RETIRE.FUND: July 2009

Thursday, July 30, 2009

Are the Gluttons of Wall Street feasting on your Retirement funds!

Will the U.S. dollar make a giant crash landing this year, or just a rough and tumble touch down on the slippery slope of Keynesian Economic Theory? Will the frantic search for stores of value, which started this summer rally, on the back of the decline of the U.S. dollar, keep the bulls charging straight up the hill?

Today's sale of U.S. Treasury Bills is the culmination of a record breaking week, in the sale of these financial instruments to both domestic and foreign buyers. The government is essentially "re-mortgaging the future of every U.S. citizen and family just to maintain and increase the massive debt load that threatens the financial well being of future generations of Americans.

And this, after the largest financial bailout of private companies in the history of finance anywhere. No wonder Ariana Huffington is reprinting her 2004 book "Pigs at the Trough" to include the companies and people in charge who helped cause the financial meltdown and then were rescued by, you guessed it, us!

Corporate greed has been a headline at various times over the past 30 years from the arrest of Michael Milken in the greed fueled 80's junk bond debacle, to the lies and false books of Enron which prompted the first printing of the book. Now previously revered companies such as Bear Stearn, AIG, Citigroup, Bank of America, Lehman Brothers and even General Motors have joined the lexicon, as their leaders were either too greedy, too blind, or too inept to keep their troubled charges out of catastrophe's way, while they paid themselves ever larger graft in the form of corporate "compensation". Andrew Hall of Citi Group is a prime example of the cult of entitlement funded by both taxpayers and shareholders taking in $100 Million per year, for the past 3 years, while each and every U.S. taxpayer just bought 54 shares of Citi without having any say in the matter.

As a former policeman, I am still astounded that "only" Bernie Madoff has been arrested. It's as if, every time the movers and shakers get into trouble over their massive greed, someone is shaken out of the rats nest to take the fall and keep the limelight away from the rest. In organized Crime circles, it is usually a small fry that takes the fall...hmmmm

The truly landmark names like J.P. Morgan and the venerable Goldman Sachs have usually dodged such issues, or at least explained them away as business necessity. Let's face it. These guys are smart. The smartest of the smart in point of fact. That is why, after all of the blood letting over the past 18 months, these two have emerged as the only two investment banks left standing. In the midst of the worst financial crisis since World War 2, in just this past quarter alone, a space of 3 months, these two Giants made over $5.5 Billion between them in pure profit. (How much have you made since March?) Now GS is poised to pay out to it's executives a total of $11.4 Billion in bonuses this year (yes, that's $11,400,000,000) How could they possibly do that?

Well one way is to speculate on the price of oil and other commodities. You can bet that, if oil is at say, $68 per barrel, that at least $25 of that price is due to the market manipulation of this one giant speculator. What does this company make? Why, it makes money, lots and lots of money, and it makes no apologies.

While many average Americans have lost their homes, their jobs and their futures, GS was betting on the futures market in oil, and making a killing while their alumni have been the driving force behind the most massive bailout of Wall Street in history. No wonder the term "Government Sachs" is whispered with winks and nods in the halls of power. Yes, they returned the Tarp money, with a 23% gain for taxpayers, but that is the sugar which they can point to to soften the blow of their gaming the system to drive up prices and profits. (Note to Government - use the 23% to hire more market policemen)

As a consequence of all of this, in June, Timothy Geithner went to China to sell the wary Chinese on the benefits of buying even more U.S. Government debt. Hopefully he is the best salesman in the history of salesmen, because he has a boatload of dollars to sell. This weeks high level talks with the Chinese may or may not bode well for treasury sales. Only time will tell, but rest assured, the U.S. dollar has seen it's best days, at least for the foreseeable future.

If you are Canadian, like me, hold on to your loonies! We are headed back to the 1950's and 60's when the Canada buck was worth more than the U.S. buck, on a consistent basis. We have the second largest deposits of oil on the planet. Our banks have stayed conservative, avoiding the toxic Derivatives debacle and have entered this summer rally strong. We have the second largest deposits of oil and natural gas in the world, the largest deposits of potash, lumber, seafood, nickel, uranium and arguably, diamonds. We own 20% of the worlds entire supply of fresh water, with only .03% of it's population. We own the largest claim to the arctic, which is suspected to harbor 25% of the total world's oil supply, and finally, the largest consumer on the planet, is right next door.

