The Secret to Acing an Interview After 50

Nilus Mattive

This post The Secret to Acing an Interview After 50 appeared first on Daily Reckoning.

The biggest stumbling blocks to older workers are…
Avoid putting this red flag on your resume…
Nothing ages someone more in an interview than…

Dear Rich Lifer,

Finding work in your 50s or 60s is no easy task, but new and somewhat surprising employment data suggests that prospects are improving, especially for older job seekers.

One big reason?

This is the tightest labor market in nearly two decades, causing employers to look beyond the sea of Millennial candidates.

At the end of July, there were nearly 7.3 million unfilled jobs, but only 6.1 million people looking for work, according to the U.S. Department of Labor.

The unemployment rate in July for Americans 55 years and over was 2.7 percent, less than the overall unemployment rate at 3.7 percent.

What’s more encouraging is the average length of unemployment for older job seekers has dropped significantly since 2012.

It’s down from roughly 50 weeks to 34 weeks for job hunters age 55 to 64 and down from about 62 weeks to 30 weeks for those 65+.

In other words, it takes about seven to eight months on average to find a job if you’re over 55.

Stumbling Blocks for Those Over 50

Something I don’t think is given enough attention today are the unique challenges the over-50 crowd faces when looking for work.

Older applicants are competing with tech-savvy Millennials who often come at a cheaper price, and although age discrimination is technically illegal, it’s still pretty hard to enforce.

A study by the Government Accountability Office found five common barriers to employment for older workers:

High salary expectations — You may need to compromise on pay as your skills might not be as up to date as they once were.

Younger bosses — It’s human nature to want to work with people who are like you. If that’s the case, you need to learn how to address this obstacle in an interview.

Out of date skills — Technology is evolving faster than ever. Whether it’s applying for a job online or actually being able to operate new software, the pace can be overwhelming.

Expensive health benefits — The older you get, the more expensive your health premiums become. Bigger companies will be less impacted by this than smaller firms.

Bias — Old habits (and ideas) die hard. Know what biases you’re up against so you can get in front.

Acing the Interview

If it’s been a while since you were actively looking for work, you’ll notice certain aspects of the application and interview process has changed.

My hope today is to give you a few pointers on how to land your next gig, whether you’re coming off a layoff or looking for part-time work as a recent retiree.

If you follow these 10 tips, your inbox should be full of offer letters in the next few months.

Tip 1: Tap Your Network

A major benefit to having been in the workforce for so many years is your network of contacts. Don’t be shy to reach out to old bosses, …read more

Major Recession Alarm Sounds

This post Major Recession Alarm Sounds appeared first on Daily Reckoning.

Red, red, in every direction we turn today… red.

The Dow Jones shed 800 scarlet points on the day.

Percentage wise, both S&P and Nasdaq took similar whalings.

The S&P lost 86 points. And the Nasdaq… 242.

And so the market paid back all of yesterday’s trade-induced gains — with heaps of interest.

Worrying economic data drifting out of China and Germany were partly accountable.

Chinese industrial production growth has slackened to 4.8% year over year — its lowest rate since 2002.

And given China’s nearly infinite data-torturing capacities, we are confident the authentic number is lower yet.

Meantime, the economic engine of Europe has slipped into reverse. The latest German data revealed second-quarter GDP contracted 0.1%.

Combine the German and Chinese tales… and you partially explain today’s frights.

But today’s primary bugaboo is not China or Germany — or China and Germany.

Today’s primary bugaboo is rather our old friend the yield curve…

A telltale portion of the yield curve inverted this morning (details below).

An inverted yield curve is a nearly perfect fortune teller of recession.

An inverted yield curve has preceded recession on seven out of seven occasions 50 years running.

Only once did it yell wolf — in the mid-1960s.

An inverted yield curve has also foretold every major stock market calamity of the past 40 years.

Why is the inverted yield curve such a menace?

As we have reckoned prior:

The yield curve is simply the difference between short- and long-term interest rates.

Long-term rates normally run higher than short-term rates. It reflects the structure of time in a healthy market…

Longer-term bond yields should rise in anticipation of higher growth… higher inflation… higher animal spirits.

Inflation eats away at money tied up in bonds… as a moth eats away at a cardigan.

Bond investors therefore demand greater compensation to hold a [longer-term] Treasury over a [short-term] Treasury.

