Betty Liu on market impacts from the coronavirus outbreak | Money in :60 | GZERO Media


I’m Betty Liu with your Money In 60 Seconds. So, the impact of the virus has pretty much been felt in the global markets. We’re now back up to around record territory, erasing most of the losses. Initially when US officials reported the second virus outbreak in the US, the markets fell. And in fact, the S&P fell the most in three months. So, in the early 2000s, a SARS outbreak actually hit the markets even more. We saw the S&P fall 13 percent based on the outbreak. But economists say it’s really not an apples to apples comparison because at the time when SARS was happening, we were in a very different economic time. That’s your Money In 60 Seconds.

Economy and the Market in 2020


As we typically do with our outlook reports,
we start with an overview on the economic environment as we see it in the subsequent
years and then we tie what are essentially those macro-views into what we expect for
the stock market. So, let me start with a perspective on the
U.S economy, which in 2019 had fairly steady growth. Nothing to write home about, but quite frankly
that’s been the name of the game for this entire economic expansion. And we generally expect something similar
in 2020. Probably no significant lift in growth, but
so far, the conditions don’t appear to be ripe to suggest that a recession is at risk. Now, what we had been writing about quite
a bit in 2019, and we think carries into 2020, is that we do have a bit of a bifurcated economy
in the United States, where we’ve had a very beleaguered manufacturing sector, much
stronger services sector. Another way to divide the economy when you
think about this notion of bifurcation is to look at the difference between business
investment and consumer spending. Regardless of how you slice and dice it, the
weakness has clearly been concentrated in manufacturing, in things like CEO confidence
and CFO confidence, weak capital spending, overall weak business investment. Now, although those represent smaller portions
of the economy than either services or consumer spending, as we’ve been pointing out, they
tend to punch above their weight in terms of the broader impact into the overall economy. And much like was the case in 2019, what we’re
watching in 2020 is to see whether, number one, the weakness persists in manufacturing,
in business investment, and whether it starts to morph into weakness in the broader parts
of the economy. So far, that has not been the case. We’ve been talking about this very healthy
dividing line between those portions of the economy, but also what we’re paying close
attention to is the labor market because it’s typically within the labor market that we
start to see that weakness more from the manufacturing or business investment side of the economy
into the broader economy. So that’s one of the things that we’re
watching for. We also focus a lot on leading economic indicators. Those sub-indicators that give you a heads
up on what is going to happen. Those have been kind of a flat trend over
the last year or so. On a change-basis, we are down to about flat
levels. That’s not a recession warning, but something
we need to keep an eye on. What’s been keeping the leading indicators
from moving more into negative territory, of course, has been the strength in the stock
market, the un-inversion of the yield curve, still very low unemployment claims. But we are seeing some weakness in some of
the other sub-indicators. So, I will keep a close eye on those leading
indicators. In terms of the implications that all of this
has had and will continue to have for the stock market, clearly, we have been in a very
strong stock market environment. I think that has been on the basis of all
the liquidity that’s been added into the system via the federal reserve, lowered interest
rates three times in 2019, caused a loosening of financial conditions. That’s one of the reasons why in 2019, although
we had de minimis earnings growth, almost no earnings growth, we actually saw P/E ratio
valuations expand. And that was because the macro-environment
really supported that valuation expansion. As we look ahead into 2020, I think we are
at a stage where we’re less likely to get that boost to valuations from the macro-conditions
of easy Federal Reserve policy, given that the Fed is on hold at this point; which means
we’re probably at or near a stage where the “E” in the P/E, earnings, are going
to have to start to do some of the market’s heavy lifting. Now, expectations are for earnings growth
to pick up in 2020, back into double-digit territory in the second half of 2020. Those estimates may still be a little bit
too high, unless we get a lift in the global and U.S. economy sufficient to bring those
earnings estimates up. But that I do think represents a risk in 2020,
that if we don’t get the expected earnings growth, that we’re not going to see much
valuation expansion, if at all. And the other risk I think we need to monitor
in 2020 is investor sentiment. Courtesy of how well the stock market has
done, and not just the U.S. stock market, global stock markets, really asset classes
across the board over the past year is that investor sentiment has moved into the “extreme
optimism” zone. Whether you’re looking at attitudinal measures
of sentiment, or behavioral measures of sentiment. Now, in and of itself, that doesn’t suggest
risk for the market. The market can continue to do well, investors
can remain optimistic, but it does set up the possibility that if there is some sort
of negative catalyst, that the weakness might be a bit more pronounced given that excess
optimism. Because it might trigger some selling by investors. So, that is another thing that we’re keeping
an eye on in 2020.

2020 Bond Market Outlook


2019 has been a very good year in the Bond
Market, with investors benefiting from both falling interest rates and stronger demand
for bonds in the riskier segments of the market. We expect 2020 to be a somewhat more challenging
year, but one that also offers investors the opportunity to add more income to their portfolios. Here are three key points about our outlook
for the fixed income markets in 2020. First, we expect the Federal Reserve to keep
short-term interest rates on hold for the foreseeable future. Barring a change in the economic outlook,
Fed Chair Powell has told us that the Fed plans to keep short-term interest rates in
the range of 1.5% to 1.75%, and we don’t expect a big change in the economic outlook
to shift that, so short-term interest rates should stay anchored in that region. Secondly, we do see room for interest rates
to move up somewhat for intermediate to longer-term bonds. Our estimate is that 10-year treasury yields
could move up to 2.25% to perhaps 2.5% over the course of the year as trade tensions ease,
the economy starts to look a little bit stronger, and inflation expectations pick up modestly. That would offer an opportunity to investors
who are looking to add more income to their portfolios to find better yields without having
to stretch into lower credit quality bonds. Thirdly, we are concerned about the riskier
segments of the fixed income market because the yields offered on those bonds are low
relative to treasuries. We suggest investors move up in credit quality
because the risks associated with bonds like high-yield bonds or bank loans are starting
to outweigh the potential rewards.

