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No Room for Careful Optimism. Not yet Anyway
2008-02-14 18:03:00
We?ve seen some interesting developments this week. Some might be considered reasons for careful optimism regarding the chances of a full blown recession hitting the US. However, several less noticed news were also published which we should consider before reaching a conclusion.#1 Warren Buffet offers to reinsure municipal bondsThe oracle from Omaha, Mr. Warren Buffet, offered to reinsure $800B in municipal bonds to help the deteriorating bond insurance market. Naturally, If Mr. Buffet sees a business opportunity in insuring municipal bonds then it is likely that Buffet considers municipal bonds to be ?good credit? caught in a bad market situation.The insurance companies, Ambac, MBIA and FGIC, were definitely not too eager to accept the offer. One apparently turned it down already. In doing so these companies gave us good reason to believe the situation might be better than we think. Buffer did not offer to reinsure CDO?s however which indicates more trouble may be brewing.#2 Januar...
More About: Economics , Room , Careful , Optimism

5 Practical Reasons Why You Should Definitely Learn a Foreign Language
2008-02-12 19:34:00
Intellectuals are often recognized by their ability to conduct fluent conversations in several languages, usually English, French and German. Being fluent in a foreign language is a pre-requirement for many academic programs and is often a mark of intelligence and capability.The majority of the non English world studies English as a default second language (as I have). That?s a step in the right direction. But I insist we should not stop there. I?ve decided to study French as an additional foreign language and urge my dear readers to do the same.The most common languages on earth are Mandarin Chinese (885 million speakers), Spanish (332 million), English (322 million), Bengali (189 million) and Hindi (182 million). The UN?s 5 official languages are: Chinese, English, French, Russian and Arabic. I believe that one of the basic steps to understanding the world we live in is to accept cultural and ethnical diversity. Language is one of the very basic building blocks of the latter.There...
More About: Leadership , Career , Foreign , Reasons

The Role of Information in Stock and Capital Market Efficiency - Part #2
2008-02-11 18:09:00
In the last post I discussed the three assumptions at the base of market efficiency models the most interesting of which is the requirement for the availability of perfect information. In this post we will see why that is the case.As aforementioned information plays the most important role in efficiency of stock markets. As information technologies evolve access to information has become increasingly and significantly easier. The household investor can access all the public information regarding a company with a couple of clicks.To make things all the more complicated some effects have surprisingly endured even though information is available. Effects like the January effect (a rise in stock prices in January) or momentum strategies point to failures in market efficiency as they should have disappeared. Take the January effect for example: common knowledge that stock prices tend to rise in January should have lead to purchases in December and in turn to a rise in prices in December....
More About: Economics , Information , Market , Investing , Stock

The Role of Information in Stock and Capital Market Efficiency - Part #1
2008-02-10 22:11:00
Market efficiency is a concept describing market behavior. The assumption about market efficiency is a basic assumption in many economic and financial models and is required in order to build fundamentals.At the basis of market efficiency are three assumptions:1. There is a multitude of sellers and buyers with no one dominant enough to affect pricing.2. There is homogeneity in products or services offered.3. Perfect information is available to everyone.These assumptions are required in order to demonstrate equilibrium of supply and demand which constitute the price and quantity of every product or service. These market dynamics also help in understanding the processes which takes place in inefficient markets.Capital Market EfficiencyThe capital market is often regarded as a market which is close to fulfilling the requirements of an efficient market where prices are determined by supply and demand as a result of the forces mentioned above.It can be easily seen that the capital market...
More About: Economics , Information , Market , Investing , Stock

