The Rise and Fall of Financial Alchemy

"You can't make a silk purse out a sow's ear." ~ Jonathan Swift

In the Middle Ages, alchemists searched for a process to transform base metals into gold and silver. During the past decade, the financial industry thought they could transform poor credit risk into good credit risk, high risk investments into low risk investments, and increase total wealth through creative debt instruments.

For a while, everyone believed financial alchemy was working. Virtually, anyone could get a home mortgage. 0% down, 125% of equity, no proof of income mortgages all occurred during the past 5 years. Home owners and buyers believed, as housing prices boomed. Risk was thought to be minimized as mortgages were divided up and packaged into collateralized debt obligations (CDO) that were sold to investors. Investment banks believed, as fees grew exponentially. Investors believed and bought up securitize debt like they were government bonds.

Then, home prices stopped rising, mortgage defaults increased, and securitized debt became illiquid. Reality set in as people realized home prices wouldn't go up forever to support the growing debt. Credit markets froze and the stock market sank precipitously, having it's worse yearly decline since the 1930s.

For now, financial institutions, investors and main street are hunkering down and returning to financial basics with respect to risk and debt. While painful, the deleveraging will create the foundation for the next economic boom. However, I expect that memories will be short, and we will see financial alchemy rise again, leading to another bubble, and subsequent burst.

Hopefully, I will recognize the signs of financial alchemy when it occurs again in the next few years.

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

Own Individual Bonds Instead of Bond Funds

For the bond portion of our portfolio, I prefer to own individual bonds and hold them to maturity over owning bond funds. My simple reason is that bond funds will fluctuate with interest rate volatility, while individual bonds will pay face value at maturity. How the Financial Crisis Impacts Your Retirement by Craig Guillot of Bankrate.com reports how retirees learned that their "safer" bond funds recently had negative returns. That's because from September to October, 2008, interest rates for non-Treasury bonds shot up, causing the market value of the bonds to decrease, and therefore reduced the net asset values (NAV) of bond funds.

The individual bonds in our portfolio also declined in value. However, since we were planning hold them to maturity, we expected to get 100% of our principal returned. In the meantime, we will continue to get 4 to 5% annual yields. Thus, it didn't matter the market value was lower in the short term, unless the bond was going to default, which is not very likely for the municpal bonds and CDs (which are treated like bonds in my brokerage accounts).

The downside of individual bonds is that there is less financial flexibility. The minimum investment is $1000 for CDs and $5000 - $10,000 for municipal bonds. The default risk is also higher for a single municipal bond, especially since bond insurers may not be able to cover losses. Finally, there is less liquidity, since selling a CD or bond before maturity often has to be done below the purchase price.

Here's what I do when owning individual bonds and CDs:

1. Own high quality municipal bonds and FDIC insured CDs. For municipal bonds, I try to stay with double A and Triple A that are insured, for what ever that's worth. Virtually all CDs are FDIC insure, make them relatively risk free for default.
   
   With the likely increase of corporate bankruptcies, I am currently staying away from corporate bonds.



2. Diversification. I typically limit the maxium amount of any issue to $10,000. That way if there is a default or bank failure, a maximum of $10,000 is at short term risk.



3. Short maturities. Most of the bonds and CDs mature in 5 years or less. In a moment of weakness, I did buy three callable bonds with attractive yields at 20 year maturities. One has already been called due to declining interest rates. I expect the other two will eventually also be called.



4. Laddering of maturities. I typically distribute the bond investments evenly across a five year time period. It enable me to hedge against both falling and rising interest rates, since 20% of the bond portfolio matures each year. Thus, if interest are falling, 80% of the portfolio is still invested at higher interest rates. If interest rates are rising, I have 20% of the portfolio to reinvest at the higher rates.

While our bond investment approach won't protect against significant short term inflation, it has provided an excellent financial buffer during the bear stock market of 2008. Of course, the benefit will be lost if there is a default. Therfefore, I have recently been shifting away from muncipal bonds and increasing the proportion of CDs, which are FDIC insured.

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

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

Copyright © 2008 Achievement Catalyst, LLC

Links To Carnivals from December 23 - 29 , 2008

Here are the Carnivals in which My Wealth Builder participated from December 23-29, 2008:

Festival of Frugality #154

Carnival of Education #203

Carnival of Personal Finance #185

Carnival of Family Life

Carnival of Twenty Something Finances

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

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

Turning a Great Small Business into a Fortune

From some of my business readings, I'm starting to get some insight into how people have turned small businesses into very large successful businesses. In both cases, the businesses start from a great idea, and grow with good execution and excellent customer service. In my opinion, the element that differentiates entrepreneurs who have great small business and those that make a fortune is the ability to create expansion capabilities that quickly allow the successful elements of the business model to be transferred. Expansion through the use of replication and scale capabilities is the element that differentiates the successful small business from the very success large businesses.

One example I like is the success story of Ray Kroc, the founder of McDonald's. Mr. Kroc did not create the idea of McDonald's. It was developed by the McDonald brothers who had one restaurant in California, which was a great success. At the time, Mr. Kroc was a milkshake equipment salesman and was impressed at the significantly higher number of machine the McDonald brothers purchased. He partnered with the brothers on franchising the restaurant and then eventually bought the entire business outright.

The McDonald brothers did well. They sold the restaurant equity in 1961 so that each one would receive $1 million after taxes. They had a great small business.

However, Ray Kroc did even better. He expanded their successful concept by creating innovative expansion capabilities such as McDonald's college, which ensured the consistency and quality of the food, service, and customer experience across the entire chain. In addition, new sites were researched and vetted by headquarters. Thus, the successful elements of the first restaurant were replicated across every new restaurant, and creating what is now a $68 billion business.