How I Turned Thousands into Millions in the Stock Market


– So I would prefer to have zero positions scanning the whole penny
stock battleground. Looking for a good play where
the odds are on my side. (upbeat music) – You started out with $12,000 roughly. Many of the attendees might have that or have less. So you did it with that
12,000 back in ’98. Do you think it’s feasible
today to start out with that small account and repeat or similar success to what you had? – Yeah I think it’s possible and I think that it is
doable if you study, if you have the right mentality– – And if you had a small
account would you do the same thing again? – I would do the exact same thing. I you know if god forbid I lost all my money I would go back to the beginning and it actually
be a good challenge. I would live off ramen, I’d live in a box. I would only miss
air-conditioning and fast wifi. Those are two things I
can’t live without right now but aside from that you
have so much opportunity right now with the bull market and possibly a bear market
in the next few years. There’s gonna be so much volatility. The only question is are
you prepared because sadly too many people are unprepared. Even if there’s a perfect play, they haven’t studied the past so for me I’m basically a glorified history teacher. I have 6,000 video lessons
going back over 10 years now. I show all my trades
going back 20 plus years. Why is something from seven years ago still relevant today? Because again these patterns repeat. And some of you guys– – Sometimes it’s the same tickers. – Same tickers, same
sectors, same patterns. – Five years later it
can be the same ticker. – Cause again it’s greed
it comes down to the media hyping stuff up. The media just wants maximum clicks. So if you start thinking in terms of, not necessarily fake news, but just being cynical with your approach to media and not necessarily believing it. They’re just gonna create click-bait so anything they talk about is gonna be exaggerated. And if you start thinking oh
this article is exaggerated this article is exaggerated
let me see how it affects theses stocks. Or again you have all these idiots who are interested in buying the one you know (mumbles) not doing the research, not realizing that the
company has no cash. And if the stock does go up they’re gonna do a financing so it’s gonna crash. So a lot of people are
just looking at penny stocks the wrong way. And you can take advantage of that by looking at it the right
way and being meticulous. – So I think the number one reason and again maybe many here
I’ve been there before. I think the number one
reason low price stocks get such a bad rap, for
lack of a better term, is people buy that and then they become the bag holder. They buy the idea lots of
times your up your up 50, 100 percent and then it
crashes the next day your red. So if you are a bag
holder we won’t ask you to raise your hand. If you’re out there your holding– – Raise your hand if you ever had a big (mumbles) and you didn’t take it. – Okay so if you– – It’s okay be proud we’re
all in this together. – If you are a bag holder in a penny stock what should you do tomorrow morning? – So for me if I ever have
any big loss well you know I usually don’t because
I follow rule number one and cut losses quickly but I’m human I might make a mistake. I might slip. I’m pretty clumsy and be
in a coma for two weeks and then wake up to a big loss. I would still cut that loss immediately because it’s not just about that loss. It’s not about the money. It’s the mentality okay . If you have to think
of losses like cancer. And you need to cut
that shit out of you as soon as possible before
it infects the rest of your body or your life. Big losses kill your confidence. They kill your account. And while your sitting
on this one loss you know stewing about it like
miserable you might miss a good opportunity because your so focused on something that doesn’t have good odds. For me sometimes the best
trade is no trade, right? So I don’t need to trade all the time. I’m always looking for a good trade. So I would prefer to have zero positions scanning the whole
penny stock battleground looking for a good play where the odds are on my side. If your in a play doesn’t
matter even if this stock is gonna come back. Your mind set is so messed up with that you are not in control anymore. You need to recognize that and you need to get out it’s like a bad breakup, right. Like you have a bad breakup you don’t ask the next person you see
“hey will you marry me?”. No your mind-set is
all messed up after the bad break-up you need to calm down. You need to go to Vegas. Go have fun for a little bit. (laughing) – But yeah that’s one of
the biggest things I think so many you know that’s why penny stocks get a bad rap. People over stay they
have that long term loss. And then it just gobbles
up your buying power. I mean if your down
40% on some penny stock when the next good one
comes along you got a few hundred dollars of buying
power because your all in this grinder that just keeps going lower. And don’t discount the
fact of that mental cap. Hey we’ve all been there. You open up that brokerage
account and your like “god damn it there’s that
big red number again”. Get rid of that . The sooner you end that bad relationship the sooner– – I can make a food analogy. It’s like a heavy thanksgiving dinner. When you have the turkey. You have the stuffing. You have the pumpkin pie. You had another pumpkin
pie because it’s delicious. You have the cheesy bread. And you just feel like
death like you gotta go to the bathroom and
you need to let it out. You don’t want that you don’t want that meal you know soaking you down
for all of December, right? You gotta go to the bathroom get it out and look
forward to the next day. Go to the gym. – I love your analogies, Tim. That one was a (mumbles). – That worked? – Who liked that analogy? – And you got that one yeah! – That one worked that
was one of the best. – Oh what ever that’s one of the worst. – Get out of here. (laughing) – I have to make a lot of analogies because you know I’m self taught. So I taught myself through thinking about penny stocks like these
real world examples. And I mean it exists, right. I feel like crap after
thanksgiving dinner. It’s delicious but I fell like crap and I have to let it out. (upbeat music) Hey Tim Sykes millionaire
mentor and trader. Thank you for watching my videos. I hope that they help you. I want to share everything that
I’ve learned over the years. You can check out more
videos right over there. And also click subscribe
so that you can watch all of these videos, get that knowledge, and become my next millionaire student.

Adapting With the Market: My Favorite Pattern Right Now


– [Tim] Good morning, Tim Sykes here. I guess it’s morning when I post this. It’s the middle of the
night when I’m filming this, and the answer is no, I don’t
sleep as much as I should because there’s so much
of information to get out, and I feel like it’s my job to update you when, you know, patterns adapt. As you might know, if you’ve been watching my video lessons for the past few months, short selling, I think, has
gotten very, very dangerous. The risk/reward is great in a bad way, not that it’s great in an amazing way. There’s great risks to shorting compared to the potential reward. So I don’t really short that much anymore. With going longs, I really
like morning dip buys, but we haven’t really seen
any true panics lately. So my third pattern that I
really like is first green days. You know, LTUM had
obviously a few up days, but then a red day and
it consolidated, and then this first big green day
was a breakout to new highs, and a lot of people who just
memorized charts, they say wow, big first green day,
look at the record volume. Let’s buy that and hold overnight, and that’s exactly what I did. The next morning, I was not rewarded. It actually would have paid
to sell into the close. I still made some money,
but I would’ve made more had I sold into the
close the night before. This did not gap up or morning
spike the way I wanted. So RAKR on Wednesday, very nice breakout. A little over extended. You can see all the little green candles, but really the first big green day, and more importantly a breakout. This was the first day on
Wednesday that it broke the previous highs here at 28 cents, but I was buying it at 39. So I recognized that I’m buying this late, but at the same time we see
a lot of these stocks run up. Recently CYDY had a similar
breakout right here, and then the very next
day it was a 30, 40% gain. So there are some precedence. BLOZF also had a breakout right
here over the previous high, and then the next day was a huge breakout. So RAKR, some people were asking why am I buying it at 39. It’s so over extended. I mean just look at CYDY
and BLOZF as recent examples where the first big green day breakout over the previous highs lead
to another big green day, but at the same time I
did not hold it overnight because I recognized that
LTUM didn’t work overnight, and there’s also probably
like a dozen examples if I really wanted to get into it of recent first green day OTC
plays that did not gap up, that did not morning spike the next day, and in fact they actually
tanked the next day where you had to get out right at the open to make a small gain or a small loss, but pretty much all of
them had morning panics, and some people say oh, Tim, you create the
morning panic when you sell. Well, RAKR, I did not hold overnight, and look it was the same
exact morning panic. So a lot of people have all
of these conspiracy theories that I am in control of this whole market. Whether I trade it or not,
the patterns are gonna work. That’s kind of the cool thing here. And no, I did not hold RAKR overnight. I sold it a little too
soon here around 43, 44. It actually went all the way to 46, and if you did manage to hold overnight, you could have theoretically gotten out at 48, 47, 46, 45, 44 all of which would have been better than my sell here in the 43s, but at the same time I didn’t
wanna take the overnight risk, and again, when I trade
with such a small account, it’s not even just trading for profits, it’s also trading in order to teach. So I’m proud that when
I saw LTUM not gap up or morning spike into it’s first green day when it frankly should’ve, I was glad to use that
lesson and adapt on RAKR, and I got a pretty good exit. Like I said though, obviously the exit could have been better had I held a little longer, but I usually error on
the side of caution, and now that brings me
now on a play on Thursday, KWBT where I made a few hundred bucks, exact, exact, exact kind of uptrend. Not an exact science, but the
same kind of price action. Here’s KWBT, big spike,
and it actually dipped, but there was a nice little bounce, and a little breakout here above 415, was the late day breakout, and KWBT, I mean, if you
look back a 100 days, it doesn’t really
matter, but even 50 days, it had one big green day, but
the next day was solidly red. This a nice first green
day, but as you can see from all the times that
it usually has green days, the candle, it doesn’t close at its highs. So that’s what this little
difference in the candle is. If it closed right at its highs, it would’ve been a full candle. Same thing with this green day
back here on December 12th. Green day on January 9th,
green day on January 10th, green day on January 13th,
and green day on January 16th. None of them! So we got one, two, three,
four, five, six, seven examples of green days, and the stock
does not close at its highs! So now, not only am I thinking, okay, I’m not sure if I wanna hold
this kind of play over night because the trend as been better to sell into the market close, but then also do I really wanna sell
right at the market close because seven different examples,
it did not even get there. It did not even finish high. So very speculative stock,
and I specifically said this. I’m not sure if I was
gonna hold it overnight, but it hit my goals. I made roughly over 10%, that
was the bottom of my goals, and even if it had been like
9% or 8%, some people are like okay, so you have to wait
for your goals to get hit, then you sell, it was
not acting perfectly, and when I, like I said, this
is not a perfect science, but I have expectations given
the fact that this stock has failed on first green day seven times they failed to hold their
gains into the close because I don’t know if the
market makers are pushing it or promoters are pumping it, or maybe just some existing shareholders are selling into the close,
whatever the case may be, it’s not finishing that strong, and it does not have a
history of strong second days. Although, some people will
say well, why even trade it? Massive volume, massive volume breakout. So does somebody know something? Is there gonna be news on Friday? Is there gonna be news over the weekend? I have no idea, but for me, buying with the intent
of holding overnight, but clearly commenting that I was not sure if I was gonna hold it overnight, but I wanted to give it a chance because if big first green
day here with record volume, like yeah, it has failed seven times, but all of that volume on
all seven times added up doesn’t even match one
day’s of volume here, or maybe it’s similar, but my point is is that this is huge, massive volume. This is not like a 10 or 20% increase. This thing traded roughly triple more then it has been recently trading. So there were a lot of buyers. So I sold it because,
again, it hit my goals, and even if it hadn’t,
I would have sold it close to hitting my goals just to play it safe
overnight, you never know. And then also I can always re-buy it back. That’s the beauty of trading. With short selling, this
is another bad thing with short selling, sometimes
you go days or weeks trying to find shares to
short of some pump and dump, and you finally find shares to short, and it might not be the right time, and you might start getting squeezed, but you don’t really want to sell, or you don’t wanna buy
to cover your short, you don’t wanna exit your position because you might not be
able to get short again, but with a play like
KWBT, I could buy again if does start running. It still finished up 40%
on the day, 40% plus. So if it looks like it’s gonna
have another 20, 30, 40%, I can just re-buy. That’s the beauty of buying, and that is the beauty of
playing it safe overnight. So I am playing it safe
overnight on all of these plays based on recent evidence. So if you understand what I’m saying, leave a comment underneath
this video saying I will base my trades off recent evidence. ‘Cause that’s what it is. I’m trying to judge the market. I’m trying to judge this pattern. I’m trying to be less stressful. I’m in California right now. So my time zones are all whacked. I really hate getting
up at 5:00, 6:00 a.m. I’m just not a morning guy. I’m filming this in
the middle of the night when I should be asleep. So I’ma take it as stress free as I can or minimize the stress (air whooshes)
as much as I can, and that involves for me right now selling before the close
on the first green day, and again, all because of
all these recent examples and all this evidence. So if you understand it,
leave a comment underneath. I’m curious to see who understands this. I’ll see you in the chatroom, thank you.