Investment Basics Carnival #6 and Weekly Round-up
2008-02-09 10:08:00
Welcome to the sixth edition of the "Investment Basics Carnival ". We recieved a record 63 posts out of which 24 were chosen and are presented here.Investment Tips1. The Dividend Guy presents Investment Ideas from My Fridge posted at The Dividend Guy Blog- There are numerous ways to find stocks to analyze. I started by looking in my fridge.2. Phil B. presents Short-Term versus Long-Term Capital Gains posted at Phil for Humanity- Short-term investments must have a higher return just to guarantee the same profit over long-term investments because of the differences between short-term and long-term capital gains tax.3. FIRE Getters presents Our 7 Mutual Fund Investing Mistakes! posted at FIRE Finance- Common investing mistakes in mutual funds4. The Stock Teacher presents Tips For Cutting Down On Trading Fees posted at Stock Investment- Advice on how to cut down on your stock trading fees and improve your returns.5. Jose DeJesus MD presents Market Timing - When is the Best Time to Invest...
More About: Round Up , Weekly

Save Time and Money with These Tips for Organizing Your Personal and Financ
2008-02-07 18:53:00
Surely you easily remember that one time you couldn?t find the receipt for that pricy camera which suddenly stopped working after 3 months. Where did I put that? Or maybe last year?s tax filings or your marriage license? How about the guarantee for the TV?In our short lives we create and accumulate mass amounts of documents ?never ending piles of paper. Unfortunately, they?re never there when we need them.Organizing your personal documents can save you precious time and money with little effort. Furthermore, having the history available, especially when it comes to bills and expanses can help you learn a lot about your spending habits and also help you with budgeting and managing expenses.#1 First and foremost you should defiantly keep the documentsAccumulating mass amounts of paper really makes you want to throw it all away even if you know you?ll regret it soon enough. In order to get things properly organized save your documents.#2 File often and don?t procrastinateNaturally docu...
More About: Personal , Money , Tips , Time , Save

When is it Reasonable to Take a Loan? Consider These 4 Questions
2008-02-05 21:24:00
I?ve recently wrote an article titled ?Avoiding the slippery slope of debt? in which I wrote about how quickly small loans may amount to significant debt and mentioned ways of avoiding it. However, there are cases where we simply must finance ourselves with the bank?s money. As with anything in life the middle way is the right way.Financing and leveraging by themselves are not bad. They are merely tools which should be put to good use.Taking a loan or any sort of external finance is reasonable when the return is usually expected to outgrow the financing costs. This return doesn?t need to be measured in dollars. In fact, measuring utility is the correct approach (for further reading: What is the economic value of happiness?).So when is it reasonable to take on a loan? I believe we should consider the following 5 parameters before deciding:#1 Is the situation or problem at hand temporary and focused?Borrowing money should be a temporary solution to a temporary problem. If a situation ...
More About: Questions , Loan

Taking the Moments to Appreciate Life
2008-02-03 20:05:00
I write a lot about investing, business and personal finance. So do many other personal finance blogs. However, we have to keep reminding ourselves money is just a means to an end and not an end in itself.A recent experiment by the New York Post demonstrates what seems to be our innate inability to appreciate the present.In the middle of D.C morning rush hour famed violinist Joshua Bell stood in a metro station and played six immortal classical pieces, such as J.S Bach?s "Chaconne? on his Stradivarius violin. He stood and played there for almost an hour with the violin case at his feet wearing ordinary everyday clothes. I believe you can guess the rest.Almost 1,000 people passed him by, nearly unaffected by the marvelous musician playing before them.Gene Weingarten discusses this experiment and its results in great detail in his article ?Pearls before Breakfast? which I believe we should all read. What really troubled me is one begging question: Would I have stopped and listened?I a...
More About: Life , Moments , Taking