But Sadly, as GS and JP go, so goes Wall Street and thus we have this summer rally in the North American markets. As I have said before, the market has been the driver of wealth for over 100 years, and will be the driver of wealth for the next 100 years. Goldman Sachs is the proof positive, of this theory. that is why you cannot sit on the sidelines and watch as the dollar goes down, and the market goes up. You've lost way too much already!

It's time to get back on the never ending roller coaster created by the gluttons of Wall Street. However, a note of caution: be prepared to get off when everyone around you is laughing hysterically and pointing upward.

The crash of 2010 could be even worse than last year!

Saturday, July 25, 2009

Is your credit card company charging you unnecessary "balance" insurance?

Image via Wikipedia

"Look After the Pennies and the dollars will look after themselves"!

That is a mantra that I have preached on these pages and, once again, it will prove it's worth to you if you take this simple suggestion to save yourself "thousands" of dollars on your credit card bills.

The truth about credit card balance insurance. - If you have recently obtained a credit card, you probably have unwittingly purchased this insurance and it will cost you literally thousands of dollars over years. (On average approx $300 per year) Many of you don't even know that you have this insurance, or that the premium is being included in your credit card balance every month, unless of course, you are watching your pennies.

Here it is in a nutshell! When you apply for a credit card, and you are approved, you may or may not hear the selling agent say to you that there is included a "one month free" premium for "balance insurance"! It will usually be blurted out quietly, almost as an after thought along with the caveat that it can be canceled with a phone call. In 95% of these case, it is completely unnecessary and here is why!

Firstly, it is not balance insurance. It is "payment" insurance. You must lose your job to collect on this insurance. Then, it only pays your "monthly payments" and not your balance. For instance, if you lose your job and have a balance of, let's say, $5,000, the insurance will pay your monthly payment until you are again gainfully employed. However, credit card policy stipulates that, if you don't pay off your balance every month, they will charge interest (often 19% or more) on the "entire balance". In other words, that interest will probably add more onto your card than the insurance paid off "and" it is repeated again the next month.

This, coupled with the Nonsense of keeping a credit card balance , will cost you dearly over time. Banks and credit card companies brag to their shareholders about making billions from this lucrative insurance. However, it is only lucrative for them, and not for you. Do yourself a big favor right now.

Call your card company and ask if you are paying for this insurance. If you feel you don't need it ( everyone's circumstance is different) Cancel it immediately and then, if you are as incensed about it as you should be, demand they pay you back every sent of the premiums you paid without knowing you were even paying them. Your retirefund demands it!

They may or may not pay you back, but with the millions who are unwittingly paying for this service that most don't need and didn't ask for, it is usually cheaper for the card company to just pay back the 1% who demand their money back and keep the controversy to a minimum. They make a lot more money that way.

"Look after the pennies, and the dollars will look after themselves"!

Sunday, July 19, 2009

The future of energy is not oil, coal, solar, wind or nuclear!

Image via Wikipedia

Investing in energy can enhance your Retirefund in a very positive way, especially at this important juncture in history. Such investments are doing that for me right now. Do some research before you jump in, but don't be afraid to jump in, just be cautious. You wouldn't buy a new car without first doing research. Investments are no different, but make no mistake, the market has been the driving force of wealth for 100 years, and will be for the next hundred years.

Energy! It is such a complex and compelling subject. From the peak oil scare, to giant wind farms in Texas funded by lifelong oilman T.Boone Pickens. ( note: there are massive wind farms throughout Germany right now) Giant solar farms in California and Arizona. Presidential candidates pushing for 20 new nuclear plants and screaming "drill baby drill"! What can be made of all of this?

There is one energy source that has been discussed for the past 20 years as the energy of the future. Because of the short attention span of many investors, and the slower pace of solid science and engineering, this energy source has been flying under the radar for the past 5 years at least.

