Business Articles, Loan Originator, Real Estate

Learning About Loan Originators, Mortgage Brokers, and Commercial Lenders

Recently I connected and met with Mr. Jim Moore an Army Ranger who served in Vietnam, and Jim has been incredibly successful as a Licensed Loan Originator in Scottsdale and Phoenix Arizona. Jim and his Mortgage Broker Team at Counsel Mortgage Group in Scottsdale are genuinely the community leaders in Arizona when it comes to Real Estate Mortgage Lending. The good service Jim and his team mates at Counsel Mortgage Group are providing the community and it’s residents in Phoenix area is truly note worthy and heart warming. Like for instance recently this team has been helping Disabled Veterans qualify for Veterans Benefits and qualify for home loans improving these Veterans lives. That is admirable on so many levels.

Starting as a Loan Originator

How did I decide to start the Loan Originator Path? I began the journey of learning more about Mortgage Brokers and Loan Originators after taking the Guidance and listening to the Good and Great Larry Ackman talk to Son Bill about his early years of Building Ackman Ziff. Listening to Larry Ackman’s personal story and guidance while talking about Structured Finance in Real Estate. This had a profound affect on me. Added with the fact Jon Gray the President of Blackstone messaged me some good uplift and cheer recently. And there you go, I said “Im gonna do this!” Now I am earning my Licenses in Arizona, New York, Kansas, Washington D.C. and Florida.

I must share as a Mergers and Acquisitions Transaction hunter it’s your job to disqualify or dismiss most of the opportunities or Deal Flow you come across. And in the mean time you find yourself with a ton of free time. So in all fairness it’s good to have a second career that can fill in the gaps of long periods of blank space. So I took the suggestion of Bill and Larry and began my journey going down the Loan Originator career route.

I do recognize I am currently studying to sit for the Series 65 Investment Advisors Exam, however that will be just an added skill and bonus to my already colorful background of learning new useful skills. I am laughing. Because this is just like me. After awhile of looking at the men I admire within Commercial Real Estate, I began to notice something. Most of these heavy hitters within Commercial real estate began and started their careers as Loan Originators. I can not help but to admit I am definitely on to something here. Here is a great example below.

Commercial Lenders

Gary Bechtel is the CEO of Red Oak Capital Holdings, this is a Company that raises funds to deploy for the purpose of short term Mezzanine Debt for Commercial Real Estate Projects and Transactions. Its a niche that took a beating during the COVID Pandemic, However Mr. Bechtel is charging ahead as one of the leaders in this niche of Real Estate Lending. Mr. Bechtel has been incredibly generous and supportive of my move into Loan Origination and for this reason? I call him a friend and community leader I could call. I hope he knows I am always available if I can be of use or helpful to his team of professional problem solvers. He is certainly someone I genuinely take guidance and leadership advice from.

If your investment committee is searching for short term commercial real estate lending? RED OAK CAPITAL HOLDINGS is your go to firm for Commercial Lending.

How do you become a Licensed Loan Originator?

The first step in this journey is to study and take a 20 hour Course and then sit for the Nationwide Mortgage Licensing System Test. (NMLS TEST) After this course of action you begin learning on the Job how to go out and spearhead opportunities. There is much more to add to this. However if you would like to learn more about Loan Origination? I would highly suggest watching Dustin Owen on the Loan Officer Podcast I have been devouring in my off time at night on the road here in the Southwest United States.

In all fairness I do recognize this path will likely take 2 years to fully develop. And I am good with that. And if you are looking to make a career out of Loans Origination or be a Bank Loan Officer? You will likely have different journeys. Here in Arizona according to state law I must spend at least 3 years working with a Local Mortgage Broker before I am able to move up to becoming a Mortgage Broker and open my own shop. In all fairness I can see why and I am good with that. So stayed tuned I will be posting a lot more on this subject as I begin building a book of business and finish my corse work and pass my NMLS test for licensing.

I highly suggest you visit the resources in this post. I am so lucky to find these people and be associated with a few.

Godspeed!

Business Articles

Henry Kravis KKR | Conflict, Integrity, Collaboration

The Angel of Truth always finds a way.

You know who is a master in the Business environment when it comes to Conflict Mastery?
Henry Kravis!

