MOVIE REVIEW: “The Big Short”


If you haven’t seen this movie. Check it out. It stars some big hitters like Christian Bale, Brad Pitt, Steve Carell and a host of other familiar faces. I found it on Netflix and was reminded of this gem by a student in my recent investing class.

For a movie about investing and the housing bubble they actually made it very edge-of-your-seats exciting.


1. The Value of Short Sellers

The whole basis of the movie is the strategy of short selling. Ultimately, this is profiting from an investment that goes down. What this strategy leads to is a sort of investigative journalism in the investing markets. These short sellers are trying to find the dirty truth of what’s going on with particular companies, industries or entire economies.

When things are being covered up and colluded upon, short sellers will dig for the facts. Like the journalists of old.

2. Don’t Trust Wall Street

They’re always looking out for their fees and commissions. You need to get an expert that profits when you profit and loses when you lose.

3. We’ll Make It Through the Bad Times

Despite massive losses or faults in the system, we will make it to the next stage of growth. The Great Recession was a bleak time. The pessimism was profound. You could feel it in the air.

And then…we made it out the other side.

4. You Need to Diversify

I sound like a broken record on this one. I say it everywhere and to anyone: get into unique asset categories. Not ten mutual funds that sound different. Ten funds that are different. Do your homework. Study up on what your money is in.

5. Most Importantly, Don’t Think You Can Short

You might be able to. You might do it a few times and make some money. But always remember the potential of a short gone bad: you can have unlimited losses.

Just be a “long” investor. If you believe the U.S. and world economy is going to go up, then buy solid, global investments and hang on. If you can get significant income from the investments then that’s even better for you.

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There’s a lot more to learn from this movie. And there’re some fun cameos, too. Take a look.


The Fed Stops Its’ Absurd Low-Rate Behavior


The Fed had mighty expectations to raise rates and did just that. Rates will go up by 0.25 percent. This is after many years of near-zero rates and it isn’t a big jump. But it will have an impact on world markets.

Finally, savers will get more income. Who knows? Maybe 5-year CDs will break 2% interest.

Yet the majority of consumers, because of their debt, will face larger borrowing costs in the future. Although the rate rise will be slow and gradual, keeping refinancing beneficial and new debt relatively affordable.

To play rising rates you can invest into super-short term bonds that can rise with interest. And avoid long-term fixed-rate investments. These will typically drop in value and provide less income than newer, fixed investments.

Also, I’ve been recommending, for years now, a super-short-term bond fund that’s paying 3-4% income annually. It has an absurdly-low duration of 57 days! Historically, these low durations perform best in rising-interest times (like we’re beginning now), potentially increasing income and value. Call me at (719) 545-6442 or email me at to discuss it further. Happy New Year!

1 Incredible Bargain to Add Value to Your Portfolio


Oil going below $35 a barrel, the U.S. reversing a 60-year fuel importing trend, local prices-at-the-pump under $2 a gallon, fracking & horizontal drilling technologies and now oil exporting are making our country the new Saudi Arabia…watch out OPEC. All of this furthers the “oil momentum” the U.S. has been experiencing.

But is low oil a good thing for the economy?


Of course, if you live in a “fracking state” or are working for an oil producer, the drop is not positive. Even with this weakness ExxonMobile (XOM, $79.16) should make $20 billion in profits. Not too shabby.

According to Stephen Stanley, every penny that gas drops puts about $1 billion into consumers’ pockets. The Energy Information Administration says, in January 2014, the national pump price was about $3.40/gallon. In November of 2015, the latest month data is available, the price dropped to $2.26.

That’s like the U.S. consumer getting a $114 billion tax refund! A tenth of a trillion to be saved and spent, priming our economy further. And it didn’t cost the government a thing.

Also, most companies will benefit from this renaissance. If you’re a company that has a fleet of cars then that expense just dropped. If you get anything delivered then that cost could drop. Even if you’re an oil refiner, then your main input cost just got cheaper. And on and on. Low oil can be beneficial to most companies and consumers.


What do you invest in to take advantage of these market moves?

For low oil you could invest in airlines, consumer staples and consumer discretionary companies. All three of these sectors have an ETF (exchange-traded fund).

