Hunter Money Smart

How to Spend, Save, Eliminate Debt, and Achieve Financial Freedom
1. Auflage 2010
ISBN: 978-0-9843877-3-1
Verlag: Georgea Books
Format: EPUB
Kopierschutz: Adobe DRM (»Systemvoraussetzungen)

E-Book, Englisch, 384 Seiten

Winner of the Eric Hoffer Book Award, Money Smart delivers a better approach to personal money management with a simple and accessible style. Author Ted Hunter shows readers that they are capable of managing their money better than anyone else, including financial professionals. He first exposes the destructive myths and system-wide incompetence that have dominated money management advice for decades. Hunter then empowers readers by providing the information they need to make their own decisions.

Autoren/Hrsg.

Hunter, Ted

Leseproben

Introduction It’s Time to Take Control of Your Money Over the past few years I’ve watched in dismay as millions of people who believed in the established financial system saw their dreams for financial independence vaporize in a sea of financial mismanagement. I witnessed friends and family members from a wide range of ages and backgrounds negatively affected by their lack of knowledge about money and by the vulnerability this creates. I saw that the financial turmoil that showed up in early 2008 had barely begun to bring to the surface the depth of the incompetence of the financial services industry and the vast majority of its alleged “experts.” I saw, with great clarity, the depth of the myths, and, in some cases, the outright lies that had been told about money and the damage they had done. Worst of all, I realized that all of this would just continue to happen unless something was done, and so I decided to do something about it. In Money Smart, I explain what you need to know to be successful with money in a comprehensive and easy-to-understand way. I cover how to spend money, save it, get out of debt, buy or sell a home, buy a car, invest, and achieve financial freedom. You’ll learn how to make financial decisions that will be in your own best interest and not in the interest of others. Whether you’re a high school dropout or you hold a PhD in economics, this book is for you. Why listen to me? For one thing, over the last twenty years I’ve called, and taken advantage of, every one of the major highs and lows of both the stock and real estate markets. Further, like you, I’ve had my share of financial ups and downs. Everything I did with money—and what money did to me and for me—gave me invaluable experiences that had nothing to do with financial experts or their advice. I discovered that being money smart isn’t complicated. It doesn’t require advanced courses in finance or expensive seminars. All it really requires is a basic understanding of the true fundamentals of successful personal money management. But looking at all that’s been happening with money, I realized that this straightforward formula has gotten lost. It’s time to find it again. That’s what Money Smart is all about. My Personal Financial Education One day, many years ago, my father sat me down and told me he signed me up for a paper route as an addition to my other existing business ventures. (I already was a junior door-to-door salesperson, had a lawn-cutting service in the summer, and worked as a trapper in the winter.) Dad said that from then on, if I wanted anything I had to earn the money myself. He would feed me and provide a roof over my head, and that was it. Dad was true to his word. Did I resent it? Nope. I went and did what I had to do. I learned a heck of a lot very quickly, I can tell you; I had no choice. Through trial and error and with a decent amount of common sense, I quickly piled up many life lessons. To this day I go back to the basic lessons I learned from those experiences. They are the foundation for all I do when it comes to money. By the way, it was sixty years ago when I added that paper route. I was nine-years-old. My father never gave me another penny until I went to college and he paid part of my tuition. I worked my way through Syracuse University where I earned a BA in economics and business. As an undergraduate I held jobs as a dishwasher, a rock bandleader, and a YMCA counselor. After spending two years in the Army as a military police officer, I had a very successful thirteen-year career with the International Paper Company and Johnson & Johnson as one of the pioneers in large-scale computer-based business systems design and implementation. In 1977, a friend and I started a real estate brokerage company from scratch. We grew it to five offices with over one hundred agents and we ran it for ten years. By the mid-1980s I was a multi-millionaire. I drove a Porsche and owned a penthouse on New York Harbor. I would stand on my balcony at night looking out at the Statue of Liberty, its reflection shimmering on the surface of the water. During the day I went to NYU Film School, on my way to becoming the next “great” independent filmmaker. Life was good. Sounds great, huh? Well it didn’t stay that way. Despite my success, I did not yet fully understand the real estate market. On the contrary, I had become a full-fledged card-carrying member of the real estate industry and, like the rest of them, had bought into “the system” hook, line, and sinker. At that point the real estate cycle turned, and turned hard. In less than four years, everything I had built was gone, along with my very last cent. The real estate market crashed because it was badly overpriced.
