wearmanyhats

One of the greatest gifts a parent can pass on to his/her child is to teach them how to manage money.  The quintessential money game, of course, is Monopoly.  However, it is a long game for young players and ends up pitting people against one another.  The real world is a little “dog eat dog” but most of the time, there’s room at the table for everyone.

That is why the more superior game is Robert Kiyosaki’s Cash Flow 101 and Cash Flow for Kids.  If you haven’t played it, you might want to think consider its merits.  Cash Flow 101 teaches the simple principles of how to attain a comfortable lifestyle, but it is a lesson learned in which you have to make choices to use opportunities available to you, and control how you use money.  It’s a good way to play the stock market without losing real money, and manage money to a great financial end, no matter what your profession.  It’s fairly realistic, and the learning is the real joy of playing.

Cash Flow 202 takes the principles learned in the first game and expands on them.  It gives the players the chance to learn about puts and option investing in a non-threatening way.  The only bad thing about the game is there are nuances that present players with challenges that can never be answered. For example, if a player holds option and then suddenly the stock splits, its not always clear how that affects the option situation.

Cash Flow for Kids is a user friendly way to introduce children to the concept of debt, money management, and entrepreneurship.  In this game, children face the possibility of starting simple service businesses, finding extra money by using their creativity, and they also see what happens when they want to buy a “doodad.”  This concept caught on quickly with our two boys and they both felt that they needed to be more careful with money in the future.

The only problem with the cash flow games is that they are very pricey.  They start new at around $200, and retain their value.  A recent check on ebay revealed them have bids at at least $90.  Few money management books or teaching collections retain their value in that price range, which testifies to how good of a game it is.

One thing that few people will talk about is the psychology of the game.  It’s interesting to see how other players treat each other and money as they play.  For example, during one game, we saw that when some folks went out of the “rat race,” they held so tightly to their money that they could never do anything for fun in the “fast track.”  They ended up with the worst luck and the most generous person won.  This was not an anomalous happening.  Our family has played this game over the years with a variety of people, and we found their reactions in the fast track always determined whether or not they won.  The generous people were always the ones who got their dreams first.

Happy New Year and enjoy life more than money, giving more than acquiring, and life should be good for you.

Open Internet Explorer or Mozilla Foxfire and a whole world of jobs opens up, some that in no way exist in the physical world.  Online work positions seem to be everywhere, though they get gobbled up, usually in 24 hours.  It’s hardly enough time to find the job listing.

This avenue of employment hasn’t ever existed during the past reccessions and depressions, and there is no telling how the money people are making online is going to affect the economy.  It is a serrindipity to have a job market in these tough times that is not on the usual radar map.

Boggers have led the way through the myriad of bogus advertising to get out excellent information about online jobs. Today.com has the best of those bloggers.  There are only one or two regular websites geared toward online job searches that have legitimate openings. Other than that, bloggers lead the way to getting the word out.

The actual positions are ones that could never exist in the real world.  Besides ghost bloggers, which can actually pay quite handsomely, there are positions such as chat room moderators.  In this job, a person has to make sure the the people who are going into chat rooms and saying things, are going to play nice.  Imagine in real life if we had someone come into our living rooms and say, “I’m here to make sure you don’t say anything that could get us all sued!”

Of course, there are the legitimate call center jobs, the ones that some people scorn as so much drudgery that some people quit after the  first day.  But there are more!  There are online editors and writers, virtual assistants, bookkeepers, web designers, tutors, and cold callers.  There are online sales jobs, tech support and on and on.  Let’s not forget the online small business owners such as the stores that sell old car parts, leather jackets, and anything imaginable. And there is always the money being made by the scam artists.

People pounding the street, looking for work would do well to remember the web.  Not just anyone can make a good career working online because you have to be self-motivated.  You have to get up every morning and know you are going to go to work on time, for a set number of hours, and nothing can interfere with that. You have to not mind having no interaction with co-workers.  But for those who can find the additional jobs, the hidden jobs, it means less time going without a paycheck.  Less time collecting an unemployment check.  Less time our nation will be in a recession.

