How to be Rich, Happy and Free from Scams

Christine Benz Question: I moved part of my portfolio out of the market in late 2008 when I was concerned that the economy and the stock market were in a downward spiral. But now that stocks have rallied, how can I get back in without getting burned? Answer: It's small consolation, but you're far from alone in this conundrum. I'd recommend that you start by establishing your target position in stocks. Then plan to slowly build your position during the next six to 12 months, adding a set amount each month until you hit your target. As to your broader concern that it might be too late to invest in stocks, Morningstar's various valuation tools can help shed some light on that topic. They can also help you focus on parts of the stock market that still have upside potential left while avoiding overheated areas. As of early this week, the universe of 1,683 companies that our stock analysts cover was, in aggregate fairly valued to slightly overvalued, with a fair value rating ...

Karen Burns Everyone has a boss. Even if you "work for yourself," you're still an employee to your client. A big part of maintaining the boss-employee relationship is to never allow a boss to think you dislike your work, are incapable of doing it, or--worse--consider it beneath you. These sound like no-brainers, but many statements heard commonly around the workplace violate these basic rules. Looking for an example? Here are seven heard in workplaces all the time. They may seem ordinary, even harmless. But try reading these from your boss's point of view. You'll see right away why it's smart to never allow these seven sentences to pass your lips: "That's not my job." You know what? A lot of bosses are simple souls who think your job is to do what's asked of you. So even if you're assigned a task that is, indeed, not your job, refrain from saying so. Instead, try to find out why your boss is assigning you this task--there may be a valid r...

Karen Burns Here are seven things you, as a boss, should never say to your employees: 1. "I pay your salary. You have to do what I say." Have you not heard? It's the 21st century. Threats and power plays just do not cut it anymore (and they were always a terrible way to manage). Yes, you pay people's salaries but that doesn't mean you're their lord and master. You are their leader, however. Leaders lead by inspiring, teaching, encouraging, and, yes, serving their employees. Good leaders never need to threaten. So keep your word, set a good example, praise in public, criticize in private, respect your employees' capabilities, give credit where credit is due, learn to delegate, and when you ask for feedback don't forget to respond to it. (Another sentence to be avoided: "Do what I say, not what I do.") 2. "I don't want to listen to your complaints." Hey, boss, you have this backwards. You do want to listen to employees' compla...

With major averages flat or slightly negative for the past 10 years, many investors have given up on the "buy and hold" strategy that became a mantra in the 1990s. That, of course, has prompted some contrarians to declare that now is the best time to be a buy and hold investor. In this case, the conventional wisdom is right, says Lakshman Achuthan, managing director of the Economic Cycle Research Institute (ECRI). "I'm not saying 'buy and hold' is a bad thing, unless you're having more frequent recessions," he says. And that is precisely what ECRI expects in the coming decade because of two big patterns that Achuthan says are irreversible: * One, sucessive recoveries from post WWII recessions have become weaker and weaker "on every count," including growth, sales, employment and production. * Two, there's more volatility in the economy, with the big swoon in late 2008-early 2009 and surge in more recent months being a glaring ex...

by Javier C. Hernandez The unemployment rate remains locked in a range that recalls the economic doldrums of the early 1980s. Housing is stuck in a ditch, with foreclosures rising. And consumers are still reluctant to part with the little cash they do have. Yet the stock markets are partying like it's 2003, when hiring was brisk, real estate was booming, wallets were fat -- and the major stock indexes started a four-year rally that would double their value and push them to new heights just before the financial crisis hit. Judging from stock prices alone, one would think the economy was poised for a roaring comeback. But the federal government plans to unplug the economic life-support programs that stimulated production, kept interest rates low and placed a thick cushion under the real estate market. Some analysts see ample reason for caution in equities, with many economists, including those at the Federal Reserve, forecasting tepid growth in the near term. "The market is as o...