I looked back at the history of the market and saw that it would have been possible to predict this market adjustment. I studied other markets, like the stock market, and saw that all markets cycle through periods of substantial overpricing and underpricing. And at that moment I got it! I saw the cycles of both the real estate and financial markets and understood what they meant and how I could use that knowledge.
I realized I had been foolish to believe that you “always invest for the long run” and that the correct approach was to buy when the market was underpriced and sell when a market was overpriced. From that day on I’ve played all the major moves of both the real estate and stock markets to my personal benefit. Taking advantage of my newfound insight, I entered the stockbrokerage industry and became a “hired gun” stock investor for about thirty affluent private clients. The 1990s couldn’t have been a better time to invest in the stock market. Better yet, I beat the market most of the time, making my clients a heck of a lot of money and bringing myself back from the dead. How I’ve Called the Markets In 1991, when I began my career as a stockbroker/investment advisor, my friends and business acquaintances were aghast. “The stock market is a disaster!” they cried. “Why would you do that?” they demanded. To me, the answer was crystal clear. We were at the low end of that market’s cycle and I saw it. In hindsight, I doubt you could find a better point in the last fifty years to have entered the stockbrokerage industry. By the end of 1999, I saw that the stock market was again terribly overpriced. I sold my investment business and the majority of my stocks and told my clients to get out of the market because they were unlikely to make a penny there for many years to come. At that moment the DOW was at about 10,900 and the NASDAQ (mostly the tech stocks) at about 4,000. The markets peaked several months later. In the winter of 2000, I saw that the real estate cycle was favorable and I put a lot of my available money into a fairly expensive house. The rest went into fixed-income investments and into building a small wholesale company. In the fall of 2005, I sent an e-mail to my friends and family, telling them that the real estate market was now very badly overpriced.
I estimated it was likely to peak in the summer of 2006 and then drop at least 30%–35%, especially on the coasts, over the next three years or so. As I predicted, the market peaked that next summer. Also in the fall of 2005, I saw the Asian real estate market was lagging behind the U.S. real estate market so I reinvested some of my money in a luxury oceanfront condo in Thailand. In the spring of 2006, I sold the U.S. house at the peak of the market for 92% more than its purchase price. In the summer of 2008, I sold the Thai condo for a three-year net profit of 58%, less than ninety days before the world markets began to nosedive. As I was essentially 100% in cash (short-term CDs) and not wishing to be such an extremist, I reluctantly put 10% of my assets into the stock market in February of 2008. The bad news, you know. The market dropped by about 30% that year. The good news was that I only lost 22%, beating the market by 8%. The great news is that the loss was only on 10% of my overall assets as I was 90% in cash and CDs. This modest re-entry into the stock market also reinforced a lesson. I had thought that I could probably select some winning exceptions in a badly overpriced market. Not so. The good stocks may drop less (and they did) but a falling market takes almost everything with it. By October 2008 the DOW dropped to 10,000 from a high of 14,000 in the fall of 2007, and the “buying opportunity” drums began beating again in financial circles and in the financial media. I cautioned my family and friends that the stock market was still overpriced, and the best bet was to continue to stay out of the market. Five months later it dropped to 6,600. So there you go. Over twenty years ago I learned the hard way to understand markets and their cycles. Since then I have called them to my benefit. My bottom line strategy is, again, really very simple. When something is underpriced, buy it. If it’s fairly priced, maybe buy it. But if it’s noticeably overpriced, sell it and invest elsewhere. These are not decisions you will have to make every day. You may only make them a couple of times in a decade. The important thing is that you must remain aware of where things stand and act when it becomes necessary to do so. There is a lot more to being money smart, however, than knowing when to buy and sell stocks and real estate....