Be the Turtle - Why Timing the Market is Impossible
2008-02-02 09:38:00
Sometimes looking at the raw data itself presents very interesting conclusions. This is one of these cases.One of the basic mistakes many investors do is trying to time the market or buy low and sell high to make quick profits. If you've ever tried that you must have noticed it's hardly as intuitive as it sounds. It appears the statistics themselves are against us in this matter.In order to see if it was possible to time the market and make relatively quick profits I've examined the daily price change for both the Nasdaq and S&P 500 indices since 1990. I've found very interesting results. I exmained the absolute daily price changes and not just the positive ones under the assumption you can also time the market downwards (sell short).There were approximately 4,559 trading days between January 1st 1990 and February 2nd 2008. Only 51 of these days yielded a price change of over 5% in the Nasdaq, and a mere 8 days in the S&P. Maybe 5% is too much to ask for? If we suffice w...
More About: Market , Turtle , Investing , Impossible , Timing

Why Diversifying my Investments Hasn?t Worked This January
2008-01-31 21:44:00
If you've taken a peak in your portfolio this January most of you probably noticed your entire portfolio glowing bright red. We are constantly preached to diversify our investments but if it fails in the "money time" when markets crash what's the use? The answer lies in the following two principles of investment and finance which are crucial to understanding the importance and purpose of diversification:#1 Good diversification lowers a portfolio?s risk level to the market risk level - When it rains everyone gets wetWhen we diversify we essentially spread our investments to lower the total risk of our portfolio. How do we lower the portfolio?s risk? By diversifying our investment and investing fractions of our portfolio in different geographies, industries and more.In so doing we are reducing the specific risks each small investment carries. Specific risks are the risk of bankruptcy of a company, war in a country etc. Due to the fact investments are correlated but not perfectly rel...
More About: Investing , Investments

The 80/20 Rule - Let Pareto Do Most of the Work
2008-01-29 13:47:00
The 80/20 percent principle has been one of my favorites for a long time. Most of us have derived this rule intuitively through our experience but are not aware of its full potential.Applying this principle or rule will help you to instantly separate the wheat from the chaff and focus your efforts to gain the maximum desired effect with minimum investment.In my university years I found out I was doing quite well with out too much effort. I did not excel but also did not wish to sacrifice my spare time studying for those extra 10 points. We are all familiar how 20% of studying yields 80% of the grade. You have to invest 5 times more to get a whopping 100. Is it worth it?The 80/20 principle also applies in many other cases. As examples consider the following:1. 20% of clients always seem to generate 80% of revenues2. 20% of the population usually owns more then 80% of the wealth3. 20% of taxpayers usually pay more then 80% of total taxes4. 20% of blog posts usually draw 80% of traffic...
More About: Work , Rule , Pareto

Portfolio Seems to Shrink Away? Ask Yourself These Questions Before Acting
2008-01-27 23:01:00
When stock markets shed percents we're used to see only in volume discounts investors tend to panic. This phenomenon is as undesirable as it is understandable. A very basic principle of investing is too hold for the long term. However, holding on for the long term is difficult enough with out having to watch your portfolio shrink away.When markets drop the majority of household investors tend to act quickly and irrationally. Immediate action is sometimes required. But that is not often the case. Household investors, in fear for their savings, are very quick to sell under-valued stocks to the market sharks circling around.Before taking action I believe we should ask ourselves these following questions which will help us cool our heads and maybe cut the vicious circle of buying high and selling low:#1 Has there been any fundamental change?Stock markets tend do let our some air from time to time. Especially after long periods of positive returns. Before taking hastily decisions ask yo...
More About: Portfolio , Questions , Investing , Acting

Avoiding the Slippery Slope of Debt
2008-01-26 16:13:00
Private consumption has been increasing steadily. We're happily consuming away. Sometimes even financing our desires with a small loan here and there.I've recently bought and refurbished my apartment. I've had to finance this purchase and the refurbishment with a significant mortgage and some personal loans. From my personal experience I find it very easy to get mixed up in debt without notice. Managing a growing amount of loans and re-payments is not an easy task. Having the ability to take more loans creates an illusion of well being and surplus cash which is very dangerous. The question "can we really afford this?" is not always asked. In my apartment I did my best to make the smallest concessions possible. I'm still balancing myself every since (6 months now). Couldn't I've just settled for cheaper tiles?I don't think life is just about saving and being frugal. I believe we should lead a life worth living without questioning ourselves every other step of the way. However,...
More About: Debt

