Wall Street

Why Oprah Deserves to Be Rich and the Wall Street Moguls Deserve...

U.S. Magazine reports that Oprah makes $385 Million per year. "Though Oprah started her life in poverty she was regarded as the richest woman in entertainment by the beginning of the 1990s," the magazine editors tell us. "Later by the age of 41 Oprah had managed to replace veteran actor Bill Crosby on the Forbes 400 with her 340 million green backs. By the year 2000 her net worth had exceeded $800 million." She is now reported to be the countries first self made female billionaire. And I think she deserves to be rich. More…

Don't try to catch a falling knife

A confession. I sometimes buy individual stocks. Not often. And never with very much money because I really do practice what I preach and believe in having a fully diversified portfolio. (Besides, I have three kids in college. There isn't a whole lot of money to spare.) But, I will from time to time I will buy a stock because I think I have spotted something that most people have missed. So, how do I with my little investing hobby.? Not great. My biggest failing is that I try to identify when I think the price of a good stock has hit bottom. Almost always, I buy too soon. What triggered this thought was the price of Citibank. I thought about buying it when it fell to $10 a share. And again at $8. And I almost placed an order when it dipped below $4. More…

Example 671 of Why to Think Long Term

It isn't often I get a chance to impress a bunch of 20 year-olds, otherwise known as my kids, but it happened yesterday. We are down in Florida on vacation, and over breakfast--well brunch; they don't get up early--I said with absolutely confidence that I could predict how the stock market would do for the day.I promised it would drop. How did I know? I didn't of course. But I did read a story in Wednesday's Wall Street Journal about how stocks were up 20% from their November lows. The story went on to hint that maybe the carnage on Wall Street was over. Any time a media person says "A," think "Z" and so I predicted the down day and I was correct. The Dow fell 2.7% The point: Ignore day to day gyrations in the market. More…

One New Year’s Resolution

For most Americans the New Year really starts today. Everyone is done visiting for the holidays and is returning to work or school. I am a not a big believer in resolutions, but here is one I plan to keep. I will continue to save aggressively for retirement. Yep, 2008 on Wall Street was a disaster. The Dow was down 33.8%. The S&P fell 38.5% and the NASDAQ was even worse—off 40.5%. Even with that dismal performance, over then last 85 years or so, stocks have outperformed every other investment there is. If you want to have enough money to retire the way you want, you have to keep investing in stocks. I plan to. I hope you will too. And, of by the way, “Happy New Year.” More…

We Might as Well Share in the Rewards

From today's Wall Street Journal: 'The U.S. government is expected to take stakes in nine of the nation's top financial institutions as part of a new plan to restore confidence to the battered U.S. banking system, a far-reaching effort that puts the government's guarantee behind the basic plumbing of financial markets." You can make the case, as I have, that the government should not be in the bailout business. (It simply isn't the way capitalism is supposed to work.) But, if taxpayers are going to be on the hook for guaranteeing loans to AIG and bailing out the banks, we might as well share in the upside. More…

Money for Nothing

Here are a couple of random thoughts, while waiting for the market to open. Should the L.A. Dodgers play the Red Soxs in the World Series, the Soxs will be paying for Dodgers outfielder Manny Ramirez to beat them. (Part of the trade that sent Manny from the Red Soxs to the Dodgers during the season required the Soxs to continue to pay all of Manny's salary for the year.) It gets better. If the Dodgers win, not only will Manny get a World Series ring, he will get two bonus checks. The first, for being a member of the winning team. And, the Sox will pay him a pro-rated share of what the losing team receives to cover the time he played for them during the season. Sure beats trying to make money in the market.. More…

Let’s not Blame the People Who Wanted to Buy Homes

If this was 24 years ago, I would have been blamed for causing the meltdown on Wall Street. I was about to turn 29, and couldn’t walk in our tiny two-bedroom condo. Every inch was covered with stuff devoted to the care, feeding and entertaining of our hyper-active two-year-old. My wife and I decided to go house hunting and found the perfect place: A three-bedroom, two and half bath home on a third of acre of land in a terrific school district. That was the good news. The bad news was it cost $138,340, and I was making all of $40,000 a year (my wife didn’t work) and we didn’t qualify for the traditional $110,000 mortgage (at 13%) we needed. More…

You Must Remember This

Over breakfast this morning, my wife handed me the business section, without even taking a glance. "I can't stand looking at the bad news anymore," she said. I understood completely. I, too, am tired of seeing the value of our retirement accounts fall day after day. But here is what I told her. Things are cyclical. We have seen the kind of stock market before. It is awful. And wearing. But eventually it ends. Until it does, if you are happy with the way your funds are allocated, my wife's approach is a good one. Don't read the bad news. Just keep doing what you are doing: Saving for retirement; making sure you have little or no consumer debt, and making sure you have money squirreled away in an emergency fund, invested in something ultra-safe. More…

Sign of Normalcy

The papers continue--and rightly so--to be filled with stories about how the crisis on Wall Street is making it difficult for "regular" people. Loans are hard to come by and sales of everything--especially big ticket items like cars--are down as people wonder about their ability to afford them. But,there is a sign things are getting back to normal. No, not because the Senate passed the bill out package last night. But because of the way USA Today reported on it. Instead of making the bailout story its lead item today, USA pushed the story further down on page one, signifying its belief that tonight's vice presidential candidate debate is more important. If the bailout is becoming old--well "older" news--maybe things will get back to normal soon. More…