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Archive for May, 2009

Did we hit the bottom?

Friday, May 29th, 2009

Today’s GDP data showed corporate profits after taxes increased by 12.9% to $1.052 trillion in the first quarter, after plunging by 28.4% in the fourth quarter. GDP fell 5.7% annual rate from January to March this year. It was originally estimated as 6.1% drop. GDP fell 6.3% in the fourth quarter of 2008. It appears that the economy is recovering especially when you consider the improvement in corporate profits.

If the corporate profits continue to climb, it will cure the employment market which will in turn improve the consumer spending. Another good news is that economists this week predicted GDP will fall only 1.8% in the second quarter. The National Association of Business Economics forecasters see GDP growing in the third quarter, rising 0.7%, and project a fourth-quarter increase of 1.8%. If this prediction works out ok, we can finally see the light.

Today’s report also shows that businesses are cutting their inventories. Even simply cutting the inventories is good news in this economic environment. All these data suggests that economy decline is slowing down. Some economists believe that the economy hit the bottom in December 2008. I really hope so.

Related Link: U.S. consumer sentiment highest in 8 months | GDP numbers from BEA

Five ways to move forward in your career path

Thursday, May 28th, 2009

No matter what our career path is each of us wants to continue to make progress each and every day. If you aren’t trying your best to make progress and get better, you’ll be passed up in no time by the rest of the pack and you won’t be an asset to any company. For the purpose of this post I’m going to assume that if you are reading this you are doing your best to move forward and have the most successful career possible. What are some ways you can do this?

Five Ways to move forward in your career path

  1. Never Stop Learning- It is so important to always be learning something new, whether it be through formal classes or simply taking extra time to learn a certain new program at the workplace. Education is a powerful thing and it can get you pretty far in your career.
  2. Network- Networking is a very important part of moving forward in your career. The goal of networking is basically to have a solid group of contacts that can help you in your future endeavors. You never know when those contacts will come in handy!
  3. Put in the time- This is probably the most straight forward of the ways to keep your career moving up. If you want to move forward you must be willing to put in the time and work your way up. Work harder than your peers and get noticed by executives.
  4. Think outside the box- A good way to do this is to try to come up with ways that will help your business or the area you work in be more efficient. You’ll have to be willing to make your opinion known, but do so in a nice manner.
  5. Have a positive attitude- So many people think that having a positive attitude can’t get you too far in life, but in reality many times a situation can be handled in many different ways and it is all about how you decide to react to it. Keep a positive attitude and you will be a better team player, and more of an asset to your employer.

How to get health insurance after layoff?

Wednesday, May 27th, 2009

If someone is laid off, he/she has the option of signing up for COBRA. What if COBRA is too expensive? Group health insurance policies can help you if you don’t want to opt for COBRA. It’s also ideal for small business owners. Wall Street Journal published an article today explaining how to get health insurance using group policy.

Form a small business or use your existing business to buy group insurance policy to save on insurance costs especially if you have pre-existing conditions. Although this option is not cheap for young people, it will work out better for 50+ crowd. Even if you are the only one employee in your business, you may be still able to participate in group insurance policy of your company.

Related Link: Improved COBRA insurance subsidies for the unemployed

Get prepared for the summer doldrums

Wednesday, May 27th, 2009

What exactly are the summer doldrums? The summer doldrums are defined on Wall Street as the period between somewhere around Memorial Day and Labor Day where the market often trades in a different type of mode than it does throughout the rest of the year. The word doldrums itself means a state of stagnation or inactivity, though that is only partially the case when it comes to how it applies to the stock market. Often the stock market summer doldrums occur at least partially because many major traders are on vacation and paying little attention to the market. Major mutual funds generally make fewer buy and sells during this period, and the overall volume on the market is much lighter than it is through other portions of the year.

The summer doldrums doesn’t necessarily mean that there can’t be any volatility though, since the fact that there is less volume actually lends itself to stocks trading more wildly than normal. In the end the summer doldrums generally are considered a time where there may be quite a bit of intra-day volatility and market shifts, but very little progress or movement over the period of a few months.

As an investor you need to prepare for the summer doldrums and understand that the trading environment is likely to be different than it is at other times of the year. Understand that it is not uncommon to see several days of almost no movement in the market followed by a day or two of massive swings in one direction or another because of a small event. These small events are able to move the market much easier during this lighter volume summer doldrums period in the stock market.

The summer doldrums are a natural thing, because Wall Street traders and investors are just like everyone else, they want to have a vacation! During vacation periods in a regular job setting there are changes, and it is no different in the stock market.

Consumer confidence jumps in May. Is it temporary?

Tuesday, May 26th, 2009

Today the Conference Board announced that May Consumer Confidence numbers jumped to 54.9, from 40.8 in April. This was significantly higher than analysts had expected, and it is also the highest confidence reading in eight months. Americans seem to be more hopeful that the job market could be in recovery mode over the next few months, which is largely behind the consumer confidence gains. The percentage of consumers that said jobs are hard to get dropped to 44.7% in May from 46.6% in April. The future outlook was even stronger as 20% of Americans now said they expect more jobs to be available in the next few months, up sharply from a number of just 14.2% a month ago.