Stock Market and Political Predictions for 2020 (w/ Jason Trennert & Vincent Catalano)


VINCENT CATALANO: Jason, welcome to Real Vision. JASON TRENNERT: Thank you for having me. VINCENT CATALANO: Tell us a little bit about
Strategas, besides the fact of the name, and get into the definition that came from it,
Strategas is what? JASON TRENNERT: Yeah, so Strategas. We’re a research firm that focuses on macro-economic
research, economics, policy, technical analysis, fixed income strategy, and it’s also a broker
dealer. In addition to research analysts, we also
have sales traders, and institutional salesman. Basically what we do is we write reports on
these big picture things. We publish them and then we travel around
the country and the world to tell institutional investors what we’re thinking. VINCENT CATALANO: That’s fantastic. You are, your role is? JASON TRENNERT: I’m the chairman of the company
and also the chief investment strategist. I mainly focused on the equity markets, but
try to also pull everything together. VINCENT CATALANO: One of the founders? JASON TRENNERT: One of the founders, that’s
right. I started in 2006. I had worked at Heiman for about 15 years
at a place called ISI Group from ’91 to 2006. Then my partners Nick Bohnsack, and Don Rissmiller,
they joined me and we started Strategas in 2006. VINCENT CATALANO: That’s fabulous. Want to start off talking about the markets,
overall, the equity markets. One of the things that stood out to me and
key reason to discuss with you today is earlier in this year on CNBC, one of the hosts there
was pressing you and Rich Bernstein. Where’s the market going to go? What’s the price going to be at? Where are we going to end up? That thing and Rich deferred, demurred. You said, “All right, I’ll give you a–“,
and you gave a number. The number was, I think for the S&P, which
was at the time around 2600 or something like that, you said in the neighborhood of like,
3000. In fact, you gave a specific number, 3005. JASON TRENNERT: Yeah. Oh, wow. That implies a certain expertise I don’t have
but at least I was bullish, at least that was on the right direction. VINCENT CATALANO: No, right direction. Yeah, definitely on the amplitude of the low
was pretty close to it. Here we are coming to the end of 2019, where
do you see the equity markets today? Valuation was tough before and more so now. JASON TRENNERT: The hard part now is the market
is not cheap by any normal standard. I don’t also think it’s particularly expensive
given where interest rates and inflation are. We’re using, just to use round numbers, about
$175 for S&P 500 operating earnings. If you put an 18 multiple on that, which I
think is fair, given where again 10-year Treasury yields and inflation is, it would tell you
the market right now is fully valued, but not overvalued. VINCENT CATALANO: Not Cape like overvalued. JASON TRENNERT: Not Cape like overvalued. I’m not sure I’m a big fan of Cape, frankly,
especially with interest rates this low to begin with. We were talking this morning in our– we have
morning meeting every morning at 7:30 where we all get together and we discuss the market’s
direction and what’s happening. Our view is largely that if we’re going to
be wrong on the market, it’s likely that the market’s going to continue to strengthen more
than people think that markets rarely stop at fair value. They tend to get overvalued before bull markets
end, and even though– again, it’s pretty fully valued right now, with the Fed on hold
for most of next year, it’s certainly hard to be short, it would be my view. VINCENT CATALANO: Earning’s looking pretty
good going into next year, at least the next 12 months. In any event, interest rates being low. That suggests to me that you guys use something
along the lines of a discounted cash flow model for value. JASON TRENNERT: Yeah, we do the earnings on
a bottom up basis, really from a sector level so that not bottom up all 500 S&P 500 companies,
but we do it sector by sector and we build it up from there and come up with an earnings
estimate for the year. Then we use a variety of econometric models
to forecast the multiple. Frankly, right now, the models spit out what
I would say was almost socially unacceptable numbers of 20 or 21, or 22 times earnings
just because you have secularly low interest rates and inflation. Probably we don’t want to bite on that too
much because generally speaking, it’s hard to get a multiple more than 19 or 20 on a
sustainable basis but by the same token, 18, or 19, is perfectly reasonable. Again, we’d rather be a little cautious and
be wrong by market moving up the other way as opposed to being too galosh and have the
market call the wrong way. VINCENT CATALANO: At an 18 multiple, that
sounds a little bit like the rule of 20. JASON TRENNERT: Yeah, that’s a fair– the
rule of 20 was created by my old boss, Jim Maltz and he had found over time, over a long
period of time, that if you added up the multiple of the S&P 500 and inflation, that on average,
the sum of those two items equal 20, over long periods of time. We have very sophisticated models that look
at all sorts of things. Then we have the rule of 20, and I’d have
to say that the rule 20 is just as good as some of the very sophisticated econometric
models. They’re largely getting at the same thing,
which is largely the idea that when you’re discounted cash flows by lower interest rates,
the net present value is quite a bit higher. That’s largely what it’s getting to. VINCENT CATALANO: Now, you referenced the
Fed and low interest rates and all, where do you see rates going into the next year,
which is a big factor all the way around economically in the financial market? JASON TRENNERT: Yeah. Well, short rates in my view are going to
stay in the current range. The Fed just met last week, second week of
December. You’re going to between 1.50 and 1.75, the
Fed has made it pretty clear, too, they’re not going to change until inflation is above
2 and looks like it’s going to stay above 2%. Right now, with inflation about 1.50, little
more than 1.50, that doesn’t seem to be likely anytime soon. I think the Fed is done for next year. Long rates, on the other hand, though, I think
should start to drift higher. Frankly, I think it’s a good thing if they’re
drifting higher because it’s a reflection of real GDP growth, as opposed to inflation. It’s hard to forecast inflation right now,
in my opinion. Our expectation is that a stronger global
economy next year will allow interest rates to move higher, and that actually winds up
being good for S&P 500 operating earnings because a steeper yield curve tends to be
good for financials. VINCENT CATALANO: That yield curve being more
positively sloped is a reflection of an economy, US and worldwide, that’s in better shape? JASON TRENNERT: That’s in better shape. Again, you have decent growth with low inflation. It’s really a Goldilocks type scenario. I think, again, next year is an election year,
too, as if we can’t forget, but the Fed probably doesn’t want to be too involved, wants to
be less involved than it has been over the last few years, probably doesn’t want to get
the president involved. They don’t need to. Again, they’re in a position now where inflation
is so tamed that I don’t think they have to worry too much about inflation getting away
from them, running away from them, and they can take their time with the next move. VINCENT CATALANO: Tell us about the political
scene because you guys covered that as well. Dan Clifton. JASON TRENNERT: Yep. Daniel Clifton. VINCENT CATALANO: Down there in Washington
and what’s your firm’s perspective on that? Implications economically and implications
for the market? JASON TRENNERT: Yeah, we’ve been in– and
I was saying before, we’ve had plenty of bad calls, but one of the good calls we’ve had
was on this idea of populism being something that can last. We were pretty early on in taking Donald Trump
seriously as a presidential candidate, pretty early on taking Brexit seriously as a potential
outcome. We’re still very much of the view that populism
is an enduring political theme. One thing I feel strongly about is that whoever
next president is, it will be a populist. The question is, is it the right of center
populace that’s in the presidency now, or is it a left of center populist, like a Bernie
Sanders or Elizabeth Warren? I think the days of– for the time being,
the days of having an establishment candidate are probably pretty unlikely, in my opinion,
and I think that it’s largely reflective of concerns that everyday people have that are
not largely and they have not really been met by the orthodoxy of the bigger parties. VINCENT CATALANO: That argues against someone
like a Joe Biden. JASON TRENNERT: Like a Joe Biden, in my opinion,
he may very well win the nomination but I think if he ran against Donald Trump, he might
have a decent chance of beating him but I think Donald Trump would win. Listen, incumbents have a hard time losing
anyway. Incumbents particularly have a hard time losing
