Year End Rally?

I think this week will confirm whether the stock market rally of last week will continue until the end of the year. If low price stocks, such as Citigroup (C), Fannie Mae (FNM), and Ford (F), continue to move up sharply, I will plan on a strong year-end rally. Should a significant rally occur, here are the actions I will consider taking:

Reduce exposure to stocks up to 33%. I believe that any rally will be short lived and the market will decline again in 2009. I will sell a portion of our managed portfolios into a year end rally to generate cash for investing in the future.

Buy call options on stocks which may significantly rebound. For example, I think Ford stock may gap upward if a favorable bailout decision is made by Congress. Ford appears to be in the strongest financial position and therefore, may benefit the most in the long run. By buying call options, I can significantly increase returns for a small investment, e.g., $100. Of course, the downside risk is that I can easily lose the entire investment.

At this point, I don't feel optimistic that a year-end rally will occur. However, a market indicator that I follow shows that a year-end rally may be possible and I want to be prepared if one should occur.

Disclosure: At time of publication, I do not have any of the stocks or options of the companies mentioned.

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

11/30/08 Bottom Fishing Portfolio Update - Market Rally Reduces Losses

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.

As part of this portfolio, I have also been selling put contracts to open on specific stocks. On October 3, I sold a November 60 put on Monsanto. On November 12, 2008, I sold a November 20 put contract to open on Energy Conversion Devices (ENER). On November 20, I sold the December 40 put contract to open on Monsanto. Finally, on November 25, I sold the December 20 put contract to open on Energy Conversion Devices.

In hindsight, I bought the financial stocks way too early. I've learned my lesson. I will not purchase any more financial company stocks, until there is a more clear turnaround in the financial crisis of 2008. This week financials demonstrated that the industry is toxic.

The portfolio shot up 28.69%, due primarily to the big market rally after the Obama economic team announcement. The overall portfolio is down 28.42%, after reaching a low of -45.30% the previous week.

	Bottom Fishing Portfolio
Stock [purchase date]	Shares	Purchase Price	Price on 11/28/08
Bank of America(BAC) [10/3/08]	100	$38.00	$16.25
J.P. Morgan (JPM) [10/3/08]	100	$49.74	$31.66
Wells Fargo (WFC) [10/3/08]	50	$37.07	$28.89
Monsanto (MON) [10/3/08]	50	$88.97	$79.20

Currently, I have profited from two put contracts which have been closed or allowed to expired. I sold two more put contracts to open and both are currently profitable due to the market rally.

	Put Contracts Sold Short to Open
Option [short date]	Shares	Short Price	Price on 11/28/08
Monsanto Nov 60 put (MONWL) [10/3/08]	100	$2.39	closed on 10/29/08 for $0.91
Energy Conversion Nov 20 put (EQIWD) [11/12/08]	100	$0.69	expired 11/21/08 at $0
Monsanto Dec 40 put (MONXI) [11/20/08]	100	$1.19	$0.31
Energy Conversion Dec 17.5 put (EQIXW) [11/25/08]	100	$1.39	$0.40

The Obama economic announcements have caused a significant rally in the market, which rose four days in a row for the first time since April, 2008, It was also the first five day rally since July, 2007and the largest five day percentage gain since March 16, 1933. Hopefully the rally will continue to the end of 2008, which may allow me to sell my positions in the financial stocks.

Disclosure: At time of publication, I own Bank of America, J.P. Morgan, Wells Fargo and Monsanto shares. I also am short put contracts on Monsanto and Energy Conversion Devices.

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

The End of the Caretaker Corporation

After World War II, corporations seemed to caretakers of their employees, providing guaranteed employment, free health care and retirement pensions. As the economy was growing rapidly, companies could afford to do this in order to attract the best employees.

However, in the past 20 years, competitive market forces and slower growth have caused many corporations to reduce some of these benefits, because they weren't sustainable. During that time, guaranteed employment, free health care, and retirement pensions were replaced with corporate downsizing, contributions to health care, and defined contribution retirement funds.

Just about every person I know has experienced major changes to their benefits. During the time I worked, my company began downsizing, and started charging for health insurance. The only thing that remained the same was our retirement plan, since the company always had a defined contribution plan, not a pension.

I expect it will continue to change, due to global competition. I hope that a stable solution is found by the time my daughter starts working.

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

Fixed Income vs. Equities after the 40% Decline

The 40% decline in the stock market has caused me to calculate the point at which equities are a better investment than fixed income. For the purposes of this exercise, I assumed I could average a 5% return on fixed income and that the 40% decline occurred at the end of the investment period. The results are show in the table below.

Years of investment	Annual return required for break even with a 5% CD
5	16.2%
10	10.5%
15	8.6%
20	7.7%
25	7.2%

Thus, money invested in the stock market for X years had to return at least Y% in order to match the return of a 5% CD. If the return is below the percentage shown, then a 5% CD was the better investment. If the return is above the percentage shown, then equities were the better investment.

With the S&P 500 return for the last 10 years close to zero, a 5% CD beat the stock market for 5 and 10 year periods. Although I couldn't find the data, a 5% CD also likely beat the stock market for the 15 year period. One has to go back 20-25 years for the stock market to break even with a 5% CD at the end of 2008.

Essentially, the bear market of 2008 has erased the additional gains of the stock market over fixed income. For now, a 5% CD appears to be the better investment for the past 15 years.

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

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

Copyright © 2008 Achievement Catalyst, LLC

Thankful for my Family

When I was a child, my mom told me that family would be a constant in my life. She explained that I could always count on family for support. Throughout my life, my family has always been present to celebrate the good times, to offer assistance during the tough times, and to provide guidance through the normal times. I am thankful to have had my parents and sister while growing up.

Also, I am very grateful to be with my wife and daughter, enjoying the fun times and working through challenges together. I look forward to many more years together and give thanks that we are a family.

