Archive for November, 2008

Medical Receipts

Sunday, November 30th, 2008

Don’t forget to starting pulling together your medical receipts in preparation for tax time.  Some stores, like Target, here in the United States, have started a separate category on their cash register receipts that states “healthcare”.  Some credit cards also break down expenditures into different categories.

Remember that if you have a doctor’s prescription for something you might be able to take it as a medical deduction.  The reason I qualify it as “might” is because some things just aren’t allowed.  Vitamins are one example of something that you cannot take as a deduction.

Your medical deductions will go on Schedule A of your Federal Taxes and you will have them accumulated with your other itemized deductions.  If they exceed your standard deduction you can use the itemized deductions.

Hope you are having a good, healthy holiday and are saving your receipts!


Kim Isaac Greenblatt

Make sure you save your medical receipts. Save ALL your receipts if you can.

Once Closed Can We Reopen Again

Saturday, November 29th, 2008

Question from a reader:”Any statistics on positions that closed and reopened again?”

Good question and specifically no.  I do have some insight on cyclical employment, boom-bust scenarios and how they affect business and some various observations that I can share.

When a country (or in this case countries) are in a depression (and for the sake of our discussion, a lot of us are way beyond recession and have entered depression territory) you see a lot of closure signs. People can’t afford to pay their rent on storefronts, buy the goods they need to manufacture, bake, cook, sew,mend, construct – you name it, if they can’t afford to do it, they will shut down.



The literal million dollar question is will they ever re-open?  That is actually on a case-by-case basis by for the most part, unless it was part of something cyclical, say tax offices that are closed 8 months out of the year and then are open only Jan-Apr, I think a lot of store owners or business people move on.  I haven’t seen out here in California a lot of “GRAND RE-OPENING” signs for companies that have closed up shop.

If they have undergone reconstruction, the signs fly, the wiggling air powered streamer men are placed outside and you will see a barrage of ads and balloons.  Let’s face it, the business spent a lot of money changing things over to get you into the store and they want you back inside – and fast.

If a business person closes up shop, they generally move onto to something else to make money.  In this current economic situation, it turns out to be taking another job and working for somebody else (usually the choice of last resort for a sole proprietorship type of person), living off of savings or moving to another place and trying to open up again.

In today’s changing economy, it depends on the type of business they have as to whether or not they will open up again.  If you are a baker and have killer recipes, you may just need a different venue or maybe some place with a lower rent.  That may be enough to get you back in the black and all you need to do is let your customers know that you are back in business.  If you are making high priced pastries, you may need to rethink your business model if there aren’t any hotels, caterers, etc who are buying your delicious and savory treats.  In tough times, there are a lot of people who move from designer food to supermarket food.

In the previous scenario, maybe you want to reopen with a different series of recipes or something a little more mainstream and a tad less upscale.  If that is what the market wants, you might be in a great shape to give them what they are clamoring for and then slowly introduce your premiere food products back into the menu.

For businesses that were relying on certain market conditions, like the realty business, there will still be people buying and selling homes, the difference is that it will be a lot harder.  I’ve talked with some people still in real estate who deal with short sales. They are making money but they say that it is very time consuming, is aggrevating and not as lucrative as it use to be.  Fair enough but at least they are still working and making cash.

If there was a business that closed near you and you are interested in it re-opening, did you think about running it or buying it yourself?   Approach the owner and you may be pleasantly surprised.


 Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement 


Kim Isaac Greenblatt


Hey, Kim, once a business closes, does it ever reopen?

Market Recovered? Uh No

Friday, November 28th, 2008

Question from a reader:  “The market has been up the last few days, I think it is a great time to get in and we are out of the woods.  How come you aren’t telling people to invest more.”

My answer is I don’t think we are out of the woods, if you think it is a great time to get bargains, go for it, and people should invest in themselves.  Three days do not a turn around make.  We won’t know when the market recovered until years from now and even then we may not be able to piece together when that happened.  Pundits have been trying to identify recovery and cause points for the depression/recession/inflation times of the 1970s, 80s and recent 2000s.  It isn’t clear even in hindsight.

The stock market may need to test some more lows and we may be in for a lot of volatility for years to come.  People are planning their portfolios as if they are day traders.  That isn’t the way to look at things, especially with bread and egg money or unless you are a good day trader.

