Sometimes, in the midst of the media mania of hype and sensation, you find voices of reason. Writers who want to deliver true investment education, not just add to the madness. As these voices of reason are discovered, their articles, websites, and video clip links will be added to this list.
1. Will You Make Your Money Back?
"The harsh math of a 50 percent decline is that it requires a 100 percent gain to simply get back to even. Sure, a mere 100 percent gain seemed easy enough not so long ago.
While Fed chair Ben Bernanke is pulling every lever possible to get us through the financial crisis, interest rates must eventually rise, not fall, from here. We Americans need higher rates to convince our creditors (including China and Japan) to keep buying our ever-growing debt. As rates rise..."
This is a fabulous must-read article written by Carla A. Fried and posted in June 2009 at CBSmoneywatch.com.
2. Stay The Course
"This is the third time in history that a major economy has found itself in a liquidity trap, a situation in which interest-rate cuts, the conventional way to perk up the economy, have reached their limit. When this happens, unconventional measures are the only way to fight recession. Yet such unconventional measures make the conventionally minded uncomfortable..."
This article was written by Paul Krugman and posted on June 14, 2009 in the New York Times.
3. Why Home Prices May Keep Falling
"Homeprices in the United States have been falling for nearly three years, and the decline may well continue for some time. Even the federal government has projected price decreases through 2010," says author Robert Shiller.
This article was posted on June 6, 2009 in the New York Times, and gives a solid historical perspective on housing price cycles.
4. The Bailout Is A Bargain
"The truth: No one's paying new taxes directly related to the bailout. And most of the government rescue packages offered to the banks have gone untapped or are being repaid."
This is a no-nonsense article posted April 23, 2009 by journalist David Weidner of the Wall Street Journal Online. It goes hand in hand with the thoughts I outlined in my article Deficit Spending Explained In Plain English.
5. The 7 New Rules Of Financial Security
These should have been the rules all along; better late than never! Authors Carolyn Bigda and Paul J. Lim of Money Magazine lay out the rules we all need to be following when it comes to investing. It starts with this one:
Rule No. 1: Risk
Old thinking: If you can stomach the ups and downs that come with risk, you'll be rewarded.
New rule: Risk isn't about your stomach. It's about making or missing an important goal.
Posted on CNNMoney.com.
6. Case Closed: Stocks Work
"If past is prologue, returns over the next five and 10 years will be better than average -- so don't give up yet," says Gene Epstein in this Barron's article published March 11, 2009.
He goes on to say, "With the stock market in the throes of yet another near-death experience, another rebirth could be in the offing," and supports his comments with solid data.
His point is well made, but if you can't handle the volatility of the stock market, and hold on for 20-30 years, than perhaps the roller coaster ride is not for you. Long term returns are great, but only if you can sleep at night.
7. How Low Can The Market Go?
"On days like today, it helps to look at the silver lining. Here it is: The farther stocks fall, the cheaper they get--and the higher the expected long-term return becomes. Unfortunately, that doesn't mean we don't have a long way to go on the downside," says Henry Blodget on Yahoo's Tech Ticker on March 2, 2009.
This internet page contains a video, chart and article that give you a realistic analysis of how low things could go before they recover.
8. New Lessons From The Crash
"Every major market crash is considered a teachable moment. And the lesson for investors invariably centers on the risk of overreacting to the news, in this case by attempting to flee equities when they're down." says author Joe Light.
"But this is not what many financial advisers are calling for this time. In fact, they say it may be well worth your while to pay close attention to what's going on in the market today..."
This article by Joe Light was posted to CNNMoney.com on 2/17/09.
9. Market Predictions - Who Got It Right?
As Einstein said,"Great spirits have always encountered violent opposition from mediocre minds."
The market predictions voiced by these academics, often in the face of violent opposition, turned out to be uncannily accurate.
It doesn't mean they will always get it right going forward, but we can all learn from listening to what they had to say, and paying attention to their views going forward.
10. How Not To Ruin Your Life - More Lessons From The Financial Crisis
"Because the past 15 months have been by far the most upsetting time period of many investors' lives -- including mine -- I am continuing to examine the lessons learned from this crisis" says author Ben Stein.
The back testing and portfolio propositions did not foresee a massive loss of confidence thanks to catastrophically wrong government moves. Thank you, Henry Paulson, for teaching us humility. Those disastrous moves told us we need to rethink our whole investment approach."
This article by Ben Stein was posted to Yahoo on 1/5/09.
