"What lies behind you and what lies in front of you,
pales in comparison to what lies inside of you." - Ralph Waldo Emerson

Home | FREE Word Gems | Contact Us

Finance and Investment Literacy - the Key to Financial Success

Issue # 012110

This issue is in HTML. If your email program cannot read HTML or if you would prefer to receive text, send an email to mailto:editor@competencesoftware.net with "Text Please" in the subject line.

Subscription Information - Instructions on how to subscribe and unsubscribe are located at the bottom of this newsletter. Feel free to forward this newsletter to interested colleagues.

This issue of Competence News contains:

• Don't want to receive our Newsletters? - Anti Spam Policy
  
  
• Editorial - Survey Results
  
  
• Good News
  
  
• Basic Knowledge
  
  
• Individual Experiences - Financial Literacy Success
  
  
• Alerts - "Cap and Trade" - Is this the next great wealth Harvesting?
  
  
• What would you like from us in 2010?
  
  
• Word Gems - Free Interactive "Knowledge Objects" on Business Finance, Investing and the basics of Computer Technology
  
  
• Contact Us

Don't want to receive Competence News?

If you do not want to receive Competence News during 2010, please type NO in the subject line and return this email. We never give our subscriber email addresses - that's never as in NEVER.

These are VERY interesting times we live in. And VERY important events are happening daily.

Our purpose is to provide you with the knowledge you need to help achieve Financial Success and Freedom.

But, we need your help in return and you can help by letting us know what is important to you.

We are conducting a survey and would appreciate your taking a minute to fill it out.

Meanwhile, we will publish the results as we receive them.

Results so far show that our readers want:

1) Good news on Finance and Investing (I get enough bad news elsewhere)

2) Basic knowledge of Finance and Investing (I don't yet have ALL the answers)

3) Interesting stories on successes resulting from financial literacy

4) Alerts on current events and trends and possible effect on financial freedom (What are the "wealth harvesters" up to now)

Until you tell us differently, we will cover each of these topics briefly and share knowledge that we have gained that may prove helpful to you,

Good News - Good news is, of course relative. And, with all the banner headlines about economic bad times and with various politicians rearing on their hind legs and proclaiming that they know all and are operating in our best interests, good news is not all that easy to find.

So let's take a RELATIVE view of what is now, in our view, becoming good news:

Taxpayers and voters are apparently rising from apathy to anger and demanding improvement from our leaders. This is spilling over to the political arena as can be seen from the results of this week's senatorial election in Massachusetts.

We do quite a bit of work on the net searching bulletin boards that deal with finance and investing. From our work we are seeing increasing involvement from the general public on these boards. Comments are running in excess of 80% demanding change in the financial arena.

That awareness is now increasing is a very good indicator and an actual hope that we can make positive changes in the finance and economic sectors.

News Item: "Personal savings rate has climbed to its highest level in the past 15 years." This coupled with reports that U. S. consumer outstanding credit has plunged in recent months.  Having directly seen the impact of facing a recession without a cushion, many Americans appear to be thriftier and more knowledgeable in managing their money.

See this long term graph which indicates at least the beginnings of a reversal of trend.

Those that depend on putting us into debt will, of course, treat this trend change as bad news and ask us to take on more credit and spend more as a solution to current economic woes. What is the "think" behind this? Let's see, we got in to trouble by spending more than we earned and accumulating debt. So the way out is to borrow more?? Well, if you want people in general to stay on the financial treadmill from birth to death, then this is a good solution. Fortunately, it looks like people are waking up and not buying the propaganda that keeps us piling on debt.

That IS good news - for us, our children, friends, our country and the rest of the world.

Basic Knowledge - With all the controversy about "Wall Street" versus "Main Street" would you like to know how "Wall Street" got its name"?
.
Here are some possibilities - can you guess the right answer?:

a) Phineas T. Wall started the first investment bank in Manhattan and the street is named after him.

b) The definition of wall fits well with those that work there - "solid" and "protect" - so it is called Wall street. A wall is a usually solid structure that defines and sometimes protects an area.

c) Peter Stuyvesant built a 12 foot high wooden wall around the area to keep out various farm animals including pigs and goats.

d) Who cares?

