Readers' Rants on American Consumerism
In Case You Missed It
On Monday, Brendan Coffey wrote his recent home energy audit and in response, we received a great question on our blog, http://www.iconoclast-investor.com. I've included it and Brendan's response below:
"I'm happy to hear your house is more then ready for the winter. Luckily I don't have to worry too much about the freezing cold living out here in San Francisco.
"Anyways, I'm wondering if you can share several more precautions/steps you took, in order to have such an efficient home? aside from caulking the windows :)
"I think we all could benefit from such information."
"We did many of the basics the utility companies tell you to do--replace the incandescent bulbs with CFLs, use a programmable thermostat to save money by not heating the house when you're not there, and insulate steam and hot water pipes and the attic.
"We also added some features that are more costly--the house has a new efficient natural gas boiler for our heat and we installed on demand hot water. The on-demand hot water is popular in Europe but less so here--it costs more (about 1.5 times replacing a hot water heater for us), but we had to replace our hot water heater and the cost differential ended up not being bad at all--if the on-demand system works as advertised for its 25 year life, we more than make up the cost in the long run. It is also a much more efficient use of natural gas, since there is no pilot light.
"We also installed efficient windows (nothing fancy, the Home Depot brand in most of the house and Andersens in spots), which has been great, since we had the old one-pane weight and pulley windows. We also generally look to buy efficiently in our appliances--Energy Star, LCD TVs over plasma (plasma uses a lot more energy). Being in California, there are generally more incentives to do a lot of these things, so it's worth investigating."
Thanks for your thoughts,
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Last week I ranted about overspending by American consumers and I received many interesting responses through email and the blog, http://www.iconoclast-investor.com. I've included some of the best rants below, but if you haven't sent yours in, feel free to do so at any time. Enjoy!
"My father who was a "roughneck" (oilfield) with very little cash always told me to buy when the people are selling!! It has served me well. I sold a company I spent 27 years building. Almost went down three times but was successful because I stayed debt free.
"My wife and I only bought what we had the cash to buy and if we wanted it bad enough we "saved." What a novel thought! Now we try and teach our children and grandchildren the same principals. I am not concerned about Warren Buffet or Barack Hussein Obama. I am responsible for me and my families survival."
"Bailouts will not work. It is like throwing good money after bad. Have we not learned our lessons about debt? The government is intervening in the natural free market forces, thinking politically that it will help them get re-elected. In so doing, the economy gets worse. It is a change all right, from bad to worse.
"It will lead to high inflation and debasement of the dollar or a depression.
"The more bailing out there is, the less purchasing power of that dollar in your wallet. So as a consumer, and with cost of goods skyrocketing, I will just shut my wallet and buy only what my family and I need.
"Let those failing businesses fail or file bankruptcy. That is the natural free market forces.
"Lowering taxes across the board for individuals and corporations is the right thing to do. Let us just hope Obama will change his mind of taxing corporations heavily; that will surely kill jobs. Jobs are what we need to have more of, not bailouts of banks, lenders, financials and corporations who led is into this mess to begin with.
"I am an investor. If my taxes on dividends, interest and capital gains will be raised, then I will get out of the market or make sure I do not earn any interest or dividends or capital gains. There is no incentive to invest anymore.
"The hope of the bailout is to thaw the frozen credit markets, let the banks lend again to each other or to consumers. But who or what kind of consumer will borrow, those whose houses are in foreclosure? Those who lost their jobs? Those retired seniors whose pensions were decimated by the fall of the value of the stock market to less than 50%? Banks will not or should not lend to these types of borrowers, if any. So it is a stalemate. Bailouts will not work."
"I think the problem does not lie in how much we spend, but in how much we invest. What's the return we have (and the economy has) buying a new cell phone with GPS, high-speed Internet or subscribing, as you say, to 900 cable channels? Most of the time it is "just" satisfaction. But the real price of this satisfaction is not written and we're just learning it is a really high price.
