10 Habits of Remarkably Charismatic People

We've all met a person that we have been naturally drawn to.  Someone who gives us special attention, puts aside what they are doing to help out in a time of need.  Inc. Magazine put together a top 10 list of what helps make someone charismatic .  As the piece points out, being charismatic is not something that you are born with, but rather something that you earn.

Top 3 below full list here

1. They listen way more than they talk.
2. They don't practice selective hearing.
3. They put their stuff away.

Hot Gift Is a Tablet, but Which to Buy?

Going gadget crazy in your house this holiday season?  I know personally speaking the amount of gadgets in my household are adding up quickly and my triplets are not even two yet.  Here is my current list of gadgets not including our two iPhones that my wife and I carry; Amazon Kindle e-reader (I know so old school), a new iPad, an ultrabook, a personal pc, and 2 separate Dell pc's used for work.

I have contemplated upgrading the Amazon Kindle but it is perfect for what I use it for which is simply reading.  I guess if it ain't broke, don't fix it.  However some of you may be in the market for the new and hottest gift gadget this Christmas which has definitely been the tablet, and just about any tablet.

NYT tech columnist David Pogue provides readers  with a who's who of tablet options that could fit any need you are looking for.

Full article here

Federal Student Lending Swells

Having a conversation with a perspective client yesterday I found myself explaining my thought process on treating college funding and planning as no other investment vehicle in that you must look at the return on investment.  I often site the example of a student who wants to become a teacher and deciding to go to a school charging some $50k or more a year in tuition, room, and board.  How would you expect that student soon to be teaching professional to pay that back based upon the current range of salaries for teachers?

Just because a loan is available to you doesn't mean that you have to take it.  However these days through the financial aid process most schools already incorporate the federal loans a student is eligible for as part of their financial aid package.  It is assumed that the student will take out the loans in order to attend school at the institution.  I completely disagree with this process.  A loan is not aid, it is a loan required to be paid back.

The WSJ released this article which details out some chilling statistics on the rise of student loan debt (no surprise to DWCM readers who have followed out posts on this topic throughout the past 2 years).

• U.S. student-loan debt rose by $42 billion, or 4.6%, to $956 billion in the third quarter, the Federal Reserve Bank of New York said Tuesday. Overall household borrowing fell during that period.
• Payments on 11% of student-loan balances were 90 or more days behind at the end of September, up from 8.9% at the end of June, a rate that now exceeds that for credit cards. Delinquency rates for all other consumer-debt categories fell or were flat.
• Nearly all student loans—93% of them last year—are made directly by the government, which asks little or nothing about borrowers' ability to repay, or about what sort of education they intend to pursue.

• "Is there any way the federal government could possibly come out to the good?" Sen. Bob Corker (R., Tenn.) asked at a Senate Banking Committee hearing in July on student loans, noting that the government demands no collateral and has no underwriting requirements. "What we're really doing is piling up debt down the road the same students are going to have to pay off."
• So-called Stafford loans account for more than three-fourths of federal student loans. They impose no credit standards and are capped at a total of $57,500 for undergraduates. Some of the money can be used to cover living expenses. For loans to parents and some graduate students, which have no upper limits, the government weeds out borrowers with an "adverse credit history," such as a bankruptcy filing in the previous five years.

The Best Business Books Of 2012: Find Fulfillment, Get Productive, And Create Healthy Habits

Having read one of the books on this Fast Company list of the best business books of 2012, The Power of Habit, which I will be hosting a book review about this upcoming February.  This list may be a read place to start if you are searching for a gift idea or something to read yourself over the holiday season.

I have listed the top 5 books on the list below.  Go here to see the full list.

1. Quiet: The Power of Introverts in a World That Can't Stop Talking, by Susan Cain
2. How Will You Measure Your Life? by Clayton M. Christensen, James Allworth and Karen Dillon
3. Extreme Productivity: Boost Your Results, Reduce Your Hours, by Robert Pozen
4. The Signal and the Noise: Why So Many Predictions Fail--but Some Don't, by Nate Silver
5. Daring Greatly: How the Courage to Be Vulnerable Transforms the Way We Live, Love, Parent, and Lead, by Brené Brown

Trends in Interest Rates on National Debt Suggest Currency Crisis is Coming

It is amazing to think about the daunting chart below.  As debt levels have shot towards the moon, interest rates have moved in just the opposite direction which fundamentally does not make since.  As debt levels increase so would your assumed risk.  As your assumed level of risk increases so should your interest rate.  At least this is how it is supposed to work.

As Mish Shedlick argues in this post, a looming currency crisis could be in the works.

Resilience of American Agriculture

Source United States Department of Agriculture
Hat Tip Barry Ritholz

Making Your Retirement Assets Last

Just reaching retirement can and will be a struggle for some people.  However the notion of outliving your assets could be much larger issue facing potential retirees.

With savers continuing to be punished in this low interest rate environment that the Fed has created, it is harder and most likely riskier to find the yield that people seek when they begin their retirement years to live off of.  Couple that with the rising costs of health care and people living longer lives, that spells a lot of concern for individuals putting together retirement plans.

There are things that people can begin to do now as this WSJ article points out.  But first and foremost is that people should begin to plan now rather than continuing to put it off.  We have discussed this very topic throughout the past two year which is the fear of doing anything which paralyses people.  Rather than taking that first step people do the worst thing which is nothing at all.  Most people's financial future depends upon them taking a proactive approach to their retirement funding because companies and government aren't going to do it for you.

As the old saying goes, "don't put off until tomorrow that which you can do today."  Full article here

• Recent calculations from the Employee Benefit Research Institute show that roughly 44% of those born between 1948 and 1978—baby boomers and Generation X—won't have adequate retirement income, and that is assuming interest rates go back up in 2014. 
• Retirees should map out a budget for necessities—include everything from housing to food, transportation, health expenses and utility bills—and set aside a chunk of a portfolio for these costs.

