And as we are learning anew in this decade, bear markets can be both grueling and extremely, extremely long. For the U.S. stock market, the 1960s and 1970s were Lost Decades, and the current one is about as bad. The major indexes, in fact, have been trading lately well below their levels of 10 years ago.
These Lost Decades include monster bear markets -- those of 1973-74, 2000-02 and 2007-present -- during which the S&P 500 Index ($INX) plunged more than 40% each time. Those are the only such monsters since the Great Depression, and two of them have come in this decade.
And the immediate future, at least, looks even more perilous. When the S&P 500 was at its low of 855 on Friday, it was 45.8% below its peak of October 2007, and foreign markets have recently been battered even worse than our own. The headlines have described a "global panic."
The good news: Some investors have managed to prosper despite those obstacles. In fact, even in the dismal market of the past 10 years, you could have done well with some smart investing choices.
Can't afford to stop
This is the magic that compounding brings to investing over time, and it's why I worry when I hear people suggest they might stop investing or even stop saving altogether. Today's market is certainly discouraging. But you can make up for market losses much more easily than you can for lost time.
The younger you are today, the greater the rewards that lie ahead -- but only if you persevere.
If you quit, all the money you might make when the market recovers is going to flow to the people who were stronger than you.
If you are older, compounding doesn't work as hard in your favor, but raising contributions can.
Let's say that instead of holding contributions steady this entire period at $1,000 a year, you increased them, both because your income was going up and because you knew you had less time to save. Say you boosted contributions 5% a year. In 1975, you were chipping in $2,000 annually. By 1983 it was $3,000. By 2000 it was $7,000 a year.
These aren't millionaire-size contributions, but you end up with a millionaire's outcome: The kitty at the end of 2007 is $1,008,858, as the chart below shows.
So forget about the naysayers. They won't be sending you checks in retirement. The more money you invest and the more intelligently you invest it, the better off you will be, whatever the market does to you over the next decade and on into retirement.
Those who have hands-on experiences with, or have been hurt by rumours, definitely have an overwhelming abhorrence for unfounded rumours.
The famous quote from the late diva Ruan Lingyu, "words of man are the most fearful thing," remains relevant to this day. Renowned Korean artiste Choe Jin-sil took her own life simply because of venomous rumours.
Having said that, a society without rumours could be utterly monotonous. Stock market, capital world, entertainment and political circles have been so enchanting because of various sorts of rumours and gossips.
Rumours can send stock prices to the heavens, but can as well throw them into the deepest hades. Thanks to the rumours of foreign exchange losses, IOI Corp's shares suffered a huge single-day drop of 20% last Friday, the worst in a decade. ....
Why is change difficult for most of us? Because change necessitates that we move out of our comfort zones.
Since the ego, or protective mind's job is survival, it will always prefer safety and security over the untested and unproven.
It likes to keep things the same. It has us believe "the devil I know, is better than the devil I don't know." In short, "if I stay with what I know and what is familiar, I won't get hurt."
This belief system is simply not true and goes directly against the laws of nature.
Most people are not totally happy and successful, yet they continue to do the same things over and over hoping someday things will be different.
Realize if what you've been looking for was where you've been looking, chances are you'd have already found it!
Doing more of the same even harder and longer is not usually the answer.
Being willing to change will usually create better results.
Since your inner world creates your outer world, one of the first steps in change, is changing your thoughts.
By examining the way you talk to yourself and your beliefs around success, money and prosperity, you are in a position to consciously change any thoughts that are based in lack, fear and limitation.
Because what you focus on expands, by intentionally thinking of prosperity, abundance and success you will attract those very things.
Change is natural.
The universe is in constant motion, from the changing of the seasons; to the way plants, trees and flowers grow; from the rushing of the rivers, to the wind that blows.
Life is always moving, always changing.
In fact, the only constant in the world, the only thing you can absolutely count on, is change itself.
Therefore, utilize every change as a gift.
Whenever change occurs, ask yourself "how can I use this change to my benefit?"
