Tuesday, February 3, 2009

Making the Tough Decisions during Troubling Economic Times

Yet another week and the uncertainty continues to grow. The time has come to do something proactive; I mean, you can't just sit on the sidelines and hope you aren’t affected. Chances are you are already affected at some level. If you own your own business then you must simply take a step back and decide what it will take for you to weather this economic storm. Success is measured by your ability to hold on through the rough times and prosper in the good times.

I’m sure you’ve heard the saying “You have to make hay while the sun shines,” well, that time is over and now you have to preserve and be ready for tomorrow. You don’t have to live in tomorrow but you do have to position yourself correctly. How do you do that? That’s easy, you start identifying areas of the economy that will have to succeed; areas that people will spend money in no matter what is happening.

But before you do that you need to make the hard decisions, you have to decide what keeps you going and do it. Don’t be paralyzed by the decision. Don’t push off tomorrow what you can and should do today because if you do you won't be around tomorrow. Those that make these tough decisions now will be well-positioned in the future.

For those of you who are currently employed, your mission is simple. Do whatever is necessary to help your company and your boss keep the doors open. You do that by recognizing and understanding that the company may be suffering tough economic times too. Look around for areas of the business that may be wasting money or areas than can be streamlined. You must do whatever it takes even if that means offering to take a pay cut. If needed then so be it, but remember the boss will remember that when it comes down to layoffs. Your boss needs people around who take ownership in what they do, and aren’t there just to collect a pay check every two weeks. I can assure you that those days gone.

Here are the alternatives in these tough times. At some point your company will start to evaluate the assets and resources and if you have the shortest seniority, your name will come up sooner than later but that’s okay. If you know it then that gives you an advantage, the ability to develop a “plan B.” But remember this, if you are thinking about finding another job rather than sticking around and helping your current company, be careful. First, jobs are very difficult to find today and if you are fortunate enough to locate a company to hire you, they are probably facing the same volatile economic conditions that your old company was experiencing. Just keep in mind; you will be the newest member of the staff in the new company which means you have absolutely no seniority. So, what were the benefits?

I recommend that you stick it out right where you are; as long as you are making money in the good times and willing to help out in the bad times you should have a win-win situation. There is plenty of hope out there but we all have to be proactive. The economy will continue to sink and with it the consumer confidence, but yours doesn’t have to. If you don’t already have a plan now is the time to develop one. Once you have your plan then you can start to work on it. Cut unnecessary spending, where applicable. Our country will be moving to more of a saving mentality than the “spend now and pay later” attitude of the last 25 years.

We have to pay sometime and now the time has come. Regardless of all the changes and solutions the new political administration sets forth, the U.S. and global economies are still going to have to run their course. This year may be tough but I believe 2010 will show promise. We may see a prolonged recession, maybe upwards of a decade or more, but some of the most profitable times in our country’s financial history have been when the economy is moving sideways. Just like the markets, if there is a sideways trend there is great opportunity to get in at the lows and get out at the highs and you can do that several times during the cycle.

Find a good network where you can share ideas with likeminded individuals and then use that network to help you and your fellow investors succeed. Remember that www.jdfn.com is a great source for such a network; it’s free and there are lots of investors bouncing ideas off one another. Right now the site is focused on FOREX trading. The Forex is a solid alternative to the stock market and a great potential source of new wealth. I encourage everyone out there looking for a change to try paper trading this amazing market place. Paper trade the Forex until you feel confident enough to trade “real” money. I know lots of people that have decided enough is enough and have shifted to the thinking that they want to control their own financial security, thus becoming full time foreign currency traders. You can easily learn to do this yourself.I am always updating good information to help you in your financial struggles, most of this is at your finger tips free of charge and you can access that at my web site www.jamesdicks.com.

As always,

Happy investing,

James Dicks

Value Added Goals

If you have read my articles for any length of time, you know that I am a zealot when it comes to goal setting. I constantly set my personal and professional goals. I write them down and watch them come to life and I hope you do the same. But one thing you should keep in mind is that your goals must match your personal value system. If any projected goal doesn’t mirror what you personally believe then your chances of success diminish greatly. Your core values, your personal desires and what you believe in are all intertwined. If you forget about one of them, the whole thing tumbles to the ground. Goal setting then becomes pointless.

Knowing what you truly believe is extremely important to create a listing of goals that actually mean something to you. Your values are standards that guide your conduct, your personal relations with those around you and give you the focus and direction needed to excel in your career. Look at it this way; it’s simply your moral fortitude - those feelings that help distinguish right and wrong and help you live your life in a meaningful way.

You must also determine who you are and understand your strengths and weaknesses. Evaluate your abilities and consider your accomplishments and failures. Knowing who you are and what you are capable of prevents you from creating goals that underestimate or overestimate your expertise and directs you toward realistic, attainable goals. Hey, shoot for the moon but if you create realistic goals you are more likely to succeed. Inaccurate direction can cause you to lose many valuable assets including time, motivation and self-esteem. Believe me; you don’t want to go there! Goal setting is a positive exercise so try to maintain your constructive attitude and examine your situation logically.