Henry is one of the Founders of KKR and who’s story is told in the movie Barbarians at the Gate

Guard Your Integrity With Your Life

Henry Kravis was a master at collaboration. Furthermore, this post will be about how a Good Man in my life personally challenged me as a fellow Entrepreneur. Motivating me to drive 19 hours driving time across country and spend countless hours developing a solution to a problem that could have meant certain failure but ended up making me look within myself and grow.

After consulting time and time again with a buddy who is a Big 4 Partner I finally had my A-Ha Moment! This post is all about the different personalities that you need to consider when a conflict or hard situation, or conversation needs to happen. Read carefully. The lesson’s in this post, most certainly will give you a formula to use so you can have the best chance at a predictable good outcomes. Especially when it seems someone is trying to compromise your integrity out of fear and passive behavior.

Watch Henry Kravis Movie – Barbarians at the Gate Movie – HERE

Ok Let’s get started, let’s say your evaluating a transaction for a Company and you meet resistance or a possible intractable challenge intended to prevent you from making the Transaction? Your team has prepared, the accountants, investment bankers, and Corporate Attorneys are all scratching their heads how to negotiate a Problem that looks like its likely to end the sell of the Company. But all of a sudden the one of the owners silently feels the transaction should not continue. And begins passive – aggressively not answering your emails. Won’t pick up the phone. And this leads to the entire transaction failing due to sabotage. What do you do????

Let it go, and allow the person space to figure it out on their own?
Do you fire off a email that is full of thoughts and beg the person to come see you?
Do you go track them down and confront them?

Here’s how I was taught to smoothly handle bumps in the road like this during Transactions by a Big 4 Partner who was the Lead Advisor for Transactions in Tech World. My buddy is a Prince of a Man and I admire and love him like a brother for all his help and guidance. 100%

It’s time for me to pass on a little of His time honored personal guidance.

The Three types of Responses to Conflict in the Professional Space.

The Mule (STUBBORN CLOSED MINDED) There’s no way come HELL OF HIGH WATER I will ever allow Dat Dat Dat…!
The Avoider ( Avoids Difficult Conversations & Situations at all costs) If a problem develops? They run or say nothing.
The Accommodator ( Agree’s with whatever is being said on the other side of the table. Never adds a solution.)
The Compromiser (Starts off as a Accommodator, but when things seem too difficult? Will shift to a weaker or less comfortable position in a negotiation even if it harms their own position.)
The BEST Response is learned and is…..? “The COLLABORATOR!” (Unafraid of difficult conversations and situations, will not settle until all sides are moving forward in a positive direction. And can inject a discernment that is sensitive, or empathetic to the other side of the table. This is the Ideal method to resolving difficult or hard situations. HENRY KRAVIS and his Wife were fantastic and very talented at this method in the 1980’s.

All of this I learned from my Buddy who has advised, and taught me to be a better Collaborator. If you choose to be passive-aggressive in a hard conversation or a difficult situation? It’s likely you will have to compromise your Integrity and Faith for the other sides comfort. This is a NO GO FOR ME! It’s just not realistic to my personality. Id rather share the uncomfortable truth in a sensitive way than allow someone’s passive aggressive behavior to compromise my Faith, and Integrity. And so should you.

Corporate Attorneys are literally terrible negotiators. They literally do not use empathy. They use brut force and time to their advantage. And in the process damage a clients position, or future business prospects.

Choose who how you treat people wisely. Because playing petty power games with people will end very fast one day unexpectedly with a Proverbial knife in your back or a lost, or sabotaged Transaction.

I hope you learned something from this post. Study the Greats like Henry Kravis. And I promise you will become better and smarter when searching for collaborative answers and predictable outcomes.

GODSPEED!

Business Articles

How to Calculate Future Value of a Investment

Do The Math!

The last few weeks have been insane with the amount of Math and Calculation in Finance I am learning and devouring. Sharpening your Finance knowledge is serious business and why learning this makes you a Professional as Investment Advisor. Here is a Finance Calculation that can calculate the Future Value of a Investment as long as you know A. The Present Value. B. The Rate of Return and C. The time involved for the return.

