The value of a safe or safe deposit box

This is another post that I hope to make relevant to personal finance and comes directly from my own families recent experience where my wife passed away. (I hope this doesn't offend anyone....I think there have been some good lessons that I would like to pass along)

Today I was thinking about the value of our safe deposit box, and how it not only protects our vital documents from fire, theft and natural disaster, but it also serves as a central point where family members can go to find these and other valuable documents.

My wife and I keep a copy of our Will in there, along with a raft of other documents that are quite important.


These include:

• Car titles
• Insurance Policies (auto, home, life, etc...)
• Investment documents and papers like savings bonds, a few corporate bonds, and home mortgage paperwork. (and eventually the deed)
• Any valuable coins or papers

One other thing I intend to keep there is a list of all my online accounts and passwords as well as any debut or credit card pin numbers. This is something my wife and I did NOT keep in any one place, and I certainly do not feel comfortable keeping them in a file on the computer nor on a piece of paper in the desk drawer!

Now that my wife has passed, I added both my daughters as owners of the safe deposit box as well. I did this because if I don't, the box is sealed upon my death and no one can get to it except for my estate. Yes, it is true that they will be controlling the estate at that point, but it would probably still take months for them to gain control of the estate in order to even get in the box.

I will probably also try to keep a copy of that paperwork that I described in my last post. The four or five simple one page documents that describe how my income comes on, and what my bills are. (along with all the names and account numbers for all my accounts with phone numbers and the name of contact people)

The idea is to not only keep things safe in times of disaster, but to also keep things in one place, for easy access. (Yes, since it would be only down the street about 7 miles, it would not escape a nuclear blast over my house....but at that point I don't think anyone would really care about my ashes)

Tomorrow....maybe a couple of words about having a Will.

Recovery after your wife passed away

If you read my last BLOG post, you will remember that my wife Cheryl (of 24 years) passed away on December 21st. I have written several Journal entries in my online journal, but I have yet to talk about the difficult emotional problems and the deep sadness involved.

But I don't think any of that belongs in a Personal Finance BLOG...but there is actually a very important aspect of my situation that does, and that revolves around what I have had to do in order to take control of the family finances and keep everything rolling along well.

First of all, it is far too early to day that everything is going to go well...but I have to say that my wife left things so well organized that so far I have been able to pick-up things, find all the accounts, the current state of bills, understand our bill paying calendar and continue on without any late payments. (so far)

First, you must understand that I took care of our retirement finances, and my wife Cheryl did all the day to day nuts and bolts bill paying. I literally did NOTHING in that regard except to keep my credit and ATM card receipts in my wallet so that Cheryl could reach in to my wallet and grab the slips in order to reconcile the account.

So when she passed away.....I thought I was totally lost. We don't have an incredibly complex financial situation having only two major credit cards (we rarely use one of them), three checking accounts (one is tied to our large investment account and is mostly only used to transfer in and out of there...and another is a small credit union account with $30 in it!)

But we have a fairly complex number of bills with odd schedules having two daughters in school and several different loans and tuition plans coming into play. (along with dutch debit accounts, car payments, house, utilities, etc....)

Some of our payments are made online, some by check, and some are automatically withdrawn....

We also have a safe deposit box in which as have some of our more important family documents. I could have just let things "roll" and dealt with any missed or skipped payments by paying their late fees....but I hate late fees and I didn't want to be late on any payments!

It has only been about a week, but I have to say that my wife Cheryl had documented and left organizing instructions that a child could understand, and it was all clearly done in the above pictured rack of file folders.

Here are the keys to her organization:

1. A single sheet of paper that lists all our money accounts (ins and outs) by name, institution, account number and has a contact name and number of a person or department to call. This sheet included a location for the safe deposit bank keys, the address of the bank and instructions on how to access the box.
2. A single sheet of paper that lists all our normal monthly expenses, the day or week of the month they are due, how they are paid (online, check, auto-withdraw from which account) and the typical amount of the bill. (or the range)
3. A single sheet of paper listing all online accounts, the login names, passwords and any specific information needed to access the account.
4. A single file folder with all unpaid bills needed to be processed. When a bill came in, she placed it in this folder, When she processed it, she marked it paid on which date...made an entry in whatever checkbook or payment instrument and placed the marked up invoice into a file folder for that "bill" in the larger file cabinet. (There was an sort of paper trail that I could follow to see if past bills were paid and when)
5. The odd and important expenses, like my daughters college loans, tuition and misc non-periodic bills had their own file folder where past payments paperwork were kept for easy reference. She also had a single sheet of paper in each folder that outlined any past and projected future payments....with an estimate of the next required payments and on which dates.

