Here is one of five chapters of “The Financial Physician: How to Cure Your Money Problems and Boost Your Financial” that was edited from the book.-Lou
NOT KEEPING INFORMED ON WORLD AND ECONOMIC NEWS
by Louis Scatigna
THE AILMENT
Globalization and instant communications have made the world grow closer and more intertwined. Now, every segment of our economy is affected by events that take place throughout the country and all across the globe — including our personal finances.
Most people don’t pay enough attention to the news. Some may follow the local news, but they have little or no interest in national and international developments. Many simply scan the headlines or half-heartedly listen to the news, but are not concerned with the details. So they miss out on investment and business opportunities and don’t learn about trends that could harm them financially.
Since change is constant, those who don’t keep up may not be aware of developments that threaten their assets and investments until it’s too late. Since their heads are buried in the sand, they don’t see ominous signs and they hang on long after they should have sold out.
DIAGNOSIS
We’re all part of a world economy even though it may not always be apparent to us. Developments in far off places can affect us as much as what happens next door. Let me give you an example.
We think of Ford and General Motors as American manufactures and Honda and Toyota as makers of Japanese cars. However, the parts that go into all of their products are made in different spots across the globe. If a supplier in China, Mexico or Spain has problems and can’t deliver its products on time, it can bring a manufacturer’s assembly lines in the US to screeching halts. Those slowdowns put extra burdens on the manufacturer’s other facilities and create delays that send frustrated customers to other manufactures. When these problems occur, they filter down to local economies and spread.
In these tumultuous economic times, economic and financial events change rapidly and those changes can be dramatic and far-reaching. You may live in the middle of nowhere, miles from the nearest town, but developments in China, Europe or Africa can hit you in your wallet. Events that occur thousands of miles away, in places with names you can’t pronounce, can have worldwide implications that directly impact you. They may affect one of your major investments or your business or indicate impending trends.
Knowledge is power. The more you know, the better you can manage our money. Investment, business and money management are information intensive and can be affected by national and world events.
The more you know about what’s going on, the greater your advantage. The knowledge you acquire gives you the ability to make the best, most informed decisions about your money.
VITAL SIGNS
Many people who didn’t follow national and world economic news have seen their savings and personal worth cut in half. Had they kept up with current events, they may have been able to take action and exercise more control over their accounts. They may have been able to cut their losses, protect their assets and move in other directions.
When you know what’s happening in the world, you have a better chance of spotting developing trends that you could invest in and profit from. By watching global markets, you could have invested in lucrative opportunities or bailed out before your investments collapsed. If you understand global markets, you can get in on the ground floor and make tremendous stock market gains or avoid big losses.
There’s no reason not to be informed and to understand the latest financial developments, especially with the Internet. The Internet is an unequaled source of information. It instantly gives us the latest news and provides us with numerous sites where we can quickly verify it. The Internet also serves as our personal financial library so we can conduct research and learn about virtually any subject or news in depth. From the comfort and convenience of our homes and offices, we can constantly keep informed.
Developments in Washington directly affect our finances. At the least, follow what’s happening nationally. Political swings affect our finances. They provide information that can tell us whether the climate is becoming more business friendly or more concerned about healthcare costs or environmental issues, which can affect our investments and personal finances.
If you want to be financially fit:
- Track what the Administration, Congress and individual legislators are proposing
- Follow what leaders and politicians are advocating and why
- Learn what direction our leaders are taking and when their proposals would take effect
- Find out whether the public is responding, rejecting or just sitting tight.
Keep up with the local news. Follow what’s happening in your city, state and region. Keep your eye on your officials. Know their agendas, what they’re trying to do.
Become an information junkie. Information is currency and amassing it can bring great wealth. See each piece of information as an indispensible part of the puzzle, without which the picture can’t be complete. Use that information to shape your finances and your investments.