Right now, many of these jobs are held by work-at-home mothers.  But online accounting jobs, which are seriously taking off, and other kinds of jobs can attract males or females.

Investors need to be aware of this job market because just knowing there are more jobs out there than what anyone expects is a very good thing.  Just knowing that a new hit online web store could open and create jobs is heartening.  Watch for new businesses.  Watch for a faster bounce than what anyone expects.  Most of all, expect that this hidden job market will change the expectations of the doom-and- gloom financial gurus who don’t think about how the web affects the economy.

There’s a family story from the late 1800s about an ancestor who ran a general store in a small town iin the middle of Nowhere, Iowa  The store is probably gone abandoned now, but at the time, did a fairly brisk business with all of the new settlers, and the Indians who passed through.  The story contains certain details that make it sound untrue, but it’s a good story anyway.

The store’s owner was also a miller, and ground his own flour and cornmeal.  One afternoon an Indian came through the door and asked him for a five pound sack of cornmeal.  The miller carefully poured out cornmeal on the scale, and when he thought the Indian couldn’t see him, put his thumb on the back of the scale and pushed the scale’s cup a bit to fully make the five pounds.

The Indian looked steadily at the store keeper, pulled out a large plug of tobacco from his pouch, then a very large buck knife, and said, “I’ll take what you got there and the thumb, too.”

As the story goes, the embarrassed, albeit dishonest, store keeper hurried to make the sale more equitable and get the customer out the door.

Ah, how times have changed.  Now there is a store within a short drive, and local businesses know that unless they can compete, their customers can almost always head to a Walmart or a bigger city to get what they need.  Nonetheless, it’s remarkable how many business owners try to cheat their way to profitability instead of playing the game straight.   Once a customer knows he/she’s been cheated,however, they never come back and tell everyone of their experience.  It’s so crazy then that people don’t conduct business honestly.

If you run a small business, keep this story in mind when you have to make decisions about how to measure your honesty over making a buck.  If you have to thank your stars that you aren’t facing a savvy Indian with a large knife, then maybe you want to reconsider what you are doing.  It’s a good scale to weigh your actions.

When I was young, Lebanon was an attractive tourist destination.  Bethlehem, too, was a tourist destination for Christians, even if no one was completely certain that the sites were accurate.  Commerce flourished, the locals did well.

Then came war, and with it, economic ruin. Consider how stability will enhance the wealth of a nation and you can contrast the United States to these small nations that used to be prosperous.  Peace equals stability equals wealth.

It’s worth noting this now because Obama has stated unequivocally that he intends to put in a stimulus package to get people working again, to create jobs and rebuild some of the areas of the nation that needs work, such as the great number of bridges that are in trouble.  Yet naysayers point to the programs Roosevelt put together as historical proof that such packages don’t work.  It was World War II, these naysayers argue, that bought us out of the Depression, not the jobs that the President created.

Maybe that is true, but long term war costs can really hurt a nation. It’s worse when the war is fought on your own soil.   Businesses can’t rely on the safety to conduct business, banks can’t loan well, people can’t keep their homes stabilized.  The wealth of a nation erodes. Wars keep commerce from happening smoothly.  Governments spend money on bullets instead of roads and education.  People spend their money on safety and survival instead of common goods.  Folks who try to keep from getting shot are not patronizing stores on a normal basis.

As investors,  war is a problem that must be taken into consideration when analyzing any aspect of investing in that country or region.  Let’s consider FOREX transaction.  Currencies rarely become strong when the country is being bombed repeatedly.  Want to invest in a regional fund?  It’s best to know what each country is doing.  Are there countries involved in wars? Any unstable governments?  Any repressive regimes?   These are all factors when analyzing prospectuses of any funds investing in specific regions of the world.