VIDEO – How to Calculate Future Value of a Investment with a basic calculator.

(EASY NASAA/FINRA TEST HOW TO) – Not Semi Annual Calculation

Here is the Calculation to follow to Find the Future Value of a Investment

The present value of $87,500 with receipt of the funds being taken 3 years (t) from today. The desired interest rate of return (r) for these funds is 9%.

To calculate this we will follow this order of operations.

Present Value (PV) = Future Value (FV)

PV = FV (1+interest rate or return)-n

Use Math Order of Operations

PV 87,500 / (1+ .09)3rd power

PV 87,500 / (1.09)3rd power

PV 87,500 / 1.295029

Equals = $67,566.55 Future Value

If you find yourself having trouble? Watch the video on my youtube channel.

I hope you found this Mathematical Formula useful on your way as a Wealth Management, Investment Advisor, or if your just evaluating a Investment to invest in as a Everyday Joe! Im positive this formula will be useful to many.

Godspeed – JS

Business Articles

FINRA Series 65 Exam Registered Investment Advisor

It’s time for me to go get the FINRA Series 65 Registered Investment Advisors Exam out of the way. Im all in.

It’s Sunday July 31st 6am, Have you seen the incredible fall in the Markets? Are we in a recession or are we not in a recession? It seems the current Administration that decides Fiscal Policy is unable to agree. I genuinely hope you are capitalizing on the correction in the markets as we continue to spiral into a recession.

Goals Keep The Talented, Strong & Courageous Seeking Excellence

Interestingly Ive decided since I find myself devouring content and books about the Series 65 Exam? And after looking at the challenge and rewards? Its time I take the initiative and have the courage to prove to the awesome Mr. Marty Bicknell CEO of Mariner Capital Management. That I can crush the the Series 65 Exam. Becoming a licensed and registered Investment Advisor Representative like himself. Marty is the leader of a very special Financial Services Firm in Overland Park, Kansas.

The really interesting thing about Marty Bicknell and Partner Cheryl Bicknell? They are Entrepreneurs like myself who Consolidated the Money Management sector. I genuinely admire their Grit and Commitment to their mission. They have made a name for themselves. And that track record is impressive.

You find that those who have passed the Series 65 are a cut above most entrepreneurs and this adds a level of sophistication and professionalism that Investors take seriously. It can do nothing except improve my life at this time.

What is the Series 65 Exam?

According to Kaplan Financial,

The Series 65 license, known as the Uniform Investment Adviser Law Examination, qualifies individuals to provide investing and general financial advice to clients. Passing the Series 65 exam qualifies individuals as Investment Advisor Representatives (IARs).

Obtaining the Series 65 license is important for representatives who provide advice on ERISA-regulated retirement accounts.

Why I decided to add Investment Advisor to my list of Qualifications?

Along my journey of Mergers and Acquisitions, and also learning to become a detailed oriented Value Investor like Warren Buffett and building a track record of positive 39.1 % in annual growth. I find myself being asked questions about Investing and money by many Tradesman like Roofing Contractors, Electricians, and even many White Collar Professionals.

“How should we invest for the Future? And “How can I grow my money?”

All incredibly important questions. Legally I am disqualified and unable to provide Investment Advice for Payment without first passing the Series 65 exam and registering with the State and SEC. But first we need to do a bit of educating and bringing you up to speed about Financial Literacy.

I have found 95% of Americans have absolutely no clue what I am talking about when I get in the details of Corporate Finance, and financial strategies inside Investing? It’s like I am talking Greek. But Good News. I find it very interesting to sit and listen to peoples financial plans and futures. That develops into some very interesting Coffee Talk. It’s incredibly clear underperforming assets are on the mind of Investors and Wealth Mangers alike.

Since these Professionals are calling on me and asking for direction to serve them on future investments or ideas? I find, I might as well make myself useful in the name of Community Service and take the Series 65 Exam and build a Financial Services Firm or business from my growing experiences in Investing, and Corporate Finance. In all honesty? I could always use the cash to fund Community service Projects as a Non Profit. Or grow my own Investment Fund. Which is the goal.