• With 70% of people over age 65 running into some type of health problem that could necessitate some form of long-term care, it's a big expense that many retirees initially forget about in planning, says Robert Stammers, director of investor education for the nonprofit CFA Institute.
• Critics say long-term-care policies can be pricey and may have limits on the benefits they pay out, so retirees need to make sure they understand what they are getting before buying. The average annual cost of such a policy for a 57-year-old single individual is about $1,900, while a couple of the same age would pay about $2,500, according to the American Association for Long-Term Care Insurance, an industry trade group.

Tax Tips for the Next Two Months

As we get closer to the end of the year tax planning usually begins to show up on people's radar screens.  Although having a tax strategy throughout the year is always the preferred method for planning, there are always things to consider as the close of the year approaches.

Tom Herman of the WSJ put together the following points in this article

1. Consider tax-loss harvesting
2. Don't get soaked by the wash-sale rules
3. Consider donating highly appreciated stock to charity, instead of selling and donating the proceeds
4. Mutual-fund investors: Beware of a painful year-end tax trap
5. Consider bunching deductions
6. Consider cashing in long-term winners
7. Punt

Handicap the Race to the Cliff

I came across this piece in Barron's and thought that it was a very good briefing on what to watch for in the fiscal cliff debate.  Columnist JIM MCTAGUE, details out the following 5 points to watch during this high drama debate.

1. The only Democrat involved in the negotiations with the GOP congressional leadership who matters is President Barack Obama
2. Closely monitor the words and behavior of the president to ascertain if he is truly engaged in the discussions
3. Pay close attention to House Speaker John Boehner. He is in a stronger position within his party than he was prior to the presidential election because voters clearly sent a message that they want elected officials to compromise on major issues, not engage in endless gridlock.
4. Watch Senate Rep. Mitch McConnell, the Senate minority leader and a fiscal conservative from Kentucky
5. Keep an eye on the Tea Party and party darlings like Wisconsin Rep. Paul Ryan and Virginia Rep. Eric Cantor

Full article here

Everything You've Heard About Failing Schools Is Wrong

This is a long but rather compelling story about about how a little girl grew up in a new land facing much adversity and addressing the misconception about what a failing school looks like.

Kristina Rizga, education writer at Mother Jones, spent 18 months at Mission High School in San Francisco trying to determine how a failing school system wasn't actually failing at all.

Complete story here

•  Judging from what I'd read about "troubled" schools, I'd expected noisy classrooms, hallway fights, and disgruntled staff. Instead I found a welcoming place that many students and staff called "family." After a few weeks of talking to students, I failed to find a single one who didn't like the school, and most of the parents I met were happy too. Mission's student and parent satisfaction surveys rank among the highest in San Francisco.
• One of the most diverse high schools in the country, Mission has 925 students holding 47 different passports. The majority are Latino, African American, and Asian American, and 72 percent are poor. Yet even as the school was being placed on the list of lowest-performing schools, 84 percent of the graduating class went on to college, higher than the district average; this year, 88 percent were accepted. (Nationally, 32 percent of Latino and 38 percent of African American students go to college.) That same year, Mission improved Latinos' test scores more than any other school in the district. And while suspensions are skyrocketing across the nation, they had gone down by 42 percent at Mission. Guthertz had seen dropout rates fall from 32 percent to 8 percent. Was this what a failing school looked like?

Week 47 Performance.....The losing streak ends

In a twisting turn of events the equity markets were in rally mode this shortened holiday week.  Friday turned out to be the biggest surprise with most benchmarks up over 1%.  We can't really speculate why markets turned around this week, we can only guess so no need to go down that road.

We think we will be up and down for the rest of the year based on reports true or not of a fiscal cliff resolution.  This could be offset by news out of the EU as they continue to muddle along trying to solve their debt crisis.

For us in the US we bounce back between the sky is falling to everything will be okay.  Personally at DWCM, we are continuing to focus on what stocks will add value to our Fund and our client portfolios.  Most positions we created orders for were not filled due to the upswing in the markets this week.

We believe that if we are patient, some stocks will come back down as the equity markets likely swing from one extreme to another.  This is where investing becomes a little difficult as you see stocks begin to climb while you wait patiently on the side lines.  There is always that impulse to jump in but this is where having conviction and believing in your research and strategy can really pay off.

It has actually been several weeks since we last had any order transactions within the DWCM Fund.  As we stated previously our recently placed orders this week have gone unfilled.  We are okay with that as we will continue to wait patiently and continue to look for other opportunities.

We currently sit at a 21% return for the year while holding a cash position slightly greater than 50%.  We have plenty of dry powder left to take advantage of any opportunities that the market may present to us.  Ideally as we have stated the last few weeks we would like to see our cash position down near 40%.

The Week Ahead
There is a good deal of economic data being released this week.  Markets are sure to trade off of this data while paying attention to Black Friday sales figures to give some indication as to how consumers will be spending this holiday season.  Let us not forget amount any data and talk coming out of the EU while keeping a watchful eye on the situation in Israel.

• Mon - Chicago Fed National Activity Index, Dallas Fed Mfg Survey
• Tue - Durable Goods Orders, Ben Bernanke Speaks, S&P Case-Shiller HPI, Consumer Confidence, FHFA House Price Index, Richmond Fed Manufacturing Index, State Street Investor Confidence Index
• Wed - New Home Sales, 
• Thu - Chain Store Sales, Richard Fisher Speaks, GDP, Jobless Claims, Pending Home Sales Index, Kansas City Fed Manufacturing Index
• Fri - Personal Income and Outlays, Chicago PMI, Farm Prices

Have a great week!

