Faith Based Investing

Where do we draw the line between faith and common sense?

When it comes to the area of saving, many confuse the act of planning with the act of hoarding.   There are both proper and appropriate ways to save and invest portions of our money.  However there is a danger of investing to create financial freedom apart from God.  Where is the line?   It will come down to your heart and where your motives lie.

The motives must still involve God and his direction for your life.  Taking matters into your own hands and relying on wealth alone will open yourself to an ungodly lifestyle.  I have met many strong followers of Christ who believe investing and saving show a lack  of faith in God.  It reminds me of the story:

A man died and went to heaven and when he got to heaven he questioned why God allowed him to die.   Earlier in the day the man had turned on the weather channel and saw that heavy rains and flooding were coming and everyone should evacuate.  The man, being faithful, said, “God will help me” so he did nothing.  The waters came in like a fury.  The flood waters began to rise and he was forced to the second floor of the house.  He saw a boat go by and the two men inside the boat asked if he needed help.   He refused saying that “the Lord will help me”.  So they went on their way.  The waters continued to rise so he was forced onto the roof of the house.  Suddenly a helicopter came by and asked if he wanted a lift.  Again, he refused saying “the Lord will help me” and off the helicopter went.  The man died in the flood and questioned why God would allow a man with such strong faith to die.  Who do you think sent the message, the boat, and the helicopter?

Tug o’ War

There is a strong need for faith but we need to balance this with our God-given common sense.  It is a responsibility for us to provide for our family’s future.  1Timothy 5:8 always comes to my mind:   “Everyone should provide for his own relatives.  Most of all, everyone should take care of his own family.  If he doesn’t, he has left the faith.  He is worse than someone who doesn’t believe”.  Pretty strong words!  We should have faith but also the desire to find ways to provide for our families.   Here are some guidelines to balance faith and common sense:

1. To be good stewards.  It’s all on loan to us from God.  By learning about the various options that are available to us, we can make the best decisions.   Careful study, prayer, and education are necessary.  If you were buying a car would you buy the first one available?  Most people will do some research, compare features, options, and prices.  You would possible test drive various models and shop different dealers to select the right vehicle.  It involves many steps.   It is the same with investing.  There are several steps you need to take to educate yourself on all of the possibilities so that you can narrow in on the type that is most beneficial.   God expects us to be wise in the area of finance.  If we do not desire to do this, we are expected and commanded to seek wise counsel.  Like the thief who pleads ignorance, the judge will still sentence him as this is no defense.  We are called to do the best with the resources that God provides.
2. To learn to defer gratification. By saving and investing we are able to delay things that we want today in preparation for tomorrow.  This has been a real sore spot for many.  They wrestle with the faith versus reason battle.  The chicken or the egg?   If we do not save for our futures, we impose on someone or something which drains resources. We also  need to be careful that we are not so close to the edge that we blinding cry out “faith” when reason could solve the problem. At the same time, we cannot take God out of the picture and always claim reason.  By praying and carefully examining our options, we can begin to achieve the correct balance.  Delaying our immediate wants allows God to provide for our needs and prepare us for bigger things to come.
3. To provide for our family’s needs. (i.e.: college, a home, etc.) As a father, I have the tremendous pleasure of providing for my families, physical, mental, spiritual, and financial needs.  As the sole bread winner, Karen and I decided early in our marriage that when it came time to have children, she would stay at home with them.  This was a clear and easy decision to make.  We wanted that close relationship to be at home until the children went off to school.  As a provider of the family saving and investing allows for me to provide an adequate back-up plan for my premature demise.  I have faith that God would provide, but why drain resources when I can use the skills and resources God provides today to prepare for tomorrow.

Seeking Wise Counsel

“No man is so foolish but he may sometimes give another good counsel, and no man so wise that he may not easily err if he takes no other counsel than his own. He that is taught only by himself has a fool for a master.”   —  Hunter S. Thompson

“He who represents himself has a fool for a client and an idiot for a lawyer.” – Old Legal Saying:

Are you a do-it yourselfer?

Many times we try to do things ourselves.    We either think we have enough skills or expertise to tackle daunting tasks or we don’t want to spend the money.  Whatever the reason, some things are best left to a professional.