A Registered Investment Advisor is your Strategic Investment Partner and Financial Services Firm Professionals

Wealth Management

When we look at the growing opportunities within the Credit Markets, S&P Index Funds, or New York Stock Exchange? We see lots of opportunities for Professionals to invest and leverage the growth for their Retirement options. After all strategically investing to receive a Monthly Payment from a Mutual Fund, or Customized Strategic Investment is very smart.

More individuals, Professional Tradesman like Electricians, Contractors, Professional Basketball Players, Baseball, Football, and even Attorneys who can start preparing accounts that can grow organically from the Stock Markets rise and fall. It’s important to point out and zero in on this point. If you are having doubts about investing in the Stock Market? You absolutely SHOULD!!! For to long Asset Management Firms have become so large and lazy the just do not care about maximizing the investments they hold for you.

However with a personable trustworthy relationship with Investment Advisor Representative managing your families wealth or strategically investing assets? You will have an edge when Investing. You have your own personal customized investment professional who can use experience and strategy to build a future of Portfolio Earnings and Gains without suffocating tax penalties that follow most investments. Investing in a private placement fund or strategically investing in a Index is an idea many add to a strategic portfolio. But before I am able to elaborate? I must first pass the Series 65 to have these conversations and establish a professional relationship with anyone.

When your thinking about your future? You need to know what are some of the choices you have for investing. This short list is some of the most common investment vehicles Registered Investment Advisors use to grow your principle investment.

Types of Investments

Stocks.
Bonds.
Mutual Funds and ETFs.
Bank Products.
Options.
Annuities.
Retirement.
Saving for Education.

In conclusion? Many people I have talked to who have passed the Series 65 Exam tell me “It’s difficult! And I barely passed.” All things considered? I do not work for a Financial Services Firm. Which makes the reason I want to take the test all that much more interesting. I want to pass this test because Id like the opportunity to expand my professional skills. And serve the community professionally. Yes I am a Entrepreneur. However I feel I have alot to give. And getting this test out of the way? Does create more opportunities for me as a entrepreneur and as a servant to the community. I plan on taking the test ASAP. And before the FALL. The sooner the Better.

Being passionate about Finance and Investing is an advantage. I plan on using my Geeky curiosity to benefit my Family, Friends, and Community and build a business along the way. Thank you for reading. Im absolutely positive I will have fantastic news to report very soon from taking the FINRA Registered Investment Advisor Series 65 Exam.

Godspeed.

Business Articles, Corporate Finance, Finance Articles, Hedge Fund Articles, Value Investing

How to Calculate a Stocks Intrinsic Value

Just like with any profession there are professionally instructed leaders of industry and amateurs. That is the same for Investing. But you should know that if you are not read up on the latest value investing procedures or if you haven’t formed your own personal checklist before investing in a Company or stock? You likely are make big mistakes along the way. But with today’s post on “How to Calculate a Stock or Company’s Intrinsic Value?” This will begin giving you a foundation or basic education to thrive and become successful in Investing.

I see so many people who do let emotions control their investing strategies and future. They are bound to lose almost everything. It’s just like If your a player in the Stock Market using only your gut and other people’s money? Your a borderline Criminal, Moron and most likely a gambling Day Trader at best. And should be taken behind the Building strung up by your ankles smothered with cheap grape jelly packets from the cafeteria and left for the Bears. These day’s Quants run the show. But there is good news! This post is for the bonafide new up and coming Investors wanting to reach that next elite level in Investing. If you have ever wondered where the like’s of Warren Buffet, Seth Klarman, Howard Marks, and other Value Investing Legends get there super secret knowledge from? This post is definitely going to provide you with a foundation of how to Calculate Intrinsic Value of a Stock or Discounted Cash Flow (DCF) of a Business.

So stay tuned…This is a post you do not want to miss. Even if it is Mathematics and heavy Calculations.

Hedge Fund Managers

If you plan on opening your own Hedge Fund Shop in the future or if your a Everyday Sophisticated Investor that plans on using Calculations and Mathematics instead of Gambling and Speculating? Your going to want to lay a foundation around Value Investing using Benjamin Graham’s teachings and procedures. So it’s absolutely vital you read Benjamin Grahams “Intelligent Investor” Book. Question. What makes a Hedge Fund unique to calculating a Stock or Companies Intrinsic value or Discounted Cash Flow? Well for starters Hedge Funds typically focus on trading on the stock market. But before I begin explaining Hedge Funds in depth like so many Financial personalities around me “I have extreme ADD sometimes.” LOL So maybe I should keep on track.