when the economy is as strong as it is now. Now, there’s 10 months in– VINCENT CATALANO:
In any number of events. JASON TRENNERT: 10 months is an eternity,
especially these days in a 24-hour news cycle. Our best guess is that the status quo will
prevail, which is to say that Donald Trump will be reelected, that the Democrats will
keep hold of the house and the Republicans will keep control of the Senate. In our opinion, that’s the most likely outcome. By the same token, it’s pretty a 50/50 country,
and anything could happen but economy, in my opinion, will be the single most important
factor in terms of who gets elected next. VINCENT CATALANO: It’d be interesting to see
what the consequences of that would be worldwide. JASON TRENNERT: Donald Trump being reelected? VINCENT CATALANO: That’s correct. In other words, 2016 wasn’t an aberration,
it is what is. JASON TRENNERT: Yeah. My opinion, Brexit, what’s happening in Italy,
what’s happening in a lot of the regional elections in Europe I think give you a pretty
strong indication that 2016 wasn’t an aberration, that there are a lot of secular pieties on
both the left and the right that have been followed by the establishment candidates,
by establishment parties, that average people are saying this just doesn’t work for us. You could go through whether it’s free trade
with a country that’s not really interested in free trade, like China or open borders
or formal Care Act or wars, endless wars and all these sorts of things average people were
starting to question and they want something different. VINCENT CATALANO: Do you think that the, in
the US, the Democrats basically with their embrace of let’s call it the coastal elites,
so to speak, and in particular, Wall Street and Silicon Valley, do you think that that
is a dynamic that’s there that the democrats are missing? JASON TRENNERT: That’s my opinion. I grew up in– both my parents were Democrats
and I was a Democrat for a while, but it was very different party at that point, it was
largely for working men, working women. It was largely anti-communist, if you had
a strong religious faith, you didn’t feel that you were necessarily excluded. The party has changed a lot now and we could
debate those things, but I could say there’s a lot of people who have those opinions now
that might not feel that at home in the Democratic Party, and I think that’s one of the issues. I think that’s part of the why Donald Trump
won, he recognized that and recognized that there are certain longing for something. That’s why I think Joe Biden would probably
have the best chance of beating Donald Trump because I think he has that every man type
of feel. I think he would have a better shot at winning
than either Sanders or Warren. VINCENT CATALANO: How do you blend longer
term trends and themes with shorter term business cycle related issues? How do you mesh the two together? Because I get a sense that you do that you
do look at both. How do you develop that into an investment
methodology? JASON TRENNERT: Yeah. Well, that’s a great question. Because it is a constant struggle, and it’s
mainly because our clients are professional investors so to be frank, the main thing we’re
trying to get first is the next six to 12 months, just trying to make sure our clients
stay employed. Then in turn, keep us employed, because one
of the hard parts about the investment business, particularly when it comes to stocks and stocks
are the longest duration assets you can get really, maybe aside from real estate. Yet most people who manage stocks are managed
at best, or evaluated on a once a year basis. Then some hedge funds are evaluated on a monthly
basis. It’s an almost impossible task for the professional
investor today, in my opinion, that they again have our trading at very long duration assets
and yet, they’re held of this very short term standard. We try to give the longer term themes and
we publish separate reports on the longer term themes once every quarter, where we try
to give people say these are big, long term things to think about whether it might be
populism or whether it might be the convergence between the public and private equity markets
or very, very long term ideas. We publish those on a quarterly basis to make
sure people know what we’re thinking about those things but we also publish every day
about what’s happening every day and what we think is the most likely outcome on a shorter
to intermediate timeframe. VINCENT CATALANO: See, I think that that’s
one of the great value propositions of Strategas, is the fact that you do reconcile the long
term framework, so to speak, with the short term practical elements of it. What you said before about professional investors
that they’re judged on a shorter term basis, they’re in long duration assets, for the most
part, judged on a short term basis in many cases. Which is a difficult balancing act to do and
the thing I’ve always been struck by is that Strategas, my sense is that you guys have
your ear to that ground better than pretty much anybody. JASON TRENNERT: Well, that’s a very nice thing
to say. It’s actually, in my opinion, is one of the
great compliments you could give our firm. I think if we do that well, it’s largely because
we– for better or worse, we travel all the time meaning I’d say for worse because I have
to go through TSA or the airport. For better, once you get to wherever you’re
going– which I travel 70, 75 days a year and will be in everywhere from- – being everywhere
from Des Moines to London to Singapore and balance. My partners travel more than I do if you can
believe it, they’re a little younger than I am. The bad thing about that is time away from
your family and it’s not easy physically. The good thing though is that you meet a lot
of different types of investors and not just hedge funds here in New York. You also meet mutual fund managers in Boston
and state pension plans and the middle part of the country and then you might deal with
a big bank in Europe or big public pension plan in Australia, those types of things. You have a good idea of where people are positioned
and how people are thinking and it keeps your mind fresh too, because you’re not just talking
to each other, which is one of the biggest, let’s say one of the biggest risk in the investment
businesses, you just spent a lot of time talking to other people that have the same idea as
you do, or the same similar backgrounds or similar circumstances. VINCENT CATALANO: How do you factor that into,
or do you not factor that into your estimates of where the financial markets will be? That dynamic of what they’re thinking etc. JASON TRENNERT: Yeah, I wouldn’t say it’s
not, certainly not. There’s no mathematical way we do it, but
we do meet every day as a firm. We have a morning meeting, as I said, at 7:30
every morning and we share all the time what we’re hearing from the road, and the questions
that were being asked by investors and that the questions that were being asked by professional
investors inform a lot of our written work because again, if you spend a couple of days
on the road, let’s say in Texas, you’ll find that you’ll get the same two or three questions
in almost every meeting or something that’s on people’s minds. That will be the basis for the next report,
we say we should look into– we might not know the answer, well, likely not know the
answer. Then we’ll do the research and we’ll say this
is actually what happens. This is how long it takes between the first
Fed easing and the next Fed tightening on average, how long does that take? A lot of things along those lines, what happens
when the dollar strengthens or when the dollar weakens as it relates to earnings or sector
weightings or things along those lines? VINCENT CATALANO: That then gets fed back
into the decision process? JASON TRENNERT: Exactly. VINCENT CATALANO: What happens if you had
a view, a consensus view, let’s call it out there, of professional investors, some of
which may carry more weight than others in your mind in terms of their insights and their
views? If that is in conflict, let’s say, with the
fundamental valuation work that you’ve done with maybe the technical market intelligence
that’s there, what happens with that? Does that tilt, you say, oh, well, we believe
this but this element here is a dynamic? JASON TRENNERT: Well, I have to say as always,
as a basis for all the things we do I have to say is, it’s long enough to know that you
have to be humble in this business because it’s a very humbling business. We’re never– I would say the style of the
firm is decidedly never to pound the table on anything. We are always thinking about ways when we
put on any new call. Before we put it on, we think about how we
might be wrong and what would cause us to change our mind before the trade is put on
or before the idea is established because it becomes important because you want to be
able to recognize when you’re wrong quickly as opposed to just trying to paper over it
or make other excuses for it. Our clients, mercifully, our clients give
us a lot of benefit for showing our work. Like as long as it’s well thought out and
