Tuesday, February 19, 2013

Coffee, Bonds, and Interest Rates

So yesterday I was sitting in a local coffee shop working on a financial model for my day job, when a gentlmen asked me if I was studying. That question led to about an hour long conversation about what I do and a lengthy discussion about the financial markets. Michael was his name and he is a retired pilot trying to figure out what to do with his idle cash. From our conversation I gathered that he had been trading bonds from the long side had been recently raising cash as he realizes that bond prices likely don't have much room to the upside. We talked about interest rates being near zero, with no room to go lower. Although neither of us know the timing, eventually interest rates are going to go up. At the very least we agree that they can't go any lower.

After we talked through a few different ways and trading vehichles to play out this thesis I reccomended to him two resources that I reccomend to everyone. That is the Think or Swim trading platform by TD Ameritrade and Tastytrade.com (links below). And of course a shameless plug, I gave in our blog url.

You could say that I am on a mission. I want people to take a more active role in their finances. I am not suggesting that you need to be glued to your computer screen 24/7, but you should know that trading is not as complicated as the media makes it out to be. You are smart enough to manage your own money. And there are ways to not only provide you with downside protection, but also to enhance your returns. The best thing is that most of the strategies that I would be an advocate of for the average retail investor will only reduce the amount of risk taken and increase the probabilty of success where comparing it to the traditional buy and hold strategy touted by financial advisors (glorified salesman).

I want you to have more than one way to make money. Don't you?

Good Luck Trading!


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