The James Dicks Blog

While I don’t have a personal crystal ball to predict the future, I continue hearing the so-called “financial experts” forecast that 2010 won’t be any better than 2009; some even say it will likely be worse. Now I’m not saying that we should just give up, roll over or panic, but I am saying that as long as we have an inkling of what may lie ahead, we will have a better chance of planning for our future economic situation. As they say, prepare for the worst while hoping for the best.

The global economic situation turned from bad to worse during the past 18 months and it probably won’t get much better in the near term. You can be assured that unless you keep the proper attitude, plan for any possible financial downturn and create a solid set of goals for the coming year, you will be in a weaker position. I’ve seen some prognostications across the board that the typical American consumer will have to “tighten up the belt” just a little more in the coming months. Some retailers are saying that even if the customer has the wherewithal to pay for items, the chances of finding them might be hindered because many retailers are hesitant about holding a large inventory.

One thing is certain. It’s the American (and global) consumer that will ultimately bring us back to financial solvency but not until they are confident enough to start spending their hard earned dollars (yen, euro, or pounds) again. The current global economic downturn has really exposed the financial “underbelly” of many personal households. No family ever handles a job loss well, but the ones with enough cash on-hand and a well thought out emergency plan will be able to handle it better than ones that don’t have them. The strong economy of the past, fed by a number of factors including cheap credit, concealed the damaging decisions that many people made in their personal financial lives.

So, let’s say the economy begins to improve this year; you can be sure that the recovery process will take many more years to come. Let’s remember that there are 15 to 20 million Americans out of work and that number doesn’t seem to be getting any smaller as job openings haven’t increased either. The paradigm of how the consumer spends has definitely changed and isn’t likely to change back to the way it was before. Today the American consumer base is either trying to pay off their debt or, more likely, allowing their accounts to default because they can no longer afford to pay the bills without employment.

America’s small business has the biggest challenge ahead of them. It is small business that keeps most of America employed but in the current situation and under the current set of rules, expanding the workforce just isn’t very likely. Through all this, if your small business is still breathing (even if only shallow), start the new year by double checking your business plan and see if it’s still valid in today’s economic reality; some changes just might be necessary. This can be a great time for you to use your networking community to find the support and information you need to make the difference between success and failure; you might even consider a strategic partnership. People and business everywhere are trying to find better ways to stay afloat and your business just may be their answer. They need to know you’re there and advertising your service or product has never been more essential. If they don’t know you’re there then they won’t be able to find or use your business or service. That will certainly hurt your bottom line.

I am very optimistic about our country and the ability of its people to find solutions. Americans do their best in times of crisis and I see the nation finding the answers that will ultimately turn this situation around to the positive. It may take some time, but we can never give up or give in. What can you do? Get up every morning, become dedicated to your plan and never allow the situation to get the best of you. This will turn around eventually but it’s going to take some hard work and determination to create a solid economic base. Don’t be mislead, it’s going to take a lot of hard work but the sooner we start rebuilding our personal and professional economic foundations, the faster our lives will start to improve. Let’s get to work.

I wish everyone a very joyous and profitable 2010, but in order to make it profitable, you must start planning. I’m not going to tell you to make resolutions for the New Year (resolutions normally fall by the wayside very quickly anyway), but rather organize and design a positive strategy to actually change your habits and develop individual goals. This kind of action will better secure your success in obtaining meaningful returns in 2010 through a meaningful reorganization of your financial life.

Goal setting is the top priority. Determine specific and attainable goals, short and long term, and make sure you write them down. Physically writing them down gives them power. The act of writing and visualizing your goals makes it much more likely that you will actually achieve them.

You must also understand your current financial situation. Add up your assets and your liabilities. Find out how much you owe on your home, your cars and your credit cards and conclude how best to whittle those liabilities down a bit during the year ahead. It’s always a good idea to get rid of debt, especially high interest debt. The beginning of the year is also a great time to establish any new insurance needs. Examine the validity of your current life, disability, home, health or auto policies and decide whether changes are required.

The best way to create a solid financial plan is to save, save, save. The general rule is to put away 5 percent to 10 percent of your take-home pay, if you can. Remember to pay yourself first and don’t wait for what’s left over after you pay your bills. If that’s your strategy, you’ll find it difficult to save anything. You should also be sure to set aside your savings in an interest-bearing account, such as a money market account, or in a tax-deferred account like an individual retirement plan (IRA). If your company offers a 401(k) plan, start contributing as soon as you possibly can, especially if the company matches your contributions. Once you’ve finished the basics, then you can start examining your portfolio and other investment opportunities.