well-reasoned, our clients cut us wide slack when we’re wrong. Again, we try to have this discipline of when
we are wrong, admitting it quickly and moving on and getting onto something where we might
have an edge. VINCENT CATALANO: That comment reminds me
of something that Byron Wien of Morgan Stanley, one said at a CFA market forecast event that
I did, when he was asked the question why are we doing this forecast for the year ahead? He said, it’s not the specific forecast for
the number, it’s the process that you put into it in understanding. That sounds like what you just said. JASON TRENNERT: I think that’s right. I think Wall Street or in the investment business,
it can be sometimes when people are not involved in the business, it can seem rather dry or
very uncreative. Yet I think the investment business in many
ways is more and more intellectually stimulating businesses there can be because virtually,
everything can have an investment implications. It can be very creative business in its own
way. If you’re a news junkie like I am, you spend
a lot of time learning about all sorts of different things, not just political events,
but scientific events or social movements, all of those things can go into higher thinking. It’s important. I view it that way, something where you’re
constantly learning and trying to test your thesis and all the rest. VINCENT CATALANO: Social Science with money. JASON TRENNERT: Yeah. I think the problems– it is a social science,
and the problems in the financial markets come when people try to make it a hard science
I find. That’s when people like long term capital
trying to make it a hard science, people that packaged mortgage backed securities and credit
default swaps, they try to make it a hard science like you put a little bit of a beaker
A and a beaker B and it equals beaker C, all the time. The thing is when you’re dealing with human
beings, it doesn’t work that way. That’s one of the things I have to say worries
me a little bit about this Fed. I feel more confident in the past Fed, Bernanke
Fed and the Yellen Fed, like I worry quite a bit that they viewed their role as really
almost as chemists, or hard scientists, where, if you do enough of one thing, it will always
turn out the way you expect it and it just doesn’t. When you’re dealing with human beings, of
course, it doesn’t work that way. VINCENT CATALANO: I want to get to a couple
of actionable items and areas that your friend was looking at. Before we do, I’d like to get your views on
private equity. Quite a bit of money is going in that direction. Institutional investors are shifting money
more so than at any point in the past into private equity. First, what’s your view in general of private
equity as an investment vehicle alternative? Then secondly, I’d like to get your thoughts
on what you think the motivating factor might be for institutional investors going into
private equity that might include the whole issue of required rates of return, and not
being able to hit it when you have interest rates at 2% and 3% and you got mark to market
with that, and then you have private equity that’s [indiscernible] your thoughts on private
equity. JASON TRENNERT: Well, I have to say in terms
of just being frank about it, we have no private equity clients. Consider the source. All of my clients are public equity or public
market clients. I want to be fair, or just tell you where
my biases might lie, but I’m very skeptical about private equity, the future returns of
private equity being anything like what they were in the past. David Swensen really put private equity on
the map in terms of an institutional asset class. What he discovered was that there was a discount
for illiquid private companies, or that there was a liquidity premium for publicly traded
companies. He said, I can buy these assets, and I can
buy them in the private markets at a discount and eventually, they’ll either be public and
so on, I’ll make a lot of money. That made a lot of sense. He made a lot of money doing it, but of course,
he was the first person to do it. Now, you’re 25 years removed from when David
Swensen really started doing that and there are now 7000 private equity funds that have
about $3 trillion in assets. In my opinion you’re running out of– and
valuations, in my opinion, are not cheap anymore. I would argue that there’s actually an illiquidity
premium now over the public markets. Part of this and this gets into your second
question, which is why are people throwing so much money there? Frankly I think people are chasing performance
and I would also say that there’s an opacity of the private markets that is very appealing
if you don’t want to be embarrassed or fired. Not to be overly cynical about it, but your
average public pension plan has an investment return assumption of 7.50%. Very hard to do that when 10-year Treasury
yields are below 2% and the long term average returns of public equities are 7, pretty hard
to get to 7.50. The only way you can really get that is through
leverage. That’s what private equity provides. It also though, it provides the best leverage
because it moves much more slowly, the marks move much more slowly and so you’re more unlikely
to be embarrassed again or fired by having very outsized allocations to private equity. VINCENT CATALANO: That aspect that, you brought
this up several time now, that aspect is I think really underappreciated by many investors. That dynamic of the potential of career suicide,
of getting fired, it’s almost as though– okay, I’ve refrained from saying this or making
this connection but it’s just such a fun thing I think to do, CFA equal CYA. JASON TRENNERT: Yeah. Well, listen, I think all of us and no matter
what line of work we’re in, job number one is keeping your job. I think that we’re just human beings. We’re all part of the same hypocrisies. You have to just recognize that and try to
use it to your advantage and it doesn’t mean that people were all– no, it doesn’t mean
you’re bad people or– VINCENT CATALANO: No nefarious reasons. JASON TRENNERT: There’s no nefarious reasons
but there is a reality of the institutional investment business which, again, is as career
as a central part of it. Just like anyone else in any other profession
has the same tensions, that this just happens to be with other people’s money that tells
they’re different. VINCENT CATALANO: That’s a great, great point. Last item, actionable ideas. Sector coping style investing, asset allocation. Give us some thoughts on Strategas as you
where I might want to be for 2020. We had Rich Bernstein on the program here
a couple of months ago and late cycle investing was his thing that he was emphasizing, your
thoughts on where we’re at and where we ought to be as investors? JASON TRENNERT: Yeah, I would say in that
regard, we have a little bit of a different view than Rich and that I’m not convinced
where his late cycle as it might seem, I know the business expansion is 10 years old. It might seem late, but I also think that
the real Fed Funds Rate is zero. Usually what ends recoveries is the Fed killing
it. Inflation rises where the Fed killing it and
here because of financial repression, you’re pretty far away from that. What we’re telling our clients to do is to
get more cyclical. We’ve told them to really get more, we told
them to buy financials, we’re overweight four sectors, financials, industrials, technology
and telecom. We’re of the view that actually next year,
the global economy will pick up. That’s largely because a lot of the trade
tensions will largely be behind us, at least as far as it relates to business confidence. In my opinion, the trade war, in some ways,
it’s sterilized some of the benefits of the tax cut that you got at the end of 2017. That was good for capital spending for a year
but then it faded because businesses got scared because of trade. If trade is behind us, there is a chance that
business confidence picks up, capital spending picks up and also global economic activity
picks up and that should be good for those sectors. VINCENT CATALANO: Anything in terms of the–
any thoughts in terms of the global markets, emerging markets, frontier, Europe? JASON TRENNERT: Europe in my opinion is probably
as a trade, as more of a trade or a tactical approach let’s say for a year, six months
to a year as opposed to secular, I like you’re up quite a bit because in some ways, I tend
to think it almost got hurt the most between the tensions between China and the US just
because it’s so trade oriented, it’s so geared towards trade, it should benefit the most
if global growth starts to pick up. The question will be longer term, whether
Europe makes the structural changes it needs to pave the way for long lasting growth, but
for next year, at least in my opinion, Europe looks quite good. VINCENT CATALANO: That’s terrific. Thanks so much, Jason. JASON TRENNERT: Thank you. I appreciate it. VINCENT CATALANO: All the best in the year
ahead. JASON TRENNERT: Thank you. Thanks a lot. Thanks for having me. Appreciate it.