When scientists such as astro physicists explore space for signs of life other than that which is found on our small planet, they always include one molecule, or at least the atomic weight of one molecule hoping that intelligent life out there will understand. There is one reason for this. It is not only the most common element on this planet, it is not only the most common element in this solar system, it is not only the most common element in our galaxy, but it is "the" most common element in the universe. It is hydrogen, and it will power our future!

Hydrogen fuel cells have been touted as the future of the automobile industry. However it is not in the automobile industry that we will feel the first major effects of this abundant energy source. No it is not in the Buses running through the streets of Chicago or Vancouver that use hydrogen fuel cells produced by Ballard Power Systems (BLD-T) It is not in the cars that already operate with these fuel cells on the highways of California. Though this is certainly the future of the Auto industry, the beginning is much more modest.

It is on the factory floors, the warehouses, storage companies, moving companies, big box stores and myriad of other businesses throughout the world that will be the first to tap into this wonderful, not so new, technology. It is the humble forklift that will be the catalyst which speeds this technology into overdrive.

Ballard Power Systems has been methodically working on their fuel cell technology for over 20 years. It holds over 200 of the original patents in this technology and it has spawned it's own competitors, sometimes called "baby Ballards" such as, Fuel Cell Technologies, Plug Power and Hydrogenics, in much the same way that "Ma Bell" spawned "baby Bells" when it became dominant in it's business. Not to say that Ballard is dominant in it's business, but it certainly is dominant in owning the patents for the underlying technology, and far ahead of the kids in development. This year, it is shipping hundreds of fuel cell generators to India and the far East, to power wireless systems. It is shipping fuel cell fork lifts to a number of companies. These are the first breaths of a sleeping tech giant in my humble opinion.

Now it is well documented that one of the barriers to utilizing Hydrogen fuel cells is the storage of the hydrogen itself. Pure hydrogen (of which the only byproduct from using it in fuel cells is pure water) is volatile and must be cooled tremendously to be stored properly (at least with today's technology). Engineers and scientists are working on this problem and, no doubt, like Edison's light bulb, they will solve it, given time. So what happens in the mean time?

Natural gas! That's what happens. You see, as hydrogen is the most abundant element in the universe, it is found in many things, not the least of which is simple water (H2O or two parts hydrogen, one part oxygen). It is also found in every hydrocarbon, including, you guessed it, natural gas. Now let me see....hmmmm which continent has the most abundant supply of natural gas hmmmm..... Why it's right here in North America of course. Canada, and the USA are sitting on enough natural gas to power the whole planet for the next two hundred years and beyond.

Storing natural gas is also a challenge, but is already being done on a massive scale. Using this "first source" of hydrogen in fuel cell vehicles (from fork lifts to buses, trucks, railways, boats, cruise ships, huge power plants and then cars)will reduce current carbon emissions by over 70%. Talk about the "green energy" of the future!

Yes I know, there are hybrid gas electric vehicles on the road and now some electric vehicles etc These "stop gap" measures were talked about by "all" of the CEO's of the major car companies in the world from GM to Honda, back in the late nineties as exactly that: "STOP GAP: technologies that will pave the way to a hydrogen economy. Even if the pure electric vehicle finally wins the battle as a dominant technology, where will the electricity come from? It will come from power plants utilizing huge fuel cell stacks, burning at first, natural gas and then, eventually, pure hydrogen. It couldn't get any greener than this.

That economy is a lot closer than many investors know, and it all starts this year with fuel cell fork lifts being shipped around the world, mobile back up power generators for wireless systems in India, Germany and Denmark . Back up home generators in North America and Japan and this is only the beginning. Sooner than you think, large dirty coal power plants from Beijing and Mumbai to New York and Mexico City will be replaced with giant stacks of Fuel Cells to generate electric power to a hungry planet. No more dirty air! No more nuclear scares. Yes, there will still be the cry to "drill baby drill" but it won't be for oil near our coastal cities or our pristine northern wilderness. It will be for natural gas, in the largest pool of on land, natural gas fields in the world! Right here in our back yard.