Another example I like is the success story of Henry Ford. He is mostly credited with the creation of the assembly line to mass produce cars, which was a great expansion capability. This allowed Ford to make cars of the same consistency and quality, at a much lower cost cars produced individually. However, an equally important expansion capability was the creation of a dealer network, as an outlet to take all the cars that were produced and deliver them to drivers. Thus, dealers bore the cost of carrying inventory, freeing up funds for Ford to produce more cars, enabling the company to operate at a much larger scale.

At this stage of my life, I think I would be happy to have a successful small business. However, should I ever want to be bigger , I would start hiring people who could help create expansion capabilities needed.

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

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

Copyright © 2008 Achievement Catalyst, LLC

12/29/08 Stock Position Update - Drifting Down

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 received sell signals for 5 out of 5 of the stocks by 11/2/08.

However, some of the metrics in the modified Unemotional Growth System indicate there may be a rally in the near term. Last week, I did a preliminary update for the buy list based on the system and will finalize it this week.

The portfolio was down slightly more than the market. The holdings lost 4.4% from the previous week. The overall portfolio is down 33.6% and the remaining holdings are down 51.2%. The only positive still has been the gain from shorting Las Vegas Sands. Otherwise, the prices of these stocks have been destroyed by the 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 12/26/08
Range Resources(RRC) [7/10/08]*	50	$58.17	$32.01
Potash (POT) [7/18/08]*	10	$215.09	$68.88
Southwestern Energy (SWN) [7/18/08]*	50	$39.46	$27.88
Potash (POT) [7/24/08]*	10	$192.02	$68.88

*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 didn't short 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.

I was looking for other stocks to short, but at this point, I think it's too risky to be shorting .

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 closed at $6.05 on 12/26/08. 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 12/12/08, the Dow, Nasdaq and S&P 500 indices were respectively down 33.95%, 42.3%, and 39.16% year to date, above the sixth low this year of 37.77%, 47.81%, and 44.39% from the 11/24/08 update.

Economists now acknowledge that the economy has been in recession since December, 2007. The lack of any significant gains since the TARP package approval, the post election decline, the recent Thanksgiving week rally, and the automaker bailout 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 up to 33% of the funds to raise cash at the end of this year.

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

2008 - Getting Over It and Moving On

2008 has been a tough year financially. Although I thought 2008 would be a poor year for investing, I didn't think it would be this bad. My plan to stay invested and ride out the downturn proved to be the wrong plan. Next week, when I do my quarterly financial update, I expect the results to be pretty dismal.

However, it won't do any good to relive 2008...it's done and will be over in a few days. Could have, would have and should haves won't change anything. The best thing to do is look forward to 2009 and try to recover from 2008.

In spite of beginning with the economy in recession, 2009 has a few good things going for it.

1. Oil prices are much lower. After peaking at $ a barrel in July, 2008, oil has fallen to a 5 year low of less than $34 a barrel. In my area, I've seen gasoline as low as $1.41 per gallon. For someone that drives 10,000 miles per year at 20 miles per gallon, that's a savings of $1300 per year versus $4.00 per gallon gas from this summer.
   
   It has been great paying $25 to fill a tank instead of the $80 I paid at the peak this summer.



2. Mortgage rates are falling. Thanks to the Fed rate cuts, mortgage rates are falling below 5% on 30 year fixed rates. Some have even predicted mortgage rates below 4%. For those that qualify, refinancing may be able to lower monthly payments significantly.
   
   In our case, we have about 59% equity in our home with a 5.375% fixed rate mortgage. If we refinance our remaining principal for 20 years at a 1% lower rate, we can lower our monthly payment by 18%.



3. Stocks have higher dividend yields. Dividend yields for the S&P 500 are at 2.90%. While low relative to historical values, it is higher than the 10 year treasury yield of 2.13%. Also, there are about 75 stocks with yields of 5 to 9%.
   
   While the first two are a "give-me,"this one is not quite as certain. In some cases, companies have been reducing or eliminating a dividend to conserve cash. Also, there is the risk that the recession will continue to reduce company earnings in 2009, leading stock prices to drop further.

Based on the above, I will enjoy the lower gas prices and look forward to mortgage rates dropping further. I also expect the stock market to start recovering, and may consider purchasing some high dividend stocks with 6-9% yields that I believe are sustainable.

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

This is not financial, investment, or re-financing advice. Please consult a professional advisor.

Copyright © 2008 Achievement Catalyst, LLC

12/28/08 Bottom Fishing Portfolio - Still No Bounce

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. I have been selling put contracts at one to two months from expiration on Monsanto and Energy Conversion Devices (ENER).

Three weeks ago, I decided to buy some Ford (F) call options, to capitalize on a possibility of a rebound if Congress supports an auto industry bailout. On December 2, 2008, I bought the December 5 call and on December 3, 2008, I bought the January 7.5 call. Since the automaker bailout did not cause a large bounce for Ford, the December calls have expired worthless.

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. Of the three financial stocks, Bank of America has been the worst pick. It also appears that I had been overly optimistic about the market impact o the automaker bailout. Because I believe Monsanto has a good business, I may buy another 25 shares of Monsanto this week. If Monsanto drops below 60, I will consider buying an additional 50 shares.

The portfolio was down 4.4% in the past week. The overall portfolio is down 34.41%, after reaching a low of -45.30% three weeks ago.

	Bottom Fishing Portfolio
Stock or Option [purchase date]	Shares	Purchase Price	Price on 12/26/08
Bank of America(BAC) [10/3/08]	100	$38.00	$13.36
J.P. Morgan (JPM) [10/3/08]	100	$49.74	$29.8
Wells Fargo (WFC) [10/3/08]	50	$37.07	$27.71
Monsanto (MON) [10/3/08]	50	$88.97	$67.72
Ford Dec 5 call (FLA) [12/2/08]	1000	$0.078	expired 12/20/08 at $0
Ford Jan 7.5 call (FAU) [12/3/08]	1000	$0.088	$0.02

Currently, I have profited from all four put contracts which have been closed or allowed to expired. Next week, I will consider selling some January put contracts short for both Monsanto and Energy Conversion Devices.