Happy Thanksgiving!


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

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

Copyright © 2008 Achievement Catalyst, LLC

Personal Finance Strategies that have Helped During This Economic Crisis

While the financial crisis of 2008 seems to have negatively impacted everything, some financial strategies seem to be doing better than others. Here are the personal finance approaches that I think have worked well for us during this crisis:

An emergency fund. This fund serves as a buffer during tough financial times, e.g. loss of job, bear market decline, or unexpected large expenses. The funds should be held in safe investments like a money market or CD. For this crisis, a bigger emergency was definitely better.

Savings allocation in cash or cash equivalents. While just about every investment class has declined significantly, boring cash and CDs have kept their value and even returned some interest.

Zero credit card debt. To me, have a large amount credit card debt can make a bad financial situation worse. On the other hand, having no credit card debt eliminates one burden during tough financial times.

Guaranteed income stream. Pensions, social security payments, bond interest or annuities provide fixed monthly income no matter what the stock market is doing.

During prosperous economic times, these strategies were considered overly conservative. However, use of these strategies has reduced some of the financial anxiety for us during this economic crisis.

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

Links To Carnivals from November 22 - 24, 2008

Here are links to Carnivals in which My Wealth Builder participated from November 22 - 24, 2008:

Carnival of Financial Planning

Festival of Stocks #116

Carnival of Family Life

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

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

Copyright © 2008 Achievement Catalyst, LLC

11/24/08 Stock Position Update - New Lows 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. I have also not taken any action on the 10/20/08 Buy List, which has already received sell signals for 4 out of 5 of the stocks since it was developed. To me, it's still not a good time to buy stocks yet.

The portfolio was down last week, as was the market. The holdings fell 12.5% from the previous week. The overall portfolio is down 34.0% and the remaining holdings are down 51.7%. 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 through November 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 11/21/08
Range Resources(RRC) [7/10/08]*	50	$58.17	$35.60
Potash (POT) [7/18/08]*	10	$215.09	$60.42
Southwestern Energy (SWN) [7/18/08]*	50	$39.46	$30.62
Potash (POT) [7/24/08]*	10	$192.02	$60.42

*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, rebounded to $14.19 on 10/31/08 before falling again to $3.23 on 11/21/08. It's too bad I didn't hold the short position until now :-)

The market continues to be choppy. All three indices are in bear market territory. As of the close on 11/21/08, the Dow, Nasdaq and S&P 500 indices were respectively down 37.77%, 47.81%, and 44.39% year to date, creating the sixth low of the year.

Most economists now acknowledge the probability of a recession in 2008 is relatively high, if we are not already in one. The lack of any gains since the bailout package approval and the post election decline indicate the market will likely 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 Bucyrus, 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

Increasing Trading in a Choppy Market

While diversified stock index investing and "buy and hold" are superior strategies for rising market time periods like 1980 to 2000, trading strategies may have better results for flat markets like 1965 to 1980.

For now, I believe there are too many negative factors, both known and unknown, for the market to reverse to an upward trend. I expect the market will be in a trading range channel or downward trend at least for the next couple years. It may even be a long term downward market similar to what occurred in Japan from 1990 to 2003.

Here's some of the different investment strategies I currently use in the part of our portfolio I manage:

Diversified stock index - This investment style will reflect the overall market. If the market is in a trading range channel or downward trend, so will the index. Matching the market is no consolation when the returns are zero or negative.

I only have one index ETF, the S&P 500 (SPY). It's down 49% since I bought it in October, 2007. I hopefully will sell this ETF during a future strong market rally. (Unfortunately, I think the Geithner rally will fizzle relatively quickly.)

Buy and hold - Works well if the right stocks, or right industries are picked. There is a bit of luck involved in this strategy. Last year, I wrote about Google (GOOG), Amazon (AMZN) and General Electric (GE) being part of my core long term holdings. Even though all the stocks are down significantly, I still believe that Google and Amazon have the potential to be big winners. I've lost faith in General Electric, due to their large exposure in financials, e.g. GE Capital.

I have not added to these positions recently. If the market declines another 50%, I will be buying more Amazon and Google.

Trade the channel - In uncertain times like now, the market often has many ups and downs as it did from 1965 to 1980. In the past, the primary opportunity was with the upward movements, by buying either a stock or index low and selling it high. Shorting was risky since the stock or index could continue to rise. However, there are now short index ETFs that cap the possible losses on shorting.

Initially, I plan to use a combination of selling uncovered out of the money puts and out of the money covered calls on Energy Conversion Devices (ENER), Ultrashort Financial Proshares ETF (SKF) and Ultrashort Oil & Gas Proshares ETF (DUG). I will add new stocks or ETFs as the market situation allows.

I plan to increase the amount of funds used to trade the channel. Of course, someone will remind me that traders generally under perform the a diversified stock index and the market. I agree the analysis is true for a rising market, for which the time period of 1986 to 2005 was. I suspect, but have no actual data, that traders have a much better chance to beat the market that is either flat or declining. However, in case I'm wrong or a poor trader, we will continue to have significant funds invested with our financial advisor in a diversified stock portfolio.

I will call this my Trader's Portfolio and have already being trading put options in Energy Conversion Devices (ENER), and Ultrashort Oil & Gas Proshares ETF (DUG). I was assigned the Ultrashort Oil & Gas Proshares ETF last Friday will sell a covered in the future. Beginning next week, I will track the results of the Trader's Portfolio versus the S&P 500.

Disclosure: At time of publication, I own shares of Amazon, Google, General Electric, and the Ultrashort Oil & Gas Proshares ETF.

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

11/23/08 Bottom Fishing Portfolio Update - Financials are Toxic

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.

On November 12, 2008, I sold one put contract to open on Energy Conversion Devices (ENER), which was down significantly this month.