The only thing Cheryl might have included in her information might have been the name and phone number of our tax accountant, since I will have to be contacting him to work on taxes before you know it....and since getting our tax information prepared was also Cheryl's work, this is something I have to get working on sooner than later! (I was the money spender....Cheryl took care of all the bookwork :-)

So we have only just begun the task of adding my daughters onto my accounts and to the safe deposit box....but at least the family machinary is set-up to receive and pay bills...and this only because my dear wife was not only organized, but created and left a great documentation trail.

None of us wants to think about our own death....but if we really love those who are left to pick-up after us and if we want them to "keep going", we would take the extra time needed to document the process we go through.

May you be every-ready but never need to use your preparations.

I am sorry I have not posted.....but our family has suffered a great loss

I am sorry I have not posted for about a week, but I have suffered a massive loss. My wife Cheryl died unexpectidly last Thursday of a heart attack and my two daughters and I are very shocked and saddened.

Yesterday's Christmas was of course not very merry, but it will be only the first of many that we have without Cheryl. My wife was the corner stone of our family....not just for me and my daughters, but for her own family of brothers and parents. She was not only an organizer and always involved, but she always "Knew what to do".

Cheryl had many activities in the community, and she did everything in her life in such an unselfish manner. These past few days I have been combing our family address book calling friends and relatives, and while this was a very sad task, I actually received great joy from it as well. I did because so many of her friends and family reminded me of some of the kind and loving things she did for and with them, and how much they loved her.

I understand that I am quite biased in my views, but I believe my wife was one of a kind and I just hope that she thouroughly enjoyed her 47 years on the earth.

I know this post is not related personal finance , but I hope you can bear with it and me at this point. I promise I will be back to posting my petty thoughts and musings....and I will probably create some post on my experiences with our personal finances after the funeral.

I promise not to make them too personal, but my wife actually took care of all the daily accounts, and I am going to have to get a handle on them and figure out how she did it and where everything is.

She was very well organized, so I should be able to do it....I will try to make my posts insightful and not just a diary.

Again....please bear with me and bu current hiatus of posts.

Thanks,
-Quentin

Quickie Idea: Open a Roth IRA for your kids!

There are two questions that come to my mind when I think about my kids and their handling of money.

First, have I taught them about how to avoid debit, how to save, and how to spend within their means.

Second, have I taught them that it is never too early to start thinking about retirement. (which sort of builds on the first item and gives them purpose for the first item)

Well, the one thing that I have always learned is to always try to walk the talk....but in this case, it is impossible to go back in time and/or even show them movies of you saving at their age.....but you might consider making the first contribution to their retirement accounts...and doing it with their involvement!

The article I just read describes contribution to a Roth IRA, and how growth in that sort of IRA is the most beneficial. (very tax efficient because it is started with after-tax money it grows tax FREE)

So get the ball rolling on their future....but don't just blindly give them the money, "teach them to fish" and get them involved in the process and explain it every step of the way. This sort of teaching will last them a lifetime. (and teach them how important it is for them to pass on the knowledge!)

Decisions, Decisions.....leave my reliable Vonage to save money with Skype?

What to do...what to do?

I am a very happy Vonage customer of about 9 months or so, and the cost of Vonage actually lowered our phone bill in half or MORE. (and gave us a much better calling area all at the same time)

You see we have cell phones, so we took our long distance phone service off our phone. With long distance, our phone was running about $100 per month. When we took the long distance company off...it went down to about $50 per month.

When we went to Vonage, I believe the fee went to $24.95 per month and this included unlimited local and long distance calling! (after all the government taxes and fees, I think we are looking at about $29 per month)

So my first thought is to drop down to the 500 minute a month plan which drops the cost to $14.95 per month.....but then this Skype plan shows up which blows that right out of the water.

Yes, the $14.95 per YEAR Skype plan is only a first year offer.....and only good until January 31st...but then it only goes up to $29.95 per year....still a huge savings!