The Fool in the Shower - Is the Fed Turning On the Hot Water Full Blast?
2008-01-24 16:31:00
Milton Freedman supposedly made up this analogy describing a bather in cold water who turns on the hot water all the way up and gets scaled.To be perfectly honest I have no idea how the Fed's cut in interest rates will affect the markets. I do have a strong intuitive feeling this isn't over yet.This interest cut has been the biggest reduction ever, I believe. Furthermore, this has been the first time the Fed has changed the funds rate between meetings since 2001 (combined effects of terrorism attacks and a recession). On the one hand this immediate response to stock market plunges world wide is admirable and seems attentive and responsive to market needs. On the other side it's as troubling as the price plunges themselves.The Fed's cut is most certainly a clear sign we're in trouble. The funds rate is the most available and most immediate tool a central bank has. The quick and resolute cut in interest rates sent a message was meant to show worldwide markets someone is still in ...
More About: Economics , Fool , Water , Full , Blast

What to Shop for in the Stock Market in Times of Recession?
2008-01-23 17:29:00
Yesterday I wrote about collateral damage and overshooting. Obviously some stocks got devalued for no just reason what so ever. Can we hunt down these opportunities? My recommendation was, and still is, no. However, there are sectors which have proven in the past to be more resilient and even suitable for times of recession and economic slowdown.The primary characteristic for these companies is that their business performance is less sensitive or even encouraged by times of recession and economic slow down. These stocks are called defensive stocks.The combination of an overshooting effect in stock prices the potential for recession makes buying defensive or cyclical stocks an interesting option.Sectors which are considered to be defensive are consumer sectors such as tobacco, food, alcohol and retail companies (such as wall mart which has recently been recommended again by analyst Mark Miller after years of standing in place). Other, more riskier sectors, are energy, utilities and t...
More About: Economics , Stock Market , Market , Investing , Stock

5 Spontaneous observations on what's going on
2008-01-22 20:27:00
I'm an optimist. I believe stock market crashes, certainly scaled, healthy ones as the one we are experiencing are good for us. If we're investing by the book we should be fine and accept what happens in the markets these days as normal and probable. I've written before on my worries about the current stock market pricing, especially the Chinese and Indian markets, and the risk of missing on terrific future growth and potential in these markets for the years to come. These markets are now letting out some long overdue air.As any investor I consider stock market crashes an opportunity. We must always keep in mind common behavioural patterns and market phenomenology. Here are some of my more spontaneous observations on what's happening:#1 This could be the turn of the tideTechnical analysis acts on trends and support lines. Trends are analysed for different periods of time and do not change lightly. However, there is always the surprise of the trend begin reversed in a couple of d...
More About: Economics , Investing , Observations , Spontaneous

AP: Casual Blogging Not Just Lunch Money Now
2008-01-21 17:23:00
While I have yet to see revenues of over a cup of coffee It seems blogging has become a profitable occupation for those who take it on full time. Unfortunately I've been very busy these last couple of days and in this post I'll mostly refer to interesting articles I've read during the past week.The first one is by Candice Choi from AP titled: Casual Blogging Not Just Lunch Money Now. Here's what I found interesting, in brief:1. 39% of American Internet users constantly read blogs.2. Naturally, there is a very long tail of blogs which earn very little for each successful blog (If you're in it for the money, better reconsider investing your time elsewhere).3. Approximately a third of blogads 1,500 bloggers make 200$-2,000$ a month. These have over 3,000-50K visitors a day.As I've detailed above I've not been able to make deadline with my posts the past few days. I've been rather busy with other things. I began writing this blog as a hobby and past time as I enjoy writing and ...

