Note to Washington: You Cannot Separate Human Psychology from Economics

The Huffington Post is talking about Obama’s handling of the economy and the world view of his economic advisers now that Larry Summers is resigning. Those policies — the bailout of Detroit automakers, an $814 billion stimulus package, subsequent programs under TARP, Cash for Clunkers and the administration’s unlimited backstop of Fannie Mae and Freddie [...]

from Joshua Kennon

Men Unlikely to Marry Women with Large Debts

There was an article three weeks ago in The New York Times that began with the following paragraph: Nobody likes unpleasant surprises, but when Allison Brooke Eastman’s fiancé found out four months ago just how high her student loan debt was, he had a particularly strong reaction: he broke off the engagement within three days. [...]

from Joshua Kennon

The Richest Man in Town by W. Randall Jones

The Richest Man in Town – The Twelve Commandments of Wealth by W. Randall Jones, the founder of Worth Magazine, is one of the great business books I’ve read this year.  It profiles some of America’s most successful self-made super-rich, focusing on the richest person in towns throughout the United States, offering insights into how [...]

from Joshua Kennon

The 2010 Values Voters Summit Concludes

Well folks, the 2010 Values Voters summit just concluded and I’ve got to be honest: It makes me sad.  Mostly, I think it arises from the knowledge that, in a vast percentage of cases, people are not binary in terms of being “good” or “bad”.  The same mindset that pervaded the Values Voters Summit seems [...]

from Joshua Kennon

What a Superpower China Means for the United States

When I was 16 years old, I was sitting in the hallways of the local high school, waiting for class to begin, discussing the state of the world with Molly.  She stopped me and asked a simple, direct question: “Do you believe that the life of an American is more valuable than the life of [...]

from Joshua Kennon

Why the Chinese Economy Is Destined to Be Bigger than the Economy of the United States

In Surprising Facts About America’s Population, I pointed out that the top 25% of people in China – the gifted students who out-test 3 out of 4 of their classmates – exceeds the entire population of the United States. This raised some concerns about my enthusiasm for the rise of China.  I thought it would [...]

from Joshua Kennon

How We Used Shares of Coca-Cola to Teach My Youngest Sister About Investing (and Why the Cycle of Consumption and Financial Stress Starts as a Teenager for Most Americans)

When I was a senior in high school, I bought my youngest sister, who was first grader at the time, a single share of Coca-Cola common stock for her 6th birthday.  I had it framed with an engraving of the first part of Deuteronomy 8:18 placed under it, “You shall remember the Lord your God, [...]

from Joshua Kennon

The Reason the Video Game Industry Is Bigger Than Hollywood

Tales of Vesperia continues to rock my world.  I played for several hours again today after reading wealth reports and working on the upcoming About.com content I’ve been writing this week (I tend to publish the good stuff over there in big batches because I like for it all to work together and be cohesive).  [...]

from Joshua Kennon

How Do You Get Rich? Do What Is On Your Desk and Do It Well

A fantastic passage from page 97 of The Richest Man in Town: The Twelve Commandments of Wealth.  It talks about how success in life comes down to execution of the work that is sitting your desk, right now.  That means getting it done right, getting it done quickly, and getting it done with pride so [...]

from Joshua Kennon

Free Trade Isn’t Always Fair Trade

A few days ago, I wrote a five-part essay called How to Solve the Trade Deficit in response to a reader question about trade policy in the United States. The reader, Adam, responded on his blog.  Here is my followup to his commentary. I Would Love to Run Trade Surpluses But It Isn’t Going to [...]

from Joshua Kennon

How I Structure My Day

When I come into the office, I begin by sitting down with a white pad of narrow-ruled paper (very small lines – smaller than college ruled because that is how I like it), and set out everything I want to achieve that day.  If I knock off the top 5 things, I consider it a [...]

from Joshua Kennon

How to Solve the Trade Deficit – A Five-Part Essay on the American Trade Imbalance

When American citizens buy more foreign goods (import) than we sell to foreigners (exports), we have to transfer part of our national wealth to foreigners.  The amount we have to transfer to foreigners is called the trade deficit. Think of it like a big, international credit card.  When we buy more from the world than [...]

