An Introduction To The Stock Market Bubble

According to analysts, there is an imminent danger of a stock market bubble bursting due to the overwhelming amount of stock market trades that have occurred in the last year alone. Financial advisors caution that regardless of whether these forecasts pan out or not, more people should become aware of market crashes and what defines a bubble. These definitions are no longer lofty concepts that only “expert” investors should know; they are real-world phenomena that affect everyone, whether everyone realizes it or not.

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Thus: a bubble describes an investing phenomenon which occurs when investors place too much demand on a specific stock or set of stocks. Investors drive the price of these stocks beyond any reasonable or accurate thought (to the point where it is no longer a good reflection of the company’s actual worth). These bubbles initially seem to blow up forever, but — as with a bubble — they’re insubstantial, they will eventually pop. The “higher” these bubbles rise, the more devastating the crash. It is typical to see market bubbles burst to dissipate millions of dollars.

These bursts are called market crashes, which are significant drops in the total value of the entire market. These crashes create a situation of panic, with many investors often struggling to gain back their losses. Different market crashes involve a myriad reactions, but the most general feeling is one of urgency. The panic that sets in usually leads to massive selling, which eventually crashes even more. In a domino effect, stock market crashes are followed by a depression.

Image Source: cnn.com

There are other nuances involved in either definition but these general outlooks should at least be understood — especially as the patterns for a stock market bubble are being evidenced in current events.

Financial blogger Steve Sorensen focuses on the topics of embezzlement and stock market culture. To learn more, visit this blog.

Financial Matters To Consider When Putting Up Your Dream Diner

It often amazes me whenever I see new restaurants pop up in my town. It’s the business of choice of a lot of people. The appeal is easy to see and understand. However, some people mistake putting up a food establishment as a simple undertaking. There are a lot more things behind the scenes than one may come to expect. Here are some of the financial tidbits people need to consider before they put up their very own dream diner.

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Image source: brooklyndiner.com
  • For diners, cafes, and restaurants, good equipment is a must. Never skimp on the equipment. Never buy second-hand. It may be expensive at first, but it will save the business more money in the long run. A diner with great equipment requires less staff, and less ingredients. But as I said, it’ll be expensive.
  • The biggest expense isn’t the equipment. It’s the staff salary. Owners should be prepared for that. And in terms of employment, the restaurant industry is the second-largest in the country.
  • If you’re planning to open a diner, look closely at your food and drinks. Food should last a week, and alcoholic beverages, maybe four to five weeks. If they last longer, then you may well be overstocking.
  • Always aim to increase sales. It’s more important than cutting costs. Increasing sales leads to expansion and growth.
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I’m Steve Sorensen and I love giving helpful financial tips and advice. Learn more, by following him this Twitter account.

The Unbreakable Bond Between Investments And The Economy

A country’s economy expands with the improvement of capital goods structures and the increase of capital stock. This is all tied to capital investment. Without it, no economic expansion would be possible. When investors buy capital goods like factories, machineries, transportation, computers, tools, instruments, or anything that leads to people being more productive, the money used to purchase all this is then termed capital investment. The important thing to consider is that the equipment (bought by financial capital), would need humans to design, build and operate.

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Now let’s get to the interesting part – how all this helps our economy expand. When capital goods are improved, the more productive we all become. Look at the fisherman who once fished with a small boat and a small net. He invested in a bigger boat, and some machinery to haul his new mammoth-sized net. He caught more fish than he ever did before. Mr. Fisherman now has a bigger house, an extra car, and a better life. Little did he know that he helped the economy expand.

Another great thing about the increase of a country’s capital investment is the subsequent improvement in the quality of research and development – in businesses. Better R&D means higher productivity. Workers are more efficient and what they produce are better. Then they become like Mr. Fisherman, with his better life.

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Hi there. My name is Steven Sorensen, and I’m a CPA and business writer based in Colorado. Learn more about business and investment by checking out this page.

Financial goals worth setting in 2017

No one is too old or too smart to set goals for the new year. Especially when it comes to
finances. If you think you’re ready with your assets and investments, think again. There might be more in store for you in the next year. But if you’re planning to make resolutions this year, be sure to include these financial goals:

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1. Start building your emergency fund.

Instead of splurging on expensive coffee and accessories for your gadgets, why not put a certain percentage of your salary into an emergency fund? Doing this for a whole year will ensure you that if something unexpected happens, it won’t make a dent on your personal savings. Having an emergency fund will ease anxiety in the future.

2. Find a new income source.

Whether it’s by investing, another job, or through a profitable passion project, make it a goal to find a new income source in 2017. Sometimes our jobs are just enough for us to get by. If your goal is to earn more, you have to stretch yourself a bit by finding ways to earn outside of your day job.

3. Be completely debt-free.

This sounds impossible, right? Don’t fret. You’ve got 12 months to complete this goal. Make it your goal to pay off all debts so that you’ll have more money to invest, save, and spend. If you can’t do it on your own, perhaps you can seek the help of a financial adviser who will plan and manage payments with you.

