Ponderings

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Sample - Weekly E-Newsletter

Stocks Continued to Lose Ground Last Week

 More bad news brought down stock prices another 1 to 2%. Concerns over political unrest in France and Greece came to the fore early last week. Later, a huge trading loss at JPMorgan Chase dashed any hopes of a late week rally. Wall Street professionals say that stocks will probably remain directionless until there are clearer signs of improvement in the U.S. economy and a resumption of cooperation among the European Union countries.
 

While stocks have been going through a rough patch of late, the average stock is still up about 6% so far this year. Many investors have preferred the relative safety of large cap stocks, but the behemoths have lagged mid- and small-cap equities so far this year.

Thoughts on Falling Off a Fiscal Cliff

The financial media has begun to focus on the substantial problems confronting governments throughout the world, including, of course, Europe, as well as China and the U.S. The commonality among all is the reticence of their governments to take action in the face of economic exigency, if not catastrophe. The worst case scenarios are indeed scary. But this assumes that the governments will do nothing to address the problems and will blithely lead their countries into fiscal perdition.

The media enjoys portraying the extremes, so you should be prepared for an onslaught of dire predictions. In Europe, this means a widespread unraveling of the plan recently agreed upon to help the weakest countries survive their economic malaise. In the U.S., this means that income tax rates for all will rise when the Bush era tax cuts expire at the end of the year and huge mandated cuts in government programs will have to commence.

Call me Pollyannaish, but I’m not betting that the respective governments are so intransigent to allow these disasters to happen. You never get very far with your money by investing as if some imagined debacle will actually occur. The odds are against it. If the broad investment class drives down stock prices because they think disaster looms, this could represent a classic contrarian buying opportunity.

Smart Money Tips

When it comes to thinking about long-term care needs, Americans have their heads in the sand. A survey that looked at how Americans are planning for long-term care later in life reveals that while a majority of survey respondents thought long-term care expenses could jeopardize their retirement wellbeing, almost 70% have done little or no planning for long term care. About half of the respondents to the survey said they would pay for long term care costs by transferring assets to family members in order to qualify for Medicaid. This is a lousy solution, though, that could backfire. My recommendation is for people to start getting realistic about the potential financial threat that long-term care costs pose, and that’s usually best addressed while you’re in your 50s or 60s.     

Beware of scams on the airwaves. The airwaves are rife with all sorts of ads that purport to help you either resolve your financial problems or get rich even if you’re broke. The majority of ads for debt relief, credit counseling, gold coins, getting relief from back taxes, buying real estate on the cheap, to name but a few subjects, are from organizations that are really not going to help you. As a first checkup on them, simply enter the name of the company on your computer browser and the word “scam” or “rip off.” Then read with horror about the troubles these companies routinely cause consumers. They may say they’ll help you, but more often than not, they’ll help themselves to some of your money at a time when you don’t have money to waste.