What then has fighting two wars done to the debt of the United States?  What will be the long term effect on our currency?  On the taxes our children will have to pay?  On inflation in the next five years?  The judge is still out on this problem, though many financial gurus like to tell us what to expect.  The truth is, no one really knows for sure.  Of one thing we can be certain:  it has been best for us that these wars have not been fought on our soil.  But how terrible that is for the residents of those other countries.

Imagine if you went to Las Vegas, sat at a poker table and put a $10 bill on your hand.  Let’s say that you won, but as you were raking in your winnings, the dealer suddenly looked at you and said, “Oh, by the way, you actually make three times what you normally would be raking in right now.”  Imagine what you would think, how excited.  What if the dealer looked at you and said, “I don’t know if you knew this or not, but you didn’t just lose your $10, but rather $30.”  What would you say then?

Well, in a way, when Direxion launched its newest bull market and bear market ETFs, that’s exactly what happened.  These ETF’s on steroids are weighted 300% to super hype the returns (and losses) on your investments.  The result: a volatile way of making money.

Do you want to insure your investment?  Consider this strategy.  First, purchase a Direxion  Energy Bull 3X and the Direxion Energy Bear ETF 3X.   If the sector moves upward suddenly, the Bear ETF will lose money while the other gains.  However, let’s say you have a feeling that energy is going to eventually go bounding upward, and you want to just play it straight.  An ETF that is set to go up 3x will give spectacular gains.

You can buy these directly from your brokerage, and you can bet speculators have been having a great time with them.  These are so hot, I recommend you check out that prospectus.   Know exactly what you are getting into when dealing with them. Good luck with however you choose to work with them.

Here is a list from IndexUniverse

About a week ago, I heard a discussion on National Public Radio concerning upcoming legislation about credit card companies. There are some new credit card rules that are meandering their way through the Congress, and these would help guard against predatory lending with credit card companies.   It would make it easier to get payments in with extra mail time, and keep companies from implementing interest rate jack ups for slightly late payments.

The call-in discussion that ensued was interesting, but the most startling comment came from a small business owners.  She said that she needed her credit card for brief, periodic times when credit was important to help keep her business running smoothly.   When she called the credit card company on an unrelated issue, they began questioning her about her debt to income ratio.  Within minutes of the conversation, the credit card company canceled her card, essentially stranding her from having the necessary credit to tie her company over.

Not everyone understands why businesses sometimes need a line of available credit.  There is a time gap, sometimes, between when a business owner delivers a service and gets paid.  Let’s take, for an example, a car mechanic.  He finishes changing out a transmission for a customer, who has insurance for such jobs.  The customer pays the $100 deductible, and the business owner must pay his mechanics for the work, their unemployment insurance, the insurance on the building, etc.  The business owner submits the paperwork for the remaining $2800 and waits for the time to process the request for the payment, which can typically take six weeks, maybe longer.

Most small business owners take a line of credit with their local banks; it’s easy to secure.  First you walk in with your balance sheet and say how much you have coming in from the insurance companies or any other company that has a bureaucratic time frame to deal with, and usually a loan is given to make payroll and pick up any operating bills.  As time goes on, and the business generates more capital, these kinds of loans are only needed in a time of economic downturn or a change in the business somehow.

Another example would be a doctor who has a her own medical practice.  Let’s say that she knows that in order to operate her business and make a modest profit, she needs to charge $65.00 per visit.  However, insurance will only pay her $55, and medicare and the VA only gives $40.  Just to break even, she needs to make $46.  She can limit how many Medicare and VA patients she can take, but sometimes more of them need to be seen in a row than regular paying clients.  She starts to drift behind with her profitability and realizes that to keep her business afloat, she must limit her clients to even fewer Medicare and VA patients, plus charge a bit higher for the office call so she can retain her staff and cover her expenses.  In this situation, she will go to the bank to secure a loan for a time being, explaining all of this situation to show why she needs it.

Now what do you do if banks suddenly no longer want to be a partner in this loan process?  There are other means of securing financing, thank goodness, but sometimes small companies won’t have the time to get that credit.  Soon, more and more companies fail, generating more job layoffs.