January Market Overview


Thanks for your company for the monthly
wrap my name is Jessica Amir, I’m with Bell Direct. Well what a phenomenal month
and start to the year we’ve had the Aussies share market is up 5.2% that’s
if you look at the benchmark ASX200 a whopping start to the year
with the broader All Ordinaries of about 5% followed by the small
Ordinaries lift of over 3% looking at the ASX200 alone, it’s been the
best yearly start to markets since 1983 with the market hitting that new
record all-time high last week of 7145
points meaning the market was 7% higher year to date but since then
we’ve had investors locking in some profits amid the coronavirus outbreak
however sentiment does remain strong across markets for a couple of very
important reasons, one better than expected
Aussie economic data less unemployment high inflation both readings closer to
where the central bank want them to be better than expected US economic data
also helped with their rates remaining on hold in the US with the Federal
Reserve chair saying the labor market remains strong an employment
participation is continuing to rise an earnings season in the US is also
helping keeping the major indices in record neighborhood as 70% of the
top 500 companies that have reported have beat forecasts plus Apple shares
hit a new a record all-time high after reporting stronger than expected results
while of course don’t forget that US-China trade deal the first part of
that deal phase 1 was inked this month keeping sentiment high while the Brexit
is going ahead as expected so let’s look at the ASX200 it hit that new all-time
high last week so when will it hit another one or we don’t know but just
looking at the historical numbers it tells us that markets pretty much reach a
all-time high on average every 19 days after an all-time-high has been reached
that’s if you look at the numbers from 1989 excluding the dry spell from 2007
to 2019 the numbers also say about 93% of the time a new all-time
high was set within the next month but what about the coronavirus will despite
what you read in the headlines we had a look at the virus outbreaks and
epidemics since the 1980s they’ve all had varying impacts on markets but this
chart shows us from the HIV outbreak in 1981 to SARS in 2003 to swine flu Zika
and Ebola all these events caused short-term impacts on markets regardless
of what was going on many other factors to consider of course but this is just
looking at the numbers what we also know about coronavirus is it’s had an impact
on Chinese and tourism related stocks particularly as China is a largest
contributor to global growth and Australian tourism as well we’ve seen
corporate Travel Management lose about 13% this month flight center down
about 9% Webjet also taking a hit with companies like these exposed to the
Chinese consumer really being questioned by investors in particular with their
earnings sectors that have been standing tall since the virus broke out
healthcare, telcos, utilities, RIT’s big dividend paying stocks plus gold stocks
as well let’s look at the best performing sectors in January where all
sectors joined in the rally healthcare of the most 13% followed by tech
stocks up 10% energy the only lagging that remained in positive territory
though really succumbing to pressure from of the oil price as supply and
demand concerns both weigh, meantime one of the standouts in the healthcare sector
was the blood plasma and vaccine makers CSL also a top pick for reporting season
according to Morgan Stanley with a price target $350 CSL shares closed at yet
another all-time high as well on Thursday $319 early in the day in fact and it looks like it
could become the largest stock on the Aussie share market taking the thunder
away from CBI plus there also whispers mounting that CSL is developing a
vaccine cure or some type of treatment for the coronavirus as particularly
this company CSL is the world’s leader in vaccines and
antibodies known as immunoglobulins. What other big stocks were on the move well
plenty Polynovo continued to shine rising 48% to another
all-time high $2.94 as its skin repair technology developed by
the CSIRO continued to roll out across the globe with its treatment now being
used in the UK Germany and Switzerland consensus also expects Polynovo
could make a profit or break even for the first time this year Afterpay also
in the lead, up 30% hitting a new all-time high after closing off their
share purchase plan going the other way aerial imaging company Nearmap fell the
hardest 28% after announcing they lost a key US customer but remember this
company was one of the market darlings last year up almost 70% and
Treasury Wine Estates shares lost about 90% after cutting the full-year
growth of forecasts amid a challenging U.S wine market and what to watch next
week and beyond on the economic horizon well in the U.S on Friday, economic data
of GDP is out with expectations that growth will remain at an annualized pace
of 2.1% in the fourth quarter of last year as for what to expect for the
rest of the year well the IMF expects growth to drop from 2.3% clocked
last year to 2% this year. Over in Europe the European Union gave the nod for the
UK to leave the EU meaning from Monday next week no UK lawmakers will be in
European Parliament and back home on Tuesday the RBA is not expected to cut
rates and it’s expected to keep the rate, the central interest rate at 0.75% as two important factors employment and
prices are getting closer to where the RBA wants them meaning the economy is
strengthening its muscle inflation let’s remember rose 1.8% year-on-year
in the December quarter and food inflation in particular is expected to
remain high for the first half of this year on the back of the bushfire and
drought impacts and don’t forget last but not least confession season
officially kicks off next week so tune in each and every day we’ll cover what
you need to be across in the main companies that report with news in 60
seconds and don’t forget to tune in to our daily market updates on Bell Direct
TV or on YouTube as well plenty to sink your teeth into. That’s it from me
take care, stay safe and I’ll see you next time bye for now.

How does UK Tax work? – What you need to know about HMRC & PAYE


I get asked a lot about tax codes and how
tax works so we’re going to tackle this topic here and explain it with some quick
examples. Tax in the UK can be a bit tricky to understand
and there are lots of confusing headlines and stories out there to bamboozle you. This
is a basic guide to tax in the UK, check out part 2 if you want to know more about how
taxable benefits such as company cars or medical expenses work.
We are going to discuss personal tax from earnings. Let’s start at the top; HMRC.
HMRC – which stands for Her Majesty’s Revenue & Customs – is the department of the
government responsible for collecting taxes. This is what people mean when they talk about
‘the taxman’. These are some of the types of tax HMRC covers:
VAT Income tax
National Insurance Corporation tax
Capital gains tax Motoring taxes
Inheritance tax Stamp duty
Insurance Premium Tax Air Passenger Duty
PAYE It’s a long list! In this video we are only going to look at
PAYE. PAYE – or Pay as You Earn – is a type
of income tax. It is the amount that is automatically deducted from your salary on your payslip
each month, before you even get a sniff of it.
HMRC gives you a tax code. We’ll discuss tax codes in a minute.
Your tax code determines how you will pay tax and your employer uses your tax code to
deduct the correct amount from your salary each month and give it to HMRC.
PAYE is applied to your normal salary, sick pay, maternity pay, directors’ fees and
pensions. Tax codes. A tax code is usually in the form
of a number followed by a letter and it is a calculation of how much tax you need to
pay in the tax year. You can find your tax code on your payslip or P60 (which we’ll
come back to) and on the letter they write you at the start of each tax year.
Tax codes are calculated as follows: The tax-free allowance for everyone is currently £11,000 This means you can earn £11,000 before you start to pay tax.
This gives you the tax code 1100L which is what most people receive.
Ok, for this example we are going to use this tax code. We will look at how your tax code
can change a bit later. Once you earn over £11,000, you are taxed
at the basic rate. This is currently 20%. So if you earn £20,000 per year, you pay
tax on £9000 at a rate of 20%. This means you pay £1800 tax per year, or £150 per
month. Your employer deducts this automatically from your payslip – hence the term ‘pay
as you earn’. If you earn £30,000 per year, you pay tax
on £19000 at a rate of 20%. This means you pay £3800 tax per year, or £317 per month. Higher rate tax is paid on income above £43,000.
So if you earn £50,000, you will pay: Zero tax on the first £11,000 as above, 20% tax on your income between £11,000 and £43,000, This is £32,000 at 20% which equals
£6400. And you’ll pay 40% tax on your income above £43,000. This is £7,000 in this example which equates to another £2800 in tax. This brings your total tax bill to £9200 or £767 per month. I’ve heard people get this mixed up and think that as soon as you enter the 40% tax
bracket, all your income is taxed at 40%. This is not how it works. The higher rate (40%) tax bracket applies all the way up to £150,000. Above this point
you will pay 45% on your income. Also, if you earn above £100,000, your tax
free allowance diminishes proportionately to zero. If you have any questions about this,
leave them in the comments below but for now, we will assume that most people watching this
channel aren’t worried about this problem. To calculate your tax just remember this; If you earn more than £43,000; the proportion above this amount times 40% and the remaining amount between the two thresholds, – which is £32,000 – times 20% So what if your tax code is not 1100L?
I’m glad you asked. Your tax code may have a different number or a different letter.
We are going to cover this in part 2. Don’t forget to subscribe.
Remember, the figures used in this example are based on the tax year 16-17 and will likely
change from year to year. The basic concept remains the same though. Further information
is available from the HMRC website.

