Ms. Morrison Speaks Money

Archive for October, 2008

I absolutely LOVE Halloween! Actually I really enjoy all the kids, and their costumes because it allows me to escape the pressures of everyday life and the stock market…imagine that! The market holds NOTHING to this; this, my friends, is scary:

So, I bought the huge bags of candy from Costco, hey where else? And I must say that although I’m “gaining health” now; i.e., having lost 10 pounds, those candybars sure did smell tantalizing in that orange basket. I beckoned kids who were walking up the other side of the complex…I was eager to see kids and give away this candy. This one had her antennae up, and you can BET it wasn’t for how the DOW closed today. I gave her two treats.

Yet my favorite was Tinkerbell, sporting great wings and glitter all over her cheeks. I leaned down, offered her the pick of the loot, and then asked her why she wasn’t flying with those great wings of hers. She looked at me straight in the eye, planted her hand firmly on her hip, which simultaneously jutted out to the left and emphatically stated, “it’s ONLY a COSTUME!”

Well that about sums it up. Kid’s do say the darnedness things, and to gain their fresh perspective tonight was exactly what I needed. It IS after all, all in how you look at it.

Posted by Debra in Celebrating Life | No Comments

I’ve just received my Master Practitioner Strategist certification in Neuro Linguistic Programming, learning all kinds of wonderful facts, which I will continue to share with you over the coming weeks and months.  For example, did you know that information flows into our minds at a rate of 2-4 million bits per second, and yet we can only digest 134 bits per second?  That means that the overflow of information floods our minds at a similar speed of water blasting from an open fire hydrant.  We “filter” what actually enters our minds by deleting information that doesn’t make sense, distorting information based upon our beliefs, and/or by generalizing.

With that in mind, and some facts to back me up, let me assure you that the media has over generalized and grossly distorted nearly each days’ news these past 3 weeks, with the positive facts coming to light on the days following their actual occurrences.  Specifically, on the initial days of the wide point spread gains and losses, only 1-2 days afterward were we served up the actual percentages of said swings, which were far more spectacular in terms of being able to frame this activity; the percentages were far more noteworthy relative to historical percentage swings.  To herald that these were the “biggest point swings ever” was true, yet NOT helpful information to the investing public insomuch as the percentage drops did not warrant such 24 hour, edge-of-the-chair myopia.

Everyone has a task; the press is excelling at theirs.  They’ve captivated the attention of people who never even knew what the DOW Jones was a year ago.  Let’s now loosen the juggernaut they have on our minds and attention and think about our individual responses to this financial situation.

It’s been said you can’t buy happiness.  Happiness currency is always liquid, always available to those who deal in it daily, or those who dare to learn to deal in it daily.  It’s our choice.  We owe it to ourselves to marshal our own resources, when those outside our control are less predictable, and captain our own ships, especially when the waters are turbulent.

Well why do we automatically connote or measure happiness in available financial currency then?  Why are we myopic about what our investments total each and every day end?  We need to understand history a bit better because I think it was Mark Twain who once said, “History may not repeat itself, but it’ll surely rhyme”.  Historically we’ve endured depressions and recessions and voila, there are people around—real people—who lived through it.  How did they?  Often with stories of personal fortitude and community support.  The great depression is a time that will remain singular in scope and magnitude in my opinion; we aren’t anywhere near the financial calamity of the great depression.  Nor do I think the current financial situation is permanent, or will take decades to extricate ourselves from.

Here’s some of the facts courtesy of Dimensional Fund Advisors, an institutional asset management company whom I utilize in Santa Monica, CA:

We’re now in the 10th bear market in past 50 years for US Stocks (defined as a peak to trough decline of 15% or more in the Standard & Poor 500).

From October 9, 2007 to Oct 15, 2008 the Standard & Poor 500 has dropped 39.53%.

By comparison, previous bear markets, their percentage drops, and the durations follow:

• March 2000 -Oct 9, 2002 dropped 49.2%  lasting 28 mos

• • (Bill Gross was quoted as saying “Stocks are nowhere NEAR their bottom” in September 2002)
• August 25, 1987 – December 4, 1987 decline of 33.5% lasting 3 months.
• January 11, 1973 – October 3, 1974 dropped 48.2% over 23 months.
  • (46% of adults feared another great depression, which never happened, of course.)
• November 29, 1968 – May 26, 1970   36.1%  over 18 mos
• December 12, 1961 – June 26, 1962  28%     over 6 months

In each of these cases the markets recovered and paid huge dividends to those who stayed the course.  Amidst vein-popping newscasters and financial prognosticators, these investors held their ship wheels steady, refusing to be buffeted about by unnecessary noise.