I have used Skype from my computer and spoken to people all around the world...and there have been times when it was a bit choppy, but I would say that it has been perfect about 90% of the time. (Vonage has been perfect just about every time.....no issues)

Yes, it means investing in new hardware to route the Skype packets. (I don't think the Vonage router is going to be configurable....I am not sure) The cost benefit analysis should be quite simple. I will be paying about $1.25 per month for Skype vs say $14.95 per month if I cut back to the 500 minute Vonage plan. If the hardware required for the Skype upgrade costs $250, the $13.70 per month saving will pay for the hardware in 18 months. (about 9 months if I compare Skype to my current $24.95 per month plan)

I guess it is not rocket science. I actually think I might just go for the less expensive Vonage plan..unless I can score the Skype router hardware for less. (which I think is possible) At that point, Skype sounds like the way to go!

Anyone out there have Skype experience...more than me? What do you think?

Market Maps from SmartMoney.COM

Check out this cool and very visual representation of the various stocks in he market. It is sometimes a lot easier to understand the various attributes of a companies finances when you see them in a graphical format.

From the website:

The market at a glance The map lets you watch more than 500 stocks at once, with data updated every 15 minutes. Each colored rectangle in the map represents an individual company. The rectangle's size reflects the company's market cap and the color shows price performance. (Green means the stock price is up; red means it's down. Dark colors are neutral). Move the mouse over a company rectangle and a little panel will pop up with more information.

Check out this page for the market shown this way, and then there is this page that shows the ETF market in a similar manner.

Also, check out this cool website that is a cool way to search for stocks by selecting various parameters to separate what you consider the wheat from the chaff. It looks like a really great tool.

The only problem with these tools is that for analytical people like me, they are addictive!

How Rich Are You?

Maybe you are wealthier than you think!

I was reading Consumerism Commentary BLOG which pointed me at a website that calculates your position of wealth in the world based on your income.

The describe why they created the website as:

"We are obsessed with wealth. But we gauge how rich we are by looking upwards at those who have more than us. This makes us feel poor.

We wanted to do something which would help people understand, in real terms, where they stand globally. And make us realise that in fact most of us (who are able to view this web page) are in the privileged minority.

We want people to feel rich. And give some of their extra money to a worthwhile charity."

They then describe the way they calculate your place in the world, and show the graph below which shows how the distribution of wealth exists...that is no where it is distributed, but how across how many people.

Of course this isn't a totally fair picture of things because the cost of living isn't exactly equal across the world either.

They then go off and describe who is behind this site, and ask you to go visit their main website....Poke in the UK.

"Poke are a creative company based in London. Our aim is to inspire people through interactive media.

We built this site because we wanted to challenge people's perception of their personal wealth. And while we're at it hopefully raise some money for a good cause. For contact details visit: Poke

With thanks to: Meghann Mackenzie for bringing us donuts and number crunching."

I'm not sure if this is all that accurate, but it is interesting to play with it to see where you stand. (But I'm not telling you where I stand)

Chinese and Indian Cars are on their way soon....

Chinese cars in the USA and Europe soon? These guys in this Economist Podcast suggest these cars are still crap, but is this another shortsighted view....

Oh, but haven't we seen those sort of short-sighted comments in the past with our old bias against "Made in Japan" not too many years ago?

Who funds our debt when the world isn't so dependent on us in the future?

I admit to being an Electrical Engineer and in no way an economist....so my ideas of how the world works may not exactly line up with reality.

I have noticed that I sometimes do not have a good perspective on how "fast" certain things tend to take....basically because the economic systems are so much bigger than I tend to imagine. (there is a huge inertia....sort of a big flywheel effect)

So when I read this article about how this US recession would not really affect the growth and health of the European and Asian economies....it caused me to go back to one of my personal predictions that the giant and growing economies of China and India are sort of "loaning" the USA the money we need to buy their goods. I felt that they NEED us because we are the big consumers, and in order for them to become the big producers, they need consumers.

Given the imbalance of trade, they quickly accumulate wealth from us...and by buying our debt with their savings, they keep us buying more and more. (and also going more and more into debt)

Apparently the US delegation to China this month seems to have come to some agreement on both counties working to lower the imbalance, but this sounds like "saving face" talk to me.

I don't think it is a fluke that China keeps their money valued low and tied to the dollar...this way it makes their goods cheaper to us and we ultimately can NOT resist them! (and in fact are going further into debt with every purchase)

But the above article sort of indicates that our slowdown is not slowing them as much as might be normal....so it seems that they are beginning to become almost "Self-sufficient"....and by that I mean that perhaps their middle class has about built up enough wealth to support the growth of their own production.....so may be they need us less and less as things go on.

Could this be why the Chinese signaled to the world that they were going to start thinking about diversifying a higher percentage of their $1 trillion cash reserve in other currencies besides the dollar?