	Put Contracts Sold Short to Open
Option [short date]	Shares	Short Price	Closed Price
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	expired 12/20/08 at $0
Energy Conversion Dec 17.5 put (EQIXW) [11/25/08]	100	$1.39	expired 12/20/08 at $0

Unfortunately, it appears the rally from the Obama economic announcements has ended. The late November rally was the first five day rally since July, 2007 and the largest five day percentage gain since March 16, 1933. At this point, I am not very optimistic about a year end rally occurring. Perhaps, these stock may participate in a January effect rally which some experts predict is more likely in 2009.

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

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 Bright Side for my 2008

2008 was a difficult year to live off investment income, which is what I was planning to do when I took early retirement in 2007. However, in spite of the poor economy and horrible investment results, 2008 does have a bright side, which, in my opinion, is always worth acknowledging.

Here are some of the good things from 2008:

Another birthday. Yes, being year older is always great milestone. It's much better than the alternative:-)

Improved health and fitness. When I retired, I was drinking eight cups of coffee a day and my exit physical showed an irregular heartbeat. My feet hurt, causing me to limp, and I was overweight.

Fortunately, according to a specialist, the irregular heartbeat wasn't a symptom of an issue. I've cut out the coffee and started an exercise program. I've lost 7% of my weight and the foot pain is virtually gone.

Last week, I developed a personal strength training program with a fitness advisor at our health club. I'm looking to have significant improvements in this area in 2009.

More family time. Trading in 10-12 hour workdays for sharing more time with my spouse and daughter has been great. For example, attending pre-school activities and various lessons with our four year old daughter has been a great trade off. I'm glad I won't miss watching this stage of our daughter's life.

Hopefully, a seasonal part time job for the next few months won't be much of an interruption to our family time.

Personal development. I've taken several courses to learn about interest areas that may be part time employment opportunities during my retirement phase. The courses have ranged from home repair to gourmet cooking, with up to four classes in a week.

Prior to early retirement, I can only recall one non-work related course. I didn't realize how much I missed having variety when learning.

Even though I'm a personal finance junkie, the elements of a good life aren't all financial. However, in 2009, I hope that I can add investment results as one of the bright points of the year :-)

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

Inverse (Short) ETF Portfolio Update - 12/27/08

The stock market is continues to be strange nowadays, with little reaction to major events such as the Madoff $50 billion investment scam, the auto bailout bill failure, and subsequent TARP bailout of GM and Chrysler. Hopefully, the lack of volatility is an indication that a rally is beginning...

To hedge against the market falling, I have small positions of Ultrashort Real Estate Proshares (SRS), Ultrashort Financial Proshares (SKF) and Ultrashort Oil & Gas Proshares (DUG). These are inverse market index ETFs, meaning they rise when the market falls and vice versa.

	Hedging in a Volatile Market
Inverse ETF [purchase date]	Shares	Purchase Price	Price on 12/26/08
Ultrashort Oil & Gas Proshares (DUG). [11/21/08]	100	$38.21	$27.72
Ultrashort Financial Proshares (SKF) [12/11/08]	20	$118.99	$116.82
Ultrashort Real Estate Proshares (SRS) [12/11/08]	20	$81.64	$55.50
Ultrashort Real Estate Proshares (SRS) [12/17/08]	20	$62.62	$55.50

I purchased these ETF because I believed they would provide some protection if the market should fall. However, upon further investigation, I learned that these ETFs can fall even if the market index declines over time, due to the ETFs being base on the daily return of the index, which Proshares customer service confirmed when I asked them about my observation. The Motley Fool has a great explanation, with an example, of how these 2X inverse ETFs may not protect against a long term decline in the index.

Based on my new learnings, I will not buy any additional inverse ETFs and look to unwind these positions, hopefully at a profit, but at a loss if needed.

Lesson learned: Don't buy derivative investments when I don't fully understand how they work, as in the case of 2X inverse ETFs.

Disclosure: At the time of publication, I own shares of the Ultrashort Real Estate Proshares (SRS) , Ultrashort Financial Proshares (SKF), and Ultrashort Oil & Gas Proshares (DUG).

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

Required Minimum Distributions for 2009 Suspended

"A day late and a dollar short." ~ idiom

Congress OKs bill to help retirees protect savings plan by Sandra Block in USA Today, report that Congress has passed a bill, H.R. 7327, to suspend Required Minimum Distributions (RMD) for 2009. RMDs currently must be taken taken from tax deferred retirement plans beginning in the year one turns 70 1/2. Suspending RMDs will allow retirement accounts time to recover some for the losses of 2008, before a withdrawal of funds is made.

RMDs are typically based on the the value of the retirement accounts on December 31 of the previous year, making 2008 RMDs were particularly painful since many accounts are much lower than the December 31, 2007 value. Therefore, suspending the 2008 RMDs would have been the most helpful legislation for retirees, which, unfortunately, Congress has not done.

A bill, H.R 7315, was introduced on December 9, 2008, to suspend 2008 RMDs retroactively. However, the bill is still in committee has not gone to vote.

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

Merry Christmas 2008

We'll be celebrating and opening presents with my in-laws today. This weekend, we'll be hosting my spouse's extended family holiday gathering for the first time. It's always fun to have three generations together for a party. There is always a great diversity of ages, topics and points of view.

Wishing you and your family a Merry Christmas and prosperous New Year.

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

Photo Credit: morgueFile.com,Mary R. Vogt

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

Copyright © 2008 Achievement Catalyst, LLC

Set Deadlines to Achieve Financial Goals

"Nothing focuses the mind like the sight of the gallows." attributed to Samuel Johnson

The restriction of time allotted to an activity can help increase motivation and movement towards a goal. In addition, deadlines often help me better prioritize tasks and focus on the most important ones. For example, setting a goal of being a millionaire by 30 creates a higher sense of urgency than a goal of being a millionaire with no specific age. Without a time limit, it can be easy to pass on important tasks when there isn't a clear endpoint.