Earlier “unprecedented events” include, but aren’t limited to:

• Highest interest rates in 150 years occurring in 1981

• Y2K planning was immense yet that whole era is hardly memorable now
• Dow fell 17% after 9/11 and recovered
• SARs virus in 2003 threatened to bankrupt the globe but didn’t
• 2002 Stocks gain 969 points in 4-days Oct 9th low, then biggest 4-day gains since 1933
• March 2003-investors bought fixed income locking up lowest yield in 44 years, when equities were clearly the lowest price asset and “best buy”.

I’ll bring you the GREAT news of today to save you tuning in:

1. Social Security’s cost of living benefits were announced today resulting in a 5.8% jump in payouts to over 50 million Seniors effective January 1, 2009, boosting the average monthly check from $1,090 to $1,153.
2. The credit crunch has already loosened, proving that the “bailout” plan named TARP—Troubled Asset Relief Program—is beginning to work.
3. Gas prices are continuing their decline.  Every 1 cent drop in a gallon of gas results in a BILLION dollars in potential Consumer Spending, 2 cents translates to two billion dollars in spending…you get the point.  We need consumer confidence and spending, so this is great news.

The discipline in all of life is either to act when action isn’t totally necessary; i.e., to buy insurance before we need it and/or to buy securities when “the world” is running for cover.  These two actions appear somewhat counterintuitive yet are essential to long term success.

And what is the most successful stock picker in history doing today?  Buying stocks!  (Not that I am recommending buying wholesale today however, as it would certainly appear that questions still need to be answered and market volatility will surely continue.)  However, Warren Buffet is indeed buying stocks, along with a bunch of other investors too, else we wouldn’t be up on the day 154 points on the DOW, after the dire predictions and tickertape along NYC streets this morning reading STOCKS DIVE, even before the market opening.  ‘Nuff said.

Posted by Debra in Investing | 1 Comment

Measuring Cups are essential in baking and in life.  Cooking allows for more variation, of course…you have the opportunity to taste as you go while cooking.  Baking, however, is entirely different.   First you decide what it is you want to make!  Today let’s choose to bake a cake.

Then we often entrust that outcome to a recommended recipe—our own or one that has been referred to us by trusted friends or sources.  Some of our favorite restaurants publish cookbooks that tantalize us with their tasty treats.  Often donors to charities donate their favorite dessert recipes to be compiled into fund raiser cook books.

All this to say that we tend to follow a recipe, measuring ingredient by ingredient, paying particular attention to how many teaspoons of baking soda compared with how many cups of flour.  A quarter teaspoon measurement for baking soda is equally important as a cup of flour, even though the measurements are not equal.  It’s the combination that is essential to a great outcome.

We combine the dry ingredients first, so that there is even distribution throughout, and then fold in those dry ingredients into the beaten eggs and liquid substance.  We’ve all learned that no matter how great vanilla smells, the taste of raw vanilla is quite different!  (And no matter how sublime that smell is, we can’t fall prey to “over doing it” by pouring several tablespoons in, because of the tantalizing smell.)  We blend our batter well to best ensure smoothness, free of lumps.  Lumps contain pockets of flour and dry ingredients which will remain cakey when baked, rather than contributing to the whole cake or dessert.

Air, too, can wreak havoc on an otherwise splendid dessert…so we are taught to grab the baking pans by both sides, raise them a couple of inches from the counter top and then drop them straight down to allow any submerged air bubbles to rise to the top and break.  Otherwise, they’ll remain within the dough/batter, and form caves and pockets that are unsightly when the cake is cut.  So, all these precautions to ensure that once we’ve allocated the proper amount of ingredients in the correct proportions, we are pretty assured of the result that is, presuming our oven temperature gauge is correct.

Each recipe calls for the oven to be set at a particular temperature, and for our batter to remain in the oven for a certain amount of time for optimum results.  A few degrees hot or cold will significantly alter the consistency of the result, and could either result in over baked, slightly burned or damp or liquid in the center—neither of which are desired outcomes.  You can’t suppress the temptation to open the oven door for a quick look, you say?  Do so at the peril of having your cake fall.  After all, you DO need all the ingredients in the batter for the cake, so what ingredient would you “sell” out of, mid-way through the final baking stage without ruining the cake?

The same thing with your effectively diversified portfolio too, which somewhat resembles a cake too, with various cake slices invested in various types of mutual funds—those that invest in large company stocks, small company stocks, international stocks, corporate bonds, global bonds, balanced funds, and Treasuries and Certificates of Deposit.  Remember, there are people—you chief among them—that will need the sustenance of that complete cake in months and years to come.  Don’t shortchange yourself and them by a precipitous action now.

