Financial topics

[Barion]

I make enough each month to pay my bills and get by, and barring something completely unforeseen, this pattern should hold steady for several more years until I get a Ph.D.

From reading your post, I really can't answer your question. I'm assuming that you are a teaching assistant in the California university system. What is your source of income and what is it based on? For example, if you are a TA, is it based on undergraduate enrollments in the psychology department of the university you attend?

No, at the moment I work full time as a security guard, but later this year I hope to become a teaching intern (different from a TA, in that I would actually be the one teaching the class and not assisting a professor) on top of that, giving me even more income.

[Higgenbotham]

No, at the moment I work full time as a security guard, but later this year I hope to become a teaching intern (different from a TA, in that I would actually be the one teaching the class and not assisting a professor) on top of that, giving me even more income.

The private security industry should be one of the few growing industries. Generally, I expect increasing need for security at the same time financially strapped governments have less ability to provide it. I envision all kinds of opportunities opening up in private security. In my opinion, it is almost certain that your real income will grow and that your employment prospects are excellent.

[Higgenbotham]

No, at the moment I work full time as a security guard...

We should see many more articles like this one in the coming years...

U.S. judges seek massive California prisoner release

By Peter Henderson Peter Henderson – Tue Feb 10, 7:18 am ET

SAN FRANCISCO (Reuters) – Federal judges on Monday tentatively ordered California to release tens of thousands of inmates, up to a third of all prisoners, in the next three years to stop dangerous overcrowding.

As many as 57,000 could be let go if the current population were cut by the maximum percentage considered by a three-judge panel.

http://news.yahoo.com/s/nm/20090210/us_ ... california

[freddyv]

In reading these forums, the blog, and the articles, I've been trying to ascertain how things will play out for people like me, and I still don't really have an idea. It seems like most, if not all, of you who participate here are people with assets and investments, and so you're trying to figure out what to do with your money when all hell breaks loose someday. I'm someone who basically lives "paycheck to paycheck" (albeit very comfortably) with a moderate amount of revolving credit debt and student loans currently in deferment because I'm in grad school. I have no investments, no assets, I rent an apartment, I make enough each month to pay my bills and get by, and barring something completely unforeseen, this pattern should hold steady for several more years until I get a Ph.D., after which I will have to find a job in my field (academic psychology--most likely professor at a university). So if the "Greater Depression" hits while I'm living this current lifestyle, I don't have a lot to lose. I don't have to worry about a stock market crash. I never bothered to sign up for a 401(k). For me, deflation has been nothing but good news because my dollar is going further than it has in a long time. The housing bubble isn't a problem, and actually is a bit of a boon for me because rents are also dropping and people flee California (like in 1992-1993), so if I decide my current rent is too high compared to the local market, I can just get a new place to live.

Is it possible that people like me actually thrive in economic downturns? I remember living incredibly well back in the early 90s for similar reasons. Back then I was in the Army, so all my basic needs were met, and my income was pure spending money for me, which I promptly spent...and then I got out and received a nice monthly stipend in the form of the G.I. Bill and Army College Fund while I went to school to earn my B.A., so I simply never felt the effects of the recession. Similarly, I never suffered one bit during the little recession we had at the beginning of this decade.

Or should I be worried that, unlike before, and right now, things will get so much worse overall that I no longer am immune and, because I have no assets and investments, I will be vulnerable where the rest of you have a layer of protection that I do not?

The key thing in times like these, IMO, is to pay attention to what is REALLY going on and not be swayed by those who tell you "things will be alright" or others' who tell you to "buy gold and live in a tent in the woods".

I know a lot of well educated people who are losing their asses right now because they can't break out of the mindset that has provided for them over the years. They believe that they can finagle their way out of this. They believe that they can continue to speculate to hold on to their speculative gains but in fact, only a few of them will be able to ride the ups and downs.

My path is to keep it simple. I don't let people get me distracted from what I know; I know the stock market is going down and that having cash is good. After that I am paying off every last bit of debt. I am also making sure my business is strong and has no waste. So far I am in much better shape than a year ago, both in my personal finances and in my business.

Times like these do provide tremendous opportunity but one of the biggest opportunities is simply to see what is coming and to sidestep it. I was able to do that with the drop in the stock market and I now have nearly three times what I would have had if I had simply stayed the course, as so many "experts" advised.

If you are young and don't have much to lose then you will find that it is an excellent time to begin investing. The key is to continue to invest over the years and to stay up on what is really going on. Don't allow anyone else to be in charge of your future. Understand that our society will come out of these times stronger and healtier, if we will only face up to our failures. Along with strengthening my financial position I am also trying to become a better person by learning from my mistakes and the mistakes my country has made. I hope to pass on the knowledge I gain to those young people I have influence over.

Please don't just see this as a time when you can easily gain a free ride from the system. Those who are capable need to step up and become leaders, even in the smallest ways.