Enter the credit card companies.  Some small business people just use their credit card to pay the bills if the banks aren’t loaning or the short term financial situation will turn around quickly.  What scared me about that call is that these companies are just dropping the credit card people without any warning, thereby shutting off another means of keeping small businesses alive.

Bad times in a nation have a way of passing.  But now we must know what is coming our way.   Small business owners shouldn’t offer up too much information if their financial situation looks even a bit risky.  And it is time to hunker down and pay the bills.  Hopefully as times get better, companies will just get stronger..

Christmas at Laura Ingalls Wilder’s house is an interesting affair to readers today.  Perhaps the gifts included a home made shelf for Ma, a scarf made for Pa, a dolly for Carrie, a simple gift for the rest.  There was almost always one gift per person as some of the family members had gone in together to make or buy one.  But the real treat were oranges or Christmas candy or oyster soup.

What a far cry from what is sitting under our tree.  We imposed a $15 limit for each person from each giver, and this year my oldest son said, “Who made that dumb rule anyway?”  We had, after one year we overdid it with him.  He was three, and he opened one gift, then two, then wandered off to play.  That was the year we got sensible.  You would have thought we would have learned from when he was two.  That year he opened a box, with help, and then played with the box!  Having children is a humbling thing.

We decided there and then that we could bankrupt our family spoiling our kids and each other.  Looking back, I can’t really remember the gifts I got as much as the games we played, the time we spent together.  I remember the church services we went to, and the time when all of the kids sang in a program.  That took some organizing!

This year the gifts grew feet and walked in by themselves.  More and more show up every day, collecting, I think, by a rebellious pre-teen who thinks that Mom and Dad’s rules stink.  Whenever one of us goes to the store, he sneaks another gift in, then says he hasn’t gotten anything for that person yet.  On top of that, there is too much in my brain, so I have gotten a few extra gifts in case I forgot one.  Ah, the benefits of early senility.  None of these things are terribly expensive.  And only a few were bought at Walmart, since I am adamant about supporting local businesses.  Some even are gently used, since I believe in recycling.  Almost all, except the Teddy Bear, are needed, and perhaps he needs a good home.

This I mention because I realize the holidays can totally become a like a wild horse.  First you try to capture it, thinking you will tame it.  Then, since it is a wild thing, it jumps around wanting to break free. Then along comes some almost teenager who feels a kinship with its free spirit and sets it loose, along with the family budget.

Every year we learn a new technique, and this will be next year’s.  I will hand them each an envelope with $50.  Then I will tell them that this is their budget for the season.  I will then find Santa and kiss him lots, before giving him an envelope with $30.  Then Mrs. Clause will take a $20 and find enough for Santa’s sock and some supplemental things that Santa can never find.  Mrs. Claus often brings back change.  If we can’t have a good Christmas complete with stockings filled for under $50 each, then there is something seriously wrong with us.  Now that I look at it, maybe Santa and Mrs. Claus’ budget could be adjusted down.

In your house, you will decide how your holidays go, of course.  Most people are not like us; they spend whatever they want.  Some folks have the money to do that, others just throw budgets to the wind.  Whatever it is that motivates you to live,  we, at our house wish you all a Merry Christmas.   For those of you who live overseas or in a culture not like ours, perhaps you don’t celebrate the holidays. We still are bossy and arrogant enough to wish you good tidings and blessings.  It’s just natural exuberance, so please excuse us.  Enjoy the holidays!

Any time you have a great deal of volatility in the market, with at least some stabilized bottom, you also have a great opportunity for profit making.  However, you also need a good chuck of cash to do this trading, and a watchful eye.  But if you are able to come up with both of those, there are some ideas that you might wish to consider.