Something else to pay close attention to is your tax strategy. When you receive your annual W-2s, make sure your monthly tax payments are being deducted at the proper level. The trick is to come as close to breaking even as possible on your federal tax returns. You should keep and invest your money throughout the year rather than allow the government to use your hard-earned cash.

There are an almost infinite number of financial topics to consider but the bottom line is getting the education you need to determine what you need to do to establish a positive financial position for 2010. Go to the library and check out books that deal with the financial issues you are most interested in (plus, you’re already saving money by checking the books out of the library rather than buying them). Subscribe to magazines, listen to radio, watch television programs that explain the financial news of the day and surf the Internet. There are so many top-notch areas where you can find the information you need to educate yourself about your financial situation. You might even take a course at the local community college or university. Remember, it doesn’t matter how old or young you are, now is the time to start improving your financial situation.

Again, I’d like to wish you a Happy New Year! You will increase the chances of experiencing a joyous and profitable 2010 if you constructively plan for your financial future.

Happy Investing!

Every year brings with it new challenges. The global economic situation I’m sure has thrown some new challenges at your investments, but as long as you take precautions prior to any calamitous events, your personal financial situation could remain balanced and relatively stable.
The trick is to prepare yourself and your investments for any future drastic market movements. Of course, it is impossible to exactly predict when or if the market will hit new highs or experience a sudden downturn. But if you create a personal financial plan in advance, you might be able to avoid making some basic mistakes, no matter which way the markets move.

The first is a plan I constantly preach, to set your goals, both short- and long-term objectives. Be extremely specific, write them down and post them someplace that will allow you to constantly see them, read them and study them. Follow the plan and try not to make emotional decisions.

Be prepared for anything. The chances of the markets going through a correction are very good. But you must also remember that the markets just might grow in value. Markets go up and down, and you need to be prepared for that. Some investors incorrectly believe they don’t need to do anything when the markets are strong and their portfolio is gaining in value.

Don’t forget to watch your asset allocation. Know what you are invested in and make sure that you examine where you money is invested a few times each year and determine whether or not it’s working for you. You can set a plan to rebalance every month or once a quarter, whatever makes you comfortable. Just don’t ignore your investments; keep your eye on the “ball.”

Make sure your plan also has diversification built in. I know you are sick and tired of me lecturing about that basic principle of investing, but I continue to hear stories from investors all over the country who keep getting burned because they don’t practice proper diversification. If just one segment of the market is providing all your gains, you could end up with an unbalanced portfolio that could possibly cost you in the long run.

Once you determine your investment style, institutionalize it to your personal trading method. When you find something that works for you, don’t let go of it. Try writing a journal to document your winning trades and, maybe even more important – your losing trades. Just like writing down your goals and ambitions, physically writing down the particulars about your winning and losing trades will burn the experiences into your mind permanently so you’ll know what to do, or what not to do, the next time.

The information available to us is almost infinite. Unlike other parts of the world, most of us in the United States have the Internet, libraries, book stores, magazines, workshops, college courses, television programs and radio shows that can teach us about the various strategies of investing. Find the plan that works best for you and make sure you feel comfortable with the manner in which you are involved in the investment community. If you need help, find an investment professional who can be a mentor and a guide. The more you learn, the better off you will become.

Happy Investing in 2010!

We are inundated on a daily basis by the 24-hour news and business channels that the United States has experienced the worst of the economic downturn and is now coming out of the greatest recession since the Great Depression of the 1930s. But if you ask your neighbor, you’re likely to discover that the typical American family just doesn’t buy it; they aren’t feeling any better today than they did yesterday.

In a recent poll of more than 1,000 Americans conducted by CNN/Opinion Research Corporation, 84% of those surveyed believe that the U.S. economy is still very much in recession which is s slight improvement from September’s poll where 87% felt the recession was still alive and well. This kind of public sentiment, while heartfelt, seems to be just the opposite of what the nation’s economists are telling us; that the “Great Recession” has finally come to an end.

Economists are in almost universal agreement that, according to the numbers, the worst of the economic slowdown appears to be behind us. According to the latest reading on gross domestic product, the U.S. economy grew at a 2.8% annual rate in the three months ending in September, the broadest measure of the nation’s economic activity. And while job losses continue, the number of jobs lost in November fell to 11,000, the smallest amount of any month since the start of 2008, while the unemployment rate fell to 10% from 10.2%. Plus a recent survey of top economists from the National Association of Business Economists found 81% agreed that the recession was over.

