Yes it is starting up again. Why? It is year end earnings reporting season. Quarter four was a disaster and I am sorry to say it is unlikely that Q1 -09 is going to be any better, might even me a lot worse. Default rates are soaring and losses are continuing. Yesterday the papers were filled with news of the break up of Citbank, and today it is B of A and Merrill that will capture the headlines. JPM is also reporting earnings. A great BLOG Baselines Scenerio captures it well in this morning's piece - Here We Go Again. Read it as it says what I would like to say only better. Yesterday the markets were a disaster and I cannot imagine today is going to be any better. Bottom line all these institutions continue to experience massive losses. The deleveraging cycle is not over. Not even close.People. We have two choices at this moment. We can choose to crawl in to bed, pull the covers up, hide, and hope the storm ( and the cold ) will pass. Or. OR. We can claim this moment to say the following "I have to prepare for the worse and then HOPE for the best. I have to do MORE to be part of the solution and to empower others to do the same. This is no more business as usual." Our financial system is broken. Our economy, the global economy is in a downward spiral. I am NOT saying it will not get better, it will, but honestly, I do not know when.
I am reprinting this ACTION PLAN that was sent out in a PP Newsletter following up on a speech Ann Kaplan and I gave together. Thanks for Ann (of Circle Financial Group) for these easy to do steps that we should ALL do no matter what the financial environment. We are speaking to a group of 50 women again tonight! The Plan:
1. Have an emergency plan in place for your family - have some cash easily accessible and make sure you are in well supported financial institutions.
2. Analyze your spending patterns - do a cash flow statement and be surprised how much you can cut if you choose to. Choose to.
3. Create a balance sheet - understand your assets and liabilities and work to reduce your debt.
4. Review your insurance - make sure you have what you need with sound providers.
5. Review and gather essential documents - wills, medical power of attorney, financial power of attorney.
6. Develop a financial policy statement for your family- identify, prioritize, and quantify goals.
7. Talk with your children as well as your parents - this is an opportunity to have conversations about money that you may have never had.
8. Work with your financial advisor - seek expert thinking by people you trust.
9. Position yourself in the market - make sure your portfolio is positioned for the future and not the past.
10. Create an investment plan to support your goals - money is a resource that enables you to achieve your life goals. Try to align them.
The trouble with talking about investing at the moment is the following - the range of possible outcomes is HUGE and besides, we are all unique! No two people have the exact same financial profile and sadly the financial services industry too often treats us like we do when giving advice. What you should do if you have little in investable assets but thankfully a good income, is completely different from what you should do if you don't work, live off investment income, and currently have little liquidity.
I feel strongly there has never in my lifetime been more uncertainty around the future, meaning more risk. What we do know is this. In general the US consumer has rolled over and it is the government that is taking their place. Will they get it right? Will the timing work? Will it be enough of two much? Will they put the proper framework in place to build a healthy future? At what cost? The questions are endless and the answers are impossible.
I have pushed you in to place of scarcity and I want to end with the opposite. Please in all of this try to come from a place of abundance. Push yourself to be generous. Yes with money but more importantly with hope, kindness and good advice. Protect yourself and your family but at the same time help others. Give what you can, then give more, but allow yourself at some point to also say enough. If everyone did this there would be enough. Move aggressively to find solutions to the problems that trouble you the most and work to make it happen. Start small, start big, just start. There has never been a better time to create your Generosity Plan. Lihnk over to Kathy Lemay's site to learn how. She has a free DOWNLOAD.
We need to help one another and help the world like never before. This is a call to action.
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