Personal Economics 101

Good article released today from Schwab. I'll summarize first, then provide the link to the entire article. 1. You don't need a budget. Yes you do. I've been doing a monthly budget since 1985.  2. An emergency won't happen to me. Hey, stuff happens. Have an emergency fund.  3. If I'm short on cash, I can always use credit. This will get you in trouble.  4. Retirement is a long way off. It comes quicker than you'd expect. Time is your greatest asset, so start early. 5. I can live without insurance. Not really. But don't go crazy either. For example, whole life insurance policies are expensive. Use term insurance and invest the difference.  6. I've got a sixth sense about investing. If you do, pass it to me please.  7. I should take Social Security as soon as I can. Well, this depends, but the longer you wait, the higher the benefit. 8. Estate planning is only for the wealthy. Sure, if you want what you own to end up in probate. Not...

The market struggles today, with all major indices down. At 10:45 am CDT, the DJIA is down about 220. The S&P 500 has lost nearly 30 points.  This is really no surprise to me. The last uptick in the market was on lower than average volume, which means (at least to me) there wasn't a lot of enthusiasm from the large institutional guys and gals.  There were other indications of some weakening in the economy, such as housing starts down 9 percent in January. KB Home and Lennar, large new home builders (I live in a new KB Home), reported lower than expected earnings and revenues. While mortgage rates are slightly lower, they are still higher than historic lows.  Reports by Schwab this morning included: " European equities are trading mostly to the downside in afternoon action, with concerns of a decline in economic growth seeming to trouble investors. Also, weak economic data out of China is weighing on the markets, while global growth uncertainty re...

Friday's market losses reportedly occurred because of weakness in Europe, among other worries of investors. Actually, it may have just been a little profit taking. With millions of investors buying and selling, there is probably no one motivation. But markets are overvalued. See the Buffet Indicator , which puts markets at significantly overvalued.  Markets may open lower this morning, based on futures markets. Not time to panic, also not time for celebration. If a new downtrend is starting (IBD indicates an uptrend under pressure), it might be time to add to long equity positions. I'll wait and see.  According to Seeking Alpha's Wall Street Breakfast report this morning, "It's another dark day for  equities across the board as heavy losses in the U.S. on Friday spread to Asia overnight, with the Nikkei closing down 3% and Shanghai 2% lower. Dow and S&P futures are now off by 0.3% and the Nasdaq by 0.6% as the U.S. treasury yield curve turned positive after...