from Joshua Kennon

How to Solve the Trade Deficit – Part I

I received a question from a reader named Adam, who asked about the threat the United States trade deficit poses to our long-term financial health. It was an excellent, intelligent, well-articulated question that happened to arrive at the precise moment I was in the mood to talk about such an issue. The result is a [...]

from Joshua Kennon

A Reader Question About the Trade Deficit

A message from a reader named Adam about the trade deficits.  I responded in a five-part essay on How to Solve the Trade Deficit. Joshua, I follow your personal blog, and find your articles very informative, it’s a great reference, and you inspire me, as I feel I am very similar to you, minus the [...]

from Joshua Kennon

A $1,000,000 Municipal Bond Dilemma

Those of you who follow my writings at About.com, a division of The New York Times, know that I’ve written about municipal bonds at the Investing for Beginners site including one article that detailed some ways to help you determine if a specific municipal bond was “safe”. At the wedding this weekend, I was discussing [...]

from Joshua Kennon

Where Do Millionaires Invest Their Cash to Keep It Safe?

I’ve been having a conversion about investing and money with the reader “Frat Man” in the comments section of another post.  He asked: I also had one other question I have always wondered. Where do millionaires keep their money? In the sense that FDIC insurance only covers $250,000 at the bank and SIPC only covers [...]

from Joshua Kennon

Where Do Most Decamillionaires Get Their Money?

Most decamillionaires attribute their wealth to owning and investing in their own, rather than in other people’s, businesses, which include the ones listed on the various stock exchanges.  The millionaires state that they can control their own businesses, but they can’t control or dictate policy to public corporations, let alone determine prices in the stock [...]

from Joshua Kennon

Response to What Is Probably the Most Ignorant Message I’ve Received In 10 Years of Writing Finance Articles

A reader named Medusa wrote me and, to keep it short, explained that I shouldn’t believe people should be rich because the Bible is against rich people, that I was going to die a miserable, lonely old man with no one who loved me because I saved my money instead of spending it, and that [...]

from Joshua Kennon

Amouage Reflection for Men Review

As I mentioned in the Amouage Jubilation XXV review yesterday, one of the Amouage fragrance samples we received from the company, which is the official perfumer to the King of Oman in the Middle East, was Amouage Reflection for Men.  I said that if the Jubilation XXV was the King, then Amouage Reflection was the [...]

from Joshua Kennon

Cherrywood Capital Group Successfully Divested Two of Its Investments

Phase I of our secret project and my third quarter goals are both going really well, even though I’m spending an inordinate amount of time on the manuscript for my next book, which is a guide to calculating intrinsic value of stocks, bonds, real estate, and other assets. Everything Merging Under the Kennon & Company [...]

from Joshua Kennon

Voltaire the Investor

How One of History’s Greatest Thinkers Amassed a Fortune One of the people upon whom I have based the way I live my life is Francois Marie Arouet de Voltaire, or Voltaire for short. Born on November 21st, 1694, he passed away on May 30th, 1778 after a long and extraordinarily successful life pushing for [...]

from Joshua Kennon

“Dreams Become Reality One Choice at a Time” – A Lesson on Life, Business, and Money

Isn’t that a fantastic quote?  I got it from Tara Beth Workman a few days ago and I’ve been thinking about it since.  I realize that it is entirely true and that my life is a reflection of that.  All of our lives are reflections of that.  Let me explain. This afternoon, Aaron and I [...]

from Joshua Kennon

The House of Creed Is the Perfect Family Business

This is cross-posted from the Investing for Beginners site at About.com, a division of The New York Times.  I wanted to point it out to the readers here and tell you to head over there and check it out because I had been writing so much about Creed perfume, cologne, and fragrance products the past [...]

from Joshua Kennon

Business and Money Wisdom for the Day – 07/05/10

The rich start from combined savings. – Traditional Chinese Proverb Do as the thirsty person drinking from a river.  He drinks happily enough, but does not covet the voluminous flow … This is how the gentleman exercises his mind for he regards rank and position as a tumor and material wealth as dirt and dust. [...]

from Joshua Kennon

Why the iPhone Will Continue to Dominate the Smart Phone Market Even if It Doesn’t Have the Biggest Screen or Fastest Processor

