My humble opinion on current financial issues.

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Very often, I have people ask me my opinion on current finance-related issues. Sometimes I'm asked in person, but many times I'm asked via Eclecticsite.com's Financial Page. The "My Humble Opinion" page is simply a journal of my ongoing thoughts and opinions. Though most of what I talk about will be directly related to finances, I'm sure that I'll sometimes wander off on a tangent. I'll only be adding entries when I feel I have something of importance to address. If there is any particular topic on which you would like my thoughts, please just send it along and I will do my best to honor the request. Please understand that everything I discuss is nothing more than my own humble opinion. Sometimes my predictions will be right on the mark and sometimes not. I will always try my best to be open and honest, but everything I discuss will simply be my humble opinion.

You asked for it, so I wrote it!
5/6/15
Many of you asked for a book about preparing for economic disaster and financial collapse. Well, it's finally ready, and here it is:

My new eBook is now available!

Economic Disaster:
What the average
person can do to prepare.

Click HERE for more information.

When to sell your stocks
3/19/15
Back in September of 2011, I informed everyone that I was buying shares of IWM and QQQ. In the interest of disclosure, I want to let you all know that I recently sold my shares in those ETFs. There are two times you should sell good quality stock market investments: when you need the money, or when you believe the U.S. economy can no longer continue. In my case, I sold the shares because I needed the money. Not bad though. I paid $64 per share for IWM, and sold each for $123. I paid $52 per share for QQQ and sold each for $105. That is a 92% return on IWM, and a 102% return on QQQ. Right now, I think that the RWM ETF is a good buy and, if you don't mind some risk, UWTI. Now I just have to wait to see how those do. I bought RWM at $14.80, and UWTI at $2.15

Here I am
3/17/15

Visit Keith's Financial Page on Facebook

A much better venue
3/12/15
I have not done a very good job of keeping up with this blog. It's just such a hassle to load my webpage editor, connect to my website, then upload the updated web page. HOWEVER, I have found a much better venue--Facebook! I'm pretty much on it each day anyhow, and it is so much easier to click over to Keith's Financial Page on Facebook to make posts. Not only will it be updated much more often, it will also provide an opportunity for more direct interaction. So, if you want more posts, and more connection with me and with Eclecticsite.com's Financial Page, please go to Facebook and like Keith's Financial Page. You can find it at Facebook.com/keithsfinancialpage. Hope to see you there!

Quick money...NOT
2/24/15
I recently addressed a very good question. How can I believe in my investments when most of them take a relatively long time to increase in value.? Simple: I'm not in it to make quick money. Occasionally, quick money happens, but not very often. My investing style works a little differently than most. I don't necessary choose investments that I think are going to go up quickly. Instead, I try to choose investments that are stacked in my favor. As long as they go up, I'm not very concerned with how long it takes...within reason, of course. "Stacked in my favor," means that there are several reasons why it would be easier for the investment to go up than to go down. I have found, over the years, that this kind of investment style is what I'm best at. That is why I bought those last two investments I mentioned on 1/12/15, UWTI and TZA. They are at an historical bottom in price. They seem to have stabilized near that bottom. TZA is at a bottom while the overall market is reaching new highs. Also, I noticed that the trading volume of these investments has increased dramatically with very little price movement. All of these signals tell me that there is a higher probability that, under these conditions, those investments will go up rather than down. Could I be wrong? Of course. With higher upward potential comes higher risk. But I only have a relatively small amount of my money in these more speculative investments. It may take longer than I thought, and longer than I would like, but things seem to be stacked in my favor with these investments, so I'm willing to wait patiently for the payoff.

Confirmation signal?
2/12/15
A month ago, I mentioned investing in an oil ETF which goes by the ticker symbol of UWTI. Since buying that ETF, I have been watching the price of brent crude oil very closely. The price of brent jumped up suddenly and seems to have leveled off at a higher level. This, to me, is a confirmation signal that the price is going to break out and rise from there. Because of this confirmation signal, I did, what is called, a follow-up buy of UWTI at $3.53. A follow-up buy is when you add more shares to what you already have. Yes, that raises the average price I have paid for UWTI, but with a strong confirmation signal, it is all right to pay a little more for the investment. I'm certain that UWTI will, eventually, go to $10, and I'm hoping for between $20 and $40. All I can do now, is wait and see. Sure hope I'm right, there's a lot of upside potential here.

A book is coming soon.
1/27/15
Ok, enough of you have asked, and I have decided to listen. I heard you. You want a book about how to get started in investing with nothing to invest. So, I am currently working on a book to teach you exactly that--how the average person can get into investing, and building wealth, when they have no money to get started. It will be an eBook, and I will keep the price extremely reasonable so that pretty much anyone can afford it. Any money I may make on it will help me to offset the cost of keeping Eclecticsite.com's Financial Page going. To that end, I make the following request: please contact me with any specific questions you have about getting started, or various areas of investing. That way I can make sure I include in the book the things that you all really want to know. I'll let you know when the book is finally ready. I'm looking forward to seeing what you all are able to accomplish using the information I'm putting in this book. So, let's hear those questions.