Diversifying Your Investments Over Time
2008-01-19 12:07:00
I've recently written a post on why long term investing isn't always a smart move. As examples I've looked at an investor who chose to invest in either the Nasdaq at 2000 or the Nikkei in the 90's. Both poor choices which have lead to years of loss and a negative return on investment.Diversification is nearly a must for household investors. Hand picking winning stocks in the style of Warren Buffet or George Soros is very hard. Household investors are often recommended to diversify their investments to include:1. Industries and economic sectors - For example growth stocks, energy, financial etc.2. Geographies - USA, emerging markets, Europe etc.3. Financial Assets - Stocks, bonds etc.By diversifying we're actually reducing the specific risks in our investments (A company defaulting, a war etc.) and we are left with the market risk. However, time represents another specific risk that should be diversified.Usually we find ourselves with a significant sum of money available for inv...
More About: Time , Investing , Investments

Generating Abnormal Returns Using Momentum Stock Investing
2008-01-18 16:43:00
The search for an investment strategy that will yield consistently high abnormal returns has long been sought for by academic researches and market professionals. Many analyists promise 2008 would be a more challanging year for investors with less opportunities to generate high returns.Momentum strategies are not intuitive. Why should a stock price keep on rising just because it has done so far? Apparently they do.These strategies are among such strategies as the January effect or week end effects that have proved over time to yield high abnormal returns (such that to contradict market efficiency assumptions).Using momentum strategies is quite simple and requires no use of judgment on the part of the investor. According to this strategy buying stocks which have performed well and selling short stocks which have performed poorly in the past would yield high abnormal returns. The underlying assumption being, of course, that these stocks would continue to perform as they have for a cer...
More About: Stock Investing , Investing , Stock , Abnormal

A Case of Too Much Information? Real Estate and Stock Investments Compared
2008-01-16 19:35:00
Try to imagine what would happen if there was a market price available for your home at any given moment, which was set by supply and demand. In short, imagine your house was traded in a house exchange. Scary thought, isn't it?I can picture myself rushing to the computer every other moment hoping prices went up. Even a small fraction of percent would be significant when real estate is at stake.This kind of behaviour would obviously not constitute smart investing. We always preach to ignore the noise in the short term and invest for the long term. Why is it so difficult to do when it comes to stocks and easily performed when it comes to real estate?This is all the more baffling as the huge amounts of money we invest in real estate, or our home, make the money we trade in stocks pale in comparison. Why are we so anxious and stressed when it comes to a couple thousand dollar invested in stocks and so relaxed when it's hundred of thousands invested in a home? This is an obvious exagge...
More About: Economics , Information , Estate , Real Estate , Investing

What is the Economic Value of Happiness?
2008-01-15 18:33:00
Economic models (usually micro-economic) use the concept of 'Utility' when describing balance and equilibrium. As we all know having money doesn't necessarily make you happier (it doesn't hurt either). Money is a very simple, straight forward and usually irrelevant variable when discussing social sciences and behaviour. As a result economists have come up with the concept of utility which quantifies the entire benefit an individual draws from a certain product, service or resource.Oddly enough, when macro economics are discussed we usually suffice with comparing GDP (gross domestic product) or GNP (gross national product) for varying countries. Obviously GDP and GNP are not measured in utility but in money. This is an unfortunate but unavoidable result of the transition from the world of model to reality.Measuring utility is very hard (impossible some might say) as utility is subjective. Money, however, is not and as such is most suitable when comparing national economies.Howeve...
More About: Economics , Happiness , Economic

The Problem With Structures - Risks and Hidden Costs
2008-01-14 22:33:00
Structured products have grown increasingly common among household investors as they are conceived as a safe investment with nothing but upsides. However, as consumers, we must ask ourselves: Are these structured products better then other forms of investment just because the principal is ensured at the end of the investment period? Isn't this a cheap marketing trick? Marketing is certainly involved here. Households prefer certainty and security. An investment that can't lose always sounds great. But stop and consider an investment with 0% return ? Isn't that the same as losing?Most structured products can be characterized by the following:1. They offer protection of principle2. They require a concession on interest paid3. They offer enhanced returns which depend on performance4. They charge management feesLet's have a look at an example. Say a structured product offers us twice the price increase of euro to dollar in 1 year. A nice return on investment is possible. However, if ...
More About: Investing , Problem , Hidden , Costs , Structures

