Friday, December 17, 2010

Merry Christmas!

MIXED ECONOMIC NEWS GAVE MARKETS little direction last week, with most domestic equity indices up slightly. By the numbers, for the week ended Friday December 10, 2011, the Dow Jones Industrial Average closed at 11,410, up 28 points, or 0.25%. The Standard & Poor’s 500 closed at 1240, up 16 points, or 1.2%, and the NASDAQ Composite closed at 2637, up 46 points, or 1.8%.
On the economic front, data indicates a slow recovery. The U.S. trade deficit fell in October to $38.7 billion, due primarily to increased exports and reduced gasoline consumption. Consumer borrowing increased by $3.4 billion in October, most of which was student loans. Credit card use fell for the 26th consecutive month, and jobless claims were down to 421,000.

While there are encouraging short term signs of economic recovery, long term challenges are real, and must be addressed. The Congressional Budget Office, www.cbo.gov, estimates that the U.S. will add another $7 trillion in debt by 2020, bringing our total indebtedness to $20 trillion, whatever that is. Either we print this money and devalue the dollar, which is the current approach, or we find other countries willing to purchase our debt. Either path brings lousy results.

Steve Jobs has been named CEO of the Decade by MarketWatch, a Dow Jones service. Tim Solso of Cummins Engine, among others, was a finalist.

The last building of Chicago’s Cabrini-Green housing project is being torn down. CG is one more case study in the string of failed attempts by government to do good. Any assistance requires buy-in by those being helped. Without this participation, a sense of futility and ultimately entitlement prevails.

Physical and fiscal health top the list of New Year’s resolutions. A few thoughts regarding fiscal health. Affluence, or discretionary cash flow, has very little correlation to wealth. Economic wealth can be described as control of assets. Affluence indicates that you have learned how to make money, or have available credit. Wealth indicates you have learned how to properly deploy the money you make. These are two entirely separate skills.

The wealthy among us have lived in the same town most of their lives, own a business, have been married once and remain that way, and live next to people with a fraction of their wealth. Here are seven common denominators we have discovered among the wealthy.

1. They live well below their means.
2. They allocate time, energy, and money efficiently.
3. They prefer financial independence to social status.
4. Their parents did not provide economic outpatient care.
5. Their adult children are economically self-sufficient.
6. They are proficient in targeting market opportunities.
7. They chose the right occupation.

What have we learned? Building wealth takes discipline, sacrifice, and hard work.

Christopher Buckley offers a Santa’s Wish List for World Leaders. Hugo Chavez - a karaoke machine with 100 anti-U.S. rants. Olafur Grimsson – 10 trillion kronur debt relief, Mahmoud Ahmadinejad – leather-bound copy of Protocols of the Elders of Zion, Nicolas Sarkozy – custom shoe lifts, Kim Jong Il – economy size tube of styling gel.

The last few weeks of each year are times of reflection and celebration. In the U.S., we start the fall holiday season with Thanksgiving, to remember God’s grace and provision to some of the early settlers of our great country. Moving into December, many celebrate Hanukkah, or the Festival of Lights, a memorial to the Jews’ victory over very oppressive rulers in the 2nd century, B.C.

In our home, we celebrate Christmas, when we pause to give thanks for the freedom, salvation, and restoration found in Christ, our Saviour. However you celebrate, make time before the new year starts to reflect on the goodness of life, the gifts of friends and family, and whatever other blessings are around you.

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