DreamWorks Capital Management

If you are currently trying to develop your own investment plan or are seeking the help of a professional investment advisor we urge you to give us the opportunity to show you what DWCM can do for you.  No matter what stage in life you are currently at, DWCM can help you plan for your ever changing needs.

DWCM can you help you with any of the steps in your wealth management journey including;

• Addressing emergency fund needs
• Developing a retirement plan
• Sending a child to college
• Looking at various investment options
• Determining how to involve philanthropic passions as apart of your planning process

With our "SMART Principles", we can help you develop your unique goals and create a focused customized plan to achieve your financial and lifestyle goals.

A Worksheet for Math-Phobic Parents

For those of you parents out there, this post is for you.  I'm not sure how many of you like math or not but trying to teach a youngster algebra or trig can be twice as hard if you fear the numbers yourself.  This WSJ article takes a closer look at the importance of match and learning about numbers at a young age.

Not having read the article prior to working with my own children I have been trying to get them to count to 5 and have them recognize numbers beyond that as well.  I'm not sure if they understand what I am saying or not but it sure makes for for entertaining times.

Full WSJ article here

• Parents play a pivotal role in kids' math attitudes and skills, starting in toddlerhood. Those who talk often to their youngsters about numbers, and explain spatial relationships in gestures and words, tend to instill better math skills at age 4, according to a long-term, in-home study of 44 preschoolers and their parents led by Susan C. Levine, a professor of psychology and comparative human development at the University of Chicago.
• Parents don't have to know math to help kids get off to a good start. Teaching youngsters to make connections between numbers and sets of objects—think showing a child three Cheerios when teaching the number three—helps children understand what numbers mean better than reciting strings of numbers by memory, Dr. Levine says. Doing puzzles together or using gestures to help describe spatial relationships such as "taller" and "shorter," can instill spatial abilities, which are linked to better math skills, she says.
• Struggling alongside your child can actually be helpful, says Suzanne Sutton, a Rockville, Md., math consultant and founder of NewtonsWindow.com, a website to help parents and students with math. A parent who is comfortable with trying and failing can teach a child how to look up things and grapple with challenges.

How To Be Creative

Did you ever wonder how the gentleman at 3M came up with the post it note?  Or how some study suggests that students with a little bit of alcohol score better on tests than their sober counterparts?  The answer lies somewhere in the realm of creativity.

Author and creativity researcher Jonah Lehrer opined on this subject in this WSJ article.  It may be that creativity doesn't come to us as we think, but instead by working diligently at solving a problem answers arrive in what seem to be "ah uh moments" but in reality is was more process oriented than some clever stroke of genius.

Most people wouldn't think of themselves as creative but think about all of the problems that you solve on a daily basis?  They might not involve solving a deadly disease but without figuring out how to side step the landmines in life, think about how less efficient you would be.

See the full piece here for a listing of points Lehrer points out that help get the creative juices flowing.

• creativity is not magic, and there's no such thing as a creative type. Creativity is not a trait that we inherit in our genes or a blessing bestowed by the angels. It's a skill. Anyone can learn to be creative and to get better at it. New research is shedding light on what allows people to develop world-changing products and to solve the toughest problems. A surprisingly concrete set of lessons has emerged about what creativity is and how to spark it in ourselves and our work.






• Creativity is a spark. It can be excruciating when we're rubbing two rocks together and getting nothing. And it can be intensely satisfying when the flame catches and a new idea sweeps around the world.
• For the first time in human history, it's becoming possible to see how to throw off more sparks and how to make sure that more of them catch fire. And yet, we must also be honest: The creative process will never be easy, no matter how much we learn about it. Our inventions will always be shadowed by uncertainty, by the serendipity of brain cells making a new connection.

10 Reasons Why Some People Love What They Do

We are always intrigued by articles and story that expand on the question, "why some people love their job or career".  Working with people on a daily we encountered people of all backgrounds, disciplines  and careers   We certainly run across a fair share that hate their jobs while a few actually do really enjoy or love what they do.

We have found one innate quality that sets people apart who love what they do, and that is they have a passion for what they do.  I personally know people that could make more money doing something else but choose to go another route because they have such a passion for helping and educating people.

Writer David DiSalvo at Forbes who has researched this very topic penned this article.  See his top 3 below

• They seldom feel disconnected from the challenge that first engaged their interest.
• They’re remarkably well-attuned to the “early years.”
• They are “portfolio” thinkers.

Happy Thanksgiving

I would like to take a moment and wish everyone a Happy Thanksgiving especially those in the armed forces that help make this day possible.  My wife and I actually hosted our first Thanksgiving this year with the help of my awesome aunt who happens to be a great chef.

Personally I have a lot to be thankful for this year none more important than a healthy and growing set of triplets and a brand new addition that arrived a few months ago.  I often remind people that it takes a village to help raise my family.  So a big thank you to the family and friends who continue to help my family grow.

I am also personally thankful for the DWCM clients that have put their trust is us and our DWCM readers who continue to look to us as a valuable source of financial and lifestyle information.

And finally a big thank you to to my extraordinary team at DWCM who help make all of this possible.

Happy Thanksgiving

Investing in Farmland

As most readers know, one of our core and long-term strategies here at DWCM is our investment in the agriculture space.  Investment in the ag industry can take on many varying aspects such as equipment makers, fertilizers, seed, and actual investment in farmland.

The chart below comes courtesy of Jerry Robinson at Financial Sense.  Robinson notes in his piece four ways to play the agricultural boom.  DWCM is not invested in any names mentioned in his article but we do have investment in the following agricultural related companies

• Mosaic, Potash, Monsanto, Terra Nitrogen

Although we consider farmland to be a potential investment in the ag industry, it would likely be a extremely illiquid investment that an investor would need a consider amount of capital invested and a long time horizon. A better way to make more of a pure land play would be through a REIT or some other form of ETF that invest in land directly.

