Working for Perks

It's Not the Pay, It's the Perks Robert Strauss in The New York Times writes about part-time jobs for retirees where the perk may exceed the pay. For example, one retiree took a job as a starter at a country club, which allows him to play golf for free. Thus he saves the "five figure" annual fee. Another retiree, who also worked as a starter for a country club, claimed he saved thousands in greens fees each month.

The country club part time jobs were great examples of how perks can be much greater than the pay. Another example was working for an airline and getting free standby flights. In my experience, the perks from other businesses are not quite as lucrative. Typically, the perks are discounts, e.g. purchase when working at retail stores, free viewing of an event, e.g. a play when ushering, or a free product or service of nominal cost, e.g. meal at a restaurant. I don't know of many perks that yield over $10,000 of value, as do the golf or airline part-time jobs.

At this time, it doesn't look like a part-time job at a country club or airline is likely for me. However, the concept of high value perks is appealing and I am collaborating with another early retiree to identify if there are other potential opportunities.

For more on Reaping the Rewards Reflections, check back every Friday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

What I Look for in an Interview

Recently, a neighbor shared her son's interviewing experience for a summer job. His dilemma was that he wasn't sure what the interviewer wanted hear. For example, even though he thought a detailed answer had been given, the interviewer asked for specifics. Also, he was never sure how good his interviews were.

I remember interviewing for my summer and permanent jobs. I also didn't have a clue about what was important. Now after doing many interviews as a hiring manager, I think I better understand why I was and wasn't successful in my job interviews. As an interviewer I try to look for specific characteristics that I believe will enable a candidate to be successful. Over time, I have narrowed it down to learning about the candidate in each of the following areas:

1. Making a difference. All candidates will have examples of organizations, projects, or activities in which they participate, which I think is a great starting point. It's one level to be a member, it's a higher level to be an officer, and even a higher level is to be responsible for a positive outcome. I usually probe deeper to find out how they personally "made a difference."
   
   Examples of making a difference would be raising more money than before, achieving a higher level of championship in sports, or enabling more participation than the previous year.
   
   Of course, I would want to understand the candidates personal contribution, versus just being present for the ride.



2. Having mastery. I expect every candidate to have a basic understanding of their field of study or work, at a minimum. The top candidates will demonstrate further mastery, by showing both depth and breadth of their knowledge. This area helps me understand how a candidate thinks and how they might apply their skills to challenges with which they have less familiarity.



3. Track record of results. Successful candidates tend to have multiple examples of delivering good results, often in different areas, including sports, academics and business. To me, it is also important to understand how the candidate overcame challenges to achieve the results.

Of course, interviewing well in these three areas doesn't guarantee an offer. However, the lack of examples in these areas would reduce the chances of getting an offer from me.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial or career advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Now is a Good Time to Review Allocation Strategies

"Don't mistake a bull market for brains." ~ stock market expression.

During good economic times, investors often feel smart, look smart and become wealthier. It appears everyone and every investment is making money. Getting richer seems guaranteed.

Unfortunately, bear markets do occur. In my experience, market declines will stress test one's investment strategies. In reviewing our strategies, I found that the allocation of investments by time and risk were the most helpful factors for weathering this bear market.

1. Allocation by when the funds are needed. A principle that worked for us is to keep money we really need (e.g. short term expenses) in investments that are liquid and don't fluctuate. For example, next year's college tuition, a house down payment, or 2-5 years retirement living expenses would be kept in money market funds or bank CDs.
   
   In a bull market, such as strategy appears overly risk averse, since the returns are much lower. We consider lower returns a reasonable trade off for a guarantee of the amount that will be available.
   
   For funds that are not needed for at least 5 years, we will invest in the stock market or real estate. It is important to periodically sell some long term funds, hopefully when the market is up, to replenish the amount in the short term liquid investments that are being spent.



2. Allocation by risk. In Risk Allocation in a Wealth Portfolio, I wrote about how investment risk should be divided among Personal (lowest) Risk, Market (medium) Risk, and Aspirational (highest) Risk. To me, the key is to have the investments in the personal risk allocation (e.g CDs, cash, home) account for about 40% of total savings. Doing so provides a good buffer when the market declines.
   
   At the end of September, 2008, the allocation in the personal risk area was at 34%. Currently, the allocation in the personal risk area is 37%, due primarily to the decline of the stock market in October, 2008.

While the declines in the stock market have significantly reduced our stock portfolio, having higher allocations in low risk/stable investments has helped us preserve savings that is needed in the near term. For us, giving up higher returns in a bull market has been worth the increased preservation of savings during this bear market.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Free Food at Taco Bell Today

On Tuesday, October 28, 2008, people are can get one free Crunchy Seasoned Beef Taco from 2 PM to 6 PM as part of Taco Bell's Steal a Base World Series promotion. One free taco per customer and people must be in line by 6 PM. See this press release for more details.

Since I'll be out during the afternoon, I'll be sure to stop by Taco Bell for my free food :-)

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Links To Carnivals from October 21 -27, 2007

Here are links to Carnivals in which My Wealth Builder participated from October 21 - 27, 2008:
Festival of Frugality #148

Carnival of Financial Planning

For some interesting posts from the blogosphere, check out these Carnivals and give the hosts some recognition for their excellent work.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Experts are Buying Stocks - I'm Selling Put Options Instead

Warren Buffet has said he is buying stocks and Jeremy Grantham says it's time to buy stocks. However, I don't feel comfortable putting new money in the stock market yet. After all, my current diversified stock holdings are down about 50% from their highs. Also, I've already been wrong once in trying to time the bottom.

Although I still do believe the stock market will recover, I believe it may decline further before rebounding. As a result, I am selling out of the money naked puts on select stocks and ETFs. Doing so creates a win/win situation for me. If the stocks rise, I keep the premium for selling the put. If the stock falls below the put strike price, I buy the stock at a much lower price.

To execute this strategy, I do the following:

1. Identify a stock in which I am willing and able to purchase 100 shares.



2. Sell 1 November put contract at a strike price 20 to 50% below the current price. Selling the option obligates me to purchase 100 shares of the underlying stock at the strike price. For example, when Monsanto was in the mid 80s, I sold one November 60 put for a premium of $239. If Monsanto is below 60 on November 21, 2008, I will be buying 100 shares of the stock at 60. If Monsanto is above 60, I will make $239 profit.



3. Wait for the November option expiration date, in this case November 21, 2008. For each option that expires, repeat for December.

In the worst case, I will need to purchase 100 shares of the stock. The good news is that the shares will be purchased at a much lower price. In the best case, the market goes up and I keep the premium from selling the options.

Since a requirement is to have sufficient funds to purchase the stock if needed, I limit the number of open put contracts to five or less at any one time.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

10/27/08 Stock Position Update - Holdings Down Over 50% Again

I continue to take no further action based on my buy list and short list of 7/7/08. I have taken four long and one short position, which has been closed. Since all the stocks have received sell signals, I'm no longer buying from the 7/7/08 buy list.

The portfolio was down last week, as was the market. The holdings lost 1.7% from last week. The overall portfolio is down 32.9% and the remaining holdings are down 50.3%. The only positive still has been the gain from shorting Las Vegas Sands. Otherwise, the prices of these stocks have been destroyed by the October decline.