by Laura Rowley Human beings crave control. Studies have found that when we enjoy the freedom and power to make our own choices, we're healthier and happier. "The ability to choose well is arguably the most powerful tool for controlling our environment," writes Sheena Iyengar, author of the new book "The Art of Choosing." The problem is some people are sorely lacking that ability, especially when it comes to money. (See nearly everyone who chose an interest-only mortgage in the last few years.) Iyengar, 40, a business professor at Columbia University, tackles the age-old dilemma of how to make smarter choices, and avoid the plethora of issues that trip us up. She established herself as the doyenne of choice psychology with a novel experiment in the mid-1990s, set in a California grocery. Her research team manned a tasting booth offering different jams near the store's entrance -- sometimes displaying 24 varieties, and other times, just six. While the table l...

Venkatesan Vembu / DNA Saturday, March 27, 2010 2:53 Hong Kong: A major fiscal shock looms over China, arising from local governments’ shadowy finances and banks’ reckless lending to them as part of the frantic rush to boost GDP growth in China following the global economic slowdown in 2008. The fiscal crisis represents “the biggest risk to China’s economic and financial stability over the next two years” and has the potential to more than completely wipe out Chinese banks’ equity base, and trigger an equity market panic when it bursts, says Credit Suisse chief regional economist Dong Tao. At the heart of the crisis are about 8,800 investment vehicles set up at the local government level to take up massive infrastructure projects to prop up GDP growth to make up for the export slowdown owing to the global economic recession. These vehicles —- called urban development investment corporations (UDICs) —- were set up “in part to circumvent rules prohibiting local governments from borrowing...

by Todd Harrison Kevin Cassidy, a senior credit analyst at Moody's, recently referenced the $700 billion in risky high-yield corporate debt on the horizon and offered, "An avalanche is brewing in 2012 and beyond if companies don't get out in front of this." Minyanville offered a similar assessment entering September 2008 as $871 billion of corporate debt was set to mature into year-end. We opined there were two plausible scenarios; a credit cancer that would chew through the financial body, or a car crash that would crack the system under the weight of an indebted world. I agree that another avalanche is building atop Credit Mountain; while risk transferred from corporate coffers to sovereign strongboxes, the magnitude is cumulative in cause and effect. And despite scary parallels between the 2008 financial crisis and our modern day sequel, savvy investors continue to monitor corporate credit as a timing mechanism for an equity downturn. As stocks grind to fresh 18-mo...

by Rick Newman Assessing Your Middle-Class Status Despite the so-called recovery, many families continue to struggle, with income and other living standards slipping below thresholds that typically represent middle-class quality of life. We've assembled a variety of metrics to help determine whether you're getting ahead, holding steady, or slipping further than most. Income For the 50 percent of families in the middle of the scale, household income ranges from $51,000 to $123,000 for a typical four-person, two-parent family. The median is about $81,000. Those numbers are from 2008, and have probably fallen 5 to 7 percent since then, on account of the recession. Median income for a single-parent, two-child family is about $25,000. Housing Costs For two-parent families, the typical home is worth about $231,000, accounting for $17,600 in mortgage payments and other costs per year. Housing costs have risen by more than twice as much as income since 1990, a trend that may finally be...

by Robert Powell Alzheimer's, inability to increase savings are two steep obstacles to golden years When it comes to retirement, there are lots of things to consider: tax rates, earthquakes, and drug interactions to name a few. But experts say there are two big elephants in the room with which many of us will have to deal, sooner or later. One is trying to make up for lost time on the savings front by assuming you can work later in life. The other is a diagnosis of Alzheimer's disease, either for oneself or a close family member. Let's tackle the tougher one first. Some 5.3 million people now have Alzheimer's, according to a recent report issued by the Alzheimer's Association. That's roughly the population of Colorado. The disease is the seventh leading cause of death in the U.S. There are some 10 million unpaid caregivers. What's worse still, there's no end in sight: The prevalence of Alzheimer's is expected to grow by more than 80% from 2000 to 202...