In hindsight, I bought the financial stocks way too early. I've learned my lesson. I will not purchase any more financial company stocks, until there is a more clear turnaround in the financial crisis of 2008. This week financials demonstrated that the industry is toxic.

A new bottom occurred, due mainly to the financial stocks. The overall portfolio declined again last week and is down 45.30%, surpassing the low of -29.78% from last week. Monsanto is also now down 24.23%, after being profitable or break even for several weeks.

	Bottom Fishing Portfolio
Stock [purchase date]	Shares	Purchase Price	Price on 11/21/08
Bank of America(BAC) [10/3/08]	100	$38.00	$11.47
J.P. Morgan (JPM) [10/3/08]	100	$49.74	$22.72
Wells Fargo (WFC) [10/3/08]	50	$37.07	$21.76
Monsanto (MON) [10/3/08]	50	$88.97	$67.41

The Energy Conversion put contract expired worthless this week, enable me to pocket a $69 premium. I also sold another Monsanto put contract, the December 40, for $1.19.

	Put Contracts Sold Short to Open
Option [short date]	Shares	Short Price	Price on 11/21/08
Monsanto Nov 60 put (MONWL) [10/3/08]	100	$2.39	closed on 10/29/08 for $0.91
Energy Conversion Nov 20 put (EQIWD) [11/12/08]	100	$0.69	expired 11/21/08 at $0
Monsanto Dec 40 put (MONXI) [11/20/08]	100	$1.19	1.35

In spite of the Geithner rally on Friday, the market and these stocks are still declining. I am considering selling a new put contract on Energy Conversion Devices, since the November contract expired. For now, I will hold the financial stocks, but make no additional purchases. If President-elect's announcement on Monday cause financials rally significantly next week, I may sell some of the financial stocks.

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

Time Really Flies

I just returned from a mini-reunion with several rugby teammates from the eighties, with some I hadn't seen for 10 years. It was great to reminisce about the games we played, parties we attended and other fun times. There were many funny stories and other great memories.

The get-together also made me realize how fast time has passed. The memories were from our youth, but we were now much older, grayer, slower, and heavier. A few had become grandparents. It didn't seem that long ago that we were regularly playing rugby.

The reunion also gave me a better appreciation for the importance of spending time with my family. Similarly, it seems my time with my parents has passed by so quickly. I was busy working and they were also busy working. All of a sudden, they were in their 70s and 80s. It won't be long before my four year old daughter is grown and my wife and I will be in our 60s and 70s. I hope that retiring in my forties and consciously spending time together keeps the next 20 years from passing as fast :-)

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

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

Copyright © 2008 Achievement Catalyst, LLC

Inflation or Deflation - What's Next?

A good estimate of the rate of inflation allows a more accurate projection of funds and investment returns needed in retirement. For our retirement plan analysis, we have been using a 2.5% inflation estimate. Inflation data from 1997 to 2008 show that this is a reasonable value. During my lifetime, inflation has been typical. However, deflation has become a possibility in 2008.

The financial crisis of 2008 has contributed significantly to the deflation risk, causing severe credit tightening, a reduction in asset values and lower demand for goods. In October, 2008, the Consumer Price Index (CPI) fell 1%, the biggest drop since 1938. While lower prices seem beneficial, long term deflation causes a number of economic issues, including business failures due to lower profits, further declines in house prices, increasing burden for debt repayment, and delayed consumer spending. For reference, the Japanese economy stagnated as it experienced deflation for over a decade, beginning in the early 1990s.

Currently, the TIPS (Treasury Inflation-Protected Securities) bonds indicate an expectation of deflation. While it make take several months to reoccur, I think inflation is the more likely scenario. I believe that the combination of massive, increased government spending (TARP and other bailouts) and very low interest rates will cause inflation to occur, once lending returns to normal levels. For reference, the monetary growth created by the Fed is over 100% for the past three months, versus a normal 3-5% level.

Thus, for now, I don't have expect to make any major changes to our retirement plans. I will consider buying some TIPS bonds, which are significantly undervalued if inflation returns to 2-3%.

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

Stock Market Values Going Back in Time

Today, the Dow closed at 7532, its lowest level since March, 2003. Yesterday, I wrote that I'm still not buying stocks and am waiting for a Dow 4000 (or 12,000) before purchasing any stock. Extrapolating the past two days of 400 point drops , that may be only nine business days from now, or December 4, 2008 :-)

A Dow close below 4000 would be a level that has not been personally witnessed by many young investors. March, 1995 was the last time the Dow closed below 4000. I'm estimating average P/Es would be near 8 and average dividends would be near 8%, levels not seen since the 80s. A 4000 Dow would be the trigger for me to starting buying again, especially for long term accounts like retirement and college savings. It may be a buying opportunity that we won't see again for another generation.

However, even at a 4000 Dow, I won't invest all our available cash. Just in case, I'd want to some funds for the possibility of the Dow going below 2000, which hasn't happened since May, 1988 :-) Now that would truly be a buying opportunity of a lifetime.

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

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

Copyright © 2008 Achievement Catalyst, LLC

Stock Market Buying Opportunity? - Not for Me

After falling precipitously since the Lehman bankruptcy on September 15, 2008, today the Dow closed below 8000 for the first time in five years. After bottom fishing with financial stocks on October 3, 2008, I couldn't decide on whether the Dow would hit 12,000 or 4,000 first, which is when I committed to start buying again. Until today, I've been debating on whether now is a buying opportunity or a continuation of a big bear market downward slide.

At this point, I think a 4,000 Dow is coming first. It pains me to write that, since I want to be an optimist. However, the reality is pretty grim and hard to ignore. Here is what convinces me the worst is to come:

1. No visibility to the end of failures. More businesses and taxpayers are going to be asking for government help. Banks and homeowners were just the beginning. The auto industry is now making their case for government support, poorly I might add. Retail is coming next, due to the decline in consumer spending. Then it will be the banks again, when credit card debt defaults increase significantly. Retirement accounts which have now lost $8 trillion in value.
   
