I've written about my enthusiasm in our current economy before, but never have I had such a desire to put my money in the market. There are deals all over the board. Hundreds of good solid companies are being slammed by the market and they are selling at record levels. The return on the companies is going to be through the roof 10, 20 and 30 years from now.
If you don't like dabbling in individual stock put your money in an index fund, but do it now. Unless you are trying to get out from under credit card debt you should be putting any available money you can into the market. The S&P 500 peaked out just under 1600 in 2007. It currently sits at 850. I'm not saying it won't fall further. I can't predict the bottom and if anyone says they can you need to steer clear of that person.
If you were in the market for a 50 inch LCD that was $1600 and got slashed to $850 would you wait to see if it goes lower? I wouldn't. I would buy the thing and enjoy the Super Bowl on Sunday (speaking of which the best time to buy a TV is the week following the Super Bowl because of all the discounts).
If you believe that American business is out of luck and we are going to falter as a country and as an economy then by all means buy some land, build a cabin, dig a well and go be happy, but if you are like me and feel that the economy will rebound sometime and things will be business as usual in the next 10 years then get some money in the market.
Personally I think Microsoft is a great buy right now. The announced layoffs hammered the price of the stock, but that just shows me that the company is in the business of making money. Harsh as it may sound I'm not looking for a feel-good company to put my money in. I want a company that can make the right decisions when it needs to. Microsoft is suffering because the public isn't buying new computers or new software, but do you think that will last? The economy will rebound and I'm betting that when it does a lot of people will be upgrading their computers. When that time comes Microsoft will shoot up again. That's a boat I want to be on.
I also think there are some good banks out there that are going to come out of this recession like champs. The banking industry is getting hammered and because of it some very good businesses are selling for cheap. Check out Wells Fargo.
Tuesday, January 27, 2009
Sunday, January 18, 2009
Inauguration: A sign of things to come?
As we are now in the midst of the worst economic downtrun of my lifetime many are looking to the highest office in the land to make the policy changes to bring us out of this recession. Yet as we begin this historic term we are asked to swallow an inauguration party with a bill of $140 million.
I'm not about to say this isn't a moment that should be celebrated. Barack Obama being sworn in is a wonderful moment for all Americans not just African Americans. Maybe we need this party as Americans. Maybe we need to splurge for a weekend during these hard times. Maybe it's important to let your hair down every once in a while. Or maybe our president elect should have said "hey we've got to tighten our belts as a country" and start with his own party.
I, for one, hope this is just a splurge for a momentous occasion and not a sign of fiscal irresponsibility for this administration, an administration for which I voted and fully support. Washington resembles Hollywood more and more each day and I believe this blatant disregard for taxpayer funds is just another example of the disconnect between the powers that be and the powers that make them be.
Not even president yet and the man has already disappointed me.
I'm not about to say this isn't a moment that should be celebrated. Barack Obama being sworn in is a wonderful moment for all Americans not just African Americans. Maybe we need this party as Americans. Maybe we need to splurge for a weekend during these hard times. Maybe it's important to let your hair down every once in a while. Or maybe our president elect should have said "hey we've got to tighten our belts as a country" and start with his own party.
I, for one, hope this is just a splurge for a momentous occasion and not a sign of fiscal irresponsibility for this administration, an administration for which I voted and fully support. Washington resembles Hollywood more and more each day and I believe this blatant disregard for taxpayer funds is just another example of the disconnect between the powers that be and the powers that make them be.
Not even president yet and the man has already disappointed me.
Tuesday, January 13, 2009
Electronic Medical Records
President elect Obama wants to computerize all the nation's health care records in 5 years. I'm not going to go into how much this will cost or whether or not it is feasible, but I will put my support behind it. I work in a hospital and clinic that are both almost entirely paperless. We still have some paper floating around for things such as MRI because the MRI is owned by two hospitals and the radiology group and not all are on the same EMR (electronic medical record).
I love electronic medical records. The transition from paper records to computer records is going to be very difficult for many physicians, but for those of us who are now being trained, computers are second nature. The errors that are avoided by not having physicians write their notes or orders are just the beginning. In addition you also have the accessibility to patients records whenever you need them. When I'm on call I can review labs, read consultant notes, and put in orders all from the comfort of my own home at 2 AM. When a patient of one of my collegues calls with a request for a prescription that was written but never called into the pharmacy I can quickly bring up the chart and read the note from the visit earlier in the day.
IHC in Utah has one of the best EMRs I have seen. In addition to being a very competent program it is also used by all the IHC facilities in Utah and thus it is possible for a physician in Southern Utah to see the results of a test done at Primary Children's Hospital in Salt Lake minutes after the test is reported. Physicians can share common drug formularies across the state to increase the speed of the paperwork required by the healthcare industry.
My hospital went paperless less than one year ago and it has not been easy. Many of the older docs complain (loudly and rather unprofessionally) every day about the system, but I love it. I enjoy being able to read what my consultants have to say rather than spending my time translating the chicken scratch of the cardiologist.
