JPMorgan’s quant guru lays out 2 reasons he sees Trump’s reelection odds rising — and urges investors to position accordingly

• JPMorgan said it sees President Donald Trump's chance of being reelected rising and advised clients on Monday to position accordingly.
• Investors can expect a 5- to 10-point shift in polling from Democrats to Republicans if people begin to perceive pro-Democratic demonstrations as violent, said Marko Kolanovic, the head of macro quantitative and derivatives research at JPMorgan.
• The “liberal trend of ‘cancel culture'” is likely behind many Trump supporters lying in polls, Kolanovic said, adding that the effect could artificially skew polls by up to 6% in favor of Biden.
• Visit the Business Insider homepage for more stories.

With 63 days left until the US presidential election, JPMorgan is advising clients to prepare for a closer race than some expect.

President Donald Trump trailed Joe Biden, the Democratic presidential nominee, by as much as 25 points earlier in August, but his chance of being reelected crept higher following last week's Republican National Convention. The shift left investors fearing that pricing in a Biden administration could have been premature.

In a note on Monday, Marko Kolanovic, the head of macro quantitative and derivatives research at JPMorgan, tied Trump's slump and subsequent resurgence to recent protests and a widespread bias in polls.

Academic research tracking peaceful and violent demonstrations' effects on elections from 1960 to 1972 indicated that peaceful, pro-Democratic demonstrations aided Democrats by 2% to 3%, while violent pro-Democratic protests aided Republicans by 2% to 8%, the bank said.

Should the overall perception of current protests turn from peaceful to violent, investors can plan for a 5- to 10-point shift in polling from Democrats to Republicans, Kolanovic said.

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How to Angel Invest

Advice for new angels in technology hubs

We expect this podcast to resonate most with people who are in a technology hub and have started investing but are not yet pros. So brand-new angels, VCs and founders who are dabbling in it.

Let’s say you’re living in Silicon Valley—or you’re in Shanghai or Beijing, or you’re in Bangalore, or you’re in London, or you’re in New York—and you get access to a lot of interesting tech companies; you’re in the tech business and earned some extra money or raised some money. How do you become a good investor?

Where to learn the basics

This podcast assumes that you have some familiarity with investing. It’s not going to be a cold start. There are resources we can point you to for the cold start. Paul Graham wrote a piece called “How to be an Angel Investor.” There’s “How to be an Angel Investor, Part 2” on Venture Hacks. There’s a course called Future Investor. You can look at all of those for the basics.

We’re going to focus on more advanced topics in this conversation. We’re going to talk about things like how to figure out what a fair valuation is; what are the pitfalls of bridge rounds; how pro-ratas work; how can you squeeze into a round when there are VCs leading; when a co-investor is providing a valuable signal versus when they’re just talking their own book; how to size up markets and startups quickly; whether you should specialize in a single vertical or diversify into multiple verticals.

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The VIX Is Raising A Red Flag For The Rally

One of the indicators I like to watch in regards to the stock market is the relationship between it and expected volatility as indicated by the VIX Index. Typically, these should move in opposite directions: When stocks rise, volatility should fall and vice versa. When there is a divergence, it can be a signal of an impending reversal.

For example, there have been several significant tops (and bottoms) identified by a divergence between the S&P 500 Index and the VIX Index. At the 2007 stock market top, the VIX showed a key non-confirmation that served as a red flag. Conversely, when stocks broke down to new lows in 2009, the VIX never came close to matching its 2008 highs, a bullish non-confirmation. Since then, we have had several bearish non-confirmations that warned of significant corrections. Today, we have another such bearish non-confirmation.

We can also dial down into a shorter-term view by looking at the 10-day correlation between the S&P 500 Index and the VIX Index. When it rises into positive territory, meaning that stocks and volatility are generally moving in the same direction, it can also serve as an effective short-term sell signal, though it does trigger early at times. Right now, this VIX warning signal is flashing again as it did earlier this year and prior to the corrections in the first and fourth quarter of 2018.

In short, the options market is sending a message that volatility going forward is likely to be greater than the stock market currently implies. And history shows the options market is usually the one who wins this sort of argument.
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8 Self-Empowerment Books to Help You Take Back 2020

Take a break from the everyday unrest of this year to be inspired by the stories of others who have faced adversity and overcame it.

