Independent, Fee-Only Financial Advisor

Independent, Fee-Only Financial Advisor

Friday, September 30, 2011

The way of the future.

Recently, a Jackson-based technology company made a large national deal. SmartSynch will supply advanced electric meters to Consumers Energy of Michigan. This will form the base of Consumers developing 'smart grid'.
SmartSynch is on the cutting edge of 'smart grid' technology, providing meters and solutions to enable intelligent monitoring and usage of electricity. The meters connect to the public cellular network, allowing utilities and users to check on usage at any point. Not only do smart meters assist utilities in measuring usage and detecting problems on the electric network, they allow users to be more efficient in their usage of electricity.
The smart grid is just one of the new technologies that promises to make the underbelly of our economy more efficient in the future. Efficiency gains translate into development and profit gains. Any deal like this spurs investment and encourages innovation. We are proud to share a hometown with a company like this.

Tuesday, September 27, 2011

Magical Thinking

This past weekend I traveled to Orlando for a conference. Of course, while I was there, I took the opportunity to visit Mickey's place. Being the off season and the middle of 9+% unemployment, I expected to be greeted with vast open spaces. Boy, was I wrong! Young families thronged the park, dropping large amounts of cash (or credit) at every turn. I was stunned! Someone forgot to tell them we now face a higher chance of a double dip recession. Based on the activity in Orlando, I think those chances just got slimmer. The beginning of the week on Wall Street reinforced this notion. Greece is taking its medicine, and we are all getting better... for now.

Thursday, September 15, 2011

a good day

US stocks were well up today as people decided that Europe was probably NOT imploding. Unemployment is still rather dismal, but industrial production is on the up and up, helping to reduce our trade deficit by a wee bit more than expected.
These were pleasant surprises that were counter to everyones worst fears. The report on consumer spending came out flat earlier this week, but hopefully more money in pockets will move things up this fall...

Wednesday, September 14, 2011

Education and the Economy

Recently, Rutgers received a $27 Million gift. This got me thinking about the American higher education system. While it is the envy of the world, it gets knocked for the sticker price. The open secret here is, hardly anybody pays that full price.
Americans are generous, and those with success and wealth often are quick to give credit to those who helped them along the way. With college being such an important influence on many people, alumni give generously: the first $100 Billion of endowment money belongs to only seven Universities. Endowments help universities expand and enhance their academic and research capabilities. These attract and better educate more students, who are given more opportunities through scholarships. In turn, these universities generate a return on investment for their students. Study after study demonstrates that university graduates earn more and have lower unemployment rates than those with less education.
Higher education is critical to our economy. Expanding peoples ideas and encouraging entrepreneurship is important. Adding knowledge and skill to students is adding value to the future workforce. The country sees returns on its investment in education through a thriving economy.

Friday, September 09, 2011

Which type of fund?

Jack Bogle, founder of the Vanguard funds is obviously a huge proponent of diversification. In this recent video he states that the diversification should be between asset classes (stocks/bonds) and within asset classes (own 1000 stocks, not just 1).
The only thing Bogle talks more passionately about is speculation. He decries ETFs for allowing broad speculation to distort market values. He supports long term investing, despite market volatility, saying "Don't worry, because corporate America is going to be there at the end of our lifetime."
Bogle prefers mutual funds as holders tend to be more long term investors than ETFs. He points to 10,000% turnover in SPY as how speculative an instrument ETFs have become. What matters here is the investors behavior. ETFs do offer more transparency and flexibility to investors than mutual funds. Short term trading and speculation are the bad behavior, a long term investor should be a priori neutral to the vehicle. Once an investor has determined the asset classes they would like to invest in, the most appropriate vehicle can be selected - be it an ETF or a mutual fund.

Thursday, September 08, 2011

a start?

The idea behind getting the economy back to a roar is getting money flowing around. Simple enough right? The Fed printed money for a while, giving it to the government nearly free and encouraging banks to pass it around too. Stimulus projects spend large chunks of money in various places, spending money on everything from asphalt and machinery for the projects to lunches and clothes for the workers.
The payroll tax has been cut, putting a few more pennies in everyones paycheck. This is just a little bit of stimulus, a little immediate money to spend. For some this will be the little extra that they can get by on, for others, a little more to save or invest. Currently this tax cut is dripping a little bit of money into the economy, keeping the cut will keep that little drip going.