Because of the holidays and the hearings for the automotive industry there might be a brief holiday pop over the next month and one would hope into the Inauguration in the next month.  My own concern is once the honeymoon period and the holidays are over, it will be some time until money gets into the system so that people like you and me can use it and benefit with it.

We will need more jobs created in this country and hopefully a lot of them will be in manufacturing since service appears to be slow if not dead.

So, to get back to your original question, I don’t think that we are out of the financial woods yet and it may be some time until we actually are.  If you like the stocks that you are buying, by all means, buy them if you have done your research and due diligence, etc.  Just don’t be shocked (you shouldn’t be anyways) if the stock still goes down.   I don’t want you losing your shirt.



Ironically, if everyone is predicting doom and gloom, pundits including Warren Buffet say that is the time to buy.  Remember though he can also get deals that you and I can’t on bulk acquisition of stock.  It will be interesting to see how President Elect Obama’s financial team get on the business of helping us repair our economy.

In the meantime, use your judgment in buying and selling securities.

Think of things now like any shopping you did on Black Friday.  There are some great deals and some not-so-great deals just to dump product.  Just because something looks inexpensive doesn’t mean that it is a bargain anymore than it looks like it is cheap.   

 Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement 

Kim Isaac

Kim Isaac Greenblatt


We aren’t out of the financial woods yet.

Happy Thanksgiving and Remember Others

Thursday, November 27th, 2008

This Thanksgiving, for some people there may not be a lot to be thankful for. I, for one, would like to just offer up the old cliche that you should be thankful for something. Even if it is the fact that you are still alive.

Our national leaders have their work cut out for them and they are being watched very closely by the world. If they make any mistakes in trying to straighten out the economy, they are going to have to change direction and do it quickly.  We didn’t get into this situation overnight and we won’t be getting it out of it overnight either.

If you are feeling lousy, try to remember that there may have been some times when you were feeling better.  Those times will come again. For now, think of this Thanksgiving as our forefathers might have (well, that isn’t true since my forefathers weren’t pilgrims but let’s just go with it).  They joined together with the Native Americans and shared their meals.  Try to remember to share your meal with somebody.

If you are a caregiver for somebody with special needs, thank you for being in that person’s life.  They may not have the ability to thank you or show their appreciation.  Kindly let me mention something for them.

You make a difference in their life and you are the engine that keeps them moving.  Thank you for remembering to stay healthy yourself and be able to care for them day in and day out.

For those of you working through the holidays, please take a moment to rest and count your blessings that you are employed.  There are millions who aren’t and some of them are hungry.  Business will come and go, but  friendship, family and health are the foundations that will help you along with whatever spiritual beliefs you have this holiday season.

If you are living in Northeast and Northern Central states, please stay warm.  If you are in the Gulf regions, please stay dry and safe. If you are living in the Tornado Alley parts of America, hopefully things won’t be windy for you. 

If you are in the military, please be safe and know that your loved ones miss you.  If you are living in another country, thanks for reading my blog and know that we are all together on one planet.  That sounds hokey but the planet is getting smaller and smaller every day whether we like it or not.



For our leaders, please use common sense in making your decisions and remember that there are people who can’t take care of themselves who need help.  While we are at it, for the people who are helping others, the chances are that this year, they may need some help and prayers as well.

Happy Holidays, gang! If I missed anything else and wasn’t thankful to a particular person or group, drop me a note or post me.  To all my friends all over the world, please be safe and have a happy healthy time no matter what you are celebrating.  May the spirits of happiness and wealth visit you in the coming year as well.

 Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement 

Kim Isaac Greenblatt

A Thanksgiving Wish From Kim Isaac Greenblatt.

Tax Law Changes for 2009 – Part 1

Wednesday, November 26th, 2008

Here are some of the upcoming tax law changes for 2009.  Basically, it also shows you what is changing, expiring, etc from 2008 and what you might need to keep track of.

 AMT (Alternative Minimum Tax)

The AMT exemption amounts have been expanded to $46,200 ($69,950 MFJ).  That makes them up from the 2007 amounts of $44,350 ($66,250).  Here is a nice surprise:  the child and dependent care credit, education credits, home energy credits are allowed for both regular tax and AMT.  That is a good thing and a welcome relief.