Source:  http://www.insidersstrategygroup.com 

The Investor Sentiment Wheel

Source Trustable Gold

Hat Tip Barry Ritholtz

What Happened to Homeowners Seeking Help

Source NYT
Hat Tip Barry Ritholtz

How Not to Get Boxed in by Apple and Google

Dropxbox is a great story about how a little company has taken on the giants with the likes of Apple, Google, and Microsoft.  Although we have never personally used Dropbox we did lay out in this post How To Choose The Best Cloud For Your Data the various options you have for storing your content online.

What seems to make Dropbox unique and sets it apart from its competition, is the fact that it can work across many different platforms such as Apple, Google, and Microsoft.  People have have various files stored across the online plain but with Dropox you can access all the different file formats in one place.

Our personally preference is still to use SkyDrive by Microsoft simply because most of the files that we use come from the Microsoft Office Suite.

If readers have any opinion regarding any of the online options we would love to hear about what you have to say.

Full WSJ article here

• Dropbox acts like a digital locker in which users can upload and store their files and photos from one computing device, say their work PC, and then access them from other devices, for instance their Mac at home or an Android smartphone on the go.
• Yet many consumers prefer to "bring their own device" to various aspects of their digital lives, a trend that has forced companies to support the iPads and iPhones that employees often bring to work. Similarly, many may also prefer to "bring their own locker" when it comes to online storage. That is because they want one that works with various platforms.
• As a private company, Dropbox doesn't release financials, so it isn't clear how many of its 100 million users actually pay for its service. They can get two gigabytes of online storage free.
• Mr. Houston says that Dropbox is profitable and that it hasn't spent any of the $250 million it raised a year ago in a financing round that valued the company at a tidy $4 billion. He says the company raised the money to be more flexible.

Week 46 Performance.....Taking it on the Chin

Well it looks like we can add one more detail to the wall of worry which are increased tensions yet again in the Middle East.  Hamas and Israel began another round of battles this week with escalating violence that has most of the globe on the edge of their seats.

Tensions in the Middle East are nothing new.  But as the US has pulled back in both Iraq and Afghanistan, the last thing America needed was another conflict to become involved in.

Politics is just one of many aspects that could and does affect both your long and short-term investing strategies.  Right now you have markets that were already very unsettled due to the US Fiscal Cliff, continued riots in the EU over its debt crisis, and a slowing China.  Throwing more fuel on the fire certainly is not going to help.

Ironically as we thought about putting the performance post together this week, our thinking was that it was time to dip into our cash reserve and put some additional capital to work.  Our belief is for all of the back and forth talk in Washington right now, this group of politicians known for not getting something done until the last hour, will once again pull something out.  However, we don't anticipate any action being sweeping changes or reforms that could actually benefit the country long-term.  But instead more of kicking the problems down the road a bit further.

We believe that companies want and will continue to improve their operations.  And although demand might not be there for most companies, the ability to continue to improve operations is always a target that is on the table.  These actions can result in whole host of events that could boost company values and stock prices.

Secondly we've been taking a look at the goods and services that people will continue to want or need through a recession.  Think health care, food & agricultural products, believe it or not cell phone, internet, or cable services.

Any type of deal completed in Washington will likely lead to a year end rally depending on other events around the world that we have laid out above.  So it then becomes a task of looking a bit further down the road into the first two quarters of 2013, what will they look like?  Demand is likely to be soft as we continue to work through our own fiscal issues while keeping a watchful eye on the EU, China, and now the Middle East.

We have updated our DWCM Watchlist of the companies that we are tracking very closely and look to start building positions in within the next few weeks.  As is our practice at DWCM, we want to lay out in plain English what we are investing in and why.  We aim to be as transparent as possible with our investing strategies and asset selections.

Once again this week, the DWCM Fund followed the broader indexes to the downside.  Gains for the year are still solidly above the four major indices by two fold, but that doesn't ease the pain on this recent sell off.  As stated previously, we look to becoming a bit more aggressive in the upcoming weeks as we look to take advantage of the possibility of a fiscal cliff deal getting done in Washington.

The Week Ahead
The upcoming week here in the US brings us Thanksgiving.  This usually results in lower trading volumes which could goose short-term volatility for a few days, and the national media outlets trying to draw conclusions about the US consumer and economy by how many bags people are carrying out of stores from the traditional Black Friday deals.

There is a decent amount of economic data bunched together during the first three days of the week.  However, most eyes will be on other parts of the world although bad economic data could give traders more reason to push indexes lower.  You also have Bernanke speaking on Tuesday which could get some market attention but most people concur that the Fed has done all that they can do for now.

• Mon - Existing Home Sales, Housing Market Index
• Tue - Housing Starts, Ben Bernanke Speaks
• Wed - Jobless Claims, PMI Manufacturing Index Flash, Consumer Sentiment, Leading Indicators
• Thu - US markets closed for Thanksgiving
• Fri - US markets close early at 1pm EST

Have a great Week!

DreamWorks Capital Management

If you are currently trying to develop your own investment plan or are seeking the help of a professional investment advisor we urge you to give us the opportunity to show you what DWCM can do for you.  No matter what stage in life you are currently at, DWCM can help you plan for your ever changing needs.

DWCM can you help you with any of the steps in your wealth management journey including;

• Addressing emergency fund needs
• Developing a retirement plan
• Sending a child to college
• Looking at various investment options
• Determining how to involve philanthropic passions as apart of your planning process

With our "SMART Principles", we can help you develop your unique goals and create a focused customized plan to achieve your financial and lifestyle goals.

Looked at one way, the fiscal cliff doesn't seem so horrific

When I read the headline in this WSJ article I had to do a double take and of course read on.  Could it be that going over the so called fiscal cliff could be a good thing?  The short answer is yes.

