Now what am I doing......where have I been!?!??

Well, I suppose I simply slipped away from my computer and perhaps ended up too attached to things like FACEBOOK.

But, I have never left my life of following the investment world, the economy and the employment scene.

I remain employed by the same company.....well, except for it being acquired by Oracle Corporation.....so honestly, things have changed significantly since they bought us, but for the most part, for the better. We are making money and that was tough for us when we were Sun Microsystems.

My investments have changed a bit too....I added a 2nd Financial Advisor and I have taken some of my money under my own wing. No, no...I am not day trading. No, I simply play in a different arena, and a place I can't find an advisor to play in so I do it to broaden my diversification.

Without using money, let me toss out my investments as they sit today.

Financial Advisor #1:

Holds about 45% of my money
Invests in Bond and Equity funds

• 70% Bond Funds
• 20% Equity Funds
• 10% Cash

Financial Advisor #2:

Hold about 20% of my investments
Invests in three different REITs and Annuity of Equities and Bond funds (started as a 50/50 split and I consider the REITS to be my toe into real estate)

Work 401K Fund: (self directed)
Holds about 20% of my investments

• 70% in Bond Funds
• 30% in Equities including maybe 15% in Oracle Stock

My Self-Directed Currency/Commodities Investments:

Holds about 15% of my investments

• 70% of it are in currencies or CD's in other currencies
• 30% of it is in Gold

I hold the following currencies (I mostly consider this CA$H)

• Brazilian Real
• Swiss Franc
• Australian Dollar
• Euro
• Chinese Yuan
• US Dollar

I like this level of diversification as I have it spread across investment people, across asset classes, and across products / markets. Right now my Gold is holding it's own because I made a huge gain on a sum I bought at about $800, but I recently about in at about $1720 as I think world economic issues will get less stable and GOLD might be a harbor for safety....but one never knows because it has been on a ride straight up for a long time.

I feel I have been doing well...but I also feel inflation is low. I worry that inflation is really on the rise, and staying still means losing. Also, I think the future of taxes is uncertain.....let me revise and extend that remark, I think it is more certain that I'd like to think....TAXES for people who have ANY money will go up. They have to, because our country is in debt people w/o money can't exactly pay. (makes me feel STUPID for being a saver at times)

My latest wrestling with our home finances.....

I thought I would just post some of the finance thoughts and things I have been pondering these days. I have not written as often as I had in the past, so you may not have followed our families situation.

My wife passed away just before Christmas last month, so quite frankly, money has not been anywhere near the top of my priority these days. Not that it isn't important, but as my dad used to say..."Money doesn't make the world go around, but it sure greases the wheel."

But let's face it, taking care of my daughters and family affairs is top priority....because blood is thicker than money. (ok...so I did a mash-up on a couple of old sayings....you get the guist)

But I have to admit that I can't just "forget" money....neither Cheryl nor I were born with a silver spoon in our mouth....and life isn't free.

Neither Life nor Death Are Free:
So here are a couple of things that have come up that you might never have considered. First, passing away isn't inexpensive. Even if you have some form of insurance, it is at least a cash flow problem. Simple services and burial costs between $10,000 and say $13,000....and the cemetery plots up here in NH are actually quite reasonable. (my wife and my plots costs $750 per site with a cost of another $750 to "open" the site for burial...but remember this cost pays for upkeep of the cemetery forever. Even inexpensive when you consider it "by the acre" :-)

The funeral home arrangements were about $9300. (I don't think that is too personal to disclose) I never looked into these costs, but I guess I wasn't surprised by any of them. Then there were all the costs for various ceremonies and participants. (no, I will not itemize those....but they include donations to the priest, church, organist/singer, and other people who worked along the way...all donations, but customary)

But back to that comment I made about the NH funeral plots being inexpensive..... my cousin who came up from Florida for my wife's funeral, and he wants to be buried with his parents in Woburn Mass. He took a ride over to size it up and get a price for cemetery plots. (Not my idea of a fun time....but he wants to have all his ducks in a row so that he doesn't impact his mate when he passes away...hopefully many, many years from now)

Anyways....the plots there in Woburn cost $2200 each! (Both are Catholic Cemeteries too!) I knew land was cheaper here in NH, but that sort of difference is crazy.

