November 8 marked the release of the October labor report, a document that has consistently reminded us of our current predicament. The report is sending mixed signals. The short-term results are showing positive signs of growth while the data says there may be negative long-term implications. Unfortunately, it is the long-term damage that is beginning to make itself known and uncertainty is beginning to set in. Considering this is all happening admits the backdrop of a health pandemic, potential labor risk is skewed very far into the red. On a positive note, jobs are being added back into the economy. As of October, 6380,00 jobs have been inserted into the labor market while the labor force itself grew by .3% and unemployment falling to 6.9%. This month-over-month improvement provides a positive indication that the labor market is healing its flesh wounds. The US economy will need consistent incremental improvement to be able to keep up with its recovery. While some improvements have been made, not all signs point north. Unemployed workers who self-classify as ‘permanently unemployed’ has eclipsed the number of temporary unemployed workers, a bad sign for a growing labor force. Last October, the US recorded 1.26 million permanently unemployed workers compared to this year’s 3.7 million. In addition to that, the permanently unemployed group makes up 33% of the unemployed population, its highest since February 2013. These, of course, are the most difficult people to reemploy and as that number grows, our recovery is lengthened. With these numbers, economists, government officials, and Wall Street analysts are certain that a V-shaped labor recovery has been long passed by and hopes for a U-shape are dwindling. This most recent job report will help us understand what needs to be done to move forward https://finance.yahoo.com/news/longterm-scars-in-us-labor-market-morning-brief-105529993.html

The US stock market’s volatility (get ready to read that word a lot) has created dramatic highs and lows for investors. The days of steady prices and predictable trends have long passed, and traders are scrambling to get a handle on this new normal. “The VIX index, an instrument used to measure volatility in the US equities market, has traded above the 30% mark in more weeks this year than it had done in the prior 10 years”. This means even our measures for volatility are… volatile. With increased market uncertainty and volatile prices becoming more common, several tenets of investing could reverse. Higher Taxes Usually, market participants would want to avoid higher taxes. Whether it be corporate or personal income, taxes have been seen as an, “impediment to corporate earning and economic growth" and a hinderance to economic demand. This paradigm of course has shifted. The coronavirus pandemic has created immense federal debt that must be funded in order for the US to recover. Investors will now hope for increased taxes to fund stimulus projects towards economic recovery. Even large corporations understand that sacrifices must be made for the betterment of the market and their industry. Political Gridlock Under usual circumstances, political gridlock has worked in the favor of market activities. A lack of cooperation between rival political parties means major changes are rarely introduced into the market. Increased corporate tax rates and more regulations, a negative for investors, have been held off political gridlock. Now the situation has changed. Market participates are now willing to embrace cooperation and reform in the name of ‘economic relief’. The recent deadlock on a stimulus deal caused a major drop in stock prices that investors would prefer to avoid. Going forward, look to see Wall Street lobbying for compromise and cooperation. Source: Three tenets of conventional investing that might reverse as volatility becomes 'the new normal, by Theo Golden, Business Insider, Nov. 5, 2020.