   In the end, the government will provide the bailout, but won't solve the problem.



2. Hedge funds deleveraging at the same time. Due to high withdrawals and high market volatility, hedge funds will need to sell assets. Since many hedge funds use similar decision making criteria, multiple sell programs will be initiated about the same time, exacerbating the market decline.



3. We don't understand what we already know. It's pretty clear that this crisis is something no one has ever faced. There is no precedent and people don't understand the complexities and the interconnections of the problem yet. I have very low confidence in Ben Bernanke and the Fed since I believe they already demonstrated mishandling a simpler challenge with subprime debt in August, 2007. Also, I no longer believe Henry Paulson, the Treasury Secretary, is taking all the necessary actions to eradicate the problem.
   
   Worse yet, we don't know what we don't know, which I fear will have issues that amplify the current problem.

At this point, almost no one expects a depression to occur. The conventional wisdom is that there will be a long and deep recession, but no depression. Conventional wisdom (and Warren Buffet) says to buy. However, I think conventional wisdom doesn't have a good track record in this financial crisis, since it also rated subprime mortgages and CDOs as low risk.

Here are the actions I plan to take:

1. Withdraw about one third of the funds in the managed accounts. Hopefully, there will be a bear market rally in the next couple months, which will allow me to sell at a higher price. I will hold the funds in cash to be re-invested when the market declines further. I will keep the other two thirds invested in case I am wrong about a market decline.



2. Buy inverse index ETFs. When the market rallies, I will buy inverse ETFs for the S&P, Nasdaq, Dow and financial indices. These will serve as a hedge against future market declines.



3. Be patient on adding new money. With the exception of inverse index ETFs and or exercise of put options, I do not plan to add new money until the Dow reaches 4,000 or 12,000. It may take years for that to happen.

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

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

Copyright © 2008 Achievement Catalyst, LLC

I Won't Follow This Advice #4 - Uninsured by Choice

Occasionally, I read commercially published articles which provide advice very different to what I have found successful in my own experience. I will be highlighting these articles periodically in a "I Won't Follow This Advice" segment. These segments represent my opinion and one should consult a professional before making any decisions. Here's segment #4.

While the following article is not giving advice, I am including it to address the issues it shares. Uninsured by Choice? Are they nuts? states that 23% of eligible employees decline their employer's health insurance coverage because of the cost and choose to be uninsured. Most of the remaining 77% turn down health insurance due to being covered on a spouse's policy.

In the article, it seems that people marginalize the risk associated with not having health insurance. Some people rationalized the choice as between health insurance and savings. In another case, the person, who has been very healthy, felt his premiums would be subsidizing those with less healthy lifestyles. Being a healthy individual, I understand the dilemma with paying health insurance premiums and getting very little financial return. Throughout my life, I have rarely gone to the doctor, which could be interpreted as I was "wasting" my insurance premiums.

However, for me, the purpose of insurance is to provide the protection against wealth destruction, not provide a financial return. I realize that I am only one major accident (car, home or sports) or major sickness away from significant medical costs. For me, being uninsured is a risk I don't want to take. I hope to never have a major accident or sickness, but should it happen, the cost can be as high as our total savings, which would far exceed the amount of premiums paid.

Finally, being uninsured may create issues when health insurance is needed, since new policies may not cover pre-existing conditions. Thus, an illness that occurs when uninsured, may be excluded from coverage in future health insurance.

Choosing to decline my employer's insurance and being uninsured is not something I would do.

Here are other articles in the "I won't follow this advice" series:

#1 - Faking Incompetence
#2 - Spend Everything and Don't Save
#3 - High College Debt

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

Photo Credit: morgueFile.com, Clara Natoli

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

Copyright © 2008 Achievement Catalyst, LLC

Links To Carnivals from November 15 - 17 , 2008

Here are the Carnivals in which My Wealth Builder participated from November 15 - 17, 2008:

Carnival of Financial Planning

Carnival of Personal Finance #179

Carnival of Twenty-Something Finances

Carnival of Family Life


For some interesting articles from around the blogosphere, check out these Carnivals and recognize the great work of the hosts.

For more on Ideas You Can, 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

11/17/08 Stock Position Update - Down 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. I have also not taken any action on the 10/20/08 Buy List, which has already received sell signals for 4 out of 5 of the stocks since it was developed. To me, it's still not a good time to buy stocks yet.

The portfolio was down last week, as was the market. The holdings fell 7.5% from the previous week. The overall portfolio is down 29.0% and the remaining holdings are down 44.8%. 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 11/14/08
Range Resources(RRC) [7/10/08]*	50	$58.17	$40.62
Potash (POT) [7/18/08]*	10	$215.09	$69.81
Southwestern Energy (SWN) [7/18/08]*	50	$39.46	$30.62
Potash (POT) [7/24/08]*	10	$192.02	$69.81

*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, rebounded to $14.19 on 10/31/08 before falling again to $6.11 on 11/14/08. 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 11/14/08, the Dow, Nasdaq and S&P 500 indices were respectively down 34.36%, 42.81%, and 39.33% year to date. Two of the three indices have exceeded the the fifth bottom from the 10/27/08 update of -35.47%, -41.48%, and -39.24% 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 market rally last month. The lack of any major gains and the post election decline indicate the market will likely 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 Bucyrus, 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

11/16/08 Bottom Fishing Portfolio Update - New Low

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.

In hindsight, I bought the financial stocks way too early. I've learned my lesson. I will not purchase any more financial company stocks, until there is a more clear turnaround in the financial crisis of 2008.

A new bottom occurred, due mainly to Bank of America, which is now down 56.79%. The overall portfolio declined again last week and is down 29.78%, surpassing the low of -27.15% from three weeks ago. Monsanto is also now declining, after being at break even for the past two weeks. The Monsanto put was closed on 10/29/08 for a small profit.