More stock possibilities
1/12/15
I've started the new year by running into a couple of stock trades I just couldn't resist. I bought some of both. One of them is TZA and the other is UWTI. TZA is a triple, small cap, bear, exchange traded fund. or ETF. An ETF is just a fund that buys and sells through your brokerage account just like a stock. Anyway, I believe the overall market is, at least for now, topping out. Since TZA is a bear ETF, it will go up as the market falls. Currently, it is at $12.70 per share, so it's a good possibility for anyone with limited funds in their account. UWTI is a triple, oil, bull ETF. Oil is really slammed right now. If oil goes back up, UWTI will go up right along with it at the rate of about three percentage points to one. In other words, about three times as much in percentage gain. UWTI is much more risky than TZA, but right now it is only $3.11 per share. At that price, I can afford to take a chance. If I'm wrong, I'm only out around $3 per share. If I'm right, there is a LOT of upside potential. In fact, the upside potential of both UWTI and TZA are almost hard to believe. I'm not telling everyone to do this, I'm just telling everyone that it's something that I personally am doing.

I bought TZA at $12.34
I bought UWTI at $3.11

It has been suggested that I start some kind of subscription-based, investing newsletter to let people know about ALL of these kinds of deals I find. Who knows, maybe I'll just do that. Any thoughts?

My new glasses
8/6/14
For a while now, I have had a link on my website to Zenni Optical. Zenni is a place to get eyeglasses at a deep discount. As an experiment, I decided to get my next pair of glasses from Zenni, and have just received them. I use progressive lenses and my prescription is such that it took me a while to find a pair of frames on Zennioptical.com that would work with my prescription. Even though I opted for one of their more expensive frames, the cost still ended up being half of what I would have normally paid. Single-vision prescriptions are so inexpensive at Zenni that the price almost doesn't even have to be considered. Well, my glasses are working out great! The frames are fairly tough and the lenses are doing everything they're supposed to do. So far, I am quite happy with my new glasses from Zennioptical.com. If you have insurance that covers eyeglasses, then a regular optician who accepts your insurance is probably the best way to go. If, however, you have to pay for your glasses out of your own pocket, check out Zenni before buying them elsewhere. They do have a return policy, but since my glasses are fine, I have not used it. I have heard from some people that Zenni usually gets it right, but in case of a problem, you might be on your own. If you're looking to save money, check out Zennioptical.com the next time you need glasses. This review is nothing but my own opinion and I have not been compensated in any way for this endorsement.

Seems like the right time
7/24/14
In my last post, much longer ago than it should have been, I mentioned an ETF which goes by the symbol SRTY. This particular ETF is a 3X short of the Russell 2000. 3X stand for triple short, which means that for each one percent that the Russell 2000 goes down, SRTY goes up about three percent. Judging by the overall market, and the chart pattern that SRTY is now forming, it looks to me that the market might be stalling out at a temporary top. I suspect that, when the right events hit the news, the market will temporarily correct--possibly significantly. For that reason, I am currently stocking up on SRTY. I don't know how long it might take, but I am very certain that the market will correct hard in the not-to-distant future and that SRTY will go up significantly. At the time of this writing, SRTY is at $38.54 per share. I am NOT a stock broker or certified financial planner so I an not qualified to tell other people what to invest in, and to be honest, I usually avoid doing so; however, I feel so sure about the eventual payoff on this investment that I wanted to let others know what I am doing personally. PLEASE make SURE that you do additional research and then make your own investment decisions since I absolutely could be wrong...but, I could also be right!

Protecting my stock market investments
2/25/14
Wow, I just realized how long it's been since I posted here. I fully intend to get back on this. PLEASE send me any questions, comments or concerns you may have so I can keep this blog going. The more interaction between us, the more posting I can do. Anyway, on to today's topic: protecting my stock market investments. You'll recall, that back in 2011, I talked about some ETFs (Exchange Traded Funds) I had purchased. IWM, QQQ and DZZ. As I posted in this blog, I sold the DZZ since I had originally bought it for a quick turn-around investment. However, I held on to the IWM and the QQQ ETFs. And look how they've performed! I paid around $64 for the IWM and it's now at around $116 for an unadjusted gain of around 81% . And QQQ, for which I paid around $52 is around $90 for an unadjusted gain of around 73%. I can't play the stock market like that any time I want, but I can do it when special circumstances arise as they did in 2011. Well, now it's time to protect those investments. Why? Because I'm getting the funny feeling that there's another significant correction on the way (another special circumstance). I wanted to protect myself AND give myself some upside potential at the same time. With a little research, I discovered the SRTY ETF. SRTY is a triple short of the Russell 2000, which is what my IWM ETF is invested in. Short means that its price moves opposite to, and triple means a three to one ratio. In other words, for every percentage IWM drops, SRTY increased about 3%. The opposite is true if IWM goes up. Here's the beauty of it: If IWM goes down significantly, I have enough shares of SRTY to not only make up for the loss, but because of the three to one ratio, it should make a profit at the same time. So, if the stock market corrects as I feel it may do soon, my SRTY protects my investment in IWM and makes a gain at the same time. If, however, I'm wrong and the market continues up for a while, then my IWM continues to gain at a rate that is higher than what I have in SRTY. Because of that three to one ratio, I didn't have to put as much money into SRTY as I did into IWM. My plan is to wait for a serious correction, sell off my SRTY at a nice profit, then wait for the market to recover and then I'll do it all again. If I'm wrong, which I certainly could be, I should be fine either way. I'm not an accountant, lawyer or stock broker, so I'm NOT telling anyone what they should do. I'm simply saying that anyone who bought into IWM like I did may want to do the same research I did and set up some protection for your gains. If you invested in something else that has a nice gain, do some research and find a way to put some kind of protection in place. I truly believe some kind of significant market correction is on the way within the next few years.