In my experience, here are some elements that are often necessary to effectively meet a deadline:

1. Commitment - Needless to say, being committed to a deadline is important. In one of my assignments in another country, a common practice was to assign a new deadline when the existing one was missed. This resulted in about 90% of the deadlines being moved later during each weekly meeting. Unfortunately, deadlines were moved multiple times and were only occasionally met.
   
2. Good planning - Know the steps that need to be done and scheduling them appropriately is a critical element to meeting a deadline. A missed step or reworking a step can sometimes add time to the plan.
   
3. Access to necessary resources - Getting something complex done often requires more resources than a single individual and his knowledge. The ability to utilize the resources needed, when they are needed is a critical element.
   
4. Excellent execution - Being fast and efficient at doing the tasks is a plus when working against a deadline.

While deadlines won't guarantee a successful outcome, they often offer the opportunity to check progress and, if needed, decide on a new direction to achieve the goal.

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

Pre-Paid Phones Save Money

Newly Budget-Minded Turn to Prepaid Phones by Andrew Lavalee in The Wall Street Journal reports how people are saving by converting from a cellphone service contract to pre-paid phone services, such as those offered by Virgin Mobile USA. The cost savings can range from $30 to $70 per month depending on the current contract. Pre-paid phone can cost as little as $10 per month, after a $10 investment in the phone.

My spouse has been using a Virgin Mobile pre-paid phone for about two years, and has had a very good experience. It works since she only makes calls as needed, versus using a cellphone to pass the time while driving or during other down time.

Of course, I think the best cost saving is to not own a cell phone, which is the case for me. For now, a cell phone is among the things that I don't want or need.

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

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

Copyright © 2008 Achievement Catalyst, LLC

Links To Carnivals from December 20-22, 2008

Here are the Carnivals in which My Wealth Builder participated from December 20 to 22, 2008:

Carnival of Financial Planning

Carnival of Family Life: Merry Christmas Edition

Tax Carnival #44: Stocking Stuffers 2008

Carnival of Personal Finance #184: From the Land Down Under

Festival of Stocks #120

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

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

Copyright © 2008 Achievement Catalyst, LLC

Timeless Financial Strategies that also Work in Early Retirement

"It's deja vue all over again." ~ Yogi Berra

The financial world is similar in some ways to the early 1980s, when I started my career. The U.S was in a recession, and stocks were an underpeforming investment. The differences were interest rates and inflation was much higher, being in the teens. However, the financial strategies that I developed and used then still seem relevant today. Although I retired early in 2007, I still hope to live at least another 50 years, requiring that we still have long term financial strategies.

Here are the strategies from 25 years ago that we will continue to use today and in the future:

1. Have an emergency fund as a buffer. In the 1980's, the buffer was our savings, which I regularly added to each month with a philosophy of "paying myself first." Now that we are retired, we're no longer saving. Instead, we have put five years expected expenses in cash and cash equivalents, which could be viewed as a very big emergency fund :-)



2. Allocate according to risk tolerance. Being conservative, my spouse and I have kept the majority of taxable account savings in CDs, bonds and money market funds. In the 1980's, I fortunate to get five year CDs at interest rates of up to 14%. Today, we're lucky if we can get 4% interest rates on five year CDs.
   
   While we have not earned as high returns as being invested in the stock market, we don't experience types of declines that happened in 2008.



3. Take risk only if one can accept downside volatility with the funds. We only invest funds in the stock market that we don't need for the next five years. For example, my company retirement account were 100% invested in our company stock, which was OK since the funds weren't need for many years. Now that I control the account, I am reallocating this portion to a diversified stock portfolio.
   
   Fortunately, the company stock has done well returning about 15% annually on funds invested in the 1980s and is only down 17% this year. However, it has also had significant down years, dropping over 50% in 2000.

Due to the 2008 decline in our stock investments, we have implemented a new strategy of reducing our withdrawal rate. Our approach is to take one some flexible part time work, which provides about 10% of our income needs.

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

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

Copyright © 2008 Achievement Catalyst, LLC

12/22/08 Stock Position Update - Still No Year End Rally

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 received sell signals for 5 out of 5 of the stocks by 11/2/08.

However, some of the metrics in the modified Unemotional Growth System indicate there may be a rally in the near term. Therefore, I plan to update the buy list based on the system this week.

The portfolio was flat last week, as was the market. The holdings gained 0.1% from the previous week. The overall portfolio is down 32.0% and the remaining holdings are down 48.9%. 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 12/19/08
Range Resources(RRC) [7/10/08]*	50	$58.17	$34.34
Potash (POT) [7/18/08]*	10	$215.09	$72.26
Southwestern Energy (SWN) [7/18/08]*	50	$39.46	$28.23
Potash (POT) [7/24/08]*	10	$192.02	$72.26

*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, rebounded to $14.19 on 10/31/08 before falling again to $3.23 on 11/21/08. It closed at $6.68 on 12/19/08. 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 12/12/08, the Dow, Nasdaq and S&P 500 indices were respectively down 33.5%, 41.2%, and 38.15% year to date, above the sixth low this year of 37.77%, 47.81%, and 44.39% from the 11/24/08 update.

Economists now acknowledge that the economy has been in recession since December, 2007. The lack of any significant gains since the TARP package approval, the post election decline, the recent Thanksgiving week rally, and the automaker bailout 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 up to 33% of the 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, Range Resources, 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

Design Changes and Content Renewal

Over the weekend, My Wealth Builder was updated to the New Blogger Layout design. Although, I had converted to New Blogger in January, 2007, I waited almost two years to convert to the new editing templates, since previously I was unable to keep both the 3-column format and the blog aesthetics. However, I recently found a solution and did the conversion in a few hours over the weekend.

Hopefully, regular readers didn't have any difficulty in accessing My Wealth Builder in the last two days.

Design Changes

The changes are minor, with an improved blogroll, a compression of the archives section, and the addition of labels.

