Finance

Perspective

The economic world is very negative right now.  The decline in market prices isn’t particularly worrisome coming at the end of a fairly long run up, neither is the decline in oil prices, due to a global price war and supply excess.   What is particularly troubling is the negative interest rates.   Zero is less bothersome than negative.   Negative is entering a world we have little familiarity with.   Japan has had negative rates for a while but always within a larger world of normal.

Its important though to keep perspective during times like these.  In my life we’ve lived through the rampant inflation of the early 80’s, the energy shortages created by OPEC.  We’ve survived the banking crisis which was the Savings and Loan crisis ( fun since about 1/3 of S&L institutions failed ).   We’ve lived through the Dot Com collapse.  We’ve survived the outright closure of Wall Street for a week or so.   We’ve survived and returned from the 2008 crisis.

This is yet another crisis, we will emerge on the other side.  There are lots of very smart people, representing wealthy interests, who are doing everything possible to return to “normal”.   A return to normal always happens.   Be patient.

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Temptation Of Eve

Legends

Unsatisfied In Paradise

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Finance

Someone Finally Said the D Word

Over at Morningstar.com author Robert Johnson, along with his editors, has broken ranks with the financial press and used the “D Word”.    Not only was the word Deflation used to describe current price variance but it was actually used in the headline.   The article “Deflation Hides the Growth in Consumer Spending” is a good read.

The part I am fixating on is that heretofore you just do not see the word Deflation used in the financial press.  Its always its euphemisms like “price declines” and my personal favorite worries of “low inflation” and related.   Denying the risks / realities of Deflation in the global economies is basically whistling past the grave yard.  It was refreshing to hear it openly discussed.

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Finance, Uncategorized

Will She or Won’t She

Tomorrow is the big day.  The day we all wait with eagerness or fear depending on ones views.   Will Janet Yellen raise the FED rate or not ?

It was little more than a year ago the quantitative easing was phased out.   Economic growth continued throughout the scale back.  Currently employment figures continue to get more and more positive.

Personally I hope for a hike.   I’d like to think the economy has returned to a modicum of normalcy.   Hopefully we can get back to decent interest rates and normal inflation pressures.   Deflation risk, what we have been fighting for several years, is a scary thing.

We will find out soon.  I think we will see a rate hike.

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Finance

Accumulating Wealth Requires Not Wanting Things

The accumulation of wealth ironically requires not desiring the things money buys.   The desire for things is what must be slain if one intends to accumulate wealth, and with it security.

Wealth is distinct from income.   Wealth is the income a person received and never spent.  The income came arrive via working, successful investments, inheritances, royalties, etc.   One may have a large income or a large amount of assets but if one is enamored with the things money buys one will quickly be out of money.

When one doesn’t desire things, one then has money to save.   When one doesn’t desire things, one then retains money one receives from others.

Loosing the desire for things, beyond a simple yet comfortable life, is only the first step.   Beyond that one must study investing, markets, economics, politics, taxes and all the rest.  One must make wise decisions.   The world is full of bad advisors.   There are so many bad investment opportunities.

Ultimately when investing one must again loose the desire for things, or in this case the desire for money.   One must learn to be content with less than one might have had.   All of the very bad investing decisions start with a desire to obtain returns that are unnatural.   Usually the building on some secret knowledge, or method, that will allegedly allow the one who posses the knowledge or skill to outsmart everyone else.    The investing world humbles all men eventually.  What goes up will come down.  Volatility works both ways.   The tortise and the hare should be remembered.

Ultimately think of money as a machine.  Its a golden goose.   You don’t eat the golden goose.   You protect it and feed it.   You maintain the machine.    Plan to use the proceeds of the investments in a time of need, not the money itself.  In this way the money will never go away, the golden goose will always live.   Again this requires, ironically, not desiring money or the things money can buy.

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Stacks of gold bars
Finance

Why Is A Modest Rate Hike So Exciting ?

Several commentators and opinion articles in the financial press have been explaining why a modest rate hike should not be a big deal.  They question why everyone is so excited about this potential rate hike.

The reason is simple.  We’d like to know if the economy truly is strong enough to start returning to normal.   Nothing is normal right now.  There hasn’t been a rate hike since 2006.  Since 2008 the funds rate has been essentially zero.  That drastic measure still was not enough to keep the ship afloat and so quantitative easing was engaged in multiple times.   In the most basic sense the economy has been skimming along the treetop and we’d like to think the motor on this crop duster has recovered enough to get us back up into the air.

There are many good signs about the economy.  The largest lingering question is likely about China.  How significant is the malaise and how substantial is the cooking of the books to make the Party look good.

If we can raise rates, if we can do it repeatedly, and still maintain our current economic situation then it will truly be a very encouraging sign.   If it turns out we have to push the increase out then it means we are still running on fumes.

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Current Events

The Post Office Is Kinda Cool

Shopping around for a mail delivery box I was surprised to find the best service and cost via the USPS.   I’d used Mailboxes Etc. and later it became the UPS Store.   I had no complaints.  Originally I went that route because they gave me a street address, they could received USPS, UPS and Fedex packages, they had 24 hour access etc.

The Post Office now lets you have 24 hour access to your PO Box, they will receive UPS and Fedex packages for you, they give you a street address to use instead of a PO Box if you want.  But the really neat part is they will email you every time they put mail in your box.

The neater thing yet is that, at least around here, the post office is cheaper too.

The post office has improved a great deal over the years.

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