It's nice to be right once in a while
7/8/13
Back in September of 2011, I disclosed some stock market investments I was making. It was two ETFs and a double gold short. In the interest of disclosure for anyone who did what I did, I went ahead and sold the double gold short DZZ at $7.14 since I planned it as a temporary holding at the time I bought it. I paid $5.28 for it. The other two, I'm holding on to. But wow, have they performed! It's not that I can accurately call stock investments any time I want. It's that from time to time the market conditions are such that economics and history give me a pretty good idea of what's going to happen. Back in September of 2011 was one of those times. I'll be sure to post again if another such opportunity should present itself. Here's how my calls did:

Back in September 2011 At the time of this post.
IWM $64.30 per share. IWM $100.13 per share
QQQ $52.40 per share. QQQ $72.57 per share
DZZ $5.28 per share. DZZ $7.65 per share (I sold at $7.14)

Here we go again...
5/1/13
I was listening to the financial news this morning, as I often do, and heard them talking about how the economy seems to be on the mend, and personal debt is on the rise. Have we learned nothing? While the economy was bottomed out and people were scared and in trouble, they were watching their money closely, getting rid of debt and putting money away into savings. Now that the worst seems to be over, people are starting to slide back into their old habits--going into debt, and having little or no emergency savings. This supports what I've been saying here on Eclecticsite's Financial Page all along: getting out of debt is one of the hardest things you'll ever do in your life. It's difficult. It's no fun. But it's so worth it when you're finally there! If the down economy has gotten you on the road to paying off debt and building up savings, please don't let the fact that things seem to be getting better stop you now. Bad times are likely coming again somewhere down the road--probably worse than what we just went through. Why not be ready when it comes? Use the skills you've learned during this down economy to maintain better control of your money. If things do get better, don't relax and start going back into debt; use that time of prosperity to build up savings and pay off debt. Normal people live under crushing debt and have little or no savings. Don't be normal!

To write...or not to write. That is the question.
4/2/13
I am simply amazed at how many people ask me about impending, economic collapse. I am even more amazed at how many people want to know specifically what I personally am doing to prepare. (Yes, I am convinced that collapse is coming eventually). I have found so many ways to prepare for economic collapse that if I tried to post them to my website, I would have to create a second website! I simply cannot afford to pay for any more website resources than I already do. Several people have suggested that I write an eBook detailing specifically what I am doing to prepare for economic collapse and sell it for a dollar or two so that everyone can afford it. I could use any money it made to keep Eclecticsite.com going. So, here's my question: if I were to write such a book, would any of you be interested? I don't want to go through the time and trouble to write it if no one would be willing to buy it for a buck or two. I'm wide open to opinions and suggestions. Please contact me and let me know what you think.

'Tis the season to be stupid.
12/14/12
Did you know that when the Christmas season starts, many people are still paying off bills from last year's Christmas? Christmas is a very emotional time...and a time of great guilt. The media tells us that if we love someone, we'll buy them this and that to prove it. I love the commercials where people surprise each other with a new car with a giant red bow on it. If they weren't able to pay cash for the new car, then someone is making payments on that Christmas gift for the next five or six years! Times are tough. Money is tight. People are financially struggling. Christmas isn't really about the gifts. It's about decorations, It's about love and friendship, it's about being with friends and with family, and most importantly it's about the birth of Jesus Christ (in case anyone has forgotten). Don't fall for the hype. Stick to the things that Christmas really means. This year, because so many folks in the family are struggling with finances, we're doing no more than $5 gifts. What can you get for $5? If you really give it some thought, you would be surprised. Besides, we all know it's not about the gift--it's about the thought that went into it and the fun and laughter of opening them Christmas morning. Of course, the parents are spending more than that on the kids, but only $5 gifts allowed for the adults. We've done this sort of thing in years past and the thought and creativity of the gifts made for much fun, laughter and appreciation. Plus, we don't have piles of credit card bills to try to pay off by next Christmas. Don't give in to the commercial hype. Retailers would like you to be stupid and spend a lot more than you really should at Christmas time. Don't fall for it. If you really love someone, don't say it with a new car or a diamond...say it by helping to relieve some of the financial stress in their life. Merry Christmas everyone. And thank you for all the visits to Eclecticsite.com.

