2008 Flashback: Bear Stearns & Personal Debt

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On today’s vlog session, I’ve gathered the following topics – all related to debt:
Flashback to 2008 – Bear Stearns: the precursor of the Great Recession

Assessing stocks – the most important company metric is debt and risk level

Book review: Squeezed. What the author describes as new for our economy is actually not new at all. And by maintaining low levels of debt, you can maintain a high level of resiliency when responding to changes in the financial environment.

 

How are you managing your debt or is your debt managing you?

 

Related post:
Investing and Behavioral Risk

Protection From Financial Chaos

 

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I stay in tune with the health of our country’s financial progress by taking in information from several sources.  I read Investor’s Business Daily on a regular basis.  They provide a gauge of the market and print it right on the front page: Market in Confirmed Uptrend, Uptrend Under Pressure, or Market In Correction.   I take cues from reports on CNBC and daily newspapers and combine the findings to make good decisions.  Ever since I’ve taken my financial position into my own hands, my level of attention is critical to its success.

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It’s Time To Go Shopping

invest

It’s time to go shopping!  Stocks are on sale!

The bull run is over.  Anyone that was waiting for a correction got what they wished for.  In spite of the  1,175 point loss, it’s still not a “bear market”.  That’s based on the percentages of the Dow Jones and S&P averages and their respective losses.  A bear market would be a result of a 20% drop.  The Dow Jones has only lost 8.5% from its record high, nowhere near 20%.

Don’t wind yourself up into a tizzy over the stock market.  I giggle when I read headlines like, “This pullback is the largest seen in the last 236-and-a-half days.”  There’s always some arbitrary measure of time in an offbeat number of days, weeks or years.  As I write, Marketwatch.com has two side-by-side headlines that contradict each other.  One promises a bear market, the next link calls this slump a correction, not a bear market.

The way I see it, this downturn is taking some of the fluff off the top.  If you bought high, like some Bitcoin investors did, your losses don’t feel so good right now.  But, hopefully you didn’t chase investments that have topped off, hoping that they’ll continue their increase.  That’s Investment Sin Number One: buy-high, sell-low.  If you’ve done this (again), it’s time to step away from the Quotron.

I don’t have any control over the jobs report or the GDP, and neither do you.  But I do know that I can control my reaction.  This is the time to test yourself.  Are you thinking about getting out of stocks? Or are you prepared to wait it out?  Better yet, are you thinking about buying?  My mouth starts to water when stocks go on sale.  When I don’t buy after a price descent, I regret it later.

It’s time to run when companies are buried in debt, when credit dries up, when new trade laws block commerce and when growth has come to a stand-still.  Entire industries can be wiped out based on one piece of legislation.  But if that’s not happening and fundamentals are strong, you’re looking at an emotion-filled selloff.

My best example of this was back in 2009.  I followed a number of stocks, mainly out of curiosity, one being GE.  When stocks were at their lowest, GE’s stock price was below $10.  I couldn’t believe my eyes.  There were no bad reports on GE specifically, just an underlying nausea associated with the economy that sent all stocks south.  I knew that GE was here to stay, and that the low stock price was related to the pessimistic aftermath of the near-collapse of the global economy.  I bought 1,000 shares at $7 a share and knew that it was going to double in a very short time.  It never felt more right and within several months, I cashed in my shares at $14.  That money paid off a car loan.  GE went on to move into the twenties.  I was anxious to pay off a debt, but easily could have quadrupled my money.  Even better, I could have bought more using idle cash but I stayed conservative and made it work for me.  As Jim Cramer says, “No one ever got hurt taking a profit”, and “Pigs get slaughtered.”

I’m watching GE again and deciding if I want to grab a few hundred shares.

My plan at this time was to make some alternative investments, but this is a rare opportunity to jump on.  If stock prices get too low to pass up, I may split my cash between some good buys and the TIPS.

 

5 Things You Need To Know About Bonds

 

investment allocation

Investing.  The word alone connotes stocks and bonds.  Diversification is the sister term associated with investing.  Subtract your age from 100 to figure out how much of an allocation in bonds you should own.  Why do we need to have bonds? And what makes bonds a necessary portfolio companion?  While trying to understand portfolio allocation a little bit better, I came up with the following five points.

 

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First, Some Basics

Bonds are fairly simple to understand, they’re loans with a specific duration.  They pay interest at stated dates.  There’s an issue date and a maturity date.  The issue date is the beginning of the loan and the maturity date is when the principal is paid back to the investor.  Therefore, unlike stocks that you own forever, bonds are a temporary loan to the issuer.

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Improve Your Financial Knowledge

financial control

When it comes to your financial knowledge, stop pretending that you don’t know what you’re doing.  There are more resources than ever.  If you’re a book lover, read a few on personal finance.  If you’re a net surfer, start Googling up on financial terms.

 

Answer the following questions and take a few minutes to research anything that you don’t know.  Don’t be afraid, we all have an area that we need to focus on.  These items are off the beaten path, and from what I’ve seen, points that cause confusion.  Some are Yes/No or True/False, while others are thought questions.

 

I’m all about sharing knowledge.  I learn something new every day and never stop reading.

 

Earning

True or False:  I have a progressive career plan that will increase my earnings within the next five years.

 

The last time I improved my work skills was ______________.

 

Related Post: Money Learning Checklist 1         Earning/Saving

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2018: What To Start Doing And What To Stop Doing

2018 leap

I’m revved up for the new year.  I like to think about the books I’ll read, the new projects I’ll work on, and my new financial goals.

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What I’ve accomplished during 2017 inspires me to keep it rolling.  I pulled off some difficult projects at work and earned a top evaluation rating and raise.  I finished an 18-credit certificate in Web Programming. I started this blog.  Learning WordPress on my own and customizing the blog page was a challenge, but the struggle stretched my skillset.  Blogging isn’t just about writing. It’s learning about social media, like Facebook, Pinterest, affiliate marketing, guest posting, and commenting on other blogs.  My professional development wasn’t ignored.  I conducted two financial planning workshops and presented at the IRS Practice and Procedures conference with the New York State Society of CPAs.

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Financial Independence Hokey-Pokey

 

financial freedomI didn’t focus on being financially independent until about three years ago.  I had an idea what my net worth was, but wasn’t fully clear on the exact number.   The lack of a plan made it a nebulous target.

THIS POST MAY CONTAIN AFFILIATE LINKS.  SEE MY FULL DISCLOSURE FOR DETAILS.

In my 20s at the start of my career, retirement seemed so far away.  I relied heavily on my accounting career to give me financial security.  After all, I chose the career knowing that I’d always have a job.  Consequently, every ounce of my energy went into working.  There were summers that I never saw the light of day. I never knew when I was getting home and I made many sacrifices.  Believe it or not, it was exciting and I enjoyed it.  I latched onto an upward trajectory of promotions and raises.  When I had full autonomy over my position, I liked being relied upon and the responsibilities that went with it.

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5 Ways Your Life Is Impacted By An Interest Rate Increase

 interest rate

Interest rates do not make for the most exciting chat topic. You won’t find it in the conversation starter game that you unwrapped for Christmas.  It’s probably easier to clear a room by yelling ‘Interest Rates!’ than FIRE!  Watch your friends and family run from you as you broach the topic of how the Federal Open Market Committee voted to keep the Federal Funds Target Rate at 1.00% – 1.25%.  Fed Prime Rate Info

Still reading? Good.  Because interest rates impact your life. Continue reading “5 Ways Your Life Is Impacted By An Interest Rate Increase”