And it's all thanks to one small company (soon to be a big company), Ballard Power Systems of Vancouver British Columbia whose founder had a vision for the future of this planet, and acted upon that vision.

Now do you think this information will affect your Retirefunds? I don't think it will, I know it will.

Update: Sept 10th 2009 ( Reuters )

"The Ardour Global Alernative Energy Index announced that Ballard Power Systems to be added to the index on September 20th 2009".

"The Ardour Global Alternative energy Index (SM) is a Capitalization-weighted, float-adjusted, index of the most prominent alternative energy stocks in the world. To be included in the AGIGL index, companies must be a pure-play and the stocks must pass multiple screens, including for capitalization, float, exchange listing, share price and turnover"!

Update: Oct 1-09 New York Times !
Oct 3 - 09 Vancouver transit accepts delivery of it's first Ballard fuel cell bus
Oct 8-09 Green Revolution

Wednesday, July 15, 2009

An uneven economic recovery starts with a rare summer rally!

Image by Getty Images via Daylife

Stratfor Global Intelligence is forecasting an uneven recovery in the world's economy. Back in June, Liz Ann Sonders, the chief economist at Charles Schwab, called the Recession over (she was one of the first to see it coming back in 2007) Yesterday, Michael Hartnett, chief global equity strategist with Bank of America Merrill Lynch (yes that's the new name) also declared the recession is over. So has Finance Secretary, Timothy Geithner, as well as just about every talking head on CNBC

Problem is, the talking heads would have you believe it is the beginning of a bull market that is going straight up. My money is on the Stratfor intelligence report, because they are quite thorough in their research and have no real ulterior motive for promoting the recovery story, and their report is tempered by where the recovery won't happen (Japan for instance).

To give credit where credit is due, the CNBC crew, (Kudlow, Cramer , Fast Money) have all along been saying that the country that led everyone into the Recession, the USA will be the country that will lead the way out. Got to give them credit, it is the general consensus. However, this was not a hard call to make, as it is what has occurred in every major recession in the past.

So, what now! Well, as most investors have fled the market since the spring rally, many of them will miss the summer rally which is starting now. A summer rally is an anomaly. It doesn't often happen as many investors still cling to old habits and standards like "sell in May and go away". The problem with that mentality is the recent and powerful introduction of electronic trading systems that can be accessed from anyone's blackberry. In this new era of international investing, you can't just go on vacation and forget about your portfolio, because you stand to lose much of the gains for the year. (or losses, depending on the situation).

If you are coming back to the market in the fall, you may miss most of this years buying opportunities which exist right now! Yes, buying opportunities! Remember this:

1. Bull markets always climb a wall of worry.

2. No one sees a bull market until it is in mid to late stages.

3. Most profits are made in the first weeks/months of the bull market.

4. Bull markets "love" inflation.

5. A weakening currency always causes inflation.

6. Banks always lead a bull market rally. (Goldman Sachs just made their largest quarterly profit in history)

Some words of warning here. The United States will be fighting the Deficit Dragon for years to come, thanks to the Dubya's tax cuts and the gluttony on Wall Street. The jobless ranks now approach 10% and will go higher. Manufacturing in North America is still decreasing. Banks have been rescued by massive inflows of Government stimulus money which still has to be flushed out of the system. The Derivatives Debacle is still not solved and won't be anytime soon. As bad as this sounds, Europe's banks are in worse shape and their Governments are either in denial or are hiding their heads in the sand. Britain's Banks have virtually been nationalized. Japan is sinking further, and has been for over 10 years. The BRIC countries may be a bright light in all of this as wall street starts another glutenous party on the backs of U.S. Citizens.

Many companies will report great third quarters, due mainly to the massive job cuts, because they have already completed most of their write downs.

How all of this will affect your retirefunds is between you and your financial adviser. Hopefully you are talking to him/her this week.

Maybe a simple Index Fund which costs less than every other fund out there, and usually beats 60% of all fund managers, will do. Whatever you chose to do, DON'T sit on the sidelines, or you will miss a great party.

Now let the jobless recovery begin!