The portion of unpaid tax, penalties, and interest that was outstanding before 1/1/2008 that is attributable to an ISO exercise is abated.  That may or may not affect you (I am banking that for most people it is a non-issue).

Changes were made so that long-term unused minimum tax credits are  to include previously-paid penalties and interest related to ISO exercises.  I hope I got that last one straight.  If you are another tax professional and interpret that differently, please let me know.

The refundable AMT credit has been modified to the greater of 50% of the long-term unused credit (up from 20%) or the prior year’s credit.  The income limitation on the credit may be removed (nice!).



For 2008 only, the refundable child tax credit is expanded.  The earned income floor is reduced to $8,500 (will be $12,050 without this provision).   Individuals may be eligible for the child tax credit who earn at least $8,500. The maximum benefit from this change is $533.

The wind energy credit is expanded to include small wind energy property which uses a small wind turbine to generate electricity. The maximum credit is $4,000 and that is great for people in areas where they can use wind power, not so great for those who don’t get enough wind to use as a renewable energy source.  If you live in wind or tornado alley, start thinking about wind energy if you can afford it and it makes sense financially for you.

If you are itemizing, you may not have to anymore.  Nonitemizers may claim an additional standard deduction for state and local real property taxes paid for tax years 2008 and 2009. The maximum deduction is $500 ($1,000 MFJ).

There will be a new Refundable First-Time Homebuyer Credit.  Taxpayers who purchased a principal residence April 9,2008 through June 30, 2009, and who have not owned a principal residence in the previous three years, may claim a refundable credit equal to 10% of the purchase price. The maximum credit is $7,500 ($3,750 MFS). Eligibility for the credit phases out for modified AGI between
$75,000–$95,000 ($150,000–$170,000 MFJ). The credit is repaid in 15 equal annual installments starting in 2010;  repayment is accelerated if the home is sold or no longer used as a principal residence.  Taxpayers must understand repayment requirement.  Recordkeeping may be difficult. The credit is claimed on new Form 5405 – more on that as it gets developed.

I have a friend who is becoming a first time home buyer and it will be something great in this economy that can help him and his taxes.  I still am a little fuzzy on how developers are working angles on this – more as I find out more. 

The so-called “Kiddie tax”  now applies to:  Children who are under age 18, Children who are age 18, unless they provide over half of their own support based on earned income, and Children ages 19-23 who are full-time students unless they provide over half of their own support based upon earned income.

What is new for Section 179 Expense Information?   The maximum §179 deduction for tax years starting in 2008 is $250,000. A phaseout of this amount starts when more than $800,000 of qualifying property is placed in service during the tax year. Note: Special rules apply to certain disaster areas.  This only affects businesses that place a large amount of assets into service in one year and have sufficient income that allows the deduction.

Depreciation is being tweaked as well.   Additional first-year 50% “bonus” depreciation is the default provision for property placed in service in 2008. Note: Special rules apply to certain disaster areas.  This will help out business owners.

Remember that money you got earlier in the year?  Forgot it already?  That was the Recovery Rebate Credit.  The rebate that was paid in 2008 will be reconciled on the 2008 tax return. Taxpayers will receive any additional credit due, but need not repay any “excess” credit received.  The credit will be claimed as a line entry on the return. The special Form 1040A for individuals not required to file will not be provided.  The IRS will provide an online resource for taxpayers to check the amount of the advanced payment they received in 2008.

 I’ve some information on casualty losses for a federally declared disaster area.  The 10% of AGI reduction does not apply to personal casualty losses that occurred in a federally declared disaster area. In addition, these losses (net of any casualty gain) may be claimed as an additional standard deduction (no need to itemize). Applies to disasters occurring in 2008 and 2009. This Will result in larger casualty loss deductions for affected taxpayers.

The Federal government is implementing Midwestern Disaster Area Relief.  There will be significant relief available to victims of the 2008 severe storms and flooding that occurred in the Midwest. Special relief is provided for losses that occurred in the core areas of those disasters.  The big question is that people may not have a clue or get confused as to what a core area is.  At this point my guess is that there will be specific cities, counties, etc. defined.