You see, no matter how tantalizing the press and the media is about snagging our attention for hours at a time, and nearly roping our minds and eyes to their screens and radio waves for the latest updates and breaking news on the markets, we must follow our recipe for success which includes measurements of the named ingredients, following our recipes—inclusive of saving each and every paycheck preferably into our pension plans and managing our outflows within our inflows–and discipline to limit our exposure to the press’ “high heat”.

So measuring enough units of happiness in our lives is in some cases a talent and in others, a learned skill.  Especially amidst a tsunami of negativity, we really need to measure and fold in a cup or more of laughter into each day.  We need to measure our love for ourselves and our love for others—seen and unseen.  We need to counterbalance the negative with more measurements of positive so that before we put ourselves into bed each night, we can expect to arise the next morning with a smile on our faces.

Whole areas of our lives exist outside the realm of our finances, such as our health and that of our families.  As I’ve learned from experience, the news of a death or serious illness in your family of origin or choosing will instantly make all this press mania background noise.  Your focus will be redirected towards what ultimately matters—personal relationships and family.  Think of that, and thank God if you are among the lucky ones today and each day if you are spared such news.

While money often buys us extra choices in some seasons of our lives, in other seasons when money isn’t as plentiful for whatever reason(s), these are a few of the free or less expensive joys of life, many of whose benefits are priceless:

• Our ability to flash someone a smile.
• Our ability to pick up the phone and call someone just to check in.
• Our ability to show support to someone we love.
• Our ability to strike up a conversation with a stranger in the community.
• Our ability to access the internet for learning (or buying and selling our stuff).
• Our ability to hand write a thank you for a simple kindness.
• Our ability to hike for an hour.
• Our ability to hug our family and friends and pets.
• Our ability to be grateful for 10 blessings each day.

These are things we can “DO” amidst market volatility and I suggest we gain control over ourselves and what we allow to influence us.  We can control our minds and our language.  We can control our moods.  We can control the number of compliments we give out each day or each hour.  We can control the emails we send or forward.  We can control the amount of hours we spend watching TV, and we must!

We can control our reactions and our emotions.  We can control the most useless emotion of all…worry!  So, ok…you say you HAVE to worry.  Fine.  You worry between 1:45-2:00am ok?  When you can tell me even one positive thing that you accomplished by worrying, I’ll be all ears.  In the meantime, do yourself (and the universe since no action is an independent action after all) a favor; stop spending valuable waking time doing something that won’t produce anything valuable!  Let’s face it, if what you are worrying about happens, you’ll have to deal with it.  If it doesn’t you won’t.  Wouldn’t you rather have an overall life strategy that contains basic principles like, when the going gets tough, the tough get going, if God takes you to a problem, God will take you through it.  Or, the confidence that as a thinking adult, you can handle it (whatever “it” is) just like you’ve handled other major decisions—great or small—all through your life.

What would we teach our children or grandchildren about choices in times like these?  They’re watching you know.  They’re especially picking up things we don’t say.  Do you realize that we communicate MOSTLY without words?  Our actual words represent only 7% of all communication, with tonality and physiology representing 38% and 55% respectively.

So why when we know that markets operate in cycles, would we ever get so confused as to think that money was the most important resource in our lives, when clearly our minds and attitudes FAR outweigh the particular amount of money in our accounts on any one day?

What’s a day, you say?  To someone with a terminal illness, that’s another sunrise and sunset.  That’s another memory to forge with their grandkids.  That’s another candlelit meal with their friends. That’s another conversation to share.  We waste time without thinking.  The value of time FAR supersedes the value of our financial liquidity, just ask anyone with a terminal illness or their family members.

Time is what we have plenty of, until we are threatened with the loss of it.  Then we can’t squeeze enough into each hour.  We waste more time and money fretting, and worrying and sending negative energy into ourselves and the broader universe.  I urge each of us to take responsibility for ourselves.

God, Higher Power, and the angels are beckoning us to learn as much as we can, experience life as deeply and richly as is possible, given each of our resources.  And how many of us are putting God/Higher Power/angels and the attainment of our happiness contingent on some externality, like the value of our investments at 4pm?  Most of us were happy at some time over the past two weeks, until some lame brain boisterously announced what the DOW closed at today.  Who cares?  Let’s shout back, enough already!  Enough focus on the negative!  Enough mud slinging.  Let’s regain our common human bond; and in America, our American bond.  Let’s do so absent a terrorist trigger.  And yes, let’s do so amidst market fluctuations.

Let’s use the assets we command in our minds in order to properly assess our next steps.  Whatever it takes, we can do; that’s what we know.  We can endure discomfort, yes we can.  We can rise above the negativity hour after hour, day after day, because we must.