For reference, the stocks on my 7/7/08 buy list were: Potash (POT), Research in Motion (RIMM), Bucyrus (BUCY), Williams Cos. (WMB), Southwestern Energy (SWN), Hess (HES), and Range Resources (RRC). The system has given a sell signal for every stock: Williams Cos. (8/8/08), Range Resources (8/22/08), Hess (9/12/08), Research in Motion (9/12/08), Southwestern Energy (9/26/08), Postash (10/10/08) and Bucyrus (10/10/08). The stocks on my 7/7/08 short list were: Las Vegas Sands (LVS), Sears Holdings (SHLD), and Life Time Fitness (LTM).

	From My Wealth Builder 7/7/08 Buy List
Stock [purchase date]	Shares	Purchase Price	Price on 10/24/08
Range Resources(RRC) [7/10/08]*	50	$58.17	$34.53
Potash (POT) [7/18/08]*	10	$215.09	$68.52
Southwestern Energy (SWN) [7/18/08]*	50	$39.46	$27.11
Potash (POT) [7/24/08]*	10	$192.02	$68.52

*Range Resources received a sell signal on August 22, 2008. Southwestern Energy received a sell signal on September 26, 2008. Potash received a sell signal on October 10, 2008. I plan to sell the position once it reaches the original purchase price, which may take a very, very long time.

At this point, I will continue to hold these stocks. I will make no more purchase since sell signals have been give for every stock.

	From My Wealth Builder 7/7/08 Short List
Stock [short date]	Shares	Short Price	Price
Las Vegas Sands (LVS) [7/7/08]	100	$38.10	closed 7/11/08 @ $33.69

I have only able to short Las Vegas Sands so far, which I have closed. I won't be shorting Sears Holdings and Lifetime Fitness since both stocks need to be "rented" from a shareholder for about 0.1% a day and a minimum of $50,000 needs to be shorted. Too expensive for me to short. I need to find other stocks for shorting, but have not identified other good candidates as of today.

On 8/15/08, Las Vegas Sands closed at a short term high of $56.30. It closed at $6.32 on 10/24/08 . It looks like I have missed the opportunity to take another short position in Las Vegas sands.

The market continues to be choppy. All three indices are in bear market territory. As of the close on 10/17/08, the Dow, Nasdaq and S&P 500 indices were respectively down 35.47%, 41.48%, and 39.24% year to date. The three indices are now at a fifth bottom by falling below the previous low in 10/13/08 update of -34.96%, -37.81%, and -37.73% respectively year to date.

Most economists now acknowledge the probability of a recession in 2008 is relatively high, if we are not already in one. With the bailout package approved signed into law, I was hoping for a bigger market rally last week. The lack of a major gains indicates the market will continue to be choppy.

For now, I am shifting to more cash and I will no longer be trying to short stocks. I will continue to maintain my holdings managed by our financial advisor, and plan to sell a duplicated funds during any strong rally which may occur.

Disclosure: At time of publication, I am long Range Resources, Potash and Southwestern in my trading account. The managed accounts are long Research in Motion, Range Resources, Williams Companies, Hess, and Sears Holdings.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

10/26/08 Bottom Fishing Portfolio Update - Still Looking for the Elusive Bottom

On Friday, October 3, 2008, I couldn't resist the temptation of buying some stocks before the bailout vote. I bought shares of Bank of America (BAC), J.P. Morgan (JPM), Wells Fargo (WFC) and Monsanto (MON). I believed that these three banks will not only survive this financial crisis, but will be one the four major banking powers in the next year. Monsanto was down over 50% from its high and its seed and agricultural businesses are still very strong.

Unfortunately, it isn't clear that a bottom has occurred. The portfolio is down 27.15%, with most of the losses coming in the first week I owned it, when it was down 23.36%. Bank of America has been the worst with a -44.55% return.

	Bottom Fishing Portfolio
Stock [purchase date	Shares	Purchase Price	Price on 10/24/08
Bank of America(BAC) [10/3/08]	100	$38.00	$21.07
J.P. Morgan (JPM) [10/3/08]	100	$49.74	$35.43
Wells Fargo (WFC) [10/3/08]	50	$37.07	$30.91
Monsanto (MON) [10/3/08]	10	$88.97	$71.95

I also sold one Nov 60 put contract on Monsanto. The contract is an obligation to buy 100 shares of Monsanto at $60. Since Monsanto is currently in the 70s, I expect this contract to expire worthless and I will keep the $239 premium. However, if Monsanto should fall below $60, I would be fine with buying 100 more shares at 60.

	Put Contracts Sold Short to Open
Stock [short date]	Shares	Short Price	Price on 10/24/08
Monsanto Nov 60 put (MONWL) [10/3/08]	100	$2.39	$3.10

So far the market action showed I should have waited before making a purchase. As a result, I don't plan to make any more purchases a more clear turnaround in the market trends.

Disclosure: At time of publication, I own Bank of America, J.P. Morgan, Wells Fargo and Monsanto. I am also short a put contract for Monsanto.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Return to Investment Normalcy

The nineties created an impression of certainty for investment success. A growing economy, a rising stock market, increasing home equity and low interest gave people confidence about their financial future.

People started to believe there was no downside and no risk in our financial choices. This created overconfidence, leading to excessive risks. Then came the technology bubble, a housing bubble, the sub-prime mortgage collapse, and a horrific bear market. Significant losses in the stock market, rising mortgage foreclosures, failing banks and money market funds losing value caused the financial successes of the nineties to give way to the financial debacles of the aughts.

Once again the stock market looks risky, houses are for living in instead of flipping, and banks lend only to those who can pay off the loan. Excess gains have been wiped out and investing has returned to what is has been, should be and will be again - good returns for reasonable risk.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Big Banks Still Paying Large Bonuses

Banks that are receiving government bailout money are still paying large employee bonuses. Hmm...it seems banks and bank employees have gotten the the best end of this deal, at the expense of the taxpayers. To me, bonuses are not guaranteed compensation, especially during this financial crisis. By not paying bonuses, banks can save significant expenses and improve their financial situation. For example, Citigroup has set aside $25.8 billion for bonuses in 2008.

I hope these banks reconsider and eliminate bonuses for 2008. To me, it seems like a bad public relations move to pay any bonuses during a year that required government bailouts.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Retirement Financial Strategies that Didn't Pass a Bear Market Test

The economic crisis of 2008 has stress tested many retirement financial strategies. Here are some I don't think are passing the test.

Being fully invested in the stock market. With long term stock market returns averaging 8-10% returns, it was considered imprudent not to be invested in equities. During the bull market, people also tended to overweight equities, to the extent of being fully invested. The trouble is that people forgot to also consider year to year volatility. I expect few retirees planned for the possibility of the market being down 10%. Probably, no one planned on the market being down over 40% in a single year.

Our solution: Keep at least 2-3 years of expenses in cash or cash equivalents. Fortunately, we were a bit more cautious in our first year of early retirement and had set aside 4-5 years of expenses.

Using a house as retirement savings. I am always amazed when people tell me their house is their retirement savings. First, a house is very illiquid. Second, I have rarely seen people sell their house when retiring. The housing bubble provided a third reason. The house can fall in value.

Our solution: We don't count our house as part of our retirement savings. If we get money from our house, we'll consider it a bonus.

Over stretching financially during good times. During a bull market, it's easy to be optimistic, to the point of over spending through higher withdrawals or mortgage refinances. Unfortunately, if costs increase permanently, then expenses are hard to reduce during hard economic times.

Our solution: Consider lowering our withdrawal rate to maximize how long our retirement savings will last. I will bring this up as a topic with our financial advisor at our next meeting.