I have combined Regular Reads, Personal Finance Friends, Investors Blog Network blogrolls into a single section of My Blog List, with the feature of showing the most recent post and listingthe blogs in order by recency of posting activity. I like this feature since I can quickly check if I want to read an article by a blogger on my list.

The archives section has been getting long, since My Wealth Builder has been publishing for over two years. With New Blogger layouts, I've been able to compress the archive section to a drop down menu.

Finally, I've been able to add a Labels section for readers who would like to see a group of posts covering the same topic. I've listed the labels by frequency in descending order. I haven't used this feature when reading other blogs, and may drop it if readers do not find it beneficial.

Content Renewal

In reviewing My Wealth Builder's content, I realized that it has evolved to spending a large proportion on the stock market and investing, reflecting my recent personal finance focus areas. This was not the original intent of the blog when I redesigned it in 2007. Here's the schedule of topics, with descriptions from that post:

Monday	Strategy and Execution - This segment is about my objectives, goals, plans and implementation for building wealth.
Tuesday	Ideas You Can Use - This segment will include tips, techniques, or current deals that are in the market. A regular article will be a "Carnivals to Read This Week" post with a My Wealth Builder Carnival pick.
Wednesday	The Practice of Personal Finance - This segment will cover habits and practices that I believe are important for success. Topics such as Mastery of Financial Concepts, Career, and Education will be part of this section.
Thursday	Crossing Generations - This segment covers personal finance topics related to my parents (e.g. inheritances, caring for the elderly) and my children (e.g teaching good financial practice, estate planning.)
Friday	Reaping the Rewards - This segment will be about preparing for and then enjoying retirement. This section will also be about about stewardship - where we manage and enjoy the rewards of our wealth.
Saturday	Reflections and Musings - This segment is intended to give me the opportunity to write about a wide variety of topics, including reviews, op-eds, human interest stories, and humorous observations.
Sunday	New Realities and New Beginnings - This segment is about being agile as the dynamics of personal finance, career success, and the global marketplace are creating rapid change. This segment will include philosophies, strategies, tips and techniques for managing and staying ahead of change.

In 2009, I will be publishing more content related to these topics and a lower percentage related to the stock market.


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

Making Old Family Christmas Traditions our New Ones

As a child, Santa Claus would always come early to our house on Christmas Eve, in time for my sister and me to open our presents before going to bed. On Christmas Eve, our parents would ask if we would want to go out to look for Santa's sleigh. We'd all get in the car, drive around the block, with our parents point out sitings of Santa. Upon returning, we'd find that Santa had indeed come and left presents. What a great holiday...staying up late and getting presents.

We did this for many years, until the discovery that Santa wasn't real. I wasn't so much disappointed in the non-existence of Santa as I was in not being able to figure out how the presents got into our house on those numerous Christmas Eve drives. Finally, I had to ask my mother, "If Santa isn't real, how did you get the presents into the house while we were out driving." Even back then, the engineer in me was showing through as I wanted to know how it worked. My mom smiled and replied, " Remember, I always needed to go back in and check something, after we were all in the car. That's when I put out the presents." I nodded and although I didn't remember, it made perfect sense.

Our four year old daughter is now at the age of knowing that Christmas is a very special day, filled with religious celebration, parties and presents. While previous Christmas days just happened, our daughter has been talking about , the birth of Jesus, Santa Claus, decorating and getting ready for several weeks. She even has a Christmas chain from school to count the number of days left.

My spouse and I have been discussing the Christmas traditions we want to add to our family celebration of the holiday. Last year, we started with reading Christmas stories in the days leading up to the event. This year, we'll be driving around the block on Christmas Eve to look for Santa's sleigh and finding that he has come early enough for our daughter to open the presents before going to bed. I had fond memories of doing this and hope that she will too.

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

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

Copyright © 2008 Achievement Catalyst, LLC

12/21/08 Bottom Fishing Portfolio Update - Still Down Signficantly

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. I have been selling put contracts at one to two months from expiration on Monsanto and Energy Conversion Devices (ENER).

Two weeks ago, I decided to buy some Ford (F) call options, to capitalize on a possibility of a rebound if Congress supports an auto industry bailout. On December 2, 2008, I bought the December 5 call and on December 3, 2008, I bought the January 7.5 call.

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. Of the three financial stocks, Bank of America has been the worst pick. It also appears that I had been overly optimistic about the market impact automaker bailout.

The portfolio was up 0.8% in the past week. The overall portfolio is down 29.68%, after reaching a low of -45.30% three weeks ago.

	Bottom Fishing Portfolio
Stock or Option [purchase date]	Shares	Purchase Price	Price on 12/19/08
Bank of America(BAC) [10/3/08]	100	$38.00	$13.80
J.P. Morgan (JPM) [10/3/08]	100	$49.74	$30.32
Wells Fargo (WFC) [10/3/08]	50	$37.07	$29.36
Monsanto (MON) [10/3/08]	50	$88.97	$71.63
Ford Dec 5 call (FLA) [12/2/08]	1000	$0.078	expired 12/20/08 at $0
Ford Jan 7.5 call (FAU) [12/3/08]	1000	$0.088	$0.02

Currently, I have profited from all four put contracts which have been closed or allowed to expired. Next week, I will consider selling some January put contracts short for both Monsanto and Energy Conversion Devices.

	Put Contracts Sold Short to Open
Option [short date]	Shares	Short Price	Price on 12/12/08
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	expired 12/20/08 at $0
Energy Conversion Dec 17.5 put (EQIXW) [11/25/08]	100	$1.39	expired 12/20/08 at $0

Unfortunately, it appears the rally from the Obama economic announcements has ended. The late November rally was the first five day rally since July, 2007 and the largest five day percentage gain since March 16, 1933. At this point, I am not very optimistic about a Santa Claus rally occurring.