What is Intrinsic Value?

The intrinsic value of something is said to be the value that that thing has “in itself,” or “for its own sake,” or “as such,” or “in its own right.” Extrinsic value is value that is not intrinsic. Many philosophers take intrinsic value to be crucial to a variety of moral judgments. STANFORD BUSINESS ENCYCLOPEDIA

If your going to understand Intrinsic Value of a Business or Stock you need to understand that the Market is just voting for the day what they price is of a Stock. It doesn’t actually value the company. We use Intrinsic Value to evaluate and make a opinion to analyse if the Company or Stock we are looking at is undervalued and a bargain. If it is not a bargain and not undervalued? Then we keep looking. What is the formula to calculate Intrinsic Value? Before I answer this basic question you must know I highly recommend you read Benjamin Graham’s “Intelligent Investor” Book. It’s Warren Buffett’s bible of sorts. But first we need to lay out to terms.

Intrinsic Value Formula and Margin of Safety. These Topics are incredibly important for making a educated and professional judgement on a company’s future. And knowing if it is worth investing in.

By the way did you miss Berkshire Hathaway’s 2022 Annual Meeting? WATCH & READ HERE!

How to Calculate Intrinsic Value of a Business?

#1 – Intrinsic Value Formula of a Business

Mathematically, the intrinsic value formula of a business can be represented as,

where FCFE_i = Free cash flow to equity in the i^th year
FCFE_i= Net income _i + Depreciation & Amortisation _i – Increase in Working Capital _i – Increase in Capital Expenditure _i – Debt Repayment on existing debt _i+ Fresh Debt raised _i
r = Discount rate
n = Last projected year

Since this formula is mathematically difficult for ADD individuals like myself who struggle with on the page formulas. I would like to make this as easy as I am able for you. Here are a few videos that go in depth. Watch the Videos below to explain the calculation and models in action. This will begin giving you a foundation to grow.

BENJAMIN GRAHAM’S INTRINSIC VALUE CALCULATION MODEL EXPLAINED

Watch this Video below for a in depth explanation by this legendary Value Investor who is Charlie Mungers Bridge Playing Side Kick Mr. Mohnish Pabrai. Mr. Mohnish Pabrai is sincerely a fantastic guy. Mr. Pabrai has been very generous with the lessons and information he gives to up and coming Value Investors/Academics. And for this reason I need to list him in my blog. The way he lay’s out all his information and lessons makes it digestible and simple to newer people like us. His resources for all Value Investors is a must see, and you should watch his Youtube Channel and Videos. 100%

Discounted Cash Flow Model

When evaluating a Company’s (FCF) Free Cash Flow currently and for the next 10 years you need to include a Average Growth Rate and also consider what your “IDEAL” return rate is that you want to include within the DCF Model. For a more easier way of explaining this I need you to watch this video below. It will give you a better understanding of “How to calculate the DCF of a Company”.

Margin of Safety

In conclusion of today’s post it seems like it would be worth it to include what I had touched on earlier, “Margin of Safety”. If you are a Hedge Fund Manager or Value Investor, or everyday Accredited Investor knowing and calculating a Company’s Intrinsic Value is incredibly useful when analysing if it is a Investment you want to make. However even though you do find the Value of a Stock or Company you need to add an extra layer of Safety to the strategy before deciding to invest. The way you do this is by adding a Margin of Safety. Benjamin Graham’s Book will give you more info on this. But if your really a Pro? You will likely want more of a tactical explanation, strategy and guidance. So I highly suggest you read Mr. Seth Klarman’s “Margin of Safety”.

To end this chapter of todays very long post, it’s ideal if I say this in conclusion. Even though you may calculate the Value of a Company or Stock? You must make a educated professional judgement if the company warrants a long term investment. Many everyday investors don’t have the temperament nor experience within Value Investing to make these correct calls. But with time and learning to be Risk Averse by, with and through failures? You will learn. I wish you all happy hunting and I do hope you learned a bunch from today’s post. It’s long over due. And let’s make something clear up front.