You see according to the Congressional Budget Office, although we would likely enter a recession in 2013 in the later years of the current decade growth is forecasted to rebound and our debt to GDP would improve dramatically.  This is a classic case of pay me now or pay me more later.

Or put another way, kicking the can down the road needs to stop at some point in time.

• But sidestepping the cliff involves a trade-off: It results in debt held by the public as a percentage of GDP rising to nearly 90% in 2022 from 72% in 2012. Going off the cliff, on the other hand, results in debt declining to less than 60% of GDP in 2022.

How Apple Became the Most Valuable Company Ever

Middle Class Struggle

The graph below helps to support an earlier post [More Economists Finally Admitting Globalization a Root Cause of Decline of U.S. Middle Class] that we discuss the downward spiral of the middle class.

The bulk of the jobs that have been added have indeed been at the lower paying levels.  With credit tight, the housing ATM shutoff, and jobs being replaced by workers in low costs countries or robots, how will the middle class endure?

What Americans do on an Average Workday

Hat tip to Barry Ritholtz at the Big Picture for the graph below courtesy of NPR

Steven Colbert on Paul Ryan's RNC Speech

Now that the election is over lets take a look back at some of the highlights.  Such as this Colbert Report.

The Colbert Report
Get More: Colbert Report Full Episodes,Political Humor & Satire Blog,Video Archive

Bloomberg's Jaroslovsky Reviews Microsoft Windows 8

Short answer to whether you should upgrade to Windows 8 according to Bloomberg's Jaroslovsky is....No.

Hat tip to Mish Shedlock

What Successful Night Owls Get Done Before Bed

Fast Company recently featured an article about how productive you can be working at night vs. an earlier post which featured What Successful People Do With The First Hour Of Their Work Day.

I have personally noticed that if I am working on something that I have a real passion about I could work on that project just about all night.  Granted, I would likely pay for it in the morning but think about how much of the project could be completed vs. stopping and then having to restart.

My point is sometimes it can be better to work at night, while sometimes it could be better to tackle it first thing in the morning.  In my mind it really depends on the project and how well the creative juices are flowing.

Below are the bullet points from the full piece here

• Pick One Project
• Combat Clutter
• Hit The “Idea” Bar
• Late Night Rendezvous
• Big Picture Thinking

Thomas Friedman: How America Is Falling Behind

The Hard Fiscal Facts

Despite tax revenues nearing the all time high set back in 2007, the federal deficit has now reached the $1 trillion mark for the last 4 years.  I would say that this is change we could believe in, but it really isn't change at all is it?

But here we sit at the verge of the fiscal cliff asking ourselves, do we prolong the pain or just stick our heads in the sand?  It's not about the revenue that the government is taking in, it's about the amount of money going out the door.

If there is one issue that we completely disagreed with Romney on, it was that the national defense budget must come down.  We cannot sustain the current level of spending in order to be policeman to the world which contributes to the deficit.

As this WSJ article also points out, that the increased revenues have occurred in the face of a meager recovery with GDP growth between 1% and 2%.  Any increase in GDP would theoretically increase the amount of revenue.

DWCM Thoughts on the Election

It has been exactly one week since the election and we at DWCM wanted to provide a brief commentary regarding the outcomes and what it could potentially mean to your investment strategy.

While we were personally supporters of Mitt Romney, but we also recognize how sensitive and polarizing politics can be so we tried to keep our comments minimal.  However, as most Americans could hopefully agree on, is that for the billions of dollars spent (in some estimates up to $6B on the presidential race) nothing has changed.  Both the house and senate are as divided as they started which means reaching a compromise on the "fiscal cliff" by the end of the year will become a daunting task in the lame duck session of congress.

It would be rather difficult to place odds as to whether or not a deal would be reached but call it 50/50 at best.  We believe that if a deal is reached it would only likely kick the problem down the road further while not solving much of anything.  However, even in this type of scenario the markets are likely to see this as positive and rally into the last few trading weeks of the year depending upon when a deal was cut.

If nothing is done and we go over the cliff, expect markets to muddle through as they have been with possible increases in volatility as buyers and sellers exchange blows around key technical levels within the four major equity indices.  What could make this scenario worse is the incoming information from the EU and the continuation of their debt crisis with no end in sight.

So where does this leave investors from a strategy standpoint?  First off we encourage everyone to remain focused on the long-term.  Easier said than done.  However what happens today, tomorrow, or next month is likely only a small slice of time in your overall picture of say saving for retirement or education goals depending upon what stage of life you are currently in.  This does not mean that you don't react to short-term  issues but you try to strike a balance between the short-term and long-term objectives that you do have.  Remember, investors have to find some degree of peace of mind no matter the investing climate.

We have been advocating throughout much of the year for investors to carry between 30% to 50% of their portfolio in cash.  This is a defensive approach that can help ease your mind and most importantly protect a portion of your assets in uncertain times.  The key is selecting the level of risk that you are most comfortable with and building your strategies around that foundation.

Who is in the White House or Congress has not influenced our investment strategies.  Even if Romney would have won, little would have changed in the investment landscape.  The President as we have stated before gets way more credit during good times and too much blame during bad times when it comes to the economy.

Specifically we are staying with our long-term strategy of choosing companies with

1. Strong balance sheets that  pay a dividend
2. Agricultural related companies that will help to feed an ever growing global population
3. Technology companies that show signs of continuous growth long-term

Our short-term strategy as we laid out above is carrying a heavier cash position than normal which would typically be between 10% to 30%.

We see our current political system as a complete failure in which those that "serve" are not doing what is in the best interest for America and its citizens.  Placing any amount of faith in a group of politicians in today's world is a risky bet and one that we are not willing to make.  As we stress to people on a daily basis, take responsibility for your own wealth management plan now because no one else will do it for you. 