And the further out in the future, the greater the uncertainty. So investors demand to be compensated for taking the long view.

Compensated, that is, for laying off the sparrow at hand… in exchange for the promise of two in the distant bush.

But when short- and long-term yields begin to converge, it is a powerful indication the bond market expects lean times ahead…

When the long-term yield falls beneath the short-term yield, the yield curve is said to invert.

And in this sense time itself inverts.

Time trips all over itself, staggered and bewildered by a delirium of conflicting signals.

In the wild confusion future and past collide… run right past one another… and end up switching places.

Thus an inverted yield curve wrecks the market structure of time. It rewards pursuit of the bird at hand greater than two in the future.

That is, the short-term bondholder is compensated more than the long-term bondholder.

That is, the short-term bondholder is paid more to sacrifice less… and the long-term bondholder paid less to sacrifice more.

China: Paper Tiger

IMG 1

This post China: Paper Tiger appeared first on Daily Reckoning.

China’s shock currency devaluation last week begs the following questions: Is China a rising giant of the twenty-first century poised to overtake the United States in wealth and military prowess? Or is it a house of cards preparing to implode?

Conventional wisdom espouses the former. Yet, hard evidence suggests the latter.

Your correspondent in the world famous Long Bar on the Bund in Shanghai, China. The Long Bar (about 50-yards long) was originally built in 1911 during the heyday of foreign imperialism in China just before the formation of the Republic of China (1912-1949). Bar regulars were divided into “tai-pans” (bosses who sat near the window), “Shanghailanders” (who sat in the middle), and “griffins” (newcomers who sat at the far end).

I made my first visits to Hong Kong and Taiwan in 1981 and my first visit to Communist China in 1991. I have made many visits to the mainland over the past twenty years and have been careful to move beyond Beijing (the political capital) and Shanghai (the financial capital) on these trips. My visits have included Chongqing, Wuhan, Xian, Nanjing, new construction sites to visit “ghost cities,” and trips to the agrarian countryside.

I spent five days cruising on the Yangtze River before the Three Gorges Dam was finished so I could appreciate the majesty and history of the gorges before the water level was lifted by the dam. I have visited numerous museums and tombs both excavated and unexcavated.

My trips included meetings with government and Communist Party officials and numerous conversations with everyday Chinese people, some of who just wanted to practice their English language skills on a foreign visitor.

In short, my experience with China goes well beyond media outlets and talking heads. In my extensive trips around the world, I have consistently found that first-hand visits and conversations provide insights that no amount of expert analysis can supply.

These trips have been supplemented by reading an extensive number of books on the history, culture and politics of China from 3,000 BC to the present. This background gives me a much broader perspective on current developments in China and a more acute analytical frame for interpretation.

An objective analysis of China must begin with its enormous strengths. China has the largest population in the world, about 1.4 billion people (although soon to be overtaken by India). China has the third largest territory in the world, 3.7 million square miles, that’s just slightly larger than the United States (3.6 million square miles), and only slightly behind Canada (3.8 million square miles).

China also has the fifth largest nuclear arsenal in the world with 280 nuclear warheads, about the same as the UK and France, but well behind Russia (6,490) and the U.S. (6,450). China is the largest gold producer in the world at about 500 metric tonnes per year.

China has the second largest economy in the world at $15.5 trillion in GDP, behind the U.S. with $21.4 …read more

Why China’s a Paper Tiger

This post Why China’s a Paper Tiger appeared first on Daily Reckoning.

Markets are still digesting last week’s Chinese devaluation that sent the Dow crashing over 700 points last Monday.

And as everyone knows by now, the Trump administration labelled China a currency manipulator.

The ironic part of it is that China has been manipulating its currency to strengthen it against the dollar.

Here’s the dynamic you need to understand…

The Chinese yuan is softly pegged to the dollar. To maintain the soft peg, the People’s Bank of China (PBoC) sells dollars and buys yuan.

That props up the yuan. It’s basic supply and demand economics.

One of the primary reasons China tries to strengthen the yuan is to prevent capital flight out of the country. If the yuan depreciates too rapidly, massive amounts of Chinese money would look to flee abroad where it can get much higher returns.