EITC—Combat pay Election.  The election to treat nontaxable combat pay as earned income for EITC purposes was made permanent. This was a nice choice option for servicemen and women who could help qualify for the Earned Income Tax Credit.  I am glad it was made permanent since they put their lives on the line for this country.  They should get something for it.

IRAs– Charitable Contributions
The exclusion of taxable distributions of up to $100,000 from IRA funds contributed directly to a charity was extended through 12/31/09.

Sales Tax Deduction The deduction for state and local sales taxes in lieu of state and local income taxes was extended through 12/31/09.

What else is in the pipleline or changed…

PMI Deduction The deduction for mortgage insurance premiums paid on a qualified residence has been extended through 12/31/10.

Tuition and Fees Deduction The deduction for up to $4,000 of higher education expenses was extended through 12/31/09.

Teacher’s Education The $250 educator expense deduction was extended through 12/31/09.  Jeeze, this was a no-brainer.  It was killing me that they didn’t extend it forever.  Without teachers our nation would be in deeper problems than it is now.

Nonbusiness Energy Property Credit (for windows, doors, etc)

The credit for up to $500 of home improvement costs was NOT extended for 2008. It was extended for 2009 only. The 2009 credit includes biomass (corn, wood pellet, etc.) heating systems. Individuals who installed new windows and doors on the assumption that the credit would be extended for 2008 will be angry. 

As more things change or get better defined I will continue this random series of articles in my blog.  Drop me a line if you want to know more.

Remember that none of these changes actually change what is happening with your income stream.  Protect yourself, save money and be ready to continue gutting things out until the economy gets better.  Just a reminder that the deadline for the next carnival of special needs and money is coming up as well.  Write our Congress and our President Elect and tell them to keep on it!

  Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement 

Kim Isaac Greenblatt

Tax Law Changes for 2009 – Part I

V Shape Recovery Strategy for our Nation

Tuesday, November 25th, 2008

Our President Elect has gone on record saying that he is planning to save or create 2.5 million jobs by 2011. In his radio address he said he would try to create those jobs by 2011.  People are already talking that it could be done and the concept of a “V” (as in “V for Victory”) turn around would mean massive changes in our economy to shoot the employment rate up an additional 2,500,000 jobs.  Think of us being on the first side of the “V” sliding down and then launching back up.  By the way, it was Winston Churchill who in World War II popularized in the modern era the use of the two finger sign for victory.



Getting back to our chances of a turnaround happening…

Dramatic turnarounds like that have happened in the past unfortunately the last time was around 1974, under different economic conditions and it took about three years to come out of it.  Out last few recoveries were in the economy but it did not result in more jobs being created. In fact, the number of jobs dwindled in 2002 and 2003 thanks to outsourcing to other countries.

In order for a rocket-launch-about-face economic recovery to happen, concrete incentives have to be in place to get business tax breaks so they can start manufacturing, incentives so they can hire people and in some cases some subsidies similar to what the banks are getting and the auto industry wants.

Currently, the banks are sitting on their cash and they aren’t kicking it down to the people that need it. To be fair, if they start kicking it down, we don’t want to start a new cycle of booming just to have it bust on us as it did the last time. 

Interest rates are low, that is good.   There is a lot of cash out there, that is good.  Something needs to be done to get the money to people, lend it to them at the low interest rates so they can get their businesses started up.  People will need to be working to make money so they can start visiting these new start-up businesses so they can spend their money there. 

We are all hoping that the President Elect’s advisors come up with something for all of us.  I think the auto industry does need a shot in the arm.  Once they have been financially innoculated, we need to get to the real illness – getting the unemployed working and getting business back in America.

Other nations are ready to invest in us if we can keep be reasonable with our costs.  It is basic economic common sense coupled with the fact that we have a stable workforce, a stable economy and we aren’t going to run off with anybody’s investments.  The same may not be true for some other countries. We also need to make money here because despite other people’s complaints and grandstanding, we are a nation of consumers and we love to shop and buy things.  If we don’t have the money or credit to do that, there aren’t a lot of other countries out there who are stepping up to pick up our shopping slack (and that includes billionaires from around the world as well).

Our best thoughts to you President Elect Obama and your advisors.  If you need any suggestions or help, please give me a call or drop me an email.