It doesn’t matter who you ask — 2020 has been an exhausting year. Between a global pandemic, political unrest and an unprecedented economic downturn, it’s easy to feel downtrodden.

While there’s no easy way to get out of this funk, it never hurts to listen to the perspectives of others. By reading books focused on self-empowerment and overcoming adversity, you can feel prepared to take on whatever the world has to throw at you in 2020 and beyond. Here are some of the top choices out there right now.

1. Learn, Improve, Master: How to Develop Any Skill and Excel at It by Nick Velasquez

With lots of people having more free time than ever on their hands, many are taking this opportunity to pick up new skills. But doing so is often easier said than done. Learn, Improve, Master doesn’t teach the basics of any one skill; it gives you the tools you need to learn things more quickly and fully in the future. Nick Velasquez’s new book is a valuable investment for anyone looking to continually grow and evolve over time.

2. Grit: The Power of Passion and Perseverance by Angela Duckworth

The title here says it all. In Angela Duckworth’s Grit, the secret to success can be found entirely in one’s own dedication and work ethic. Duckworth looks at standouts everywhere from West Point to the National Spelling Bee and has found one thing in common: sheer determination. If you’re looking to learn how to take your career to the next level through hard work, this book is the one for…

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The 3 Fund Portfolio – A Simple Investment Strategy That Works

The 3 Fund Portfolio is a simple investment portfolio that only contains 3 assets, which are typically equity (stocks) and fixed income (bonds) mutual funds. A three fund portfolio is considered a ‘lazy portfolio’ because it requires very little maintenance. This investment strategy is also simple to implement and is viewed favorably by the investment community which often recommends them as a solid introduction to long term investing.

If you’ve read our guide on asset allocation then you might recognize the phrase 3 Fund Portfolio.

This investment strategy may seem simple, but the underlying principles are solid. It helps you easily create a well-diversified portfolio with low fees (expense ratio).

Let’s jump into what the 3 Fund Portfolio actually is, how it works, and how you can make your own. But first, let’s make sure we are all on the same page.

What’s an investment portfolio anyway? Your portfolio is the collection of assets that you own. If you have all of your investments at Vanguard, then that’s where you’d go to see your portfolio. Yours might even be spread amongst a few different financial institutions.

This is pretty common if you have a 401K from work with one brokerage and your IRA with another one. In that case, you’d want to take a step back and look at your overall investments to see your entire investment portfolio.

Why Investors Love 3 Fund Portfolios

The beauty of the Three Fund Portfolio lies in its simplicity and efficiency. The typical 3 Fund Portfolio contains a U.S. ‘total market’ index fund, an international ‘total market’ index fund, and a bond ‘total market’ index fund.

Investors don’t need to necessarily use mutual funds to construct their portfolio either, as an ETF portfolio offers the same benefits. As a result, the asset classes included in these portfolios are…

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We’re in the ‘early innings’ of a bull market, and any temporary correction will be just a buying opportunity, Leuthold strategy chief Jim Paulsen says

• Jim Paulsen said during a Leuthold Group webinar on Thursday that he believes stocks are in the early innings of a bull market.
• The chief investment strategist said investors should be prepared for more than one correction, but they won't be permanent and could be buying opportunities.
• Paulsen added that economic indicators are showing signs that an economic rebound is beginning, and this rebound will be good for stocks.

• Visit Business Insider's homepage for more stories.

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Jim Paulsen said he believes that signs are pointing to an economic expansion and that US stocks are in the “early innings” of a bull market. While he said it will take a few years for the economy to fully recover, he told a Leuthold Group webinar on Thursday, “I am bullish.”

The chief investment strategist also said this doesn't mean there won't be any corrections. “Expect corrections. We're definitely going to get more than one of those and they'll be scary when they occur, ” Paulsen said.

These corrections won't be “end game” for the cycle, though, and Paulsen sees them as buying opportunities.

One signal of this new bull market is what Paulsen calls the “divot repair.” Paulsen said that the pandemic has created the deepest recession the US has ever had, and this large divot in the economy has created a huge upside opportunity for the future of the stock market.