	Bottom Fishing Portfolio
Stock [purchase date]	Shares	Purchase Price	Price on 11/14/08
Bank of America(BAC) [10/3/08]	100	$38.00	$16.42
J.P. Morgan (JPM) [10/3/08]	100	$49.74	$34.47
Wells Fargo (WFC) [10/3/08]	100	$37.07	$28.73
Monsanto (MON) [10/3/08]	50	$88.97	$74.10

I also sold one Nov 60 put contract on Monsanto. The contract is an obligation to buy 100 shares of Monsanto at $60. I closed out the contract at $0.91, for a profit of $148.49, or a 62.10% gain.

	Put Contracts Sold Short to Open
Stock [short date]	Shares	Short Price	Price
Monsanto Nov 60 put (MONWL) [10/3/08]	100	$2.39	closed on 10/29/08 for $0.91

At this point, the market and these stocks appear to be declining again. If Monsanto falls reaches the low 70s, I will consider selling a put contract, either a November 40/50 or December 50, on the stock again. I will hold the financial stocks, but make no additional purchases.

Disclosure: At time of publication, I own Bank of America, J.P. Morgan, Wells Fargo and Monsanto shares.

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

Mr. Paulson - I'm Disappointed

I supported the bailout bill because I believed buying the illiquid CDOs would fix the credit crisis. Henry Paulson recently announced that TARP funds will no longer used for buying troubled assets. I was shocked by the change. After all, doesn't TARP stand for Troubled Asset Relief Program? In spite of the existence of massive troubled assets and the problems they have caused, the Treasury plans to divert the funds to address the looming credit card crisis.

To me, the Bush administration has pulled what I consider a bait and switch - gaining support for a specific purpose and then using the funds in a completely different way. I am disappointed in Mr. Paulson's change of course. I would not have supported the bailout bill for the way the funds are currently being used.

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

Retiring Early in Turbulent Times

When I retired in my forties in October, 2007, the stock market was near its peak, the economy was strong, and employment was good. Since then, the market has declined over 40%, the economy is likely in recession, and unemployment is at 6.5%, the highest level since 1994.

Obviously, the past year wasn't the greatest time to retire early. However, we did survive our first year, and I think the prospects of staying in retirement are still good. Here's a brief financial assessment of how well prepared we were for the financial crisis during our first year of retirement living.

What Has Worked

Reviewed options with our financial advisor, in advance. About a year before retiring, I started working with our financial advisor on retirement scenarios. I covered a +/- 20% range retirement incomes, paying off or keeping the mortgage, and different financial returns. As a result, we had a good idea of how much was needed to comfortably enable retirement in different economic scenarios.

Our advisor's analysis showed the biggest risk of failure was a bear market during the early years of retirement. Although we prepared (see next bullet), we didn't expect a scenario as bad as the one we are now experiencing.

Put expected near term expenses in cash or cash equivalents. We were conservative and kept approximately five years of expected expenses in CDs, bonds and money market funds. Theoretically, we can wait five years for the stock market to recover. However, in year four, I may start to be anxious :-)

Health insurance coverage. I was eligible for our company's retiree health insurance plan, which provides the same coverage as when I was employed, but at four times what I paid as an employee. It would have been hard for me to retire without guaranteed health care coverage, since a major medical incident without coverage can be very costly.

What Didn't Work

Lump sum diversification. After transferring part of my company retirement funds to an IRA, I invested the cash portion (about 50%) in a diversified stock portfolio, right at the peak of the stock market. Since historical data investing as a lump sum was better than dollar cost averaging, I had convinced myself lump sum was the right approach.

Unfortunately, this part of our savings has declined 40% along with the rest of the market.

What I Wished I Had Done

Pay off the mortgage. I wrestled with this one for a while and finally decided keeping the mortgage was worth the tax benefits for at least the next couple years. If I had sold some of the stock portfolio to pay off the mortgage, I would have avoided almost all of the 40% decline for that part. Ah... hindsight is 20/20 :-)

What Was Really Lucky

Did not diversify most of my company stock. Since the majority of my retirement account is in company stock, the plan was to sell it in stages and reinvest the proceeds into a diversified stock portfolio. It has taken longer than expected and I have kept most of the sales proceeds in cash. The delay has been fortunate since my company stock is only down 16% versus 40% for the market.

Of course, I was very lucky. Most experts would recommend against have the majority of one's savings in one stock.

Financially, our first year in retirement has be very good, given the poor economic situation. I expect our second to be equally challenging. Hopefully, I will still be able to give a positive assessment a year from now :-)

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

Financial Lessons from my Parents' Generation Re-Learned

My parents grew up during the Great Depression and the lessons they learned shaped their money management philosophies. My generation seemed to have forgotten these lessons. However, the financial crisis of 2008 is painfully providing us with the same lessons to be re-learned again.

There are no guarantees. Bull markets have made us complacent, causing expectations of a rosy future. How many times have we heard, " Based on historical average returns of 10% in the stock market..." ? The bear market of 2008 has made it clear every year does not deliver the average.

Avoid being over leveraged. Leverage can be destructive, especially in a down market. Use of excessive margin in the stock market contributed significantly to the crash of 1929 -1932. 30 to 1 leverage for CDOs contributed to the down fall of Bear Stearns and Lehman Brothers. No money down for overpriced houses are now leading to record foreclosures.

Build a financial buffer to get through tough times. No matter how little my dad earned, my mom always saved for that rainy day. Fortunately, my parents didn't have many financial crises and were able to use their savings as a down payment on a house or to purchase a car.

Optimistically, I expect this crisis will pass too, as did the Great Depression. However, I hope my children will remember and benefit from the lessons re-learned.

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

Stocks - Is it Time to Buy or Sell?

To say it has a horrific year for stock market investors would be an understatement. At the end of October, the Dow was down 28.18%, the S&P was down 32.84% and the Nasdaq was down 32.84%. It would have been worse if it weren't for a rally of about 10-11% during the last week of October.