So I suggest everyone at least consider how their passing will impact the remaining family members, and either set money aside or have some level of insurance.....I suppose that is a tough thing to consider, but it doesn't have to be. We talk about health and auto insurance and we clearly never want to use it just the same.

Short Term and Long Term Planning:
Besides this cash flow crunch, I have also been starting to think about my youngest daughter's desire to transfer to another college. Cheryl and I had a financial plan worked out where we have saved money to help our daughters get through college, so this is a topic we have discussed many times.

My focus now is around Kristen's desire to go on for her PhD.....and believe you me, I am thrilled that she understands the value and wants to do that! (My dad warned me not to stop my education because it would be tough to get back to it...and I have to say, my dad was 100% correct!)

So I'm not so much stressed about Kristen transfering (I am taking a week off from work to take a grand tour of a few colleges on the east coast with her soon)...nor am I too worried about her leaving $30,000 in scholarship money behind at Hofstra, since I do want to support her and Kim to the fullest. As we talked about this the other night, I realized that I just moved my investment portfolio on to a more "conservative" tack. (I am worried about our economy, the falling dollar, and the housing bubble....but you know I worry a lot less about it when I don't pay attention! the old saying is right-on: "Ignorance is bliss!!!")

So I guess I need to add one more item to my massive "to-do" list....to again look at our long term financial plan for everything and re-balance it given a slightly higher (and longer) cost of college.

But like I noted earlier....I have my priorities....and unless the market is crashing down around my ears, I have more pressing priorities at the moment.....like my kids! The finances can wait until they get back to school and I get back to my empty house. (not actually empty at the moment with both my girls and my mother in-law here right now :-)

I hope this sort of BLOG entry isn't so boring or "frightening" as to turn people off....please bear with me as we get through our family problems. I will attempt to keep all my posts at least tangentially related to personal finance...and perhaps bring up topics like this that some may not even consider thinking about. (but will probably unfortunately affect every one of us at some point in our lives)

Change in financial focus

I have not given this much more than a short thought in the shower this morning, but I think I will BLOG about it since this is how I tend to get clarity of some ideas.

My personal finance thoughts in the shower revolve around my wife Cheryl's passing and how I am going to think about our savings. (both retirement and otherwise)

We had always thought of these savings as having two or perhaps components to them. The first component is more of a short term component where we had always planned to make sure our daughters had their college schooling paid for. We have two daughters, and we have squirreled away a bit of money for that purpose. (and are also relying on a reasonable level of return on the whole nut as well as continued contributions in savings in order to fund the costs)

The second component of our nest egg was the money we needed to ultimately retire and maintain some sort of standard of living. Once again, we were pretty well on our way to getting that saved, but certainly could not there yet. Again, we had plans to continue our savings regiment, and baring any sickness or loss of job, the trajectory of this portion of our savings was going along OK as well. The savings held in our home equity was a bit piece of this, as well as most of our 401K money.

The third component of our plans revolved around money we wanted to save in order to do more traveling in our retirement. Nothing fancy, mostly around our own country and perhaps a few other interesting places in the world....but this was sort of going to come from money that came above and beyond the second net egg component above. Neither of us had champagne tastes, so we would be doing all this on the cheap....but still, we had plans to do a lot more slow, sight seeing kind of travel.