(Reuters) - Many workers around the world have given up hopes of advancing in their jobs, but the bad economy is keeping them from finding new ones. Such "walking wounded" workers are increasingly exchanging ambition for job stability, which now even trumps pay as a consideration, according to a biennial survey by the human resources consultancy Towers Watson Co. People are becoming "nesters," who prefer to stay in one career or with one employer for their entire career. The report highlights a disconnect between what such "nesters" want and the growing trends that are shaping the global workforce: an increasing emphasis on flexible staff and short-term employment, more offshoring and part-time work. "People are increasingly wanting things that are harder to get," said Max Caldwell, a leader of Towers Watson's talent and reward business. "They'd like to settle into one or two companies for life. What people want is security, stabilit...

by Michael Kahn Weak trading levels have thus far not undermined the stock market's recent rally. But that doesn't mean that they couldn't. Many in the financial media have latched on to the argument that the low-volume nature of the recent stock rally doesn't necessarily undermine it. After watching the stock market grind higher over the past two months, I must agree that basing investment decisions on volume has left many looking silly in the face of a strong bull advance. Still, one of the most dangerous phrases in investing is "this time it's different." While there are periods when basic concepts of trading and market psychology seem to be out of line with reality, eventually they do make their way back. Think back to the end of the Internet bubble when price/earnings ratios were discarded in favor of "new economy" metrics. It only worked for a short few months. For this reason, I must caution investors that volume does indeed still matter. ...

Suppose that every day; ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this: The first four men (the poorest) would pay nothing. The fifth would pay $1. The sixth would pay $3. The seventh would pay $7. The eighth would pay $12. The ninth would pay $18. The tenth man (the richest) would pay $59. So, that's what they decided to do. The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. He said, "Since you are all such good customers, I'm going to reduce the cost of your daily beer by $20. Drinks for the ten now cost just $80." The group still wanted to pay their bill the way we pay our taxes, so the first four men were unaffected. They would still drink for free. But what about the other six men -- the paying customers? How could they divide the $20 windfall so that everyone would get his "fair shar...

Simon Mortlock Banks made a lot of their layoffs way back in Q4 2008 and Q1 2009, but the job market only really picked up late last year. This means there are people, quite a few people, who have now been looking for work for a whole year (or more). In many cases, the stigma of a year’s unemployment could be stifling their job searches, and leaving them with much explaining to do during interviews, especially in a sector as unforgiving as financial services. If you are among the many approaching this unhappy anniversary, here are a few tips that might help you turn the tide. Prepare well for the “why were you retrenched?” question Interviewers will hammer you on why you were laid off. Don’t give them an inch. Hit back calmly and confidently. Show a positive attitude, as opposed to dwelling on the negatives. “It’s essential to articulate the reasons why you were retrenched or found it difficult to secure a new role in 2009, clearly showing an understanding of global markets, economics ...

The author is a senior banker based in Singapore, with three decades in commercial and investment banking at major international firms. My nephew, who works for a major foreign bank in Singapore, laments endlessly about the tremendous working pressure and stress which he faces daily. He talks about aggressive and unrealistic revenue targets, unfair head office politics and unreasonable expat bosses. He remembers his early years with a local bank when he had more time for his family, friends and leisure activities. And he always says that one day soon, his wish is to “retire” in a local bank. Despite the above, I understand that my nephew has declined numerous opportunities to be interviewed for senior positions in the local banks. His predicament is understandable. His compensation from his years with a foreign bank has enabled ownership of an upmarket condominium and a new BMW, and has allowed him to play golf on weekends and dine at the finest restaurants in Singapore. The pay and li...