Why Morning Routines Are Creativity Killers

So when is the best time to find your creative juices?  Well it shouldn't be a surprise that it isn't those times when you are stressed or consumed with whatever task you are currently working on.  Here is a Time story that has some dos and don'ts when it comes to finding the right time to be creative.

• By not giving yourself time to tune in to your meandering mind, you’re missing out on the surprising solutions it may offer. (If you happen to be one of those perky morning people, your most inventive time comes when you’re winding down in the early evening.)
• Your commute filled with honking cars or sharp-elbowed fellow passengers doesn’t help, either. The stress hormone cortisol can harm myelin, the fatty substance that coats our brain cells. Damage to these myelin sheaths slows down the speed with which signals are transmitted between neurons, making lightning-quick “Eureka!” moments less likely. And while we all should read up on what’s going on in the world, it may be better to put that news website or newspaper aside until after the day’s work is done. A recent study published in the journal Psychological Science found that subjects who watched brief video clips that made them feel sad were less able to solve problems creatively than people who watched an upbeat video. A positive mood, wrote researcher Ruby Nadler and her co-authors, increases “cognitive flexibility,” while a negative mood narrows our mental horizons. The segment that made participants feel worst of all? A news report about an earthquake.

• So what would our mornings look like if we re-engineered them in the interest of maximizing our creative-problem-solving capacities? We’d set the alarm a few minutes early and lie awake in bed, following our thoughts where they lead (with a pen and paper nearby to jot down any evanescent inspirations). We’d stand a little longer under the warm water of the shower, dismissing task-oriented thoughts (“What will I say at that 9 a.m. meeting?”) in favor of a few more minutes of mental dilation. We’d take some deep breaths during our commute instead of succumbing to road rage. And once in the office — after we get that cup of coffee — we’d direct our computer browser not to the news of the day but to the funniest videos the Web has to offer.

ABB Robotics: Kiss Your Manufacturing Job Goodbye

Hat tip to Barry Ritholtz at The Big Picture for this post on the latest robotic innovations from manufacturer ABB.  This post goes hand in hand with the topic of increased productivity in the US and shift in manufacturing jobs that we have been talking about for the past few years.  The decline in people manually making something to an increase in people who help the machines to keep going which results in a net decline of jobs.

Which USA do you work in?

Mark Cuban, owner of the NBA Dallas Mavericks basketball team, and co-shark on ABC's Shark Tank, tackles the issue of brick and mortar jobs vs. digital jobs in one of his regular blog posts.

Cuban's position is that intelligence is being sucked out of the brick and mortar jobs as processes become automated and less people intensive.  This is the opposite when it comes to the digital side of things where people are taking big data and scrunching it down into usable bits of information.

Cuban solution which goes far beyond the differences in these two types of jobs is that the university system needs to be doing a better job of providing the tools necessary for student to transitions into jobs that companies actually need filled with the right skill set.

Full Cuban post here

• Every smart company wants to become smarter and the way to do that is not by asking their employees to communicate  orally or in writing to management, its by automating everything.
• The problem for those  who work in brick and mortar is that as the intelligence is sucked out of the job. The intelligence required to do the job is reduced. Yes, you still have to be good at what you do. But you can  be great at customer service or great in a factory line with out a college education. The competition for jobs that don’t require degrees has pushed down the wages paid for brick and mortar jobs as well. When there are no specific skills beyond basic people and communication skills required the job pool competing for any openings expands considerably. Forcing down wages. Leaving more unemployed unemployed.

How I Finally Went Cold Turkey From Working On Vacation

With the holidays quickly approaching, many of us will be trying to take some time and away from our busy schedules and careers.  however making that clean break from work isn't as easy as it used to be.

For all of the good that new technologies have created, the downfall has been that we are more connected than any time in our history.  This means that we are more accessible than at any time in history.  Making it hard to actually take a breather, relax, and more importantly leave work behind.

As this Fast Company article points out it once was hard to stay connected when on holiday.  Now its's hard  not to stay connected.

Walter Robb on Whole Foods' Recession Lessons

Walter Robb, co-founder of Whole Foods interviewed in BusinessWeek.com.  Lessons he and the company learned going through the "Great Recession".  One area that Robb noted in the video below, was that the company put a greater emphasis on building their cash reserve, going from a few hundred million to over a billion.  You see even a company the size of Whole Foods needs an emergency fund.

5-part IQ test to make you a better investor

This post by PAUL B. FARRELLof Market Watch goes partly in hand with our post You Can Learn from Others.  Farrell's focus is too try to get people to think about what would help make them a successful investor.

The piece of his article that resonates most with us is the following:

• The best investing strategies are simple, timeless, obvious, transparent ... and too often ignored. Yes, ignored. Why? Because most investors have trouble making decisions. They rely on the random flow of breaking news, biases, weak data and so-called experts.

We have often sited that people can be their own best source of data and research.  Refer to that shopping trip to the store, mall, or conversation with your kids about the newest trends in tech and social media.

Farrell also reinforces one of the points that we emphasized in our previous quarterly lecture held in September, "Balancing Your Changing Investment Needs" which was that people need to take control of their financial future.  Whether it is planning for retirement, saving for college tuition for a loved one, or making sure you have an emergency fund, no one is going to take care of this work for you.  Balance and responsibility go hand and hand when it comes to your wealth management journey.

Complete Farrell article here including quiz.

• Folks, the biggest decision every investor must make is taking total responsibility for their investment strategy and performance. Most waffle. But you’ll never mature by default, by following the “experts.” You must take charge of the good, the bad and the ugly in this increasingly dangerous world.
• It’s your money, your retirement, and in the end, you, not the gurus you follow, are stuck with the gains or losses. Remember the wisdom of Lao Tzu another great investment adviser 5,000 years ago: “He who knows others is wise. He who knows himself is enlightened.” Which are you?