So, why the discrepancies?

While there have been some economic improvements, economists believe that it will take a long time, perhaps even years to dig out of the economic upheaval that this recession caused. Because the improvements have been slight, the average American family just doesn’t feel it yet. One economist put it this way, “The hole is a very big hole this time and the recovery is very modest so it might take us a number of years to get out of the hole.” And this startling result also came to the surface recently. While economists are getting more optimistic, the consuming public appears to be getting even more pessimistic. The same poll found that only “15% believe the economy is starting to recover from the problems it faced in the past year or so, down from 17% who saw improvement in the previous poll in September.” And the public also believes that things will get worse before it gets better.

This is something that the retail industry didn’t want to hear during the biggest shopping period of the year. Holiday shopping so far has been less than stellar. A recent Christmas Retail Survey released during the first week of December by America’s Research Group (ARG) and UBS showed that sales were weaker this year than in 2008. Of those consumers not shopping, an overwhelming number, 95.1%, said they will wait until just before Christmas (some even said they’d wait until December 24) to get more items on sale.

And further evidence of a shaky American consumer base, the most recent Consumer Credit report released by the Federal Reserve showed that Americans borrowed less for a record ninth straight month in October, another sign that consumer spending will remain weak and make it more difficult for the economy to produce a sustained rebound. And unless the U.S. consumer develops some confidence in the nation’s economic foundation, the chances for recovery are probably negligible.

We are all hoping for a more profitable 2010, and the last thing I want to be is pessimistic (it just goes against my nature). But until our national housing and mortgage industry is repaired, until the banks start loaning money again, until jobs start picking up, until the confidence of the American consumer is bolstered by a feeling that our economy is, in fact, returning to normal, this country could continue to experience the same economic doldrums in the New Year. Let’s hope the effects of the technical economic improvements economists are seeing today will soon show themselves fundamentally to those of us who live on Main Street USA.

When I look back on 2009, I realize that it was an extremely challenging year and many things I wanted to accomplish just didn’t get done for one reason or another. I’m still very proud of what I did accomplish in my business and my personal life and I’m sincerely confident about the prospects for the next year. It never pays to dwell on the bad times when so much of what happened this past year served to teach us valuable lessons; lessons that could never be taught or experienced in a classroom environment, even at the finest business college in the world. The challenge today is discovering fresh ways of effectively applying the lessons we learned this year while assuring ourselves of a better year ahead.

We can only learn from our mistakes after we admit that a mistake actually occurred. We all must realize that without experiencing mistakes in our lives, we would never learn or grow. So, when you look at it from that point of view, our personal blunders can actually turn out to be positive events. Think about how each of us expands our horizons. We don’t just gobble down every fact we can about a subject and instantly become experts. We practice and develop an understanding of the topic; then when we then make our mistakes we simply adjust our methods to develop positive solutions.

It makes no difference what the topic is; when we first learned to walk, all of us probably fell down more than we stood on our own two feet. When we first started learning Algebra equations, we no doubt got more wrong that right. So, when you look at it that way, the mistakes you’ve made along the way have actually helped you become the success you and your business are today. That’s not to say that you should strive to make errors in life, but when you do, you should be prepared to quickly examine them carefully and learn that by changing the way you accomplish any particular task will probably lead you to certain success.

While I’m on the topic of success, one thing that we all need to be very mindful of is the fear of success. So many people today just won’t allow themselves to succeed and when failure does occur (and it will) they interpret that as a sign of weakness and create an internal obstacle that keeps them from experiencing accomplishment. Always remember that it’s the difficult times that create the opportunities in our lives. The more mistakes you make, the more opportunities for you to learn and the more you learn, the more proficient and confident you’ll be in your given vocation.

Mistakes will occur now and then, but you must never allow them to hold you back from attaining your personal goals. Maintain an optimistic approach to life and keep pushing your situation forward; this is how noble ideas are shaped. If you become withdrawn and lose confidence because you made an error, you place an internal roadblock between you and any opportunity that might make itself available. On the other hand, with the proper attitude, your mistakes can become the very source of all future achievements in your life.

I’m sure that we all made a lot of mistakes this year and I’m also certain that we’ll all be making a few more next year. The most important thing to remember is to become deeply aware of your personal situation from day-to-day and adjust quickly to insure that the damaging results produced as a result of your mistakes are simply not allowed to take hold. Just plan to quickly apply the lessons learned from your mistakes and you can be sure that considerable success won’t be too far behind.