“Stocks react not to levels, they react to change in activity and there's huge possibilities to have positive change in economic activity if only because things are so bad right now,” the strategist said.

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Net Worth Is Misleading, Stick to Monthly Passive Income for FIRE – 50PlusOnFIRE

You will find an endless number of posts on FIRE that include discussions about the central roll of net income in your journey to financial independence and early retirement. But Networth, while not unimportant, pales in comparison to your Monthly Passive Income (MPI) if you truly want financial independence.

Why is passive income more important than net worth?

Passive income surpasses net worth in importance as you approach retirement because it pays the bills and supports your progress toward meaningful financial goals. Net worth provides a theoretical value to your possessions while passive income offers immediately usable money.

Back in the late 90s, Stanley and Danko released their landmark work, The Millionaire Next Door, cementing in the mind of just about everybody who read it the roll of net worth in becoming a millionaire. After all, they used net worth and not income to define a millionaire: someone whose net worth, excluding the value of their primary residence, reaches or exceeds $1M.

Your Net Worth Means Nothing at the Grocery Store

While net worth may serve you well when describing your general sense of wealth accumulation, it does nothing for you on a day-to-day basis. It will help you if you want to apply for a loan but not when checking out at the grocery store. For everyday purchases, you need income, whether passive or active.

The problem with net worth stems from the likelihood that it involves many non-liquid assets. Some of these assets might include property, some art and collectibles, retirement accounts, a business, jewelry, vehicles, boats, furniture, and even business equipment.

You can’t use non-liquid assets to pay your bills or make purchases. Stores don’t accept non-liquid assets as payment in most countries.

I have other reasons for not placing net worth on the…

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Learning from Warren Buffett and LTCM

In the late 1990s, the world's largest hedge fund at the time, Long Term Capital Management (LTCM), failed.

The failure sent shockwaves across Wall Street and the rest of the financial world. The hedge fund had been one of the largest players in the global derivatives markets, and when it failed, it dragged its counterparties with it.

Eventually, the Federal Reserve was forced to bail out the fund instead of risking a global financial crisis (though, no federal funds were used - the Fed merely brokered a deal on LTCM's behalf with a consortium of Wall Street Banks). However, before the central bank stepped in, Warren Buffett (Trades, Portfolio) also made a bid for the fund's portfolio of assets.

It later emerged that Buffett made a bid of $250 million for LTCM. On top of the purchase price, Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B) would have to put $3.75 billion into the fund to meet other obligations. If the deal had succeeded, Buffett would have paid $250 million for $100 billion worth of securities and over $1 trillion worth of derivative contracts.

LTCM had been forced into a corner because it could not meet margin calls on its extensive portfolio of derivatives and other assets. It seems Buffett was betting that if Berkshire bought the assets, LTCM's former counterparties would back down, giving the firm breathing room to unwind the positions. This may have produced enormous profits for Buffett and his investors.

Ultimately, the deal fell apart. As Buffett later described, due to the deal's size and volatility in the underlying portfolio, he gave LTCM a short window to accept the offer. They declined, and the deal fell through.

Smart people and dumb decisions

LTCM became a case study of how even the smartest people can make dumb decisions. The 16 people who managed the business were considered some of the smartest economists...

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The 7 Best Ways to Invest $1,000 (& Beyond)

Need a Side Hustle? Get a free copy of my Side Hustle Guide here and learn how to start making money on the side using these proven steps!What would you do right now if I handed you $1,000 cash money and said to you:

“You can have this $1,000, but you got to tell me the best way to invest $1000.”

How would you respond?

Me personally, had you asked me that question or confronted me with the same scenario 5-6 years ago, I would have stuttered and probably just said to save it.

While saving isn’t a bad answer per se, at the end of the day there are better ways to invest $1,000. Whether it is your first time investing $1,000, you just got your tax refund, or you are simply looking to invest $1,000 every month…

Today we will discuss the best options available for investing $1,000!

Real quick, prior to looking at the 7 best ways to invest $1000, keep in mind that you can invest more when you make more (duh).

Here are Money Life Wax our team is huge on helping people figure out ways to create more money either outside of their full time job or with entreprenesuhip.