Economic Collapse???
11/2/12
I am amazed at how many times people ask me about the possibility of economic collapse--specifically, if it will happen and how to prepare. As for the first part, if it will happen, I have to say a resounding YES. There is no way to know how long until it happens, but I am absolutely convinced that it's going to happen. The only way I can see for an economic collapse to be avoided, given current conditions and government debt, would be for greed and corruption to be eliminated from business and government. Well, it just is not within human nature for that to occur; thus, an economic collapse is inevitable. There are other reasons I'm convinced of a coming economic collapse, but they have to do with biblical prophecy for our future and I don't want to lose any of you by injecting religion into this. However, if anyone is truly interested, let me know and I'll think about going into it in another post.

As for the second part, how to prepare, as I have mentioned in other posts and in some of the articles on my website, getting out of debt is the number one best way to prepare for economic collapse. You may have plenty of money but have it all become nearly worthless in a collapsed economy. Your creditors are still going to want to be paid, but you won't have enough deflated money to pay them. And THAT is when people start taking things away from you such as your car, home, furniture and appliances. Basically, anything that is not paid-for will become a target and will likely be taken away. Now please understand that I am not a gloom and doom kind of guy. It's just that this threat is so likely and so devastating that it would be foolish to not make some effort to prepare. Also know that this collapse won't just be the United States. When we go down, the whole world will be going with us to at least some extent.

All of that to say this: I came across a YouTube video which offers some very good advice on the topic of preparation for economic collapse. PLEASE take the time to watch it. Trust me, if I can't convince you to take 15 minutes of your time to watch a video, then you aren't likely to do the other things needed to prepare for economic collapse. Even if it doesn't happen in 2012 or 2013 like the video discusses--it will happen sooner or later! Want to prepare for an economic collapse? Then start with this video titled "Surviving 2012-2013 & the coming years in North America, Europe & the rest of the world."

http://www.youtube.com/watch?v=ivDLoSGXEv4&feature=fvwrel

It's hard to assemble something with missing parts.
8/10/12
Don't you hate it when you buy something that requires assembly and as you work on it you discover that pieces are missing? Without all of the pieces, the project will either be less sturdy and less functional than it should be, or it will be impossible to get it assembled in the first place. With the exception of last year, I have taught an adult financial class at my church every fall. The class was eight Sundays in a row with each week's lesson being a different aspect of handling money wisely and effectively. As I have already mentioned, I did not bother to teach the class last year and have no plans to teach it this year either. Why? Because the students in my class were trying to assemble something without all of the parts. The first class, I would have eight to twelve students which is a pretty good turnout at my rural church. By the third or fourth class, I would be down to three or four students. By the last class in the series, I was in there by myself. No one had any complaints about me as a teacher. I make the class fun, interesting and hands-on. I teach with a LOT of humor and with an upbeat attitude. But, it seemed that other things kept interfering with their making it to class each week. It was such things as over-sleeping, weekend trips, other plans, or just not feeling like going to church on a particular day. Why am I telling you this? Because I don't want you to try to assemble something without all of the parts. Each week was a different aspect of financial strategy. The very last class, the one I generally ended up with no students showing up, was how to put all of the previously learned financial techniques together and how to make them work. Do you see the problem? If they missed classes, they were missing pieces they needed to put the financial techniques to work. And since no one was there for the last class, at least for the past two years, they ended up with a bunch of pieces and no plan for how to put them together. When I asked some of the folks why they didn't come to the last class, they usually told me that they "had learned enough to get started." Well, maybe they could apply the techniques taught on the days they were there, but they would be unable to truly achieve financial freedom without knowing how to make it all the way to the end. Making it to the end was what the last class in the series was all about. All of that to say this: as you study and learn from this website, make sure that you are NOT skipping steps or taking things out of order. Do ALL of the steps and DO THEM IN THE CORRECT ORDER. If you skip parts, or only apply the parts you like or are at least willing to do, things might work at first, but WILL eventually grind to a halt. I've seen it happen far too many times.

