Relief

2015.SeptThe photo shows a familiar medicine that buffers stomach upset and treats a headache. When we reach our personal threshold for tolerating digestive discomfort, the fizzy water is there if we keep some on hand. Declining stock markets bring us up against another personal threshold, this one for financial discomfort. It is our nature to sell off stocks when we think we will lose more in the next market session, even though we know full well it is the worst time to sell. The “medicine” in this case is to recognize our personal threshold for market risk, and then add a sufficient amount of fixed income assets –bonds and cash—to buffer our stock holdings well enough to keep the possibility of market discomfort within tolerable bounds. Whether it’s indigestion or a falling market, in each case the right dose of “medicine” can bring a satisfying measure of relief if we plan ahead… a simple strategy indeed.

Leverage

leverageA baseball bat extends our reach and provides immense leverage when it connects with a fastball… every now and then there’s a home run. When it comes to buying a home or a car, a loan leverages our reach beyond resources at hand. We need to qualify for credit, and if approved the resulting commitment lets us enjoy something we could not obtain any other way… as long as we keep up with the payments. Investors leverage their real estate deals and they buy stocks on margin, hoping for that home run where a relatively small cash commitment reaps a profit bonanza. A baseball player who strikes out in two-thirds of his or her times at bat is a champion with a .333 batting average, but a borrower who misses a few payments is a poor credit risk. Leverage works both ways, and careful coaching can make the difference between win or lose before signing loan papers or stepping up to the plate.

Rain

2015.JulybProtecting yourself from Identity Theft is like the weather: everybody talks about it, but nobody does anything about it. When it rains, everything gets wet so you put on a raincoat. When your identity is pilfered from a database you cannot prevent it from happening. But… you can discover the theft early-on by reviewing your credit card, bank, and investment statements online and regularly. You can limit your credit cards to a single provider you feel will best help you recover from physical loss or theft. You can change the access passwords to your bank and investment accounts regularly. You can add an encryption feature to your emails, to thwart thieves who hunt among them for account numbers, lifestyle clues, and your friends’ identities. You can build a separate email account to use with anything you purchase, subscribe to, enroll in, or report to online… and keep that account’s Contacts folder empty. In short, you can think like a thief every time you spot or touch your plastic money, set up a cash transfer, write an email, enter your computer, or share your Social Security Number. It’s like putting on a raincoat in a rainstorm… not perfect, but definitely helpful.

Be Prepared

2014.MarchIt was 8:32am on a sunny California winter morning and traffic was moving smoothly at 60-65 miles an hour on the 405 out of Los Angeles when I felt a hard jolt at the back of my car, accompanied by the sound of glass and plastic tinkling onto the freeway. The driver in the adjacent lane misjudged his lane change and hit me instead.

If you have your driver’s license, registration, and proof of insurance handy, you are well along in the process of working out the accident report with the on-scene officer.

Other nice-to-have items at such times include a cell phone and your insurance company claims department number, membership in an outfit that will respond to help you glue back the pieces, and a card listing contact names and numbers in case you prove incoherent…or worse.

Should this ever happen to you, it will happen fast. You won’t have time to think about all the steps in the process. So…check periodically, and be sure your glove compartment holds the up-to-date basic items you may need to recover well from an accidental connection with another driver.