This post is just a short taste of what Calculating Intrinsic Value is all about. The topic and subject is so deep and wide this post is nothing compared to the expertise out there in the market. If you are a Beginner or moderate investor? Please find a mentor and study the greats/legends like Warren Buffett, Charlie Munger, Bill Ackman, Mohnish Pabrai, Howard Marks, Seth Klarman and others. Then you will begin to see “How to use this post as a spark of which direction you should go to invest in your education, experience and financial gain.”

Godspeed
JS

Accounting, Corporate Finance, Finance Articles, Real Estate

Four Loan Types Business Leaders Need To Know

When you need money as a Investor or Real Estate Developer? You will certainly use one of these Loan types. Entrepreneurs also need to know and digest what the 4 different Loan types are when Investing and using Debt vehicles or Borrowed money.

Kansas City Private Loans, Kc Mortgages and Kansas Missouri Financing Available.

Contact Me HERE NOW!

What you need to know?

What Is a Balloon Payment Loan

A balloon payment loan is a mortgage or loan in which does not fully amortize over the term of the note, thus leaving a balance due at maturity. The final payment is called a balloon payment because of its large size. Balloon payment mortgages are more common in commercial real estate than in residential real estate.

Constant Amortization Loan

In this Method of lending an equal portion of the principle is paid at each period plus interest variable.(On the loans Remaining Balance)Paid in the beginning of each period. Example Photo of the Schedule of Paying the Principle and the selected terms or additional Interest.

Constant Payment Loan

Constant Payment Loan is what most who buy a house refer to as a Mortgage. However in the world of Real Estate this loan example is a simple Loan plus interest schedule you pay back over the life or duration of the Principle.

Here is a Example image of the Simple Calculation of Constant Payment Loan and Interest Schedule.

Interest Only Loan

An interest only Loan is the simplest type of Interest payment loan schedule. Meaning you pay a percentage of Interest on the Principal annually over the life or duration of the loan. Until the loan is paid off. Simple. But here is a image to demonstrate to those who may have trouble computing the schedule. If your anything like myself? I always need extra help. Your in good company.

Loans Interest payments are easy to compute as a Business leader if you understand the basics. This post will help anyone getting in Real Estate of needing to research what Repayment of Loan interest really means.

I truly hope you learned something today. As this post was meant to be lean and mean. I did not want to pose how to calculate the Interest payments. Because often times you will become confused reading the verb-age. So just youtube the Payment Calculations of the loan types. This post was just meant to show what and how things work in the world of Interest loans and Amortization schedules. Cheers to all the Bankers in Finance, and Mortgage Brokers out there. This Post was sparked after I learned that a good man and Titan in the New York Real Estate Community passed last Tuesday. Simply I was watching a Interview and heard Larry start to speak about the Loan types with Son Bill in casual Conversation. And decided I needed to follow up on the Finance Slang and types they were discussing. And Viola this post was born.

R.I.P. to the Good and Great Mr. Larry Ackman.

Godspeed and Cheers To Larry.
JS

Business Articles, Economics, Finance Articles

“What is Quantitative Easing?”

Today your going to learn “What Quantitative Easing is?”

About a Month ago I was invited to a ACG (Associated Corporate Growth) Reception and the first person I meet turns out to be a very nice guy named Chad G. Chad is just no ordinary average finance guy, he is a respected leader and a experienced Portfolio Manager. Chad is the Senior Vice President and Portfolio Manger for Waddell Reed’s High Income Fund. But meeting him you would never know he manages a huge Asset. He’s just a fantastic nice guy. As soon as I meet him? We immediately connected and began talking shop all about Corporate Finance, M&A, and his work in Asset Management. These are incredibly advanced topics. But very interesting to me.

Talking shop with other Finance Professionals is something that usually does not happen to me as a Entrepreneur here in Kansas City. Most people look at me like I am talking Greek. But here in front of me is a SVP of a Major Kansas City Asset Management Company and Fund. Chad could easily speak my new language of Finance. And truth be told that was really awesome to me. It made connecting with him all that more interesting and dynamic. Thanks Chad! It truly is a Privilege to connect with you Good Sir!