You Can Learn From Others

I was participating in a business book club review earlier this week and to my surprise part of the discussion came around to talking about how to find good stocks.  The gentleman giving the exampled talked about a senior men's investing club that started to think about what stocks would do well with the coming Hurricane Sandy?  People want to maintain power, so who makes generators?  Answer, Generac, GNRC.  Not only do they make portable generators, but they actually make stand alone systems that can power your entire house by hooking into your natural gas line and avoiding the need to refill with gas which became an issue during the Sandy storm when there was no power to actually pump gas at the stations.

Another example that the investment club brought up was what stocks would do well with an Obama win.  For whatever reason someone in the club though about guns.  Now why would guns sales go up with a Obama win?  My rationale would be the very conservative people out there wanted to become a little bit more protected, but I'm just guessing.  But lo and behold, guns stocks such as Smith & Wesson SWHC and Sturm, Ruger & Company RGR spiked this week while most stocks were heading lower.

We did a post back in July titled, Anyone can be an economist.  At the time we were discussing how to take advantage of the drought conditions that were crippling the country.  Once again we point out that when you can put a thought process together and back it up with some solid judgment and possibly some data and analysis, you can be a successful investor by taking advantage of short-term or current trends.

I often tell people that tips are for waiters when it comes to picking stocks.  However, going out and blindly buying a stock just because you heard something about it isn't a good enough reason to make a purchase.  Peter Lynch was famous for this when he was racking up historical returns while managing the Magellan Fund at Fidelity.  Taking a trip to the mall to see what was new, to look at where the people were, and to try and spot new trends proved to be very advantageous for Lynch.

The point is, keep an active mind when it come to these types of situations.  And just as important don't be afraid to act when the moment is right.

The piece below is a home video of a Generac backup generator system for your home that runs off of your gas line.

Week 45 Performance.....The Election Came and Went Just like the Raly

All eyes in the US this week were focused on the Presidential election.  We will have a separate post on that so we will stay away from politics for the most part with this weekly performance post.

All four major indices started off the week in rally mode on Monday and into Tuesday but it was next to impossible to determine what meaning that may have had.  What happened according to media pundits, was that the election did not become a drawn out affair which would have created instability within the markets and the country, but instead as the last ballots were counted people could begin to hone in on the fiscal cliff issue.

What also didn't help on Wednesday was that European headlines were back on the front page with rioting tin Greece and Mario Dragi making comments about concerns within Germany.

You can expect from here on out since we are through the bulk of earnings season, that the fiscal cliff topic as well as the EU mess is what will drive headlines and market benchmarks.  It's really too hard to handicap right now which way the cards will fall with the US fiscal cliff issue.  Right now there appears to be a willingness between the two parties to work together but you just never know.

Because of this we remain very cautious of both situations even though our buy list is growing very long at the moment.  We have stayed patient over the last few weeks as the markets have declined waiting to see any signs of stability before putting new capital to work.  This is the tight rope that you walk waiting to see if things turn around before missing out on current opportunities.

All four major equity benchmarks finished lower this week making it the fifth week in a row that indices have finished lower or barely finished in the black.  The same is true for the DWCM Fund which finished down for the 7th week in a row.  Talk about a bad streak.

Our YTD return is still above 20% which in most cases is more than double the return of the four equity benchmarks.  We are constantly looking for new opportunities to build upon our YTD gains but as we mentioned previously we are being very cautious.  We are still carrying a 50% cash position which has limited some of the losses that we might have already incurred.  Remember the first goal in our fund is to achieve an absolute return.  First and foremost we want to preserve capital and then look at beating the four equity benchmarks which is our second goal.

Remember we are not market timers trying to be all in or all out of the market at once.  We follow strategies that will help build client wealth and capital for the long-term.

The Week Ahead
Markets are closed in Monday in the US in observance of Veterans Day.  It goes with saying that many of us would not be able to do what we do on a daily basis without the sacrifices of those and their families who have served in our armed forces.  We thank them and appreciate those that continue to protect our freedoms.

The rest of the week has trinkets of economic data being released.  However most if not all of the market activity will be driven by fiscal cliff and EU talk.  Beware, further volatility to the upside or downside is likely.

• Mon - US markets closed
• Tue -  NFIB Small Business Optimism Index
• Wed - Producer Price Index, Retail Sales, Business Inventories
• Thu - Consumer Price Index, Jobless Claims, Empire State Mfg Survey, Philadelphia Fed Survey
• Fri - Industrial Production, E-Commerce Retail Sales

Have a Great Week!

DreamWorks Capital Management

If you are currently trying to develop your own investment plan or are seeking the help of a professional investment advisor we urge you to give us the opportunity to show you what DWCM can do for you.  No matter what stage in life you are currently at, DWCM can help you plan for your ever changing needs.

DWCM can you help you with any of the steps in your wealth management journey including;

• Addressing emergency fund needs
• Developing a retirement plan
• Sending a child to college
• Looking at various investment options
• Determining how to involve philanthropic passions as apart of your planning process

With our "SMART Principles", we can help you develop your unique goals and create a focused customized plan to achieve your financial and lifestyle goals.

Percentage Growth in Government Jobs vs. Private Jobs vs. Population Growth; Facts and Consequences

Some very interesting trends and stats in the area of population and employment courtesy of Mish Shedlock. I've posted a few charts below but there are additional charts and detail within his post here.

Do Something

Do Something

View more presentations from Sarah Kathleen Peck

How Not to Become Mat Honan: A Short Primer on Online Security

This is a very useful article for taking steps to protect your digital or online identity courtesy of Wired Magazine.  I have listed the top 5 highlighted bullet points from the article below.

1. Use Two-Factor Authentication with Gmail and Other Accounts
2. Use SSL or a VPN with Public Wifi
3. Use Unique Passwords
4. Use Complex Passwords for Important Accounts
5. Don’t Link Accounts

Yes, College Is Worth It — With Some Caveats.

