As we approach the New Year (and New Millennium for some!) let’s take a look at a CFP Board Licensee Survey on what CFP licensees believe are common mistakes consumers can make when approaching financial planning:
Keep your dreams alive, and best wishes for the New Year!
Technology Notes
The recent correction in technology stocks has been nothing short of brutal. Robert J Samuelson theorizes in theDecember 11th issue of Newsweek that over-investment in technology may be catching up with companies. Mr. Samuelson writes, "There’s no obvious reason that companies can’t invest too much in high-tech boxes just as they have historically over-invested in office buildings or commercial jets. The dot-com debacle may simply be a harbinger of a bigger problem. Over-investment depresses profits. Retrenchment follows as spending is cut until surplus supply is absorbed and profitably restored."
Mr. Samuelson provides an example of how rapidly technology is changing. In 1984 a single fiber-optic strand (slightly wider than a piece of hair) could carry the equivalent of about 700 phone conversations. Now that number exceeds 20 million! There is a lot of competition out there, and no one knows who will succeed as technology changes. Profits will arrive for some, but there will also be failures and bankruptcies. For investors, diversification is the key. Allocate only a certain amount to technology stocks, and also diversify your technology holdings.
Dot.com meltdown
There was an interesting, and in many ways sad, article in the November 25th issue of the Washington Post about Shaw Furniture located in Randleman, NC. This was a family run business that had been around for 59 years, and sold out to Living.com during the dot.com boom last year.
The business was profitable, and Living.com was going to use Shaw to help with internet sales and distribution. Like many dot.com companies Living.com was flush with cash from an IPO, and they spent it: nearly 40 million in the first 18 months, and another 40 million in just its last six months. Money was going out the door much faster than it came in.
A little more than a year after Shaw had been acquired, Living.com filed for bankruptcy taking Shaw down with it. Shaw closed their doors in August, leaving employees and depositors in a lurch. The town has lost a business many have grown up knowing. The toughest thing is that the business would still be there, making money, if they hadn’t accepted Living.com’s buyout offer.
Book Review of the Month The Re-enchantment of Everyday Life by Thomas Moore
The Re-enchantment of Everyday Life was first published in 1996, and it holds a special place on my bookshelf. Ghandi’s quote "There is more to life than increasing its speed," comes to mind when reading this book. The author Thomas Moore has degrees in theology, musicology, and philosophy, and was a monk in a Catholic religious order for twelve years. He takes an insightful look at how magic and enchantment should play an important role in our lives. He shows how this can be done, by becoming more fully aware of the environment around us. Specific aspects of our daily lives such as clothing, food, furniture, architecture, ecology, language, and faith all play a role. Moore describes the renaissance that these aspects, along with others, can undergo when there is genuine engagement with beauty, craft, nature, and art in both private and public life. This is thoughtful reading at its best.
"The future belongs to those who believe in the beauty of their dreams."