Friday, March 28, 2008

I learned something that might be useful - "In times of crisis, correlation increases."

I read an interesting thing on the Seeking Alpha BLOG that I will not try to repeat here, (and that BLOG refered to this article)

The article stated something quite interesting:
There is no escape. People investing in stocks have lost money since world equities peaked on Hallowe'en last year and shifting around the world cannot change that. The amount you lose is determined by your home currency.
So it sounds as though the world economies are slowing down in lock step.....probably an indication of hosw strong of an influence the US economy, and the US Dollar has on everyone.

So my theory has been that the world would eventually get tired of the USA's debtor ways, and find a way to replace our consumtion with consumers....oh, say from China or India.

I think the sign that this has begun to take hold is when the three economies of the world stop correlating so closely.....when the USA is allowed to drop while the others level off and then perhaps climb.

At that point, there will be a clear winner in terms of where to invest. But what to do in the mean time.

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Tuesday, March 25, 2008

An interesting article that talk about "intervention" for those with "spending / debt" problems

My girlfriend is an addictions councelor so she would have a lot better read on the additions angle on this thought.....but I think the article is an interesting read.

From the article:

Financial interventions, by contrast, are usually conducted by amateurs on impulse. And giving up money isn't an option.

"Financial mismanagement is more like an eating disorder," Willis said. "We have to have a relationship with food, and we have to have a relationship with money."

And instead of breaking through someone's denial, face-offs over money often just lead to resentment.

Check it out. I think we all know people that we can see who are steering their "ship" toward the rocky coastline.....and we want to just reach out and grab the rudder. (described as a train wreck in this article)

But I guess it isn't all that easy.

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Monday, March 24, 2008

Two news reports from a local NH TV station that describe the condition of the economy

The Whitehouse assesment of the state of the economy is one full of positive spin. I suppose this is what you would expect for anyone trying to make the job they are doing look I suppose we might want to just consider that when we read it.

But there were two articles that came across my email today that make me wonder how things are going. I don't know if they are leading or lagging indicators....but I assume that might be the latter.

The first talk about the number of homeless in NH doubling in the latest "one day count" just recently taken. The state apparently takes this count on the same day every year in an attempt to have a standard metric of measurement. The count of homeless is taken on January 30th, and this year's count showed 2600 people vs 1300 for last year. (with 484 of them sleeping on the streets and not in shelters) A two fold rise is a significant increase for sure, especially since the article noted that the numbers have been essentially FLAT for the past 3 years. What's going on? The winter wasn't that warm that people flocked to NH to be homeless here as opposed to a southern state.

The second article I read today talk about the increased debt load that college students are now taking on as opposed to students in the past. It turns out the the average student has about $20,000 in debt upon graduation.....with credit card debt averaging about $3300. Several "experts" noted that they felt today's students had too many credit cards and too much card debt.

The article noted:
Overall, 46 percent of students and 55 percent of former students were reported delinquent on credit card payments. Lowe said she was surprised that 21 percent of college freshmen were at least four months behind on their credit card payments. She also said she was shocked that 42 percent of students had at least six open major credit cards, not including store-issued cards or gasoline cards. "The delinquency shows that they really don't know the consequences of what happens when they don't pay their credit card bills," Lowe said. The consequences include lower credit ratings, which could affect their chances of renting an apartment, getting a job, getting another student loan, or after graduation, buying a home.
Six credit cards.....yikes, I have two and never use one holding it as a back-up. It sounds as though some of them are going from one to the other in order to juggle between them. That seems like financial quicksand to me!

Even with the $3300 credit card debt, it would take 11 years to pay that off with minimum payments. (and not adding at all to the much longer if you do) this a leading or lagging decide.

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Thursday, March 13, 2008

Here is a finance blogger who has a theory about the NEXT bubble....

According to Money and Such, the next bubble after say the current housing bubble is already forming in the commodities market. (here is an old article that says the same)

I guess I'm not sure what the definition of a bubble is, but it might be the case since the cost of commodities has been rising quickly.