The case for buying is made by Stocks look cheap worldwide makes a case for investing since P/E ratios are close the those of the 70s, when valuations of stocks were cheap. On the other hand, an article in Yahoo! Finance predicts that the financial crisis will worsen with an upcoming "bloodbath in the hedge funds."

Is Now the Time to Buy Stocks? by John Cochrane in today's Wall Street Journal provides a balanced approach to considering this question. Mr. Cochrane uses dividend/price data and volatility analysis and concludes whether to buy, sell or hold depends on an investor's situation.

"If you're less leveraged, less affected by recessions, and have a longer horizon than the average, it makes sense to buy. If you're more leveraged, more affected by recession or have a shorter horizon, it might be the time to sell, even though you might be cashing out at the bottom. If you're about the same as everyone else, do nothing and relax."

I interpret his conclusions as follows:

1. For cash I don't need for 5-10 years, consider buying stocks.
   
2. If I need more cash now, sell stocks, even at a loss.
   
3. If neither #1 or #2 apply, maintain the funds currently invested in stocks and wait out the recession.

This seems like a good set of principles to immediately incorporate into our stock investment strategies.

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

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

Copyright © 2008 Achievement Catalyst, LLC

Links To Carnivals from November 4 - 10, 2008

Here are the Carnivals in which My Wealth Builder participated in from November 4 -10, 2008.

Cavalcade of Risk #64

Carnival of Personal Finance #178

Festival of Stocks #114

Carnival of Family Life

For some interesting articles from around the blogosphere, check out these Carnivals and give some recognition to the hard work of the hosts.

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

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

Copyright © 2008 Achievement Catalyst, LLC

Procrastination has Saved Us Money

In general, procrastination is not a good idea. However, I have found at least one exception. Procrastination can be quite beneficial when considering a purchase during a weak economy. Here are some recent experiences where I found procrastination saved us money.

Gasoline. When gas prices were rising, I used to buy whenever I saw a good price, before he inevitable increase. Now that the price of oil is falling, I've found waiting is better. It seems the price of gas has been dropping almost every day. Whenever I fill up my gas tank, gas prices always seem to be lower the next day.

Best price seen this year: $1.769 for unleaded regular gas.

Health club membership. Earlier this year, I was investigating different health clubs for a possible membership. They would offer deals on initiation or monthly fees that expired at the end of each month. However, after the expiration date some of the clubs offered even better discounts.

After choosing a health club over the summer, we were unable to join due to my needing a physician statement. By the time I had the doctor's note in September, the club had a special $0 initiation fee to join, which saved us $52.

Periodical subscription. I have subscriptions to financial publications to help generate article ideas for My Wealth Builder. I sometimes let a subscription lapse, to enable me to try other periodicals. In one case, a periodical sent reminder notices, that reduced the renewal price with each succeeding note, until it was equal to the best special introductory offer given to new subscribers, saving between $50 and $100 from "normal" renewal offers.

Since it was one of the publications I like, I relented and re-subscribed for another year.

In our case, all the examples were relatively small savings. However, I expect that people who have waited until now to buy a house or car are getting much better prices or discounts than they would have a year or two ago.

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

Veterans Day Freebies and Discounts

For Veterans Day, several businesses are honoring veterans, military members, and in some cases, their immediate families with free meals, free admission or discounts. Some of the participating establishments are shown in the table below.

	Beneficiaries
Establishment (valid dates)	Veterans, Active Military Reservist	Immediate Family	Guest
Lowe's (11/6 to 11/11/08)	Yes	Yes	-
Home Depot (11/6 to 11/12/08)	Yes	Yes	-
Golden Corral (11/17/08)	Yes	-	-
Knots Berry Farm (11/1-11/27/08	Yes	-	Yes

For more details see Veterans Day Free Meals and Discounts at Military Finance Network.

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

11/10/08 Stock Position Update - Still Very Volatile

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 up down last week, as was the market. The holdings fell 4.6% from the previous week. The overall portfolio is down 25.7% and the remaining holdings are down 40.3%. 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 11/7/08
Range Resources(RRC) [7/10/08]*	50	$58.17	$40.19
Potash (POT) [7/18/08]*	10	$215.09	$80.57
Southwestern Energy (SWN) [7/18/08]*	50	$39.46	$34.42
Potash (POT) [7/24/08]*	10	$192.02	$80.57

*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, rebounded to $14.19 on 10/31/08 before falling again to $7.03 on 11/7/08. 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 11/7/08, the Dow, Nasdaq and S&P 500 indices were respectively down 31.00%, 37.89%, and 35.38% year to date. The three indices may test the fifth bottom from the 10/27/08 update of -35.47%, -41.48%, and -39.24% 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 market rally last month. The lack of any major gains and the post election decline indicate the market will likely 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 Bucyrus, 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

11/9/08 Bottom Fishing Portfolio Update - Still Down Signficantly After a Month

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.

It appears that the bottom will be tested again. The overall portfolio declined again last week and is down 20.97%, after being down as much as 27.15% the two week's ago. Monsanto is still holding at break even and I've closed the Monsanto put for a small profit.

	Bottom Fishing Portfolio
Stock [purchase date	Shares	Purchase Price	Price on 11/7/08
Bank of America(BAC) [10/3/08]	100	$38.00	$20.49
J.P. Morgan (JPM) [10/3/08]	100	$49.74	$37.75
Wells Fargo (WFC) [10/3/08]	100	$37.07	$29.50
Monsanto (MON) [10/3/08]	50	$88.97	$88.12

I also sold one Nov 60 put contract on Monsanto. The contract is an obligation to buy 100 shares of Monsanto at $60. I closed out the contract at $0.91, for a profit of $148.49, or a 62.10% gain.