How to Protect Your Money From Inflation
2008-01-13 19:24:00
There is little doubt prices are on the rise. Oil, wheat, corn, metals and more have recently surged in price. The housing slump does balance things out for now but in time we're bound to feel inflation's sting.Inflation simplified is increase in prices for popular commodities. This price increase devalues each dollar and as a result devalues our earnings and investments. Each dollar can buy less.How do we protect our money from inflation then? The rule of thumb is to invest in real assets. These assests' value is not dependent, or is adjusted to price levels. Let's have a look at some of the steps we can take to protect our money from inflation:#1 Change the mix of our deposits to include price adjusted depositsIf we believe inflation is coming it is wise to make use of inflation adjusted deposits. These deposits yield lower returns but guarantee the value of your money. If we look at a deposit with a nominal interest rate of 5% and an inflation of 2.5% in the same year this de...
More About: Money , Investing

The Economist: "Sooner or later the world's hottest market will burn up"
2008-01-12 15:51:00
I read this very enlightening and interesting article in The Economist which strengths my resolve to avoid the Chinese stock market for the short run. I believe the Chinese market is a great long term opportunity but it seems to lack maturity required for competitive capital markets.The Economist lists the following as reasons for the foreboding title:1. The Shanghai stock exchange is virtual and differs greatly from the western concept of stock markets where demand and supply are free.2. Stocks do not actually grant full ownership rights.3. Chinese stock prices are believed to move in just one direction: Up. This belief is a result of a series of IPO?s of government companies which were priced in a fashion that would lead to high demands and huge price surges.4. Lack of alternatives for Chinese savers.5. Lack of the ability to ?Short? on stocks.6. Lack of transparency.The complete article can be found here.More on the Chinese stock market:1. NYSE urges China for more listing flexib...
More About: Economics , Market , Investing

Investment Basics Carnival #5 and Weekly Round Up
2008-01-12 15:31:00
Welcome to the fifth edition of the "Investment Basics Carnival ". We had 35 posts out of which 17 were chosen and are presented here.1. Larry Russell presents Fund Authority Scores - Taking the Snake Oil Out of Investment Fund Evaluation posted at THE SKILLED INVESTOR Blog, saying, "Superior mutual fund and ETF performance charts are the sales tools of modern financial snake oil salesmen. They allow investment fund promoters to market selectively their supposedly superior funds and to allege that their excessively high fees are worth it. 2. Michael E Johnson presents Should I Use My Loans To Invest? posted at Student Loan Consolidation3. Value Seeker presents Stock Investing Vs. Stock Trading - Stock Investment Resource: Stock Market Investing Tips posted at Stock Investing, saying, "Describes the advantages and disadvantages of stock investing compared to stock trading." 4. Slackerwealth presents Investing in Agriculture, ETN, Jim Rogers posted at A Slacker's Quest for His First M...
More About: Round Up , Weekly

Building Character Through Long Distance Running
2008-01-10 13:12:00
I took part in a 10K race today (~6.25 miles). There is something powerful and motivating about running alongside several hundred other runners. I've been running long distances for 6 years now and I believe long distance running (or any endurance sport) are great character builders.Some argue this is a 'what came first - the hen or the egg?' sort of argument. They argue some people posses the qualities required to practice long distance running or any endurance sport. From my experience it is quite the contrary.The required stamina and mental strength can be built slowly and gradually through training. Each accomplishment makes you hungry for more and increases your belief in yourself. There is an increasing trend of executives who adopt the practice of endurance sports, especially triathlon, as another from of achievement and as something more to note on their resume.I believe adopting an endurance sport can lead to changes in mentality and way of thinking, in addition to the c...
More About: Building , Running , Career , Psychology , Character