Me, for example, I have discovered what I am good at and what requires professional assistance.  Take, household improvements or repairs, I learned very early on, that this is an area that requires help immediately.  After several “experiences” of making bigger problems out of small routine repairs, it is quite obvious this is an area where I lack gifts.  I can make a mountain out of a mole hill!  What starts out as a simple task to most turns into a big mess for me.  Believe me, it is not fun paying someone to not only fix the original problem, but also the new problems I have created.   Sometimes, even when we have the expertise, knowledge, or skills, we still need a sounding board to bounce ideas and receive wise counsel.

Smart in finances, needs help managing

Bill came into my office.   A middle aged CFO with over 25 years of financial experience, an MBA from a good school, and decades of investment experience.  The thorn in his side was his investment portfolio?   Himself!  Despite the schooling and book knowledge, Bill’s portfolio was a mess and nearly impossible to keep track of.  Like the weeds that took over the garden, Bill left his portfolio untamed.   Bill had “over diversified” his holdings.  He owned hundreds of stocks, mutual funds, and bonds. It would make a full-time job tracking, analyzing, and monitoring all of his positions.   Bill thought he knew what he was doing, but his results confirmed otherwise.  Like the surgeon is prohibited from performing surgery on family members, due to the emotional conflicts, Bill should have outsourced his own portfolio.

The biggest mistakes, most investors make is a lack of understanding risk.  Most investors who handle their own portfolios are too conservative or too aggressive.  Very rarely do they have the right mix.   The average do-it yourself investor experiences returns significantly lower than the markets and falls way short of the returns achieved by financial professionals.   A recent study showed that an average investor can trail an index by as much as 8% per year!

Questions to ponder:

What areas of your finances could you turn over to a professional?

Would God be proud of the way you are handling your portfolio?

What other areas of your life could you use wise counsel?

Two Proverbs:

Proverbs 15:22: “Plans fail for lack of counsel, but with many advisers they succeed.”

Proverbs 11:14: ^“For lack of guidance a nation falls, but many advisers make victory sure.”

Where is your treasure?

God spoke pretty clearly when He said “where our treasures lie, our hearts lie also”.  We read it, but do we live it?  I mean how can he expect us to follow Him completely, right?  Yet tht is exactly what He is asking.  We, instead, put our trust in things that have no eternal value…  (money, material possessions, fame, etc.).  God wants our minds, hearts, and wallets to pursue His righteousness, yet too many of us pursue the wrong things.  We care too much about the amount of the profits we make rather than the source of those profits. 

Where Values and Profits Collide

Many corporate leaders are faced with decisions in which values and profit collide. This is why it is valuable for you, the investor, to set your priorities. Let your principles and values guide you in accomplishing this task. To start, think long and hard about your answer to this important question:   Would I abandon my principles in favor of choosing a path of profit?

Biblical values are many times pitted against bottom line demands. Larry Julian wrote about this in God Is My CEO. Larry is a successful consultant and speaker who specializes in biblically based leadership development and strategic planning. His mission is to help businesspeople integrate their work and faith, transform their adversities into their destinies, and revolutionize their lives into their legacies. There is a great moment in God Is My CEO where he shares,

“We usually want to do the right thing but often succumb to the short-term, bottom-line demands of daily business life. While we are encouraged to follow God on Sunday, we are not supposed to make the right ethical decisions in the trenches on Monday through Friday. 

This paradigm has demanded that we operate in two separate worlds: a deeply personal, private, spiritual world and a very public, demanding, competitive business world. For the most part, these two worlds clash in their values, beliefs, and principles and we are caught in the middle.”

 Dishonesty Has a Way of Catching Up With You

Taking part in an activity that is unethical, immoral, or dishonest to make a financial gain is wrong no matter how you try to justify it. Throughout history great men have fallen because they neglected to maintain moral integrity.  From those who participated in the slave trade to those involved in Nazi concentration camps to the Wall Street meltdown of 2008, in which we watched companies that had been around for more than one hundred years collapse. One common theme recurs: greed, deceit, and a “culture of corporate corruption.”