TREATMENT
I try to keep up by getting information from many sources, the Internet, newspapers, magazines, television, radio and blogs. I like the Internet and constantly use it because it’s easy to visit many different sites and get lots of varied information. My favorite websites are:
MarketWatch, http://www.marketwatch.com
Dow Jones website that provides business, economic and financial market news and commentary.
Yahoo Finance, http://www.finance.yahoo.com
Yahoo’s financial section provides economic and financial news and commentary. It can be personalized to provide real-time stock quotes and portfolio tracking
Morningstar, http://www.morningstar.com
A comprehensive financial resource that provides in depth research on mutual funds, stocks and Exchange Traded Funds. For years, Morningstar has been the leader in mutual fund research and is a great financial education resource.
Fox Business, http://www.foxbusiness.com
Delivers financial headlines, videos and financial market analysis. Excellent financial planning and personal finance section numerous useful financial calculators.
Bloomberg, http://www.bloomberg.com
Arguably the most comprehensive financial news organization in the world providing up to the minute business news. Tops for real-time, financial data and economic news and commentary. Also has a good personal finance section.
Drudge Report, http://www.drudgereport.com
Aggregates the news and links to important news articles on everything from politics to financial markets. Updated frequently each day so news can break on this site before most traditional news outlets.
Kitco, http://www.kitco.com
Excellent for tracking developments in precious metal markets. Gives real-time quotes on gold, silver and other metals. Is a top resource when considering gold and silver purchases.
US Internal Revenue Service, http://www.irs.gov
A great website that allows you to keep informed on tax laws and policies. Forms and instructions can be downloaded. Is user friendly and easy to search and navigate.
Watching America, http://www.watchingamerica.com
If you want to know what people abroad are saying about America, this is the site for you. Translates foreign language articles into English. Excellent for getting news without the media spin.
Wall Street Journal, http://www.wsj.com
The granddaddy of financial news. Provides hardcore business, personal finance and market news. The editorials are well written and top people in government and business contribute in the opinion section.
My favorite newspapers are:
The Wall Street Journal
I read it cover to cover everyday to get a comprehensive overview of the economy and financial markets.
Barron’s
Dow Jones weekend newspaper. It’s a statistical wonderland, full of every financial statistic imaginable.
My favorite magazines are:
Money
Easy to read magazine that focuses on personal financial management and investing.
Kiplinger’s
Excellent personal finance magazine covering all topics affecting your financial life.
My favorite radio shows are:
Bob Brinker’s Money Talk
Long time veteran Bob Brinker’s national weekend finance show, I try not to miss it.
The Financial Physician
My weekly personal finance and economic weekly radio program.
My favorite blogs are:
The Motley Fool, http://www.fool.com
Very popular website for the average investor. Although mostly about investing, it has other sections relating to personal finance.
Free Money Finance, http://www.freemoneyfinance.com
Great comprehensive financial website who’s goal is to grow your net worth. The site gives great advice about goal setting, financial planning, investing and taxes
Personal Finance Advice, http://www.pfadvice.com
Really good financial advice blog moderated by a veteran personal finance writer.
Peter Grandich-Agoracom, http://grandich.agoracom.com
My good friend, Peter Grandich’s financial blog offers excellent advice on the financial markets and delivers it with his unique brand of lighthearted humor.
The Financial Physician, http://www.thefinancialphysician.com
My list of blogs would not be complete without telling you about my financial blog. My blog provides my commentary on the economy and financial markets as well as sound financial planning advice. A great place to keep informed on what’s going on in the financial world.
MY RX
Informed investors take advantage of geopolitical events that influence financial markets and economies. Energy prices are especially affected by events in the Middle East and other oil-producing areas. Weather patterns can cause changes in the prices of food commodities.
Every week, both the government and the private sector release reports that have a major influence on the stock and bond markets. Investors who kept informed during the financial crisis were able to protect their portfolios by making adjustments to their investments.
If you follow the news and financial developments, it will not only improve your financial health, it will improve your mental health. It will stimulate your mind and make you a more interesting and interested person. The information you receive will improve your decision making by giving you more facts and a new a broader context in which to make your decisions.
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