For at least the next year, I believe our strategies should focus on preserving assets, including not selling stock when the market is down. However, should the market rally significantly, I will take the opportunity to sell some equities to create cover at least one more year of living expenses.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Money Mistakes with Children

Top 5 Money Mistakes Parents Can Make by Carmen Wong Ulrich of CNBC.com offers the following errors to avoid with our kids. I couldn't resist commenting on how I think I'm doing :-)

1. Not talking about money. No problem for us in this category. In fact, I'm a personal finance junkie and have to work hard to find other topics :-)



2. Being embarrassed at cutting back and saving. Not me. While all my colleagues bought new cars, I drove the 13 year old family car during my first two years of working. I also plan to quit buying clothes for the next ten years.



3. Not walking the talk. I learned this one when we were failing to get my daughter to eat vegetables, when I wasn't. I now eat the most vegetables at meals:-)



4. Not taking advantage of teachable moments. I'm sure my daughter wishes I'd give fewer coaching tips.



5. Not teaching the difference between needs and wants. We may have to put more effort in this area. Even though our daughter is only four, she pointed out that a Corvette is a "very nice car" she'd like us to have.

Personally, I would add one more: letting them learn through experience and small mistakes. For example, I had her make her first purchase when she was three.

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Choose Better over More

Three Times As Good, One-Third As Much by Daphne Kim at the blog Joyful Days shares a great principle that can be used for personal finance, among other areas.

Simply, the post proposes that focusing on making each item, event or commitment three times better at one third the frequency can be more satisfying and therefore higher value. Examples included in the post are eating out and clothes. Specifically, instead eating a three mid- priced restaurants during the month, consider eating at one higher priced restaurant. Or instead of buying numerous inexpensive clothing that wear out, purchase the more expensive one, which will likely be more durable.

Overall, I think "better over more" is a great strategy. My spouse is an excellent practitioner of buying better quality. For items such as furnishings, clothing, vehicles and food, she generally choose fewer higher quality options versus more low price and lower quality options. In the time we've been married, I've come to very much appreciate my spouse's approach to buying items, to the extent of letting my spouse making the decision on most everything we buy. However, I still can't resist trying to negotiate a better price on large purchases :-)

Finally, I agree with the author that there are two areas where we don't necessary go for much higher quality - electronics and vehicles, where we purchase the minimum that is "good enough." We surely don't need or want to pay for vehicles and electronics that are three times better.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Money Market Funds Temporarily Safe Again

After a money market fund broke the buck, the government quickly guaranteed value of money market funds as of September 19, 2008 for three months, with a possible extension for one year.
U.S. News & World Report summarized the elements of the program in the article Money Market Guarantee Program FAQ. Here are what I thought were the key elements of the program:

The program is optional. Money market funds can choose to participate or not. It's important to check with each fund as to whether they are part of the program.

The account amount as of September 19, 2008 is the maximum protection. Money added after September 19 won't be protected. If money has been withdrawn after September 19, new additions up to the amount that existed on September 19 will still be protected.

While I think the guarantee program is helpful, I still think it's a good idea to continue to minimize risk for our cash equivalents. We will continue to move our money market funds to FDIC insured money market deposits for the short term.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Links To Carnivals from October 14 -20, 2008

Here a links to Carnivals in which My Wealth Builder participated from October 14 - 20, 2008:

Investing Carnival #17

Festival of Frugality #146

Carnival of Family Life

Carnival of Personal Finance #174

Festival of Stocks #111

For some interesting posts from the blogosphere, check out these Carnivals and give the hosts some recognition for their excellent work.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial, investment or family advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

10/20/08 Stock Buy List - Changing My Purchase Strategy

With the stock market decline in 2008, I've decided to update my buy list, in anticipation of a good buying opportunity in the near future. No stock met my criteria in the modified Unemotional Investor Growth system. Therefore, I have chose the top five stocks. For background, see My Stock Picks for Q1 2007 for a description of the modified Unemotional Investor Growth system. The Top 5 system is a direct application of the Unemotional Investor Growth system described in the book The Unemotional Investor by Robert Sheard.

	My Wealth Builder Buy List - 10/20/08
Stock	System Used	Target Price	Target Shares
Kansas City Southern (KSU)	Top 5	$15-20	100
Hess Corp (HES)	Top 5	$25-30	100
CF Industries (CF)	Top 5	$30-40	100
EMCOR (EME)	Top 5	$8-12	100
Flowserve (FLS)	Top 5	$30-35	100

To avoid buyer's remorse again, I plan to wait for a further market correction before taking any long positions. The approach I will use is to sell a November expiration put with a strike at about 50% of the current price. For reference, here are the current prices and 52 week highs.

	My Wealth Builder Buy List - 10/20/08
Stock	10/20/08 Price	52 week high	Put Month, Strike, Price
Kansas City Southern (KSU)	$30.93	$55.90	Nov 30 - $2.55
Hess Corp (HES)	$57.38	$137.00	Nov 30 - $0.50
CF Industries (CF)	$60.97	$172.99	Nov 30 - $1.30
EMCOR (EME)	$19.87	$36.05	Nov 17.50 - $1.15
Flowserve (FLS)	$66.21	$145.45	Nov 40 - $0.60

Based on the availability of November put options at strikes 50% below today's price, I will try to sell November 30 puts for both Hess Corp and CF Industries. Selling a put obligates me to buy 100 shares of stock which has fallen below the strike price. If Hess Corp or CF Industries are below 30 on November 21, 2008, I will gladly buy either of the stocks.

Disclosure: At time of publication, I do not own shares of any stock mentioned in my trading accounts. Hess is owned in accounts managed by our financial advisor.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

10/20/08 Stock Position Update - Still Down Significantly

I continue to take no further action based on my buy list and short list of 7/7/08. I have taken four long and one short position, which has been closed. Since all the stocks have received sell signals, I'm no longer buying from the 7/7/08 buy list.

For a pleasant change, the portfolio was up last week, as was the market. The holdings gained about 4% from last week. The overall portfolio is down 31.7% and the remaining holdings are down 48.6%. The only positive still has been the gain from shorting Las Vegas Sands. Otherwise, the prices of these stocks have been destroyed by the October decline.

For reference, the stocks on my 7/7/08 buy list were: Potash (POT), Research in Motion (RIMM), Bucyrus (BUCY), Williams Cos. (WMB), Southwestern Energy (SWN), Hess (HES), and Range Resources (RRC). The system has given a sell signal for every stock: Williams Cos. (8/8/08), Range Resources (8/22/08), Hess (9/12/08), Research in Motion (9/12/08), Southwestern Energy (9/26/08), Postash (10/10/08) and Bucyrus (10/10/08). The stocks on my 7/7/08 short list were: Las Vegas Sands (LVS), Sears Holdings (SHLD), and Life Time Fitness (LTM).

	From My Wealth Builder 7/7/08 Buy List
Stock [purchase date]	Shares	Purchase Price	Price on 10/17/08
Range Resources(RRC) [7/10/08]*	50	$58.17	$33.20
Potash (POT) [7/18/08]*	10	$215.09	$74.43
Southwestern Energy (SWN) [7/18/08]*	50	$39.46	$29.10
Potash (POT) [7/24/08]*	10	$192.02	$74.43

*Range Resources received a sell signal on August 22, 2008. Southwestern Energy received a sell signal on September 26, 2008. Potash received a sell signal on October 10, 2008. I plan to sell the position once it reaches the original purchase price, which may take a very, very long time.