After all, would you want to hold a rapidly deteriorating asset that constantly loses value? Or if you were a Chinese investor, would you try to convert your money into a currency that holds its value?

That’s the question Chinese investors have been facing.

A capital drain could devastate the Chinese economy, which badly needs the capital to remain in China to support its massive Ponzi schemes, ghost cities and overinvestment.

That’s why the PBoC has been trying to support the yuan, even though a cheaper yuan helps Chinese exports.

That’s the conundrum China faces. It wants a cheap yuan — but not too cheap.

I wouldn’t call last Monday’s devaluation  the sort of “max devaluation” I’ve warned my readers about before. That would have been a devaluation of 5% or more in a single day, and that’s not what happened last week. I would classify it as a “red line” devaluation.

The yuan temporarily broke through the 7.00:1 “red line” dollar peg. It has since returned to normalized levels.

It’s actually ironic that China is being labelled a currency manipulator, if manipulating your currency means cheapening it.

That’s because China was manipulating its currency to strengthen it against the dollar. And when the yuan/dollar exchange rate crossed the 7.00:1 “red line,” that meant China temporarily stopped manipulating its currency higher.

If China didn’t manipulate the yuan higher, it would depreciate even more against the dollar. And the exchange rate stabilized last week when China resumed the manipulation. In other words, when China strengthened the yuan.

Welcome to the currency wars! They take on a logic all their own. In many ways it’s a race to the bottom.

I explained it all years ago in my 2011 book Currency Wars.

As soon as one country devalues, its trading partners devalue in retaliation and nothing is gained. China’s case is complicated by its desires for both a strengthened and weakened yuan.

But the ultimate reality is that currency wars produce no winners, just continual devaluation until they are followed by trade wars. That’s exactly what has happened in the global economy over the past 10 years.

Currency wars and trade wars go hand in hand. Often they lead to actual …read more

EXPOSED: Another Currency Manipulator!

This post EXPOSED: Another Currency Manipulator! appeared first on Daily Reckoning.

Currency manipulator!

Today we point an indignant and accusing finger at the latest currency manipulator.

Let all proper authorities take notice.

The accused is not China — incidentally.

But we cannot proceed without first noting another manipulated market…

The stock market presented a distressed scene this morning.

Plunging bond yields are the explanation widely on offer (falling yields reflect a poor economic outlook).

Yields on the 10-year Treasury slipped to 1.595% this morning — lowest since autumn 2016.

The Dow Jones was down 589 points before an invisible hand intervened, stabilized the bond market… and redirected the stock market.

The index nonetheless lost 22 points on the day.

Both S&P and Nasdaq gained on the day.

Meantime, gold spins into delirium — gaining another $25 today — to $1,509.50.

But now that the administration has hung a “currency manipulator” sign from China’s neck… we are duty-bound to expose the latest currency manipulators.

Our spies have marshalled the evidence. It is circumstantial evidence, we freely concede.

It is nonetheless damning — more than sufficient to empanel a grand jury.

Who are these latest currency swindlers?

Here we refer to the dastardly Swiss.

The Swiss are currency manipulators.

Our spies inform us…

That Swiss sight deposits — bank deposits that can be withdrawn immediately without notice — surged 1.6 billion francs in the week ending Aug. 2.

This anomaly follows a 1.7 billion increase one week prior.

Add one to the other and the conclusion is clear: The Swiss National Bank (SNB) has been monkeying in the currency markets.

It has been printing francs to purchase euros. Why?

To cheapen the franc… to advantage their exports… and to lift their tourism industry.

Evidence suggests Swiss manufacturing has already sunk into recession.

And the European Central Bank (ECB) is preparing to reopen the monetary faucets in September. The ensuing flow would depress the euro.

In comparison, the Swiss franc would tower high as the Matterhorn.

It is already at its highest peak since June 2017.

And so the Swiss authorities are purchasing euros — on the quiet — to cushion the blow.

That is the case we argue today.

Here we introduce our first witness, Credit Suisse economist Maxime Botteron:

I think the SNB was intervening in the market last week — this was the biggest weekly increase in sight deposits since May 2017. This is a clear sign the SNB was active in the market.

Witness No. 2 presently enters the witness stand, a certain Thomas Stucki.