If you lose your job, know that a new and better opportunity awaits you.
If you lose a relationship, know that a new and better relationship awaits you.
The happiest and most successful people all share a critical characteristic – the trait of adaptability.
Which means they have the ability to quickly adapt to new situations and circumstances.
The idea then is to go with the flow and not only accept change, but embrace it as an opportunity to expand yourself and your life.
doctors in the U.S. prescribe placebos regularly without telling their patients.
LONDON - About half of American doctors in a new survey say they regularly give patients placebo treatments — usually drugs or vitamins that won't really help their condition.
And many of these doctors are not honest with their patients about what they are doing, the survey found.
That contradicts advice from the American Medical Association, which recommends doctors use treatments with the full knowledge of their patients.
"It's a disturbing finding," said Franklin G. Miller, director of the research ethics program at the U.S. National Institutes Health and one of the study authors. "There is an element of deception here which is contrary to the principle of informed consent."
The study was being published online in Friday's issue of BMJ, formerly the British Medical Journal.
Placebos as defined in the survey went beyond the typical sugar pill commonly used in medical studies. A placebo was any treatment that wouldn't necessarily help the patient.
Scientists have long known of the "placebo effect," in which patients given a fake or ineffective treatment often improve anyway, simply because they expected to get better.
"Doctors may be under a lot of pressure to help their patients, but this is not an acceptable shortcut," said Irving Kirsch, a professor of psychology at the University of Hull in Britain who has studied the use of placebos.
This has been the scene in the past four months as buyers chose to "wait and see", anticipating further price drops next year.Even though experts say prices will not dip much, some real estate agents are in jitters over the prospects for the economy next year.Many real estate agents interviewed believe that the property market will only go downhill.
"Business has been bad. It's hard for us to sell houses nowadays," said one real estate agent.He believes prices of condominium flats will drop heavily, after experiencing rise of RM1,000 to RM2,000 per square foot in the past two years,
He said those most likely to be affected are middle-income property owners who have difficulty in servicing their housing loans.
He said prices of middle range homes might be stagnant for a couple of years.
Another real estate agent, who wanted to be known only as Lim, said properties on the outskirts of Kuala Lumpur, such as those in Puchong, will feel the impact more than upmarket areas like Mont Kiara and Sri Hartamas.
Property developer Sunrise Bhd is to defer some of its projects while waiting for the market to readjust.
The developer added that it will take measures to complete its Solaris Dutamas, 10 Mont'Kiara, 11 Mont Kiara and Mont Kiara Meridin projects.
Boustead Properties executive director Datuk Ghazali Mohd Ali said prices of condominium apartments might remain stagnant.
"However, a good piece of property in an excellent location and well managed will be able to ride a recession better than other forms of investment," he said.
If you have the education, you will always have plenty of money.
You know you are financially smarter or increasing in sophistication when you can tell the differences between:
1. Good debt and bad debt
2. Good loses and bad losses
3. Good expenses and bad expenses
4. Tax payments versus tax incentives
5. Corporations you work for versus corporations you own
6. How to build a business, how to fix a business, and how to take a business public
7. The advantages and disadvantages of stocks, bonds, mutual funds, businesses, real estate and insurance products as well as the different legal structures and when to use which product.
"We had seen what had happened with African nations that had taken aid from the IMF; they never are free."
Malaysia defied the prevailing orthodoxy of the day and closed its doors to outside aid even as Asian financial markets, including its own, were collapsing.
Even Daim credits part of Malaysia's turnaround to the country's ability to export oil, electronics and textiles.
But most economists agree that at the very least the plan did not sink the economy into further depths.
Is it a matter of it all vanishing into thin air? Some would say yes
NEW YORK - Trillions in stock market value — gone. Trillions in retirement savings — gone. A huge chunk of the money you paid for your house, the money you're saving for college, the money your boss needs to make payroll — gone, gone, gone.