At this point, I will continue to hold these stocks. I will make no more purchase since sell signals have been give for every stock.

	From My Wealth Builder 7/7/08 Short List
Stock [short date]	Shares	Short Price	Price
Las Vegas Sands (LVS) [7/7/08]	100	$38.10	closed 7/11/08 @ $33.69

I have only able to short Las Vegas Sands so far, which I have closed. I won't be shorting Sears Holdings and Lifetime Fitness since both stocks need to be "rented" from a shareholder for about 0.1% a day and a minimum of $50,000 needs to be shorted. Too expensive for me to short. I need to find other stocks for shorting, but have not identified other good candidates as of today.

On 8/15/08, Las Vegas Sands closed at a short term high of $56.30. It closed at $13.06 on 10/17/08 . It looks like I have missed the opportunity to take another short position in Las Vegas sands.

The market continues to be choppy. All three indices are in bear market territory. As of the close on 10/17/08, the Dow, Nasdaq and S&P 500 indices were respectively down 31.85%, 35.48%, and 34.84% year to date. The three indices are now at slightly above the fourth bottom in the 10/13/08 update of -34.96%, -37.81%, and -37.73% respectively year to date.

Most economists now acknowledge the probability of a recession in 2008 is relatively high, if we are not already in one. With the bailout package approved signed into law, I was hoping for a bigger market rally last week. The lack of a major gains indicates the market will continue to be choppy.

For now, I am shifting to more cash and I will no longer be trying to short stocks. I will continue to maintain my holdings managed by our financial advisor, and plan to sell a duplicated funds during any strong rally which may occur.

Disclosure: At time of publication, I am long Range Resources, Potash and Southwestern in my trading account. The managed accounts are long Research in Motion, Range Resources, Williams Companies, Hess, and Sears Holdings.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

10/19/08 Bottom Fishing Portfolio Update - Still No Clear Bottom

On Friday, October 3, 2008, I couldn't resist the temptation of buying some stocks before the bailout vote. I bought shares of Bank of America (BAC), J.P. Morgan (JPM), Wells Fargo (WFC) and Monsanto (MON). I believed that these three banks will not only survive this financial crisis, but will be one the four major banking powers in the next year. Monsanto was down over 40% from its high and its seed and agricultural businesses are still very strong.

Unfortunately, it isn't clear that a bottom has occurred. The portfolio is down 20.18%, with all of the losses coming in the first week I owned it, when it was down 23.36%. Bank of America has been the worst with a -38.84% return.

	Bottom Fishing Portfolio
Stock [purchase date	Shares	Purchase Price	Price on 10/17/08
Bank of America(BAC) [10/3/08]	100	$38.00	$23.24
J.P. Morgan (JPM) [10/3/08]	100	$49.74	$39.33
Wells Fargo (WFC) [10/3/08]**	100	$37.07	$32.06
Monsanto (MON) [10/3/08]	50	$88.97	$80.00

I also sold one Nov 60 put contract on Monsanto. The contract is an obligation to buy 100 shares of Monsanto at $60. Since Monsanto is currently in the 80s, I expect this contract to expire worthless and I will keep the $239 premium. However, if Monsanto should fall below $60, I would be fine with buying 100 more shares at 60.

	Put Contracts Sold Short to Open
Stock [short date]	Shares	Short Price	Price on 10/17/08
Monsanto Nov 60 put (MONWL) [10/3/08]	100	$2.39	$2.38

So far the market action showed I should have waited before making a purchase. As a result, I don't plan to make any more purchases a more clear turnaround in the market trends.

Disclosure: At time of publication, I own Bank of America, J.P. Morgan, Wells Fargo and Monsanto. I am also short a put contract for Monsanto.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Thanks for your Prayers

A quick update on my father-in-law's surgery. The surgeon was able to remove the tumor and believes the cancer has not spread. My father-in-law is recovering and should return home in about 10 days.

Thank you to everyone who prayed for him. I'm sure your prayers helped.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or spiritual advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Financial and Political Humor

With the current financial crisis and upcoming elections, here's some humor to lighten up one's weekend:

Financial

1. What's the easiest way to make a small fortune in the stock market?
   
   Start with a large one.



2. What's the difference between an investment banker and a large pizza?
   
   A pizza can still feed a family of four.

Political

1. How can you tell when a politician is lying?
   
   When his lips move.



2. What's the difference between a politician and a catfish?
   
   One's a slimy, scum sucking, bottom feeding creature and the other is a fish.

Financial and Political

• Recently George W. Bush was asked for his perspective on the "credit crunch." He replied," It's my favorite candy bar."

Have a great weekend!

For more on Reflections and Musings , check back every Saturday for a new segment.

This is not financial or political advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Passive Income is not Effort Free

To some personal finance bloggers, passive income is the holy grail of making money. By definition, passive income includes dividend, interest, internet advertising and rental income and the impression is that no additional work is needed once the the stream of income is developed. While I like concept of additional sources of income besides a job, I disagree with this perception of passive income. Maintaining a sufficient passive income to support oneself can take signficant work, although a different type of work than earning a wage.

For me, a better description would be the term "non-wage income," since the income is not coming from one's day job. Non-wage income has many advantages, including no boss, no co-workers and flexible hours. Its main disadvantage is the variability of income stream, which can differ significantly each month. Reducing the variability and increasing the certainty of non-wage income stream takes a lot of effort, which can include research, due diligence and frequent income reviews. However, by ensuring the lower range of the income stream is above salary income, one can choose to live entirely on non-wage income.

For reference, I believe the only true passive income is a pension or social security. However, even the certainty of this income is not guaranteed in today's economy.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Retiring on the Cheap - Part I

There are lots of articles on retiring with a million dollars or more. There aren't many articles on retiring when one hasn't saved much, other than recommending to start saving furiously. With the recent decline of the stock market, retiring with less may become the norm. How to Retire on $12,000 a year by Scott Burns on MSN.com offers how one might retire with only social security payments.

The answer - Share fixed living expenses with others. In other words, get roommates, which can significantly reduce housing and utility costs. In addition, there may also be economies of scale in sharing transportation and food costs.


While a possibility, I don't think I could have roommates as in my younger days. However, this arrangement may work for some retirees

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial or retirement advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Cutting Way Back on Clothing Purchases

When we were sorting through my parents' belongings , I discovered they had much more clothing than they would ever need. We donated many new items that were never worn. Well, the acorn doesn't fall too far from the tree. As I've done an inventory of my belongings, I realized that I have way too many clothes. In some areas, I may have enough garments for the rest of my life :-)

How did it get this way? Like my parents, I am prone to purchase a good deal in clothing, even if I don't need it at the moment. So I have quite a large stock of jeans, casual pants, shorts, polo shirts and dress shirts. In addition, I have a large number of t-shirts due to various promotions that give them to people.

Here's what I plan to do about it:

1. Wear what I already own. Even though I haven't purchased much clothing this year, I still have many items that have never been worn. Since my weight only varies by +/- 5%, I still fit into most of my clothes. For now, I plan to wear most of my clothing until they wear out.



2. Don't buy more unless I own less than seven. Seven is the most times I would need any type of garment in a week. So unless I have fewer than seven, I won't purchase the garment.