Why was this connection unique to me? Usually I do have a very difficult time meeting and connecting with others who work in Financial Services here locally in Kansas City. But this night would be very different. The entire presentation on the Mergers & Acquisitions state within Kansas City was truly impressive. CC Capital Advisors did a fantastic job presenting. If you missed my article about Kansas City’s best Investment Bankers? Read that (HERE)

The Bond Market Explained By Video

Quantitative Easing Described?

For most out there reading this Post? I will most likely need to describe what Quantitative Easing is in simplistic terms. And please don’t mistake this article as “Quantitative Tightening” thats the reverse of Easing. And a different article.

What does Quantitative Easing Mean?

Quantitative Easing is when the Central Bank approves the creation of Money. This money is invested into Government Bonds. These Government Bonds are held by Banks. These Banks are then able to begin lending to Small Businesses and Individuals. And this in theory will stimulate the United States Markets.

How Quantitative Easing help the Economy?

This is all theory based, it’s only based on what the Economy Academics have brought to the table to explain how this may work. But in general. We don’t know. But what we do know is Quantitative Easing is supposed to stimulate the American Economy when it looks like the Economy is about to freeze or fail from lack of capital being traded.

Quantitative Easing is supposed to stimulate the Economy in three ways.

The federal government auctions off large quantities of Treasurys to pay for expansionary fiscal policy.⁵ As the Fed buys Treasurys, it increases demand, keeping Treasury yields low (with bonds, there is an inverse relationship between yields and prices).

QE Keeps Bond Yields Low

Treasurys are the basis for all long-term interest rates. Therefore, quantitative easing through buying Treasurys also keeps auto, furniture, and other consumer debt rates affordable. The same is true for long-term, fixed-interest debt. When mortgage rates are kept low, it supports the housing market. Low rates on corporate bonds makes it affordable for businesses to expand.

QE Attracts Foreign Investment and Increases Exports

Increasing the money supply also keeps the value of the country’s currency low. When the dollar is weaker, U.S. stocks are more attractive to foreign investors, because they can get more for their money. It also makes exports less expensive.

QE Could Lead to Inflation

The only downside is that QE increases the Fed’s holdings of Treasurys and other securities. For example, before the 2008 financial crisis, the Fed’s balance sheet held less than $1 trillion. By July 2014, that number had increased to almost $4.5 trillion

WARNING – Some Financial Experts Warn Quantitative Easing could create out of control inflation, and possibly “HYPERINFLATION”.

The more dollars the Fed creates, the less valuable existing dollars are. Over time, this lowers the value of all dollars, which then buys less. The result is inflation.

Inflation doesn’t occur until the economy is thriving. Once that happens, the assets on the Fed’s books increase as well. The Fed would have no problem selling them. Selling assets would reduce the money supply and cool off any inflation.

The Following Three Ways QE could stimulate the Economy was borrowed from “THE BALANCE ARTICLE”.

I do hope you learned more on the topic what Quantitative Easing is today? And I also hope you learned more about the Basics of the Bond Market in the Video.

In conclusion of today’s post it was important for me to share my story of connecting with Chad. Chad’s professional career is certainly involved with the Bond Market. Which in turn is related to Quantitative Easing. But regardless I had to introduce him somewhere. And today’s post made the most since. I genuinely hope you learned a few things today. And as always Stay Tuned. You never know what it right down the road on this journey I am on inside Finance.

Thanks for Reading! GODSPEED.

Business Articles, Investing, Investment Banking, Mergers and Acquisitions

The Federal Reserve Raises Interest Rates

The Federal Reserve raises it’s Benchmark Interest Rates by half a percentage point which is the most aggressive action since the US is facing highest inflation rates in 40 years. Behold a new term for most? “Quantitative Easing”

After much anticipation, fan fare, and business news speculation due to rising costs within the market and easy access to cheap margin debt? The Fed convenes and finally comes out and say’s “It’s time to raise the Fed’s Interest Rates.”

The last time the Fed Raised Interest rates were in 2018. Quantitative Easing is now working by pushing more money into the economy by way of the Central Banks buying more Government Bonds through individual banks which lends money to businesses and individuals.

