Saturday, November 08, 2008

Recommended Aricles & Commentary

Here are some of the personal finance articles I enjoyed over the previous week. To be honest, this week I did not have much time to roam far and wide, as I normally do, and instead mostly stayed with my favorite PF blogs. Here are my recommendations for the week:

Plonkee wrote a wonderful piece about gap years - a common practice in Europe where people take a year off work - often before or after college, and go travel the world. Personally, I did this twice - once before college and once after my first year as a lawyer. Those were some of the best times of my life. Those two 6 month periods also helped to define and mold who I am today. Sadly, very few Americans make travel a major part of their early adulthood.

On the Digerati Life this week, there were two articles I particularly liked. One dealt with not buying a new car - a topic which I wrote about myself a while back. The other had to do with signs of a stock market bottom. I want to comment briefly about both posts - first, the car purchase. It appears that Americans in general have decided to forgo buying new cars for now - as evidenced by the complete meltdown of Detroit auto sales, and that's a perfectly rational decision in tough times. However, let me tell you a story - my company has been going through a fund raising process in this horrible financial environment (I will write a long post about this about 2 weeks from now), and as a consequence, I have been meeting many venture capitalists. The vast majority of these arrive in our office driving Porches or BMWs, but just last week I met one venture capital partner who drives a Nissan Altima. I immediately took a liking to the guy. Here's someone who spends his money wisely, even though he is obviously very well off financially.

Regarding the signs of a stock market bottom, I have this general advice: don't look for them. Trust that the laws of economics, much like human nature, have not and will not change. As long as we remain a capitalist nation and a huge asteroid does not collide with the Earth, stock markets will, over the long haul, yield about 8% a year. Some years will be better, some will be worse. You can save yourself a lot of anxiety and heart ache if you accept this and continue to invest in a disciplined manner regardless of what the market happens to be doing that specific year. Easy advice to give, tough advice to follow (even for me).

Five Cent Nickel this week started to entertain the notion of a second stimulus check- yeah, I don't know that this would be a viable long term strategy for stimulating the economy. In fact, I am not even sure if throwing even more federal money into the battle is a good idea or not. I am concerned about the mounting deficits and debt load. Someday soon we will have to pay the piper in the form of substantially higher inflation, a potentially steep decline in the value of the US Dollar, or both. I am keeping an open mind though, and don't pretend that I know what the right answer here is.

This week I participated in a couple of blog carnivals, including the Carnival of Personal Finance where Sun awarded me the honor of Editor's Pick for my post about leaving your job in a tough economy. I am honored. The post seems to have stuck a cord, since it was also taken up by many other bloggers. I also participated in the Carnival of Money Stories and in the Festival of Frugality. Finally, this week my blog was flooded by traffic when MSN Smart Spending featured my article about how to avoid getting laid-off. Hey, welcome new readers and RSS subscribers!

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