Let the record indicate Mr. Stucki is former manager of the SNB’s foreign currency reserves:

When the ECB statement was published at 1.45 p.m. last Thursday the euro lost value against the dollar, but not against the franc… Any move by the SNB to buy euros with newly created francs would bolster the single currency [euro]. It is possible that the SNB is behind this development.

It is likewise possible that night will follow day… that a dropped apple will plunge groundward… that a senator of the United States will disgrace his office.

In conclusion we summon the testimony of Mr. Karsten Junius, …read more

The Swiss Battle to Cheapen the Franc

Jim Rickards

This post The Swiss Battle to Cheapen the Franc appeared first on Daily Reckoning.

One of the crucial insights in currency trading that many investors fail to grasp is that currencies don’t go to zero, and they don’t go through the roof. That’s a generalization, but an important one. Here are the qualifications:

This observation applies to major currencies only — not to currencies of corrupt or incompetent countries like Venezuela or Zimbabwe. Those currencies do go to zero through hyperinflation.

The observation also applies only in the short-to-intermediate run. In the long run, all fiat currencies also go to zero.

Yet over a multiyear horizon, major currencies such as the dollar (USD), euro (EUR), yen (JPY), sterling (GBP) and the Swiss franc (CHF) retain value and do not go to extremes. Instead, they trade in ranges against each other. That’s the key to successful foreign exchange trading. Trading profits are the result of catching the turning points.

Your correspondent in Zurich, Switzerland, during a recent visit. In analyzing the complex dynamics of foreign exchange markets, it is essential to visit the countries whose currencies are being studied. Foreign visits offer the opportunity to meet with government officials, bankers, business executives and everyday citizens of the affected countries to gain insights that are not available through digital and media sources.

Stocks can go to zero when a company goes bankrupt. Enron, WorldCom and a host of dot-com stocks in the early 2000s are all good examples. Bonds can go to zero when a borrower defaults. That happened to Lehman Bros. and Bear Stearns.

But major currencies do not go to zero. They move back and forth against each other like two kids on a seesaw moving up and down and not going anywhere in relation to the seesaw.

The EUR/USD cross-rate is a good example. In the past 20 years, the value of the euro has been as low as $0.80 and as high as $1.60. There have been seven separate instances of moves of 20% or more in EUR/USD in that time period. But EUR/USD never goes to zero or to $100. The exchange rate stays in the range.

Turning points in foreign exchange rates are driven by a combination of central bank interventions, interest rate policies and capital flows. The old theories about “purchasing power parity” and trade deficits are obsolete.

Foreign exchange trading today is all about capital flows driven by policy intervention, sentiment and interest rate differentials.

Another good example is the Swiss franc (CHF). If you look at its exchange rate with the dollar, an exchange rate of 0.80 francs per dollar indicates a strong franc. An exchange rate of 1.05 francs per dollar indicates a weak franc. Right now the exchange rate is 0.97, which leans towards a weak franc relative to the dollar.

CHF has traded in a range of 0.87–1.03 for the past six years. One move that stands out is the spike on Jan. 15, 2015, when CHF surged from 1.02 to 0.86, a nearly …read more

What I Learned from Eating Candy

Nilus Mattive

This post What I Learned from Eating Candy appeared first on Daily Reckoning.

I don’t remember exactly how old I was, but it was either late single digits or early doubles.

I was looking through the local newspaper and saw a big, bold ad. Or maybe my parents showed it to me… I can’t remember that part either.

What I do remember is what the ad said, and how exciting it was to me at the time: Topps, the famous baseball card and candy company, was looking for taste testers.

More specifically, they wanted children taste testers. It was a one-day job. You’d go there, taste some sweet stuff, and get paid to tell them what you thought.

My brain was reeling. Paid to taste candy! Are you kidding me???

This ended up being my first paid job.

I can still picture the long wooden table. A bunch of us were sitting around it, with an adult at the head. We tried different things one at a time – gum, hard candy, and all sorts of other confectionery products.

After giving our opinions, we walked away with even more candy and $5 each.

The more I think back on it, the more I realize it might have also been my best job ever.

The Lesson:

A job isn’t just about the raw pay. It’s about the other benefits … including doing something you enjoy.

The Gas Station

Of course, once I turned 16, I went out looking for a “real” job.

As a newly-minted driver, a gas station seemed like a logical place to start. Heck, my dad worked at one when he was a young man and the hours were pretty flexible.