Ok! But What does raising the interest rates mean? After yesterday’s press conference, the Federal Reserve’s Chairman Mr. Jerome Powell began informing the Press and the Finance community. Today’s Information and Report from the Good Reporter Mr. Jeff Cox, The Business News Editor of CNBC. FULL ARTICLE

“The Federal Reserve will begin to Raise Interest rates by a half a Percentage point per the markets anticipation. When asked, The Fed’s Chairman Jerome Powell had to say about this historic increase?

“Inflation is much too high and we understand the hardship it is causing. We’re moving expeditiously to bring it back down,” Fed Chairman Jerome Powell said during a news conference, which he opened with an unusual direct address to “the American people.” He did touch on the burden of inflation on lower-income people, saying, “We’re strongly committed to restoring price stability.”

Furthermore the Feds Chairman say’s, “The American economy is very strong and well-positioned to handle tighter monetary policy,” he said, adding that he foresees a “soft or softish” landing for the economy despite tighter monetary policy.

It’s likely according to the Chairman Powell’s opinion and comments on this interest rate hike, “Their will be many Fifty 50-Basis Points rate increases are coming soon. But likely not more aggressive than that.”

When you stop and consider how the Fed will begin raising the Interest rates in detail? It will look like this. They will start by raising the Interest rates by Half a percent in the first stage. Then raise again to the Three Quarters range of a Point. Then another quarter percentage of a point, Equaling the Full 1.0 percentage point. The video below demonstrates the numbers in detail.

With all the free flowing margin debt that has been free flowing for years? It makes sense the Fed is wanting to take the steps and transition raising the debt interest rates instead of a sudden hike. This ensures markets are not suddenly impacted to the point of panic. Rolling out stricter policy for a soft landing on the American People and Investors. This also begins to address the Inflation that is beginning to be out of control. But here are some more in depth facts from the report.

In conclusion we will need to sit back and see how things begin to work. It’s never easy to accept the Party’s over with easy free cash. But as time moves on I have a suspicion the market wont rise above what the market can handle. That is just my 2 cents

In addition, the central bank outlined a program in which it eventually will reduce its bond holdings by $95 billion a month.

This undoubtedly is the largest rate increase since the fed relaxed rates in 2000, and the inflation of American Debt has pressured the Fed to begin the process restricting Debt Rates.

Fed Chairman Jerome Powell underlined the commitment to bringing inflation down but indicated that raising rates by 75 basis points at a time “is not something the committee is actively considering.”

Thanks for reading todays Post on this Historic Event we have all been anticipating and speculating on for quite some time. If you have anything worth the time to add? Please comment below,

GODSPEED
JS

Entrepreneurs

7 Veterans Who Became Entrepreneurs After Military Service

One of the great things about being a Veteran is having a Network of War fighters you can call on when doing a Article like this. As such I feel it’s fitting to name a few Veterans doing some big things.

First I would like to start off with a Natural leader, a Leadership Teacher, who trained myself to be a servant to others and especially to the community. He is fast becoming the go to man Law Enforcement and Civic Leaders Call to train their teams in Leadership.

Article:

Coming Soon.

Business Articles, Investing

Berkshire Hathaway Annual Meeting

If your anything like myself? You want to attend the Berkshire Annual Meeting if you can. Today’s meeting did not disappoint. Warren Buffett and Charlie Munger put on a show that we in the Finance and Business space will be dissecting and analyzing for decades.

Berkshire Hathaway

Click here for Berkshire’s Website

Since I am certain you do not want me continuing with my ridiculous interference. Without further ado, Here is today’s Meeting from CNBC.

Berkshire Hathaway Shareholders Meeting 2022 LIVE STREAM

Did you catch my article on Finance Models? (CLICK HERE)

The two Oracles of Omaha Nebraska, Charlie Munger and Warren Buffett.

Investing is Simple. The lesson’s stacked up from Both Mr. Buffett and Mr. Munger are this. Invest in things that will be around a long time. And invest in the things we love. Like See’s Candy, and Coca-Cola. That’s great advice and advice I live by. I hope you got a bang for your buck visiting my short post about the Annual Meeting today. Thank you for dropping by.

Godspeed JS