My brother always says it's better to be lucky than smart. So my neighborhood dodged Irene's bullet last night. My building never lost power or water, which is good for me because the bathtub-full-of-water trick didn't work. I should have checked the plug, which apparently was designed only to stop the water from draining long enough to let someone take a bath. The tub was bone dry this morning.
Anyway, I took my copy of Barron's to the Tastee Diner this morning. (I had a pocket full of quarters in case the Washington Post's delivery person made it to my building; no surprises, she/he didn't.)
Barron's isn't something I normally read on my own, but I got a gift subscription from a friend with points of some kind. Anyway, I normally can't decipher my way past the front editorial, but this week's Streetwise piece by Jacqueline Doherty, "Prospering in a Weak Economy," contained some interesting perspective.
Citing analyst Craig Moffett of Bernstein Research and the Labor Department's Bureau of Labor Statistics, Doherty notes that unemployment is only 4% for Americans with college degrees and 14% for those with only high-school diplomas. Moffett concludes that 40% of Americans have no discretionary income.
What does this mean to Barron's readers? I.e., well-educated people with money to invest? There is growth in companies that provide services to below-poverty consumers.
"One area that's growing: those servicing cellphone subscribers below the poverty line who receive government subsidies," writes Doherty. "Moffett recommends MetroPCS Communications (PCS), which saw its shares tumble from north of 18 to a recent 10.67."
I interpret this as advising rich people how to further exploit the poor. Well, the poor don't have a lot of leverage, but they can learn the same lessons (even if they don't read Barron's.)
Not that anybody should take advice from me, especially when it comes to choosing between satellite TV service and "a third meal." But maybe there could be a way to turn the tables on the exploiters: save for shares in Disney instead of saving for a Disney vacation, or give up Happy Meals for a year to open an education Roth IRA with McDonald's shares (reinvesting the dividends, of course). In other words, invest in what you'd normally buy. The rich guys are.
(Disclosure: I own Ford's shares; and I've been a Ford-vehicle owner since 1982. Okay, so it's only three vehicles in 30 years, and it's only 200 shares. In me, Ford's may not have a frequent buyer, but it has long-term customer loyalty.)
I've known for awhile that my capital was worth more than my labor, even in a down economy (and a down market). The jobs that are gone are not coming back; employers have outsourced or automated them.
Back in the early 1980s, one of THE FUTURIST's authors wrote that we should all own robots not so they'll do our work for us, but so we can live off the income they generate when we sell or license them to do other people's work. Applying that same principle generally, I figured the only way to beat the rising costs of gasoline and health-insurance premiums was to own stock in energy and health companies (and since I'm not smart enough to pick those companies, I let the mutual-funds managers do that work).
This might be my most blindly ignorant blog ever. I am entirely too uninformed, lazy, and risk averse to write on this subject. I have no mortgage or college tuition to worry about, as most people do. Anyway, it just rankled me to see how already-rich people are being advised how to profit from the already-exploited.
Last piece of ignorant advice for anyone who can't start saving or investing. The trick my mom gave me before I had enough to even open an IRA was to pretend to save. She subtracted $20 from her checking account (every week? every month?) and recorded the amount in the back of her checkbook. The money was still in her account, but if she didn't see it she didn't spend it. Eventually she saved enough for whatever she needed it for.
I did the same and managed to get enough for an IRA. My arbitrary goal was to match my rent in monthly savings. I did it for about two years, and it got me enough to actually begin investing for real.
Not all the water is in the same bathtub. Thanks to inheriting my Dad's credit union account, some of my water is in a different, less-leaky tub than the stock market. So hopefully I'll never run completely dry--or get completely soaked.
A little smart, a little lucky.