Now I'm not predicting a crash of total melt-down of the dollar and therefore our economy....that would make their $1 trillion dollar reserve evaporate....that's not what the Chinese want either....but perhaps this might be the start of a slow "backing away" from the dollar by the world who now looks at the dollar as being better than gold.

I worry that our country needs to fix things NOW....while we still have the ability to do something. Our debt to the world is already of record size....but our country and currency still has very good standing in the world, and we need to get our house in order before we lose that too.

Tis the time of year for giving......

This is the time of the year to give, and I just heard a message from my local radio station suggesting that people support two organizations that are helping in very worthwhile areas.

I am posting the information on these groups here because I wanted to give you pointers to a couple of groups that I myself think are worthwhile....but I know there are plenty of local groups all around the country that do great worthwhile work.

The first group I wanted to mention is the Marine Toys for Tots Foundation.

From their website, the organization describes itself like this:

MISSION: The mission of the U.S. Marine Corps Reserve Toys for Tots Program is to collect new, unwrapped toys during October, November and December each year, and distribute those toys as Christmas gifts to needy children in the community in which the campaign is conducted.

GOAL: The primary goal of Toys for Tots is to deliver, through a shiny new toy at Christmas, a message of hope to needy youngsters that will motivate them to grow into responsible, productive, patriotic citizens and community leaders.

OBJECTIVES: The objectives of Toys for Tots are to help needy children throughout the United States experience the joy of Christmas; to play an active role in the development of one of our nation's most valuable natural resources - our children; to unite all members of local communities in a common cause for three months each year during the annual toy collection and distribution campaign; and to contribute to better communities in the future.

______________________________________

Then there is Operation Care Package..

From their website:

Operation Care Package is a volunteer 501 (c)(3) public charity, dedicated to our mission that no Hero serving our Nation should be forgotten.

Our goal is to support our Soldiers, Marines, Sailors and Airmen through care packages and letters of encouragement.

The group was formed in March of 2003, by Debbie Smothers, Debbie Durawa, and Pat Curran. Debbie Smothers' brother, David Bishop, an Army Green Beret for 19 years, has served in Iraq, Afghanistan and many other countries. Debbie Durawa's son, Matthew Zwolinski, and Pat Curran's son, Joe Curran, both serve in the Army and were deployed in Iraq.

Some of the soldiers don't receive anything in the mail, and they exist on little supplies," said Smothers. I don't think any of them should go without something from mail call."

With the help of so many generous individuals and businesses throughout the Country, we have been able to reach thousands of our Heroes throughout the world.

We could not continue this vital work without your help. Thank you, and please continue to keep all of our Military and their Commanders in your thoughts and prayers.

______________________________________

No matter what our station in life, I believe it is our responsibility to reach out and help our fellow humans in need, and I urge everyone to do what they can.

Gift Card buying, selling and trading!

Tis the season for giving...and a blogging friend of mind reminded me that a gift card is a great thing to get for someone who is a bit tough to buy for. Sure, you may know they like tools, but have no clue as to which particular tool they really want.

Ditto for perfume....or candy...you name it and you could be facing a potential exchanged gift. (for style, size, smell...) You can of course get generic gift cards from Visa or American Express too.

So while a gift card isn't the first present that comes to mind, I'd have to say that it is one of those things I would get around to considering once I ran out of ideas. (They are just not on the front of my buying list)

So while buying a gift card is a part of my vocabulary, I never realized there was a sort of after-market to buy, sell and trade these cards. (Gift Card Trading just never occurred to me)

Apparently EBay has a special area to transact gift-card buying/selling. Then there are specialty vendors like CardAvenue, CertificateSwap, GiftCardsAgain, GiftCardBuyBack and PlasticJungle.

These places have different fees and costs, but they have been invented to facilitate the sale, purchase and exchange of gift cards.

If you have a gift card you want to get rid of....or have one you might want to get for a slight discount, you might want to check out the above websites.

Does a falling dollar cause inflation? Will the Fed care?

The following thought that came to mind is a simple one....does the lower dollar cause prices increases that result in increases of inflation that the Federal Reserve will work even harder to squelch?

First, I have heard that our new Fed Chairman is the kind of person who "targets inflation" as the main way to judge the need to stimulate or slow the economy. The idea is that a "hot" economy would stimulate demand for labor that might the be in shortage which would cause wage and shortly thereafter, prices to rise.


