Investing

TODAY SHOW

A Suckers Rally

As a follow up to my last post, here’s a video of my Today segment this morning on the same topic:

Less-Bad News

Read the newspapers these days and you’re seeing a lot of coverage indicating that there’s an economic recovery on the horizon.

* Last week, ADP said that employers cut 491,000 jobs in April, versus the 708,000 that were lost in March. In fact, job losses were at their lowest since November of 2008.

* Fed Chairman Ben Bernanke forecasted a turn-around for later this year, saying that conditions in the financial markets have improved and the banking system is gradually being repaired.

* President Obama said on Friday that “the gears of our economic engine do seem to be slowly turning once again.”

* The Dow Jones Industrials gained nearly 165 points and finished up 4.4 percent for last week – the eighth gain for the index in nine weeks.

Is this good news? Eh. What I really think it is is less-than-bad news. But the fact that it’s being played so positively could cause problems for you and me. If individuals follow these encouraging headlines they can become too optimistic and sabotage their financial future. When we feel too good, too powerful, too in control of the future, it tends to backfire. There are studies from Duke University that found that when people see the glass as too full, they behave in ways that aren’t good for their future. They overspend. They accumulate debt. They fail to save. On the other hand, mild optimists – people who are happy, but not complacent – save more and are likely to have emergency funds. More…

What’s A Hedge Fund, Mom?

This morning, as we were rushing to stuff lunches into already over-loaded backpacks, grab the tennis rackets and coats (because despite the fact that it’s officially spring, it was 20 degrees outside) my 14-year-old hit me with this question: “What’s a hedge fund, mom?”

I backed into an answer.

Me: Do you know what a mutual fund is?

Him: Ummmm….

Me: It’s usually a bunch of investments in stocks or bonds or both bundled together.

Him: Okay.  (He turns and walks out the door and then, realizing we are having a conversation shouts,) I’m still listening.

Me: Well the whole point of a mutual fund is that if one of your stocks or bonds is losing money, the rest of them may not be so you won’t end up losing your whole investment.   That’s called “diversification.”  Anyway, a hedge fund invests a whole bunch of investments at the same time too, but many of them are riskier than stocks and bonds.  So for the most part only wealthy people are allowed to invest in them.

Him: Do you?

Me: Do I what?

Him: Do you invest in them?

Me: No.

Him: Can you put on Z-100?

More…

MONEY 911

Planning for a Rainy Day

Where should I be putting my money now? That seemed to be the theme of this week’s Money 911. Personally, I see it as a great sign: Clearly, people are beginning to think about saving when they come into a little extra money, rather than spending. That’s the kind of attitude we need right now.

Here’s the clip, in case you missed it:

MORNING JOE

Investing Tips from the Top

You’ve probably heard me say it a hundred times: If you have a long time horizon, getting in the stock market now is a good idea. Eventually, things are going to turn around, and this opportunity to buy low shouldn’t be missed. But is that the kind of advice we want to hear from President Obama? That was the hot topic when I stopped by Morning Joe this morning.