How to Pay For School | Tips On Saving Money For College


Hey everyone, so college is one of the biggest
expenses you face as a young twenty-something. According to data from valuepenguin.com, the
cost of college is, on average, anywhere from $4,800 a year for a typical community college
to as much as $50,000 a year or more for a private four-year college. That’s quite a chunk of change to somebody
who’s just graduated high school. So it’s not surprising that the student
loan debt in America is over $1.5 trillion with the average person carrying approximately
$30,000 in student loans. Even with the additional income commanded
by those with at least a bachelor’s degree that amount of debt can really hamper early
progress toward financial success. This is especially true if you happen to graduate
during a time when good jobs are scarce as many people have in recent years. So that begs the question of how we can better
prepare ourselves for the costs of higher education? That’s what we’re going to be talking
about today. In today’s video, we’re going to be discussing
how to save money for college. There is no doubt that college is great for some
people. Higher education is downright mandatory for
certain career paths like doctors and lawyers, but it isn’t for everybody. You can create a very comfortable life for
yourself with or without a degree. So before we talk about how to save money
for college I want to briefly discuss some statistics and reasons why some of you may
not actually need college at all. According to the Bureau of Labor Statistics,
the median income for high school graduates in 2017 was about $37,300 per year. For those with bachelor’s degrees, it was
about $61,800. And for those with advanced degrees, it was
about $75,400. There’s certainly a pretty big leap between
high school graduates and those who have at least a bachelor’s degree, but we also have
to consider the time it takes to get that degree and the cost of college itself. According to ValuePenguin.com the average
annual cost of a four-year college for in-state residents is about $25,000. For out of state residents that number increases
to nearly $41,000 a year. Private schools are even more expensive than
that with the average cost clocking in at over $50,000 a year. Those numbers include costs associated with
tuition and fees, room and board, books and supplies, transportation, and other miscellaneous
expenses. Judging by those numbers a four-year degree
at a school in your state may set you back about $100,000. That’s quite a chunk of change. Assuming that you put the full cost of that
degree on your student loans with a 4.5% interest rate and the standard 10-year term you would
be paying over $1,000 a month after graduation. That’s also quite a chunk of change. In fact, it’s about 20% of the median income
for those with bachelor’s degrees. John isn’t sure of what he wants to do for
work, but he’s been told that you need to get a college education to make it in today’s
job market so he goes to school. He pays about $25,000 a year for his education
and winds up $100,000 in debt by the time he’s wearing the cap and gown on graduation
day. He’s now 23 years old and gets a job earning
$60,000. He lowers his tax bill as much as possible
by investing in his 401K and IRA. After taxes, this would look suspiciously
like $4,200 a month. Not including the student loans he lives on
$2,000 a month. Since his student loans are costing him $1,000
a month, his total expenses are $3,000 a month. Therefore, John has about $1,200 a month left
over to invest. At an average 8% rate of return, John would
have $217,000 to his name when his student loans would finally be paid off at the age
of 33. This is certainly not bad and with his student
loans now gone, he will be able to start aggressively saving for his financial future. However, similar success can be achieved without
a degree. Jane also wasn’t sure what she wanted to
do for work, but unlike John, she decided to not pay for college unless she had a good
idea of what she wanted to do. She found a job at 18 making $36,000 a year
and just like John investing in her 401K and IRA to lower her tax bill as much as possible. After taxes, she takes home about $2,550 a
month. She lives on $2,000 a month just like John. She invests her leftover cash and has a net
worth of $167,000 at the age of 33. If Jane continued to invest like this she
would reach financial independence at the age of 45. That is a little later than John would be
based on these numbers but it is still far earlier than the average person, despite the
fact that she’s only got a high school diploma. Both John and Jane’s situation are good
ones to have. John had an idea of what he was going to school
for and was able to make it pay off for himself in a big way. Jane didn’t have a reason to go to school
so she saved herself from the costs by finding a good job that didn’t require higher education. She could, of course, decide to go to college
further down the road if she found something she really wanted to do that had a higher
education requirement. And with a full-time income, it would be much
easier for her to save money for the degree than it would’ve been in her youth. Bob’s situation is not as good. Like Jane, he didn’t know what he wanted
to do but he’s been told that you need to get a college education to make it in today’s
job market so he goes to school. He spends three years at college (racking
up $75,000 worth of student loans in the process) but never finds what he’s looking for. He doesn’t end up getting a degree and settles
into a job paying $36,000 just like Jane did. Like John and Jane, he lives on about $2,000
a month, but unlike Jane, he also has student loan payments to make. His payments are about $777 a month. That eats into the rest of his income and
then some so he is not able to invest at all. Unless something changes he’s just going
to go further into debt with time. And unfortunately for him, student loans are
incredibly tough to get rid of even through bankruptcy. Ultimately, this is the scenario we want to
avoid. That’s why it is crucial to have an idea
of what you’re going to college for. Your idea may change after you’re there,
which is fine, but we don’t want to just go to college to find our reason for pursuing
higher education. At tens of thousands of dollars a year, that’s
just too expensive of a risk to take. So first thing’s first, try to get an idea
of what jobs you might want to do by shadowing people in the fields you’re interested in
throughout high school (or earlier if you have the chance). If you find that you would love doing a job
that doesn’t really require a university education then you have saved yourself tens of thousands
of dollars if not more by forgoing the pursuit of a degree. If you end up finding a job that does actually
require a University degree, then you can start looking into ways to save on college
costs. This could include many things such as going
to a community college to get your two year degree before transferring to a 4-year University
to get your higher degrees, looking for scholarships or grants, looking for part-time jobs you
can do while at school, and saving early in things like ESA and 529 plans if you have
the time among others. These strategies can make a pretty big difference
in the cost of college and the amount of catch-up work you’ll have to do after graduation. For example, according to ValuePenguin’s
data, the average annual cost of a community college is just $4,864. Heh, and I say just $4,800 as if that’s
not also a lot, but it significantly cheaper than the 4-year university. If you got your two-year degree from the community
college it would run you about $9,700. You could then transfer to a 4-year university
and finish your bachelor’s for an additional $50,000. In total it would cost about $60,000 compared
to going to the 4-year university from the beginning and shelling out six figures. ESAs and 529 Plans are both ways to save for
educational expenses. ESA stands for education savings account. The 529 Plan gets its name from the IRS Code
number that it’s based on. Both the ESA and 529 Plan allows for tax-free
growth and withdrawals as long as you are withdrawing the money for qualifying educational
expenses. While contributions to the ESA are not tax-deductible,
they can be withdrawn tax-free for qualifying primary and secondary expenses as well as
college. You can choose just about any type of investment
you want and can contribute $2,000 per child, per year. ESAs must have a beneficiary listed and that
person must use the money by the age of 30 to avoid any taxes and penalties. If they aren’t going to use the money before
30 you can transfer it to another beneficiary as long as they are related to the original
beneficiary. This is really cool because it means that
if you’re saving for your kids college and they end up deciding not to go you can transfer
the account to your grandchildren! However, there are income restrictions with
the ESA. The restrictions begin with incomes between
$95,000 and $110,000 for individuals and $190,000 and $220,000 for those who file jointly. 529 Plans are offered by most states and are
a little more restrictive with their investing options than the ESA. For most states there are a few portfolios
that you can choose from when investing your money and you can reallocate your investments
twice a year. To make up for this the 529 Plans do offer
higher contribution limits of $14,000 per year and the money is still withdrawn tax-free
for qualifying expenses. There is no age limit for those using the
money. So if you’re beneficiary decides they want
to go back to school in their forties they’re free to do so with this money. Withdrawals can be used for college expenses
including tuition, room and board, and textbooks and supplies. However, they cannot be used for primary and
secondary school expenses like the ESA can. Unlike the ESA, there are no income restrictions
with most 529 Plans. And finally, just like the ESA, you can transfer
from the original beneficiary to someone else as long as they are related. With both of these plans, it’s important
to consult a financial professional as there are sometimes some differences in the fine
print, but this is generally how the options look. But as you can imagine these options can give
your son or daughter a massive head-start when it comes to saving for college. Assuming an 8% return and that you begin putting
money away for your child’s future educational costs when they’re born you could have an
ESA valued at over $80,000 by the time they’re 18. This could grow to as much as $120,000 by
the time their graduate college. The 529 Plan, due to it’s higher contribution
limits could be a great way to play some catch-up if you are starting later on in the game. At $14,000 a year, you could put away over
$110,000 in as little as 6 years assuming an 8% average annual return. However, if neither of these strategies work
for you there are still other options such as summer work. It’s great to be able to work during the
summer to earn money to pay for school. If that’s not enough though, there’s no
shame in working part-time during the school year as well. Your 30-year-old self will thank you for it
someday. Consider if you went to a community college
to get your two-year degree. It costs you approximately $10,000. If you then went to finish your bachelor’s
at a 4-year school you’d be paying about $50,000. In total your educational expenses are around
$60,000 over the course of 4 years. If you worked a full-time job in the summer
(13 weeks) that pays $12 an hour you would earn about $6,240. If you also worked 20 hours per week during
the school year (39 weeks) you would earn an additional $9,360. In total, you would have an income of $15,600. After taxes, this would likely be about $14,000
a year in income. With $15,000 a year in educational expenses
that would nearly pay for your entire degree! Within a few months of graduation, you could
be debt-free and off to the races building your investing portfolio. This may not help you save for college early,
but it will certainly help limit the damage excessive student loan debt can do to your
financial picture going forward. So those are some strategies for saving and
paying for college. Have you used any of them to help pay for
your or your children’s education? If not, what strategies did you use? Let me know in the comments section below.