Second, I think everyone can plainly see that a vast sum of common goods for sale here in the USA are made elsewhere. If the dollar continues to weaken, it means other currencies are getting stronger and this means that the price of goods being imported is going up. If this is true, then I would think that companies selling these products can only able to absorb those increases for a short amount of time...and will than begin raising prices.

It would seem to be that those price increases would result in ever increasing inflation which is what the Federal Reserve would be triggering on.

Would the Federal Reserve see this increase and automatically decide to try to slow the economy down to counteract the price increases. Could those attempts show it down more than it really should be.

I am sure the Federal Reserve takes a large number of facts and figures into consideration....they probably release simplified remarks to us because releasing more would not benefit most of us.

Baby boom in China; Year of the Golden Pig (any investment opportunities?)

The year 2007 is one of the special "Year of the Pig" that comes around every 60 years. Having a child is this special year is apparently very lucky, and this seems to NOT have gone unnoticed. (In China anyways)

I have read several reports that indicate that China expects a bump in the birth rate of 20% this coming year, and at least part of it is the hope of the Golden Pig year. (general prosperity is of course another reason)

So the obvious question that pops into my mind is "How can I invest to take advantage of that?"

Well, I don't know that I have enough of a cultural knowledge of China to truely know the answer, and it is always dangerous to reflect the values and characteristics of the USA on any other place in the world. I also would not like to guess how this would play out in say 5 to 10 years when these "Golden Pig" kids are growing....that's kind of a long term investment to me.

I'd be interested in your thoughts. I'm thinking that besides the normal baby related clothing or toy stuff that the thing to consider is perhaps entertainment or education. I'm not sure how the Chinese version of Disney will go over, but with this sort of baby boom and an ever increasing wealth there, I would think that spending more of their new family members might NOT be just an American trait, but perhaps a normal human reaction.

Maybe 20% increase isn't enough to cause any noticeable difference, but I suspect it is. What do you think? (this guy thinks "golden pigs" are the way to go)

I love my Chinese MP4 Player (ChiPod)

Why is this a Personal Finance Question? Because I think I saved a lot of money buying a ChiPOD instead of an Apple iPod. (What's a ChiPOD you ask?? I did NOT coin the phrase, I found it called this on this unofficial support website.)

I'll note right up front that these MP3/MP4 players are NOT for everyone, but as a daily listeners of Podcasts and music on occasions, I find the unit I bought on EBay to fit my needs perfectly.

I have never had an iPod, but my daughter had one and I had a Creative Zen. Both were great, but they had one feature I never want to see in an MP3 player again...that has a disk drive.

I don't remember dropping my Zen, but the drive died about a year into owning it. Not only that, it was kind of large.

When I went out searching for another MP3 player, I decided to try one of the "inexpensive" Chinese non-name brand MP3 players that you can buy on EBay. I bid on it on Thanksgiving day as I felt I would get the fewest people competing with me....and sure enough, I had my 4GB FLASH based MP3 player for less than $60. (shipping included)

So I have had it now for a couple of weeks, and I have to day I love it. First of all, it is so tiny it fits easily in my shirt pocket. The battery life is just great, and it is as easy to use as a USB based storage device....it simply looks like a disk!

I mainly listen to Podcasts, and I just drag those on and off every morning. This player actually does play video and show photos, but you have to run a conversion program to turn normal video files into files that will play on the small screen. I have tried it with a few video podcasts, and it works great. (but I use it mainly in the car, and watching video while driving is more than a bit dangerous! :-)

The only huge negative I have is that the CD that came with the device (the one with the conversion programs on it) also came with a Trojan Virus in one of the files. When I asked the seller, they simply said "Oh yea, several other customers who bought one also complained of the same thing." He then pointed me off to a website for sort of "unofficial support" and drivers.

The player not only plays video and shows photos, but it has an FM tuner that works very well, and a microphone so you can record sounds / voice. It even has a small speaker that you can play through....and it works well in a quiet room.

I don't think you can beat the features for the price. Heck, the 4GM of memory is worth the $60 even if only to use it as a thumb drive.

Take a look on EBay....you might find one of these as a good inexpensive alternative to an iPod. (Watch out Apple!)

PS: If this isn't interesting enough, check out the Dick Tracy MP4 Video watch!

Wholesale Clubs are not my bag! (this post explains why)

I signed up for a BJ's Wholesale Club 60 day pass, and I have been to the store three times so far. The first trip was just to look around, and the last two to shop.