Be prepared to update your goals to mirror what is important in your life right now. Things change and so should your goals. Update your aspirations and objectives now and again to help you achieve the things you need to do right now. If your situation changes but your goals don’t, you could lose your drive to achieve the desired results. Increase your chances of success by defining what is important to you. Develop your goals based on personal values, desires, and innermost beliefs, and create your achievement expectations to match your circumstances. If you skip any of these steps, you could weaken your motivation, fail to work up to your abilities, and reduce your opportunities for success.

Developing a road map for life will help you no matter what you do, personally or professionally. When your goals are reasonable and emulate your values and desires, you will become extremely motivated. I guarantee it. When you become motivated and work hard to attain your value-oriented goals, you will more than likely succeed. When you succeed, your motivation will continue to expand, and drive you to set new realistic and attainable goals, which will allow you to continue to achieve. Know who you are, know your current circumstances and desires, set your realistic goals, and start to succeed. Do it today!

Markets go up, markets go down – How is it affecting you?

Routinely, the stock and bond markets pretty much follow the sentiment of the day. And, at times, it actually gets to be pretty ridiculous. For instance, the stock exchanges were extremely weak the other day based upon the idea that the Asian and European economies were beginning to show some definite weakness. So, it’s not enough for us to concern ourselves with our own economy, now we have to worry about what’s happening in China? Investors seem to worry about just about everything. Some things are actually happening (the war in Iraq, poor earnings reports, weak economic numbers, and economic stimulus packages) and some things are yet to occur (possible future terror attacks or what Mr. Bernanke “might” say to some congressional committee next week).

Look, our day-to-day routines with our families and our jobs normally guarantee a steady stream of decisions to make and problems to solve. So, why worry about the financial markets. Most of the events that change the direction of the markets are completely out of our hands anyway. What we should be concentrating on is how we can create a portfolio that is relatively immune to these outside events. Create a portfolio that can weather the storm of global uncertainty.You’ve heard all of it before. Diversification and proper money management are the best methods of insuring that your investments (no matter what they are) will be protected from the highs and lows in the markets. In a diversified portfolio, should one investment react poorly to negative national or international events, you can normally count on another investment to make up the difference.

Examine your personal investment model on a semi-annual basis, or at the very least, annually. Really explore what you are invested in. Do your holdings include stocks, what about interest rate instruments, mutual funds, real estate, commodities, the foreign exchange markets? Choose the opportunities that give you the most comfort. If you can’t sleep at night worrying about your investments, then you shouldn’t be invested in them. Learn as much as you can about the investments you don’t understand that could possibly help your future financial growth. For instance, if you don’t understand REIT’s (Real Estate Investment Trusts), read about them, ask questions, study the topic before you make any monetary move.

Once you are involved in a particular investment, make sure you follow its progress. If you are trading stocks or Forex, always set your stops and limits to guard against losses. If you are investing in a 401(k) plan at work, study your investment options often and rebalance, when necessary. The key to a positive investment life is education.You can count on the world situation being volatile today, tomorrow, next week, and probably for the rest of your life. The financial markets will continue to show weakness on some days and strength on others. If you meet the challenge of creating a balanced portfolio through diversification you most likely will worry less and definitely have more time to enjoy the most important things your life has to offer, family and friends. It really is that simple.

Happy Investing,

James Dicks

It's the Little Things that Create BIG Savings

It’s the small things that will add up; some obvious things like saving on your electric bill or re-evaluating your other monthly bills. Take a few moments to go over your personal budget and examine all the money going out and all money coming in. A few simple strategies, like using fewer Christmas lights and limit the time they are on during the holidays (See my last blog), reducing unnecessary expenses around the home or office, car pooling to work and less or more creative types of entertainment. These are all areas where you can begin to save money.

If you are saving money, then you are making money so remember it's pretty easy for anyone to start making some cash, just save a little. A few other areas that you can look to making a difference are areas such as your insurance; we all have a tremendous need for insurance in all areas such as home, health, automobile, life, and disability. Meet with a trusted insurance agent and review your policies to see where you can make some changes that will keep you adequately insured but not over insured. Insurance is an area that many of us simply buy buy buy!

Top goal for 2009 review what you have in insurance and what you need.

Those of you that are in a mortgage and not upside down, this will be the year to refinance. The rule of thumb is 2 points. If the mortgage rates have dropped by at least 2 points then it is worth refinancing, but hold out because we have a ways to go before we see the bottom of the long term home interest rates. You will be able to make a significant savings by refinancing so pay attention to the rates and be ready to refinance when the time comes.

Remember, if you’re saving money, you’re making money!

Happy Investing!

James Dicks