Salary Negotiation: How And When To Ask For More Money | Burning Money Questions | MONEY


Hey guys. I’m Kimberly B. Cummings. Career and leadership expert and founder of manifestyourself.com. Welcome back to Burning Money Questions. In this episode, we are talking about salary negotiation. Recently, we asked you all to send us all the questions you have about this topic. Here are the answers. What’s one of the most important things that you can do in an interview that can affect the outcome? I’m so happy that you asked this question. Before we can talk about salary negotiation tactics, we have to talk about the interview process. If you are not able to successfully navigate the interview process, you will never get the chance to talk about salary negotiation. It’s important to remember that your process begins the moment you get in touch with the company and apply for the job. Every interaction you make with the recruiter, hiring leader, or a potential colleague, is an opportunity to evaluate if you’d be a great fit to join the organization. It’s important to pay attention to the little details, as well as the big ones, to ensure it’s clear that you are capable. From the beginning, make sure that you triple check your resume and cover letter for any typos. This is a quick way for a recruiter to confirm that you pay attention to details. Also, do your research on the company, and be sure that you have answers to common questions like, ‘Tell me about yourself,’ ‘Why are you interested in working here?,’ ‘Why are you leaving your current company?,’ ‘Where do you see yourself in the next three to five years,’ and can give solid answers to any nuances for the particular role you’re applying for. When do you bring up salary questions in the interview process? This is one of the most popular questions that I receive about salary negotiation. When can I bring up the money? In most cases, the recruiter will ask you about your requested salary range in the initial phone screening or interview. There may even be a question on the job application asking about the range as well. It’s important to know the target salary range before applying to the role. We will talk about where you can find this a little later. But if the recruiter or hiring manager doesn’t ask you in the initial phone screenings, generally it’s appropriate to bring this up closer to the final stages of the interview process. Every process is different. So this may be in the second or third round of interviews where it’s generally appropriate to ask the recruiter or hiring leader if they are able to share the compensation range for this role. This can be a touchy subject because if it’s too early in the process and the recruiter didn’t bring it up already, the company may not even be sure you’re a finalist for the role yet. So if it hasn’t been discussed, do your best to ensure it’s towards the end of the process, when you are fairly certain, or better yet, it’s been confirmed that you’ll be getting an offer. What happens if I say the wrong number when I first speak with a recruiter and want to negotiate a higher number later? I know this can be super hard. Salary negotiation is an interview tactic that you must prepare for. In the same way you research the company before the interview, it’s important to research the salary and prepare to have this conversation. It’s natural that you’re going to learn more about the scope of the role once you’re speaking with the hiring leader and potential coworkers. If after learning more about the role, you feel that the initial salary you shared is no longer appropriate, bring this up with your recruiter next time you’re chatting about next steps in the interview process, or towards the end of your interview process, like I mentioned in the last question. However, make sure that your change in salary requirements is based upon new information that you learned, and not because you just want more money or feel like they have more money to give. Remember, in the world of work, you are being paid to complete a particular job based upon your unique skills, training, abilities, education, etc.. So when you are positioning yourself to negotiate a salary in any scenario, it must be based upon those unique skills, training, abilities, and your education. Your reasoning can never be, ‘because you just need more money.’ Where can I go to find out how much I should be making? There are so many tools online to determine what the going rate is for the role you’re applying for. My favorite is LinkedIn salary. You’ll be able to get the full picture of salaries by job title and location. While you may not think location is an important factor, it definitely is. Cost of living in a particular area is factored into that salary that companies offer. Some companies may even pay a differential to employees working in high cost of living areas, like New York City and San Francisco. When you know you’re about to embark upon any type of career transition, I recommend using a tool like LinkedIn salary to inform your process. You’ll be able to look up job titles you’re interested in, and determine a salary range based upon data that incorporates years of experience, education level, company size, geographic location, and more. You’ll easily be able to determine what is the median amount for that role, and what should be an appropriate salary to request when you’re navigating the salary negotiation process. When you’re using tools Iike LinkedIn salary, you’ll see wide ranges sometimes, so make sure you narrow down a range for yourself that only spans about $10,000-$15,000. Ideally, the bottom of the range you share should be the target salary you’re looking for. Once I already have the job, how do I make a case for a promotion? This is super exciting to me. You’ve ideally been in a role for at least a year and you’ve made some impact that warrants a promotion or salary bump. The key point here is that you made an impact. Simply doing your job is written in the job description makes it hard to negotiate a sizable raise. Your case for promotion into a more senior level role needs to be based upon your experience, accomplishments, or change in scope of the original role. If you’ve mastered your role and are now able to train new people on specifics, or are now innovating on existing processes, you can base your conversation on your experience, and how you’re leveraging that to increase productivity, return on investment, or another company metric. If you’ve surpassed all established metrics for your role and you have concrete accomplishments that have helped the company reach their goals, you would be able to base your conversation on your accomplishments and plans to grow even more in the upcoming fiscal year. If you’ve been in the role and the scope of work has changed, I recommend outlining the changes in a solid plan to continue to produce at a high level, that may even incorporate elevating your role, and bringing in a new team member who can report to you and assist with the workflow. Advocating for promotions can be tricky. So make sure you have a rock solid plan, buy-in from senior level stakeholders, and a track record of success at the organization, before starting these conversations.