I saw one of the local chains was looking for attendants so I applied.

A few days later, I was heading out for my first real job interview. I put on a collared polo shirt … a nice pair of khaki pants … and, unlike the present day, made sure my hair was neatly trimmed.

Just like the Topps gig, I can still remember what the room looked like. I was sitting in a dark, cramped office across from a guy who wasn’t nearly as dressed up as me.

After a brief introductory conversation, which I thought went well, he surprised me by saying, “Do you really think pumping gas is the right job for a kid like you?” 

A kid like me? What did that mean?

I didn’t have to wait very long for the answer. He basically went on to explain that I was a little too polished for the job. It was messy, menial work and I probably wouldn’t want to do it very long.

He went on to say something about I would probably be happier as a cashier inside one of their other stations but I was already insulted.

Here I was, trying to show respect and suitability by dressing up …read more

Rake in Summer Savings the Lazy Way

Nilus Mattive

This post Rake in Summer Savings the Lazy Way appeared first on Daily Reckoning.

Summer is here, and it is HOT.

Mind you, this week has been a bit of a reprieve from the oppressive heat, but last week was certainly a scorcher.

It got me thinking. 

When temperatures start rising, so do electric bills.

Obviously, where you live plays a big part in how much you end up paying on your monthly electricity bill.  Some places like Southern Louisiana for instance, have cheaper electricity, but scorching hot summers raise costs compared to more energy-expensive states like Northern California, where the climate is more temperate.

But no matter where you are, I have some tips that can help you save on your monthly bills.

The average US household spends about $112 a month on electricity according to the US Energy Information Administration. And a large portion of that is based on heating and cooling usage.

Is it worth moving to save a few bucks on electricity? Possibly.

Especially when you factor in “energy choice” states like Connecticut, Delaware, Washington D.C., Illinois, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, and Texas where you can negotiate cheaper contracts with providers.

But that’s a conversation for another day.

Today I’m giving you the lazy-man’s way to save on electricity.

No state hopping. No having to buy new energy-efficient appliances. No installing smart programmable thermostats. No extreme home makeovers to save a few hundred bucks on your electricity bill.

Why?

Because most of the big savings you’ll find on your monthly electricity bill don’t require a lot of money or investment.

These are my top 10 ways to save on electricity every month – the lazy way.

1. Fill the Cracks

Unless your home is brand new, there’s a good chance your windows and doors are leaking money.

Fill these cracks with caulk and weather-stripping to reduce drafts and your electric bill will drop dramatically.

According to Consumer Reports, sealing leaks in your home can reduce energy costs by 15 to 30%.

2. Use MAJAPs at Night

When it’s hot outside, avoid using your stove, washing machine, clothes dryer and dishwasher. All these major appliances (MAJAPs)  draw a lot of energy and typically produce heat.

This in turn causes your AC to work harder trying to maintain your home’s temperature. Also, depending on where you live, your electricity provider could offer reduced rates at different times of day.

Typically evening usage and weekends are cheaper than daytime during weekdays.

3. Use Ceiling Fans

Even if you have a central HVAC system, consider turning on your ceiling fans to help cool and heat rooms faster.

Fans push hot and cold air through your whole house so you can reach your room’s desired temperature a lot faster. Ceiling fans can save you up to $438 per year.

4. Wash …read more

My Top 5 Tips to Save Money Using THIS

Nilus Mattive

This post My Top 5 Tips to Save Money Using THIS appeared first on Daily Reckoning.

In corporate finance there’s a term used to describe inventory that sits in a warehouse costing the business money — that term is called carrying costs.

Imagine for a second that your house is run like a business and all your belongings are its inventory. The more stuff you own, the higher your carrying costs will be.

Of course, not everything you own will end up costing you money but you get the idea.

I believe minimalism is a sort of antidote to personal carrying costs.

Just like the costs of carrying excess inventory will eventually cripple a business, owning too much stuff will eventually wreak havoc on your state of mind and your wallet.

Today, I want to share a few principles from minimalism that will save you money.

What’s interesting about these five principles is they’re not about restricting your spending so much as changing what you decide to spend your money on that makes the difference.

Here are five minimalist principles that will fix your money problems:

1) Value Experiences Over Things

Minimalism is about focusing on what’s important to you. If you stop to really think about what you value most, you’ll realize it’s probably less about the materialistic things in your life and more about the experiences.

