Is it time for the market to pull back?

You may be watching the current market and wonder how much further the market can go up. I like to see the markets go up just like everyone else, but it can't go straight up. Recently I have been watching the market and it seems like this part of the bull run might be running out of steam. Its time for a moderate correction, there are three indicators that say it may be time to protect your portfolio.
The first indicator is the VIX. The VIX is referred to as the complacency indicator, it measures the cost of protecting your positions. When the market advances typically the VIX pulls back. Right now the VIX is sitting at 14.62 and the 52 week low is 14.27. Typically when the VIX reaches these levels it indicates a pullback is imminent. The second indicator is a saying. The saying is, "Sell in may and go away." Historically the summer time is the worst time to be in the market. Lastly, the current advances in the market have been on light volume. What this says to me is that there is not a lot of conviction in the advances the market is making. Also the market is sitting at technically significant levels so it seems that everyone is waiting to see whether the market will pull back or break out.
In closing I don't know where the market will move from here, but it may be a good idea to buy some puts or take some profits off the table and move into cash. I believe the bull market still has a long way to go, but a 10% could be close.

First Video Post!!

Peer to Peer Lending

Something I have added as a small portion of my personal investment portfolio is a P2P (peer to peer lending) portfolio. What is P2P? P2P is an alternative credit source. What you do is browse the prospective borrowers on the P2P site and decide to fund a portion of their loan. Often times the minimum amount to "bid" on the loan is $25, or you allow the P2P platform create you a portfolio according to your guidelines.
I personally use prosper.com. I started by investing $50, $25 went to two individual loans. My current note yield is around 19%. Now, to be fair I expect my returns to sink downwards as my portfolio grows. I am very pleased with the results that I have gotten using prosper. My to debtors have been on time in their payments every month so far, and I am in the process of funding another loan. To be fair though you should be prepared for some losses, Prosper projects losses for you and claim that the average investor is still receiving 10% returns. Also if you are looking at this as an investment for yourself it will be important to keep in mind that losses will occur. Banks have credit reserves in case you don't pay your mortgage or credit card, and the bank is actually required to do this due to accepted accounting principles. You should also predict some sort of potential losses and have a "reserve" estimate so that you aren't disappointed when one of your borrowers default.

If you have any specific questions about Peer to Peer Lending I would be happy to answer them.

Be your own banker

Have you ever considered being your own bank. You could have your own ATM and you don't have to go see the loan officer and attempt to convince them to give you a loan. Well you can, first I would like to say that I am not the first to develop this concept or use it. Actually the person that commercially published the idea was R. Nelson Nash, his book is called Becoming Your Own Banker: Unlock the Infinite Banking Concept. I recently read the book myself and now I am trying to improve upon it. Before we get started I want to advise you that I am licensed to sell basic insurance policies but not licensed for any variable or investment products. For professional purposes value my advice for what you payed for it.
The personal banking concept is build off of a permanent life insurance policy. Most of the time when you make a large purchase you have to decide between giving up interest that you earn, or paying interest on money that you financed. This happens because you either have to take money out of savings to pay for the item or pay the bank interest for the financing. What if you were able to continue earning interest after purchasing something and then pay interest back to your self. What ends up happening is that over time you develop a large pool of money that has multiple advantages that can be provided to you.

1. You can finance larger and larger purchases as your cash value accounts. While enjoying tax deferred growth inside the vehicle. If you were earning interest in just a plain old savings account you would be required to pay taxes on the interest.
2. Pass on wealth tax free to your decedents. I am pretty confident that if you can pass directly to your heirs that is a plus for anyone.
3. Provide retirement income, this retirement income often times far exceed your original cost of this policy and keep some sort of death benefit intact.

I would also like to point out that these policies take a little while to get started. Permanent life insurance products can be likened to an airplane. When a 70 ton airplane takes off it requires a lot of fuel, but as the plane reaches its cruising altitude and speed it becomes much more efficient. Actually the plane continues to become more and more efficient because it is consuming fuel and becoming lighter. A life insurance policy is the same way, the longer it is in force the more efficient it will become. An important thing to take away from this is to not let the policy lapse, if you do you will have been purchasing expensive term insurance. If you are truly interested in this idea I would start by reading Becoming Your Own Banker.

As I implement this infinite banking plan I will keep you updated on how it works for me.