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

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

Inverse (Short) ETF Portfolio Update - 12/20/08

The stock market is definitely strange nowadays, with little reaction to major events such as the Madoff $50 billion investment scam, the auto bailout bill failure, and subsequent TARP bailout of GM and Chrysler. Hopefully, the lack of volatility is an indication that a rally is beginning...

To hedge against the market falling, I have small positions of Ultrashort Real Estate Proshares (SRS), Ultrashort Financial Proshares (SKF) and Ultrashort Oil & Gas Proshares (DUG). These are inverse market index ETFs, meaning they rise when the market falls and vice versa. Last week, I added 20 more shares of Ultrashort Real Estate Proshares (SRS) to our trading account.

	Hedging in a Volatile Market
Inverse ETF [purchase date]	Shares	Purchase Price	Price on 12/19/08
Ultrashort Oil & Gas Proshares (DUG). [11/21/08]	100	$38.21	$32.68
Ultrashort Financial Proshares (SKF) [12/11/08]	20	$118.99	$110.40
Ultrashort Real Estate Proshares (SRS) [12/11/08]	20	$81.64	$58.76
Ultrashort Real Estate Proshares (SRS) [12/17/08]	20	$62.62	$58.76

At this point, it appears the market will be flat to slightly positive in the short term. Personally, I wouldn't mind a year end rally, even if it means losses for these inverse ETFs. However, if the market falls instead, I will have some protection through these ultrashort ETFs.

Disclosure: At the time of publication, I own shares of the Ultrashort Real Estate Proshares (SRS) , Ultrashort Financial Proshares (SKF), and Ultrashort Oil & Gas Proshares (DUG).

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

My Worst Money Nightmare

When lottery jackpots are over $100 million, I like to buy one or two tickets on a chance to win. For sentimental reason, I typically play one set of numbers related to important dates for our family.

My worst money nightmare is having my numbers win, when I haven't purchased a ticket.

Realistically, I shouldn't have to worry about this nightmare coming true. As noted in A Very, Very, Bad Retirement Plan, the odds of winning are 1 in 175,711,536, meaning my nightmare would occur once in 1,689,000 years, statistically speaking:-)

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

Recalibrating Expected Annual Stock Market Gains

For many years, the stock market seemed to be sure way to retirement riches. With 10% average returns (prior to the most recent decade), the stock market would turn savings into riches through the process of compound interest. Indeed, I have written about 10 to 12% annual stock market returns in Retirement Saving Challenge - The Power Of Compounding and Why Most People Get Returns Less Than The Market

Now, it seems a long term bull market may have caused some to (mis)take average annual returns for guaranteed annual returns. As a result, there may have been over allocation of savings in the stock market, due to the belief that future returns would match the historical 10%. Unfortunately, 2008 has proven there are expecting average annual returns from the stock market each year can be devastating, as many diversified portfolios are down 40 to 50%, with little hope for recovering losses soon.

At this point, we have reduced our expected stock market gains to 7% annualized returns, with possible +/- 30% variation. In recognition of the high yearly volatility, we will only invest money in the stock market which is not needed for at least five years. Money needed for the short term will be kept in CDs, bonds, and money market funds. That way, significant declines in the stock market , such as in 2008, won't affect the funds needed for expenses in the current year.

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

Educating for the Future

Although I am not an expert or practitioner in the field of education, I've come to the conclusion we need to upgrade our K-12 curriculum to educate our children for future challenges.

In my opinion, our current curriculum was designed to prepare children for the transition from an agricultural economy to an industrial economy. It focuses on developing abilities to read, write and use math. This was great training to prepare people for work in manufacturing, i.e. the industrial economy.

As the world moves towards a knowledge economy, reading, writing and math will continue to be important, but not sufficient, skills to have. Here are two important capabilities I believe need to be included for our children to be competitive in the future economy:

Problem solving - I believe the world is becoming more complex, creating more challenges that require solutions to address multiple dimensions. Today's basic education won't prepare our children for the future they will face. A start for a problem solving curriculum could be combining core skills such as reading, writing and math with critical thinking skills to objectively analyze a situation, develop potential solutions, and implementing them.

Engineering is one example of a "problem solving" education. However, I think the principles of problem solving should be taught in K-12 and expanded past science solutions.

Money management - I believe financial skills will be an important part of the future knowledge economy, as important as knowing how to read, write, and math were in the past. The average person already needs to manage a range of financial instruments, which are sure to keep growing in the future.

For me, the basics will include managing personal finances. However, it will also be important to understand and use advanced concepts such as compound interest, debt amortization (including mortgages), investing, and retirement.

Unfortunately, I don't think changes like these will be made by the time our daughter enters kindergarten. Therefore, as parents, we will likely carry the responsibility to teach these concepts.

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

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

Copyright © 2008 Achievement Catalyst, LLC

The Discipline of Using Cash Simplifies Budgeting

I am a big fan of a budget being low effort. There are too many other things I'd rather do than to rigorously track my spending numbers. In To Budget or Not to Budget..., I wrote that I "paid myself first" in place of keeping a detailed budget and in A 60/40 Approach to Budgeting Money, I shared a three bucket money management approach that we used in place of a budget. In today's segment, I'd like to share how living on a cash basis also helped me keep budgeting simple.

For reference, I learned about spending on a cash basis because I lived without a credit card until sometime after college. That's because I graduated in the dark ages :-), before credit cards were offered to college students. Back then, everything I spent was by cash or check. When the money was gone, I had to stop spending.

Spending on a cash basis forced me to make choices. If there wasn't enough money, I had to choose between item A or item B. I couldn't have both. The discipline of cash basis spending evolved into a habit even as I started using credit cards for convenience.

In A 60/40 Approach to Budgeting Money, I shared that we used three money buckets for our funds, before I took early retirement. First, we put 24% in our retirement savings accounts. Second, we put 16% in our saving for large purchases account, enabling to pay cash for all items up to a car. Finally, the remaining 60% was put in our spending account, which for is our joint checking account.