by Paul B. Farrell Commentary: Historians Warning of a Sudden 'Thief at Night,' an 'Accelerating Car Crash' "One of the disturbing facts of history is that so many civilizations collapse," warns anthropologist Jared Diamond in Collapse: How Societies Choose to Fail or Succeed. Many "civilizations share a sharp curve of decline. Indeed, a society's demise may begin only a decade or two after it reaches its peak population, wealth and power." Now, Harvard's Niall Ferguson, one of the world's leading financial historians, echoes Diamond's warning: "Imperial collapse may come much more suddenly than many historians imagine. A combination of fiscal deficits and military overstretch suggests that the United States may be the next empire on the precipice." Yes, America is on the edge. Dismiss his warning at your peril. Everything you learned, everything you believe and everything driving our political leaders is based on a misleadi...

LONDON - BRITAIN which emerged from recession in the final quarter of 2009, faces a 'high' risk of relapse and below-average growth in the next two years, the British Chamber of Commerce warned on Sunday. 'The UK economic outlook will remain highly uncertain for a considerable time,' the BCC said in the group's latest economic forecast. The recovery will be fragile, and the risks of a relapse are high.' The BCC predicted that the economy will grow 1.0 per cent this year, followed by expansion of 2.1 per cent in 2011. It shrank by 5.0 per cent in 2009. The 2010 forecast was unchanged from previous guidance but the 2011 figure was lower than its prior prediction of 2.3-per cent expansion. 'The obstacles to a sustained medium-term recovery now appear greater,' the business group said. The BCC added that the recovery would be 'modest and below the historical average in the next two years'. Britain escaped from recession in the fourth quarter of last ...

By Dan Caplinger Making sure you have enough money to retire comfortably is the biggest long-term financial challenge you're likely to face. Some of the most useful tools to help you save for retirement, however, also have other features that could have an even bigger impact on your finances long before the day you quit your job. Making the most of a good thing Tax-favored retirement accounts like IRAs and 401(k) plans come with a host of benefits. The most immediate comes from traditional IRAs and 401(k)s, which give you an immediate tax deduction for the amount of money you contribute. Depending on your tax bracket, a $5,000 contribution to an IRA could be worth as much as $1,750 in tax savings this year. More important from a long-term perspective, however, are the long-term advantages to having money inside a retirement account. As long as your money is safely sheltered within that account, you don't have to worry about paying any income tax on the capital gains you realiz...

By Jennifer Schonberger When the world was reeling from the global recession, China was the leading the global economic rebound. The Shanghai Composite Index surged ahead by 80%, and companies like China North East Petroleum (NYSE: NEP) and China Automotive Systems (Nasdaq: CAAS) rose by more than 600%. The country’s massive stimulus package spurred investment in infrastructure and boosted demand for equipment and commodities, helping companies like Caterpillar (NYSE: CAT) and Freeport-McMoRan (NYSE: FCX). But as China attempts to cool what officials feel is an overheating economy, concerns swirl around what those actions will mean for the sustainability of the global economic recovery, and companies like Diana Shipping (NYSE: DSX) that rely on global revenue streams. Mark Edwards, vice president and portfolio manager for T. Rowe Price Emerging Market Stock Fund (PRMSX), weighed in on these topics in an interview, as well as discussing how the global recession has initiated a rebalanci...

By Dan Caplinger Smart investors look for great values among investments. But when the prices of everything seem to be going straight up, what's a good value investor supposed to do? What the rally did After a big run-up like we've seen over the past year, it's no big surprise that the pickings for value seekers have started to get a little thin. But I didn't realize just how thin until I took a look at the new 52-week lows list. Typically, checking out which stocks are hitting new lows for the year can uncover a treasure chest for value hunters. Seeing what investors have beaten down and left for dead last year, for instance, would have given you so many strong ideas that you would've had trouble looking into them all. Yesterday, though, I found only a single regular stock on the NYSE list: TerraNitrogen. The Nasdaq list was no better: I didn't find a single stock with a market cap over $100 million on it. So much for easy pickings! What got left behind Unfort...