I initially went in to find a chair and a lamp for my wife, and I quickly found out that shopping at a wholesale club is a lot like shopping at Building 19. (a store that sells insurance recovered merchandise and has the motto GOOD STUFF CHEAP) The problem I have with both of those stores is that you just can't reply om any pasrticular thing being in stock. (except for perhaps food)

My wife and I went in to BJs on another occasion when we were looking for an electric blanket for my daughter. They had them, but only in King and Queen. (the selection was nil too)

Then, tonight I went in looking for a battery for my daughters 1998 Jeep Cherokee. There is not much special about that battery, except that BJ's simply didn't have anything like it in stock.

I skipped over to Walmart, and they had three batteries that for the Jeep and I had a choice.
(and the prices were better on batteries in general)

My point is simply that it seems that BJ's (and probably all the clubs) are not general merchandise shops....they carry a lot of very popular things, but they are lacking of many of the less mainstream items. (and sizes)

Besides, I am more of a bargain shopper. BJ's does not seem to have sales...and I thrive at searching out sales. I think lazy shoppers might benefit from "club" shopping.....but I find it even a bit boring.

Such is life......

I've adjusted from 80/20% Stocks to bonds/cash to a 50/50 mix!

I was thinking about all the recent data coming out and worrying about the softening economy. I have been very happy with my portfolio's performance for the past year, and have only made minor adjustments perhaps once in the last 16 months.

But I was just feeling too uncomfortable with the trends these days. You name it, it seems all the numbers are coming out negative.

Also I felt that the ever weakening dollar is a sign that the signs I am looking at are being seen by investors across the world....why the stock market constinues t go up, I am not sure....but I decided that my 80/20 stock to bond mix was just way too aggressive for such a conservative risk-averse investor as me.

I called my financial advisor and talked to him about changing the mix. Given my risk tolorance, he liked the way I was thinking and agreed.

He suggested a 60/40 mix, but I then suggested 50/50 and without hesitation he agreed. He noted that we had made a great gain over the year and it was wise to take some off the table at this point.

Quite honestly, I am a bit worried at 50%, but much less so than 80%. I am going to look at some other alternatives that might be a bit more stable, but for now I am happy.

More to come as the "soft-patch" is approached.

China isn't just a Manufacturer....they are trying to LEAD the world's Technology Direction too

EVD players.....for the price if DVD...right now....today! (that's $87 in case you were wondering)

We in the west like to think of China as our "manufacturing arm"....but the Chinese are not happy simply making our goods.

Sure, they know that there is plenty of value in that, but they see the great value in being the leaders and creators of those things.

But wait, isn't that what our leaders of industry and government have declared that we have carved out for ourselves....we would develop ideas and they would make them.

Sorry Charlie, China has a different notion of the world. They have always had their eyes on the whole process....and they didn't create this plan today. They have been sending people to school and positioning them in major industries all around the world for quite a while, carefully getting the knowledge and experience they need to bring it all back home.

But after experiencing the taste of life in a free and expanding US or European country, why would they bring their skills and knowledge back "home"?

....come on people, China is the fastest growing place on earth right now...it is the wild west of the east! It is gold rush time in China, and who wasn't lured out west in the USA by the gold rush.

There are articles that talk about China having an 8% growth rate, but I keep reading news briefs about growth in the 9% and above range! (double digit growth has been reported over and over) That is exciting growth compared to the 2.6% we have here in the USA!

They have a statistic called Purchasing power parity, and they say China is very close to the USA already when you look at things from that perspective!

Here is an article I saw on the net that talk about China creating a new ultra-high density DVD standard that is supposed to blow away Bluray and HD-DVD. They say they want to make it a standard in China....well, this isn't the first standard they have tried to create in China. (going against the current world standards) They have apparently begin creating their own Cell ular system standards, their own WiFi networking standards, and their own encryption protocols.

None of it has stuck yet because they are still the 3rd largest market in the world....but you mark my words, when they get to #1, or even #2 with the kind of growth that are having....the world standards will be theirs. (we will have no option but to accept cell phones with Chinese keypads)

You heard it here first......(Ok, probably not first....but you heard it!)

How I investment, and an update on my own "Mad Money" account

I guess I sometimes wonder how to let people into my head as far as my investment ideas. It is a tough one, and a balance between a full and open discussion of the whole investment portfolio, or something less.

Well, I'm not exactly ready for the full disclosure....mainly because it is not just my money, but my wife and family and because I'm not sure exactly how that would benefit me.

So I took a small bit if stock I had with Vonage and moved it to a separate account where I will try to invest it in directions I think make sense.