Tuesday, July 14, 2009

Your Welcome America! Mission Accomplished! Love Dubya

Image by robertodevido via Flickr

On the day that President Obama took his oath of office, America was 10 $Trillion in debt. By the end of this year (2009) U.S. debt will surpass 13 $Trillion. By 2017 (8 years out) that debt will surpass 23$Trillion if nothing changes! How did this happen? How will this affect your Retirefund? How can America cope with this huge debt load? What effect will this have on the U.S. dollar?

The trail down this slippery slope of deficits and debt began over 8 years ago. On the day he took the Oath of office, George W. Bush (Bush 2) inherited a "national surplus" from President Bill Clinton. It was the first U.S. surplus in 30 years! Bush 2 campaigned on a promise to cut taxes and reduce Government. Dubya had been there when his father, George Herbert Walker Bush (Bush 1) spoke those now infamous words about not increasing taxes "Read my lips, no tax increases"! He was also there when his father famously recanted on that promise and set in motion substantial tax increases to help pay for the first Iraq War (operation Desert Storm). That controversy probably lost Bush 1 the election to President Clinton and it might be said that it was burned into the consciousness of Bush 2.

After George W. bush took office, he introduced the largest tax reduction in United States History. He and other Republicans looked back fondly at the Reagan years of Reaganomics ie: "lower taxes, reduced Government" which many people believe to this day was Reagan's legacy. However President Reagan was a pragmatist and when recession hit and deficits followed, he went on air to explain to the American people that he was not about to let his grand children pay for his debts and promptly raised taxes in a number of areas. Many of today's Republican politicians like to forget that simple fact, but every President in history acted when the unpopular decision to raise taxes had to be made to reduce the national debt, and they reluctantly did so, knowing full well that American voters want lower taxes, more medical benefits, more social security and high pensions but do not want to pay for them. Sometimes they paid the price at the polls, like Bush 1 did.

Bush 2 was having none of that. He did not make decisions based on fiscal responsibility, but on political expediency. He simply did what he thought the voters would reward him for. Immediately upon taking office, he announced the largest tax cut in American history, albeit, cuts that would benefit mostly rich Americans. When 9/11 hit and America declared it's "war on terror" (actually it is a war on "terrorism not terror", but that's for language critics to debate)President Bush directed U.S. Forces into Afghanistan to route out Al-Queda but at the same time, he and the hawks in his administration looked for a reason to attack Iraq, a country that had nothing to do with 9/11. We all know how that worked out don't we, but I digress. My point here is only financial and I will leave the debate about Iraq to others for now.

The bottom line is that, in the middle of two extremely costly wars, and after the largest tax cut in U.S. history, Dubya did what no other wartime President had ever done in history. "He cut taxes again"!

This second set of tax cuts were, arguably, larger than his historical cuts upon taking office. No other President in history had ever done this before. In fact every other President faced with such challenges, had always raised taxes, or cut benefits, or both, to pay for war. Americans, and indeed all freedom loving nations know that this is a necessary thing to do at such times. Apparently Bush missed that class at Harvard.

That essentially brings us up to today's gigantic and growing, U.S. Debt! Those massive tax cuts, which mostly benefited wealthy Americans, are still taking their toll on the country. Two wars are still going on, and are being paid for with borrowed money from other countries, the largest debt holder being Communist China at approx. 1.6 $Trillion in U.S. Treasury bills. China has made no secret of the fact it is worried about the possible future decline in the U.S. dollar (and thus it's foreign reserves of Treasuries) As of late, they have been on a buying binge of commodities from oil, to potash, ingredients for making steel, plastic etc as it seeks to diversify the stored value of it's reserves. Now China is openly calling for the establishment of an "international currency" based on five national currencies, the dollar, Euro, Pound, Yen and Renmimbi.

Suffice to say this is not going to happen any time soon, but it should give pause (or even shudders) to America and the entire west. By 2050 China's economy will be twice that of the U.S.A. and that has ramifications far beyond just financial. China is still, after all, a communist, totalitarian country and democracy is a pipe dream still.

Now how will all of this affect the Retirefunds of we mere mortals? Since I brought you to here, I'll give it a shot!