Whether you're a stock broker or Joe Six-pack, if you have a 401(k), a mutual fund or a college savings plan, tumbling stock markets and sagging home prices mean you've lost a whole lot of the money that was right there on your account statements just a few months ago.
But if you no longer have that money, who does? The fat cats on Wall Street? Some oil baron in Saudi Arabia? The government of China?
If you're looking to track down your missing money — figure out who has it now, maybe ask to have it back — you might be disappointed to learn that it was never really money in the first place.
Robert Shiller, an economist at Yale, puts it bluntly: The notion that you lose a pile of money whenever the stock market tanks is a "fallacy." He says the price of a stock has never been the same thing as money — it's simply the "best guess" of what the stock is worth.
"It's in people's minds," Shiller explains. "We're just recording a measure of what people think the stock market is worth. What the people who are willing to trade today — who are very, very few people — are actually trading at. So we're just extrapolating that and thinking, well, maybe that's what everyone thinks it's worth."
Shiller uses the example of an appraiser who values a house at $350,000, a week after saying it was worth $400,000.
"In a sense, $50,000 just disappeared when he said that," he said. "But it's all in the mind."
'A big mistake'
Though something, of course, is disappearing as markets and real estate values tumble. Even if a share of stock you own isn't a wad of bills in your wallet, even if the value of your home isn't something you can redeem at will, surely you can lose potential money — that is, the money that would be yours to spend if you sold your house or emptied out your mutual funds right now.
And if you're a few months away from retirement, or hoping to sell your house and buy a smaller one to help pay for your kid's college tuition, this "potential money" is something you're counting on to get by. For people who need cash and need it now, this is as real as money gets, whether or not it meets the technical definition of the word.
Still, you run into trouble when you think of that potential money as being the same thing as the cash in your purse or your checking account.
"That's a big mistake," says Dale Jorgenson, an economics professor at Harvard.
There's a key distinction here: While the money in your pocket is unlikely to just vanish into thin air, the money you could have had, if only you'd sold your house or drained your stock-heavy mutual funds a year ago, most certainly can.
"You can't enjoy the benefits of your 401(k) if it's disappeared," Jorgenson explains. "If you had it all in financial stocks and they've all gone down by 80 percent — sorry! That is a permanent loss because those folks aren't coming back. We're gonna have a huge shrinkage in the financial sector."
Being a millionaire today does not mean that much.
Today, $1 million is just the starting point to beginning to invest like the rich.
Being financially smart included knowing when to be frugal and when not to be.
Many people become rich by being very smart with knowledge from the B and I quadrants.
Many of these individuals operate behind the scenes and manage, control, and manipulate the world's business and financial systems.
Millions of people faithfully place their retirement savings and other monies into the market.
However, the decision-makers of the marketing and distribution system of the underlying investments actually make the large sums of money, not necessarily the individual investor or retiree.
As rich dad taught me years ago, "There are people who buy tickets to the game, and there are people who sell tickets to the game. You want to be on the side that is selling the tickets."
Own the corporate ladder rather than climbing it.
Winston Churchill: Success is the ability to go from one failure to another with no loss of enthusiasm.
Regret over past financial decisions can have a powerful hold on you.
At 23, you may regret running up $20,000 in credit card debt during college. At 35, you may regret never having gone to college. At 45, you may regret having never started that consulting business you always dreamed of pursing. And at 65, you may regret not having saved more for retirement. In recent days, many financial chickens have come home to roost.
Regret, financial or otherwise, can have a powerful grip on your life. For most, the question is not whether you have financial regret. The question is how you harness the power of that regret to make sound financial decisions today that you will not regret tomorrow.
Here are some ideas to help you do just that:
Stop beating yourself up over past financial mistakes.
We all have made stupid financial decisions. Even Warren Buffett has made dumb investments, which he readily admits. We can spend a lot of time and energy lamenting those past decisions, but it will not help us make better decisions today. We need to stop obsessing about the past and, instead, use the lessons it can teach us to make better decisions today.