Admittedly, we did not strictly adhere to cash basis spending since we used a credit card for daily expenditures and paid off the balance each month. However, we still operated as if we only used cash, since we only put a fixed amount to our checking account each month and we kept the amount spending below that level.

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

Frightening Market Predictions and How I'm Reacting

8 really, really, scary predictions by Fortune offers some doom and gloom from some leading economic and investing experts. Overall, these experts believe 2009 will be a very bad economic year, where many investments will be risky and one should preserve capital and be safe. I quoted some of the summary points from the article in the bullet points below.

Nouriel Roubini, NYU economics professor - "For the next 12 months I would stay away from risky assets. I would stay away from the stock market. I would stay away from commodities. I would stay away from credit, both high-yield and high-grade. I would stay in cash or cashlike instruments such as short-term or longer-term government bonds. It's better to stay in things with low returns rather than to lose 50% of your wealth. "

Bill Gross, bond mutual fund manager - "Investors need to recognize these titanic shifts in market and public policies and be content with single-digit returns in future years. ... Above all, stick to high-quality companies and asset classes. The road to recovery will be treacherous.

Robert Schiller, Yale economics professor - "But after the stock market crash of 1929, the price/earnings ratio got down to about six, which is less than half of where it is now. So that's the worry. Some people who are so inclined might go more into the market here because there's a real chance it will go up a lot. But that's very risky. It could easily fall by half again."

Sheila Bair, FDIC chairman - "We need to return to the culture of thrift that my mother and her generation learned the hard way through years of hardship and deprivation. Those are lessons learned that the current crisis is teaching us again."

Jim Rogers, commodities investor - "In my view, U.S. stocks are still not attractive. Historically, you buy stocks when they're yielding 6% and selling at eight times earnings. You sell them when they're at 22 times earnings and yielding 2%. Right now U.S. stocks are down a lot, but they're still very expensive by that historical valuation method. The U.S. market is yielding 3% today. For stocks to go to a 6% yield without big dividend increases, the Dow will need to go below 4000. I'm not saying it will fall that far, but it could very well happen. And if it gets that low and I'm still solvent, I hope I'm smart enough to buy a lot. The key in times like these is to stay solvent so you can load up when opportunity comes."

John Train, investment advisor - "In the present environment I favor companies that can prosper in the lean years ahead. So, not Saks, but Wal-Mart; not Neiman Marcus, but Dollar General. Or specialists, such as Fastenal, Monsanto, or Schlumberger. And when should you buy? In or near what I call the Time of Deepest Gloom, if you can spot it."

Merideth Whitney, bank analyst - "I think the overall economy will be worse than people expect. The biggest issue will be consumer spending. If 2008 was characterized by the market impacting the economy, then 2009 will be about the economy impacting the market. It's already started. "

Wilbur Ross, billionaire - "If President Obama promptly and decisively resolves these problems, whether or not he adopts my recommendations, and restores public confidence, he can end the recession by early 2010. If not, the economy will languish for a long time."

Some investors might see the overwhelmingly bearish sentiment as a sign the market is near the bottom. However, I think there is some merit to their forecasts. Therefore, I am not adding any new money to invest and am hedging with some inverse ETFs, in case the market falls further. At this point, I will continue to stay invested with what is already in stocks, but trim as much as 33% to be reinvested later, either after a market decline or rise.

Disclosure: At time of publication, I own shares of Monsanto and Wal-Mart in a managed account and Monsanto in a trading account.

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

Retailers Offering Great Deals to Attract Holiday Shoppers

Analysts expect more discounts as Christmas nears reports that stores as offering larger discounts with only 8 shopping days remaining. This past weekend shoppers found discounts of 50, 60 and even 70 percent.

Based on our experience, retailers are going all out to get our business. Recently, we received a J.C. Penney $10 off coupon for any purchase of $10 or more, which was great to use for a small gift. My spouse is regularly finding gift items at 50% off, before applying discounts from coupons. In addition, we've found that cashiers are very flexible in helping us find discounts that we didn't expect.

Although I'm not a big fan of holiday shopping, I may venture out in the next few days to see if I can find any deals too good to refuse, such as a loaded laptop for under $200:-)

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 December 9 - 15, 2008

Here are the Carnivals in which My Wealth Builder participated in from December 9 -15, 2008:

Carnival of Money Stories #88

Money Hacks Carnival #42

Carnival of Conservatism

BoBo Carnival of Politics

Carnival of Financial Planning

Festival of Stocks #119

Carnival of Family Life

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

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

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

Copyright © 2008 Achievement Catalyst, LLC

Be the Go-To Guy

Bulletproof Your Job: 4 Ways to Stay Employed by Patrick Erwin at CareerBuilder.com offers these four approaches, which are based on the book Bulletproof Your Job: 4 Simple Strategies to Ride Out the Rough Times and Come Out on Top at Work by Stephen Viscusi, for being valuable to an employer:

Be Visible - Simply, be noticed by one's management by taking certain actions. In addition to his examples, I would add "write summaries, proposals, and recommendations."

Be Easy - Don't cause trouble for one's boss. In my opinion, a time tested principle that many poor performers don't follow.

Be Useful - Take on additional work and consistently over deliver. If I had to give one factor credit for my mid-career success it would be this element.

Be Ready - To deal with any circumstance, including change. I would add to make "success" the only option.

Overall, I thought the points were good. Based on my career experience, I could simplify to one factor, "Be the go-to guy" for the high priority and crisis work. Looking back on my experience, I realize that I was the go-to guy for a number of important projects in our business in the middle of my career. It was during that time that I advanced significantly and quickly, both in level and compensation.

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

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

Copyright © 2008 Achievement Catalyst, LLC

12/15/08 Stock Position Update - No Santa Claus Rally Yet

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 received sell signals for 5 out of 5 of the stocks by 11/2/08. To me, it's still not a good time to buy stocks yet.