The jump in consumer confidence was much more than just about anyone had predicted. Interestingly enough, there is also some talk going around Washington and Detroit that General Motors may be nearing the same fate that Chrysler did just a few weeks ago. One has to wonder what the bankruptcy of General Motors would do to consumer confidence and the overall job outlook.

For now it seems that Americans are becoming more hopeful about the future more than anything else. Americans aren’t saying things are getting better, rather they are saying they are expecting them to get better. They also aren’t saying that they will be spending more now, rather they are saying that they hope to be able to spend more in the future. It is important to note that consumer confidence is a very fluid number, which could turn back down on any kind of major economic setback.

The jump in consumer confidence is a positive sign, but one should be careful not to read too much into it. In the end it will be the economic results that matter, not the amount of hope consumers have or don’t have about what those results may be.

Know when to cut your losses in stocks

Monday, May 25th, 2009

The stock market is a very complicated system and no matter how good you are you are going to make mistakes. It is important to be able to realize when you have made a mistake and then take the appropriate action. There are going to be times when the reason you invested in a stock or mutual fund are no longer there, and as soon as you know that is the case you must understand that it is time to cut your losses. It can be difficult to decide to do this, but it is absolutely necessary since being stubborn will get you nowhere fast in the modern stock market.

When should you not cut your losses? You shouldn’t simply cut your losses because the investment you made has lost 5% or 10%, or some random number that you have set in your head before you make the investment. This is a dangerous way to go about investing, since the modern market is so volatile a stock can lose that amount in a day or two and often nothing has fundamentally changed inside the company. Only sophisticated traders should use a stop loss order, and long-term investors have no business ever making such a move.

There is a delicate line between being stubborn when investing and cutting ties with your investment too soon. This is probably the single biggest reason that it is extremely important for the common investor to do their homework on their investments, even after making the initial investment. Just because you have bought the stock doesn’t mean your work is done, in fact the work is simply beginning. If you don’t keep up with the day to day news surrounding that particular company or the market in general, there will be no way for you to make an educated decision as to whether the stock should be held onto or sold. Most of all as an investor you should understand that in the long run cutting your losses in stocks can be just as profitable as selling your winners.

Do you really need all your cell phone applications?

Friday, May 22nd, 2009

The latest cell phone’s from all of the major cell phone carriers have gotten more and more advanced, doing some pretty incredible things. Today’s cell phones are becoming do it all devices. The cell phones are capable of allowing you to surf the Internet, listen to music, take high quality pictures, serve as a GPS, and do endless other application that one would have never guessed would be possible as recently as a few years ago. Are all of these great new cell phone applications really cool? Absolutely, the applications have become more and more impressive by the year. The greater question that every consumer really should ask themselves though is “Do I really need all of these cell phone applications?”

Let’s face it, you are paying a pretty penny for all of those amazing cell phone applications. Saving money on your cell phone bill may be started by reducing the amount of cell phone applications you have access to. Just because your phone is capable of doing it doesn’t necessarily mean you need to pay to have access to it. Consider keeping the most essential applications on your cell phone active, but getting rid of those you don’t really need.

Consider the fact that many of those applications you can pay a higher monthly fee to obtain through your cell phone you may also have access to in other forms. For example, why pay extra for a GPS device in a phone if you already own a Garmin GPS device? Why pay for Internet connectivity on your phone if you don’t really need it and have the Internet both at work and at your home? There are lots of things in life that we would like to have that really aren’t necessary. Cell phones as a whole are great devices that save lives and make communication much easier, but do you really need all the cell phone applications that you are paying for?

United States AAA credit rating in danger?

Thursday, May 21st, 2009

Today the markets and the overall business world was jolted by the news that S&P has downgraded Britain’s economic outlook from stable to negative, and that the AAA credit rating that Britain has is in some jeopardy. To put it in perspective, today is the first time that Britain’s outlook has been at negative since 1978. Markets around the world were quick to respond, and they clearly didn’t like the news one bit. British markets plunged almost 3% on the news, and stock markets around the world moved down in kind.

Throughout the day more and more speculation grew about the possibility of a downgrade in the America’s economic outlook by the ratings agencies. In fact, Bill Gross of Pimco, stated on CNBC today that he believes the United States is definitely going in the same path as the British and that the AAA credit rating that is so important to our nation could be downgraded over the next three or four years. This news spooked the markets and gave investors reason to sell stocks and take their recent profits.

Why would a lower credit rating than the top of the line AAA damage an economy like America’s or Great Britain’s? A lowering of the credit rating would dramatically push up the cost of borrowing, which would most certainly put more pressure on the already strained budgets of these countries.

In the end it could be a case of the ratings agencies just trying to cover their butt, because we know in the past they had done very little to make investors aware of the problems that were going on. The likelihood of the United States credit rating being pushed down isn’t too great, but it is definitely higher today because of the massive deficits the nation has. The credit rating of the United States is in no immediate danger, but in the future things could be different if steps aren’t taken to improve the problems.

