Today’s flashback to 2008 follows the buyout of Bear Stearns, how their executives knew the financial reality and how the subsequent fallout of the failure of the large financial institutions was forming. CNBC aired a special, Crisis on Wall Street, on the frenzy of reactions during mid-September 2008 to deal with the quick domino-effect of the bankruptcies of the country’s largest banks. If you didn’t watch it, you can probably catch a rerun.
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?
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 inConfirmed Uptrend, UptrendUnder Pressure, or MarketIn 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.
On a typical lazy weekend, I came across an Amazon Prime flick called The Joneses. All I saw from the description was “a perfect family…” and stopped reading. I don’t like spoilers and I also know that there are no perfect families, so it intrigued me.
I was pleasantly surprised to see some of my factor actors, Demi Moore, David Duchovny, and Lauren Hutton, and as the story progressed, it sent my money-brain thoughts into motion.
The movie opens with the Joneses moving into a new home. It’s in a polished, upscale neighborhood where the possibilities of a charmed life await. With their stately peaks, each house’s exterior represents the image of suburban nirvana.
When it comes to saving money, there are many ways to economize. Taking your lunch to work is a great way to avoid overspending. Then, there’s finding better alternatives. A generic store brand is worth a try and may be just as good as a name-brand item. Ultimately, there’s doing without. However, the habit of doing without may offer diminishing or detrimental returns.
Frugal, froogal, froot-gle. Nothing good can come of acting out a word that sounds way goofy. I’m reminded of 18th-century farm living where vocabulary was as limited as the society’s vocational opportunities. No one’s saying that you can’t adjust some habits downward, but developing an austerity habit may not help your future as much as you think it will. Frugalizing to the nth degree can be harmful to your well-being.
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.
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.