3. Stop buying specialized clothing. For just about every sport, there are special garments that can be purchased. No more for me. I'll wear the same clothes for tennis, soccer, yoga, weight training and other sports.

Except for athletic socks, I think I can avoid buying any clothes for about ten or twenty years. Since I am a conservative dresser, most of the garments I own will be in style for at least ten more years. After that, I'll probably look like the old guy who wears the outdated wardrobe:-)

For more on Crossing Generations, check back every Thursday for a new segment.

This is not financial or fashion advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Bottoming of the Stock Market is Testing my Patience

Once again the stock market made another head fake. On Monday, the market closed with the largest one day gain ever, only to give back almost all of gains in the following two days. Unfortunately, it probably means that the market hasn't seen the bottom yet.

I've already have buyer's remorse from stock purchases I made before the final bailout bill vote. I don't want to make the same mistake again. Here's my plan on putting additional money back into the market.

1. 50/50 approach. At this point, I'm not sure whether the market will rebound or go down further. Before putting significant amounts of money into stocks, I will wait for the market to either go up 50% ( Dow about 12,000) or go down 50% (Dow about 4000). If the market is up 50%, it will be clear that the stock market has rebounded. If the market is down 50%, there will be significant bargains available.
   
   The downside of this approach is missing out on a rally should one happen. However, since we have sold very little of existing holdings, a significant part of our savings would still participate in a market rally.



2. Develop a new stock buy list. I will update my modified Unemotional Investor Growth stock purchase list and be ready for the buying opportunity when it occurs. I plan to publish the updated list next week.
   
   
3. Sell out of the money puts instead of buying the stock. There are some stocks that I believe are already good deals, e.g. Monsanto, which is about $80. However, I realize that they may fall further. My plan is to sell puts that expire in one or two months at significant discount. In the case of Monsanto, I've sold the the November 60 put, which obligates me to buy the stock at 60 should the stock fall below 60.
   
   The main downside of this approach is the possibility of buying stock as the market continues to fall. To minimize the amount of stock purchase, I plan to keep the number of concurrent open put positions below five. That way, we will never have to purchase more than five different stocks should the market continue to decline.

This three step approach will make the continuing volatility in the stock market a little less frustrating. Based on the latest economic data, I wouldn't be surprised if the bottoming of the stock market lasted another three to five months.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial or investing advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Other Potentially Risky Holdings: Gift Cards, Traveler's Checks, and Municipal Bonds

"It ain't over 'til it's over." Yogi Berra

Although the government intervention is having a positive impact, I continue to take steps to minimize exposure to potential risks caused by the credit crisis.

Recently, we learned that supposedly safe investments such as money market funds can be risky. This got me thinking that there are probably other money equivalents that are no longer as safe during this financial crisis. Here's my short list so far:

1. Gift cards. Bankruptcy of a company can significant reduce or eliminate the value of a gift card, as demonstrated earlier this year with the Sharper Image. Holders of gift card are unsecured debt holders, who get funds before shareholders, but after secured debt holders. Usually, unsecured debt holders get little or no money from a bankrupt company.
   
   Currently, we have about $75 of gift cards from a local restaurant and about $20 from a book store. We'll be spending them before the end of the year.



2. Traveler's checks. We use American Express Traveler's checks during vacations and other long trips. Although advertised as safer than cash, I suspect the checks would be worthless if American Express were go bankrupt.
   
   Currently, we have several hundred dollars of leftover checks from vacation. I think it's time to cash them.



3. Municipal Bonds. With declining real estate values and higher unemployment, I expect that the revenue of municipalities will decline significantly, leading some to go into default.
   
   Currently, we have municipal bond money market funds and several individual municipal bonds. We'll be moving the money market funds into a bank money market fund that is paying about 3.5%.
   
   We will continue to hold the bonds we have since most mature from 2008 to 2010. The bonds are all insured against default, although the bond insurers may be solvent enough to cover the defaults. At this point, I don't plan to buy any more individual municipal bonds.

In the end, I expect that these holdings will prove to be relatively safe. However, just in case the credit crisis worsens, I want to minimize potential losses if possible.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Links To Carnivals from October 7 - 13, 2008

Here are the Carnivals in which My Wealth Builder participated from October 7 to 13, 2008.

Investing Carnival

Cavalcade of Risk #62

Carnival of Financial Planning

Weight Management & Fitness Forum #27

Carnival of Family Life

Carnival of Personal Finance #174

Total Mind & Fitness Carnival #71

Festival of Stocks #110

For some interesting articles from around the blogosphere, check out these Carnivals and give the hosts some recognition for their excellent work.

For more on Ideas You Can Use, check back Tuesday Sunday for a new segment.

This is not financial, family or health advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

10/13/08 Stock Position Update - Remaining Holdings Down Over 50%

I continue to take no further action based on my buy list and short list of 7/7/08. So far I have taken four long and one short position, which has been closed. Given the extreme volatility of the market, I continue to be cautious for both purchases and selling short.

The returns were poor again this week, but surprisingly not as bad as last week. The holdings lost about 10% from last week. The overall portfolio is down 35.0% and the remaining holdings are down 53.0%. The only positive still has been the gain from shorting Las Vegas Sands. Otherwise, the prices of these stocks have been destroyed by the last two week.

For reference, the stocks on my 7/7/08 buy list were: Potash (POT), Research in Motion (RIMM), Bucyrus (BUCY), Williams Cos. (WMB), Southwestern Energy (SWN), Hess (HES), and Range Resources (RRC). The system has given a sell signal for every stock: Williams Cos. (8/8/08), Range Resources (8/22/08), Hess (9/12/08), Research in Motion (9/12/08), Southwestern Energy (9/26/08), Postash (10/10/08) and Bucyrus (10/10/08). The stocks on my 7/7/08 short list were: Las Vegas Sands (LVS), Sears Holdings (SHLD), and Life Time Fitness (LTM).

	From My Wealth Builder 7/7/08 Buy List
Stock [purchase date]	Shares	Purchase Price	Price on 10/10/08
Range Resources(RRC) [7/10/08]*	50	$58.17	$26.86
Potash (POT) [7/18/08]*	10	$215.09	$91.08
Southwestern Energy (SWN) [7/18/08]*	50	$39.46	$20.81
Potash (POT) [7/24/08]*	10	$192.02	$91.08

*Range Resources received a sell signal on August 22, 2008. Southwestern Energy received a sell signal on September 26, 2008. Potash received a sell signal on October 10, 2008. I plan to sell the position once it reaches the original purchase price, which may take a very, very long time.

At this point, I will continue to hold these stocks. I will make no more purchase since sell signals have been give for every stock.

	From My Wealth Builder 7/7/08 Short List
Stock [short date]	Shares	Short Price	Price
Las Vegas Sands (LVS) [7/7/08]	100	$38.10	closed 7/11/08 @ $33.69

I have only able to short Las Vegas Sands so far, which I have closed. I won't be shorting Sears Holdings and Lifetime Fitness since both stocks need to be "rented" from a shareholder for about 0.1% a day and a minimum of $50,000 needs to be shorted. Too expensive for me to short. I need to find other stocks for shorting, but have not identified other good candidates as of today.

On 8/15/08, Las Vegas Sands closed at a short term high of $56.30. It closed at $14.05 on 10/10/08 . It looks like I have missed the opportunity to take another short position in Las Vegas sands.