The portfolio was up last week, in spite of a relatively flat market. The holdings gained 16.3% from the previous week. The overall portfolio is down 31.9% and the remaining holdings are down 48.9%. 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 12/12/08
Range Resources(RRC) [7/10/08]*	50	$58.17	$36.15
Potash (POT) [7/18/08]*	10	$215.09	$66.55
Southwestern Energy (SWN) [7/18/08]*	50	$39.46	$28.78
Potash (POT) [7/24/08]*	10	$192.02	$66.55

*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 closed at $5.94 on 12/12/08. 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 12/12/08, the Dow, Nasdaq and S&P 500 indices were respectively down 33.11%, 41.91%, and 38.73% year to date, above the sixth low this year of 37.77%, 47.81%, and 44.39% from the 11/24/08 update.

Economists now acknowledge that the economy has been in recession since December, 2007. The lack of any gains since the bailout package approval, the post election decline, and the recent Thanksgiving week rally 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 up to 33% of the 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, Range Resources, 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

Auto Bailout Bill Failure - Democrats Should Start Admitting Responsibility

The media, UAW leadership and Democratic congressional leaders have attributed Thursday's failed auto bailout bill to southern Republican Senators voting against the legislation. I can understand why people have concluded that Republicans caused the bill to fail. The bill required 60 yes votes to be considered, and failed by a 52 -35 roll call vote, with 31 Republicans voting against the bill. However, in looking at the voting data in the table below, I conclude the Democrats have equal or greater responsibility.

Here is the breakout of the overall votes:

	Senate Vote for Considering Auto Bailout Bill
Party Affiliation	Yes	No	Did Not Vote
Democrat	40	4	4
Republican	10	31	4
Independent	2	0	0
Total	52	35	8

According to an Associated Press article $14B auto bailout dies in Senate, "Majority Leader Harry Reid, D-Nev., called the bill's collapse 'a loss for the country.'" To me, it seems that the eight Democratic Senators who did not vote for to consider the bill would have given the bill the 60 vote count needed for consideration. Ironically, Reid was among the four Democratic Senators that voted no (Baucus, Mont.; Lincoln, Ark.; Reid, Nev.; Tester, Mont.). Three out of the four that did not vote (Biden, Del.; Kennedy, Mass.; Kerry, Mass.; Wyden, Ore.) were also a surprise to me.

As noted Political Ironies from the Financial Crisis, the Democrats need to understand that they're in charge now and are accountable for future results, whether they act or not.

For a detailed break out of the vote by party affiliation, see this article . For a breakout of the vote by state, see this article.

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

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

Copyright © 2008 Achievement Catalyst, LLC

12/14/08 Bottom Fishing Portforlio Update - Down During an Up Week

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.

Two weeks ago, I decided to buy some Ford (F) call options, to capitalize on a possibility of a rebound if Congress supports an auto industry bailout. On December 2, 2008, I bought the December 5 call and on December 3, 2008, I bought the January 7.5 call.

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. It also appears that I have been overly optimistic about the occurrence automaker bailout.

The portfolio was down 7.8% in the past week. The overall portfolio is down 31.11%, after reaching a low of -45.30% three weeks ago.

	Bottom Fishing Portfolio
Stock or Option [purchase date]	Shares	Purchase Price	Price on 12/12/08
Bank of America(BAC) [10/3/08]	100	$38.00	$14.93
J.P. Morgan (JPM) [10/3/08]	100	$49.74	$30.94
Wells Fargo (WFC) [10/3/08]	50	$37.07	$26.72
Monsanto (MON) [10/3/08]	50	$88.97	$69.73
Ford Dec 5 call (FLA) [12/2/08]	1000	$0.078	$0.04
Ford Jan 7.5 call (FAU) [12/3/08]	1000	$0.088	$0.03

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.

	Put Contracts Sold Short to Open
Option [short date]	Shares	Short Price	Price on 12/12/08
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	$0.10
Energy Conversion Dec 17.5 put (EQIXW) [11/25/08]	100	$1.39	$0.39

Unfortunately, it appears the rally from the Obama economic announcements has ended. The rally was the first five day rally since July, 2007 and the largest five day percentage gain since March 16, 1933. At this point, I am not very optimistic about a Santa Claus rally occurring.

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

Dealing with a Schizophrenic Market

On Thursday night after the auto bailout vote failed, Senate Majority Leader Harry Reid, "I dread looking at Wall Street. It's not going to be a pleasant sight." Yesterday, I fully expected the Senate failure to deliver an auto bailout bill to cause a meltdown in the stock market.

Boy was I wrong.

It seems the market no longer reacts as people might expect. After the Dow lost about 200 points at the open, the market ended up 64.59 for the day. Previously, on October 3, 2008, I bet on the market rallying after the $ 700 billion bailout bill passed, only to see my investments fall precipitously in the ensuing weeks.

While I was thinking an auto bailout would cause market to rally, I am definitely not sure. If the Bush adminstration provides a bailout loan, the market may fall as it did after the TARP bill passed on October 3, 2008. To hedge against the market falling, I added the Ultrashort Real Estate Proshares (SRS) and Ultrashort Financial Proshares (SKF) to my current holding of the Ultrashort Oil & Gas Proshares (DUG). These are inverse market index ETFs, meaning they rise when the market falls and vice versa.

	Hedging in a Volatile Market
Inverse ETF [purchase date]	Shares	Purchase Price	Price on 12/12/08
Ultrashort Oil & Gas Proshares (DUG). [11/21/08]	100	$38.21	$30.51
Ultrashort Financial Proshares (SKF) [12/11/08]	20	$118.99	$122.36
Ultrashort Real Estate Proshares (SRS) [12/11/08]	20	$81.64	$77.25

The stock market is definitely strange nowadays. Hopefully, it will rally if a bailout is announced next week. If the market falls instead, I will have a little protection through these inverse ETFs.

Disclosure: At the time of publication, I own shares of the Ultrashort Real Estate Proshares (SRS) , Ultrashort Financial Proshares (SKF), and Ultrashort Oil & Gas Proshares (DUG).

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