If there are any billionaires who also are looking for consulting and suggestions, please let me know as well!

 Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement 

Kim Isaac Greenblatt

Talking about V Shape Recovery for America.

What Is Tramp Art

Monday, November 24th, 2008

Question from a reader:”You mentioned ‘Tramp Art’ in one of your blogs.  What is it?”

Tramp art should really be called chip art or woodchip art.  The term “tramp art” was used because it was thought that tramps or hobos were the people who actually made it.   In the late 1800s and early 1900s there weren’t bums or derelicts but tramps or hobos.  There was a huge culture and community but the particular style of art that was attributed to them wasn’t really tramp art. It really took a lot of time and craftsmanship to do the wooden pieces. While I am certain that some hobos may have had the skills realistically it just doesn’t make sense that all of them were woodworking masters.

It is thought that the style of woodworking or carving came from Germany, Scandinavia or some of the Nordic nations.  Nobody knows for sure and if you have definitive sources, please email or comment this entry so we all will be educated.

So-called tramp art was generally from cigar boxes, packing crates, popsicle sticks, corrugated cardboard, and anything that was recyclable from paper or wooden materials.  Like any artistic niche, there has been a lot of counterfeiting and investing in it during a Recessionary market isn’t a bad idea but it may not be a profitable one.  With values for everything dropping, it is going to be a matter of time before the price of artistic pieces drops to match what the actual market will pay for something.

Basically, if you don’t know what you are doing in buying tramp art, you should study up, consult a genuine expert from a university or somebody who is familiar with the materials.  Better yet, ask yourself why you are investing in something that you may not particulary understand.

If you enjoy what you are looking at, buy it for the sake of enjoyment whether it is an original or a copy.  If you are looking into tramp art as an investment, you need to look super closely if it is something not made out of a cigar box.



The whole business is in the stylized woodworking.  Usually you can look at the layering and it will look pretty cool.   Some of the details in houses, castles and other miniature marvels are amazing, especially when you see that they were all hand carved.   There are some modern artists who are creating modern tramp art with the same loving detail as people did decades ago.  One of the biggest problems is that cigar boxes, the source and base for tramp art are not being made as much as they were years and ago and the boxes that are around are being used for storing people’s knicknacks once the cigars are gone.


Another question from a reader: “So art investments are a bad idea?”

My answer is no, but you should only do them if you love art and know what you are doing.  If you like something, buy it because you are attracted to it.  Think of it as starting a relationship before you plunk down any cash. Sure there is an infatuation but is it something you really want hanging around in your living room five years from now?


Another question from a reader:”What about comic books as an investment?”

My answer is if you like the comic book, buy it and read it.  If you are interested in collecting comic books, you need to do some research and I will try and touch on this as a separate blog in the future sometime since this is another situation where you need to find what niche that you want to be in.  Unless you are a multi-billionaire, you won’t be able to collect everything.

Remember people that in times like now, it doesn’t hurt to be patient (or at least move slowly on some investments)  for at least a few months until our new Administration gets some economic programs going.  It does go without saying though that if something is scarce and in demand, it will go up in value.

  Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement

Kim Isaac Greenblatt

What is tramp art?

Antique Collecting In Today’s Market

Sunday, November 23rd, 2008

At Arianna’s last AYSO soccer practice I was talking with one of the players who had at a very early age discovered the joys of antique collecting. She wasn’t talking about collecting furniture, large pianos, tramp art or anything like that.  She was talking about small, older items that she found at swap meets that touched her.

That is a great way to collect things.

People should collect things that they like or appeal to them. I have a friend who loves (when she has the discretionary income) to collect heron art.  She has heron plaques, heron statues, a heron sign and if she could find a way to have them live in her backyard and not migrate would collect herons herself.

The take-away from all of this is there is a joy that you can’t put a price on for things that appeal to you.  When I watch the antique shows on cable, you generally find that a lot of people are curious of the value of something but if it is a family heirloom or the garage sale knick-knack that they scored for US $1, they generally won’t part with it.  Well, at least they say they won’t part with it while on camera.  For all I know they are racing over to collect a check once the digital video has stopped recording.