 Integrity is critical not only in our personal lives, but in daily business activities. If you are like many, when you hear words like integrity and character, you may think about morals and ethics, but do you think of profit potential? If a corporation and its leaders lack integrity or offer products and services that harm people physically, mentally, financially, or spiritually, who pays the price?

 The character of God is based on love, faithfulness, and trust among many other traits. But when we allow our character flaws to interfere with our relationship with God, we ultimately pay the price. Look at anyone who has fallen in Hollywood; look at the number of sports stars whose careers have come crashing down. Look at church leaders who have been plagued by scandal. Look at top business and governmental figures who have gone to jail over fraudulent activities. All these stories typically begin with a breakdown in character.

 We Need to Rebuild America!

When we allow huge moral and ethical lapses to occur, over time they eventually cause some major losses of not only individual careers, but entire companies and even confidence in the markets themselves. But the biggest price of all is the separation from God. Though God never leaves His own, many choose to run from Him. God is the cornerstone of our laws, liberty, and government in America. Now more than ever we need to strengthen America.  Are you doing your part?  Are you investing in corporations that support your values and promote faith, hope, and love?  Are you screening out companies that are destroying our culture?   One investor at a time, we can unite to rebuild America and make attractive profits in the process.

Do your values reflect the world’s priorities?

Let me ask you an important question: How do you feel about the moral direction of our country? Are you saddened by any of the items on the following list?

• The rising number of abortion clinics and facilities

• The increased activity of “pro-abortion” activist groups

• The shady, deceptive practices being used by the pornography industry

• The number of deaths caused by the tobacco industry

• The number of families being torn apart by addictions ranging from alcohol and drugs to gambling

• The promotion of homosexuality

If any of these issues deeply sadden you, think of how God must view His creation being destroyed by these issues. It breaks His heart. If Jesus were an investor today, would He place money in any company involved in those areas? Would He choose to start a business of His own that was involved in any of these areas?

The answer to both questions is an emphatic no, but you may be unknowingly profiting from these industries.  God has entrusted you with His resources, and it is your duty to be a wise and faithful manager of the assets He has provided you. In order to do this, you will need to follow biblical principles. As a Christian and an investor, it is more important how you make your money than how much money you make.

There is no doubt that sinful activities can be extremely profitable, but if you can invest in a manner that avoids industries that blatantly oppose God’s Word and still make a good profit, why would you choose any other way? Do you think God is more concerned about the amount of money you earn or the manner in which you earn it? How we invest money is a true measure of the values we hold dearly. If we stray from God’s values should we really be surprised when things fall apart?

The World vs. the Word

You may be confused as to how to manage your money simply because you have taken the world’s advice. You may have formed your financial habits from the actions and advice of your parents, friends, school, and the media. How successful has that been for you? For many, the approach is simply not working. Why are so many failing?

When we have an educational system in America that does very little to teach people the basics of financial management, a church that shies away from financial discussions, and an abundance of confusing, contradictory messages from the media and so-called experts, it is no surprise the average Christian is confused about where to turn for advice!

Choosing the world’s way of handling finances over God’s way is a recipe for disaster. Fear and greed are the motivating advice being sold by much of Wall Street. This advice can lead to financial ruin. Many become so confused that they choose to go it alone and rely on the banks to tell them what they can and cannot afford. They may choose to make financial decisions based on the latest advice in Money magazine, on the radio or TV, or their coworkers’ suggestions.

Rather than knowing for themselves where they stand financially, they listen to bad advice. Hosea 4:6 reads, “My people are destroyed for lack of knowledge” (NIV). The majority of people have no financial plan or have built their plan on the ways of the world. If what we’ve been doing so far it isn’t working, we need to change direction. Change begins with looking at God’s Word.

BIBLICAL WISDOM ON INVESTING

On diversifying: “Give a portion to seven, or even to eight, for you know not what

di­saster may happen on earth” (Ecclesiastes 11:2 ESV).

On seeking advice: “Without counsel plans fail, but with many advisers they succeed” (Proverbs 15:22 ESV).

