Prosperity

It has fallen upon the consumer to make our economy strong. All the politicians, economists and talking heads on TV are telling him (that's you and me) to get out there and spend your money. Buy that new car, build a new house and fly off to some remote place for an expensive vacation.

Where did the idea that consumer borrowing is a recipe for prosperity? As I recall when I was a kid my Dad told me to work hard, save my money and invest wisely. That still seems like a good idea. Where have I gone wrong to want to live within my means and save some of what I earn?

Corporations have also taken on huge amounts of debt. Many businesses were happy with a net, net profit of 5% to 10% yet today the real cost of company debt is running about 10% which doesn't leave much for the bottom line. Fewer and fewer companies are paying dividends because they don't have enough money left over for their investors. Now many have such poor cash flow that they do not have the cash for new equipment and the banks are not in a lending mood. Profit margins are at their lowest in the past 50 years. The talking heads on CNBC-TV mention capital appreciation as the way to make your profit. Pick a good stock and watch it go up.

We have had an 18-year bull market that ended in 2000. All you needed was a dartboard to be able to choose a stock that was going up. Everyone was weaned away from dividends. As long as it was going up who cares if you get a little check at the end of the year? Here is an interesting statistic that may shock you as it did me. From 1871 to 1997, 126 years, common stocks went up about 7% per year, BUT only 1.6% of the increase was due to price appreciation. The balance of 5.4% came from dividends. And today, for all practical purposes, there aren't any.

No one, including Mr. Greenspan, is encouraging you to save money. Why? Because for every one percent increase in the national savings rate it stops the spending of $75 billion (yes, that's a B). That would slow the economic recovery and our Washington politicians don't want that. Debt has become the "in" thing. People brag about how much they owe.

If you want prosperity now and when you retire you must create it for yourself. Don't figure that Uncle Sam is going to maintain your current life style after you quit working.

Saving money, paying your bills and smart investing have not gone out of style.

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

Copyright 2005

---

What Does it Take to be a Stock Trader?

It takes a total mental commitment to the task. It... Read More

Stuff

I continually hear from economists, talking heads, other market letter... Read More

How Much Money Can I Make With Trading? What Account Size Do I Need To Start?

What account size do I need?How much money can I... Read More

Trapeze Artist - Swinging with the Stock Market

When we go to the circus we see a trapeze... Read More

High Price/Earnings Ratios and the Stock Market: a Personal Odyssey

After some forty years of banking and investments, I retired... Read More

E-mini Day Trading - Day Trading for Beginners - Stock Market Timing Software

I mean it when I say that. While plastic silverware... Read More

Stock Insurance

You have a lock on your house. You have a... Read More

Staying Sane While Wall Street Crashes

Everybody is riding the Wall Street Roller coaster. Even if... Read More

The Inside Scoop on Mutual Fund Rip Offs

The bear market that showed up at the end of... Read More

Trend Trading - Trading Stocks Using Technical Analysis and Swing Trading Strategies

Peter is a professional trader, Paul is not. Peter has... Read More

10 Tips For Creating Wealth From the Stock Market

1. Do not spread your money too thin.My friend has... Read More

A Personal Stock Market Investment Philosophy

∙ Make every investment in the stock market a long-term... Read More

Where Is The Beef?

Where is the beef? Or maybe it should be where... Read More

How Covered Calls Turned a Trader Around

Sidney felt sick as she looked at her latest OptionsXpress... Read More

Fake Money

Reach in your pocket and take out that big roll... Read More

War Market

There is no question that the stock market is being... Read More

Parachute Investing

Ever jumped out of an airplane? It's OK if you... Read More

Exchange Traded Funds Primer

Exchange Traded Funds (ETFs) are a group of passive index... Read More

Stock Options Trading Strategies - Lean

Professional stock options traders use the term lean to refer... Read More

Catnip of the Stock Market

I have watched my cat play with a bag of... Read More

The Holy Grail (of Investment)

Every year I go to the Money Show in Orlando,... Read More

Buying Mutual Funds

It looks like the market is ready to start up... Read More

Option Trading Basics

Options trading can increase the profits you make when trading... Read More

Successful Trading ? Taking Profits - Part 1

So you're started trading, you bought some positions with your... Read More

Stock Market System ... ONLINE STOCK TRADING ... Beyond Day Trading Basics & Tips

Day trading is all about making buy and sell decisions.... Read More

No Load Mutual Funds or Exchange Traded Funds (ETFs)?

If you are fed up with early redemption charges and... Read More

8 Penny Stocks to Avoid

There are many good penny stock investments available, which could... Read More

The Importance of Using Stop Loss Orders When Spread Trading the Financial Markets

A Guide to Using Stop Loss Orders Stop losses are... Read More

The Top 10 Reasons to Invest in Mutual Funds

Everyone who follows the financial news has heard of mutual... Read More

Mindset

In 1960 an engineer working for a watch company in... Read More

How to Pay Less and Get More: Discount Broker vs Professional

How do you invest? What do you really pay? At... Read More

So, What is This Stock Market Thing Anyway?

We've all heard of the stock market and probably have... Read More

The Shadow

The Shadow knows. There used to be a radio program... Read More