I’ve talked about this before on the site that there are certain things that you won’t want to give away or sell. Others, if there isn’t anything genuinely antique and you might want to sell, well, business is business.

When I sold my Watchmen first edition comic books it wasn’t that I didn’t like them, it was just that I didn’t feel a need to hold onto them as much as my Shadow comic from the 1940s.  The Watchmen comics fetched over $300 or so dollars.  The Shadow comic might get me $50 or so but in terms of scarcity, I just treat it like it was a museum piece.  There are a lot less comic books around from the 1940s than from the 1980s-90s.  I remember buying that book for $3 at a thrift store in Cleveland Heights Ohio years ago as well.  I was a lot of money in the 1970s but I also picked up a Dollman comic and a Captain Marvel Junior comic as part of the deal.  It was a nice score.  Would I part with the books anytime?

If I really needed the cash, sure, but the nostalgia value and sense that there is more room for appreciation since they are scarce books is what makes me want to hold onto them.

If you are antique collecting for truly nice antiques, be prepared for keeping them stored and preserved.  Wood needs to be protected not only from the elements (wind, fire, rain) but from critters like termites and the family cat that jumps on the table and starts clawing with her back claws on the surface because it feels so good.

Glass objects need to be secured if you are in an earthquake zone.  If you are in a child zone and your children of all ages are running through the house and not adverse to the occasional rough housing, you may want to think twice about putting the rare china or glass that you found out in public or on the mantle except for holidays or special occasions.

Paintings and anything made of paper has to be protected from being ruined by light.  When I saw the Declaration of Independence in Washington D.C. you can see that compared to some of the other documents that the years hadn’t been kind to it – especially since it was on display outdoors for a long time.  You could tell from other documents, like the Magna Carta, that some documents were preserved better than others based on the information and money that was available at the time.  Learn from others mistakes!

People need money these days and you can find some great deals at swap meets, garage sales and some auctions.  Just a reminder that you shouldn’t get caught up in the missionary zeal for over-bidding or spending more than you should for your goodies.  Part of the fun for antique collecting is bragging rights that you got the object dirt cheap!

My best thoughts to you with whatever it is you decide and congratulations on taking the time to actually ENJOY whatever it is that you are purchasing.

   Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement


NOTE:  To the readers who wanted to see my no-frills book cover for my book from my first few blogs, here you go.  It should be up on the Internet where my book is available within a few more weeks. Give it time, I promise you will see the image elsewhere.  Thanks for asking!  All of you truly rock.

Didn’t I warn you that green on white looks funny on white pages?  Maybe I shouldn’t be in such a rush to get the cover up.  That is the price one pays for demonstrating generic no-frill book covers.


Kim Isaac Greenblatt 

Talking today about antique collecting in today’s market.

When will the stock market stop dropping

Saturday, November 22nd, 2008

Question for Kim:”When do you think the stock market will stop dropping?”

If the market is closed now, the market will have stopped dropping.  On a more serious note, my answer is whenever there is an equilibrium.  Remember that we had a stock market where people overreacted and we had quite a boom period.  We are getting the ricochet effect because people now are saving their money and running away from the markets in droves.  Nothing wrong with that, you just need to factor that into your decisions if you are deciding to actually purchase stock.

If you are going in for the long haul, you need to do some due diligence and look for companies that will be around and have cash.  Cash is king these days.  Research what they do, what they develop and what their expectations for the future are.  Remember that people are investing or even betting that a certain company or stock will be going up in the future.  Some are betting that the price of the stock might go down as well.  Prices react to market news and situations based on how people think it will changes things in the long haul.

Companies that are providing services that people need on a daily basis and are cash rich and low or debt free are good candidates to research.

That all being said, you still may want to sit on the sidelines for a bit.  Trying to pick a stock that will go up in a market that is falling is like trying to catch falling porcupines.  Yikes. 



The markets may go up a little bit at the Presidential Inauguration.  The markets may go up for the holidays.

Or, they may continue dropping like they just heard of gravity.

Warren Buffet’s portfolio is down just like everybody else these days. Unless you have a very long view for the future, you may get scared for the next few months, if not years. 

Getting back to the original question, people usually talk about when the market recovered AFTER the fact.  While you are living through it, you generally don’t know what will happen.  The people who make money have done their research, are willing to take a calculated risk and they get a little bit of good luck.