On being steady, patient, diligent, and faithful: “The plans of the diligent lead sure­ly to abundance, but everyone who is hasty comes only to poverty” (Proverbs 21:5 ESV); and “A faithful man will abound with bless­ings, but whoever hastens to be rich will not go unpunished” (Proverbs 28:20 ESV).

On screening your investments: “You must not bring the earnings of a female prostitute or of a male prostitute into the house of the LORD your God to pay any vow, because the LORD your God detests them both” (Deuteronomy 23:18 NIV).

Our goal at www.jayperoni.com is to help you make wiser decisions with your investment dollars.  On a regular basis we will feature a new segment called  ”The Battle of Good Versus Evil”.  We will look at the activities of various corporations and present both the good and bad being done by publicly-traded companies.

I wanted to share some analysis from our friends at www.stewardshippartners.com:

Time Warner  (Ticker TWC) – Porn, Homosexuality and Anti-Family Activity

“Things that cause people to sin are bound to come, but woe to that person through who they come.” Luke 17:1 (NIV)

Time Warner is perhaps best known today for its disastrous acquisition of America Online, viewed by many as one of the worst decisions by a corporate management team in history. While this purchase of one of the Internet’s early icons has severely hurt shareholders, we are more concerned by the moral pollution Time Warner is now spewing throughout our society as its negative societal impact goes well beyond just the company’s shareholders. While this company certainly has some worthwhile attributes, these are easily offset by the sizable quantity of disturbing activities for which it is responsible.

In addition to advertising in porn magazines, Time Warner’s AOL.com derives revenue from ad placements and/or links to porn websites. Clearly, as Christian investors we seek to avoid ownership of companies involved in activities that are harmful to those both producing and consuming the pornography.

Time Warner has also been identified by the Biblically Responsible Investing Institute as one of the foremost supporters of homosexual­ity. The Bible clearly indicates that homosexuality is a sinful behavior and using shareholder resources to promote homosexuality is at odds with Christian investors’ beliefs.

Via Time Warner’s Home Box Office unit, its movie production units and its broadcast TV unit, the company produces a massive quantity of programming which undermines healthy family values. Violence, drug use, sexual content and obscene language are frequently found in the company’s programs.

Excluding Time Warner from our list of potential investments is not a difficult decision. There are few admirable aspects to this company. As BRI investors seeking to please and honor our Lord, we naturally look elsewhere to achieve investment success as we do not want to be associated with a company using shareholder resources in a manner which have a negative impact on individuals and society in general.

Jay’s Take:

Not a place where I would feel comfortable investing the money God entrusts to me.  According to Morningstar (as of 2-20-10), the top ten funds that own Time Warner are as follows:

1. American Funds Growth Fund of Amer A
2. Dodge & Cox Stock
3. American Funds NVIT Growth-Income II
4. Dodge & Cox Balanced
5. Vanguard Total Stock Mkt Idx
6. Vanguard 500 Index Investor
7. SPDR S&P 500
8. American Funds Invmt Co of Amer A
9. Vanguard Institutional Index
10. Van Kampen Comstock A

“Knowledge is the key to financial freedom”

How do you reach your financial goals without sacrificing your principles?

Jay Peroni, CFP® can help you find your way using a GPS System based on biblical principles:

	Grow your wealth: We’ll show you how to find investments that reflect your Christian values, morals and beliefs. You will receive specific investment strategies and advice designed to help you grow the assets God entrusts to you. We’ll teach you how to know what to buy, when to buy, and when to sell. It is about how to find good investments! Imagine making long term 20 year compounded rates of return of 20%, 30% or even 50% per year. We made over 50% in 2009! Some of the greatest investors of all time (Warren Buffett and Peter Lynch to name two) do this by asking two simple questions: Is it a wonderful business? Is it on sale? That’s it. Simple. Easy. We show you exactly what to do!
	Protect your wealth: Our training is designed for an environment such as this! High unemployment, low interest rates, volatile stock market. Our strategies are designed to help you weather the storm, gain peace of mind, and have confidence that you’re heading in the right direction. With specific training and strategies, you’ll know exactly what to do.
	Share your wealth: By having more you can give more and help advance God’s kingdom. Financial freedom allows you to help more of His people. We provide timely financial advice and training to help you better manage your finances.