The debate over, "is college worth it", will likely not fade from the headlines any time soon as the unemployment rate stays stubbornly high and statistics come out about the continued rise in college debt and costs.

It has been well documents that people with a college degree make more than those without.  However, not all college degrees are created equal.  Some degrees pay more than other, while other can make you more employable.

We have argued at DWCM that the college education process needs to be looked at with what your ROI (return on investment) would be rather than simply making an emotional decision which could affect the rest of your life.

Needless to say, this WSJ article highlights the work of Jonathan James, an economist at the Cleveland Fed, who helps to break down the data.

• Back in the 1970s, Americans who’d attended college but didn’t receive a degree earned about 15% more than those with just a high school diploma. For college graduates, the wage premium was about 40%. Three decades later, the premium for college graduates has shot up to more than 80%. For those with just “some college” (but no degree), the premium has stayed relatively stagnant, rising to just about 20%.
• That “college graduates” category is still pretty broad, though, so Mr. James takes the next step, splitting out those with advanced degrees. For workers with just a bachelor’s degree, the wage premium over high-school graduates has risen from a bit over 30% in 1977 to more than 60% in 2010. But interestingly, the premium hasn’t grown significantly over the past decade. These days, really getting ahead requires an advanced degree, which boosts earnings some 30% versus having a bachelor’s degree (and by a whopping 120% versus having just a high school diploma).

A Conversation with Ray Dalio

Legendary hedge fund manager Ray Dalio founder of Bridgewater Associates, L.P., wraps his arms around the topic of global economics.

Hat tip toBarry Ritholtz at the Big Picture

Barry Ritholtz: Sailing with Sea Monsters

4G or Not 4G: A Guide to Cut Through All the 'Fast' Talk

Walt Mossberg of the WSJ explains the varying degrees of 4G technology and what it means for consumers.

Collection of Charts

This is an amazing set of charts compliment of Business Insider.  The collection of charts total 69 and all of them are worth a look.  Below is a sample of one such chart

Rising Food Prices

Hat tip to Barry Ritholtz at the Big Picture for the WSJ graph below

40 Must-Know Statistics About Long-Term Care

Although Christine Benz does not identify her specific sources of the statistics below in her Morningstar article, Morningstar is typically a very reliable source of information.

• 37 million: Number of Americans age 65 or older in 2005.
• 81 million: Expected number of Americans age 65 or older in 2050.
• 9 million: The number of Americans over age 65 who need long-term care in 2012.
• 12 million: The number of Americans expected to need long-term care in 2020.
• 40%: The percentage of the older population with long-term care needs who are poor or near-poor (income below 150% of the federal poverty level).
• 78%: Percentage of the elderly in need of long-term care who receive that care from family members and friends.
• 34 million: Number of caregivers who provide care to someone age 50 or over.
• $113,640: The maximum amount of assets a healthy spouse can retain for the other spouse to be eligible for long-term care benefits provided by Medicaid.
• 49%: Percentage of nursing home costs covered by Medicaid, 2002.
• 25%: Percentage of nursing home costs paid out of pocket, 2002.
• 7.5%: Percentage of nursing home costs covered by private insurance, 2002.
• 79: Average age upon admittance to a nursing home.
• 40%: The percentage of individuals who reach age 65 who will enter a nursing home during their lifetimes.
• 892 days (2.44 years): Average length of stay for current nursing-home residents, 1999.
• 272 days (8.94 months): Average length of stay for discharged nursing-home residents, 1999.
• 38%: Percentage of nursing home patients who will eventually be discharged to go home or to another setting.
• 10%: The percentage of people who enter a nursing home who will stay there five or more years.
• 65%: The percentage of people who entered a nursing home who died within one year of admission.
• Five months: The typical length of nursing-home stay for patients who eventually died in the nursing home.
• 25%: The percentage of deaths in the U.S. that occurred in nursing homes, 2010.
• 40%: The expected percentage of deaths in the U.S. occurring in nursing homes by 2020.
• 68%: The probability that an individual over age 65 will become cognitively impaired or unable to complete at least two "activities of daily living"--including dressing, bathing, or eating--over his or her lifetime.
• 42%: The percentage of individuals in nursing homes who are experiencing some form of dementia.
• 33%: The percentage of individuals in nursing homes who are suffering from some form of depression.
• 71%: Percentage of patients with advanced dementia who died within six months of admission to a nursing home.
• $73,000: Median annual rate, nursing-home care in U.S.
• 3.63%: Increase in median annual nursing-home costs since 2011.
• 4.5%: Annualized increase in median annual nursing home costs, 2008-2012.
• $162,425: Annual cost of nursing home care, Manhattan, N.Y.
• $60,773: Annual cost of nursing home care, Des Moines, Iowa.
• $86,140: Annual cost of nursing home care, Tampa, Fla.
• $41,000: Average annual base rate for residence in assisted living facility, 2012.
• $20: Average hourly rate for licensed, non-Medicare-certified home health aide.
• 7 to 9 million: Estimated number of U.S. residents who had private long-term care insurance, 2010.
• 59: Age of typical purchaser of long-term care insurance, 2010.
• 79%: Percentage of long-term care insurance purchasers with more than $100,000 in liquid assets.
• 44%: Percentage of population age 50 or older with more than $100,000 in liquid assets.
• $1,831: Average annual premium for long-term care policy purchased by person age 55 or younger, at coverage start date. (Policy provides a daily benefit of $150, four to five years of coverage in home and institutional settings with a 90-day waiting period, and 5% automatic compound inflation protection.)
• $3,421: Average annual premium for same policy purchased by an individual age 70-74.
• 9%: Percentage of long-term care insurance purchasers who let their policies lapse within the first year of purchase.