The market continues to be choppy. All three indices are in bear market territory. As of the close on 10/10/08, the Dow, Nasdaq and S&P 500 indices were respectively down 34.96%, 37.81%, and 37.73% year to date. The three indices are now at new lows from the peak in October, 2007 and YTD.

I continue to believe that the probability of a recession in 2008 is relatively high, if we are not already in one. With the bailout package approved signed into law, I was hoping for a market rally last week, but it didn't occur. The lack of a positive gains on Friday doesn't give me much hope a rally will occur this week either.

For now, I am shifting to more cash and I will no longer be trying to short stocks. I will continue to maintain my holdings managed by our financial advisor, and plan to sell a duplicated funds during any strong rally which may occur.

Disclosure: At time of publication, I am long Range Resources, Potash and Southwestern in my trading account. The managed accounts are long Research in Motion, Range Resources, Williams Companies, Hess, and Sears Holdings.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

10/12/08 Bottom Fishing Portfolio Update - I Bought Too Early

On Friday, October 3, 2008, I couldn't resist the temptation of buying some stocks before the bailout vote. I bought shares of Bank of America (BAC), J.P. Morgan (JPM), Wells Fargo (WFC) and Monsanto (MON). I believed that these three banks will not only survive this financial crisis, but will be one the four major banking powers in the next year. Monsanto was down over 40% from its high and its seed and agricultural businesses are still very strong.

Unfortunately, last week's market results made it clear that a bottom hasn't occurred. The portfolio has fallen 23.36% in the one week I've owned it. Bank of America has been the worst with a -45.08% return.

	Bottom Fishing Portfolio
Stock [purchase date	Shares	Purchase Price	Price on 10/10/08
Bank of America(BAC) [10/3/08]	100	$38.00	$20.87
J.P. Morgan (JPM) [10/3/08]	100	$49.74	$41.64
Wells Fargo (WFC) [10/3/08]	100	$37.07	$28.32
Monsanto (MON) [10/3/08]	50	$88.97	$74.18

I also sold one Nov 60 put contract on Monsanto. The contract is an obligation to buy 100 shares of Monsanto at $60. Since Monsanto is currently in the 80s, I expect this contract to expire worthless and I will keep the $239 premium. However, if Monsanto should fall below $60, I would be fine with buying 100 more shares at 60.

	Put Contracts Sold Short to Open
Stock [short date]	Shares	Short Price	Price on 10/10/08
Monsanto Nov 60 put (MONWL) [10/3/08]	100	$2.39	$3.36

This week's market action showed I should have waited before making a purchase. As a result, I don't plan to make any more purchases a more clear turnaround in the market trends.

Disclosure: At time of publication, I own Bank of American, J.P. Morgan, Wells Fargo and Monsanto. I am also short a put contract for Monsanto.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

It's Time for New Leadership

What They Said About Fan and Fred in the October 2, 2000 Wall Street Journal takes quotes from 2003 to 2006 hearings to show that Sen. Thomas Carper, Rep. Barney Frank, Sen. Robert Bennett, Rep. Maxine Walters, Sen. Chris Dodd, and Sen. Charles Schumer supported the excessive risk Fannie Mae and Freddie Mac were taking.

For example, at the House Financial Services Committee hearing, Sept. 25, 2003,
Rep. Frank said, "I do think I do not want the same kind of focus on safety and soundness that we have in OCC [Office of the Comptroller of the Currency] and OTS [Office of Thrift Supervision]. I want to roll the dice a little bit more in this situation towards subsidized housing. . . ."

Personally, I don't want Congress to be rolling the dice with taxpayer's money anymore. It's time for new leadership who will be stewards of the taxpayer's money, instead of using the funds to promote their own political agendas.

I've already committed to not voting for any major party candidate in the Congressional races. I'm now seriously considering not voting for either the Democrat or Republican candidates in the Presidential election.

For more on New Beginnings, check back every Sunday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Asking for your Prayers

Last week my father-in-law had surgery to remove a cancerous tumor. The operation was successful and he will now begin chemotherapy treatments.

I am a believer that prayer can help heal and that more prayer is better. If you could include my father-in-law in your prayers, it would be greatly appreciated.

For more on New Beginnings, check back every Sunday for the next segment.

This is not financial or spiritual advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

There Should Be More Executive Firings

In my opinion, there haven't been enough firings of executives. With the exception of Bear Stearns, Merrill Lynch and Citigroup, there doesn't seem to be many government or business executives being fired. In my company, people have been fired for much less than losing $20 billion in one year. Or in the case of the government, losing a couple trillion dollars.

Here are a few people that I wonder why they haven't been fired or asked to leave:

1. Congress. I'd fire everyone in the Senate and House, effective immediately. In my opinion, they have only a few important roles - defense, interstate commerce, and our monetary system. If they don't get these right, nothing else matters. Saying the current credit crisis is a major screw up by our government would be an understatement.
   
   Worse yet, I have not heard anybody in Congress accept responsibilty or apologize to the American people. That's why I'm not voting for the incumbent Congressman, even though he is from my party. In fact, I'm not voting for any major party candidate and will likely vote independent.
   
   Since these are elected officials, we have no one but ourselves to blame if they are re-elected.



2. Chris Cox, Chairman SEC. I believe elimination the uptick rule (i.e. stocks can only be shorted on an uptick) is one of the stupidest things that the SEC has done in recent years. The other is not enforcing the ban on naking shorting (i.e. shorting without borrowed shares.) While I am not an economist, I believe both absence of regulation in these areas accelerated the decline of stocks during the crash of 1929.



3. Rick Wagoner, CEO General Motors. Last Friday, the market capitalization of GM dipped below its market capitalization in March, 1929, just before the stock market crash. GM is only worth about $4 billion nowadays. Mr. Wagoner achieved this 20 fold reduction of GM value in only 8 short years, since taking over in 2000.
   
   For reference, Toyota is has a market capitalization of $96 billion, even after losing half its value since February, 2007.



4. Jeff Immelt, CEO General Electric. Invest and Deliver was the theme of the 2007 annual report. GE seems to have forgotten the deliver part in 2008. It seems GE needed financial businesses, which drove its growth under Jack Welch, to continue to meet the deliver part. GE's market value is now equal to what it was in 1997.
   
   I thought Mr. Immelt had a great strategy of focusing on green technology and infrastructure and made GE one of my core holdings. In hindsight, it seems Mr. Immelt should have put more focus on his strategy by divesting the financial businesses.
   
   If 2008 had be Mr. Immelt's first year, he would be the benefit of the doubt. However, he has been CEO for 7 years and should be held accountable.

There are probably some wonderinging why I didn't include President George W. Bush on the list. He would be, except that he already can't return for the next term. Besides, I think his legacy as the worst President to date will be more painful than being fired.

Disclosure: As of the time of publication, I own shares of General Electric in our personal and managed accounts.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

How This Retiree is Dealing with Stock Market Collapse

One of the benefits of retiring in my forties is having time. Unfortunately, early retirement also gives me ample time to watch the collapse of the stock market. The precipitous drop in the stock market completely surprised me. It is amazing that the indices have declined more than 20% in the first four days of this week. I have never lost so much money so quickly.

However, being retired has also given me more time to think about what to do. Here are my thoughts:

Hold what I've got. Since I don't need the money for at least five years, I don't want to be guilty of buying high and selling low. To sell at this point would guarantee losses of over 30%.

Don't buy into the downtrend. On the other hand, I don't think now is the time to buy either. After experiencing buyer's remorse for stock purchases made just before the bailout vote on October 3, I've decided to return to my buyer's strike approach. I'm going to wait for a noticeable reversal before investing large amounts of new money.