It All Comes Down to the Existing Investment Consumers Have Made in their iTunes Library of Music, Movies, Games, Apps, and Television Shows It seems that a handful of tech folks and business bloggers – and, in fact, even my own brother – don’t seem to understand that the reason people choose the iPhone over [...]

from Joshua Kennon

The True Test of Greatness Comes in the Heart of Winter

Only in winter do the pine and cypress show they are evergreen. – Confucius points out that all trees are green when times are easy, Spring and Autumn Period When you are managing your business, your life, or money, the true test of your ability and talent will come during the bad times. Have you [...]

from Joshua Kennon

The Concept of Mental Models Goes Back Thousands of Years

You are only playing a single note. You should find others who can teach you how to use the other holes in your intellectual flute. – Zi Yu accuses Prince Mou of having a one-track mind, Zhou Dynasty When Charlie Munger talks about the importance of “mental models“, he is espousing the same wisdom shown [...]

from Joshua Kennon

Mail Bag – How Does Someone Start Creating Passive Income?

Among the thousands of emails and messages I receive regularly, I came across one today that was sent to me on May 17th by Cale P. Here is the question that was posed: I’m a pretty talented IT professional with great salary and a standard quality of living. I’ve known that I won’t be in [...]

from Joshua Kennon

The Maserati Quattro Is a Thing of Beauty

I am not a car guy. In fact, I’m a stern believer that people shouldn’t spend more than 10% of their net worth on a car when they are first starting out (and much lower later in life as their balance sheet equity expands). Thus, if you have $150,000 in savings, you shouldn’t spend more [...]

from Joshua Kennon

The Joy of Cash Dividends

Over the years, I’ve written a lot about dividends on the Investing for Beginners site at About.com.  In fact, over the past few years it has been one of my absolute favorite topics to cover because through the Great Recession of 2007-2009, those who owned a collection of high quality dividends stocks were better able [...]

from Joshua Kennon

The Bosendorfer Strauss Grand Piano – A Real Life Lesson in the Time Value of Money

The Opportunity Cost of a Bosendorfer Strauss Grand Piano I’m going to teach you a financial technique that can help empower you to make informed choices about your own life and keep more cash in your pocket.  I’ve been using it since college and it’s done wonders from my bank balance and investments. From the [...]

from Joshua Kennon

The Housing Crisis Isn’t All Bad …

As Warren Buffett pointed out in this year’s letter to Berkshire Hathaway shareholders, for every house that falls in value and pushes one family into bankruptcy, another American family benefits from the lower prices as new households are created due to the younger generation graduating from college, settling down, and moving out of their parents’ [...]

from Joshua Kennon

The 5 Levels of Building Wealth

Early in life, I developed a theory that there were five levels of building wealth that most self-made men (and women) go through to reach financial independence.  It was started by my love for Carl Barks Scrooge McDuck comics.  When I started reading the Federal Reserve reports of consumer wealth, empirical studies, and other sources [...]

from Joshua Kennon

The American Express Plum Card Program

How the American Express Plum Card Helped Revolutionize Mount Olympus Awards A few days ago, I mentioned in The Importance of Frugality in Building Wealth that one of the ways we were able to save money was by using the American Express plum card at all of my businesses.  The new product offering by American [...]

from Joshua Kennon

Focus on the Roots Before the Leaves

“The problem is that people, particularly younger people, have come to focus on the trappings of wealth over everything else – including the work or savings to accumulate the wealth to be able to reasonably afford luxury brands.  When we think about “rich,” we think about acting rich over being rich. The Mercedes Millionaire worked [...]

from Joshua Kennon

Misconceptions About Wealth

How The Marketing Industry Continues to Convince Average Americans They Know What a Millionaire Looks Like A few days ago, I quoted something from one of Dr. Thomas J. Stanley’s books: “In the United States, there are three times more millionaires living in homes that have a market value of under $300,000 than there are [...]

from Joshua Kennon

How One of My Family Members Used Shares of U.S. Bancorp to Build Substantial Wealth

A member of my close family has been using a technique to build substantial wealth that doesn’t require a high income or any specialized knowledge, extra work, or effort.  I was so impressed by the way he implemented this program, I thought I would share it with my other family and friends (as well as [...]