It is better to look ahead and prepare than to look back and regret. -- Jackie Joyner-Kersee
Regret for wasted time is more wasted time. -- Mason Cooley
Learn from that which you regret.
If regret has any positive value, it comes from evaluating the decisions you made that caused the regret.
Never regret. If it's good, it's wonderful. If it's bad, it's experience. -- Victoria Holt
Regret for the things we did can be tempered by time; it is regret for the things we did not do that is inconsolable. -- Sidney J. Harris
To regret deeply is to live afresh. -- Henry David Thoreau
It is never too late.
If you are reading this article, it is not too late. Many go to college during retirement, or start investing in their 50s (or later), or start a business only after retiring from a career. Sometimes we convince ourselves that it is too late to accomplish this or that because it eases the pain of regret. But it is a lie. Believing that it is too late to change may make us feel better, but it also causes us to repeat the same inaction that caused the regret in the first place. Look at it this way.
If you are 45 and considering getting a college degree, you have two choices: turn 50 with a college degree, or turn 50 without one.
There is no old age. There is, as there always was, just you. -- Carol Matthau
Do not go gentle into that good night,
Old age should burn and rave at close of day;
Rage, rage against the dying of the light. -- Dylan Thomas
Focus on today and tomorrow, not yesterday.
Make decisions today so that tomorrow you will look back without regret.
When one door closes, another door opens; but we often look so long and so regretfully upon the closed door that we do not see the ones which open for us. -- Alexander Graham Bell
All saints have a past; all sinners have a future. -- Warren Buffett
One success can wipe out 10,000 failures. -- The Dough Roller
Many people say they have a lot of experience because they keep making the same mistake over and over again.
If a person truly learns from a mistake, his or her life changes forever, and what that person gains instead of experience is "wisdom".
People often avoid making financial mistakes, and that is a mistake.
They keep saying to themselves, "Play it safe. Don't take risks."
People may be struggling financially because they have already made mistakes and have not learned from the mistakes.
So they get up everyday, go to work, and repeat the mistake and avoid new mistakes, but they never find the lesson.
These people often say to themselves,"I'm doing everything right, but for some reason, I'm not getting ahead financially."
Rich Dad's comment:
They may be doing all the right things but the problem is that they are avoiding the worng things - wrong things such as taking more risks.
They are avoiding their weaknesses instead of confronting them.
They are not doing something they may be afraid of doing, and consciously choosing to avoid making a mistake rather than make one.
Some of the biggest failures I know are people who have never failed.
What is the lessons ?
Whenever we make a mistake, we become upset.
An upset is our maker's way of telling us that we need to learn something.
It is a tap on our shoulder saying, "Pay attention. You have something important to learn. If you lie, blame, justify, or deny the upset, you waste the upset and will waste a precious gem of wisdom.
By The Wall Street Journal
The relentless slide in home prices has left nearly one in six U.S. homeowners owing more on a mortgage than the home is worth, raising the possibility of a rise in defaults -- the very misfortune that touched off the credit crisis last year.
The result of homeowners being "under water" is more pressure on an economy that is already in a downturn. No longer having equity in their homes makes people feel less rich and thus less inclined to shop at the mall.
And having more homeowners under water is likely to mean more eventual foreclosures, because it is hard for a borrower in financial trouble to refinance or sell a home and pay off the mortgage if the debt exceeds the home's value. A foreclosed home, in turn, tends to lower the value of other homes in its neighborhood.
........ The declines have made homes more affordable, bringing prices in many areas closer to their long-term relationship to incomes. .......
All your friends are riding but all you are doing is climbing on the bike and immediately falling off. You make mistake after mistake.
Then suddenly, you stop falling off, you begin to peddle, the bike begins rolling, and then suddenly like magic, a whole new world opens to you.
That is the magic found in mistakes.
Street smarts versus school smarts
Yet each time he made a mistake, instead of being depressed, he often seemed happier, wiser, more determined, and even richer from the experience.
"Mistakes are how we learn. Every time I make a mistake, I always learn something about myself, I learn something new, and I often meet new people I would never have met."