Hedge against losses. Unfortunately, I have closed out our only hedge. I sold the bear funds from October 1 - 7, expecting (incorrectly) that a bottom would occur with a bailout bill passage. So we are no longer hedged with short positions against a further downturn.

When there is a short term rally, I will look to buy inverse index ETFs or a bear mutual fund again.

Develop a buy list with capitulation buy points. There are some great stocks that have been beaten down significantly. Google is down almost 60% from its high. Amazon, almost 50%. I would be happy to get either of these stocks 80% down from their highs, even if the market hasn't demonstrated a turnaround. However, I would only take small positions, less than 0.3% of my portfolio.

Take advantage of high volatility. With the VIX in the 70s, option premiums are very high. I had already sold some covered calls on my company stock in the retirement account.

I am also considering selling one or two short term, out of the money puts for stocks on the buy list to be developed. In the worst case, I may be obligated to buy 100 shares of a quality stock at a significantly lower price. In the best case, the option expires and I keep the premium.

In addition, should the market rally significantly, we may sell some stocks that have gains.

At this point, we do not need any of the funds invested in stocks for five years. As part of our early retirement plan, we set aside enough cash, CDs and bonds for several years of expenses. If the market is still declining in 2010, we'll need to revise how we handle our stock investments.

For more on Reaping the Rewards , check back every Friday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Bear Market Survival Skills

I have been an stock investor through four bear markets (1981, 1987, 1990, and 2000) prior to current one which started in 2007. Even though my portfolio have sustained significant losses, I have been much more level headed during this bear market than in previous ones. If I could go back in time, here's what I would tell my younger self.

Don't invest money that may be needed in the short term. To me, it is painful to sell stocks at a loss just to generate needed cash. I've learned to keep cash needs in money markets and short term CDs. While they don't appreciate as much, I know I can count on a specific amount being available.

Money I include in this category are emergency funds, next year's college tuition, and three year's of expenses when retired.

Invest in quality. Quality stocks tend to recover from bear markets. Poor stocks tend to stay at lower prices for a long time or even become worthless. A corollary to this is: Don't speculate too much.

My experience shows speculative stocks suffer the worst declines during bear markets. I've had several go to zero. However, most of the quality stocks I owned recovered and advanced further.

It's impossible to call the bottom in advance. I wish I could time the markets, but I can't. Neither can experts call the bottom or top consistently. I now choose to stay invested in quality stocks, which should recover when the market turns.

In the nineties, I bought Best Buy at $20 and then watched it decline to $11. Frustrated, I sold at $11. The stock then advanced to $80 over the following year. Recently, I bet wrongly bet on capitulation happening last week.

Don't let fear drive actions. The market always looks bleakest just before bottom. This is also the time when fear of further losses cause some to sell their stock holdings.

At the end of 2002, I sold all my stock holdings, except for my company stock in our retirement accounts. By being in mostly cash, I missed the 2003 stock market rebound.

This too will pass. In every bear market, there are experts claiming a crash or depression. In every case, they have been wrong. At this point, I still believe the U.S. economy is strong enough to recover, no matter how bad it currently appears.

I would tell my younger self that I should expect to lose money during a bear market. However, surviving a bear market means that I will make money in the next bull market.

Knowing all this hasn't improved my returns during the current bear market. However, it has enabled me to stay invested this time, while waiting for the expected turnaround. Hopefully, past bear markets are a good predictor of the future performance of this one :-)

For more on Crossing Generations, Thursday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Municipal Bonds Funds Yielding Over 4%

Periodically, I check our accounts to ensure we are getting good yields on cash portion of our investment accounts. Typically, for taxable accounts, we keep cash in a municipal bond fund. For tax exempt retirement accounts we use a money market funds.

Usually, money market funds are paying 30 to 50% higher interest than municipal bond funds. Imagine my surprise when I discovered that the reverse is now true, municipal bond funds are yielding over 100% more than money market funds. For example, my money market funds are yielding about 1.7% and my municipal bond funds are yielding about 4.1%.

To make sure the information I read was correct, I called several brokerages and confirmed my findings were true. One broker explained that it was probably due to a large amount of municipal bond selling by investors that lowered the prices, and, therefore, increased the yield. Another reason might be that new offerings need to have higher interest due to the current credit crisis.

Whatever the reason, I'm going to enjoy getting over 4% tax free. However, I am not going to add any more money to these funds, in case it turns out to be one of those events that's too good to be true :-)

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Waiting for Capitulation

In 2007, I thought there was a high probability of the markets falling. However, I didn't think it would get as bad as it has been for the past couple weeks. If I had, I probably would have sold all my investments and stayed in cash :-)

The question now is when capitulation will happen. Once capitulation occurs, it's time to buy stocks in anticipation of a rebound. However, if often is hard to identify the occurrence of capitulation until sometime after the fact.

Last week I bet capitulation had happened and bought some shares Bank of America, J.P. Morgan, Wells Fargo and Monsanto last Friday before the passage of the bailout bill. I regretted doing so over the weekend, and regret it even more today. By close of market today, it was the fastest 23% I ever lost, meaning capitulation had not yet happened.

Based on the results of this week so far, it appears there's still more market decline to come before capitulation occurs. Unfortunately, this last stage is likely to very painful. At this point, I'm torn between beginning to exit the market and starting to buy some beaten down stocks before a turnaround.

Intellectually, I know it is important to stay invested and I'm trying hard to keep our longer term savings in the market. For now, I'm going to observe the market reaction for the next few days before making any investment changes.

For more on The Practice of Personal Finance, check back every Wednesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Finding Lower Gas Prices

Over the past couple weeks, I've noticed that gasoline prices have been falling. Today, I bought unleaded regular gasoline for $3.239 per gallon.

To help people find the lowest priced gas in their area, MSN.com has created a daily gas price by station locator which is searchable by zip code. The data is based on previous night submissions and may not reflect fast changing markets.

According to the locator, only one station in my area had a lower price than what I paid. I never thought I would feel good about purchasing gasoline at over $3 per gallon :-)

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Miraculous Weight Loss

Last month, we went on a weekend camping trip at a state park. Being a former Boy Scout, I still like to camp in tents, even though the norm nowadays seems to be an RV. We camped for 3 days and two nights, cooked over a fire and hiked through the park.

Since my spouse planned the meals, we ate very well, unlike the hot dogs and hamburger surprise I had as a Boy Scout. We had sirloin cheeseburgers, grilled cheese and soup for lunch, steak, salad and vegetables for dinner, and eggs, sausage hash browns for breakfast. The portions were large and I ate until I was full every meal. I fully expected to gain weight.

Much to my surprise, I lost at least five pounds and achieved my lowest weight of this year. I am now within 2% of my target weight from my New Year's resolutions. To me, it was miraculous that I lost any weight at all. We were eating high fat, high calorie food every meal and I was stuffing myself, to avoid having leftovers.

After contemplating on the reasons for the past month, I think I have figured out why I lost so much weight. In order of importance:

Ate only at meals. Since we didn't bring any additional food, we only ate during our three meals, breakfast, lunch and dinner. There was no snacking or small meals in between.

Low amount of processed carbohydrates. We only had one loaf of bread for seven meals. Although we had ice cream one evening, there were no cakes, candies or cookies.

