The 20 th century ended with almost every stock index at a record high. Talk TV tells us about new millionaires every day. TFM striving to maintain his unique ability to accomplish what no once else can accomplish losses money on every stock and mutual fund investment. In fact, the bank holding his emergency savings account decided to start a monthly holding fee significant enough to wipe out the earnings realized on the 2% interest they pay. Thankfully, U.S. Savings bonds can't go down in value so he's a little ahead for the year.

Some of the investments should be classified as gambles, for instance the $500 laid down on Boston Chicken. Probably the worst investment decision this year. Not because they were already bankrupt - that's actually the primary reason they received consideration. The stock at one time traded at over $60 a share, after they declared it dropped to $0.17 and then worked it's way up to the $0.50 - $0.60 range. They still had plenty of stores in business, seemed like a good gamble. What was totally ignored was TFM actually ate in one of the restaurants a few years before. His impression - an overpriced KFC. The food tasted ok but portions were small. It looked like they designed the interior for people willing to give extra money for "atmosphere". Certainly not a place he would ever eat again but a gamble was in order since no trip to the casinos was planned for this year.

The biggest disappointment of the year - Hastings. For those of you not familiar Hastings rents videos and sells books. TFM really likes shopping in this store. Actually, TFM doesn't really like shopping anywhere but he hates going to Blockbuster so Hastings seems like heaven while he's there. One of the great mysteries of the 20 th century - how does Blockbuster stay in business? True story - my sister took two tapes back to Blockbuster. She didn't check them first and her small children actually put two of their tapes into the cases instead of the rented movies. The next day she went to rent another movie and the employees correctly notified her she had two movies overdue. She drove home got the two rented tapes returned them and paid the late fees. At that time, the employees couldn't find the cases for the rentals or the two original Disney movies returned in the cases. The next week she went back to rent a movie and the manager indicated she owed four days late charges on the movies returned the previous week. You see they didn't get the rentals back into the cases until four days after they were returned, therefore, the customer incurs late fees. Also, the Disney tapes were "lost" never to be seen again. Last I knew it's been more than three years since she's been inside a Blockbuster.

Some of us though just lived to be annoyed. This entire "Rewards" campaign ensures the family usually drives the mile to Hastings instead of walking the three blocks to Blockbuster. First of all, after paying to join Rewards, it turned out they gave many of their "valued costumers" the benefit for free. How they determine "valued costumers" cannot be based on number of videos rented because TFM's family was not invited. Then two months after purchase of the rewards benefit they raised the rate on "favorites" rentals so that two for one meant if you bought into the Rewards package you could continue to rent favorites for about the same price as you did prior to the program starting. If not you get to pay three times the everyday Hastings rate for favorites. Back to costumer service - when returning a video to Blockbuster the movie is always handed to the staff and the staff is then required to put the info into the computer. This process became necessary due to frequent "late fees" for movies returned on time and unsympathetic employees. In Hastings the one time I uttered "I thought I got that back on time" the charge was off the computer before the sentenced was finished. I still feel bad about it since on the way home a recalculation proved the fees were legitimate. But I feel good about shopping at Hastings. Not to mention they keep a good selection of children's tapes which they rent out for free. Since Hastings goes out of the way to satisfy the costumer while Blockbuster does the best it can to alienate it's costumers, investing in Hastings seemed like a good idea. Not only did this happen once but even after it lost half it's value a second purchase ensued. The company still gives great values. It seems though they've expanded a lot. Hopefully, they do a better job at it than Home Quarters. Sure losing the investment dollars would hurt but not nearly as bad as having to spend more time in the competition's stores.

In this day and age you don't invest in individual stocks except as a bet. You invest your retirement nest egg in mutual funds. Not quite as bad luck here. If you read the prospectus they just sent out you may even think they made 8% on one of the funds. But when you look at the balance at the end of last year add the $750 invested throughout the year you might wonder how come this years ending balance is only $690 more. This must be the new math everyone is always railing against. Now I can see why. Then there's the money invested in a bond fund - not quite the same as buying municipal bonds. Lesson learned. Thankfully, all this stock and mutual fund experimentation did not convince me to reduce the amount invested in U.S. Saving Bonds so the family still has savings that increase in value every year. Even so we won't be dissuaded from stocks. There's probably a few more good years left in the market.