from Joshua Kennon

The Importance of Frugality in Building Wealth

I was up until 6:30 this morning reading Stop Acting Rich … By Thomas J. Stanley, Ph.D., the author of the incredibly successful The Millionaire Next Door and The Millionaire Mind.  It’s remarkable because so much of what the “average” millionaire did to achieve his or her wealth is exactly, precisely the same things I, [...]

from Joshua Kennon

John Templeton and Value Investing

John Templeton was a billionaire mutual fund pioneer that specialized in using a value investing strategy to buy stocks around the world.  By practicing a disciplined version of Benjamin Graham’s teaching on a global scale, Templeton amassed an astounding record that made shareholders of his fund wealthy and earned him hundreds of millions of dollars [...]

from Joshua Kennon

Value Investing 101

Some of the greatest investors in history have been value investors including Warren Buffett, Walter Schloss, the Managing Directors of Tweedy, Browne & Company, Bill Raune, and Eddie Lampert, just to name a few.  With hundreds of billions of dollars in wealth between them, you may be tempted to look into the value investing philosophy and [...]

from Joshua Kennon

Why Some Critics Hate Dollar Cost Averaging

Occasionally, you will run into some financial journalists who are not fans of dollar cost averaging.  The reasoning ordinarily comes down to one of two things: If an investor happens to dollar cost average his money into the stock market when prices are rising, he will miss out on some of the gains he would [...]

from Joshua Kennon

How Investors Who Practiced Dollar Cost Averaging Were Richer Within Only 2 Years of the Credit Crisis Meltdown

Citing data provided by Vanguard, one of the premier mutual fund and 401(k) providers in the world, The New York Times recently reported that 60 percent of 401(k) accounts now have more money in them than they did before the stock market crash and worst recession since the Great Depression began two years ago. That [...]

from Joshua Kennon

Paying for Your House with Dollar Cost Averaging

A close family member recently used dollar cost averaging and the power of compounding in such a creative way, that I thought it would be useful to share it.  This technique, which he developed after studying the various returns available on different asset classes, was designed to show that two factory workers, both earning the same [...]

from Joshua Kennon

The Basics of Dollar Cost Averaging

Dollar cost averaging is an investing technique that can lower your risk, increase your profits, make market volatility less emotionally painful, and help put you on the road to financial independence.  When combined with asset allocation, it’s a nearly unstoppable force that can grow your wealth far beyond what you ever imagined.  This guide to dollar [...]

from Joshua Kennon

Why Savings Bonds Should Be In Your Portfolio

I am working on more than 50+ pages of new content for the Investing for Beginners site detailing the importance of United States savings bonds; in fact, I’m going to build several huge hubs around it. As odd as it sounds given the boring nature of savings bonds, it’s gotten me really excited about these [...]

from Joshua Kennon

Exotic Asset Classes for Asset Allocation

You may have been tempted to add some exotic asset classes to your asset allocation portfolio. Although financial instruments such as auction rate securities and options on futures may sound exciting, they can be fraught with danger, waiting to wipe out your entire portfolio if you aren’t careful. This brief overview of exotic asset classes [...]

from Joshua Kennon

International Asset Allocation 101

Most growth asset allocation model portfolios call for exposure to the international asset class. In fact, in the article Factor In Your Income Sources When Seeking Diversification, I explained that one of the ways my own family reduced the risk involved with having such a big part of our net worth invested in private businesses [...]

from Joshua Kennon

Real Estate Asset Allocation 101

When you’re ready to add the real estate asset class to your investing portfolio, your asset allocation decisions aren’t done.  You have a smorgasbord of options, including REITs, apartment buildings, storage units, parking garages, farm land, strip malls, office buildings, and rental houses, just to name a few.  You can even invest in mixed asset [...]

from Joshua Kennon

Asset Allocation for Small Business Owners

If you own a small business, your asset allocation needs are going to be different from someone who works as an employee.  That’s because you already own substantial equity (stock) whether or not your realize it.  In fact, if you’ve been successful and are anything like the average entrepreneur, your business represents more than 90% [...]

from Joshua Kennon

What Asset Classes Should I Consider for My Asset Allocation Portfolio?

When you are ready to begin investing with a disciplined asset allocation plan, you may wonder which asset classes are appropriate for your strategy.  According to the Securities and Exchange Commission, the best way to determine the best asset class is to consider two factors – your time horizon and your risk profile. Your Time [...]

from Joshua Kennon