We can vote, and we must.  We can get involved at the local level of governing in our communities and we must.  Let’s show our kids and grandkids that if the people lead the leaders will follow.  Let’s lead by example.

Certainly as Americans, we have good lives, we have assets that will regain and surpass their original value if we “leave them in the oven” long enough.  We have measurements in teaspoons and tablespoons and cups of our own power and grace and tenacity.

Stay tuned for more suggestions on where to place your focus, to create a fully inspirational life, despite any background noises.

Posted by Debra in Investing | No Comments

I know it’s fall, but no where NEAR Christmas, so why all the ornaments on the rescue package? I mean I thought we were in a sub-prime mortgage clean-up and a solidifying the financial liquidity mode here so that Americans could continue to borrow money to keep their budgets or businesses afloat?

So to hear that the “new” package being voted upon in the Senate as we speak holds provisions for wooden arrow manufacturers in Oregon and tax breaks for Nascar race track builders and Virgin Island Rum Makers and research tax credits for Harley Davidson and subsidies for General Electric is stomach turning sick! I mean isn’t Warren Buffet’s 3 billion dollar investment in GE subsidy enough? Tax credits for film makers to shoot in the US? Without homes and jobs, there’ll be little demand for films…sorry! And while most people won’t be able to afford cars or the gas they guzzle, we’ll be reduced to bicycles NOT Harleys!

All the ornaments—that are supposedly “making it more palatable for more Republicans”–add up to over $112 billion dollars MORE than the unthinkably large $700 billion dollars floated over the past week. What are the senators, not to mention each of our Presidential candidates thinking? Especially after both McCain and Palin are out fist pounding for “no more pork sausages”! Then, what exactly WILL they call this?

Ok…so perhaps each Senator (or House member for that matter) hasn’t read every word of the over 500 page new missive, yet to capitulate to these lobbyists in this manner, to subjugate real credit pain of average Americans to the special interests of a few companies or industries that are, may I emphatically state here, totally fringe to the day-to-day survival of most Americans, and superfluous to them “making it” is more than irresponsible, it’s outright enraging!

The defeat of the first bill was unexpected, yet most, including me, argued that to have extra time to thoughtfully consider the ramifications and to educate those who didn’t understand the inextricable connection between Wall Street and Main Street could turn out to be an unexpected blessing. As it turns out, all it bought time for apparently was every last lobbyist to cram back into the halls of Washington to concoct their wildest, most harebrained pet projects and somehow, interject them into this otherwise serious bill.

I never want to harangue without dispensing some good news, or giving some good advice, and believe me, it’s taken me some time to come up with any, yet here it is. If we all carve out more time to become involved in our nation’s politics, perhaps we can preclude future debacles such as this. The phone campaigns in the past week have been remarkably popular and effective. What’s to stop us then from regularly writing or phoning our Congress people or House Representatives and making our voices/values known? It’s worth the expenditure of time, believe me. We need to get involved, and not just in the 11th hour.

Finally, if we all take a smart approach to investing, and instead of “betting” on individual companies; i.e., investing in individual stocks, we were to invest our money in no load diversified mutual funds or Exchange Traded Funds, then we’ll never be subjected to the single-stock risk that has been so stinging to those who have “lost fortunes”. I understand investing in the companies in which we work, especially through our 401(k)s and retirement plans. However, we must diversify our overall investment portfolios and focus on investing in no-load, low-cost index funds or Exchange Traded Funds in order to capture a decent return without the risks of concentrated positions in any one or two companies. (My guidelines have always been that I want an investor to have at least $250,000 in mutual funds, before they buy even one stock.)

I’ve heard hundreds of people exclaim, “that couldn’t happen to MY stock” only to watch Lucent, Enron, WorldCom, Global Crossing, Bear Stearns and Lehman Brothers (and others I’m forgetting) all bite the dust. It CAN happen to “once good” companies, so why try to guess which ones will be next? If Warren Buffett and Peter Lynch–two of the most talented stock pickers of our time–BOTH recommend against buying individual stocks, and instead recommend that investors buy index mutual funds, who are you to not heed their advice?

For those stocks you’ve inherited, consider the tax ramifications of selling them—either for gains or losses. Finally, should (after careful analysis) you end up choosing to keep some of those stocks, at least protect yourself on the downside by buying an insurance policy on the stock, otherwise referred to as buying a Put, at a particular price, which will be a good step towards potentially limiting a lot of downside risk. However, my best advice here is to invest in no load index mutual funds—stocks, bonds, and money markets—thus diversifying your risk.

Smart money is always medium-to-long money…hang in there!

Posted by Debra in Investing | No Comments