Tag: credit ratings

What Will Cause The Next Stock Market Crash?

Summary:

  • Investors feeling safer than they should is the primary cause of market crashes.
  • Consumer debt is at unhealthy levels, but it is not reflected in consumers’ credit scores.
  • Bonds in every sector have the potential to be much riskier than their credit ratings indicate.
  • It may be a good time to avoid long-term bonds and securitized debt and to look for investments less exposed to high levels of debt.

Stock market crashes, like those that hit the U.S. markets in 1929, 1987, and 2008, tend to follow the same formula. This makes people wonder why they keep happening and we cannot prevent or even predict them. In fact, the act of thinking that we can prevent or predict them can at least partially be credited with causing them.

The formula is essentially as follows…

Continue reading at Seeking Alpha.

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My Year with a Cash Back Credit Card

Like many consumers, my wife and I have long been suspicious of credit card companies. We are generally cautious about debt, not wanting to add to our massive student loan obligations. Credit cards, of course, are among the worst kinds of debt: with high interest rates compounding at a rapid rate.

Up until the end of 2016, the only credit cards we ever had were from making a large retail purchase on credit. For example, I purchased my Macbook Pro with Apple Credit, which is really just a Barclay credit card. The first year has no interest, so I paid off the account in one year and paid no interest. I wanted to keep that line of credit open to build my credit rating, so I set up automatic bill-pay on a bill that is $15/month. I pay off the balance every month, and I don’t use that card for anything else. It has been great for building my credit at no cost. Otherwise, it not very useful and adds to my stress sometimes when I worry about forgetting to pay it.

blue-cash-everydayWhile teaching my high school personal finance class about credit cards and credit ratings, I decided to do an experiment and try using a cash back card. I compared some cards and decided to apply for the American Express Blue Cash Everyday rewards card. Credit Karma informed me that with my credit history, my application would have a good chance of being accepted, and it was. Continue reading “My Year with a Cash Back Credit Card”

How the Next Bust is Brewing

Check out my article, “How The Next Bust Is Brewing,” which was just published by Seeking Alpha. It covers…

  • Consumer credit scores have reached a record high.
  • The mistakes that caused the 2008 financial crisis are falling off credit reports.
  • Credit card debt remains on the rise.
  • FICO is lowering the standards for achieving a high credit score.
  • The average American household is a higher credit risk than it appears to be.

These are very concerning developments that every investor should be aware of.