Saving with coupons...or maybe not.
7/16/12
So often in counseling I have people who tell me they're saving tons of money by using coupons when they shop. Yet, their finances don't seem to be reflecting the claimed improvement. When I dig a little deeper, it's very obvious why. The money-off coupons were getting them to spend more money than they would have without the coupons! Here's why we don't use many coupons: we normally buy non-name brand stuff. We have found that the coupons take a little money off of higher priced stuff that we normally wouldn't have bought. In other words, we could buy our usual bag of potato chips from Aldi for $1.89 or we can use a 50 cents off coupon to buy a $4 bag of chips at a name brand grocery store. I've now spent $3.50 instead of $1.89 and the coupon ended up costing me money instead of saving me money. Yes, I possibly moved up in quality, but I did NOT save any money. Sometimes coupons work, such as when a coupon is $1 off and the item is reduced to $1 in price...yep, I got it for free! But that is really rare. So, coupons only work if it is money off on something you would have normally bought otherwise. Don't let the coupons trick you into spending more money on something that isn't even what you normally buy. It's rather petty, I know, but every little bit counts...especially while you're getting out of debt. Please do the math before using coupons. Once you're out of debt and have savings, you can move up in quality coupons or no coupons.

Oh those student loans.
5/25/12
To those of you who sent me emails asking for more posts to the My Humble Opinion page, thank you! I wasn't sure anyone was even reading these. So, I am now resolved to posting here MUCH more often. Please check back from time to time...I'm on it now, I promise.

Now, on to the topic of student loans. First of all, understand that the cost of a college education goes up at two to three times the rate of inflation. So, if it seems like the cost of a college education is getting out of control...well, that's because it is. Sadly, though, the outrageous cost of college seems to have sent everyone running for student loans. Don't misunderstand, I'm not dead set against student loans; but I am dead set against going there as a first resort. The biggest problem I have with student loans is that kids are graduating with unbelievable amounts of student loan debt hanging over them. It's not unusual for it to take ten to fifteen years to pay them off! That's a lot of debt for a very long time for someone who is just starting out in life. The problem is that other sources of money for college require a lot of effort. Student loans, on the other hand, are quick and convenient. That convenience is what is making them the first choice of many people trying to pay for college. The second problem I have with student loans is the laws that have been enacted to protect the lenders. Student loans are NOT bankruptable. If you crash and burn financially and the courts see fit to grant you a bankruptcy, you are still required to pay your student loans back in full no matter how much they are. But, the thing about student loan laws that infuriates me the most, is that a student loan lender can attach your bank accounts and seize your assets without due process. In other words, they don't even have to go to court to prove that you owe the money! They can come after you just because they want to! It's possible that they have the wrong person and you don't even owe them the money and they can still just take it without any kind of court order. Their records may fail to indicate that you paid off your loan and they can just come after you and "steal" your money right out of your bank account! How a law like that was passed here in America in the first place is beyond me! Guilty until proven innocent, and seizure of personal property WITHOUT any kind of due process whatsoever.

So, PLEASE make student loans your very last choice for funding college. You can still use them, but make sure that you have obtained as much as possible in other ways before resorting to loans. For information about ways to fund college before resorting to student loans, please read my article "Where To Get Money For College." And again, thanks so much for those of you who gave me so much encouragement regarding my website.

What about the Euro?
12/7/11
There's a lot of talk right now about the Euro and how much trouble it may or may not be in. So, what about the Euro? Basically, if the Euro does collapse, there will be a devastating ripple throughout world economies. The actual scale and effect is too complex to accurately predict no matter what "experts" say. Just know that it would end up being really, really bad...at least for a while. How long? No way to really know. In my humble opinion, even if the Euro is saved, it's future is in serious doubt unless Europe finds a way to start shedding her debt either by paying it off or by debt forgiveness. Significantly reducing her debt would require Europe to also significantly lower her standard of living. The same would be the case if the United States decided to eliminate her debt. Again, in my opinion, this is unlikely to happen and even if saved for now, I think the Euro would find itself in serious trouble again sometime down the road. If things get fixed, then the economy will continue its serpentine climb to improvement. Of course, that will only last until the next serious down cycle; but, that's how economies work. They cycle. Good to bad to good and back to bad again. There really is nothing the average person can do about the possible disintegration of the Euro. What we CAN do is be ready in case things do turn ugly. I know it's the same old story over and over from me, but the best way to be prepared is to be debt free and have a nice emergency fund built up. It's funny how those two things seem to be such good ways to be prepared for just about any financial disaster, but they are. Other than that, all you could really do is to have a few months worth of food and water tucked away to get through the transition period from collapse to the start of rebuilding either the same system, or a new one.