	Put Contracts Sold Short to Open
Stock [short date]	Shares	Short Price	Price on 11/7/08
Monsanto Nov 60 put (MONWL) [10/3/08]	100	$2.39	closed on 10/29/08 for $0.91

At this point, the market and these stocks appear to be declining again. If Monsanto falls significantly into the low 70s, I will consider selling a put contract on the stock again.

Disclosure: At time of publication, I own Bank of America, J.P. Morgan, Wells Fargo and Monsanto shares.

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

Time to Invest Social Security in Stocks?

In Creative fixes for US finances Jim Jubak offers that now might be a good time for the U.S. government to put some Social Security funds into the stock market. Here are the reasons for considering this move:

Buy low and sell high. Investing Social Security funds seemed to be a good idea during the bull market and near the peak. From a contrarian view, now would a great time to put Social Security money into the stock market.

Bailout retirement savings account holders. The U.S. government is bailing out banks, insurance companies and investment banks. Others, such as the auto companies, have requested money. Why not use some of the bailout money to directly help the taxpayer. Injecting Social Security funds directly into the stock market may help end the bear market, which has reduced retirement account values by over $2 trillion.

Overall, I think this is a reasonable idea to consider for a portion of Social Security funds. Doing so would offer two immediate benefits: 1) Show confidence in the U.S. economy and 2) Injects funds to replace money that has been withdrawn from stocks over the past few months It may even make Social Security solvent for the longer term, which would help everybody.

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

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

Copyright © 2008 Achievement Catalyst, LLC

Over $2 Trillion in Retirement Account Losses

According to the Congressional Budget Office, as much $2 trillion have been lost in retirement savings for the 15 months ending in September, 2008. Since the Dow declined 14% in October, 2008, I expect the losses are now well over $2 trillion.

It isn't surprising that the government would track these numbers. At a tax rate of 15%, this is equal to over $300 billion in lost future tax revenue for the federal government and about $100 billion for state and local governments.

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

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

Copyright © 2008 Achievement Catalyst, LLC

College 529 Savings Account - Signifcantly Down

In preparation for our year end financial review, I looked at the college 529 savings account for our four year old daughter. We originally opened the account in December, 2005 and have made the maximum state tax deductible contribution for each year. To date, we have split the contributions with 31.25% each in the Aggressive Growth and International funds and 18.75% each in the 500 Index and Extended Market funds.

The bear market of 2008 has destroyed the college savings accounts. Not only have all the gains from 2006 and 2007 been eliminated, the losses have also reduced the principal from the contributions. Here are the results as of 11/5/08:

	Returns
Fund	YTD 11/5/08	Loss since 2005 (not annualized)
Vanguard Aggressive Growth Index Portfolio	-35.50%	-25.08%
Vanguard 500 Index	-33.95%	-27.74%
Vanguard Extended Market Index	-36.59%	-29.89%
Vanguard Developed Markets International Stock Index	-41.23%	-31.25%
Total	-	-28.74%

Until doing this analysis, I didn't realize we had lost almost 29% of our contributions. It's a good thing we don't need the money for another 14 years. Hopefully, the market will recover by then :-) Seriously, this bear market has clarified my future investment strategy for college funds. I will definitely move a significant portion to interest bearing accounts within 2-4 years of needing the money for college.

In the meantime, we will continue to make the maximum state tax deductible contribution for 2009. However, this time we will stagger the contributions over several months, in case the market continues to decline. Also, the contributions will be divided such that each fund again will have 25% of total contribution made since 2005.

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

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

Copyright © 2008 Achievement Catalyst, LLC

Exceptions that Avoid Penalties for Early Retirement Plan Distributions

With the current economic decline, it may be likely more people will be taking early withdrawals from retirement accounts. Unfortunately, early withdrawals may be subject to a 10% penalty, in addition to income taxes. Based on the instructions of Form 5329 , there are exceptions that avoid the 10% penalty. Using these exceptions may eliminate the 10% penalty and reduce one's taxes.

Exception Number	Reason
01	Qualified retirement plan distributions (does not apply to IRAs) if you separated from service in or after the year you reach age 55 (age 50 for qualified public service employees).
02	Distributions made as a part of a series of substantially equal periodic payments (made at least annually) for your life (or life expectancy) or the joint lives (or joint life expectancies) of you and your designated beneficiary (if from an employer plan, payments must begin after separation of service).
03	Distributions due to total and permanent disability.
04	Distributions due to death (does not apply to modified endowment contracts).
05	Qualified retirement plan distributions up to (1) the amount you paid for unreimbursed medical expenses during the year minus (2) 7.5% of your adjusted gross income for the year
06	Qualified retirement plan distributions made to an alternate payee under a qualified domestic relations order (does not apply to IRAs).
07	IRA distributions made to unemployed individuals for health insurance premiums.
08	IRA distributions made for higher education expenses.
09	IRA distributions made for the purchase of a first home (up to $10,000).
10	Distributions due to an IRS levy on the qualified retirement plan.
11	Qualified distributions to reservists while serving on active duty for at least 180 days.
12	Other (see other on pg. 3 of Form 5329 instructions)

Of note, some exceptions (nos. 7,8, and 9) only apply to IRAs, and some exceptions (nos. 1 and 6) do not apply to IRAs.

It may be helpful to consult a financial or tax advisor before taking an early distribution from a retirement plan. They can help determine of one of the above exceptions apply and, therefore elmiminate the 10% early distribution penalty.

Finally, these are the penalty exceptions that were in effect as of Novbember 5, 2008. There is a possibility that Congress may act to forgive the early distribution penalty in 2008 and provide some economic relief to the tax payer.

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

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

Copyright © 2008 Achievement Catalyst, LLC

Cavalcade of Risk #64

Welcome to the Cavalcade of Risk #64. As the name indicates, this Carnival is about risk - e.g. insurance, health, financial, and other types. While every post submitted was a great article, I only included those submissions I judged primarily related to risk management.

