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As people maybe have thought about the things they are thankful for in the last couple of days I had a thought about people also being very worried about their financial situations. How many people have mortgages that are too big, are over extended on credit cards and whatever else you can think of?

As you can maybe tell by my thoughts about portfolio management I am very conservative (I think) with personal finance issues. We paid off our small mortgage in Prescott very quickly, have not had a credit card balance since 1992 or 3 and the mortgage on our Hilo house is not even 20% of our income. This sort of approach prevents most problems from ever happening. Similar to my portfolio is down 40% now what do I do, waking up one morning and realizing there is not enough money for the bills is a bad place to be.

That is the crux for living below your means. Some people do thrive on that sort of stress, I want no part of it.

Different subject. I first made mention of the dollar’s status as world reserve currency changing in some way in 2004. Now four years later the path to this is easier to see (it may not happen of course but things in the US have deteriorated mightily). Here is a snippet from the FT on Thursday about the yen possibly filling that role.

I’m not sure what I think about the likelihood of yen becoming a world reserve currency just yet as I believe the vast majority of the yen rally has come from unwinding/deleveraging/forced selling. If some country does share this role with the US (I think that more likely) or supplants the US (less likely IMO) it will make sense to own some of that currency. Something that has helped the US through all of this crisis is the need for dollars around the world. This contributes to the willingness to buy our debt for close to no yield. Were the US not the center of the universe I imagine things would be much worse than they are. I think a country ascending to that status would be a very attractive hold.

Lastly here is a link from RGE about SWF performance (free registration required but worth it). I am a huge fan of looking at what SWFs and endowments do with their portfolios but not a fan of trying mimic them. It is very difficult, if not impossible, for them to take a defensive position. I wrote about this a few weeks ago for TSCM. Take from these what you need but realize they too have flaws.

6 Comments

  1. Perhaps China’s currency will dominate. Jim Rogers has been suggesting this for some time now.

    Reply
  2. Would you please ask your wife to call my wife and explain the part about living below your means 🙂 She is happily clicking away and has been for quite some time now.

    Reply
  3. I’m married to a man who from the beginning believed in “living below your means”… We both had pretty good jobs, but nothing outstanding. Had a reasonably priced home, no credit card balances, and saved first, before the paycheck came home. We had a twelve year plan for retiring early, and were able to do so, at age 55.

    One thing he taught me when we got married. You live on a cash allowance week to week, for routine expenses. Even though his paycheck was monthly! I tell you, if you go into the grocery store with cash, you will NOT spend more than you plan on. He often had money left over at the end of the week, and would take less… I always spent mine, and sometimes borrowed from the next week. But it worked.

    He took the same conservative careful approach to managing our money, and even though there is an economic crisis, we are okay. The 20% in a low cost S&P fund took a bit of a hit, but the other stuff is fine. And we don’t “need” to touch the funds.

    Love the blog. JWC

    Reply
  4. A rather interesting YouTube video has been doing the rounds .. http://www.youtube.com/watch?v=2I0QN-FYkpw

    The video is intended to “big up” money manager Peter Schiff and his – mostly correct – calls on the market. I found it fascinating not because of Schiff, about whom I know nothing and have no reral view – but because of the astonishing arrogance and self-absorption of his “opponents” – the financial media perma-bulls (with special mention to that always thoroughly annoying buffoon Ben Stein). They openly laugh and scoff at anyone who expresses any ideas that differ from their world-view which is that people should just keep on blindly buying stocks whatever the conditions are (and keep on paying them their commissions, of course). Just listen to the laughable crap coming out of their mouths and then remember, these are the same people appearing on the same shows today, thousands of Dow points and dozens of percentage points in home values later .. and they are still telling us what we should be doing with our money because these networks keep inviting them back.

    Aaaaaaaaaaaaargh! Expect their voices to get louder and their insufferable arrogance to get more puffed up if the market continues to rally somewhat.

    Reply
  5. I should add, of course, that you probably know this all already – having sat in studios with some of these people I’m sure.

    Reply
  6. i have had the same trouble with Schiff the whole time. he has been beating the same drum since the mid 1990s making it reasonable to ask whether he really was correct or if there was a broken clock element to his story.

    I would also wonder if he took any defensive action as obviously foreign stocks, which is what he either mostly or exclusively owned went down just as much if not more.

    Reply

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Shopping Day!

So do your part and get to clicking!

As people maybe have thought about the things they are thankful for in the last couple of days I had a thought about people also being very worried about their financial situations. How many people have mortgages that are too big, are over extended on credit cards and whatever else you can think of?

As you can maybe tell by my thoughts about portfolio management I am very conservative (I think) with personal finance issues. We paid off our small mortgage in Prescott very quickly, have not had a credit card balance since 1992 or 3 and the mortgage on our Hilo house is not even 20% of our income. This sort of approach prevents most problems from ever happening. Similar to my portfolio is down 40% now what do I do, waking up one morning and realizing there is not enough money for the bills is a bad place to be.

That is the crux for living below your means. Some people do thrive on that sort of stress, I want no part of it.

Different subject. I first made mention of the dollar’s status as world reserve currency changing in some way in 2004. Now four years later the path to this is easier to see (it may not happen of course but things in the US have deteriorated mightily). Here is a snippet from the FT on Thursday about the yen possibly filling that role.

I’m not sure what I think about the likelihood of yen becoming a world reserve currency just yet as I believe the vast majority of the yen rally has come from unwinding/deleveraging/forced selling. If some country does share this role with the US (I think that more likely) or supplants the US (less likely IMO) it will make sense to own some of that currency. Something that has helped the US through all of this crisis is the need for dollars around the world. This contributes to the willingness to buy our debt for close to no yield. Were the US not the center of the universe I imagine things would be much worse than they are. I think a country ascending to that status would be a very attractive hold.

Lastly here is a link from RGE about SWF performance (free registration required but worth it). I am a huge fan of looking at what SWFs and endowments do with their portfolios but not a fan of trying mimic them. It is very difficult, if not impossible, for them to take a defensive position. I wrote about this a few weeks ago for TSCM. Take from these what you need but realize they too have flaws.

Submit a Comment

Your email address will not be published.

WP-SpamFree by Pole Position Marketing