11.10.2020 What is investing? Many people’s first thought is a stockbroker; the Wolf of Wall Street-type salesman who calls you with the latest stock tip and advice on how you can beat the market. But an investment is not limited to stock-portfolios. Merriam-Webster defines the word “invest” as “to make use for future use or benefits.” At its core, an investment is simply something you build incrementally over time, receiving a benefit in the future. Think about top athletes. They invest in their bodies though nutrition and workouts, knowing their off-the-field habits will pay off when the whistle blows. Kobe Bryant was known as one of the fiercest competitors to ever play basketball. Kobe invested in his jump shot every off-season by shooting 2,000 shots a day, ultimately earning him five NBA championships. From a student’s perspective, you invest your time studying, knowing that the benefit will be a higher GPA, leading to a higher salary when you graduate. Urban legend claims Albert Einstein believed, “compound interest is the most powerful force in the universe.” The average annual return of the S&P 500, considered a reliable benchmark for the American stock market, has averaged roughly a 10% annual return since its inception. $10,000 invested today, considering the 10% average return, without any additional contributions, will be worth $174,494 in 2050. If you let that money grow 20 more years, again no contributions, it will be worth $$1,173,909 in 2070. The initial investment grew $164,000 in the first 30 years, and close to $1M the next 20. The key concept here is time: Whether you are an athlete, student or someone looking to create wealth, the more time you invest in something, the greater the future benefit. So how can you get started? $10,000 is a lot of money for most college students, but luckily there are some great tools out there, allowing investors to get started with $1 or less. (Robinhood, TD Ameritrade, etc.) The first step is to open an account and make a deposit. Buying individual stocks can be risky and time-consuming, so for most investors the best way to build wealth is to “buy the market” though either an ETF (exchange-traded fund) or mutual fund. These products shelter investors from the risk of the individual stocks, while providing them with the return they desire. Companies such as Charles Schwab, Fidelity and Vanguard all have funds that fit this need, and typically are titled “Index Funds.” The market is opening opportunities for first-time investors to build long-term wealth as investing becomes increasingly democratized. The longer your money is in the market, the more you will have in the future. The average person does not have the time to research and find the best stocks out there, so “buying the market” is typically the best option for new investors. Considering how easy it easy to invest today, 2020 is a great time to start investing. Major US Stock Indices: Dow Jones (DIJA): 30 large publicly traded US companies S&P 500: 500 of largest publicly traded US companies Nasdaq Index: 2,500 American stocks & other equities, mostly technology related Major European Indices: Financial Times Stock Exchange (FTSE 100): 100 largest companies on London Stock Exchange. (Footsie) Euronext 100 (N100): 100 largest/liquid stocks traded on Euronext. (Largest stock exchange in Europe) Deutscher Aktienindex (DAX 30): 30 largest German companies traded on Frankfurt Stock Exchange Major Asian Indices: Nikkei Stock Average (Nikkei 225): Top 225 blue chip (high value) companies traded on Tokyo Stock Exchange Hang Seng: 50 largest companies of the Hong Kong market and is considered a main indicator of overall market performance in China Sources: https://www.expatica.com/finance/investment/investing-as-a-hobby-1565316/ https://www.investopedia.com/insights/introduction-to-stock-market-indices/

The last couple weeks and earnings reports have shown a slow but steady recovery of the U.S. economy. This added confidence is also shown through the U.S. labor market, which continued to rebound in October. Private-sector employers added 906,000 jobs last month, an increase from September, which offset a drop of 268,000 jobs in the public sector. Andrew Hunter, senior U.S. economist at Capital Economics, said “[The report suggests the labor market recovery] still has plenty of momentum.” Despite this, the full recovery of the economy is still far out, as increased coronavirus infections have persisted. Along with this, the jobless rate is roughly twice as high as it was in February. Employers added 638,000 jobs in October The Labor Department reported a decrease of the unemployment rate, down to 6.9% Employers have added 12.1 million jobs since April Source: “Drop in Jobless Rate Shows Healing U.S. Labor Market,” by Josh Mitchell, Wall Street Journal, Nov. 6, 2020

Democrat and former U.S. Vice President Joe Biden was declared the winner of the 2020 U.S. presidential election by several major television networks on Saturday, beating Republican incumbent Donald Trump who took an industry-friendly stance on regulation. While Biden is unlikely to prioritize a financial industry crackdown, he is expected to take a stricter line than Trump, as well as his former boss, President Barack Obama. Biden has tapped former derivatives market regulator Gary Gensler, who has a reputation for being tough on Wall Street, to work on a transition plan for financial industry oversight. The pandemic has shone a harsh spotlight on America's racial and wealth inequalities, galvanizing Democrats to use a range of policy levers to address the problems. Those include the 1977 Community Reinvestment Act, a fair lending law giving banks regulatory points for lending to low-income communities. Biden has pledged in campaign materials to expand the rules to other sectors, including mortgage and insurance companies. Addressing the country's affordable housing crisis is a priority for Democrats and Biden. A Biden administration would probably try to halt a Trump plan to release housing finance giants Fannie Mae and Freddie Mac from government control, a move Democrats worry would increase the cost of mortgages for middle- and lower-income Americans. Biden has also pledged to review rules by Trump's housing regulator which are meant to guard against lending behaviors which disproportionately adversely impact racial minorities. Biden has called for a robust Consumer Financial Protection Bureau (CFPB), created following the 2009 financial crisis to ensure banks did not take advantage of consumers. The agency has been less aggressive under Trump, and Biden has endorsed stricter oversight of consumer lending and called for a crackdown on discriminatory lending practices. Among Biden's most eye-catching policy proposals is the creation of a public credit reporting agency to compete against the likes of Equifax and TransUnion. According to Biden's campaign materials, the new agency would aim to “minimize racial disparities” in credit reporting after some studies found the current system excludes minorities. Biden has expressed support for a long-held progressive policy to get the U.S. Postal Service to provide basic banking services. Progressives say the plan would reduce economic inequality by allowing “unbanked” Americans to access reasonably priced banking services and credit, and to avoid predatory lenders and expensive check cashing services. Source: “What a Joe Biden win could mean for financial policy,” by Pete Schroeder and Katanga Johnson, Reuters, November 8, 2020.