When I was in medical school I was very worried about the regulations that were coming down the line to prohibit cursive writing in prescriptions and to eventually requiring all prescriptions to be printed or phoned. Since graduating from medical school I have not written one prescription by hand and in that time I have only received one call from a pharmacy requesting clarification on an order.
I think Obama has a good idea here and we would be smart to get behind it.
I love electronic medical records. The transition from paper records to computer records is going to be very difficult for many physicians, but for those of us who are now being trained, computers are second nature. The errors that are avoided by not having physicians write their notes or orders are just the beginning. In addition you also have the accessibility to patients records whenever you need them. When I'm on call I can review labs, read consultant notes, and put in orders all from the comfort of my own home at 2 AM. When a patient of one of my collegues calls with a request for a prescription that was written but never called into the pharmacy I can quickly bring up the chart and read the note from the visit earlier in the day.
IHC in Utah has one of the best EMRs I have seen. In addition to being a very competent program it is also used by all the IHC facilities in Utah and thus it is possible for a physician in Southern Utah to see the results of a test done at Primary Children's Hospital in Salt Lake minutes after the test is reported. Physicians can share common drug formularies across the state to increase the speed of the paperwork required by the healthcare industry.
My hospital went paperless less than one year ago and it has not been easy. Many of the older docs complain (loudly and rather unprofessionally) every day about the system, but I love it. I enjoy being able to read what my consultants have to say rather than spending my time translating the chicken scratch of the cardiologist.
When I was in medical school I was very worried about the regulations that were coming down the line to prohibit cursive writing in prescriptions and to eventually requiring all prescriptions to be printed or phoned. Since graduating from medical school I have not written one prescription by hand and in that time I have only received one call from a pharmacy requesting clarification on an order.
I think Obama has a good idea here and we would be smart to get behind it.
Wednesday, December 31, 2008
Personal Net Worth... What a Crock.
I occasionally check-in on other personal finance blogs and one that I have read a few times is Million Dollar Journey. In the most recent post the author states that his net worth has increased 10% in 2008. The numbers are all there to support his claim, but if you look closely you see that the majority of the net worth is in property, almost half of the $309,000.
It's very dangerous to claim a personal residence as part of your net worth. Your residence is not a liquid asset. If forced to sell there is no guarantee you would recoup your purchase price. In the market we have today you may not even be able to sell your house. If you do happen to sell the house you have to find a place to live. Whether that be another house or a rental you have to put up some money for that.
To illustrate the danger of including a primary residence in one's net worth let's assume that this couple become unemployed in the next few months. They are in no real danger as they have $62,000 in very liquid assets, but with $265,000 in debt plus living expenses that $62,000 could easily be gone in a year.
This same sort of accounting is found on the balance sheets of every publicly traded company. There are thousands of companies that show a positive net worth because of assets that are not liquid. As the debt piles up the net worth seems to keep up as well, but when we hit a recession like we have today we find that those assets are not worth nearly what was reported when the company files chapter 11.
If you really want to have a good view of your personal net worth you need to divide your assets based on liquidity. Cash is obviously on one end and property (primary residence) is on the other. Retirement accounts fit somewhere in between as they are not worth what's on the paper if withdrawn early. Debt should also be divided into short-term and long-term. A 30-year $300,000 mortgage looks much more cumbersome on a balance sheet than $30,000 in credit card debt at 16.5%, but the credit card debt is much less manageable than the mortgage.
The bottom line is don't be fooled into thinking things are fine because your net worth looks good. All those assets aren't going to mean anything if you can't find somebody to take them off your hands, and nothing decreases prices like a fire-sale.
It's very dangerous to claim a personal residence as part of your net worth. Your residence is not a liquid asset. If forced to sell there is no guarantee you would recoup your purchase price. In the market we have today you may not even be able to sell your house. If you do happen to sell the house you have to find a place to live. Whether that be another house or a rental you have to put up some money for that.
To illustrate the danger of including a primary residence in one's net worth let's assume that this couple become unemployed in the next few months. They are in no real danger as they have $62,000 in very liquid assets, but with $265,000 in debt plus living expenses that $62,000 could easily be gone in a year.
This same sort of accounting is found on the balance sheets of every publicly traded company. There are thousands of companies that show a positive net worth because of assets that are not liquid. As the debt piles up the net worth seems to keep up as well, but when we hit a recession like we have today we find that those assets are not worth nearly what was reported when the company files chapter 11.
If you really want to have a good view of your personal net worth you need to divide your assets based on liquidity. Cash is obviously on one end and property (primary residence) is on the other. Retirement accounts fit somewhere in between as they are not worth what's on the paper if withdrawn early. Debt should also be divided into short-term and long-term. A 30-year $300,000 mortgage looks much more cumbersome on a balance sheet than $30,000 in credit card debt at 16.5%, but the credit card debt is much less manageable than the mortgage.
The bottom line is don't be fooled into thinking things are fine because your net worth looks good. All those assets aren't going to mean anything if you can't find somebody to take them off your hands, and nothing decreases prices like a fire-sale.