Gold has been on a downhill pattern for a while, though almost everyone who knows gold fully expects the financial situation of the United States to eventually have gold break out and fly upward at some point in the future.  Not too long ago, I told you to pick up gold when it was around $720/oz, but now I don’t feel that the dollar will allow it to go t earing upward.  If, indeed, you did buy in at  that lower number, feel free to take profits TODAY.  If you are a long term trader, expect the price of gold to flying up at some point once inflation kicks in to counter all of the deficit spending of the US government.  Right now, all we see is a downhill trend, but at some point, that $720/oz will look very cheap.

The marriage partner of this is the dollar.  If you are FOREX trading, the dollar will go back up soon, so now’s is a good time to buy.  People are still running to the dollar for security, and the recent decline in the dollar is just the usual market ups and downs.

Enjoy this week of quiet.  Next month expect the market to absolutely tank downward. This respite is welcome now.

Last summer during a youth softball game, I got to sit down with the wife of a local car dealer.  We’d been happy with the Park Avenue we had purchased from them, thought the price was fair and the gas mileage is over 3o, so we were satisfied.  She, on the other hand, had a hybrid Toyota.  She was getting way more miles to the gallon than we were, but we hadn’t paid nearly what she did for her car.

“I got it before they got hot,” she said.  “We were lucky because now you can’t find one anywhere.”

Oh, what a difference six months can make.  Today, thanks to the credit crunch, hybrids are sitting on the lot.  Toyota, in case you hadn’t heard, posted its first loss in 70 years.  With few exceptions, vehicles are simply not moving off the car lots anywhere in the world.

It would be a huge mistake for the auto industry to take this to mean that people do not want a hybrid. A fool would think that since gasoline has gotten cheap again that therefore people aren’t willing to buy a hybrid.  Not true.  Lots of people would like to buy them.  However, without credit to buy the cars, a lot of people can’t even pick up any car.  And since the unemployment numbers are going up, and people are nervous about losing their job, few feel secure enough to take on more debt.

Hopefully the auto industry does not take a dim view of hybrids.  People may not be willing to pay extra for any car right now, but most of that has to do with factors other than desire for the vehicle.  Hopefully Detroit, if it makes it beyond the rough days today, will invest in better fuel efficiency for our future.

While sitting around having coffee after church, the conversation turned to pirating, and the frustrations of seeing big ships suddenly taking over by inexperienced men who then hold the ship for ransom.  The concern here is that one of these days a large ship filled with fuel is going to hit a rock and spill everywhere.

This group is not your usual Minnesota Nice group.  They are actively involved internationally in some way with a variety of project both around the world and locally.  One is involved in Pakistan with a family there, and has spent significant time in Turkey.  Another just returned from a trip to Germany.  Some are working with folks who are trying to make a difference to the people of Haiti, and all of these church members have attended fundraisers for the betterment of life in Ghana.  It is not surprising then that there focus is on international events.

“What I’d like to know,” said one of the more outspoken women of the group, “Is how the investment bankers of Wall Street who cost our taxpayers a fortune in bailouts are any different than those pirates that take over ships out in Malaysia and Africa.  How is Madoff really any different than they are when he can wipe out whole charity organizations.”

I can’t say that I have ever thought of that before.  However, by one of the definitions given by Yahoo, a pirate is, “One who preys on others, a plunderer.”  In that definition, a case could be made that Madoff is indeed a pirate.

What she said next, gave me great pause.  “Madoff should be tried in World Court since his swindling affected people and organizations worldwide.”

The World Court, which was originally set up to settle disputes between nations in a peaceful manner, has also taken upon itself to try cases of crimes against humanity.  In the past few decades, it has increasingly taken on the genocide and handed down sentence after sentence against monsters who butcher groups of unarmed civilians. There are so many cases against plaintiffs accused of genocide that it will take years to hear the cases.

Having said that,  the United Nations has set a great deal of law concerning the sea. It may or may not have laws concerning international organizations that get swindled. Perhaps the UN will address that in the future.

Whatever the case, think how Madoff’s situation affects investors.  Hundreds of “little investors” had their life savings with his firm.  They have basically awaken one morning to find it all gone.  If they can get caught, can you?  If you do, should there be some sort of international law protecting your money?  It’s something to think about.