What to do.....riding a bubble isn't too bad....getting out at the right time is the key.

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Tuesday, March 11, 2008

What I told my financial advisor this morning......

I went to see my financial advisor this moring before work and we had a long discussion about my goals and risk tolorance.,

He of course suggested I "Stay the course"....which of course makes total sense if you think you can't really time the market and believe in long term returns.

But this market feels a lot like the market in 2001.....shaky and based on a sliding economy. I don't see it as market timing to slide out right now as I don't see a solid economy under-foot.

Well, I decided to back down from my 60% equities / 40% bond position to a 30% equity / 70% bond position. I was worried that I would be locking in losses from yesterday's drop....but low and behold, the market rallied big time today and HOPEFULLY he sold towards the end of the day and I might have hit it on an up-stroke. (also slid a sliver of money into a currency trading "fund" too)

No big deal if it continues up for a couple of days.....I don't see that as a long term thing. If it is...then I suppose I screwed up....but I just don't see why the market has been going up for the last 12 months.....seems like as bubble to me. (perhaps money rushing from realestate to the market....looking for "some place" to go because let's face lose money to inflation if you just put it in your mattress)

I suppose 12 months from now i will know if I was correct, or just a big wimp..... (I could be both too)

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Sunday, March 09, 2008

Check out this gal's BLOG...explaining the Chinese Money Ethic

Check out personal finance BLOGGER WISEBREAD: Living Large On A Small Budget for more insight into how the Chinese people save.

Compare that with how you treat your you save.

Compare that with how others your know save......

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For some reason, this graphic made me more sad than knowing the actual numbers.....

I saw this graphic on this website where it is titled "Begger Man Sam"....and it is a depiction of Uncle Sam looking for a hand-out.

As silly as that sounds, it is sort of where we are today with our trade imbalance and with so many foreign countries owning our bonds / debt.

If we stop buying their goods....or stop exporting our own jobs, they will be asking for their IOUs back....and where will we be at thatp oint. (as a country) We will be out there with our tin cups asking for investors to buy our debt.

Oh what a tangled web we have woven. I pray we can turn this around before we become #2 economy....for at that point I fear it will be too late.

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The savings rate is a broader issue that even I thought....

The poor piggy bank to the left is darn hungry....and I was thinking that our national savings problem was happening because perhaps half the people....maybe less...are not saving enough.

But the table below that I took from this article on shows perhaps a broader problem. Oh...and it is a problem that appears to NOT be as age specific as I thought. (though older people do seem to save better)


Monthly savings goal by age

Total 18 to 34 35 to 49 50+
Able to achieve monthly goal 28% 28% 24% 39%
Able to save some, but not enough 36% 34% 39% 32%
Not able to save at all right now because of other financial responsibilities 32% 34% 34% 25%
Refused to answer 4% 4% 3% 4%


Yikes....over 70% of the people in this country are not making their goals! Oh...and do you suppose their goals are high enough to begin with? (I hope so)

This is will be cope with this.

I suspect I know and I'm worried by the fact that the savers are in the vast minority....sounds like wealth re-distribution is probably the word of the day in the future. Yup....Tax the "rich"....except in this case, the rich are simply those who put money away as they were supposed to...perhaps even went without things to make sure they would not be a problem for their kids.

Live and learn....of course, it has not happened yet. Let's hope it doesn't, because this is a horrible message to the right thing and you will be rewarded (NOT), or spend like a drunken sailor and we will bail you choose.

Had I known about those options, I might have chosen to run my life a bit differently. (but as I hasn't happened yet)

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Friday, March 07, 2008

Ever hear of the "Amero"? How about the North American Union?

This is the first time I had heard of a plan to create a North American Union....and to mint a currency to replace the US Dollar, The Canadian Dollar and the Mexican Peso......this new currency would be called....the Amero.

Can this really be true....I;m not sure.....and the graphic of the Amero to the left is BOGUS (I think)...but the video of Vincente Fox below talking about a North American Union isn't faked.......