The trick of course is knowing when to get out. Now is not that time. A disclaimer stating TFM is not a professional financial analyst and all statements herein should be considered opinions not investments advise should occur at this point. However, if you haven't figured that out by this point of the article you've probably got some serious financial problems. In that case let me refer you to the front page of this web site where you can find the address to send contributions. You'll get nothing in return except the satisfaction of knowing Publishers Clearing House didn't get any of your money. Still you should feel pretty confident the major stock indexes will continue to rise the next few years. Partially, due to "new math". For instance the Dow selects the companies on it's list to reflect the overall atmosphere of the economy. That is to say once a company begins to lose ground significantly over a period of time it is dropped from the list and a strong performing company take its place. Not only do the companies change but the formula for calculating the Dow changes periodically also. In fact if you used the same formula used at the beginning of the index the level would be in the low hundreds. This of course wouldn't give the market the psychological boost needed to persuade people to keep investing. Thus the importance of "reworking" the numbers. Even so, there is still money to be made in the market.

Economist need to spend more time analyzing the effect baby boomers have on the market. It is my opinion this sustained bull market exist due to two main factors: 1) Congress consistently promoting laws that favor stocks over other investment devices and 2) The baby boomers injecting a lot of cash into the system triggering a classic supply and demand reaction. Neither one of which can lead to returns capable of supporting the baby boomers once they get to retirement age. But with a favorable monetary policy from the Federal Reserve the chance of a few more of us getting rich and getting out still exist for the next few years. The problem occurs when the baby boomers become a group which needs to withdrawal from the market. Then the same supply and demand model will kick in - only this time in reverse. We need to know if the severity of this groups withdrawals will leave a large portion of this group with no savings or if it can be manage in a way to allow some security for all. At least the investments made today tend to favor companies offering new products and methods. Since these investments are in companies without a proven market or product, there is the potential these companies may developed into profitable entities capable of paying dividends about the time these people retire. This is less worrisome than if we still demanded companies produced profits every period at the expense of upgrading equipment and products. But there is no way to tell yet if these methods can develop into a better system.

The other non-sustainable item - Congressional incentives - actually produce more harm, despite the fact they are manageable. The recent trend of laws encouraging investments in stock while discouraging savings in more secure devices successfully encouraged the American public into the dangerous position of relying on profits from mutual funds as a primary retirement source. Removing the tax exempt status of checking and savings accounts while lowering the tax rate on capital gains encouraged investors to redefine the portfolio. The resulting dependence on non-secure funds ensures a large number of individuals currently trying to "save" will be forced to rely on social security as their primary source of retirement income. Certainly, prior to 1980 not enough Americans invested sufficiently in stocks to ensure either a healthy corporate or individual financial environment. The question becomes have we progressed enough or should we continue to encourage a further abandonment of secure investments in favor of non-secure investments. Certainly, you can tell my opinion from the tone of the question. Which regulations help the country. The regular IRA and Roth IRA's as well as promotion of 401K and other work sponsored retirement programs. Rules promoting internet trading and the lower cost involved with that method. Which regulations work against the financial health of the country. Taxing secure savings accounts, lower capital gains rates, removing the restrictions on length of investment, and the integration of secure and non-secure investments all help to create an imbalance in the financial world. A "good" imbalance now since "everyone is getting rich" but in order for this trend to continue baby boomers will need to donate more and more money while Congress must relax even more and more of the safe guards put in place after the great depression.

Promoting a healthy financial environment wouldn't be that difficult, especially given the mood of the fed. Instead of raising interest rates Congress should lobby the fed to allow them to raise the tax rate on capital investment. This will make secure investments more attractive to individuals and they will turn to these investments again because of this security. The shifting of money from stocks to savings accounts will tend to "cool" the economy while also increasing the revenues of the federal government allowing for a reduction in the national debt or the marginal tax rates. To further promote secure devices the tax on savings accounts should be removed. The country benefits because interest rates need not to go up. Therefore, companies still have the opportunity to prosper. This method clearly is superior to the current thinking of raising interest rates until we drive enough companies out of business to free up some labor.

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