OK...fine.
9/30/11
People occasionally ask me for stock tips. I generally don't give them because people have different levels of knowledge regarding the stock market, different amounts of money to invest, and different tolerances for risk. Besides, I don't want to be responsible for someone getting financially hurt if my idea goes bad. In spite of my reasons for generally not giving stock tips, people keep asking. So, OK...fine, I'll let you in on what I am doing personally. I am NOT recommending any particular investments or stocks, I'm just letting you know what I am doing based upon how I currently view the stock market. First of all, remember that I do not recommend individual stocks. I recommend mutual funds or ETFs (Exchange Traded Funds). For more on these investments and how to invest in the stock market, be sure to read my article about stock market investing. Anyway, I think the market will kind of bounce around for a while and then improve slowly. This, of course, goes out the window if there is some major news event that changes things. You see, that's the problem with trying to "beat the market" as they say; there is just no way to predict what craziness the world will come up with in the near and far future, and this craziness affects the stock market considerably. So, right now, I am pretty much splitting my money between the IWM ETF and the QQQ ETF. I also think it would be a good idea for me to put a little bit of money in the DZZ ETF. Now, let me explain to you what each if these is and why I'm choosing to invest in each one. First, IWM is the symbol for the iShares Russell 2000 Index which represents thousands of small companies. When a market improves, it is generally the smaller companies that grow the fastest. Since I think the market will improve, I want some of my money in those faster growth companies. QQQ is the symbol for the PowerShares QQQ Trust which is largely made up of technology companies. Technology is another sector that tends to lead a recovering market. Finally, DZZ is a gold short. That means it goes up when gold goes down and down when gold goes up. Since DZZ uses margin, it actually moves at about twice whatever gold does but in the opposite direction. Moving in the opposite direction is what the word "short" refers to. Just remember that it works in both directions. If gold goes up, then DZZ goes down twice as much. If gold goes down, then DZZ goes up about twice as much, in percentage that is. Since gold is at an all time high, and gold tends to move the opposite of how the economy is doing, I want to have a small amount of my money in DZZ so that when the economy recovers and gold falls, I make money. Remember, though, that all of this is purely speculation on my part and all depends on future world events which I cannot predict. This is just a quick explanation of what I am doing personally with the current market. Do your own research and make your own decisions. The information given here is just my humble opinion. OK, now that I've put it in print, it will be interesting to look back sometime down the road and see how wrong, or right, I actually was.

At the time of this writing:
IWM $64.30 per share.
QQQ $52.40 per share.
DZZ $5.28 per share.

A wild ride.
9/20/11
The stock market has sure been one wild ride lately. A few people have asked me what I'm doing about it personally. Well, honestly, not much! Historically when the stock market has these wild up and down movements, it's a good time to get in. Is it scary? Yes. Can it go bad on you and cause you to lose money? Yes. But historically, it does eventually trend up. Often times, these wild rides in the stock market serve as what is called a "Shakeout." A shakeout is when the uneasy, wild movements of the market scare many people into pulling their money out. This, in fact, is part of what creates the wild ride in the first place: people pulling money out of the market, wondering if that was a wise decision, then dumping the money back into the market. The thing about a shakeout is that when all those who want out are finally out, the market can settle down and generally even start to trend up a bit. Many of the people who got out, now start getting back in which helps drive the market further upward. That is why a market that is bouncing wildly after dropping significantly can be a good time to get in. Just pull up a chart of the DOW or S&P and look for what happened after every time it bottomed out and bounced around.

The big mistake that too many investors make, is that they pull their money out at the bottom because they're scared, then put it back in at higher prices as the market starts to trend back upward. They often lose a lot of money by getting out low and getting back in higher. That's why I just let my stock investments ride it out. That way I'll know that when the market trends back up, my money will be rising right along with it. I know one guy who decided to make his money by selling his stocks on an upward bounce, then buying them back on a downward bounce. He kept doing this on every bounce making a small profit each time. The problem is that eventually the market bounced up and then started trending back up. Since he had sold his stocks on that bounce upward, he now had no stocks with which to ride the uptrend. In order to get back in, he had to buy more stock at the now higher, up-trending prices. Since the stock prices were higher, it ended up costing him most, if not all, of the little bit of profit he had made playing the bounces. I'll admit that it is tempting when you see all those, almost predictable bounces; but, you never know which time it will bounce up and not bounce back down for you to buy the stocks back. What am I doing? Just letting my holdings ride. In fact, when I have enough extra money, I like to buy more stock at times like these. Just make sure you invest in the stock market the right way!

What now ???
8/8/11
The Unites State's debt rating has been lowered to AA+, the stock market is dropping like a rock and people are worried. People keep asking me "what now?" As in "what should we do?" For the most part, if you're already following what I teach about living debt free and having savings, then continue to do what you've been doing. If not, then get on that right away. It's never too late to be better off. What am I doing with my broad market stock investments? Nothing. I'm leaving them right where they are and I'll ride the market out as I always do. The way I see it, one of two things will happen: eventually the market will improve and the value of my portfolio will too, or the economy will completely tank in which case my money won't be worth much anyway. Historically, it will be the former. Am I right in this assessment? Only time will. tell.; but, I like playing the historical odds and history says that one of these two things will happen and eventual improvement is the most likely. I'm willing to bet that looking back from maybe even the near future, now will prove to be a very good time to have gotten some broad market stock investments going. Of course I could be wrong, but history suggests otherwise.

