Boomers, Markets & Money

A Down-to-Earth Discussion of Financial and Lifestyle Information for Baby Boomers

Paul Volcker: Why Are We Here With No Regulation?

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I saw this one-minute video on Bloomberg Surveillance (my favorite financial TV news show) this morning.  It is definitely worth watching!

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How to Handle Emotions When Making Investment Decisions

We all struggle with emotions regarding money. Making major investment decisions without safeguards during periods of extreme emotion can work against us both in down and up markets.

I saw a helpful interview on Bloomberg TV this week. Greg Davies, Barclay’s head of Behavioral Finance, offered some tips on how to make better decisions when you feel your anxiety spike.

  • Develop habits over the years that you use regularly. A well-thought-out routine will help you make sound decisions when events rattle the markets. So, at a time when the markets are calm and you feel coolheaded, write down what you should do. Read it when you feel anxious. He said it is critical not to wait until the last minute when you are in a very stressful situation. A checklist can be one way to organize your plan.

    Milo contemplating his next move...

    Sleep overnight on major investment decisions. (Click to Enlarge)

  • Have a cooling down mechanism planned. Davies suggested planning on sleeping overnight on a decision to make a major change in yourinvestment portfolio. Or you could have a plan to talk to a trusted friend or financial advisor before acting on a major revision.

We’re all familiar with those uncomfortable feelings that pop up during major market declines. But emotions can work to an investor’s detriment during stock market upswings, too.

I can’t help wondering if a little stock market euphoria is developing now. I saw four commentators make optimistic comments about the stock market during a segment on CNBC this week. Ralph Acompora exclaimed, “I’m so excited! We have years left!” When I heard that, I felt really uneasy.

I had visions of CNBC anchors putting on Dow 10,000 hats the first time that level was hit. (For your amusement, I have included a link below to a pictorial of the Dow 10,000 hat.) Investors can feel pressure that they are missing out on a rally and buy in at market peaks.

As Warren Buffet said, “You try to be greedy when others are fearful and you try to be very fearful when others are greedy.”

Sources

“Old Hat: Dow 10000, a History in Headwear” by Matt Phillips. The Wall Street Journal

“How to Overcome Emotional Responses in Investing”   Bloomberg Television Video.

Tightwad Tips: A Good List of Food Money-Saving Ideas

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My go-to nutritionist, with masters degrees in both nutrition and public health as well as decades of work experience, answers all my nutrition questions cheerfully.  Even better, Lisa is my sister-in-law , so the price is right!

I asked Lisa if she had any suggestions for money-savings tips for healthy eating.  Lisa “sniffed around” for us, as she said, and came up with a great article.  Money Talk News’ “30 Tips to Save on Food” has many useful suggestions.

No doubt you will already use some of these strategies, but I learned a few things.  Three helpful tips I picked up:

  • The suggestion to use up all your leftovers may seem obvious but I liked the suggestion of the Big Oven app.  It has a clever feature where you put in three ingredients you have in your refrigerator and it comes up with recipe ideas. Click on the Recipe Tab, click on Use up Leftovers!  I typed in carrots, bell pepper, and ground turkey.  Up popped 19 recipes.  I’m going to bookmark this site.  BigOven
  • Author Angela Colley advised substituting cheaper ingredients in recipes for expensive ones.  She noted that Cook’s Thesaurus has a list of food substitutions.  The Cook’s Thesaurus
  • Since we’re discussing food, I’ve included some photographs of a food market we visited in Peru this fall.  Of course, once I got started, I had to slip in a few other pictures.  I hope you enjoy!

This gallery contains 10 photos


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FASCINATING VIDEO: The State of Manufacturing in the United States

I was watching Bloomberg Surveillence this morning and saw a very interesting guest interview regarding the manufacturing sector.  The team interviewed Willy Shih, Harvard Business School professor and Chairman of QD Vision.  He is very knowledgeable, discusses very important issues affecting our country now, and has some good recommendations. I hope you take a look at it and give it some thought.


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Small Business Saturday is November 24

In recent years, I’ve tried to buy as many of my holiday gifts as possible from local businesses.  It is my small effort to help the local economy.

SCORE, a volunteer organization that helps small business, explains how we can all help. SMALL BUSINESS SATURDAY

Another way I like to help small businesses is to shop at the Rhode Island School of Design Holiday Alumni Art Sale.  It’s coming up Saturday, December 8th.  It’s a great way to get unique gifts at a reasonable price.  I figure I am helping artisans keep afloat and am buying American-made products.  Perhaps you can see if your local art school or university has a similar art sale.

Happy Shopping!


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LESSONS FROM RETIREMENT SURVEY RESULTS

BlackRock conducted a survey of retirees, retirement plan sponsors, and workers saving in retirement plans.  A few points jumped out at me:

  • People expect retirement to be an active time in their lives.  Currently, 47% of retirees work or volunteer because they enjoy it while 1% work for income.  However, current workers have dramatically different expectations for the retirement phase. The majority, seventy percent, expect to work for enjoyment and fifteen percent expect to work for income.
  • Over half of plan sponsors are not confident plan participants are saving enough for retirement.
  • Current retirees in the survey were confident in their retirement.  They also had the vast majority of their expenses covered by traditional secure sources of income such as Social Security and defined benefit plans.

How can we use these survey results?

  • Clearly, people nearing retirement expect their lives to be different than the traditional retirement scenario. Some type of work will be a part of their lives for personal satisfaction, and for many, by necessity. We should be exploring ideas on how to make that happen before we retire.
  • This may be stating the obvious, but most of us should be saving more money. Probably a lot more money.

 

The survey raises a lot of questions for me as well. How is the quality of life of people going to be affected when they don’t have these secure sources of income? Plainly, the practical aspect of affording necessities is a concern for many. But I believe stress levels for retirees and those approaching retirement are elevated and will continue to stay high.

Looking at the big picture—how is the economy going to be affected? (Not to mention the effect of stress on our health.) The United States had a low savings rate compared to other developed countries in the past.  The high level of spending helped our economy grow at a higher rate than other industrialized countries.  Will the loss of secure sources of income be a permanent drag on the economy as people are forced to save a higher percentage of their income?

You can find the survey at: 2012 BlackRock Retirement Survey


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BOOK REVIEW: Stock Trader’s Almanac

I enjoy occasionally browsing through Jeffrey Hirsch’s Stock Trader’s Almanac because he looks through market data to find seasonal patterns in stock and commodity performance.  The book is presented in a calendar format and reviews the performance of various indices on different days of the month throughout the year.  The effect of the presidential election cycle on market performance is also investigated.  Helpful information is noted on the calendar, including Fed meeting dates, option expiration, and so on.  Entertaining quotes from well-know investors, business leaders, and politicians are sprinkled throughout the calendar.

I’m not a trader and I wouldn’t trade or invest solely on this information.  But I do think this information helps investors understand some of the cyclical undercurrents affecting market performance throughout the year.