Is the economy recovering?

A very interesting post by Mr.E started my thought train of how much debt is really healthy, and what point should we get really worried. As the article states we have long crossed the point of no return. I personally dont think we will ever recover from the trillions of dollars being pumped into the economy.

But! No country is going to sit idly watching, I'm sure there are options (like a bad debt write off for instance). So who takes the load remains to be seen.

More below:

20 Reasons Why The U.S. Economy Is Dying And Is Simply Not Going To Recover

Investments will never be the same again

Until the 2009 recession, The stock market was all about long term investing where you buy and forget about stocks or it was about day trading where you panic about indices every minute of the day and hope tomorrow will be bigger. The 2008-2009 crash wiped out so much value off the market that even a good recovery over years would still leave many high and dry. Now the experts preach mid-term investments. Buy stocks, keep watch everyday but sell when it crosses a reasonable profit margin.

More here: Bye Bye To Buy And Hold

Are millionnaires born?

If you thought you need to have 'the winning streak' to be a millionaire, think again. Most millionaires also read 'get-rich-quick' books, many of them lost a good deal of money in the markets, like you and me they also think twice before buying that expensive watch, Ok maybe I overdid it, if I had that extra money I would'nt think twice, infact it would be a great investment. But you get the picture right?, anybody can be a millionnaire, the secret is to start early, start saving and investing (need not be the market) investing in things that dont depereciate much as early as possible is the secret. More thoughts here:

Yahoo finance - 10 secrets of making money

Is recession good for you?

If you thought the recession has helped floor prices, you could'nt be further away from the truth. The recession has floored prices of things that will make you want to spend, but make you poorer in the long run. Here's a nice bunch of tips on yahoo on how to get the most of falling prices but still keep afloat in the sea of debt.

Yahoo Finance - Falling Price Advantage

back to basics

Todays investment avenues are becoming more and more sophisticated. "Sophisticated at stealing your hard earned money". What better advice than a industry veteran whose been making investment plans for years.

given a choice, choose vanilla ice cream

The boom bust cycle

If only things would be as predictable as the boom-bust graphs say. Nevertheless a great read on economies and their cycles.

http://www.henrygeorge.org/charts/

For all you fresh millionniares out there

Tried and tested advice by the "Get real" finance gurus for all the new IPO millionniares out there. "San Fransisco Magazine"

Golden rules for a freshman

This post on WSJ sums everything there is to my philosophy of financial planning. Start saving as early as possible, remember that savings and returns follow the log curve, so put up with it in the initial years, Most of all don't let appearances fool you into spending money. At the end money can never buy "Lasting happiness", if you remember that, most of our expenses would come down to the real necessities. Ofcourse nobody's saying that you give up everything and live like a recluse, but set some limits.

Getting Going

Dilbert's theory of financial investment

I'm summarizing from Scott's original post, as I cant find it anymore..

1. Make a will

2 .Pay off your credit cards

3. Get term life insurance if you have a family to support

4. Fund your 401k to the maximum

5. Fund your IRA to the maximum

6. Buy a house if you want to live in a house and can afford it

7. Put six months worth of expenses in a money-market account

8. Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement

9. If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio

All that glitters is not gold

Why Gold:
Gold’s lack of correlation with equities in particular is one of its
most striking investment attributes.

Q3 2006 Summary:
Market volatility levelling off. During volatile markets, consumers stay away from jewellery, implies more jewellery buying in the next 2 quarters.

Industrial demand fell by 2%, because of more silicon, Industrial future might be gradually tapering off.

Gold production has been growing at 2% annually. There has always been a mismatch between demand and supply.

Risks
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India has always been the largest consumer of gold (historical reasons)

A report from WGC clearly says: "The association between gold and “auspiciousness” has been used in recent years to promote the idea of buying gold. Over the past five years".

Once our people realise what is happenning, this gold rush might slow down.

http://kitco.com/LFgif/au75-pres.gif
1975-2006 Shows that we are close to the big peak. Does it mean a fall soon?

Indians are attracted to gold as investment, as rupee is not yet fully convertible, and gold is a means of diversifying. I think our FM mentioned that ruppee will get full convertibility in another 5 years.

Conclusion:
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Gold as a strategic asset - WGC
"Gold is highly susceptible to geopolitical factors. During times of relative stability a small positive allocation may be useful. During time periods of abnormally positive economic activity gold returns may reflect multiplier effects associated with cultural issues."

"given a relatively small portfolio allocation to gold or commodities, the transparency and low correlation of gold with
other major asset classes makes it an attractive investment instrument. Depending on the assumptions, empirical evidence indicates that as much as 4% gold allocation may provide useful strategic benefits."

"Our empirical findings show that a small allocation to gold, in the order of 1 to 2%, is a significant and useful component of low risk portfolios."

References:
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Gold info http://en.wikipedia.org/wiki/Gold_as_an_investment
http://www.gold.org/ (I found WGC reports to be unbiased, even though I was skeptical in the beginning)
The 7 Golden Rules http://www.austincoins.com/7_gold.htm

All about money

This blog will have a compilatilation of my finance tips and learning