You remember the family vacations you took as a kid with your parents over the new suit you bought or the expensive watch that’s sitting in your dresser drawer.

Once you accept this reality, your spending shifts to align with these values. It’s no longer should I buy this new car or nicer pair of shoes. You’d rather save that money for your next big trip or outing with friends.

2) Understand Your Wants vs. Your Needs

It’s estimated that the average American household spends over 90% of their annual income. A big chunk of that spending goes toward things you don’t actually need.

Living minimally, forces you to identify what’s essential in your life and what’s excessive. A good exercise to do every month is review your credit card and bank statements.

Take out a pen and mark beside each line item whether it was a need or a want. If you do this every month, you’ll start to see patterns in your spending.

As you shift your spending to align with your values, you’ll see less wants show up. That’s not to say you shouldn’t spend your money on things you want though.

You’ll just have a clearer picture of the wants that actually add value to your life as opposed to the wants that are driven by laziness or gluttony. For example, eating out because you don’t want to cook versus going out for dinner with friends.

3) Buy Quality Over Quantity

If you’re always looking for the best deal on every purchase, you’re probably sacrificing quality.

Minimalism is less about trying to save a buck and more …read more

RIP: Fiscal Responsibility

This post RIP: Fiscal Responsibility appeared first on Daily Reckoning.

Republicans and Democrats have stowed their axes, sunk their differences… and agreed to raise the debt ceiling.

The government will remain in funds for the next two years — beyond the 2020 election, not coincidentally.

The Wall Street Journal reads the truce terms:

Congressional and White House negotiators reached a deal to increase federal spending and raise the government’s borrowing limit, securing a bipartisan compromise to avoid a looming fiscal crisis and pushing the next budget debate past the 2020 election.

The deal for more than $2.7 trillion in spending over two years… would suspend the debt ceiling until the end of July 2021. It also raises spending by nearly $50 billion next fiscal year above current levels.

Failing a deal, the Capitol lights would have winked out Oct. 1. And the federal government would have slammed its door on the noses of the American people.

Chaos and Old Night would have descended upon these shores…

A Rain of Horrors

The ranger at Glacier National Park would have been thrown into idleness…

The Federal Theatre Project would have been thrown into darkness…

And the bright-eyed sixth-grader from Duluth would have been thrown from the Smithsonian.

The last government shutdown (December 2018–January 2019), stretched 35 impossible days.

How we endured those black, unlit times… we cannot recall.

Yet our representatives at Washington have spared the grateful nation a sequel.

Absent a deal…

They would have been required to hatchet spending $120 billion flat, all around.

The arrangement instead raises spending caps some $50 billion this year… and another $54 billion the next.

Both Sides Claim Victory

The president declared the deal “a real compromise in order to give another big victory to our Great Military and Vets!”

With straight faces Nancy Pelosi and Chuck Schumer announced:

With this agreement, we strive to avoid another government shutdown, which is so harmful to meeting the needs of the American people and honoring the work of our public employees.

Democratic Sen. Patrick Leahy gushed the agreement will “stave off economic catastrophe.”

It will furthermore reverse “unsustainable cuts in nondefense discretionary spending.”

Just so.

The Real Meaning of Bipartisanship

The late Joe Sobran labeled Democrats “the evil party.” Republicans were “the stupid party.”

Thus he concluded that “bipartisanship” yields outcomes both evil and stupid.

Perhaps Sobran hooked into something…

Under the deal Republicans get their guns. Democrats get their butter.

And the taxpayer gets the bill.

He pays now through higher taxes — or later through higher interest payments on the debt.

But pay he will.

And so fiscal responsibility lies dead beyond all hope of recall.

“No!”

We expect Democrats to spent grandly and gorgeously.

Since FDR it has read the identical electoral blueprint.

But Republicans traditionally existed for two purposes: to lower taxes — and to square the books.

You wished to spend money you did not have? And throw open the Treasury to the public?

“No!” was the answer you could expect.

Like a sour old schoolmarm with steel in her eye and a rattan in her hand… they might not have been popular.

But you knew where they were. And you could trust them with …read more

My Important Message for Options Investors

Nilus Mattive

This post My Important Message for Options Investors appeared first on Daily Reckoning.

