>drum roll please<
In this week's post, allow me to wear my fortune teller's hat and give my bold predictions for the year ahead. Now before I start, allow me also to gloat (har har) about an article I wrote that wound up in the Business Mirror.
To sum it up, here was what I said,
"Your active source, be it business or employment, will not evaporate overnight. But the upcoming volatility in the financial markets, which will affect stocks and bonds (do not forget), is only a reminder to you that you should always live within your means. It is also a reminder that large gains from investments are an echo of this famous proverb, “If it sounds too good to be true, it probably is.” Stay safe. "
There's nothing sweeter and more irritating than to hear someone tell you, "I told you so."
Risking a spank to the face or a kick in the a--, I told you so! Haha. In fact, I am also saying that in front of the mirror.
Though I may have had it right with my prognosis last year; I did from time to time forget my own admonition.
It's just good I didn't get sucked in to the double-your-misery-in-five-years scheme. It's also good I am not American and did not entrust my entire life savings to Madoff. I'm also thankful that my preneed firm is still alive, "still" being the operative word here.
Killing Me Softly
You see, the term Filipino time is not used for naught. Progress and development in some sectors and current affairs of the country is slow. Take the public transportation for one. Take our country's competitiveness as another example. Further to that, take the effects of the global financial meltdown as another instance.
So far, our country has either weathered the storm quite well or we are just starting to feel the ill effects of Wall Street greed. No matter which side of the fence you are, uncertainty reigns supreme. And markets hate uncertainties. For this reason, investments this year, particularly paper investments would likely stay flat or decline even further.
If you are someone looking to invest, now is still a good time to invest, as was last year or the year before. Investing is always long term so ruin your eyes a bit and be a farsighted person. For those who invested last year and crying and ripping their hearts out (and maybe their financial "advisor's" also), remember that you didn't invest to make a quick buck. You can go over to the casino for that.
I'm also hearing a lot of people - including Dr. Doom and Jim Rogers - say that you should stay away from the US dollar. For someone who grew up seeing the dollar rise from the high 20s to the high 50s, it's something that's thought provoking, even mythical. So what does a poor fellow who has life insurance quoted in dollars? When he dies, does his beneficiaries get only peanuts?
Yes, the Philippines isn't as fast paced as most of the developed world, but being late also has its merits. Take this chaotic time to review all the assets you have with you. Are you well diversified or are you putting everything in just one basket?
Farming and Gold
During times of crises, the only things that are safe are basic commodities. Unfortunately for us, our slow paced development works to our disadvantage. For poor folks like you and me, it's hard to get our hands on investments in gold. The closest thing to that is jewelry, and it don't come cheap.
Your other option is to buy shares of companies that produce gold like Philex Mining. Apex Mining seems to be getting a lot of attention lately. I'm not saying that these are the stocks you must buy. A lot of "experts" (you see in the olden days, experts were often asked about stocks to buy, and most of them tanked last year, apart from being out of their jobs) tell people to buy defensive stocks - utilities and mining.
I prefer to take it a step further by asking you, the investor, this question. Are you looking at a potential rebound in the global economy. If yes, why are you being defensive? Why aren't you buying the other stocks that are dirt cheap?
Other than gold, food is another potential haven for you. We can do away with a new cellphone, but we cannot live without rice. Again, there aren't really investment avenues for us folks with regards to agriculture - unless you become a farmer.
Whichever investment you choose, it depends on what you see in your own crystall ball.
Something worse over the horizon
Critics and pundits are saying that the age of government control is back, with Newsweek bannering their recent issue with "We are all socialists now"on their cover.
Jim Rogers says that the stimulus plan won't work. Let me share you snippets of the article that came out in CNBC recently-
The recent shifts towards protectionism are harmful, Rogers warned.
"This is very dangerous, that's what caused the great depression in the 1930s. If it happens again, then you'd better sell all the stocks, you'd better sell a lot of everything and bunker down," he said.
"We already have a lot of social unrest developing. If protectionism comes back, you'd better be really, really careful," Rogers added.Do you hear the drums of World War III?
Last thoughts
While I dream of electric sheep and hope one day of becoming an oft-quoted (expert) source, I just try my best to explain complicated financial planning concepts into digestible nuggets for now.
I'd love to be a consistent contributor to a personal finance column, but I guess some of the things I say are better off being published in a blog than in newspapers or magazines.
While there may be experts out there - hopefully not from Wall Street and ratings agencies - we have to dissect the information ourselves. After all it's our money we're risking.
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