My thanks to Hank Stern for the opportunity to host the Cavalcade of Risk a third time. Besides being fun and educational, hosting a Cavalcade leads to a nice traffic increase for the week:-) It's easy to become a host. Just contact Hank at the Cavalcade of Risk site or send him an e-mail.

And now to the Cavalcade ...

Insurance

Wenchypoo presents Uninsured By Choice--Are They Nuts? posted at Wisdom From Wenchypoo's Mental Wastebasket, which links to an article at MSN Money describing reasons people turn down their employer sponsored health insurance. Similarly, Bob Vineyard, CLU presents I Want Care, I Want it Now, and I Want it Free posted at InsureBlog. What's the risk of going without health insurance? Here's the true story of one man's experience, and what can be learned from it.

If you prefer to be insured, Silicon Valley Blogger presents Get The Right Coverage! Insurance Policies You Need and Those To Avoid from The Digerati Life. In case you're thinking of moving to Singapore, KCLau presents some insurance options in Case Study: Financial Goals of a Malaysian working in Singapore posted at KCLau's Money Tips.

Interested in reducing car insurance costs? LAL presents Keeping on top of insurance posted at LivingAlmostLarge, noting "it made sense to keep the insurance company aware of our newer, improved driving records." For other ways to reduce premiums, see Clearing Up Insurance Myths by Khan at Higher Education and Career Blog, who interviewed Dick Hospital, the Vice President of Underwriting for GEICO Insurance, to help dispel some of the most commonly held insurance myths.

Unfortunately, health insurance keeps getting more expensive. In a recent poll 41% of those surveyed blamed insurance carriers for the rise in health care costs. Louise Norris at Colorado Health Insurance Insider and Joe Paduda at Managed Care Matters provide their perspective on the reasons in their respective posts of Who Americans Blame For Rising Health Care Costs and What's that light in the tunnel? Also along the lines of higher costs, FMF presents Five Insurance Traps posted at Free Money Finance, noting five risks that can cause insurance premiums to increase or even loss of coverage.

Finally, has the risk not being able to self fund long term care expenses recently increased, especially after retirement savings have taken a major hit (as in the past few weeks)? In What About Long Term Care Protection, the Long Term Care (LTC) Blog recommends long term care insurance as one way to minimize that risk.

Health Care and Health

Jason Shafrin presents Insured use emergency room more often for primary care issues than uninsured posted at Healthcare Economist, saying insured individuals are more likely to use the emergency room than uninsured individuals.

David E. Williams presents Will credit crisis reduce health care spending growth? at Health Business Blog. The credit crisis also poses serious risks for hospital finances, but may spell good news for health care cost control efforts.

Marc Onigman, of the aptly named Sleep blog, discusses recent research in Daylight saving time affects heart attack risk: study suggesting a causal link between changing to daylight savings time and the increased risk of a heart attack. On the other hand, Dr Isis from On Becoming a Domestic and Laboratory Goddess subjects that same study to a royal fisking in The Transition to Daylight Savings Time and the Risk of Myocardial Infarction..., reaching some very different conclusions.

Financial and Business

Nancy Germond presents Don't Forget Management By Walking Around saying "I went 'old school' on risk and took a walk down memory lane. I think with Excel and e-mail and wikis and teleconfering, managers have forgotten one key component."

Sun presents How Safe Are My Banks? posted at The Sun's Financial Diary. "In most cases, money in the banks is safe as long as the banks are members of the Federal Deposit Insurance Corporation (FDIC) and the total amount of money with a specific bank is under the FDIC insurance limit."

Raag Vamdatt presents Equity Investment is Risk Free - Here's the Proof posted at RaagVamdatt.com. "The riskiness of stocks depends on how long you keep invested. If you invest for the long term, equities are virtually risk-free. This is a very bold statement to make. So, let's analyze past 18 year's data, and see how risky stock investment actually is."

This concludes this edition of the Cavalcade of Risk. I hope you enjoyed reading these posts as much as I did. The next CoR will be hosted at Managed Care Matters on November 19, 2008.

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

Copyright © 2008 Achievement Catalyst, LLC

Election Day Freebies - Voter Rewards

USA Today published a list of establishments that will be giving freebies to voters on election day, November 4, 2008. Here are the ones I will try to get:

Free 12 ounce coffee at Starbucks.

Free star shaped donut at Krispy Kreme.

Free scoop of ice cream at Ben & Jerry's from 5PM to 8PM.

An "I voted" sticker will be sufficient proof of voting at Krispy Kreme. Based on the links, Starbucks does not appear to require any proof and Ben & Jerry's doesn't even require the recipient be a voter. The freebies are only available at "participating locations" and YMMV.

Enjoy!

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 27 to November 3, 2008

Here are links to the Carnivals in which My Wealth Builder participated from October 27 to November 3, 2008.

Carnival of Financial Planning

Festival of Stocks #113

Carnival of Family Life - The Very Late Edition

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

For more on Ideas You Can, 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

11/3/08 Stock Position Update - Big Rebound

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 up significantly last week, as was the market. The holdings gained 25.7% from the previous week. The overall portfolio is down 23.7% and the remaining holdings are down 37.5%. 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 10/31/08
Range Resources(RRC) [7/10/08]*	50	$58.17	$42.22
Potash (POT) [7/18/08]*	10	$215.09	$83.26
Southwestern Energy (SWN) [7/18/08]*	50	$39.46	$35.62
Potash (POT) [7/24/08]*	10	$192.02	$85.26

*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 and rebounded to $14.19 on 10/31/08. 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 10/31/08, the Dow, Nasdaq and S&P 500 indices were respectively down 28.18%, 35.11%, and 32.84% year to date. The three indices are now above a fifth bottom from the 10/27/08 update of -35.47%, -41.48%, and -39.24% 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. In addition, the election results this week will likely add to the volatility.

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