Learn Jay Peroni’s GPS System that has helped thousands learn how to successfully build wealth!

Only 15 spots left! Classes start March 2nd, 2010!

For Details go here:

http://www.jayperoni.com/seminar/sales.html

On Tuesday, I hosted the “No More Just Surviving, Let’s Start Thriving! 2010 is Your Year!” webinar.   We had several hundred participate via phone and/or internet from all over the world!  We are deeply humbled and were excited to share the amazing discoveries of how 5% of the population thrived in 2009 while 95% barely survived.  We revealed 10 key principles.  If you were there, did you take notes???

For those who were able to attend live: Thank you so much for carving out some time to spend with me, I hope you found it educational and rewarding.   I have extended the $50 discount on the 4 week intensive course.  

You can still go to http://www.jayperoni.com/seminar/sales.html

 Type in PERONI  as the discount code and you will instantly save $50.  

Remember the class starts on March 2nd and will be four weeks of intensive learning followed by a year of practical application – truly life changing.   We only have 15 more slots open. 

For those who missed the live webinar or want to hear the recording:

Please go here to listen:

http://www.audioacrobat.com/play/WRR7sBVQ

Even though you didn’t attend live, you can still save $50 off our 4 week intensive course as well by entering PERONI as the discount code at http://www.jayperoni.com/seminar/sales.html

Only 15 slots are open and the doors will close until the next session!

Slides from Tuesdays Webinar

Thrive 2-16-10

Attached are the slides I presented on Tuesday night (click above).  As always, if I can answer any questions, please let me know.

Thank you for supporting us!

Mistake # 1: choosing a salesperson instead of an independent professional with a fiduciary responsibility.

According to Registered Representative Magazine, salespeople in the financial services industry earn on average $175,000 to $200,000 per year. It’s not uncommon for financial advisors to earn millions annually.

Though many advisors may claim to have your best interest at heart, you actually fall to the third slot on the totem pole of many advisors:

1.         Your advisor’s interests

2.         His or her firm’s interests

3.         Your interests

The Securities and Exchange Commission (SEC) and the National Association of Securities Dealers (NASD) govern brokers and investment advisors.  However, the odds of an advisor facing daily conflicts of interest are as common you spotting a Toyota while running an errand.

Conflicts are so widespread and entrenched on Wall Street that all attempts at reform have failed. The backroom deals, commission incentives, payments for shelf space, etc are happening as you read this.  Advisors are often “glorified salespeople” who have one goal: make as much money as possible.  Most have no fiduciary responsibility so the prudent rule says they can invest in anything as long as it does not harm you.   So the advisor is free to sell you a variable annuity with a 10 percent commission.  Your cost? Five percent annually in fees and by the way you can’t sell it for at least ten years or you’ll pay huge penalties.

So in essence, they are not bound to act solely in your best interest.  With commissions on the line, many sales people will act in their own self-interest, justifying the product with the highest commissions. With two identical product choices (one paying a 7% commission, the other 4%, which do you think the advisor would choose?)

From a legal standpoint, an advisor is only required to avoid selling you an “unsuitable” investment product. This meets a very minimum standard.  There is no requirement to act in

your best interests or as a fiduciary on your behalf. Additionally, they don’t even have to disclose any conflicts of interest that may exist.  Talk about a bum deal for you!

Mistake # 2:  Listening to the media

Money magazine, Fortune, USA Today, CNBC’s Jim Cramer, Forbes, you name it; they are all there to entertain! Let me repeat this they are all there to entertain. This means sell you something! If you don’t tune in, buy from their advertisers, and continue to frequent them regularly, they go out of business. Bold headlines, irrational advice, entertaining news, sensationalized stories…it must capture your attention.

How poor is the advice from the media? In 2000, Case Western Reserve University conducted a study showing that investors who follow media recommendations lose 3.8% of their money in the following six months after the recommendation. So why do so many people blindly follow the media’s investment advice? Predictions made about sports, weather, and Wall Street make good conversation pieces, but poor investment strategies!