Despite the ongoing uncertainty of the economy due to coronavirus, U.S. households increased their spending in September by 1.4%. This is due to the higher pay and remaining pandemic aid which therefore helped to boost incomes. Additionally, personal-consumption expenditures also rose in September, according to the Commerce Department. This rise in personal income also reflected an increase in employee compensation. Companies like Mattel Inc. and Chipotle posted strong quarterly sales figures, which reflects the increased interest of American households for food that can be ordered online as well as in-home entertainment. After a sharp decline in August, personal income increased 0.9% from last month. After being surveyed from The Wall Street Journal, economists expected a 1% increase in spending and 0.5% increase in personal income. U.S. GDP rose to a record 7.4% in the third quarter https://www.wsj.com/articles/consumer-spending-personal-income-coronavirus-september-2020-11604012444

Being in control of your finances is crucial to having financial freedom. Some of the simple ways that we can do this is to avoid taking on unnecessary debt and spending money on things we cannot afford. However, the foundation of this is having a budget. A budget allows you to keep track of every dollar that you spend and every dollar that you make. There are lots of tools and apps you can use (such as Mint or EveryDollar) to help you create and stick to a budget and track all your spending to ensure you do not overspend. While there are several types of budgeting techniques, the budgeting technique I use is called the zero-based budget. This involves writing down how much you make in a month (monthly income) and your expenses (rent, groceries, gas, books, utilities, miscellaneous costs, money being saved/invested, etc.) Your goal is to make sure that your expenses subtracted by your income equals zero. This ensures every dollar you make and spend is accounted for. More information: Zero-balanced budget: https://www.daveramsey.com/budgeting/how-to-budget 4 budgeting methods: https://corporatefinanceinstitute.com/resources/knowledge/accounting/types-of-budgets-budgeting-methods/

History’s greatest stories have all had an entertaining climax, where every plot piece comes to a head and the entire story unfolds. The legend of 2020 is one of those stories. For US citizens, the stage was set in March, with major domestic outbreaks of coronavirus leading to nationwide shutdowns and a halt to life as we know it. With the coronavirus as the antagonist and President Trump as the leading male, the script was leading to events of epic proportions. Here in November, a day for the election, a yearlong pandemic is finally giving us the climax we deserve. As of Halloween, the US sits at 9 million confirmed cases, leading the world in infections. Unfortunately, a slowly approaching presidential election has kept the government from taking any considerable action. Any shutdowns could interfere with an already controversial voting system and would create serious losses in an already volatile stock market. Stimulus hopes kept stock prices at an inflated state for much longer than many thought possible, but that goodwill has since faded. Last week, the S&P 500 and Dow Jones fell 5.6% and 6.5% respectively, their greatest loss since March. Large tech stocks led the tumble although reporting outstanding Q3 earnings. Investors are left with little options as risk and volatility become commonplace, even in foreign markets. In Europe, increased daily cases have led to another session of shutdowns. While Europe only has 10% of the global population, as a continent it accounts for over 20% of confirmed cases. Although their death rate has been marginal in comparison to the summer months, the recent uptick just before winter is a major cause for concern. Officials are concerned that as the weather gets colder, flu season will coincide with a rampant virus creating the perfect storm for infection. Additionally, as more people will gather indoors, restaurants, travel, and entertainment industries will struggle to facilitate business with limited outdoor resources. All conditions considered, European officials have begun to shut down businesses and work-related travel and have urged other world leaders to follow suit. https://www.nytimes.com/2020/10/31/world/great-britain-coronavirus-lockdown.html https://www.nytimes.com/live/2020/11/01/world/covid-19-coronavirus-updates https://www.nytimes.com/live/2020/10/30/business/us-economy-coronavirus