Let me say right now though that this is NOT what I have EVER done. Even back in the boom-boom '90's, I was never a day trader. In fact, I very rarely owned individual stocks. I was always a stock and bond fund buyer....and except for some company stock and a few government bonds, I have never wanted to own individual securities.

Too risky...too volitile, too much work. (I'm the slow and steady saver type)

My investment philosophy is one of diversification because I am a very risk adverse person. In fact, when I finally went to an investment advisor, I wanted to make sure they were not only suggesting diversification across funds, but also fund familes! (I didn't go so far as to diversify across advisors....we just don't have enough money for that :-)

So this small portfolio is not at all a model for my own investments. It might be what Jim Cramer calls "Mad Money"....but even so, I am not chasing risky investments. I might be a bit more of a market timer, but I'm not in it for the quick buck. I want to try and do the homework to pick good solid companies in solid markets that investors will look favorable on. (and buy their stock)

Because my investment amount is small, I am probably going to limit this to 2 to 4 stocks at any one time. (the sales commission is just too pricey for any more)

So I went from 300 shares of Vonage a few months ago (sold at a loss...ouch! I hate losing money!!!) to the current mix of 99 shares of CHINA UNICOM LTD and 11 shares of ISHARES FTSE/XINHUA CHINA 25 INDEX FUND.

These together with $3.01 in cash are currently valued at $2,262.30. (I had initially bought the Vonage at about $3000...and sold it for about $2100) I'm clawing my way back from the Vonage loss....but I think these shares will give me a good steady climb for at least the next 3 months.

I think my last accounting here was when I bought the FXI, and I had $2202.27 in the account...so todays reporting is a net plus of anout $62.03 or about 3%. (yes, there were some down days in between, but I have confidence in these picks overall)

We shall see how things progress....probably not with a weekly report, but perhaps every month or so.

Wish me luck!

As far as R&D Spending, China swaps places with Japan! (Closes in on USA)

Well, I guess you might have seen it coming when you looked at the graph to the left....even though the numbers reported there look small for those years, the trajectory of growth is one that should be scary. (According to an article, in 2001 the USA spent $282 billion and Japan $104 billion)

So how has all this progressed....well, I am not sure it is going to be clear from the way money is spent since the world currencies are fluctuating and some say the Yuan is not properly set to the dollar. (China apparently fixes it and it is supposed to currently be undervalued)

But this article in 2003 clearly indicates that China is a distant third in R&D spending. Then
this 2004 article talks further about the advances in R&D spending in China, and their steady increases as a percentage of GDP. (this and the steady growth in technical education make it clear that this is a plan, not a fluke)

Then in 2005, this article simple asked the question directly in it's title, "Is China the next R&D Superpower?"

So last night we see this article that is yet another in the series.....this time we see that China has eclipsed Japan in R&D spending, and according to other articles I read is spending about 41% of what the US is in R&D. (That's $136 billion for China vs $330 billion in the USA...but that about that devalued Yuan...could they already actually be spending more than we calculate?)

What does this all mean.....well when a person at the Organization of Coorperation and Development is quoted as saying the development is "stunning", we might want to stand up and take notice. (and work to maintain our lead)

We will see if the news organizations in this country even report this. (I think it should be front page news)

Hard Landing, Soft Landing.....any landing at all....

With all the negative economic news in the recent months and all the talk of hard and soft landings, I thought it would be interesting to look at some of the recent news a bit more.

It certainly is easy to miss or dismiss things during the holiday season....but it was the lack of Black Friday shopping traffic that initially made me pause and consider the situation. (though E-Commerce sales seems to have increased nicely 42% over last year)

My interest in HARD vs SOFT landings came when reading articles like this one which talks about how the currency markets are worried about a weak US economy. Apparently the Dollar slid further against the Euro and the Pound, and hitting a 14 year low against the latter.

But surely a piece of the currency traders concern includes announcements by China that they will diversify some of their currency reserves into other currencies....and away from dollars. Now this announcement is a bit dated, but that together with a possible slip in the US economy may have the currency traders thinking that China will make good on their word sooner than later. (I have heard people say that if there is a dollar crash, everyone gets hurt....but those that get out fast get hurt less)

So with talk like that, perhaps the dollar slide is a self-fulfilling prophesy!

So perhaps the next bit of news about the unexpected manufacturing contraction in November was another piece of the reason for the latest pessimism. Apparently the Institute for Supply Management said its index of national factory activity unexpectedly dropped to 49.5 from 51.2 in October. Economists had forecast a slight rise to 51.5. It was the first time the index had fallen below 50 since April 2003. An index below 50 indicates shrinking activity in the sector.