Looks like people are working to make the America's into the next the Europien Union and their Euro.

Check out Mexico's Vincente Fox in this video.

Then check out CNBC talking about the Amero.

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Tuesday, March 04, 2008 is a pretty negative article......are people catching on to the situation?

I only skimmed this article, and I didn't research any of the facts....but it doesn't take a deep read of it to see he is pretty negative about our countries situation.

Wow....I've seen a lot of negative stuff written lately...yet the stock markets seem to hold firm.

Could it be that money is fleeing all kinds of other investments, and needs a "home" stocks are it for now?

I don't think people like the idea of holding cash, so perhaps they move it from one thing to another.....

What to do is a good question......and when to do it is perhaps a better one.

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Sunday, March 02, 2008

Hmmm......I guess this is the answer to a question I had a long time ago.....

The question was whether our decaying economic situation would result in a fast and abrupt collaps of markets or whether it would be a slow decay.

Looking at my portfolio results above for the last has been up and down on a daily basis....but pretty much a slow and constant decay as seen by the graph above.

This is what the Federal Reserve people call a "Soft Landing" sounds so something you want to would be quite a different feeling if they called it a "Slow Death"....or "death of a million cuts".

How to invest in times like these.....I believe these are times when people running the world economies are working hard to "rebalance" values and money in order to better represent the actual shifts of wealth.

Yes, it isn't like a grand puppet-master orchestrating it all...I'm not a conspiracy kind of guy....the world it too big for that....but at this point, everyone is working together to try and deflate the "balloon" of instability that our seemingly drunken credit binge seems to have left us with.

Where to to invest in times like these is the question......

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Saturday, March 01, 2008

Economy souring.....Stock Market figuring that out finally.....Gold is already HIGH.....Is it Inflation or Deflation......How does one invest now?

Warren Brussee is a retired Engineer (which brings him up one notch in my book right off :-) and he has written a book titled "The Second Great Depression: Starting 2007, Ending 2020".

I read the book over a year ago, and found it fascinating because it seemed to be describing a path to depression that was quite possible. I mean the signs were on the wall....he simply seemed to have read the tea leaves and seen this as a result.

Well, I have to day that the mess we are in right now has unfolded pretty much as he predicted in his book with housing being the bubble that is pulling all sorts of other areas down. (other areas that were also over leveraged, or poorly set-up with respect to risk)

Here is a radio show that interviews Warren, and lets you hear it right from his mouth. I suggest you listen to the man, and then if you think he makes some the book.

Oh.....and READ his Blog for continued analysis of current events as they unfold. He posts to it monthly and analyzes data as it comes out every month and compares it to what he wrote in the book.

Warren's book recommends Treasury TIPS.....but that doesn't seem like a high interest alternative.....but it is inflation adjusted.

The first question is your take on inflation vs deflation. I used to be a deflation guy....but I think that inflation is the way the USA will get nailed because the dollar will devalue because we ow so much to so many....we will print our way out of it. (we we have already begun doing with the latest government stimulus plan)

Gold just seems to expensive already.....almost feels like a "bubble" in it did with housing and the stock market in the .COM bubble era.

I hear commodities are a good place to be when there is inflation because these are generally goods that people require in the economy, and so the demand tends to be OK.

How to invest in them though...funds, futures markets, etc.....

Stuff I just know nothing about.

I will talk to my financial advisor and see what he suggests.....I'm sure it will be a fund because he "trades" in funds, and gets paid that way. Also, funds tend to be lower risk.

I believe the US Dollar is in for a I was wondering if holding a basket of currency in a safe deposit box might be almost as good as Gold.....Ok....that is probably a bad characterization.....I wonder if it would be a good idea.

Something like 1/3rd Euros, 1/3rd Chinese Yaun and 1/3rd Swiss Francs? They say currency markets are the most volatile.....but I see the US dollar as being a real problem in the future....we are just in too much debt to everyone.

Any thoughts?

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