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Subprime Lenders Gone Too Far – A Time Bomb Waiting to Explode

Remember when a 20% down payment was expected when purchasing a house.  Sometimes with stellar credit and maybe a special situation, like a first-time home buyer, you could get in with a 10% down payment.  I recall a few weeks after my wife and I purchased our first home – both cars broke down.  Saving for your first home is one of the few times, from a financial perspective, that both husband and wife are clearly on the same page.  Everything takes a back seat to saving for that down payment – shoe shopping, night out with the boys, everything.  That’s exactly why both of our cars broke down.  We had neglected maintaining the cars and everything else while saving for our down payment. 

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Financial Freedom – The Pursuit of Happyness

Over the holidays, I saw the movie “The Pursuit of Happyness.”  Yes, I know how to spell happiness, but it is spelled with a “y” in the movie.  It is based on the true life story of Chris Gardner’s rise from homelessness to owning a multi-million dollar brokerage firm.  It’s an excellent message movie for all Financial Freedom seekers.  I can’t recommend it high enough.

Dreams Squashed

Chris’ original dream of becoming a doctor was squashed as he became an unexpected father and had to find a job to support his son and girlfriend.  Except for a few, that’s the story of our lives.  We all have big dreams early in life.  Mine was to be an airline pilot.  However, my first job out of college was that of an engineer.  In 10th grade, my guidance counselor suggested that I consider engineering since I was good in math and science.  It work out well for me, but pilots are often good in math also.  Interestingly in the movie, Chris found himself about to squash the dream of his son to be a basketball player.  Once he realized what he was saying, he made it clear to his son to not let anyone take away your dream.

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Wealth Building Thru Gold Investing – It is All About Supply and Demand

I took me a good year and a half to get back into the groove after the pounding I took during the internet implosion of 2000.  That was an extremely painful year and I was in no hurry to donate more money to Wall Street.  I tried a few of the same old things from 2000 in early 2002 with little success.  By late 2002, I discovered Adam Hamilton and the world of commodity stock investing.  

Since I worked in high tech, I had seen first hand how tons of money was plowed into anything internet related.  Engineers with Power Point presentations had gotten millions of dollars in venture capital money, while capital intensive areas such as mining were ignored.  The payback on an internet investment was infinitely shorter than an investment in mining.  Mining companies had to find deposits, mine and then sell it.  There were environmental and political issues to overcome as well as potential labor problems.  With virtually no investments going into mining, it made sense that commodity prices were in the dump. 

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Mr. Government Will You Keep Your Cotton-Picking Hands Out of the Market: I am Trying to Make a Buck

This is the second time in the past 2 months that governments’ interference with the market has cost me money.  There are many other covert operations, but that’s for a different article.  The two times that I am discussing were in plain view for all to see.

The first occurrence was on November 1.  The Canadian government announced that it was removing preferential tax treatment for income trusts.  An income trust is a business entity, which receives very favorable tax treatment and pays the majority of its cash flow out to shareholders. Dividend yields of 10-14% are quite common.  Many oil and gas companies, in Canada, are formed as income trust.  Thus, over the last few years investors have enjoyed large capital gains along with their dividends.

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Impact of the Dollar Decline

It is hard for most Americans to get a grasp on what has been happening with the dollar. It’s not like the stock market where its price is quoted on the nightly news.  Now if you frequently travel abroad – you have a better understanding.  Your dollar buys less stuff every time you step off the plane, but  that’s a relatively small number of people.  Regardless to what Bernanke says about inflation - people are quite aware that prices are going up more than 2-3%. However, most have not connected the dots. 

I like how U.S. Representative Ron Paul describes the situation.  “This decline in the value of the dollar is simple to explain. The dollar loses value as the direct result of the Federal Reserve and U.S. Treasury increasing the money supply. Inflation, as the late Milton Friedman explained, is always a monetary phenomenon. The federal government consistently wants to spend more than it can tax and borrow, so Congress turns to the Fed for help in covering the difference. The result is more dollars, both real and electronic– which means the value of every existing dollar goes down.” 

Whether people realize it or not, we experience the impact of the declining dollar every day. Dollar goes down – prices go up.  So what is one to do? Continue reading “Impact of the Dollar Decline”