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Just remember, these goals require change and effort. Don’t hesitate to ask for help when you need it. Here’s to a richer 2017!

Thanks for reading. My name is Steven Sorensen, and I’m a CPA and business writer based in Colorado. My goal is to help people reach their financial goals. I also advise businesses on issues such as avoiding employee embezzlement and improving retirement plans. Visit this page to know more about what I do.

A Layman’s Introduction To Shadow Banking

With the upcoming elections, many financial institutions have been preparing themselves for the inevitable monetary repercussions. Of particular interest is the recent news on shadow banking. The name should not deter the layman from knowing more about it. This is a financial topic that is relatively easy to understand. Detailed below are some concepts to be recognized.

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Image Source: bloomberg.com

It was coined in 2007: Shadow banks were termed by Paul McCully of PIMCO, a bond fund company, to define any financial vehicle operated by banks that sells loans as bonds. It has evolved today to cover any type of financial intermediaries that offer bank-like transactions but may or may not be regulated by official boards. This includes any form of pawnshop, peer-to-peer lending, hedge forms, or even bond-trading platforms formed by technology firms.

It’s a booming business: Unlike traditional financial institutions, these non-regulated groups have been growing. This is also attributed also to the low interest rates provided for by these companies. In 2014, it was estimated that the informal lending sector amassed assets worth more than US $80 trillion – a number that is expected to double in the next few years.

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Image Source: cnbc.com

There is a move to regulate it: Shadow banking is now hitting the headlines because regulators are now becoming aware of this new financial order. Conventional banking systems are taking the hit; a condition further exacerbated by global regulations to keep strict lending protocols. Local authorities are now determining the need for leverage limits on different types of shadow banks in America and Europe.

The business of shadow banking is a hot issue among the presidential candidates and many Americans are curious as to what their candidate will do regarding this situation.

Steve Sorensen writes embezzlement-related articles and other business topics. He is a financial blogger and shares his ideas on this YouTube channel.

Checks And Balances: Preventing Employee Embezzlement

The 2013 Martin Scorsese biographical black comedy crime film, The Wolf of Wall Street, was one of the top movies that year, receiving positive reviews and various awards and nominations.
Its story, which recounts the Wall Street career of former stockbroker Jordan Belfort during the late 1980s to early 1990s, is a cautionary tale of how important it is to build and manage wealth the right way – else, one would be paying for it to the full extent of the law.
Some financial, and moral, lessons that can be gained from the film are the following:
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Paying one’s dues
The idiom “There is no shortcut to success,” is demonstrated in the movie when it shows how low some people can get just to accumulate wealth fast. Belfort and his associates founded Stratton Oakmont, a faux organization, which they used to defraud investors and conduct scams. It helped them amass wealth for a while, but it was ultimately branded as illegitimate by federal prosecutors and SEC officials.

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Ethical behavior matters
There are many perfectly legal schemes, such as selling penny stocks, lack of transparency and opening offshore accounts using other people’s identities, that are deemed unethical; doing so is a recipe for disaster.

Keeping both feet on the ground
Success can easily get into someone’s head and without proper management of wealth, losing it is not a farfetched reality, just like when the film’s main character spiraled into a world of drug use, debauchery, and insane purchases.

Steve Sorensen here, a Certified Public Accountant and financial consultant who provides individuals and businesses advices related to investments, banking, loans, and even issues such as employee embezzlement. Learn more about his work by perusing this LinkedIn page.

Facing all the odds, how is the U.S. economy doing?

The coming national elections have everyone speculating about the future of the U.S. economy, especially following Brexit and the increasingly low-interest rates. In an in-depth article, the New York Times has listed some of the good and the bad aspects of our economy. On the positive note, GDP is growing better than it looks, with a 2.4-percent increase not including inventories. Consumption expenditures also increased by 4.2 percent and contributed to a 3.1-percent rise in retail sales.

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Image source: regaltribune.com

According to Jim O’ Sullivan, chief U.S. economist at High Frequency Economics, the employment growth remains strong, with 255,000 new jobs created in July alone. This has made the unemployment rate steady at 4.9 percent. So far, more than 1.3 million jobs were added, and wages grew up by 2.6 percent compared to 2.2 percent in the same period from last year.

However, despite these strong numbers, the economic growth is still deemed to be slow as compared to what the situation was like prior to the 2008 global financial recession. There is a decline in business spending, especially in energy exploration, because of the drop in prices of oil and natural gas. This is seen as one of the key reasons growth is relatively slow. Worker productivity is also not that remarkable, marking a sharp blow to the country’s long-term prosperity.

In response, Professor John B. Taylor at Stanford University believes that a better-looking economy can be achieved by adopting policy reforms. Among his proposals were lower tax rates, free trade agreements, and regulatory reforms. Taylor believes that the economy is at the bottom of the recession and is ready for a restart.

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Image source: nyt.com

As a finance professional, I provide a wide range of advice to clients of all economic backgrounds and on issues ranging from accounting and economics to employee embezzlement and retirement planning. To know more, follow me on Twitter. Steve Sorensen here.