Additional exercise. We hiked about five miles while camping and we needed to walk a quarter mile to the rest rooms and showers. While not much, this is more walking than we normally do in a three day span.

I am convinced these three factors enabled me to quickly lose weight that weekend. Since returning home, I have tried to implement all three elements into my diet and exercise plans. While not perfect, I've made some major changes. I've cut back significantly on bread products, eat primarily at meals, and doubled my exercise.

So far I've lost another 2-1/2 pounds in two weeks and am on target to meet my New Year's resolutions goal by year end.

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or health advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Links To Carnivals from October 6, 2008

Here are links to Carnivals in which My Wealth Builder participated on October 6, 2008:

Festival of Stocks #109

Carnival of Personal Finance #173

Carnival of Family Life

For more on Ideas You Can Use, check back every Tuesday for a new segment.

This is not financial or family advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

Wealth Builder Ratios - Q3 2008 Update

Here is our Q3 2008 Wealth Builder Ratio update. I am disappointed with this year's YTD results versus goals and 2007 results. 2008 has not been very kind to our financial plans and goals so far. Through September 30, 2008, the Dow was off 23.91%, the Nasdaq down 21.49% and the S&P 500 down 18.2%. For more details on the relevance of these ratios, please see this How Much Is Needed To Be Wealthy - The NUMBER.

Ratio and Target	Q3 2008	Q3 2008	Comments
Investment Income to Salary Target=0.8 2007=3.41	-4.65	-2.36	For the third year in a row, the returns of the stock market under performed in the first half of the year. However, in 2008, the poor performance has continued through September. This year's declines have caused our portfolio to lose 2.36 times my pre-retirement salary. Most of the recovery was due to a 15.8% gain in my company stock since June 30. We have now lost about 2/3 of our 2007 gains. Fortunately, we do not yet need to sell any investments for our retirement expenses. At this point, we are staying invested in the market, and taking the opportunity to increase our cash position during rallies.
Savings to Salary Target>20 2007=23	18.1	20.1	The significant loss versus 23 in 2007 is due to the stock market decline in 2008. Our total stock and CD/bond investments fell 10.6%. My company stock, which had declined 17.2% to June 30, 2008, has recovered to only being down 4.5%. Thus, our total investment losses improved to -12.5%
Debt to Salary Target=0 2007=1.51	1.49	1.48	Currently, our only debt is our home mortgage. Since we retired, we have not made our usual 4% principal payment in January. Since we will wait for the market to recover before selling some investments to cover this payment, this payment is not likely to happen this year.

My financial goals for 2008 are:

1. Continue to maintain an Investment Income to Salary ratio > 0.8. (off track)

2. Maintain a Savings to Salary ratio of 20. (on track)

3. Reduce my Debt to Salary Ratio by 0.1 to 1.41. (off track)

(For reference, Salary refers to gross salary just prior to early retirement in October, 2007.)

Both #1 and #2 were directly correlated with how well our stock, bond, and CD investments did. Due to the bear market in 2008, our stock, bond, and CD investments have lost -10.6%. Including stock options, our investments fell -12.5%. This compares with an S&P return of -23.91% and a Dow return of -18.2% through September 30, 2008. Number 3 will be achieved if we make an additional payment equal to about 4% of our mortgage principal before the end of this year, which is now unlikely.

It has been very challenging retiring at the beginning of a bear market. At this point, I am concerned but not panicking. Our short term expense (next 3-5 years) are invested in CDs, bonds and money markets. So we can wait for the stock market to resume an upward trend, hopefully in the next 1 to 2 years.

In our Q4 2007 update, I noted that "2008 will be an interesting (and probably volatile) year, given the economic and political uncertainty, and the upcoming Presidential election. Next year will be a good test of the effectiveness of our investment strategies." So far 2008 is proving that statement to be correct:-)

For more on Strategies and Plans , check back every Monday for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

10/6/08 Stock Position Update - Holdings Down Over 40%

I continue to take no further action based on my buy list and short list of 7/7/08. So far I have taken four long and one short position, which has been closed. Given the extreme volatility of the market, I continue to be cautious for both purchases and selling short.

The returns were horrendous this week. Due to the no vote for the bailout early in the week , the holdings lost about 15% from last week. The overall portfolio is down 27.8% and the remaining holdings are down 43.2%. The only positive still has been the gain from shorting Las Vegas Sands. Otherwise, the prices of these stocks have been destroyed by the past week.

For reference, the stocks on my 7/7/08 buy list were: Potash (POT), Research in Motion (RIMM), Bucyrus (BUCY), Williams Cos. (WMB), Southwestern Energy (SWN), Hess (HES), and Range Resources (RRC). The system has given a sell signal for Williams Cos. (8/8/08), Range Resources (8/22/08), Hess (9/12/08), Research in Motion (9/12/08) and Southwestern Energy (9/26/08). The stocks on my 7/7/08 short list were: Las Vegas Sands (LVS), Sears Holdings (SHLD), and Life Time Fitness (LTM).

	From My Wealth Builder 7/7/08 Buy List
Stock [purchase date]	Shares	Purchase Price	Price on 10/3/08
Range Resources(RRC) [7/10/08]*	50	$58.17	$34.15
Potash (POT) [7/18/08]	10	$215.09	$95.36
Southwestern Energy (SWN) [7/18/08]**	50	$39.46	$29.33
Potash (POT) [7/24/08]	10	$192.02	$95.36

*Range Resources received a sell signal on August 22, 2008. I plan to sell it once it reaches the original purchase price.
**Southwestern Energy received a sell signal on September 26, 2008. I plan to sell it once it reaches the original purchase price.

At this point, I will continue to hold these stocks. Although I am extremely tempted to buy more as the stocks decline, I will make no additional purchases at this time.

	From My Wealth Builder 7/7/08 Short List
Stock [short date]	Shares	Short Price	Price
Las Vegas Sands (LVS) [7/7/08]	100	$38.10	closed 7/11/08 @ $33.69

I have only able to short Las Vegas Sands so far, which I have closed. I won't be shorting Sears Holdings and Lifetime Fitness since both stocks need to be "rented" from a shareholder for about 0.1% a day and a minimum of $50,000 needs to be shorted. Too expensive for me to short. I need to find other stocks for shorting, but have not identified other good candidates as of today.

On 8/15/08, Las Vegas Sands closed at a short term high of $56.30. It closed at $23.11 on 10/3/08 . It looks like I have missed the opportunity to take another short position in Las Vegas sands.

The market continues to be choppy. All three indices have been in bear market territory. As of the close on 10/3/08, the Dow, Nasdaq and S&P 500 indices were respectively down 20.6%, 20.58%, and 23.91% year to date. The three indices blew past the third bottom of 17.70%, 17.81%, and 18.77% in my 9/15/08 Stock Position Update.

I continue to believe that the probability of a recession in 2008 is relatively high, if we are not already in one. With the bailout package approved signed into law, I am hoping for a market rally next week. However, the lack of a positive response on Friday doesn't give me much hope a rally will occur.

For now, I am shifting to more cash and I will no longer be trying to short stocks. I will continue to maintain my holdings managed by our financial advisor, and plan to sell a duplicated funds during any strong rally which may occur.

Disclosure: At time of publication, I am long Range Resources, Potash and Southwestern in my trading account. The managed accounts are long Research in Motion, Range Resources, Williams Companies, Hess, and Sears Holdings.

For more on Strategies and Plans, check back every Monday for a new segment.

This is not financial or investment advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC