Some thought provoking news around the world this week!
I’m going to admit this shamelessly – my all time favourite TV show is Tom & Jerry (still!). I also admit I have fallen off the lounge laughing at it as well (not just figuratively), and not too long ago either. OK, that’s my time in the confessional for the month done (thank goodness!). I can’t but relate some of their escapades, to what’s happening with Greece these days.
It’s been a few months since I wrote about the situation in Europe, so I thought this would be an appropriate time to bring you up to speed. Last night, the 17 member group of European finance ministers signed off on a second round of bailouts for Greece. This follows on from the first round in 2010.
So, is the problem now fixed or did Tom just hand it over to Jerry?
The best description I have heard of an optimist is someone who falls off the top of a 20 floor building, is falling past the 10th, looks down and goes “so far not bad!”
As an investor it is almost a given that you will find yourself in situations where it might feel like the bottom’s given away – however optimistic you may be, the less frequent these occasions occur, the better off you would end up being.
Regardless, some investors regard losses in relative terms and others regard them in an absolute sense. Philosophically there are three methods of managing investments: passively, actively or with an absolute return focus. Which one are you aligned with?
Sometimes, even the best of us can get suckered into a raw deal. But a healthy attention to detail, discipline and asking the right questions can save you not just a bruised ego but also your hard earned money.
“Don’t put all your eggs in the same basket” is an adage that has almost been done to death in the financial media (I fear even I may have referred to it in one of my previous blogs!). So my apologies if you feel this sense of déjà vu and you are thinking to yourself “heard that, know that, can we please move on!”
But for a naturally curious person the obvious question that slaps them in the face is “So how the hell am I supposed to hatch them?”
If you are the type who has even a casual interest in financial media (and I’m assuming you do, if you are reading this!) you are sure to have come across the term “asset allocation”. Asset allocation is the technique by which you figure out how much to own of what assets you need to help you reach your financial goals.
If you are invested in a managed fund (unit trust or mutual fund, depending on which country you are in) you would be familiar with how the performance of your investment is reported.
If it is a personalised statement you receive then typically it should show the actual return that you earned from being invested in the fund. But, if you are referring to published fund performance tables then be aware that the returns you see may not be the returns you earned on your investments.
Here’s why.
I agree I didn’t keep up my promise to write about what happened in Europe, after the scheduled meeting of their leaders on the 23rd, to agree on a way forward for the European economies. Fact is, the group never met on the 23rd – perhaps because the French were busy getting thrashed right here in Auckland at Eden Park that night (Go The All Blacks)!
But, kidding aside, European leaders did knock together the semblance of a plan last night, on the 27th. As I suggested in my blog last week, the likely outcomes from the European meeting of leaders could have only been binary – either fatally negative or refreshingly positive. Read on to see how I got it wrong!
I can tell you right now that I will be apologising right through this piece to my readers because I may be (actually, ‘will be’) touching on some sensitive areas, but trust me, it’s nothing personal!
Doomsday predictions crack me up – honestly! Think about it for a minute – if you really think the world is going to end on a particular day does it really matter what you do leading up to that day? It’s not like you can get everything ready to catch the next flight out to Mars or something. So why the hell get excited about it? Or, why do you need to go around telling it to everyone else – you really think you will be ‘world’ famous the day after and go around saying “I told you so”? Hmmm…think again.
Here’s the latest one: apparently doomsday is Oct 21 this year (yup, day after tomorrow). Ok, I admit I don’t know what may or may not happen on Oct 21 – but I do know what could happen on Oct 23rd, which could fundamentally change all our lives.
The latest issue of the Harvard Business Review (HBR) runs a short excerpt on a topic called “polychronicity”. Join the club if you hadn’t heard that one before! In the simplest of terms polychronicity is the tendency to multi-task. To be ‘polychronic’ thus means to be able to multitask. The research excerpt suggests that the financial performance of companies with highly polychronic teams was significantly better than that of companies with average or monochromic teams.
Not to worry, this blog is not going to end up being a critical review of the research. But I do think there are parallels to this concept when thinking about managing your personal finances. The ability to manage multiple demands on your financial future can be rewarding.
Nothing like a freezing weekend on the ski slopes to clear the cobwebs in your head. But, driving back from Mt. Ruapehu on the weekend I was back to wondering what to write about this time around. Having missed last weeks’ blog I am in no mood to make a habit of it.
I was reminded of a conversation I had the other day. The comment she made was “I love reading your blog, your style of writing and your viewpoints, but….” (there’s ALWAYS a ‘but’), “….I wonder if you could write something that is relevant to someone like myself who’s got a mortgage and not much to invest. All your blogs appear to be focused on savings and investments; how about something on managing your finances in general?” Obviously that’s got me thinking!
Okay, let’s focus on credit cards!
