Scary News Headlines

News headlines are always scary. The Covid pandemic seems as if it will never be eradicated, what with Delta evolving into Omicron. Economic news cries of supply chain constraints and rampant inflation. Inflation hasn’t been this bad since the early 1980’s. And Russia is massing troops on the Ukrainian border. The stock market has succumbed to all this negativity by declining for the month of January. There’s an old investment adage that says as January goes, so goes the rest of the year. What’s in store for 2022?

As I was reading through some of my older posts, Pursuing Money published in July 2009 caught my attention. The specific issues then are different from today’s challenges. In 2009, banks and brokerage firms were going bankrupt. Citigroup, GM, and other major corporations needed government bail-outs. The “Axis of Evil” Iran, Iraq, and North Korea continued to export their terrorism. I can’t help but wonder, as Yogi Bera famously said, is it:

Deja vu all over again?

Scary news headlines are legion now as they were then. As I asked in the 2009 post, how do you react to all of this? Are you at risk of allowing the negativity to paralyze you into inaction? Please, no! What we can not do is despair and do nothing. You know what happened to the servant who buried the treasure his master gave him (Mt. 25:24-30). You don’t want to hear our master say those nasty words, “You wicked servant.” Instead, we should strive to hear, “Well done, good and faithful servant.” How do we get that response?

Again, as I said in 2009, all we can do is control our reactions. We can not control the stock market or Russian military maneuvers. We can’t control the weather. But, we can maintain hope and portray a positive countenance about our future. We can take intentional steps to make the future better for others and for ourselves. Try these action items:

  1. Acknowledge that God is omniscient. He is with us. He is in control. He loves us.
  2. Humbly put Him first in every area of your life – including with your finances. 
  3. Give courageously to those charities that feed, clothe, house, educate, and protect the poor and innocent. 
  4. Be prudent with your investments. #Diversify risks by investing across broad categories of asset classes – stocks, bonds, real estate, #gold, and maybe even cryptocurrencies.
  5. And don’t worry so much! Jesus tells us 4 times in Matthew 6:24-34 to stop worrying, to not be anxious, but rather to seek first the kingdom of God (see 1-3 above). 

We’ve made it this far; through market crashes of the dot-com bubble of 2001 and the financial collapse of 2008, and muddled through a flat 2015. Some investment theorists suggest the market moves in 7-year cycles. What does that mean for 2022? I don’t know. Mark Twain is often credited with saying, “History doesn’t repeat itself, but it sure does rhyme.” 

Whatever comes this year, by God’s grace we’ll make it through. So, put Him first, giving Him all praise, glory, and honor. Give and trust Him to provide all you need. Give courageously in grateful response for all the blessings He gives to you. When we seek God first and give, we become a part of the mission of the church, a part of something bigger and more majestic than ourselves. In that we find the peace, contentment, and happiness we truly seek. 

Investment Headlines are Confusing

A blog thread on started with the statement, “I simply cannot understand the stock market headlines.” Most of the response posts have done little to bring clarity to the matter.

Throughout my working career it seems there has never been clear-cut reporting on the economy and investing. Very smart people who dedicate their lives to studying the markets often disagree with each other. What’s more, empirical data suggests that when a consensus forms favoring a certain outcome, that majority opinion is almost always wrong.

Who Should We Follow?
We all need to make decisions about our future. It would be foolish to ignore the need to build resources to provide for our future economic needs. We want to base our decisions on the best data we can possibly obtain. And who better to obtain that information from than experts?

The trouble is that those experts are interpreting historical data trying to divine meaning for the future. Is it possible that that exposes us to a form of sorcery? Sorcery is listed alongside acts like murder, fornication and idolatry. It is akin to divination and soothsaying. Bible passages in Galatians 5, Deuteronomy 18 and Revelations 18, 21 and 22 tell us clearly that there is no room for any of this in God’s kingdom.

So, What Do We Do?
Still, we are faced with having to make investment decisions as prudently as we can for the benefit of our families. Difficult at any time, recent stock market volatility is paralyzing, and historically low interest rates, rendering so called safe alternatives like CDs so unattractive, only exacerbate the process.

Prudent investment decision making follows fundamental rules which have proven true over many decades of various economic cycles. First among all investing rules is that of diversifying.

Diversification answers the most basic questions of how much of a portfolio should be allocated to the stock market? To bonds? To real estate and gold? And how much cash balance should be maintained? The asset allocation process can go deeper and get more complicated. But it is important to strike a balance between the effort and energy it takes to make these decisions versus the added benefit that drilling into the minutia may add to the portfolio returns.

To keep the process simple, I recommend following the most fundamental of all financial truths. That is to follow God’s law for investing and managing personal finances. It is so simple, it is profound. It is this:

Tithe 10%  Save 10%   Live on 80%

What Was That?
As simple as it is to state this rule, it is hard to implement. But I know from experience, and from the experience of many clients and friends, that following this rule leads to a sense of peace. Peace that comes from doing good for the community with your tithe. Peace that comes from providing for your family’s future. Peace beyond understanding that comes only from following God’s laws.

God’s peace to you.

Things Are Not Always What They Seem

Things aren’t always as they appear.  Even less often are they what we want them to be.