The price of gasoline (as usual)
4/12/11

The price of gas just keeps going up (no surprise to me) and people are really concerned. Well, first of all, understand that in general we Americans rely very heavily upon our cars. Our economy and our culture are built around that fact. For that reason, the price of gas is very, very emotional. We respond much more emotionally to an increase in the price of a gallon of gasoline than we do to many other price increases in our society. Just look at what the price of a pizza has done over the last 30 years...yet you don't see Americans all up-in-arms over pizza prices. Why? Just what I said; the price of gas is very emotional to us Americans.

I did some quick math just to put things in perspective for myself, and here is what I found. In my calculations, I assumed an average fuel economy of 20 miles per gallon and an average driving distance of 15,000 miles per year. I rounded all of my results to make the math a little cleaner.

With these assumptions, the average driver would use 750 gallons of gas per year. That means that a $1 increase in the price of a gallon of gas would mean an additional $750 per year. Therefore, each $1 increase in gas would cost an additional $63 per month which comes to $17 per week. Now for the perspective part of this discussion: that $17 per week is the price of a pizza, or going to the movies, or taking some kids to McDonalds. My point? If gas goes up one whole dollar, you would only have to give up a pizza or going to McDonalds to cover the cost. Many Americans do end up going out for pizza or to McDonalds or to the movies or some other such thing at least once per week. Cut out one of those trips, and a $1 increase in gas is covered. If gas went up $2, cutting out something like going out to a restaurant or to a sporting event would probably cover it. Dealing with increases in gas prices is like dealing with any other financial challenge--you need sacrifice. I once had someone complaining bitterly to me about the cost of gas. He stated that he just could not afford it any longer. I asked him if he had stopped all unnecessary trips in his car. He asked what I meant, so I explained. Had he stopped driving out to visit friends and family? Had he stopped driving to restaurants, movies or sporting events? Had he stopped driving to get away for a weekend? He admitted that he hadn't yet given up any of those things. I then pointed out to him that when he was down to necessary driving only and still couldn't afford the gas, that would be the moment he could no longer afford the cost of gasoline. Basically, he wanted to get control of having difficulty filling his tank, but had been unwilling to make any sacrifices.

Look for things in your own life you might be able to give up to make sure you can afford to put gas in your car. What about people who are so financially tight that they have nothing in their lives they could give up? Well, that is when you stop all unnecessary driving. In other words, no driving somewhere just for fun or enjoyment. Then think about combining trips. If there's something you need, is there a store along one of your necessary driving routes that carries that item? That includes grocery stores, hardware stores, re-sale shops, convenience stores, etc. Even if the items you need cost a little more at those stores, as long as it's less than what the gas would cost, you're doing well. Also, can you carpool with others to places such as work, church, shopping, etc.? Look for creative ways to avoid trips in the car.

Basically, my advice is what it always is: Follow a written budget, get out of debt and start building up savings so you can deal with increased costs. Political pressure aside, the cost of gas will continue to trend up over time just due to inflation. Like everything else, you already know the cost is going to increase, so prepare yourself now starting with all the things I just discussed.

What about the disaster in Japan?
3/15/2011

So, what exactly are the financial implications of what's going on in Japan after an unbelievable 9.0 earthquake? Answer...no one really knows! However, I do have a few observations and some guesses. First of all, understand that the economy of Japan was already burdened by debt to the point that I'm not sure how it has held on this long; so, the cost of rebuilding, of dealing with the nuclear disaster, and the humanitarian aid will have to have a significant effect on Japan's economy. They may try to hide it with more borrowing and government IOU's, but Japan will eventually have to get its financial house in order if it is to avoid a financial collapse now or sometime in the future. By the way, the national debt here in the United States is headed in more or less the same direction. Keep a close eye on what Japan's economy does as time goes by and see if they end up getting into huge financial trouble. If nothing changes, the U.S. will be going down the same road sooner or later and you'll know what to expect.

In the meanwhile, expect the stock market here in the U.S. to take a hit, at least for a while. The prices for some goods could rise as a result of this as could the price of gasoline. It may take months or it may take years, but in my opinion, barring significant, unforeseen events, the ill-effects here in the U.S. of the Japan disaster will eventually improve and things will financially get back to normal...whatever 'normal' is. I believe the stock market will come back up, and when it does, it could jump suddenly. If you pull your money out of the market now, you may be holding it in cash, miss a quick up-tick, and end up taking a big loss. Actually, now will probably prove to be a good time to get into the market so you can ride it back up. What am I doing? I'm leaving my stock market investments right where they are. Now understand that I'm talking about broad-market ETFs and mutual funds, not individual stocks. If you have stock in individual companies closely tied to Japan, this could get very ugly for you. The way I see it, if there is a worldwide financial collapse, it won't matter much where my money is...it all pretty much goes worthless. I fully believe it won't come to that--at least for now. In the meanwhile, continue to prepare for any and all disasters by getting out of debt and building up savings.

How worried am I?
2/22/2011

Since I have been asked this questions several times recently, I decided to comment on it here. Many people have been watching closely the goings-on in the Middle East and are very concerned for what the consequences might be here in the United States. Their question was: how worried am I about all of this? Well to be honest, I am concerned for how these events may ultimately affect people living here in the U.S., but personally, I am not worried.