My thoughts this morning have changed quite dramatically. I guess not having my wife here makes me consider my priorities.....well, not so much my priorities, but the goal of each. You see, I still keep as my priority the idea that our kids need an education. But having lowered my need to travel, I think I would like to try and see if they are interested in as much education as possible. My daughter Kristen is already talking about a PhD in Archeology, but I think I will try to figure out how I can ore properly support that. I am not sure what Kim's ongoing education plans are, but I guess I need to talk to her. (and soon since she is a Junior now)

In terms of travel, I will still travel at some point. But my idea of fun is loading up a van with a sleeping bag and camping across the country, seeing the local sights and sounds. (It sort of comes from the stories of my Uncle Joe who was the Merchant Seaman, and who was a very free spirited soul who loved to travel simple and light.....all he seemed to NEED was a guitar and a local bar to drink and play in.....I can't play guitar, and don't drink...so my traveling will be different for sure)

We currently work with a financial planner, and one of the things we have worked on is making sure he understands our risk tolerance and our financial goals. I think I described our previous goals pretty clearly above.....but I admit that I still need to formulate and solidify my future goals....well, in the future. (the near future)

So perhaps later this quarter, perhaps in spring, I will be going off to see Larry to get my finances perhaps heading in another direction. Sort of like my traveling plans in the future, I am not quite sure where my mind will lead me on this journey....but like the name of my BLOG, I am the conservative type, so I will almost certainly "Measure Twice and cut Once."

Happy New Year to All!

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)

Our investments (the general broad brush anyways)

I promised when I started this BLOG that I would talk a little about our own families assets and investments. I believe I said something to the effect that I wanted to figure out exactly what I wanted to disclose and how to dislose it.

I actually have little issue disclosing things to friends and people I know and trust, but the internet being a sort of "open book" means there are all kinds of people out there and while I am sure only "good" people read me....I figured I would just keep it general....after all, who really cares about little old me.

The first thing I think I will address is our risk tolorance. We have answered a number of worksheet questionaires that assess our risk tolorance, and I have to say my wife and I are a bit conservative when it comes to investing. I hate to lose money because I feel we have saved it and it feels as though all my work was for not if I lose it.

My proof of that assesment is found in my consern back in 2001 when the market was starting to tank. (I think it started in about March 2001) I was sick of seeing my portfolio drop, so on about September 4th I told our advisor to move it all to bonds. (just a few days before September 11th)

We lost about 25% in the big downturn in 2001....and I know people who lost a lot more. Of course I also did not get back in very early either, so I missed some of the subsequent ride back up too. (I told that story not to show you my "luck", but our risk aversion.)

So now that I told you that story about being conservative/worry wart investors, I am going to show you an asset allocation that sort of flies in the face of what I just said. To the right you will see that for all my worry, we actually have 77% of our portfolio in stock! (actually, we have only two individual stocks and a very small amount of those too...the rest of the investments are all in mutual funds)

I can already see the value of looking at this because in doing so the hairs on the back of my neck came up....leading me to think that in our next meeting with our advisor, I might ask that this percentage be shifted a bit more to bonds. (but I need to talk to Cheryl and our advisor first....whats the back back-of-the envelope rule for percent stocks, something like 110-your age in percent.....so for me that would be 63%)

The other thing I didn't mention is that our conservative nature also means we have a very diversified portfolio of funds and fund families. But I'm not going to drag you through that detail.

As with stocks, our bond holdings come mostly in bond funds, although we do have some money in EEE Savings bonds (small bonds that my mother gave me as birthday gifts over the years) and a few iBonds. (again, not any large number of dollar value) We also own a City of Manchester zero coupon bond that I can honestly say I do not totally understand, but that seems to have appreciated in value quite nicely and I liked the idea of investing locally. (again, not very large in value)

The cash is mostly in a high yield savings account. (fully FDIC insured)

Now in terms of our return, the graph to the left shows the value of our portfolio over the past two years. You can see the general ups and downs of the market in that period, but also that we have made very decent gains. (about 8% per year, which is OK given the conservative natur of the portfolio and since I think inflation has been something like 3.4% in 2005 and about 2.7% so far this year)

Well, I am not sure that any of this information was helpful to anyone but myself. I think I will be looking to move some money out of stocks, and into bonds....and then into a bit move of it into foreign investments. (and am also thinking a small amount of non-dollar demonimated equities....but my advisor is not too keen on that....and I listen to him more times than not....except back there on September 4th, 2001....hmmm)