Rick Kahler's Financial Awakenings

Now that the election is over, the partying has begun for our next President’s enthusiastic supporters. Meanwhile, President-Elect Obama and the Democrats are getting ready to enjoy almost complete control of government policy, something no party has come close to having since 1965.

Change is in the air, so let’s review the changes Obama promised to deliver on the tax front.

When we pass from this life, we will each leave a legacy. Regardless of our preparation—or lack thereof—for the end of life, we will indisputably leave something behind. That legacy will be both tangible and intangible.

Most of us know that the purpose of a will or living trust is to pass on the material things we want people to have. However, few of us have ever given much thought to how we wish to pass on our knowledge and beliefs.

One of my clients recently asked me, “How much has your portfolio lost in the market this quarter?” My answer was, “Exactly the same percentage as yours.”

To me, managing my clients’ portfolios in the same way I manage my own is a no-brainer. Employing the same investment philosophy in both cases is a matter of both common sense and integrity.

Friday, October 10, was one of the darkest days of my professional career. Indeed, that whole week was one of the most emotionally exhausting times I’ve ever had in my work. It was a helpless feeling watching the portfolios of my clients in a free fall, melting away like ice cream on a hot summer day, for seven straight trading days. Then on that Friday, to watch the Dow hit 7,777 intraday was overwhelming.

With the current economic news, “investing” in the lottery might be tempting. But before you go buy a bunch of tickets, here’s a story I recently heard from an old friend. He and his wife had won a million dollars in their state lottery last year. He told me that after all the initial excitement, he now wishes they had never won the money. “It’s caused more problems than it’s worth,” he said.

I found this interesting.

The bear market we’ve anticipated for the last several years is here, and she’s recently grown from a baby bear into a mama bear.

We are said to be in a bear market when the Dow or the S&P 500 declines by 20%. Until a few days ago, even with all the market gyrations of September, we were down about 23% from the top. The precipitous drops of the last few days have left the S&P down 36% from the market high on October 9, 2007.

The number one question posed to me by clients and the media alike in recent days was, “What do you think of the bailout?”

As best I can figure, the foundation of the most recent problem came in 1999 when the Clinton administration wanted to increase the percentage of Americans owning homes. The reason more Americans didn’t own homes was that they could not qualify for home loans.

Okay, I’ll admit even I am starting to get scared. No, I’m not concerned about my asset allocation policy, my mutual fund investments, or the US economy as a whole. What scares me is the economic ignorance of our two Presidential candidates and the American public.

Certainly, this has been an interesting time for the economy.

What about other money market funds available to your clients? Is client money safe in those funds?

• We cannot predict the effects of recent market conditions on any security, including money market mutual funds.

• However, we can tell you that TD Asset Management USA Funds, Inc.

Now that the conventions are over, I’m forced to wait until the debates to get my next dose of political adrenaline. In the meantime, here are the money scripts I heard from the Republican candidates.

Governor Palin’s acceptance speech included the following beliefs about money:

• Luxuries are inappropriate for elected officials.

• Government should not spend more than it receives.