--Fred

[freddyv]

This video of an interview on CNBC is incredibly interesting...

http://www.cnbc.com/id/15840232?video=1027496846&play=1

In it, Noriel Roubini and Nassim Taleb try to get across to the CNBC talking heads that what we have here is a real, serious economic crisis brought about by massive fraud and risk-taking by the very people who are still in power. The talking heads are completely and totally unable or unwilling to grasp that idea and what really needed to be said by one of the guests was, "You people are the problem. You are perfect examples of "experts" who are completely and totally unable to see outside of your little boxes. All you want to know is how can we now speculate on this situation? How can we make more money at someone elses expense?"

But it was not said.

Still, more and more people are coming to see how corrupt and unept are these talking heads. That is part of the process and my prediction is that 5 years from now these people will either be gone or they will be singing a very different tune.

--Fred

[The Grey Badger]

No, at the moment I work full time as a security guard...

We should see many more articles like this one in the coming years...

U.S. judges seek massive California prisoner release

By Peter Henderson Peter Henderson – Tue Feb 10, 7:18 am ET

SAN FRANCISCO (Reuters) – Federal judges on Monday tentatively ordered California to release tens of thousands of inmates, up to a third of all prisoners, in the next three years to stop dangerous overcrowding.

As many as 57,000 could be let go if the current population were cut by the maximum percentage considered by a three-judge panel.

http://news.yahoo.com/s/nm/20090210/us_ ... california

How many are in for minor drug violations?

[Higgenbotham]

No, at the moment I work full time as a security guard...

We should see many more articles like this one in the coming years...

U.S. judges seek massive California prisoner release

By Peter Henderson Peter Henderson – Tue Feb 10, 7:18 am ET

SAN FRANCISCO (Reuters) – Federal judges on Monday tentatively ordered California to release tens of thousands of inmates, up to a third of all prisoners, in the next three years to stop dangerous overcrowding.

As many as 57,000 could be let go if the current population were cut by the maximum percentage considered by a three-judge panel.

http://news.yahoo.com/s/nm/20090210/us_ ... california

How many are in for minor drug violations?

It can't be more than about half, as drug offenses only account for 18% of the prison population. My guess is less than 15% out of the 57,000 would be for drug possession with no other history of criminal activity (since drug offenses include crimes other than possession). Here are some statistics and information for reference.

http://ojp.usdoj.gov/bjs/glance/corrtyp.htm

[John]

From a web site reader:

> Thought you might enjoy this table I found for S&P500 earnings
> and estimates dated 2/6. You'll laugh at S&Ps projections that
> show PE going up to 37 and then 43 over the next 2 quarters!

> http://www2.standardandpoors.com/spf/xl ... EPSEST.XLS

This is very useful information. This Excel spreadsheet gives
earnings an P/E ratios from S&P. They're slightly different from the
Reuters figures that CNBC posts, but this spreadsheet has a lot of
useful information.

Here are the quarter by quarter P/E estimates for the next two years
(columns A and H in the first tab of the spreadsheet):


Quarter ending P/E ratio estimate
-------------- ------------------
12/31/2010 16.87
09/30/2010 16.92
06/30/2010 17.51
03/30/2010 19.03
12/31/2009 20.74
09/30/2009 39.88
06/30/2009 42.62
03/31/2009 36.70
12/31/2008 29.60


The Q4 (12/31/2008) P/E estimate is 29.6, which is considerably
higher than the estimate based on Reuter's figures.

Each figure in column H is computed by taking the S&P 500 average in
column B and dividing by the sum of the previous 4 quarterly earnings
per share values in column D.

As the web site reader points out, P/E ratios are estimated to be
46.62 and 39.88 in the next two quarters.

Sincerely,

John

[Matt1989]

Comparison

http://1.bp.blogspot.com/_pMscxxELHEg/S ... tWarII.jpg

[jwfid]

This video of an interview on CNBC is incredibly interesting...

http://www.cnbc.com/id/15840232?video=1027496846&play=1

In it, Noriel Roubini and Nassim Taleb try to get across to the CNBC talking heads that what we have here is a real, serious economic crisis brought about by massive fraud and risk-taking by the very people who are still in power. The talking heads are completely and totally unable or unwilling to grasp that idea and what really needed to be said by one of the guests was, "You people are the problem. You are perfect examples of "experts" who are completely and totally unable to see outside of your little boxes. All you want to know is how can we now speculate on this situation? How can we make more money at someone elses expense?"

But it was not said.

Still, more and more people are coming to see how corrupt and unept are these talking heads. That is part of the process and my prediction is that 5 years from now these people will either be gone or they will be singing a very different tune.

--Fred

Oh my God. I sat there in disbelief! I had no idea everyone of these guys had their heads so deep in the sand. I used to watch these guys everyday and thought the actually knew something about the world. No wonder the stock market is so over priced.

With people like this in the "know", we are in up to our necks.

I used to think we already had our panic back in October, but, John, you are right. The real panic is coming soon.

Joe