 Good day fellow investors, I hope you feel great today and welcome back to the stock market weekly news with the fundamental twist. Today we're going to talk about what to be careful when taking and looking at brokers. We're going to talk about what Buffett finally said about cryptocurrencies thus leading pointing towards the risk. Then we're going to look at Buffett's Claremants and what's his cash pile at the moment which is a huge part of portfolio which again indicates to the risks of what is going on. Just a quick note on telecoms that we have been talking in another video, a quick note on debt and household inequality. So let's immediately start with the dangers coming from brokers even those that seem not so dangerous. The Wall Street Journal interviewed dozens of former employees of the largest free discount brokers by assets, fidelity and TD or merit rate. They found for example that even if fidelity boosts itself to pay to have the lowest fees among all brokers and so the company incentivize their representative to sell higher cost products to customers. So even the bigger brokers try to sell you the higher cost products which means that a broker's intention is to put money in his pocket not to make you richer. It might not sound that important but there is a huge difference in how fees affect your portfolio. So if the big brokers, the established brokers do it, what do you think what are the less established brokers doing? Now there are brokers with no fees which is okay but you have to be careful there and be careful about things like this. I opened an account with another broker a few months ago just to test it with a small amount of money to see I wanted to see how it works with options and so. Nevertheless I kept getting emails, weekly emails with investing our investment funds in a invest following this trading daily trading strategy because according to them the returns were 40, 40%, 2014, 15, 15%, 16 and so on. In the last four years their trading strategy brought to 100% returns. So the problem is that okay you find a low cost broker but they want to make money and today's strategy of a lot of brokers is to pull the customer in and then bombard the customer with things that he might even bite. Trading strategies, portfolio funds, margin and options and who knows what which a lot of the clients really don't understand what is going on behind that so my message is if you use a broker use it only for what you have started using it in the first place which is buying and selling stocks. Everything else has to be a part of a strategy coming from you never buy something coming from the broker because the broker is there to make money on transactions. So really be careful with what is the broker selling to you and what you actually need. Most investors really need a broker only to buy. You buy a stock put it in your account and ask a la vista and reinvest the dividends and so on and so on. But if that would be the case that we just buy and sell very little over a year then brokers wouldn't make so much money and they make the most money on margin accounts on managing your money and so on and so on. So be very very careful with that. It's their business it's what they do so by knowing what they do you can protect yourself in the long term. Now finally Buffett said it in terms of cryptocurrencies generally I can say almost with certainty that they will come to a bad ending. Almost with certainty what does that mean 99% 98% so all those people who invest in cryptocurrencies have to expect a bad ending. The possibility of a bad ending it's all about risk reward when investing. At this point in time cryptocurrencies I would say 98% chance of a bad ending 2% chance of a good ending. So the odds are much better if you go to the casino and you put it off on red. Black is no good so on red is much better trust me. So if you are invested in cryptocurrencies be sure to understand the risk reward at this moment or if you know somebody that investing cryptocurrencies make them understand the risk reward and so they will learn about investing and hopefully not back off investing when they lose their money in cryptocurrencies because that would be the biggest tragedy of all tragedies that will happen after the cryptocurrency bubble explodes because a lot of people will get burned and they won't continue to invest and that's a tragedy because their wealth will remain smaller because they got burned on cryptocurrencies. On the cash thing Buffett, Claremont and Watsa sit on huge cash stockpiles. Buffett has 100 billion in cash with Berkshire that's 15% of assets of 35% of equity. Claremont has 40% of assets in cash and Watsa 44% in cash. As investing is all about risk reward if they have 35 to 44% in cash it signals really that the market is very very risky and you want to be on the right side of that risk reward situation. As always on this channel we keep talking about hedges protection avoiding risky stuff or at least limiting your portfolio exposures. So if they hold so much cash they are really long-term investors you really have to see how much cash should you hold in this moment and what are the assets that you will own later. It's simply enormous amounts of cash that they hold and Buffett doesn't like cash, Buffett hates cash but he's holding on to it for better opportunities. A quick look at the telecoms. I said I don't like telecoms I made a video about telecoms very risky with little expected rewards and this is one of the main reasons. So in the last 10 years the telephone index price index what you pay for using telephone internet data and whatever dropped more than 30%. That's a sector I would like to avoid when investing because in addition to this drop there is plenty more disruption coming and we'll see how it ends up. And this is something very very important to look at. The household debt service payments as a percentage of disposable income versus in red the effective federal funds rate. We can see that what households have to pay for debt services so interest is always around the left column around 10%. It spiked in 2009 when it went to 14% and now it's down again to 10%. However if you look at the red line in 1985 when it was 10% interest rates were 13%. Now interest rates are 1% and that debt service payment as percent of disposable income is still the same. If interest rates go higher like it has been the case in 2007 then we could see this ratio that to disposable income shoot up. And what happens if you take away 3, 4, 5 percentage points of your disposable income and we know that income consumption is the biggest contributor to GDP. So if you take those few percentages from just small increases in interest rates away from consumption you get a recession. We have had an inflation I will make a special video about inflation 2% so we are getting their closer interest rates are going higher so really it's all pointing to not so good things in the medium term. In the short term don't fight the trend. This is also something very very important about the inequality something that Daileo keeps mentioning 50% of households own no stock. 35% of households in the US own only indirectly via their pension funds and only 14% of households households directly own stocks. Now I as an investor I always own stocks I have been owning them for the last 15 years and it has been a huge part of my life a huge positive part of my life that enabled me to do so many things. Now I see that 50% of the population doesn't even own stocks. In Europe I think the active percentage of the population that owns stocks will be around 5%. Pension funds a little bit higher 50% probably or even higher but it's really really something to think about. We might think that we are in the stock market that everybody owns stocks but really very very little people do so because they don't understand. So we really should even if Kiyosaki has been saying it for 15 years have financial education financial planning investing classes in high school for everybody and it should be a strong strong statement from the government from everybody to understand what's going on. The problem is that it is a big business behind it so banks would immediately say buy my index fund buy this buy this and it's very difficult to teach it in an equilibrate way. Perhaps we should make a course ourselves here for the teenager how to invest what to go about but it's a long-term process so I hope that this YouTube channel will help people to raise their wealth standards and in general one by one is my motto raise the global well-being the global health the global wealth whatever in order to make this a better world. Thank you for watching thank you for your comments which definitely make this a better world because we are all learning together so I'm looking forward to them and I'll see you in the next video