Mistake # 3:  Listening to friends and family talk about “what’s hot”

Since 1990, we’ve seen investing fads come and go. In the 1990s it was technology stocks, followed by real estate, and then it became oil and gold, then emerging market countries like Brazil, Russia, India, and China. Today many flock to any form of green or environmental investing. Investment fads are only in vogue until everybody knows about them. Once they become cocktail party conversation, financial magazine material, or an internet sensation, the fad is as good as dead on arrival.

I remember late in 1999 when I received a call from one of my beloved clients Molly. Molly was in her mid-80s and a very conservative investor. She was wondering if she should sell many of her dividend stock investments and put them into an Internet mutual fund. I asked Molly about her nearly 30% return from the prior year. Was she not happy? She said she had a friend (and everyone has one of these friends) who made over 100% the prior year in an Internet fund. After explaining the risks, and discussing her personal situation, I talked Molly out of investing in the Internet fund. Not that I had a crystal ball or anything, Molly had no place being in the internet.

Normally a fixed income and dividend stock owner, this would have taken her risk level from a 4 all the way to a 10. Molly took my advice and we all know how the Internet story unfolded. I don’t always claim to get it right when it comes to trends or predicting short-term movements in the stock market, but what I can spot are troubled signs that a strategy is headed for disaster. Human nature drives people to invest in fads only after prices have already risen. This means those late to the game are the most apt to get hurt. We only hear about a trend after people have already been successful making it less and less likely that you can follow their success. Instead, you need to figure out how to buy low and sell high. Here’s a hint: investing in fads is not the way!

Mistake # 4: Listening to your co-workers

Too many people put too much in their own company’s stock or take too much advice from co-workers.  When it comes to investing, many turn to the well known well established companies. After all they can’t fail? Wait, Enron, WorldCom, Lehman Brothers, and Ginnie Mae to name a few, were giants who became extinct just like enormous dinosaurs. Bigger is not always better! In fact, much of the growth for many companies takes place within the first few years of operation.

Bloomberg provided further proof that the largest companies aren’t always the best. Their publications (as of December 31, 2008) show that 49% of the companies in the S&P 500 (largest, most widely known companies) had lower prices in 2008 than in 2000. In fact Merrill Lynch lost 78% in 2008, AIG lost 97%, Fannie Mae lost 98% Freddie Mac lost 98%, while Wachovia lost 85%. Still not convinced?

From 2000 to 2002 GE lost 53%, from 1999 to 2005 Coca-Cola lost 40% within seven years, from 2000 to 2002 McDonald’s lost 60% in three years, even trusty old Wal-Mart lost 37% from 2000 to 2007 (a 8 year span). These are some of the largest companies in the entire world. If they can lose almost half or more of their value within a relatively short period of time, biggest isn’t always best!

Don’t get me wrong, large company stocks have their place in a portfolio. My point is just don’t assume that if you buy the biggest and best companies you will profit. As they say “timing is everything”.

In order to truly understand an investment opportunity, much homework is needed. You should evaluate a company’s financial potential by looking at a wide number of financial data available at sites like www.Morningstar.com, www.valueline.com, www.zacks.com, and Yahoo Finance to name a few.

Where do you turn for financial advice?

So where do you turn? Rather than running from advisor to advisor, changing accounts from firm to firm, or seeking a savior, other than The Savior Jesus Christ, it starts with your education. You can’t expect someone else to bail you out of trouble.  It all starts with you!  You have the power to change your financial future if you are willing to put in the time, energy, and effort.

There is no one-size-fits-all solution. Truth being, there is no shortage of good ideas: Stocks, bonds, real estate, options trading, commodities, exchange-traded funds — there are dozens of ways to invest. Chances are you’ve probably tried some or many of these options. How successful have they been? If those ideas made you rich, why are you reading this book?

Your education is the key to your future success. If you want to grow your wealth, you cannot keep doing the same things you’ve done in the past and expect different results. You probably tried a lot of ideas with little to no success. This is okay. In fact better than ok, it’s perfect! This is perfect because you’ve seen what hasn’t worked and you now know there has to be a better way.

I found a better way!

