By 2 Cents on July 29th, 2011 | Category: Giving |  Love and business and family and religion and art and patriotism are nothing but shadows of words when a man’s starving.
~O. Henry, Heart of the West, 1907
Are you tired of the debt crisis in Europe and the inane arguments over the U.S. debt ceiling? Have you had it with watching wealthy politicians and bankers arguing over who’s going to sit in the last deck chair on the Titanic? While all of these theatrics seem like a surreal scene from The Simpsons, there is a crisis unfolding in another part of the world that has received precious little attention..
Children are starving in Africa. OK, so that’s nothing new, right? Yawn . . . You may not be aware that things are much worse than usual in Eastern Africa because of a devastating drought. People who normally have very few resources are trying to cope with a [...]
Read on and enjoy … What’s More Important Than the Debt Ceiling?
By 2 Cents on July 27th, 2011 | Category: Investing |  If I had a formula for bypassing trouble, I would not pass it round. Trouble creates a capacity to handle it. I don’t embrace trouble; that’s as bad as treating it as an enemy. But I do say meet it as a friend, for you’ll see a lot of it and had better be on speaking terms with it.
~Oliver Wendell Holmes
When I wrote about Why This Is No Market for Couch Potatoes, it sounded like I was saying that there’s elevated risk in both the stock and bond markets at this moment in history. I was. That begs the question then: Where can we invest? If not stocks or bonds, where? Gold? Real estate?
An astute reader posed that exact question and I said I would address it in a future article. So here we go. I [...]
Read on and enjoy … Portfolio Options for a Risky Market
By 2 Cents on July 21st, 2011 | Category: Investing |  The conventional view serves to protect us from the painful job of thinking.
~J.K. Galbraith
A recent article in the Globe and Mail delivered the following advice to investors: Don’t Let a Fear of Bonds Infect Your Healthy Portfolio. The implications are clear:
1. Concerns about ultra-low interest rates eventually turning higher are overblown.
2. If you succumb to the paranoid people who think interest rates can actually rise above 0% – 3%, your portfolio will be unhealthy, damaged, infected. (The image with the article showed people in protective masks.)
3. And my personal favourite: Long term investors need not concern themselves with shorter term market movements because markets always rise over the long term – whenever that is.
So there you go. “Stop worrying so much about bonds.” All you have to do is put your desired allocation in bond mutual funds or [...]
Read on and enjoy … Yes, You Can Live Without Bonds
By 2 Cents on July 18th, 2011 | Category: Investing |  Never accept the proposition that just because a solution satisfies a problem, that it must be the only solution.
~Raymond E. Feist
Update: This article was featured in the Totally Money Carnival at Family Money Values. Thanks!
A recent article in Money Sense magazine offered some data on investment returns for the publication’s preferred investment indexing method: the Global Couch Potato portfolio. It’s a simple, low-cost way to invest in a set allocation of stocks and bonds with limited effort on the part of investors. The rise of ETFs over the past decade has turned this strategy from a questionable alternative to mutual funds to a near standard in the DIY investment space. Many personal finance and investing sites promote it as the best way for individual investors to manage their portfolios.
The strategy grew out of a desire to circumvent the [...]
Read on and enjoy … Why This Is No Market for Couch Potatoes
By 2 Cents on July 15th, 2011 | Category: Investing |  Prosperity is a great teacher; adversity is a greater.
~William Hazlitt
If you believe the opening quote, we are in for some great lessons – at least according to Felix Zulauf of Zulauf Asset Management in Switzerland. The transcript of a recent interview with him was published by McAlvany Weekly Commentary. It is optimistically entitled Marching Full Speed into Calamity.
It’s rare to find such great detail in a single interview, especially if you’re accustomed to consuming your market commentary via television, where guests are rarely allowed to finish a sentence let alone expand on their thoughts. This far-ranging discussion covers Zulauf’s views on everything from stocks, bonds, and gold to sovereign debt and the fate of the European Union.
His views are not too far from my own, and he even uses a similar weather analogy. (See 5 Year Market Outlook: Felix Zulauf
By 2 Cents on July 13th, 2011 | Category: Economics |  I am more afraid of an army of one hundred sheep led by a lion than an army of one hundred lions led by a sheep.
~Charles Maurice, Prince de Talleyrand-Périgord
When the financial crisis erupted in 2008, many questioned the leaders and regulators in place at the time. How could the global financial system be humming along one minute and completely bankrupt the next? Clearly, those in charge either made some very questionable decisions or failed to inform the public of the potential consequences of those decisions. Most likely it was both.
When it came to constructing solutions for the crisis, however, we continued to listen to and implement the ideas of the same people who brought us to the brink. In turn, those people followed policy prescriptions similar to the ones that got us into trouble in the first place. Were there no other options available? [...]
Read on and enjoy … How the Leadership Void Feeds the Financial Crisis
By 2 Cents on July 8th, 2011 | Category: Economics |  Investors have very short memories.
~Roman Abramovich
Today’s U.S. Nonfarm Payroll Report was a huge disappointment by any measure. Paraphrasing some reaction to it (mostly from economists who got it wrong):
catastrophic severely disappointing no redeeming qualities whatsoever Stop looking for the silver lining. There is none.
Now most of you know that I have a fairly bearish view on the economy due to the global debt burden. So I’m doing an I-told-you-so happy dance right now, right? Not so much. While I did add to my tiny HIX position today, I’ll be out of it again quickly if the market changes its mind, as it’s wont to do regularly.
Attention Deficit and Hyperbole
Why so sanguine in the face of data that is, by all accounts, unexpectedly and extremely negative? Because years of following the [...]
Read on and enjoy … Was the U.S. Employment Report Really Catastrophic?
By 2 Cents on July 1st, 2011 | Category: 20 Cents |  It’s been a busy couple of weeks as my son had a significant surgery on his leg last week. Caring for him afterwards has been a round-the-clock job. I hope to be able to jump back into writing a little more in the coming weeks, although we have our big move looming as well. I’ll do my best to keep up with my one post a week minimum and add in a few bonus articles when I can. In the meantime, I did manage to find some good thought-provoking articles from around the web this June. Enjoy!
1. In an article published in the Washington Post, Barry Ritholtz of The Big Picture blog shared 7 Life Lessons from the Very Wealthy. This one is well worth a few minutes of your time.
2. What If 8% Is Really [...]
Read on and enjoy … 20 Cents from June 2011
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