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On this episode of Tape Talk we talk about the US Debt situation and the never-ending Debt Ceiling debates. Is it as bad as the headlines make it sound?

What is the National Debt? Why Does it Exist?

When a country spends more than it takes in its budget ends in a deficit. When this happens debt must be issued to make up the difference. While this sounds like a dire situation it's a fairly typical situation among many of the countries throughout the world. We'll consider if the national debt is bad or if it can actually be a beneficial tool for the country.

A Country is Not a Person

Most discussions around the national debt end up trying to make parallels to an individual consumer so that we can get our mind around the size and scope of the debt situation. However, this presents a significant problem. A nation is completely different from an average household. We consider why being a nation without a life expectancy, having the ability to print money, and control over taxes all contribute to national debt being significantly more sustainable than your average household debt.

Don't We Owe China Too Much?

One of the biggest arguments surrounding our debt levels is the fact that China owns a lot of our debt. Is this nefarious or simply the standard state of affairs? We break down the real level of US debt that China owns so we can consider how at risk the nation is.

There's No Easy Fix

Many discussions around the national debt inevitably result in pointing one's finger outward and expecting that someone needs to get the situation figured out. We consider how practical it is to pay down or pay-off the national debt. Also, is it possible to pay down the debt without affecting individuals' own financial situation?

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On this episode of Tape Talk we take a look at five big mistakes investors are making in today's market environment. 

 

Passive Indexing

With the recent history of steady gains in the major equity indices, many investors have become a fan of investing in index funds. The upside to this is many investors are paying significantly less in fees than they ever have before. The downside is that many investors still don't know what they're invested in, how an index works, or whether or not they're overweighted in any potentially overvalued sectors of the market.

 

Chasing Yield

Life is tough in today's economy for those who require a steady yield from their investments. With the 10-year Treasury trading near the level of inflation, investors have begun stretching out into more fringe investments to fill the yield side of their portfolio. This began with things like high-yield "junk" bond fund but has now moved to high-yield equity investments. These are far from the blue chip company trading at a 4% yield. What we're talking about here is the 8-25% yielding investment that investors assume has little risk of principal loss or a slashing of yield when the truth may be just the opposite. 

 

Social Security

 

There's a lot of factors that go into the decision of choosing when a person should begin taking their social security and yet the decision is often made emotionally rather than objectively. As most people's only form of a pension in today's retirement world, it becomes even more important to run the math and work with an advisor to ensure you're putting yourself on the social security path that is best for your individual circumstance. 

 

Annuities

With many investors having become risk averse as stocks have notched new highs seemingly monthly there's been a search for ways to lock in guaranteed return with little to no volatility. Unfortunately, volatility is what creates the compound returns in the stock market. The alternatives that some investors switch to might be full of restrictions and fine print which they hardly understand or don't take the time to review.

 

Market Timing

Even after eight years since the S&P 500 bottomed during the great recession, there's a caution among many investors who wish to never see their capital be exposed to volatility like that again. This results in their participating in the market in fits and starts while they attempt to call the next market top and put their money back in during the next generational bottom. This hyperactivity though can often just result in missing much of the returns required to meet an investor's goals.

 

 

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Covered in this episode of Tape Talk Radio:

Real Estate Market Update with Queen of Real Estate Kelly Karls

August's new home sales data came in weak, showing an over 9% decline in July and falling to a low for the year. Are buyers' interests beginning to wane or is this simply a "blip" in the market? In contrast, existing home inventories continue to contract leaving little on the market for buyers and causing homes to sell at a quick thirty days on average.  To add to the picture, interest rates are projected to head higher from here. We talk to Kelly Karls, Lexington's Queen of Real Estate, about what buyers and sellers should be thinking about now and what to expect going foward. 

 

What's Happening in the Market Now?

Have financials replaced transports in the Dow theory? Is rotation finally beginning to take shape? While the general indices have stagnated for the past month there has been movement under beneath the surface of the market. We'll talk about the sectors that are taking a pause and look at a few that may be ready to move higher. What should investors be looking for now to take advantage of this rotation?

 

How Does Rotation Affect an Index?

When you buy an index you're naturally aligning your weighting to the specific sectors as they are in the index. This isn't necessarily a bad thing. However, what happens when the largest sectors zig while the smaller sectors zag? Is there a way for investors to look beneath the index and understand what's going on in the individual sectors? It's possible that investors can find opportunity in sectors or themes even while the market indices overall head nowhere.

 

Headwinds Ahead?

Whatever happened to the debt ceiling discussion? Will Congress be able to get anything done or have hard lines been drawn between legislators and the President? If the debt ceiling discussions inject a bit of volatility into the market what might people consider doing depending on their various investment stage?

 

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On this edition of Small Business Spotlight, we talk to professional angler Bradley Roy from Lancaster, Kentucky about the Business of Fishing.

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Covered in this episode of Tape Talk Radio:

North Korea threatens aggression and the stock market blinks.

After President Donald Trump threatens aggression for North Korea's bullying tactics the market quickly sunk. What should investors make of the news? Is it time to fear a new bear market?

 

How to allocate your investments in every life stage.

Not everyone should be allocated the same way. Investment allocation is time dependent since most people will need to use their investments at some point in time. Are you allocated correctly for where you are on your investment journey?

 

How a financial plan affects your allocation.

So how do you figure out how you should be allocated? Frankly, if you've not done a financial plan you may just be guessing. Consider how critical it is to have a plan before and during your investment journey.

 

Lining up your required rate of return and your temperament.

Just because the numbers say you should be allocated a certain way doesn't mean you can stomach that. Not everyone is cut out for every allocation level in investing. A good advisor should help you align your suggested allocation and a level of risk that still allows you to sleep at night. 

 

Are you as diversified as you think?

Have you considered that many mutual funds and ETFs own many of the same major stocks? This means you might not be as diversified as you think. Even after buying different funds or investments you may be heavily concentrated in a few stocks. Find out how to figure out if you really are diversified. 

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For this edition of Small Business Spotlight we talk to Chris Eddie, co-founder of Smiley Pete Publishing. He shares the story of how two college buddies started a hyperlocal publishing company and began connecting local consumers and business. Find out what's next as they continue their evolution as a company by developing local events to even further highlight local businesses. 

For more information on Smiley Pete visit: SmileyPete.com

For more information on Crave Lexington visit: CraveLexington.com

 

To find out more about Tatro Capital, find us at TatroCapital.com

Stock Market Rotation

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Covered in this episode of Tape Talk Radio:

Rotation is the name of the game across stock sectors.

Caterpillar earnings breathe new life into the Trump trade.

Facebook earnings and the tech-based economy.

Risk versus investors' expectations.

Your allocation and your temperament.

What should investors really expect from the market?

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Covered in this episode of Tape Talk Radio:

The stock market bears must be on vacation as markets march higher.

The Senate health care bill is on life-support but stocks don't care.

Guest trader, Frank Zorrilla (@ZorTrades), brings views from a trading desk.

A deep dive into emerging markets with a look at Baidu.

Plus, a sneak peek into Tatro Capital's upcoming brand change.

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Covered in this episode of Tape Talk Radio:

What's a financial plan, how does it impact investing?

Common reasons for putting off planning.

What to expect from a financial plan.

What makes planning unique.

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Covered in this episode of Tape Talk Radio:

This week's headlines: Senate health care bill, banks rally, tech fades.

What is passive investing, how does it differ from active?

Why has passive investing become popular?

Can an investor be truly passive?

How does planning affect your investments?

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