1. Taxes will increase in the U.S.A. and this "must" happen soon.

There should be a new gasoline tax of perhaps 10% instituted now, before gas starts to rise again. This will spur investment in green energy.

The tax deduction for housing (mortgage interest deductions) should be capped at $250,000 so as to allow the deduction for basic housing but not for extravagant housing in the millions.

There should be an immediate 2% "goods and services" tax implemented federally on all goods and services sold/purchased in the United States.

There, now that I've fixed some of the deficit problems, how will all this affect our Retirement funds in the meantime?

1. The U.S. dollar will decline in value over the next three years spurring inflation!
2. As this occurs investors will seek better stores of value and the stock market will rise along with commodities, oil, gas, food etc.

3. The U.S. cost of living will increase reducing the standard of living in the USA for many of those who aren't prepared.

4. U.S. Housing prices will decrease, or at least that market will remain stagnant for years to come.

5. The U.S. national defense budget will be reduced.

6. Health care, (medicare, medicaid, etc) will be drastically reformed, or it will be the ball and chain that drags the U.S. economy ever deeper into the abyss.

And remember this my Canadian friends. When the U.S. Sneezes, we always catch a cold. What will happen if the U.S. catches pneumonia? Here's hoping it won't. Here's hoping the the good ole U.S. of A will lead the rest of the world out of this mess that it led us into!

Sunday, July 12, 2009

Funny golf thoughts and retirement gems.

Image by geishaboy500 via Flickr

Here are some funny golf thoughts and retirement gaffs that you can share with friends and relatives!

When a man retires, his wife gets twice the husband but only half the income. ~Chi Chi Rodriguez

Golf is played by twenty million mature American men whose wives think they are out having fun. ~Jim Bishop

Golf is an awkward set of bodily contortions designed to produce a graceful result. ~Tommy Armour

One thing about golf is you don't know why you play bad & why you play good. ~George Archer

I regard golf as an expensive way of playing marbles. ~G.K. Chesterton

Art said he wanted to get more distance. I told him to hit it & run backward. ~Ken Venturi, on Art Rosenbaum

A retired husband is often a wife's full-time job. ~Ella Harris

If you're caught on a golf course during a storm & are afraid of lightning, hold up a 1-iron. Not even God can hit a 1-iron. ~Lee Trevino

I've been attending lots of seminars in my retirement. They're called naps. ~Merri Brownworth

I'm retired - goodbye tension, hello pension! ~Author Unknown

Retirement itself is the best gift. No gold watch could ever top it. ~Abigail Charleson

Retirement: World's longest coffee break. ~Author Unknown

Middle age is when work is a lot less fun & fun is a lot more work. ~Author Unknown

In a dream you are never eighty. ~Anne Sexton

It is almost impossible to remember how tragic a place this world is when one is playing golf. ~Robert Lynd

The trouble with retirement is that you never get a day off. ~Abe Lemons

Life begins at retirement. ~Author Unknown

I regard golf as an expensive way of playing marbles. ~G.K. Chesterton

How old would you be if you didn't know how old you were? ~Satchel Paige

Golf is so popular simply because it is the best game in the world at which to be bad. ~A.A. Milne

I don't intentionally spoil my grandkids. It's just that correcting them often takes more energy than I have left. ~Gene Perret

When people start concentrating on the really important things in life, there will be a shortage of golf clubs. - Bub Pelham

Grandmas hold our tiny hands for just a little while, but our hearts forever. ~Author Unknown

Grandmas are experienced mothers, with lots of frosting!