I want to cover an important topic that is a little more technical, so put on your thinking caps!

I’m talking about options trading.

Options are by no means new, and I’ve talked about it options plenty of times before. But I find options trading is something that many traders are scared of because they don’t understand it.

And it makes sense!

You shouldn’t trade something that you don’t understand. So I wanted to take some time and explain options briefly and then look at some of the finer nuances of options trading.

That way, whether you are new to trading, or you have been doing it for a while, you can trade with more confidence!

What are Options

An option is a contract between two parties that grants the owner the right — but not the obligation — to buy or sell shares of an underlying security at a specified price (the strike price) on or before a given date (the expiration date).

U.S.-listed options generally expire on the third Friday of the month.

In the rare event that the Friday is a holiday, the options expire on the preceding Thursday instead.

There are two basic types of options:

A call option gives its holder the right — but not the obligation — to BUY an underlying security.

A put option gives its holder the right — but not the obligation — to SELL an underlying security.

Each options contract covers 100 shares of any given security, known as a round lot.

There are options actively trading on most major stocks and ETFs, and investors frequently use these investments as a way to hedge their portfolios or to speculate on a security’s future moves.

How Options are Traded

One advantage of using options like this is that investors put less capital at risk — because buying a contract allows you to control 100 shares for a lot less money than it would take to buy the shares outright.

Plus, when buying options, they have strictly limited downside, which is not technically the case with other speculative activities like short selling.

Of course, in addition to buying options, you can also SELL options to generate additional investment income.

You see, most investors who use options to speculate never think about where the options actually come from.

Yet the reality is that options come from other investors willing to take on the specific obligation of the contract, in a process known as option writing.

An investor who writes a call is willing to sell the security covered by the contract at the specified strike price up until the option’s expiration day.

And an investor who writes a put is willing to buy the security covered by the contract at the specified price up until the option’s expiration day.

Now, here’s something a lot of options investors – maybe …read more

6 HUGE Social Security Mistakes

Nilus Mattive

This post 6 HUGE Social Security Mistakes appeared first on Daily Reckoning.

One of the biggest Social Security mistakes I see people make is claim their benefits too early.

According to the Center for Retirement Research at Boston College, 60% of seniors are applying for social security benefits before full retirement age.

If you turned 62 last year, your full retirement age will be 66 years and six months. Full retirement age will continue to increase in two-month increments each year until it reaches 67.

Even though you’re eligible to start claiming benefits at 62, it’s ill-advised. Monthly payments are reduced by 25-30% if you claim at 62, depending on your birth year.

In theory, claiming Social Security benefits should be straightforward — after working several decades, fill out an application and get a monthly benefit check for the rest of your life.

But, you and I know it’s not that easy. There are strategies to consider if you want to maximize your benefits, and there are several mistakes that could cost you thousands of dollars over the course of your retirement if you’re not careful.

Here are just a few mistakes I see people make that could easily be avoided.

Mistake #1 – Claiming Benefits Too Early

I already explained why this is not advised for most retirees. But if you already chose to claim benefits early and now are second-guessing your decision, there are some recourse steps you can take.

Specifically, you are allowed to withdraw your Social Security application and re-claim benefits at a later date, but two conditions apply.

First, you must withdraw your application within the first 12 months of receiving benefits. And second, you have to pay back every cent of benefits you’ve already received. Which can be a lot of money if you weren’t planning on withdrawing.

This is why you should be certain. There are some perfectly good reasons for claiming benefits before your full retirement age, but it’s important to weigh all your options before you make moves.

Mistake #2 – Not Understanding the “Earnings Test”

If you’re still working and haven’t yet reached full retirement age, your benefits can be withheld based on your earnings.

Here are the two “earnings test” rules for 2019:

If you will reach full retirement age after 2019, $1 of your benefits will be withheld for every $2 you earn in excess of $17,640.
If you will reach full retirement age during 2019, $1 of your benefits will be withheld for every $3 you earn in excess of $45,920. This is prorated monthly, and only the months before your birthday month are counted.

To be clear, benefits withheld under the earnings test aren’t necessarily lost. They can be returned in the form of increased benefits once you reach full retirement age.

People who think they can be fully employed and collect their Social Security benefits are often caught off guard when the Social Security …read more