Ponderings

Food for Thought

I keep my ideals, because in spite of everything, I still believe that people are really good at heart.

Anne Frank

Money Can Be Funny

There’s another advantage in being poor. The doctor will cure you faster.

Jacob Braude

Word of the Week

Kleptocracy – Rule by thieves

News reports of financial shenanigans and a sense of entitlement at all levels of government: Kleptocracy at its best.

sTOCK mARKET mOVES bACK TO pOSITIVE TERRITORY

The stock markets enjoyed a strong week which pushed most stock indexes into positive territory for the year so far. After starting the year strongly, stocks went through a rough patch, only to be followed by another period of gains. For the week, large company stocks rose an average of about 3% while, as so often happens, their mid-sized and smaller brethren fared even better.

So, much like the last decade in microcosm, we’ve had ups and downs so far this year pretty much amounting to nothing. While positive economic news is certainly sending encouraging signals for a continuation of the uptrend, investors, low volume in the various stock exchanges suggests that investors are far from convinced that stocks will continue to rise.

Observations from the Road. Travelling as I do several times a year on behalf of public television is both arduous and edifying. It’s wonderful speaking with people throughout the country and finding out what’s on their (financial) minds. Here are my observations so far:

Concerns over housing prices. Concerns abound over local housing prices. A strong housing market is essential to our sense of financial wellbeing. No other economic trend, with the possible exception of jobs, will be more important to restoring consumer confidence than rebounding home prices.
Desire for more simplicity in their financial lives. People are overwhelmed by their complexities of managing their finances. They would prefer to simplify their investing, insurance, debt, and retirement saving. There are ways to do just that, and they will probably produce better results to boot.
Optimism that things are gradually getting better. Despite all the troubles endured during the recession, and many people have been hurt very badly, the human spirit remains. The people I’ve had the pleasure of meeting over the past few weeks have by and large been optimistic about the future and are confident that they’ll eventually be better off than they were even before the current mess commenced.

Smart Money Tips

Don’t fall prey to human nature. There’s an inherent danger in following the opinions of those who purport to know about the future of the economy, the investments markets, or any other condition, for that matter. The problem is that we tend to form our own opinions and then wait until we hear others state the same opinion. Once your own view is supported, you are convinced that the truth has been divined and act accordingly. But as you have probably found – or will discover – your actions may not reap the rewards you or your fellow opinion-sharers predicted. There is nothing that worries me more than people who are convinced that some future event is inevitable, whether it’s gold going to $8,000 an ounce or the stock market falling 80%. Might happen, but it probably won’t.

Some things haven’t changed. My new public television special (see below) encourages new approaches to achieving financial security. One common question from viewers has been: Are any of the old rules of good financial management still valid? The answer is yes. Two rules that will never change are, first, living beneath your means. If you don’t get into the habit of spending less than you earn, you can’t build the resources necessary to become financially independent. If, as many are predicting, future investment returns are going to be lower than in the past, saving regularly and regularly increasing the amount you save will become even more important. Second, diversification has, is, and will always be essential to protecting the investments you have so laboriously built up. Diversification is particularly important under current market conditions – rock bottom interest rates and stocks coming off their strongest gains in many decades.

Debut of Jonathan's New Public Television Special

Tune in to my all-new public television special, The New Affluence: Money Help is on the Way. The program will redefine what it means to achieve a life of abundance. The money rules have changed and The New Affluence lays out a plan to achieve and maintain financial security under the new rules so you can regain control over your financial future. Check your local listings for March broadcast dates. Special thanks to the no nonsense life insurance company SBLI of Massachusetts (www.sbli.com) for providing the national underwriting of the program.