What a bargain grandchildren are! I give them my loose change, & they give me a million dollars' worth of pleasure. ~Gene Perret

Don't worry about avoiding temptation - as you grow older, it starts avoiding you. ~Author Unknown

When a man retires & time is no longer a matter of urgent importance, his colleagues generally present him with a watch. ~R.C. Sherriff

Men do not quit playing because they grow old; they grow old because they quit playing. ~Oliver Wendell Holmes

No man needs a vacation so much as the person who has just had one. ~Elbert Hubbard

Golf is not a game, it's bondage. It was obviously devised by a man torn with guilt, eager to atone for his sins. ~Jim Murray

It is almost impossible to remember how tragic a place this world is when one is playing golf. ~Robert Lynd

Grandchildren don't make a man feel old; it's the knowledge that he's married to a grandmother. ~G. Norman Collie

Old age is fifteen years older than I am. ~Oliver Wendell Holmes

Growing old is mandatory; growing up is optional. ~Chili Davis

A man is not old until regrets take the place of dreams. ~John Barrymore

The money's no better in retirement but the hours are! ~Anonymous

We are young only once, after that we need some other excuse. ~Author Unknown

Retirement itself is the best gift. No gold watch could ever top it. ~Abigail Charleson

I enjoy waking up & not having to go to work. So I do it three or four times a day. ~Gene Perret

In my retirement I go for a short swim at least once or twice every day. It's either that or buy a new golf ball. ~Gene Perret

Golf is a lot of walking, broken up by disappointment & bad arithmetic. ~Author Unknown

Golf is a good walk spoiled. ~Mark Twain

Friday, July 10, 2009

Even a broken clock is right twice per day!

Image via Wikipedia

There are investors and there are traders. Traders trade! Investors invest! However, there is one thing they have in common. None of them can "time the market". Truly, if they could time the market, many of the talking heads on CNBC would have made billions on last years crash, or this springs bounce, instead of keeping their jobs trying to sell us on the benefits of the "hot stock of the day".

For the average Joe or Jill, a good practice is to "Invest for the long term" in increments using dollar cost averaging (ie: have your investment money put into your favorite mutual fund every paycheck) so that you can level out the gyrations in the market. If you are a little bolder and want to do some of your own homework, then Invest in individual stocks of solid companies with great products, market niches and good management

No one is right all the time! Not even the investment greats like Warren Buffett or George Soros. If they make big mistakes, and they do, then how many more mistakes are made by the coffee fueled, adrenaline pumped, talking heads on CNBC (fast money, Cramer, Kudlow, Kneale etc) Just because you took their advice and got lucky once, doesn't mean they are going to be right next time. They make mistakes, just like you do. Just like I do. Just like we all do.

It is important to do your own homework when investing. If you don't feel you have the time or expertise and you just want to invest in mutual funds, then at least do enough homework to pick a good manager. Investing in mutual funds is essentially investing in good management. 60% of fund managers today "Do not beat the Index". In other words, if you just invested in a basic index fund, with a lower fee base (because it is tied to the Index of the market you are investing in) on average, you will beat 60% of the mutual fund managers out there who get fat fees, for their so called expertise.

Nobody sees a bull market in our near future right now, but remember this. Bull markets always climb a "wall of worry". Bull markets are never identified until most of the profits are already made. Bull markets love inflation. A weak currency (read u.s. dollar) always increases inflation. With the current trend to deflation, markets in turmoil, with investors sitting on the side lines and the Chicken Little's clucking that the "sky is falling", Now may be a great time for contrary investors to take the opposite view and invest in a basic Index fund that costs less than 1% in fees. Or maybe not!

You can always keep your dollars on the sidelines, where they are sure to lose value over time. You could invest in mutual funds administered by a good manager who's track record shows a consistant return better than the Index.

Or, you could act on the next hot tip from one of the talking heads on CNBC. After all, "even a broken clock is right twice per day"!

Monday, July 6, 2009

U.S. Dollar up this week, getting ready to dive lower, but there may be a silver lining!

Image via Wikipedia

The U.S. dollar seems to be strengthening this week, but, Don't be fooled. It is going to dive much lower over the next few years. That according to Dow Jones News Wire and even George Soros, who actually doesn't like any currency today. Soros says that:

"the usd is a weak currency, except for all the others"!

Now, how do we mortals interpret that statement? Soros went on to point out that China's currency would be an interesting story if they let it float on international currency markets, but they won't.

If you had almost two trillion dollars in international reserves like China does, and you wanted to try and keep that value in today's market, where would you try to store that value? In China's case, they seem very unhappy that the majority of their monetary reserves are in the usd. So, where do we put our two trillion?

