INVESTING BLOG

Understanding how to manage money will make a big difference for your financial stability. “ Money is a very powerful thing, which you hardly notice when it goes right, but which can create havoc when it goes wrong.” – Milton Friedman  A major study conducted by the Financial Industry Regulatory Authority demonstrated that people with higher levels of financial literacy are more likely to find financial security or stability.  Financial literacy means the scaled ability to competently understand what money is, how to raise money, and the various ways of effectively managing money. Financial literacy does not guarantee financial security, although financial literacy and security are strongly correlated. People who understand finances have a higher chance of becoming financially secure and wealthy. People who do not understand finances are much less likely to establish financial security or acquire personal wealth.  Just as there is a scale to reading literacy and compre...

Trump’s policies may well enrich many firms, but they will impoverish the average American. The headlines tell us that the Dow Jones is up around 1,000 points since Donald Trump won the election on November 8th. The conventional wisdom is that this shows how much confidence people have in Trump’s ability to generate a healthy American economy. The argument is that if people are willing to buy stock in American firms, this indicates their belief that those firms will see improving profits over the next few years. They then draw the conclusion that more profitable firms indicate a healthier American economy. Although this argument is correct about stock prices reflecting an increasing belief in the profitability of US firms, it makes a major error in assuming that profitable firms necessarily mean a better economy. The Economy Isn’t A Thing First, it’s important to understand that phrases like “a healthier economy” are themselves problematic. The “economy” is not the thing we should be c...