Apply this to investing.  When making investment decisions, it is common to consult the annual reports of the companies under consideration.  Unfortunately, in the recent past, annual reports aren’t always as accurate as you expect them to be.  (Think Enron and Tyco)  The once vaunted, irreproachable accounting firms upon whose unqualified audit opinions we relied are now scrambling.  While they shore up their accounting practices and corporate images, we investors are left standing in the rain without an umbrella.

Even more recently, ordinary folk and sophisticated investors alike have been scandalized.  Some investment advisors and firms marketed their products as providing above average returns with very little risk.  Their positioning was just subtle enough to sound plausible, but we now know in hindsight that their offers were too good to be true.  We are left wondering where we can turn for trustworthy information and help.

How about industry standard, long established brokerage firms and investment companies like mutual funds?  These companies interests are aligned with their customers and they have the resources to always provide best-in-class solutions, right?

While generally true, unfortunately we can now see how firms get caught up in trading schemes that jeopardize the viability of the company and so their ability to serve you, their client.  Think of the mutual fund accounting irregularities in the early 2000s and more recently Lehman Brothers, Merrill Lynch and others.

No More Stocks
Okay then, to heck with the stock market.  How about investing in government bonds?  Why not just sidestep the shenanigans and settle for a reasonable interest rate guaranteed by the government?

Yes, but…  It is true that FNMA and FHLMC (Fannie Mae and Freddie Mac) are government sponsored agencies, and so have special privileges with the Treasury Department to ensure their bond holders receive timely payment of interest and principal.  But recently, their accounting systems have had glitches that are causing these agencies to restate their earnings.  At the very least, the credibility of their information is in question.   And now we have to wonder what their roll, if any, was in applying overly aggressive pressure for issuing sub-prime mortgages.

What’s an investor to do?  Throw up your hands, give up, walk away and put your money in a mattress?  Settle for 2% at the bank?  Buy gold and dig a hole to bury it in the ground?  Maybe yes, yes and yes, but remember the lazy steward in Matthew 25 before running and hiding in fear.  Before you throw the baby out with the bath water, consider what prudent investment strategy demands.

Okay.  Okay.  But what am I to do?
Ask yourself these questions:  Why are you investing?  What is it that you are trying to accomplish?  And, what amount of risk are you willing and able to endure to meet your goals?

Abraham Lincoln once said, “I cannot understand why men should be so eager after money.  Wealth is simply a superfluity of what we don’t need.”

So again, why are you investing?  Are you striving to accumulate wealth for wealth’s sake?  If so, is that causing you to stretch to a level of risk you would otherwise avoid?  And after this past year’s investment results, is that striving really worth the aggravation?

Be proper and prudent in your stewardship of financial resources.  Remember the fundamentals of diversify, diversify, diversify.  And seek the guidance of a trusted financial professional.  While we can’t promise avoidance of turbulence caused by unforeseen and uncontrollable outside influences, we can promise diligence and sincererity in keeping you on the straight and narrow path

Pursuing Money in a Tough Year

What a tough year this has been for pursuing money.  Bank and brokerage firm failures.  Sub-prime mortgages and housing market crashes.  Government bailouts of Citigroup and GM.  Credit crunches and high unemployment.  Stock market roller coaster volatility and terribly low interest rates.  Iraq, Iran, North Korea, Afghanistan…

How do you react to all the negative news?  Where, or in what do you place your faith for the future?  Sirach 31:5 says that one who loves gold will not be justified.  One who pursues money will be led astray by it. Heed what Jesus taught His disciples in Luke 12: 22-36.  Do not worry.  Be ready for action.  Make “purses that do not wear out.”

How diversified are you?

You know that #diversification is the key tenet for a sound investment strategy.  Consider gold as a component of your asset allocation.  Could this be the purse that does not wear out?

Gold is considered a long-term storehouse of value.  As such, it fulfills all the functions of money. Bullion bars are bulky and must be safe-kept somehow.  On the other hand, gold coins are portable and come in varying denominations.  Universal recognition and acceptance as a form of payment make gold coins easy to buy and sell worldwide.  And recently exchange traded funds like “Spider Gold Shares” allows investment in gold by virtue of a financial instrument that tracks the price of bullion.

Of paramount importance is gold’s ability to retain its purchasing power.  It has done that and then some.  According to Blanchard and Company, $1000 invested in generic gold coins in 1970 would be worth about $40,000 today.  They say gold is up 150% since 2001.  Although gold fluctuates in value, this average 10% annual return demonstrates gold’s ability to keep pace with inflation.

Don’t Worry.

We can’t do anything about the stock market’s and interest rate’s reaction to the war and terrorism, world and economic news, fear of a financial freeze and private company governance.  We can’t do anything about the UN or the axis of evil.  We can’t do anything about the weather.

We can control our responses, however.  We can maintain hope and portray a positive countenance about our future.  We can stop waiting for a return to the stock values of the 1990s.  We can decide to manage investment risk more honestly and proactively.  We can decide to diversify amongst and within asset classes.  We can act with an attitude of, “Here we are today.  Let’s go forward from here.”

And when the gold dust settles, and we have more confidence about the clarity of the immediate future, we can turn in our gold coins to be melted down and made into investment vehicles of another nature.  As Tobit 12:9 instructs, community driven investments such as meals and school supplies for under-privileged children. Relationship driven investments such as rings, necklaces and bracelets for our loved ones.    Investments that offer returns that are immeasurable in worldly quantitative terms.  Hopefully as with Peter in Acts 3:6 we can say, “I have no silver or gold, but what I have I give you.”