People are also jumping on shorting the market and eventually there will be a time that they will be called on their stock.  There tends to be a ricochet effect from that kind of behavior but there is no guarantee.

Questions I would ask for you are:

1.  What are you planning on investing in?
2.  Are you holding onto investments and just worried?
3.  How is your stomach for handling losses?  If you are young, you have time to watch it recover.  If you are in retirement, you may want to think it through.
4.  Is there anything else you can invest in that would be profitable that you can make more money in?

The last item is very important because people need to remember that the stock and housing markets aren’t the only investment game in town, though they have made – and lost – a lot of people money.

Make sure you aren’t gambling bread and egg money either.  If the money isn’t in a 401K or IRA, make sure you have a cash pad in case you get laid off, have emergencies or anything else unexpected happens.

Confidence will be the key. Whenever people feel confident that things in the future will be stable, conducive to making money, safe for companies to operate without fear of being taxed too death, fear of starving, etc, the market will go back up. It may not go up fast but those are definite feelings that people will have to have for the stock market to change, in my opinion.
If anybody tries to show you graphs or charts to predict the future, use a grain of salt because a lot of past indicators or chartists are about as accurate as fortune tellers.

Now, if you have cash, and I mean a LOT of it laying around-

How about starting up a manufacturing business?  I know that is the subject of another blog of mine but if it is money you are after making, how about thinking about other ways as well?

Disclaimer Stuff For You:
I am not a financial advisor and at the time of this article all my positions were in king cash.  I do know a thing or two about making money, tax preparation, dealing with people, project management, making it through bad/hard times and running a business.  Check out my book and see if it inspires you to greater things!  I am also available for hire or contracting  if there is a good fit.

   Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement

Kim Isaac Greenblatt

Hey Kim, when do you think the stock market will stop dropping?

Financial Markets Are Constipated With Cash

Friday, November 21st, 2008

Question from reader:”Where is all the cash that the banks should have received for the bailout?”

My answer is that it is in the banks, they have received it, are receiving it and promptly are sitting on it.  Other companies like insurance companies, other types of financial institutions are trying to get reclassified as banks to jump on board the government bailout train.  It hasn’t been helping us as consumers, has it? 

The banks are sitting on cash, fearful to loan it and, as pundits have said, are constipated with money.  It is just stuck there.  Like you, I am unsure what the trigger mechanism will be to let rip from the bowels of banking the loose cash.  Whatever it will be that will get the money back into circulation -like orange juice and flax seed – we should be careful that the remedy will not make our digestive  system worse.  It will be interesting. 



Think of it this way, the money supply HAS been increased.  The problem that I see is that the velocity of it being introduced into the public sector is next to zero due to fear, uncertainty and the lame duck waiting period until we get our new President and Administration.  Hedge funds have been dropping out of the markets (I for one am glad for that) but with their departure goes the leverage crazy wheeling and dealing that kept the cash rolling.

This means that we are in at least a period of short term deflation.  So, if banks start lending cash again, they will increase their lending ratios but hopefully they will be watched a little closer this time around.

Will this mean low interest rates and free cash will start the cycle of bubble investing over again?  Maybe but not to the degree we just went through, at least until people start forgetting about the bad times they are going through.

Will gasoline and gold go through the roof?  I don’t see that happening right away.  It will take time for markets to adjust and it may be that people are adjusting to living on less and in turn, spending less.

Will the American people practice sound savings and borrow less?  Probably not but we can hope that at least for the short term we might be pleasantly surprised.  Internationally we might be looking at some inflation down the line as well but judging by the financial reeling that other markets are doing six months after our financial meltdown I would venture to say that they are all tied together.

Maybe it would make sense for countries to start having their own monetary system independent of each other something like Canada has done.  Canada has had minimal exposure to the financial meltdowns because of their limiting the participation of banks in speculative investments.  In hindsight a great idea!

Back to the original question, once we get something to lubricate the banking system’s digestive tract to ease the fear, the money should flow.

   Practical Money Making-Surviving Recession, Layoffs, Credit Problems, Generating Passive Income Streams, Working Full Time or Part Time and Retirement

Kim Isaac Greenblatt

Banks are constipated with cash.