The only airline ETF is U.S. Global Jets ETF (JETS, $25.63). You can use Consumer Staples SPDR (XLP, $51.24) and Consumer Discretionary SPDR (XLY, $79.59) for those areas. Both of the SPDRs are the largest fund in their respective sectors but there are many more to choose from.

As always, use these ideas for your starting point to research and learn more, not as specific recommendations. I have other ideas that are producing anywhere from 4-9% in annual income. Call me at (719) 545-6442 or email me at to get more info on these. Happy New Year!

How NOT to Get Ripped Off


According to Thomas Stanley, author of The Millionaire Next Door, most millionaires take the advice of a CPA, attorney or other financial adviser. It makes sense. We’re too busy with our career or business to become an armchair expert in these subjects. So we farm it out. Or, at least, the millionaires do.

When you seek investment advice it’s very important to understand who you’re talking to. I recently had someone ask me if I was a CFP (Certified Financial Planner). And that’s a very good question. It showed that this investor was seeking qualified advice, not just a sales pitch. I applaud and appreciate that.

And no, I’m not a CFP. But I have the same fiduciary and ethical standards as a CFP because I’m a licensed financial advisor.

I know, I know. All of this is super-boring but its super-important. This small detail could mean the difference between you keeping your money or getting ripped off….If you’re taking advice from a product salesperson are your best interests top priority? Or is making a sales commission top priority?

In answer to that, let’s look at the definition of fiduciary duty: “A fiduciary duty is a legal duty to act solely in another party’s interests.” That’s from the Cornell Law School website (here’s the link: fiduciary duty).

A fiduciary financial advisor is obligated to act in your best interest. If there’s a choice between something that will benefit the advisor or the client, they must choose the client interest over their own.

So how do you make sure you don’t get ripped off? Choose a fiduciary financial advisor.

3 Incredible Predictions for 2015


It’s usually a bad idea to try to predict the future but I couldn’t resist. I think these predictions could be no-brainers. Or I could get egg on my face with all of the other crystal ball gazers.

The first deals with the stock market, the second with interest rates and the third with oil.


I’ve said it constantly: the U.S. market is amazing but it’s been up for six years in a row without a major correction. It’s had near-corrections three times, according to Yardeni Research (Ed Yardeni is a prominent and respected economist). But it didn’t quite hit 10 percent down during those times.

A correction is a market drop of 10-20 percent. My definition of a “major” correction is 15% or more down. From 18,020, made by the Dow Jones last December, a fifteen percent drop would see the DJIA at about 15,300.

Six years up. No correction. Must be moving towards us soon…so that’s the time to buy hand over fist. Get your watch-lists ready and keep some cash in your accounts. Better yet, make sure your portfolio is paying high income and be flush with cash for this potential buying opportunity.


Rates have been sooo low for sooo long that it seems overdue for them to rise. The economy is really moving and soon inflation should be revving up, too. This will typically make the Fed act, raising rates.

According to their September, 2014 projections, fourteen out of 17 Fed “participants” (only 12 are voting members) say that 2015 is the year to raise rates. Not 2014 (obviously) and not next year.

So brace yourselves a bit. Lower your bond maturities. Don’t buy long term CD’s. Lock in your debt rates now with fixed, low interest. Do not get variable debt.


There seems to be a battle between new technologies in exploration and extraction versus fossil fuel demand. The way I look at it is this: will China, and other emerging economies, ever stop using oil? For that matter, will the U.S. stop using oil? Probably not for a long time.

In the meantime, the U.S. is one of the leaders in better oil technology and we’re benefiting from that today at the pump. But other meaningful technologies, like electric cars, are pretty slow to be widely adopted. Which equals more oil use.

Plus, our population, both domestically and worldwide, is set to keep rising to at least 9 billion people. Which means even more oil use.

Of my three predictions, I think this one could blow up the easiest. You just never know with oil. I wouldn’t bet against it for too long, though. Whether there’s an increase this year or later, it seems to be a pretty solid asset.

The current price for WTI crude is $47.25. A fifty percent increase would be $70.88 a barrel. We’ll see….