How to Plan Your Budget to Spend Less and Save More

Tuesday, May 19th, 2009

Spending money is easy. You just can’t seem to get enough of it. Making money on the other hand is a tough job. Who wouldn’t love to own a home, have a nest egg set aside to enjoy their golden years and put their children through college without drowning in debt? You can do all this and much more regardless of your income if you learn the knack of planning your budget such that you spend less and save more.

First, identify where you spend most money. You can do this by keeping track of the money you spend. Maintain a diary to enlist the things you buy in a week or a month and their price. Make sure that you collect bills, receipts etc so that you can refer them for an idea of prices and tax. Note if you have spent money unnecessarily on indulgences and whims. Learn to distinguish between things you simply want and those that you really need.

If you have computer at home, no need to use paper diary. You can use software like Quicken or Microsoft Money to keep track of your expenses. Both software products are not free, but you can use Quicken online for free. You can also access your personal finance information from iPhone using Quicken application. If you are not comfortable storing your personal finance information in Quicken server, you can purchase the desktop software for $39. Whether you use Quicken or Microsoft Money, it will be well worth it because of the convenience and accuracy provided by these products. You can download the information from bank account or brokerage account directly into Quicken and Money to save time entering the data.

When you analyze your expenses, check whether you pay your cable provider for premium channels you barely have time to see. If yes, it would be wise to downgrade your cable plan. You will be able to save $50 per month which comes to $600 per year.

If you find yourself subscribing to magazines you rarely read, cancel those subscriptions. You can enjoy the same magazines in a library. If you rarely go to gym except in the first week of the year, why pay for it?! You can analyze your situation for other subscriptions too and cancel them if you don’t use them much.

Paying your bills on time will help save on late fees and the like. Use online calendars or to-do notes to keep track of your bills and dues. If you use Quicken or Money, you can set the reminders in the software to alert you when the bills are due. You can also save on ATM charges by using your bank’s ATM so that you don’t have to pay transaction fees.

Keep away from credit cards as much as possible. They may be tempting to use but you can run up a whole lot of debt by using credit cards. Use credit cards only when absolutely necessary and pay off at least the minimum balance due each month.

It may seem impossible to save on grocery bills. But you can save a bundle by using discount coupons and buying fruits and vegetables when they are in season. You can make preserves like jams or pickles to use when a particular fruit or vegetable is off season. Buy store brand food products like cereals. They contain the same stuff as the brand name products. Make good use of discount sales and offers at supermarkets. Plan your meals for a week or so and buy accordingly. That way, you will be able to avoid wastage. You can also save on food by avoiding restaurants and fast food outlets. Not only are they unhealthy, they are also expensive. If you are working, try to bring lunch from home so that you do not have to eat out.

Set aside money for a rainy day. Make it a goal to save at least 10% of your income for unforeseen expenses or add it to your retirement account so that you have a good sum set aside for your retired life.

Most people tend to end up paying a lot of money on phone bills because they cannot find a plan that suits their needs. Visit BillShrink.com to find a cell phone plan that is best for you. BillShrink is a web service that uses information you provide such as how you use cell phone plans and find one that suits you best.

Ratesurfer is another website that helps minimize your credit card bills. It will let you know when your credit card account rates change so that you can decide whether to transfer balances between accounts. If you wish, you can permit ratesurfer to do this for you so that you are paying the lowest possible interest.

Our modern lifestyle and soaring expenses may make saving a difficult task but these simple budgeting techniques can help trim our expenses and increase our savings.

Related Links:

Is using coupons really worth it?
Promotional discount codes for online shopping
Using coupons to buy organic food

Obama announces new gas mileage standards

Tuesday, May 19th, 2009

Today President Obama announced a very aggressive new plan to raise auto gas mileage standards and cut back the effect of greenhouse gases. President Obama called this plan the start of the “clean energy economy.” The move is being lauded by quite a few, but it is also being criticized by some because of the effect it will have on the prices of automobiles.

What exactly will this new plan require of automakers? It will require that each automaker boost their average fuel efficiency on specific automobiles to at least 35 miles per gallon by 2016. In 2007 President Bush announced a similar plan, but the plan gave automakers until 2020 to meet these demands. The current administration says that they want to speed up the process of helping out consumers by improving fuel efficiency, while at the same time reducing pollutants to our earth.

The new gas standards bill comes at a very difficult time for the auto industry, but it is also a very difficult time for the economy as a whole and consumers in general. While I understand the argument that some are giving that the automakers are unable to pay for this right now, I also believe that consumers deserve better fuel efficiency out of their cars. In addition to the need for fuel efficient cars for consumers, this move will also likely help the need for foreign oil. Dependence on foreign oil is something that has driven up gasoline prices in a huge way over the last few years, and it is something that many have come to realize must stop.

In the end getting tough on gas guzzlers should be a net positive, if things are conducted in a proper way. It is important that there continue to be strong safety regulations so automakers do not simply make a car more fuel efficient less safe. The automaker that is able to make a strong  initial move toward fuel efficient cars is likely to benefit in a huge way from this plan.

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