Commodities, that's where! This spring there has been a rally in commodities. Now do you think that China's hoarding of commodities might have a little something to do with that run up? Soros certainly thinks so. I believe a fund manager who made over 1 Billion on the currency market just last year alone should know a thing or two about this subject. The Chinese obviously believe that they will hold more value in commodities than in the u.s. buck. I think they are right, but how can we mere mortals gain from this knowledge.

Back on June 16th, I mentioned in this blog, that a number of hedge fund managers have stocked up on gold as of late. They will probably sell it into a buying binge of scared investors during the next downturn in the markets. If you buy it then you will make them lots of money, and lose your own. There is, however, a silver lining. As I mentioned in that previous blog, I believe silver is undervalued . This week, it appears, Analysts from Dow Jones agree with me. They are calling for a short drop in the price of silver, possible to the $12.90 level, but then call for it to reach $15 over the next few months.

If you are nervous, and don't believe my "favorite company" tech recommendation ( Wilan Technologies ), then silver might be a good place to store some value in the short term, while you "wait and see" along with the other Trillions of dollars sitting on the sidelines.

That is, of course, if you are a U.S. citizen. If you are Canadian however, you might want to sit tight as silver, gold, and commodities are most affected by the decline in the u.s. dollar over time, and what does Canada have an abundance of? You guessed it! And the Canadian dollar will rise because of it, against the greenback.

Though the Canadian Government doesn't want parity, it's coming, and soon.

Predictions: ( I know I shouldn't make them)

End of year - U.S. dollar - Canadian dollar at par

End of year: Wilan $5-$7 share (Currently $ 1.49)

Oct 2009 - Silver $15 Gold $1,000

Update: Sept 10th

Wilan $2.22

Silver $16

Gold $1008

Saturday, July 4, 2009

Investing long term OR trading short term! Do you really need to ask?

Image by Getty Images via Daylife

Businessweek recently asked on it's blog if investing long term in the stock market is still a good strategy for your retirefund, or if a short term "trading" system might be more beneficial. Do you really need to ask this question?

Let's answer that with two more questions shall we! How many of you timed last years market plunge? How many of you "timed" this springs bounce? I thought so! If you didn't time either of these obvious opportunities, then why would you even consider trading short term? This is not to say that you shouldn't sell stocks. That is how you book real profit. However, if you buy a classic car at an auction, you don't sell it at the same auction. You bought it because it accumulates value, and that takes time.

Long term strategic investing in the stock market has returned the most value to investors than any other store of value over the past 100 years. It will continue to do so over the next 100 years. Why? To draw a simple analogy, the stock market for investors, is what the ocean is to sailors. If it empties, it won't matter what ship you have your family in because every boat will be on dry land. In investment terms, no other investment will stay afloat if the market is gone.

That is why you hear terms such as "a rising tide floats all boats" from investment gurus. It is the same analogy used when Warren Buffett says " when the tide goes out, you can see who has been swimming naked"!

Now let's draw another simple analogy for "today's market"! Currently the tide is very low and most boats are aground. If you pick the sturdiest, fastest boats from the ones that are currently stuck on the sandbars, you will definitely sail away and win the race when the tide comes in, and make no mistake. It will come in. It always does!

RETIRE.FUND

Thursday, July 30, 2009

Are the Gluttons of Wall Street feasting on your Retirement funds!

Saturday, July 25, 2009

Is your credit card company charging you unnecessary "balance" insurance?

Sunday, July 19, 2009

The future of energy is not oil, coal, solar, wind or nuclear!

Wednesday, July 15, 2009

An uneven economic recovery starts with a rare summer rally!

Tuesday, July 14, 2009

Your Welcome America! Mission Accomplished! Love Dubya

Sunday, July 12, 2009

Funny golf thoughts and retirement gems.

Friday, July 10, 2009

Even a broken clock is right twice per day!

Monday, July 6, 2009

U.S. Dollar up this week, getting ready to dive lower, but there may be a silver lining!

Saturday, July 4, 2009

Investing long term OR trading short term! Do you really need to ask?

Search This Blog

Domains on Auction Here!