How much are you willing to spend on lifestyle and image?
2008-01-09 15:08:00
I enjoy the occasional meeting in a coffee shop now and then. An interesting thought came to me today after having ordered yet another overpriced cappuccino. How much am I willing to spend on my concepts of lifestyle and on my image?The more observant of us have probably noticed Coca-Cola, Pepsi, Starbucks or Nike don?t just sell drinks or shoes. They sell lifestyle. Advertising is in part about creating associations between the product and our desires. We buy these products because we?ve been ?programmed? to associate Coca-Cola with freshness and coolness for example (there are many other examples).The issue of spending on lifestyle is complicated and vast in scope. Hopefully I?ll write more on the subject in the near future. In this post I intend to linger on a very specific and annoying aspect of it. If you?ve ever ordered a coke for 5$ you probably know what I?m writing about.Pricey places allow themselves to charge extra for the most basic products. Ordering a 5$ coke at a fanc...
More About: Economics , Lifestyle , Image

10 Tips and Truths for Successful Option Trading
2008-01-08 17:30:00
Household investors tend to lose at option trading. This is an unfortunate but unavoidable fact as these are sophisticated markets which require high proficiency and deep understanding as well as advance algorithms and computing power in trading.Tips for success in trading option should be in accordance to the aforementioned truth.#1 Limit your lossesIt is very easy to adopt a double or nothing attitude at options trading. This is a mistake as the risks, at times, are highly against you. Only trade money you are willing to lose.#2 In options high variability yields high returnAn option holds a certain potential. When you hold on to an option in times of high variability the chances of that potential becoming real are increased. Think of an option to buy a certain stock at the price of 9$. If the stock price fluctuates significantly (for Ex. 4$-8$) your option will be worth more then if the stock price was very stable (for Ex. around 6$). This is due to the increased chances of the s...
More About: Trading , Investing , Ruth

Increase Your Motivation to Save by Illustrating Your Progress
2008-01-07 15:38:00
If you?re an avid manager of your personal finances you are probably keeping a budget of your incomes and expanses. Most of us are hard working people trying our best to save a decent amount each month. Since our monthly savings add up quite slowly and our loan repayments go even slower we sometimes have a hard time noticing the big picture and the general direction in which we?re headed.I have found illustrating that direction or trend is very helpful in motivating me to do my best to increase my monthly savings. Since you probably have the figures available on your budgeting excel sheet illustrating the trend shouldn't be hard work.Think of the following graph illustrating the trend of increased savings and reduced debt for a certain household. This household has borrowed 100,000$ for 5 years and has a savings of 20,000$ which grows by 500$ each month.If we look at the trend for 10 more months we can easily see the lines converging in the near future. This illustration is a great...
More About: Motivation , Progress , Save , Budgeting

There Goes the January Effect ? Are We Facing a Recession?
2008-01-05 18:39:00
A week ago I wondered whether we will get to see the famous January effect making an appearance in the markets. I?m afraid the answer seems to be a definite no. January Isn?t over and still may surprise us but the January effect in all its glory has regrettably not made a grand entrance.The Nasdaq has lost 6.5% the past week with the Dow Jones not far behind, again under 13,000 points. Several indicators support the general feeling the US economy is headed for a recession. Although it is still too early to determine we?re heading to a recession for certain more and more telling signs are available to investors:1. US unemployment rate surprisingly jumped to 5% (from a previous 4.7%).2. The Institute of Supply Management?s manufacturing PMI reading fell to 47.7% (from a previous 50.8%) which translates to decline in manufacturing activities.3. The ?Fed? announced a 50% increase in credit auctioned in January.4. Investors currently estimate a 0.5% cut in fed funds rate is more probable...
More About: Economics , Effect , Recession , Facing