Click here for the story on how "Wall Street" was named and see if you were right..

Individual Successes

We have thousands of stories of how financial literacy has benefited individuals and businesses small and large. In future newsletters, we plan to feature specific individuals who will tell their own in depth stories. Below are some comments on the importance of financial literacy.

"Thought it was very good ... easy to follow and entertaining at times. My suggestion here at Amoco is to make a bunch of business leaders take the course. When I'm talking to them about cash flows ... they don't understand ... they don't get it. I was telling a friend of mine about Financial Competence who is a small business owner as it makes so much sense to gain those abilities. The Marketing people - even the MBAs don't understand risk and Financial Competence would help them as they are decision makers." -- L. G., Amoco Canada

"I had never had a financial background and this REALLY helped me. Am involved in looking at new farm stores - credit balances etc. and Financial Competence helped tremendously. I know what I'm talking about now. Enjoyed taking course - financial statements were my weakness." -- T. B., Cargill

"The strength of the program, IOMA believes, is the depth of the material available. This is more than just financial planning. This is an educational course about how financial markets work, what actually constitutes capital gain, and why it's important to understand inflation. No assumptions are made about the user's level of understanding so even the most unsophisticated 401(k) plan participant will not be left adrift. ... Armed with a solid understanding of investment basics ... 401(k) participants can move to sections like Getting Started. At this point, users are becoming conversant with successful investment strategies and can review how each might work for their particular investment objectives ... Another important point: It's fun. IOMA's reviewer spent more time than was necessary to analyze and report on the product." -- IOMA's Report on Managing 401(k) Plans.

Alerts - What is "Cap and Trade"

Cap = Limit

Trade = Trade a "credit" that is issued by a governmental agency that allows a group to emit a certain amount of carbon pollutants into earth's atmosphere.

The group is not allowed to exceed its issued credit. The credit has $$$ value.

How?

If a group goes over their "carbon credits" they have violated the law and risk incurring penalties.

So what happens if a group that needs to emit more carbon than they are allowed?

They purchase the "credits" owned by groups that are under their allowance. The group that wants to emit more pollutants can buy credits from others and can thus emit more carbon without risking penalties.

The buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions below the seller's allowance.

But, wait, that is not the whole story. There are now carbon trading exchanges.

The prices of "carbon credits" can now be traded on an exchange dominated by large financial interests and regulated by government agencies that regulate financial markets.

The government agency that controls carbon emission standards can and does influence the price of these "carbon credits". By reducing the total allowable carbon emissions the credits that one owns become more valuable according to the laws of supply and demand. More demand and lower supply = increased prices.

Hmm. Sound familiar?

Want to have an idea on where this could be headed?

Review the dot com and home mortgage market results over the last 10 years. Values were created out of thin air by creating special financial "instruments" that were based on carbon credits that have underlying value. The guys that bought the instruments low then used PR to manipulate and inflate the value, created huge demand and then dumped them on the late comers at a high price. That government regulators were only "asleep at the wheel" is being VERY kind.

And down came crashing the securities markets and with them our property values and the international economy.

That is why we alert on this new potential "harvesting" of wealth.

Perhaps this time will be different?

Maybe. And maybe we should all go to Blockbuster and rent the "Wizard of Oz" and watch it on our DVD players non stop.

But, perhaps the trend we are seeing as outlined in the Good News section can give us some hope.

Meanwhile it would seem prudent to take to heart the words of Sir Francis Bacon, "Knowledge is Power". That begins with a good command of Finance and Investing basics.

Stay tuned for news of this "Cap and Trade" game as it evolves.

Survey - What would you like us to communicate in 2010? We need your feedback.

Please follow this link and take the survey:

Like Competence News? Don't like it? Just want to tell us or our readers something?
Email us at mailto:editor@financialcompetence.com. We'll get back to you.

About Your Subscription to Competence News™

Competence News is brought to you by Competence Software, Inc.

If you wish to unsubscribe or be removed from future issues send an email to editor@competencesoftware.net with NO in the subject line or in the beginning of the message.

If you wish to subscribe or want to change your email address from the above, send an email to editor@competencesoftware.net with YES in the subject line or in the message.

Competence Software - Phone: 727-298-0341