Throughout the past 15 years, I have been managing millions of dollars for people just like you. I’ve spent years studying for the CFP® designation, years getting my masters degree in financial planning, and working for some of the largest firms on Wall Street. Then finally I had enough! I was tired of working for firms that claim to have the best interest of their clients at heart but their decisions clearly indicated otherwise.

The chain of command often does not work in your favor. If your firm is publicly traded, shareholders come before you. If you invest in mutual funds, your manager gets paid whether he makes you a dime or not. Mutual funds spend billions each year selling you product yet very few outpace their benchmark.  If you invest at a bank or credit union it’s often about fee revenue more so than making you money. If you invest with an insurance company often it’s about making a commission and there is little incentive for servicing your account.

Now don’t jump to conclusions. I’m not here to bash every financial advisor, broker, planner, or a Wall Street firm, I am here to say I have found a better way.  That’s exactly why I help start Values First Advisors, an independent firm dedicated to putting our client’ values and interests first.  At Values First Advisors, we offer asset management and financial planning from a biblical perspective and work on a fee-only basis.   We charge fees for our services based on the value of our time and the amount of money we are managing.  It’s all about having someone working in your best interests, if we can help you in any way, please let us know.

With all of the reckless government spending, many are becoming concerned about the potential devastating effects of inflation.  Significant inflation is not only feasible, it is very likely. I wanted to take a few moments to update you on what is going on in the economy, how inflation can be dangerous, and provide several investment ideas that will help us fight inflation in the upcoming days.

Why is inflation inevitable?

With Democrats and Republicans alike agreeing deficits are necessary to fight our current economic crisis, Obama and his party have no constraints on how much they are willing to spend! “Sky’s the limit!  Heck, they have already committed to spend over trillion-plus dollars over the next two years alone.

So how will we pay for it?

We really only have two ways to pay for the spending:

(1) Printing more money, which causes inflation, and/or

(2) Hiking taxes, which kills investment, businesses and jobs.

Why is inflation dangerous?

Inflation simply means rising prices. But in addition to retail price inflation measured by the Consumer Price Index, you also have monetary inflation – the growth of the money supply, or the total amount of money in the economy. (Our money supply includes dollars, checking and savings accounts, CDs and money market funds, and short-term transfers of securities in exchange for cash.)

Here is the great balancing act of the Federal Reserve. If it eases the money supply (think lower interest rates), borrowing costs decrease, and investment generally increases. But with easy money, price inflation and currency devaluation follow. The Fed can fight inflation by raising rates to effectively tighten the money supply, but with possible byproducts of reduced consumer spending, lower corporate earnings, and less investment.

Is the government helping or harming the economy?

My opinion is the government is doing much more harm than good with its current spending.  We must realize that government intervention is magnifying, not solving the problems that caused the crisis!  It’s only when the patience of the public with Obama’s remedies run out that we can get the train back on the tracks.  Was Scott Brown the beginning of this trend?  Let’s hope so!

What do you do in the meantime?

There are many ways to protect you and your family from the potentially dangerous effects of inflation. Hard times for America do not necessarily mean hard times have to come for you.  No matter what the economy is doing, no matter what the state of financial markets are there is always a strategy available that can make you money. The key is to recognize opportunities wherever they may be and, more importantly, detach from old investment strategies that are no longer working.

Here is a list of inflation protection securities.  Please note these are a list of suggestions.  Many of these do not appear in our recommended portfolios as of yet.  Please do your own research before purchasing. Here are six ETFs poised to do well if inflation takes off:

Holding   (Symbol)                                  

IShares US TIP Securities  (TIP)                                         

IShares COMEX Gold   (IAU)                                        

IShares Silver (SLV)                                       

Proshares Ultrashort 20+ Yr Treasury (TBT)                                                                   

Proshares Ultrashort 7-10 yr Treasury (PST)    

SPDR DB Intl Gov Infl-Bonds  (WIP)

Let’s be realistic: the next several years may be the toughest ones for Americans in their lifetime. However, they do not need to be tough years for you if you prepare, trust in God, and find and follow sound investment advice.  We here at jayperoni.com seek to be a trustworthy, reliable source for your financial advice for years to come!  You don’t have to go it alone. We’re here each step of the way.