Much of the conversation relative to savings and retirement issues revolves around two central questions: How much money do I need in retirement? How much can I take out of my portfolio each month to reasonably assure myself that I will not run out of money before I die?
Here is a deeper question: How can I be sure that I will not run out of TIME
before I die?
That may seem to be a confounding statement. How do we know how much time that we have on Planet Earth? Life expectancy tables are useful in estimating possibilities, but the statistics are just averages. We do not know on which side of the curve we will fall. We may look at our gene pool and benchmark ourselves against mom or dad, or Grandma Charlotte, or Great Grandfather Bill, to get some idea of possibilities.
We are all endowed by our Creator with a TIME BANK. With the exception of Christopher Hitchens and his ilk, many of us believe that God knows to the second how long we will live. From the moment we are born, our clock is
ticking. Every minute, hour, and day is a withdrawal from our “time bank.” As with money extracted from our savings account or portfolio, we should ask, “Are we spending our time wisely?”
A client on her 68th birthday confessed that she had made a big mistake a little over a year ago. “I retired,” she said, “and I am bored out of my mind.”
As her financial advisor, I took time to go over her portfolio and her cash flow needs, concluding very quickly that she was in “great shape” financially. Of a one and a half hour discussion, we spent less than 15% of the time talking about money, what some would call ROI – Return On Investment.
Gratifyingly, we spent most of our time discussing what Mitch Anthony, my friend, author, philosopher, and advisor to advisors, calls ROL – Return On Life.
Mitch Anthony wrote a book, The New Retire-Mentality: Planning Your Life and Living Your Dreams. . . At Age You
Want. We buy the book by the case and give copies to clients. For anyone, and married couples especially, in their
30s, 40s, 50s, 60s, and beyond, the advice is “forget retirement in the classic sense.” It is about living, REALLY LIVING, until the day that you die!
Yes, there will be surprises as we traverse life’s path and climb God’s mountain. But if we begin with the end in
mind (The E-Myth), we can make tactical and strategic adjustments as we go. An experienced advisor is an invaluable
resource in helping you to make wise and fulfilling choices. He or she may know about alternatives that you have yet to
discover.
There was a synergistic richness to my conversation with my client on her special day. Birthdays as milestones make us more reflective. She realized that beyond a respectable net worth, she had achieved substantial LIFE WORTH as a mother, wife, as an independent woman once divorced, and as an entrepreneur and businesswoman.
She had developed a high level of SELF-WORTH (self-esteem), a depth of INTELLECTUAL CAPITAL. She wasn’t
worried about running out of money before she died. She was worried about running out of purpose and energy!
Hugh Massie, an Atlanta-based international wealth mentor specializing in human behavioral discovery, is author of
Financial DNA – Discovering Your Unique Personality for a Quality Life (Wiley, 2006). Massie makes points similar to
Anthony. If the conversation with an advisor or broker is just about money or some hot product, you are being hortchanged. In Massie’s words, “Most of us…are on a discovery journey, searching perhaps more than ever before for the meaning of life and our place in the world.”
Such was my client’s quest. She wanted to re-engage, reignite her passion, refocus her unique abilities, and recharge her intellectual capital account. Those who believe in God’s gift of time also believe in the power of discernment, the process of discovering our unique life purpose and aligning that with vision and life-energizing passion.?
Both books mentioned are worth your time and concentration. “Future time” is all you have left. Energy comes from passion, purpose, and clear vision. To borrow a line from Dan Sullivan, The Strategic Coach, “Always make your future bigger than your past.”
Every 24 hours constitutes “time-based” capital. Either you can be refired (“fired up” over and over every day) or you
can be re-tired (“tired” over and over every day).
3930 East Jones Bridge Road Suite 150 Norcross, GA 30092 770-441-2603 (Fax) 770-441-7936
The Investment Coach 1994, Walker Capital Management Corp. Lewis Walker is President of Walker Capital Management Corp.nd Walker Capital Advisory Services, Inc., a Registered Investment Advisor (R.I.A.) Securities and certain advisory services offeredhrough The Strategic Financial Alliance, Inc. (SFA). Lewis Walker is a registered representative of SFA which is otherwise unaffiliated with the Walker Capital Companies.
Posted by hkelly as Financial Planning with Lewis Walker at 2:25 PM EDT
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The first trading week of October ended with the Dow Jones Industrial Average (DJIA) at 14,066 and the S&P 500 index at 1557.59. The charts for both bellwether averages showed sharp V-Shaped patterns as equities rebounded from August lows to reclaim the records of July.
Recoveries to a previous high point in a volatile stock market generate investor angst. “Should I (we) take money off of the table to decrease risk?”