So in addition to investing $1,000 per month, here is a great read for making an extra $1,000 per month to bookmark for later!

*Remember – every dollar invested today doubles in 10 years on average!*

1. Start Your 401(k)

If you haven’t got one already, a 401(k) retirement plan is one of the best ways to invest $1,000 — especially as you could literally double your money (more on this in a second).

A 401(k) is a retirement savings plan that is sponsored by your employer. One of the benefits is that you can invest a chunk of your paycheck in one each month before any tax has been deducted. In other words, a 401(k) allows you to save for your retirement and enjoy tax breaks at the same…

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Bank of America details red flags to watch for when hunting down cheap stocks

• Bank of America recommends value stocks over growth names as major indexes breach record highs, but warns that value traps could damage investors' portfolios.
• Value traps are stocks that seem inexpensive but are more likely to continue falling than stage a comeback.
• Bank of America searched for stocks with relative prices falling faster than their earnings, and found that real estate investment trust, telecom, and multi-utilities stocks screen as value traps.
• Investors should pick high-quality names with strong price momentum and fundamentals within the value space, the bank's analysts said.
• Visit the Business Insider homepage for more stories.

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Bank of America's analysts prefer holding value stocks over more expensive growth names, but see a handful of traps dotting the investing landscape.

Several gauges used by the bank identify the stock market as extraordinarily expensive. For one, the S&P 500 sits at record highs roughly five months after bottoming out on virus fears, despite the pandemic's economic damage still looming.

Stretched valuations across the market's darlings leave the best opportunities in value picks, the team led by Savita Subramanian said in a Tuesday note. However, certain inexpensive stocks pose a major threat to investors and should be avoided at current levels, they added.

The bank screened for companies and sectors that are inexpensive because relative prices are declining faster than their earnings. Though such stocks may seem like appealing buys at first, the analysts warn that their earnings deterioration can continue and leave investors with a rapidly depreciating asset.

Some sectors are fraught with traps specifically due to possible de-rating on pandemic-related risks, the team said, including real estate investment trusts.

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Advice for investing at record highs, including a 7-part stock-picking model

The stock market is sitting at record highs. So why does it feel like the party's already dispersing?

It could be the recent measured skepticism from firms like Morgan Stanley. While chief US equity strategist Mike Wilson isn't ready to predict another bear market, he did recently say that three conditions in particular could combine to spur a near-term correction.

[caption id="" align="aligncenter" width="400"]Photo by Got Credit [/caption]

JPMorgan has also joined in the lukewarm chorus, with strategist John Normand recently outlining what could trigger a bond-market sell-off that could threaten stocks. The implications of such a shift would bleed into everything from equities to gold — a situation that has Normand urging traders to hedge.

Also within JPMorgan is Eduardo Lecubarri — the firm's global head of small and mid-cap equity strategy — who predicts a rangebound stock market for the next year. But while his market-wide forecast is largely neutral, Lecubarri still sees select investing opportunities. He recently laid out 11 regions and sectors poised to outperform.

The Investing team at Business Insider is closely monitoring these shifting views to help you figure out how to excel in any market environment.

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She thought unemployment benefits were coming. Two months later, eviction loomed

Jennifer Moon has waited more than two months for unemployment benefits — and the delay presented a scary situation.

Absent any income, the 46-year-old, who lives in Cedartown, Georgia, fell behind on bills.

Lenders repossessed her car. She lost water at her home, which she rents, before a friend helped pay the bill.

Most significantly, Moon, a certified nursing assistant, also couldn't pay her rent. She missed two months of payments — $900 total — and next month's rent is due soon.

The landlord threatened eviction if Moon can't pay up by month's end.

More from Personal Finance:

Where states stand on the extra $300 weekly unemployment benefits

What Joe Biden plans to do for student loan borrowers

Don't count on the $300 unemployment boost anytime soon

"I begged and pleaded with them," she said. "[They said] I have exactly 10 days to be vacated."

Making up the shortfall by returning to work is also a risky proposition

. Moon has a lung disease, pulmonary emphysema, which requires her to use oxygen and puts her in a high-risk category for Covid-19.

Moon, a single woman, doesn't have family to fall back on for help, and cares for a 30-year-old son with a disability.

Photo by malias

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