A demolition yard in Aliaga, Turkey where old cargo ships, tankers, research vessels and now, cruise ships retired during the Covid-19 pandemic get torn apart and broken into pieces. In this case, they’re not being broken in half to get upgraded and stitched back together. Instead, circling the Fantasy’s partially deconstructed innards are buyers from all sorts of industries, looking for rock bottom deals on everything from artwork and kitchenware’s to electrical wires and stainless-steel sinks. For the cruise company, it’s an opportunity to recoup at least some value from an asset that’s currently acting as dead weight; while its value has declined with age, the Fantasy was originally built for about $225 million. For the recycling companies that buy the vessel for cash and take on the hazardous task of emptying its valuables. If, for instance, the Carnival Fantasy superstructure contains 15,000 tons of steel, the scrap may sell for upward of $4.7 million, based on current global market prices though other factors also come into play, such as local prices and demand. Along with the risk of market fluctuation, the buyer also takes on the uncertainty of just how much metal can be salvaged. Pre-1990s ships tend to have more steel in their hulls and underwater plating; those built in the ’90s and thereafter can contain lighter, stronger alloys. Either way, steel and metal scraps will travel to a smelter to make rebar for construction projects around the world. Steel from some other dismantled ships can find its way to Turkey’s large car-manufacturing industry, where it might contribute to parts for Toyotas or Fords. Aluminum, copper, and stainless steel are also salvaged and resold, along with valuable commodities that mostly remain in Turkey. The ripped-out teak decks on Fantasy may end up in local shops, restaurants, and homes. Theater scenery and lighting may find its way into show productions. Even the tackiest artwork has some value and can end up in restaurants throughout the country. “The longer the pandemic rages on in the world, the more cruise ships will end up in scrapyards and my guess is at an increasingly younger age,” says ManWo Ng, a maritime management professor at Virginia’s Old Dominion University. “Even if a vaccine becomes available, how many of us will be comfortable jumping right back on cruise ships?” Old cargo ships, tankers, research vessels and now, cruise ships are being sailed to Aliaga, Turkey, the ship breaking capital of the world. Buyers from all sorts of industries, looking for rock bottom deals for artwork and kitchenware to electrical wires and stainless-steel sinks. Opportunity for cruise companies to recoup at least some value from an asset currently acting as dead weight Carnival Corp. said it plans to sell 18 ships in 2020. 12% reduction https://www.bloomberg.com/news/articles/2020-10-29/the-messy-booming-business-of-recycling-cruise-ships-in-turkey

Most financial experts recommend that you have somewhere between three months and six months of basic living expenses in your emergency fund. The three month guideline is generally recommended for those who are in salaried positions and have more secure employment. This amount can seem daunting at first, but the idea is to put a small amount away each week or two to build up to that goal. Emergency savings are best placed in an interest-earning bank account, such as a money market or interest-earning savings account, that can be accessed easily without taxes or penalties. Emergency savings should be placed in an account that is easily available, so you do not incur early withdrawal penalties as you would with an account such as a CD or IRA. 59% of adults can’t pay for a $1,000 emergency through savings. Illness/accident, unexpected job loss, home/car repair https://www.cnbc.com/2020/01/21/41-percent-of-americans-would-be-able-to-cover-1000-dollar-emergency-with-savings.html https://www.wellsfargo.com/financial-education/basic-finances/manage-money/cashflow-savings/emergencies/

Debt is essential for creating future wealth and achieving financial goals but taking on the wrong debt can be the difference between bankruptcy and prosperity. As aspiring future-oriented individuals, we must understand debt, credit, and your credit score (The Adult GPA). When released into the world your GPA no longer follows you, so lenders, employers, and professional organizations will judge you based on your credit score. Your credit score, simply put, is a measure of how you manage debt, and the sooner you can increase your score, the better. Good Debt: Low-interest debt that increases your earning potential or net worth (in moderation). Timely payment on these debts not only raise your credit score but are easier to manage due to the focus on principle over interest. They also give you an asset that can be resold or skills that can be exchanged for income. Student loans, mortgages, and small car loans are all solid options for good debt. Car loans and mortgages give you a manageable and usable asset that can be sold. While the car will most likely sell at a loss it can be utilized to create income. When signing a mortgage agreement, it’s important to have at least 20% equity at all times then leverage the home into either a rental space or sell at a profit. Student loans raise income potential, but it is important to actively pursue manageable repayment options. Bad Debt: Expensive debt that can hinder the current financial situation. These debts usually come with high or variable interest rates and pertain to object that devalue quickly. These debts tend to eat directly into or replace the funds you would use to repay them. Taking on these debt expenses usually dig you into a deeper hole than where you started High-interest credit cards, personal loans for discretionary purchases, and payday loans are all historically bad options when taking on debt. All of these debt classes are very similar as they do not contribute to any asset except cash. Most of these loans replace income instead of adding to it making them increasingly harder to pay off the longer you have them. These can detrimental to your credit as you take on more and more