Headlines in the financial press and dour talking heads on television do not buoy mental health. “Cautious hopes” seemed to be the watchward for 4th quarter expectations (Wall Street Journal, 10/1/07).
Consider this blurb from the Chicago Sun-Times:
“These days it is too easy to run across respected market analysts who will tell you that stocks are due or overdue for a painful correction. Maybe not another October massacre, but certainly a substantial fall that would knock down the Dow Jones Industrials another 5 or even 10 percent.”
A herd-like rout driven by credit woes saw major market averages down by 9%-10%, in August as worries over subprime loans, mortgage defaults, record oil prices, and the U.S. dollar at new lows, even against the Canadian “loonie”, roiled markets. Were September-into-October investors loony? What about the headlines?
If the story from the Chicago paper seems credible, note that it appeared on October 15, 1992. The Dow closed that day at 3,175. Over the next 15 years it was to rise by over 343%. If that were to happen in the same magnitude over the next one and a half decades, the Dow would reach 62,312 by 2022.
Following the October Massacre of 1987, on November 3, 1987 The New York Times opined, “Trading range seen for Dow,” as the market closed at 2,014.09, 26% below its all-time high of August 25, 1987. Two years later on November 3, 1989, the Dow closed at 2,629.51, up + 30.6% since the “trading range” prediction.
Time magazine on October 26, 1987 quoted E.F Hutton analyst Newton Zinder as saying, “It’s extremely emotional. People are dumping stocks with reckless abandon. As trite as it sounds the market is going down because it’s going down.” Investors were worried about high oil prices ($20 a bbl.), a fragile dollar, and a dead-in-the-water housing market with conventional mortgage rates surging to 11.4%. Money was flowing into banks. Guru Charles Allmon, editor of the widely followed Growth Stock Outlook Letter, uttered his now famous quote: “I’m neither a bear or a bull. Right now I’m just chicken.” (Now age 86, Allmon was still chicken, i.e. “bearish,” in early July of this year, expecting the real estate crunch to last through 2010. As for E.F. Hutton, people quit listening after a series of scandals. The firm disappeared through a series of mergers starting in 1988).
While history cannot predict the future, it does help one to maintain perspective. I have always respected classic value-oriented money managers like John Templeton, Jean-Marie Eveillard, Charles Brandes, and David Dreman, who see emotional routs as opportunities. Writing in Forbes (10/15/07), “Panic No. 12,” Dreman recalls that since the post-WWII panic of 1948-49 over the Berlin blockade, “a dozen financial crises have erupted. After each the market roared back. So don’t bail out.”
Whether we will be writing about the market as a “trick or a treat” post-Halloween, we cannot say. Debate now centers on whether or not we are headed for recession. Fed research pegs the odds of a U.S. recession in the next 12 months at 23 percent. If I could take odds of a positive outcome to Las Vegas at 77 percent, I’d be on the next flight west.
Federal Reserve policy has turned accommodative, cutting interest rates on federal funds by 1/2 of one percent (50 basis points) to 4.75%. In turn the move lowered the prime lending rate to 7.75% from 8.25%. Ten year Treasury paper offered a yield of 4.64% on 10/5/07; 30-year paper, 4.871%. Fixed income yields pose little competition for stocks as far as real growth of capital is concerned.
The glass, then, is 77% full! The Fed has bolstered the banking system with reserves, allowing increased lending for credit-worthy projects. The Monetarist School of Economics holds that loan availability will stimulate economic activity and spending. It takes time for money magic to work through the system so ride out any short-term volatility and FUD Factor breakouts (fear, uncertainty, doubt). International markets have shared in the stock market recovery indicating foreign investor approval of monetary moves in the U.S. as favorable
for equities globally.
A friend of mine e-mailed news that he and his wife sold their house in Boca Raton, Florida, “for a good price.” They are happily ensconced in a rented villa in Santa Fe, New Mexico, as they search for a permanent residence in what my friend called a “dopey hacienda.” (Make the word “adobe”). He sold a house in south Florida near the coast in what everyone knows is a depressed market?for a good price! The sky is not falling, pigs don’t have wings, and the chickens still have their heads. Might be a great fall, after all. Pray for a treat in the form of
rain!
The Investment Coach 1994, Walker Capital Management Corp. Lewis Walker is President of Walker Capital Management Corp. and Walker Capital Advisory Services, Inc., a Registered Investment Advisor (R.I.A.) Securities and certain advisory services offered through The Strategic Financial Alliance, Inc. (SFA). Lewis Walker is a registered representative of SFA which is otherwise unaffiliated with the Walker Capital Companies.