On the street, you are given the mistake first then it's up to you to find the lessons, if you ever find it.
On the street, you are smart only if you make mistakes and learn from them.
A new, more powerful Fed emerges in crisis
Central bank is increasingly aggressive in attempting to stabilize economy
Retirement account losses near $2 trillion
Financial crisis forcing workers to delay their golden years
One of my fren put a message on his msn: 9 to 5, work until 95 ?
Some extracts from A new, more powerful Fed emerges in crisis :
Dusting off Depression-era emergency powers, the Federal Reserve is extending its reach over the economy as never before, pushing the limits of its authority, if not exceeding them.
Now the nation's central bank is even becoming a source of loans for companies other than banks.
Radical steps by the Fed under chairman Ben Bernanke — all in the name of seeking to halt the panic sweeping financial markets — are turning it into a financial colossus. They're also putting the government deeper in debt and taxpayers further at risk if the various moves fail.
Some extract from Retirement account losses near $2 trillion :
The upheaval that has engulfed the financial industry and sent the stock market plummeting is devastating workers' savings, forcing people to hold off on major purchases and consider delaying their retirement ...
"Some people will delay their retirement. In particular, those on the verge of retirement may decide they can no longer afford to retire and will continue working,"
<- what ?
Can the bailout work? Fat chance
At best, Congress voted to approve a quick fix that's bound to fail in the long run.
But don't blame Wall Street vacillation for the jumpiness. It should be seen in the context of a decisive, coordinated effort by governments worldwide to manipulate stock markets higher by every means possible without regard to such niceties as fundamentals, the rights of shareholders or the laws of financial gravity.
....... Virtually every respected authority in the world of real capital believes the bailout bill approved by lawmakers won't solve our banks' problems. Yet the nation's political leadership pressed to pass it with the breezy confidence of the captain of the Titanic.
...... the financial bankruptcies we've seen in the past six months have come in order of their gross leverage, or the ratio of total assets to shareholder equity. The more leveraged -- Bear Stearns, Lehman Bros. (LEHMQ, news, msgs), Washington Mutual (WAMUQ, news, msgs), I'm talking to you -- the more vulnerable they were.
The reason is that as loans of a financial company lose value because of underpayment, company executives must write down the asset side of their balance sheets and at the same time reduce their shareholder equity on the liability side. Banks are allowed to lend only in proportion to their shareholder equity, so as the equity becomes thinner, banks are less able to lend money to make a profit.
Sophisticated customers then see that the banks are in precarious condition and make withdrawals. And so to satisfy those requests for withdrawals, banks are forced to liquidate more assets at distressed prices, prompting further reduction in shareholder equity. Yow! This process is then repeated in a vicious cycle until shareholder equity goes to zero and the company becomes insolvent. So long, banko.
Got that? What the government now proposes to do is to buy the questionable assets to protect the institutions against failure. So far, so good. Yet just taking the assets out of the mix would do nothing to provide additional bank capital, so the balance sheets would be just as fragile and prone to bankruptcy. At best, Hussman adds, you'd be allowing banks to liquidate their bad loans more easily to meet the demands of customer withdrawals.
...... have the government provide capital directly via a high-interest "superbond." It would be counted as capital, yet in the event of a bankruptcy, it would have a senior claim above stockholders and senior bondholders. That would protect the financial system, Hussman says, while also protecting customers and taxpayers. Bond interest would be deferred until a bank met a certain level of profitability.
This is essentially the route that Warren Buffett has taken with his investments in Goldman Sachs (GS, news, msgs) and General Electric (GE, news, msgs) over the past two weeks: provide capital in return for a financially viable security that is senior to shareholders' stakes, accrues at a high rate of interest and can be called early, as soon as the bank can secure cheaper financing.
...... And now we'll just have to see whether their efforts will work out for more than a couple of months and we can all go back to our regularly scheduled lattes, or whether it's time to start figuring out how to sell pencils. Place your bets. :D