Investing according to your goals

We came across an excellent article that emphasizes the importance of individuals investing according to THEIR goals. This is a point we like to consistently make with clients, as well as company employees we speak to through our non-profit workshops. Unfortunately, too many people do not invest according to their goals and put their long-term plans in serious jeopardy.

If you are not investing according to your goals you tend to “chase the market”. That is, when the stock market is doing well and hitting highs you decide you want to be more aggressive and make more money. When the stock market is hitting lows you decide you do not want to take more losses and you become very conservative. Investing according to your goals keeps you grounded and minimizes emotional financial decision making, which is something that rarely ends well.

We encourage you to click on the article, it is a quick read and well worth your time. Below is an excerpt, as well as the link:

When we make investment decisions, they should be tied to our goals. We get into big trouble when we either:

a) Fail to get clear about our goals
b) Invest based on someone else’s goals

For more click here:

http://bucks.blogs.nytimes.com/2012/12/24/dont-mistake-investing-folklore-for-personalized-advice/

Central Banks in 2012

We first want to wish you a Merry Christmas and Happy Holidays!

There are so many financial stories from 2012 but one has trumped all in the eyes of the financial markets. It has been a year when Central Banks around the globe have printed an unprecedented amount of money.  As you can see since 2008, Central Banks balance sheets have exploded.  This truly is an economic experiment since we have never seen this level of Central Bank intervention before.  This year the stock market has paid little attention to a struggling jobs market, weak economic growth and declining earnings expectations and has rallied on the surge of money in the system. 

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The financial markets have paid little attention to the European debt crisis of late, due in large part to the European Central Bank’s aggressive money printing.  However, as we have repeatedly pointed out nothing has been “fixed” in Europe.  

First up, European GDP has tended to track US GDP growth, but there has been a wide divergence in the past year.  The US has slowly recovered while Europe continues to contract.
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Source: Kit Juckes, Societe General

Next up is a chart of GDP growth in the large Euro countries.  Notice while Germany continues to grow, Italy and Spain continue to deteriorate.  All of the money printing by the ECB can temporarily deflect attention from Italy and Spain but unless these countries change course and pursue policies to stimulate growth the crisis will return.

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Source: Laurence Boone, Chief European Economist BoA Merrill Lynch

Lastly, Europeans support of the Euro has dropped from over 80% to 53%.  If this trend continues it will be problematic for European leaders, who are trying to solve the crisis..

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Source: Nomura Securities