Reach him on the Web www.theinvestmentcoach.com
Posted by bondsblog as Financial Planning with Lewis Walker at 7:39 AM EDT
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Japan, China and Taiwan sold U.S. Treasuries at the fastest pace in at least five years in August as losses linked to U.S. subprime mortgages sparked a slump in the dollar.
Japan cut its holdings by 4 percent to $586 billion, the most since a new benchmark for the data was created in March 2000, Treasury Department figures published yesterday showed. China’s ownership of U.S. government bonds fell by 2.2 percent to $400 billion, the fastest pace since April 2002. Taiwan’s slid 8.9 percent to $52 billion, the most since October 2000.
Asia’s dumping of Treasuries exacerbated the biggest sell- off in U.S. financial assets since Russia defaulted in 1998. The dollar has declined by 7.2 percent this year to a record low against the euro as the Federal Reserve cut interest rates last month to support the housing market, reducing the yield advantage of U.S. fixed income assets.
“People are concerned about the U.S. dollar falling,” said Hiromasa Nakamura, who helps oversee the equivalent of $25.7 billion at Mizuho Asset Management Co. in Tokyo. “The Fed will continue to cut rates and the dollar may fall for three to six months.”
The dollar fell to 116.82 yen at 11:16 a.m. in London, 116.92 late in New York yesterday and traded at $1.4171 per euro, close to a record low of $1.4283.
Sovereign Wealth Funds
The cutback on Treasuries came as China and South Korea joined Singapore and Norway in setting up so-called sovereign wealth funds to invest excess foreign-exchange reserves from export revenue to improve returns.
“Asian central banks are becoming more conscious of increasing returns,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. in Sydney. “We’re seeing moves to create sovereign wealth funds, which by definition suggest a structural shift away from Treasuries.”
Any gains in the dollar are a “selling opportunity,” Rennie said. The dollar may fall to $1.44 against the euro and 115 yen at the end of the year, he said.
Ten-year Treasury yields declined almost 2 basis points to 4.64 percent, according to bond broker Cantor Fitzgerald LP. The yield will decline to 4.53 percent by year-end, according to a Bloomberg News survey of economists, with the most recent forecasts given the heaviest weightings.
Agency Bonds
Any claims that China is dumping U.S. assets are “spurious” because the nation had also raised its purchases of U.S. agency debt, according to an Oct. 16 report by Win Thin, currency strategist at Brown Brothers Harriman in New York.
China bought an extra $2.7 billion of agency bonds in August, adding to $65.7 billion net purchases of those securities since June 2006, Win said.
“The data supports our view that diversification does not automatically mean outright dollar sales,” he said. While China may be diversifying its new reserves, “it is still a net buyer of dollars but maybe just a smaller share.”
China’s $200 billion fund known as China Investment Corp., whose investments include a 9.4 percent stake in Blackstone Group LP, will invest based on returns, Chairman Lou Jiwei told reporters in Beijing yesterday.
The decline is Treasuries holding is “a reflection of diversification into higher-yielding assets from Treasuries,” said Craig Chan, a Singapore-based strategist at Lehman Brothers Holdings Inc. “The dollar’s weakness is also a factor in play.”
Stocks, Treasuries
The five biggest Asian holders, which include South Korea and Hong Kong, trimmed holdings by 3.6 percent to $1.14 trillion, or 51 percent of all foreign investment in U.S. government debt, the Treasury Department said.
Total holdings of equities, notes and bonds fell a net $69.3 billion in August after an increase of $19.2 billion in July, the Treasury Department said. None of the dozen economists surveyed by Bloomberg News predicted the decline, the first since Russia defaulted in 1998.
“They were for the month of August, a month of quite some market turmoil, therefore I don’t think they were particularly surprising,” Robert Kimmitt, Deputy Treasury Secretary said in Berlin today. “Any prudent investor with a diversified portfolio is going to want to have U.S. securities. That would be true also for sovereign wealth funds.”
Treasuries have returned 4.5 percent this year, heading for the best gain since 2002, as the U.S. central bank switched its focus to supporting growth from curbing inflation, according to indexes compiled by Merrill Lynch & Co.
The Fed on Sept. 18 cut its overnight rate for loans between banks to 4.75 percent from 5.25 percent to avoid a recession. Fed Chairman Ben S. Bernanke said this week that markets have strengthened since August, though a full recovery “is likely to take some time.”
To contact the reporter on this story: David Yong in Kuala Lumpur at dyong@bloomberg.net ; Wes Goodman in Singapore at wgoodman@bloomberg.net.
To view the original article, click here.
Posted by bondsblog as International Markets at 7:29 AM EDT
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