It was the first time the index had fallen below 50, which indicates shrinking activity in the sector, since April 2003. The Commerce Department reported U.S. construction spending declined 1 percent in October, more than expected and adding to a growing pile of evidence that the housing market is cooling." type="hidden"> U.S. construction spending as reported by the Commerce Department declined 1 percent in October, more than expected. But this simply adds to the already large mound of evidence that the housing market is more than cool......is perhaps stone cold. (but we probably will NOT be able to assess that until the normally spirited spring sales season rides around)

What about retail....we don't have to wait for spring for an assessment there....holiday time is the hot time for retail. Well, the market is apparently worried that Walmart may be the canary in the coal mine as they have recently reported November sales were their first month's decline in sales in 10 years. They also warn that December projections only indicate a 1% increase, and they are looking forward to a very disappointing holiday shopping season. (to be fair, Target reported sales increases above what the analysts expected, but then again, JC Penny and Costco also fell short of Wall Street expectations.)

But even with all the pessimism, there are plenty of people who are not ready to use the word recession. Of course, it is my experience that recessions are not "called" until after the fact. (I think this is because predicting it early can result in a self-fulfilling prophesy)

But what about this report of US income and spending increases for October? This surely indicates good signs. Well, this does indeed bode well, except the pessimist in me worries that the average US citizen may not be all that good with their money because they are the very people who bid up housing costs to mania levels while maintaining a zero balance savings account. I'm not sure why as continue to spend....the only answer I have is because we were offered more credit. (not because we actually have any money saved)

Yes...I warned you...I am often a pessimist.

So how about the other "unexpected" report a few days ago about the jobless rate being higher than expected.

The Labor Department reported that the number of U.S. workers applying for jobless benefits rose a higher-than-expected 34,000 to a seasonally adjusted 357,000. Analysts had predicted claims would edge down to 314,000, so this increase seems like another "surprise".

It was also reported that claims in the prior week were revised UP slightly to 323,000 from the prior estimate of 321,000....also a sign that the current increase is probably not a mis-calculation. Today's news article has a very similar conclusion.

Of course, the Federal Reserve is not so negative....though they are currently using worrisome words like "cautiously optimistic" when talking about the holiday retail sales picture. They often seem to "cherry pick" their statistics to paint the picture they want to see. I suspect they want to always paint a positive picture and never be the "reason" for the economy slowing down. They are much more comfortable "calling" the slow-down after it happened with a set of "revised numbers".

The third quarter US GDP numbers have also been revised upward to indicate a 2.2% growth. But the news report had a comment by an economist that indicated that these numbers are not a rosy as they look because "some of the new business investment seen in the past quarter went into inventories." Increased inventories mean an eventual further slow-down in production until those inventories are consumed. (possibly not good news for future production businesses)

There was apparently a downward estimate of imports in a prior report, but this was even a possible further sign of a slowdown as it might indicate a general decrease in purchasing. (which sounds consistent with the numbers from Walmart and Costco)

In the latest reports from Japan about their stock market, it appears that perhaps some or all of the above is enough to depress Japanese stock prices. Ditto for reports about the Australian Stock market.

Oh, one last thing....the weather is a bit warmer here in the Northeast than normal....but this has not kept fuel prices from continuing their slow yet steady rise in recent times.

As an aside, I looked at the Wiki article on the "Housing Bubble", and found it to be very detailed and complete. (as far as I can tell) In fact, I have to read it over again because it really seems to be a great synopsis of the whole situation.

At this point we might want to get our reading on "soft-landings" up to date....for this I also recommend the Wiki on "Growth Recession" and plain old "Recessions". (let's hope there is no need to read ahead to "Boom / Bust", Panic, "Long Depression", "Great Depression" or "economic disaster")

Remember....I can't see the future, I'm not even an economist.....I'm just an Engineer who tends to be a pessimist. (who is rarely disappointed)

New Balance Shoes: Made in USA, 10% off and FREE shipping too!

I like New Balance because they continue to keep American's working with American made products. Yes, I know, they get plenty of their good from overseas, but they have factories right here in Massachusetts. (and I like to support our countries economy and have put a stake in the ground and buy only American shoes)

So I thought I would pass along a coupon I just received in my email. It is for 10% off, and FREE shipping. I know is isn't a huge deal, but if you were interested in one of their products, it might be just enough to close the deal.

So here it is....enjoy!