How to be Rich, Happy and Free from Scams

By Paul J. Lim, senior editor (Money Magazine) -- Diversification, the notion of spreading your investments among different baskets of assets that don't rise and fall in unison, has long been considered one of the safest and surest moves you can make with your portfolio. After all, if any one basket falls apart, most of your brood should remain intact. Then along comes a market tornado like the one of 2008-09 that scrambles all your eggs, leaving you wondering what to do. Now famed hedge fund manager Jim Rogers, among others, warns, "You can go broke diversifying." TV talking heads are questioning the value of spreading your bets. And Googling the phrase "diversification is dead" returns half a million hits. But using the financial crisis to conclude that diversification is pointless because stocks, bonds, and other assets will move in tandem forevermore is a misreading of recent history. A better interpretation: Michele Gambera, chief economist for investment c...

by Jeffrey McCracken and Tom McGinty Companies Begin to Tap Record Capital Piles for Mergers; Walgreen Says It May as Well Spend It One year removed from the trough of the recession, American corporations continue to hoard more cash than ever. There are now tentative signs that they are finally comfortable using the money to do some shopping. The 382 nonfinancial firms in the Standard & Poor's 500 that have reported results for the fourth quarter of 2009 are now holding $932 billion in cash and short-term investments, according to a Wall Street Journal analysis of data from Capital IQ. That sum is up 8% from the third quarter and up 31% from a year ago. At a time of low interest rates, reopened credit markets and growing optimism about the economy, CEOs and their boards seem to be questioning the wisdom of sitting on all that cash. And with the S&P 500 still trading 29% below its October 2007 peak, companies are deciding cash is their preferred currency for acquisitions -- ...

by Paul B. Farrell Commentary: Munger warns 2012 is our tipping point on 'road to ruin' Good news, Americans are "downbeat about today. Upbeat about tomorrow," says the latest USA Today/Gallup Poll. "Americans feel battered by hard times, record home foreclosures, stubbornly high unemployment rates and war." And yes, we are "fed up with Washington and convinced more than 3 to 1 that the nation is heading in the wrong direction," yet there's "confidence that there will be better times ahead, that the classic American dream endures and hasn't been extinguished. It's not even at its low ebb." Why? Because we're in denial! Do Main Street's 95 million investors know something Warren Buffett's long-time partner, Charlie Munger, doesn't know? Munger is warning us "It's Over" for America. Yes, "o-v-e-r," America's in decline, at the end-of-days, coming to "financial ruin," says Mun...

by Peter Brimelow and Edwin S. Rubenstein Commentary: Stocks have more potential upside than downside risk Stocks rebounded strongly in 2009. But they're still fairly low by historic standards. We base this conclusion on the work of Prof. Jeremy Siegel of the University of Pennsylvania's Wharton School, author of the classic book, "Stocks For the Long-Run." (Note: Siegel should not be blamed for the conclusions we draw from his data.) Siegel's most famous finding: Counting capital gains and dividends together, and adjusting for inflation, stocks have accumulated on average in real terms at a remarkably consistent 7% or so over the past 200 years. Shown on a log scale, this consistent trend appears as an impressive upward-slanting straight line. For several years, we've been writing columns that look at stocks relative to that upward-slanting trend line. Since the Crash of 2008, we've twice pointed out that stocks had reached levels below trend that in the ...

by James B. Stewart Back in late October, with stocks rallying, I decided to hedge some of my exposure by buying a "short" exchange-traded fund -- an ETF designed to rise when the market falls. At the time, based on historical norms, the market was overdue for a correction. After all, stocks had gone up nearly 57% without any correction of 10% or more since March, despite a sluggish recovery and rising unemployment. So I bought shares in the ProShares UltraShort S&P 500 fund, which aims to double the inverse return of the Standard & Poor's 500-stock index. In other words, for any given day, if the S&P 500 fell 10%, this ETF would be expected to gain 20%. I wrote then, "I'm deliberately calling this an experiment, not a recommendation. I suggest that conservative investors let me be the guinea pig." The guinea pig is back with his report. It's long been my policy to avoid bets on short-term moves in the stock market. There are good reasons for...

by Liz Ryan Every few years, a management book or philosophy emerges to change our thinking about the best ways to lead employees. From The One Minute Manager to Who Moved My Cheese?, new and revived leadership concepts have shaped the way we organize, evaluate, inspire, and reward team members. With so many competing management theories in the mix, some ill-conceived practices were bound to take hold—and indeed, many have. Here's our list of the 10 most brainless and injurious: 1. Forced Ranking The idea behind forced ranking is that when you evaluate your employees against one another, you'll see who's most critical on the team and who's most expendable. This theory rests on the notion that we can exhort our reports to work together for the sake of the team 364 days a year and then, when it really counts, pit them against one another in a zero-sum competitive exercise. That's a decent strategy for TV shows such as Survivor but disastrous for organizations that int...

by Laura Rowley Back in 2007, bored and frustrated with her day job as an office administrator, New York musician, artist and writer Summer Pierre wrote and illustrated a 'zine about her double life. "I wanted to make something that honors the fact that most of us have two lives and that takes A LOT of energy," the California native wrote on her blog. "I also wanted to make something that could be an easy reminder that you are living your ONE life right now (not later) -- why not enjoy it as much as you can -- with a day job or not."Pierre's whimsical handbook was a hit with struggling artists as far away as Japan, New Zealand and Egypt. "The Artist in the Office: How to Creatively Survive and Thrive Seven Days a Week," was published in paperback this month by Perigree. The book offers inspiration and practical tips not only to frustrated artists, but alienated workers clinging to jobs they hate, reluctant to move on because of the tough economy. ...