"Concerned" simply means keeping track, more or less, of what's going on and then taking any actions or making any preparations that may be warranted.

"Worried" implies that I am stressed and possibly scared over how it may affect me personally.

No one--and I mean NO ONE can fully predict what effects events in the Middle East may ultimately have on us here in the U.S. I am no different. I honestly have no idea exactly how all of this will eventually play out and to be honest, it doesn't really affect my plans. I'm referring here, of course, to my financial plans. After all, my intent here is to address financial issues. Will oil and gasoline prices rise? In my opinion, YES, that's a given. When, how much and for how long they will rise, nobody knows. Besides which, regardless of what politicians might say, the Earth's oil will eventually run out. So, if events in the Middle East don't interrupt oil supplies, eventually oil supplies will be interrupted nonetheless. I believe this is a lot closer to happening than most people think. It won't be suddenly and all at once though. As oil reserves are depleted, countries will compete for the remaining resources first financially...then eventually, I truly believe, with military action. Sometime down the road, it may be soon or it may be decades, gasoline might go to $6, $12 and I wouldn't be surprised to even see $20 per gallon or more! But as I said, no one really knows.

The smartest thing to do is to stop worrying and start preparing. So, how best to prepare? Well, it's the same old stuff I've been teaching right from the start. Live on a budget, get out of debt, build up savings and start figuring out now how you would pay super-inflated gas prices. I understand that may sound rather simplistic, but it's still good advice. Think about it. Of all of the ways that events in the Middle East could significantly affect us here in the United States, what is most likely? Economic impact is most likely! How do you prepare for unforeseeable economic impact? Live within your means (with a budget), eliminate other people having so much control of how you spend your money (by getting out of debt), be prepared for emergencies and high gas prices by having a financial cushion (by having money saved for emergencies) and plan now what changes you may need to make in different scenarios that may come to pass.

So,here's my advice: Get out of debt and start saving as much money as you can. Those are things you CAN control--don't worry about the things you CAN'T control. If you just do that, you'll be surprised how many calamities you'll be prepared to handle.

Have we learned anything?
1/21/2011

I heard recently that, due to the serious downturn we all experienced in the economy, more people than ever have reduced, or even eliminated, their debt. To those of you who have done so, I say well done! Reducing or eliminating debt is always a wise decision. However, to this I add a warning: be very, very careful not to fall back into the same trap at some time in the future. Right now, many people are making huge adjustments to their lifestyles in reaction to the fear that is instilled by a struggling economy.

My prediction, and hence my warning, is that as the economy improves, many people will regain their previous level of confidence and comfort with regard to the economy and will slowly return to buying things on credit and taking on debt along with all of the associated payments. I doubt that credit will ever be quite as easy to come by as it was in the last ten years or so since the lending practices of many businesses and credit card companies have recently been revised. At one point credit was so easy to come by that credit card applications were appearing in the mail on a daily basis. If you've noticed, for now that has stopped; but over time, credit will become somewhat easier to get than it may be right now and that's when people will begin to get back into the habit of borrowing. If you have been smart enough to reduce or even eliminate your debt, make every effort to stay that way. If you have not, well, it's never too late to be better off, so start on a debt reduction plan right now.

Should you buy gold?
1/21/2011

With the price of gold hitting all time highs right now, I am constantly asked if now is the time to invest in gold. First of all, gold has never been a good investment. On average, over the last hundred years or so, the increase in the price of gold has barely kept up with inflation. This means that over time, money invested in gold will more or less retain it's buying power, but won't really appreciate and build into true wealth.

Besides which, think about it, if gold is at an all time high, which way is it most likely to trend? Down! At least somewhat. The price chart for gold does show an overall uptrend, but that uptrend, as I have already stated, merely reflects an increase in inflation. When gold is at an all time high, it tends to drift back down and get back to following the same curve as the rate of inflation. Sometimes, when it hits such a high, it levels out for a while and waits for the economy to catch up to it. The net result is that the buying power of money invested in gold simply keeps pace with inflation. Yes, if you look at the historical price of gold it might look as though someone could have gotten rich if they had invested in gold just prior to the recent run-up, and that may be true; however, there was no way to have known exactly when that point was. As they say, hindsight is perfect, but at the time there was no sure way to know that gold was going to shoot up like that. What about people who had bought gold a long time ago and had held onto it? Well, yes their investment actually increased significantly in the short term, but look at the rate of increase in the price of gold the whole time they were holding onto it. Compare that to how they could have done if they had just invested in the overall stock market. The return on a broad market stock investment would have grown proportionately more and would have performed much better than just keeping up with inflation. If you think it might be a good idea to invest in gold in case of a natural disaster or an economic collapse, please refer to this section of one of my other articles on the Financial Page.

Bottom line: In my humble opinion, don't invest in gold!

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