Mean Markets and Lizard Brain

1.Our instincts tend to be out of sync with financial opportunity.

2.Observe that the blade of grass that resists the lawn mower gets cut down, while the blade that bends remains uncut.

3.People are not rational, markets are often crazy.

4.It was the best of times, it was the worst of times.

5.The U.S. consumer is unlikely to be a major source of economic growth.

6.Exports are a potential source for economic growth, but given their relatively small role in the U.S. economy the effect may not be significant.

7.The U.S. government has the potential to increase defcit spending and provied a boost to the economy. However, additional deficit spending may cause an increase in mortage rates and damage the housing market.

8.A cheaper dollar decreases imports and increases exports, reducing the current account deficit.

9.Buy at today's prices.

10.Buy inflation-protected securities.

11.The dollar is likely to fall against Janpanese Yen and Chinese yuan.

12.15% should be invested in nondollar assets.

13.U.S. government bonds will measure the speed and length of any decline in the bond market.

14.Bond prices move in the opposite direction of interest rate.

15.When interest rates go up, bond prices go down. When interest rates go down, bond prices go up.

16.Rising interest rates are bad for bond owners.Falling interest rates are good for bond owners.

17.Lower bond prices mean higher future returns. higher bond prices mean lower future returns.

18.Borrow at fixed rates.

19.Buy bonds that mature soon.

20.To decrease the burden of rising interest rates is to reduce the amount of borrowing.

21.Growth rate is crucial to determing stock valuations.

22.Stocks provide protection against inflation and deflation.

23.Stocks provide against currency swings.

24.To buy stocks is the ability to avoid taxes.

25.Live in your home; make your money at work.

26.P/E of a home: Market price/Net rental income
P/E of a stock:Market price/Expected share

27.P/E Category
>30 Expensive
20-30 Premium
10-20 Solid value
Less than 10 Cheap

28.Have a fixed-rate mortage.

29.Don't trade emotionally.

30.Never trust anyone, not even yourself.

31.Losers average losers.

32.Do not dollar cost average.

33.If U.S. government bonds decline in value, so will other U.S. bonds.

34.Do not open your mutual fund statements.

35.Keep your financial news flow consistent with your decision time frame. As much as possible, turn off the TV during the day and don't look at your protfolio.

36.Maitain the ability to make at least two different moves.

37.Keep your investment position conservative enough so that you preserve both options of increased risk or decreased risk should other panic and present you with an opportunity.

38.Choose the time to go "all in" carefully and scale down quickly.

39.Those who trade too much should arrange their finances so that impulsive trades are not possible.

40.Remove temptation; do not expect to resist it.

41.When you have eliminated all which is impossible, then whatever remains, however improbable, must be the truth.--Sherlock Holmes

42.Allocate more money to lower-risk assets.

43.Buy some inflation and deflation protection, eg. drug companies, oil companies, TIPS, Series I U.S. Saving bonds.

44.Pay off your debts.

45.Seek a secure paycheck.

46.Be different.