"So stop your spending and start your investing: invest in your health (sports and sleep), try to learn something new or insulate your home. This will make the economy run and will give you a better return."
"Just another statement to put into your ranting--it is actually my own personal rant: You're not a homeowner until you actually own the home.
"If our country is to survive, then the government has to incentivize savings."
"You go ahead and rant. I'm with you. It's a shame this can't be a softer landing for the economy.
It seems to me consumers just don't want any more debt, period. The circus in D.C. thinks they can fix that. It turns out the banks are mostly hoarding the money anyway and everyone wants some. It used to be when we spent our money with the automakers we got a car. Now they want us to spend our money with them and we get nothing.
"I'm thinking it would be good for more of these companies to go through reorganization bankruptcy. The airlines did it and it worked fine for them. A little corporate (and governmental) housecleaning sounds good to me. I just read Deutsche Bank reported of the $1.8 Trillion in troubled mortgages, 80% are owned by investors. This whole bailout has really gotten crazy. I'm done with my rant ... for now.
"Perhaps you can convince the leaders of this country to do the same. Balanced budget, who cares, let the next administration worry about it. Why ask taxpayers to not spend within their means when our representatives are not doing it?
"That is like telling someone to go on a diet while you are overeating."
"My father, who would be 106 if he were alive today, was a stock broker, as I was, and he had a famous line that I heard many times. "What this country needs is another good depression and then maybe some of these kids will learn something."
"I think we may have that opportunity and I don't disagree with the premise of your rant. I've been a banker so I understand a little about what is going on now. I also am a trainer and was in the audience back in the 1990s when a major bank announced to their employees, whom I had just trained, that the bank was introducing a debit card. I was mad as a hatter because my pea brain mind said there goes the float. In retrospect, I have come to the conclusion that every person, no matter their age, must be certified, (don't ask me what that would entail) to have a credit card. Prior to certification, the only card they would have available to them would be a debit card. They then might find out that they have to have money in the bank before they could spend any money. ("Gee, I didn't know that money doesn't grow on trees" or "But mommy and daddy have always bailed me out before.") Then you might be able to get through to the thick skulls that 25% of your income is the maximum that should be tied up in a mortgage payment, etc.
"You know, maybe the bankers or creditors should go through the same certification training."
Thanks for listening to me,
Thanks to all of those who wrote in and shared your views. We invite you to continue the conversation on our blog, http://www.iconoclast-investor.com.
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In case you didn't get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, we have links below to each issue.
Cabot Wealth Advisory 11/17/08 - The More You Conserve Now, the More You Have for Later
On Monday, Brendan Coffey wrote about getting a home energy audit only to find out he had the best house the examiner had ever seen. While this is a good thing, it also means that Brendan won't be able to save much money on home heating costs. He did make a trip to Home Depot to continue Greening his house and found many others with the same idea in mind. Brendan also discussed whether Green mutual funds and ETFs are worth buying. Featured Stock: American Superconductor (AMSC).
Cabot Wealth Advisory 11/20/08 - Smart Investors Ride the Wave
On Thursday, Paul Goodwin wrote about how negative headlines and poor sentiment may be good news for investors. The stock market usually bottoms and begins a move higher when the last seller has sold and sentiment reaches its lowest levels. Paul also wrote about how, like surfers, good investors ride the waves of the stock market to get in, and stay out, at just the right times. Paul discussed a stock that's often hailed as the Yahoo! of China. Featured Stock: Sohu.com (SOHU).
Cabot Wealth Advisory 11/21/08 – Advice to Use Now
On Friday, Michael Cintolo wrote about his observations of the historic times we are experiencing in the stock market and the economy right now. Mike wrote about how no matter how your portfolio has done in the last year, you can learn to be a great investor, and that doesn't mean reading every newspaper article and watching pundits on television. It means learning through trial and error, reading our advice and believing that you can make money in the stock market.
Until next time,
For Cabot Wealth Advisory
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