Wednesday, December 24, 2008
Why you should care about Bernard Madoff.
Bernard Madoff was recently arrested for securities fraud after being turned in by his sons. Madoff's fraud is valued around $50 billion. The list of those directly affected by Mr Madoff is extensive, but the majority of Americans don't seem to care because it didn't affect them. The truth is that we are all affected, albeit indirectly, by Mr Madoff's scheme.
Madoff ran the largest Ponzi scheme in the history of the United States and he did it for years. He was described by some of his closest friends as the most honest man in America. He donated millions to various charities. I don't know why he did it and I'm not sure I care, but the fact that he did do it and got away with it for so many years is unacceptable to me.
First of all how did he fly under the radar for so many years? Why didn't the SEC step in and act on the tips that we are now hearing had been coming in for years? We live in a Country where the top government officials make a fraction of what our society deems them worth. The President pulls less than half a million per year and when he leaves office he can make that much in one speaking engagement. The top SEC officials make millions in salary and stock options when they leave their posts for the private sector. Those who leave are protected by those left behind and Mr Madoff seems to have been protected from investigations from time to time.
The Ponzi Scheme in itself is a danger to society. There are many variations, but boiled down to basics the scheme is a form of investment fraud where the original investors are paid with the money from newer investors. The scheme generally continues until the investors try to withdraw their investments and find that there is no investment to withdraw from. Often this coincides with a down turn of the market like we have had recently.
What Bernard Madoff did to me was shake my trust in our financial system. Madoff's scam scares me more than anything that has happened in the past year. We live in a time where wealth is tracked by computers. Million dollar purchases are done through the internet. All of my accounts are held at financial institutions. I don't know the CEO's of these banks. I haven't met with their accounting firms. I have an account showing that I own shares of Nike, but I've never seen any stock certificates. I base my decisions on the information I read in the balance sheets. I trust that the figures are correct. I trust that Nike really is selling that many Lebron Shoes.
Millions of Americans trust others to handle their investments. How do they make the decision on who to choose. To my knowledge Bernard Madoff has always received glowing reviews by his family and friends, some of whom have lost large sums of money as a reslut of Mr Madoff's actions.
Before I was born my grandfather made a stock purchase from a woman in his home town. Shortly thereafter the stock price soared and he stood to make a large profit. He returned to the woman and nullified his purchase. He did not even want to appear to have made an insider deal. He would not have that woman think bad of him. I fear that many today would call what my grandfather did an act of stupidity rather than see it for what it was. My grandfather would not sell his integrity for any amount of money.
My greatest fear is that we as a society no longer operate under principles of morality. Bernard Madoff sold his integrity and in so doing finally gave me something to be afraid of this year.
Madoff ran the largest Ponzi scheme in the history of the United States and he did it for years. He was described by some of his closest friends as the most honest man in America. He donated millions to various charities. I don't know why he did it and I'm not sure I care, but the fact that he did do it and got away with it for so many years is unacceptable to me.
First of all how did he fly under the radar for so many years? Why didn't the SEC step in and act on the tips that we are now hearing had been coming in for years? We live in a Country where the top government officials make a fraction of what our society deems them worth. The President pulls less than half a million per year and when he leaves office he can make that much in one speaking engagement. The top SEC officials make millions in salary and stock options when they leave their posts for the private sector. Those who leave are protected by those left behind and Mr Madoff seems to have been protected from investigations from time to time.
The Ponzi Scheme in itself is a danger to society. There are many variations, but boiled down to basics the scheme is a form of investment fraud where the original investors are paid with the money from newer investors. The scheme generally continues until the investors try to withdraw their investments and find that there is no investment to withdraw from. Often this coincides with a down turn of the market like we have had recently.
What Bernard Madoff did to me was shake my trust in our financial system. Madoff's scam scares me more than anything that has happened in the past year. We live in a time where wealth is tracked by computers. Million dollar purchases are done through the internet. All of my accounts are held at financial institutions. I don't know the CEO's of these banks. I haven't met with their accounting firms. I have an account showing that I own shares of Nike, but I've never seen any stock certificates. I base my decisions on the information I read in the balance sheets. I trust that the figures are correct. I trust that Nike really is selling that many Lebron Shoes.
Millions of Americans trust others to handle their investments. How do they make the decision on who to choose. To my knowledge Bernard Madoff has always received glowing reviews by his family and friends, some of whom have lost large sums of money as a reslut of Mr Madoff's actions.
Before I was born my grandfather made a stock purchase from a woman in his home town. Shortly thereafter the stock price soared and he stood to make a large profit. He returned to the woman and nullified his purchase. He did not even want to appear to have made an insider deal. He would not have that woman think bad of him. I fear that many today would call what my grandfather did an act of stupidity rather than see it for what it was. My grandfather would not sell his integrity for any amount of money.
My greatest fear is that we as a society no longer operate under principles of morality. Bernard Madoff sold his integrity and in so doing finally gave me something to be afraid of this year.
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