some money selling arms, best case I get the price of oil up and I’m laughing. What are the chances the US will crank up its fossil fuel production to lower world oil prices? Now I’m laughing harder…

The point is, this may or may not happen, but there are many scenarios like this every day that most investors never consider. It is for the unforeseen circumstances that we must prepare. For months we have warned that Russia could make things at least temporarily uncomfortable by dumping their US Treasuries. There are now some  in Russia making that very threat. They are also threatening to work to take the world off the dollar standard. Success there would be devastating to us. The upshot? Always practice good risk management, there is a lot of uncertainty out there!

In the show we also looked at the markets, some levels and the rise of subprime auto loans. All you really need to know here is that there are people putting up shotguns as downpayments and paying 20% interest on used vehicles. These loans then get packaged and sold as AAA rated, because they are “insured”. Haven’t we seen this movie before?

Listen Here:

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If you would like to submit a question to the show, or to give us feedback, please send an email to: phoenix@tradingacademy.com. Also, check out our sister show, “The Right Side Of The Trade” on the following stations:

◾550 KFYI: Sundays at 4am

◾960 The Patriot: Noon Saturdays and 8pm Sundays

◾1510 Money Radio: Tuesdays 9am

◾1100 KFNX: Thursdays at 4pm

March 15, 2014: Forever in Your Debt…

We talked a little Crimea (on its way to Russia), a little China (on its way to insolvency) and a lot of putting the US economic situation into perspective. The short answer, things are not as rosy as they appear. Unfortunately, GDP is not wealth and growth through debt is not sustainable (at least as we are practicing it). We started off with this trip down Memory Lane:

“The federal government’s financial condition and fiscal outlook are worse than many may understand. Despite an increase in revenues in fiscal year 2006 of about $255 billion, the federal government reported that its costs exceeded its revenues by $450 billion (i.e., net operating cost) and that its cash outlays exceeded its cash receipts by $248 billion (i.e., unified budget deficit). Further, as of September 30, 2006, the U.S. government reported that it owed (i.e., liabilities) more than it owned (i.e., assets) by almost $9 trillion. In addition, the present value of the federal government’s major reported long-term “fiscal exposures”—liabilities (e.g., debt), contingencies (e.g., insurance), and social insurance and other commitments and promises (e.g., Social Security, Medicare)—rose from $20 trillion to about $50 trillion in the last 6 years.

The federal government faces large and growing structural deficits in the future due primarily to known demographic trends and rising health care costs. These structural deficits—which are virtually certain given the design of our current programs and policies—will mean escalating and ultimately unsustainable federal deficits and debt levels. Based on various measures—and using reasonable assumptions—the federal government’s current fiscal policy is unsustainable. Continuing on this imprudent and unsustainable path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our domestic tranquility and national security.”

David Walker FY 2007 Budget of the US Government January 2007

Yes, this is from an official US government document, not some Tea Party manifesto, and let me ask you, in the last 7 years, have things gotten better or worse?

Listen Here: 

Click Here For Free CD Offer!

If you would like to submit a question to the show, or to give us feedback, please send an email to: phoenix@tradingacademy.com. Also, check out our sister show, “The Right Side Of The Trade” on the following stations:

◾550 KFYI: Sundays at 4am

◾960 The Patriot: Noon Saturdays and 8pm Sundays

◾1510 Money Radio: Tuesdays 9am

◾1100 KFNX: Thursdays at 4pm

March 1, 2014: Risk! Rolling on the Ukraine…

We talked a little Ukraine and the general uncertainty in the world. We then moved on to a discussion about how we have been able to live beyond our means for decades now, not just by borrowing, but by trading worthless little green rectangles for TV’s, cars, etc., and how ultimately this all has to end, and end badly. The overall theme was the importance of risk management. It is the unknown unknowns that get you. And just like a terrorist only has to be right once, a trader or investor only has to be wrong once to suffer some major losses. So risk management first, last and always!

Check The Show Out Here: 

Click Here For Free CD Offer!

If you would like to submit a question to the show, or to give us feedback, please send an email to: phoenix@tradingacademy.com.

Also, check out our sister show, “The Right Side Of The Trade” on the following stations:

◾550 KFYI: Sundays at 4am

◾960 The Patriot: Noon Saturdays

◾1510 Money Radio: Tuesdays 9am

◾1100 KFNX: Thursdays at 4pm