Category: INO.com Contributors

Dude, Where's My IRA?

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


The experts still tell us we should allocate our retirement portfolio to 60% stocks, 40% bonds, give or take, depending on your age.

But how does a sensible investor do that in this era of zero percent interest rates? Do bonds really have a place in your portfolio anymore? It's a reasonable question to ask.

If you put 40% of your money in safe (i.e. U.S. Treasury) bonds that are unlikely to default, it's essentially dead money, unless you're okay with earning less than 2% a year over the next 10 years.

If you want to earn more than that, you'll have to go way out on the risk curve. And if you're going to do that, you're probably better off putting your money in blue-chip equities or ETFs that pay high dividends. They're arguably safer than junk bonds, and the dividends will cushion your portfolio if stock prices go down.

But then there goes your diversification. You'll have 100% of your portfolio in equities. What happens when the stock market finally corrects? Will your bond portfolio save you? Continue reading "Dude, Where's My IRA?" →

Gold and Silver: Short "Short" Play

Posted on by Aibek Burabayev

Aibek Burabayev - INO.com Contributor - Metals


Gold

4H Gold Chart
Chart courtesy of Tradingview.com

As seen in the above 4-hour chart, Gold has finished shaping a short term reversal pattern we've seen before, called a Head And Shoulders pattern. This pattern was confirmed on the RSI where the model is even more bearish as consequent lower highs were shaped.

The vertical neckline, highlighted in black, has been broken today below $1197 and this is a good sell signal. The target is the distance from the top of the head to the neckline, subtracted below the neckline. So the market aims for $1159 (highlighted in the red dashed horizontal line), which is $35 down from the current price at $1194. Continue reading "Gold and Silver: Short "Short" Play" →

Insure Against The Upcoming Fed Rate Hike

Posted on by Daniel Cross

Daniel Cross - INO.com Contributor - Equities


Nothing makes financial markets more skittish than the threat of a rising rate environment. The Fed removed the word “patient” from its statements and though the exact timing of the increase is still up for speculation, an interest rate increase of 0.10% to 0.25% is a certainty this year.

Higher interest rates might not seem like a positive thing for stocks – higher rates mean less money available for investment growth by businesses – but that's not true across all sectors. For life insurers, rising rates mean more profitability.

Life insurance companies must hold a large amount of its assets in liquid form and are subject to strict regulations as to how that money can be invested. Conservative asset classes like bonds, treasuries, and money-market securities are the only types a life insurance company can invest in. Liquidity is a key component of this industry as the company must be able to meet its policyholder obligations when a claim is made. Continue reading "Insure Against The Upcoming Fed Rate Hike" →

The Dollar Breaking Point

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


Last week, the Fed released its FOMC minutes, the protocol of the Fed's decision makers, and already it seems to have backfired. While the minutes thoroughly described how FOMC committee members have gradually shifted their projections on inflation and a lower Fed Funds Rate, comments that were supposed to gently assist in tilting the dollar lower have done the exact opposite.

FOMC Minutes Backfire

The Fed's statement contained two comments that were combined or written in such a way that investors immediately became wary of shorting the dollar. The first, was the remark on the fact that excess capacity and downward pressure in commodities was seen as winding down gradually thus keeping the Fed's long-term inflation target of 2% (or close to it) still intact. So far so good, yet the Fed also added a statement on what is holding back the possible rate hike and that is low energy prices and a strong dollar. In other words, the Fed outlined that a lower dollar would increase the chances of a rate Continue reading "The Dollar Breaking Point" →

Jobs Report Says No Rate Increase This Year

Posted on by George Yacik

George Yacik - INO.com Contributor - Fed & Interest Rates


Friday’s jobs report was the final nail in the coffin for an interest rate increase in 2015.

I know I shouldn’t get carried away by one statistic, especially this early into the year. The nonfarm payrolls report is only one number – an important number, for sure, but still only one number – so one shouldn’t base his entire opinion on it. And I’m not. But the lackluster figure was just the latest evidence of just how weak the U.S. economy has gotten over the last several months and merely confirms the trend – with an exclamation point.

The Labor Department said nonfarm payrolls grew by only 126,000 in March, the smallest gain since December 2013. To add insult to injury, February’s increase was revised downward by more than 30,000 to 264,000. That brought down the average monthly gain in the first Continue reading "Jobs Report Says No Rate Increase This Year" →