Cost of College

by Bruce Fenton

A college-bound student is likely to pay a huge price for that coveted sheepskin … $12,127 a year to cover tuition, fees, and board and room at a public institution … more than $29,000 per year at the average private college, according to the College Board.

The rest of the story is not much better. If college costs continue to inflate at the same rate as last year (6.6 percent), those same figures are $38,316 (public) and $91,627 (private) for a child born today. What’s more, congressional budget cuts mean variable-rate federal loans, with rates as low as 4.7 percent, will lock in July 1 at higher fixed rates. Stafford Loans, the most popular of all, will be fixed at 6.8 percent while Parent Loans for Undergraduate Students (PLUS) will be fixed at 8.5 percent.

In 1912 the late Supreme Court Justice, William O. Douglas, rode his horse from Yakima, Washington to Whitman College in Walla Walla where he lived in a tent (his story) while working his way through school and sending money home to his widowed mother. After graduation he hired on as a sheepherder to take a trainload of sheep to Chicago, riding the rails the rest of the way to New York and Columbia Law School. This makes a wonderful story, one that is sure to win points when you tell it at the dinner table to your children … but not the case today where the cost of college now exceeds the cost of a new home in parts of the country.

The College Board tells us that last year 13 million college students in the United States received $143 billion worth of financial aid. The American Council of Education estimates that more than 10 percent of those who didn’t apply would have been eligible for some aid.

There is plenty of financial aid available to those who learn how to use the system and resources available, according to student loan originator, Sallie Mae®. On January 1, the Department of Education began accepting the Free Application for Federal Student Aid, or FAFSA.

The FAFSA process is needs-based, taking into account parental and student income, age, and assets and determines how much the family is expected to contribute toward the student’s education. If this number is less than the amount charged by the selected college, the student is eligible for the difference, which can come in the form of grants, scholarships, or low interest loans.

To understand the FAFSA process, go to the web site, www.finaid.com where you can input your financial information and calculate an estimated family expected contribution figure.

Sallie Mae’s website connects to a database with more than 2 million scholarships worth roughly $15 billion. The database lists the scholarships for which students qualify, based on their financial needs, grade-point average and academic or extracurricular interests.

For families facing college expenses, those likely to qualify for financial aid should strive to get into the best colleges possible and those likely to not qualify should seek out the most economical college programs.

In the case of the former, if the family is expected to contribute $10,000 and the cost at an Ivy League school is $45,000, the family is going to pay $10,000 whether the student goes to a state college next door, or to the Ivy League institution.

In the case of the latter, parents and student should shop for the best school possible within their budget. The student might consider enrolling in Advance Placement classes while in high school to earn college credits. These credits may cut the college stay from 4 years to 3 … a significant saving!

Scholarship and aid money typically is handed out on a first-come basis. So learn the system, apply early and apply often.

Bruce Fenton is a financial consultant, a writer, and the Managing Director of Atlantic Financial Inc. Bruce welcomes inquiries, comments, and questions. He can be reached by contacting The Fenton Report.

Cars and USA Today

by Wendell Cayton

According to an article in USA Today, I qualify as a “cheapskate.” No, not because I make my own soap, or buy the cheapest beer, but because I drive a car with over 250,000 miles on it. “Not such a bad thing,” says Thomas Stanley, Ph.D., author of The Millionaire Next Door.

Dr. Stanley, who makes his living studying the habits of millionaires, tells us that those interested in achieving real wealth view financial independence as more desirable than displaying high social status. His study subjects see cars as functional tools of transportation, not status symbols. They are more likely to own older, American-made cars rather than newer, more glamorous foreign models.

I can attest to his findings from my experiences in dealing with the financial lives of many people. Show me a person who constantly trades for a new car, or leases a more expensive car than they could buy, and I will show you someone who is having trouble accumulating wealth!
I wasn’t always so insightful. I remember coming home from an all-expense paid, 13-month, camping trip in Southeast Asia with a year’s worth of combat pay in my pocket. Bought the first Alfa Romeo I laid eyes on. Learned a couple of years later in the oil fields of Western Colorado that “metric” and Italian precision hadn’t made it into this land of 24-inch crescent wrenches and breaker bars!

After “investing” in a number of other foreign sports cars, I began to understand what Dr. Stanley was talking about as he described the inverse relationship between wealth accumulation and frequent new cars. He said we are essentially a consumption-oriented society. If we choose, we can become wealthy by adopting a defensive strategy of inoculating ourselves from contracting the high-consumption lifestyle that many of our non-wealthy, but high income-earning neighbors have adopted. By so doing, we should be able to save significant amounts of capital that can be put to better use as investments in real wealth producing assets, rather than the superficial.

Stanley’s PAWS (Prodigious Accumulators of Wealth) are more likely to:

• Buy used cars, especially large American makes. They buy them by the pound. Why spend $15 per pound for a BMW 740 sedan when you can buy a Ford Explorer for $5.98 a pound?
• Spend 25% less than those who inherit wealth on their most expensive car purchase.
• Be more interested in objective measures of wealth than in the car they drive.
• Favor models such as used Jeep Cherokees, Cadillac De Villes, Ford F-150 pickups and Explorers, Lincoln Town Cars, and Chevrolet Suburbans.

I have found other advantages to owning a 250,000-mile car. I haven’t made car payments in years. I don’t waste a lot of time in front of magazine racks reading up on the latest models. My car is easy to find in an airport parking lot. It’s the one that doesn’t look like all the newer cars . . .no fancy round headlights with little wipers. And it continues to transport my daughter, her friends, and a dog without causing me to stress out over their spilled drinks or muddy paws.

Finally, my wife apprised me that granite counter tops are more important in our life than cars. So what do I need a new car for anyway?

Measuring Oil Reserves

by Bruce Fenton

The cold winter, strife in the Middle East and a contentious energy policy proposal all make fertile ground for investors looking to profit from investments in oil companies. However, as investors are finding out, a barrel of oil in the hand is not like a barrel in the ground!

Any investor looking to profit from an investment in an oil company wants to know the amount of oil available for sale. Unfortunately, that oil is in the ground, and its actual volume must be estimated and then extracted before it can be sold.

Measuring oil reserves is both a political and a practical problem. Different countries and oil companies use different methods. Politicians would like to see oil reserves grow and contribute to the wealth of the world. Regulators like the SEC are apt to take a more conservative approach. And there is the issue of the unit of measure—what constitutes a barrel of oil?

The Handbook of Chemistry and Physics lists eighteen different definitions of “barrel,” ranging from 30 to 50 U.S. gallons in volume. For example, a barrel of beer equals 43 U.S. gallons, while a barrel of oil is only 42 U.S. gallons, a measurement adopted by the Petroleum Producers Association in 1872.

In the political arena, the stated value of a nation’s oil reserves can enhance its perceived wealth, enabling it to borrow for other purposes at more advantageous rates against its oil reserves. Oil producers doing business within these nations are encouraged to use more liberal measurement techniques when measuring oil reserves. However, those who lend against reserves require a tighter definition of “reserves.”

Oil that has been discovered and remains in place is considered “reserves.” All discoveries are initially appraised for their size in terms of oil in place. Based upon complex calculations involving many variables, the probability for successful extraction is estimated. If there is a reasonable certainty that the oil can be recovered given current and projected future operating conditions, the reserves are considered to be “proven.”

The remaining reserves are assigned “probable” and “possible” designations. The former are reserves with better than a 50% chance of recovery and the latter have a less than 50% chance of being recovered.

Over time, reserves can be changed from probable or possible to proven or vice versa. For example, according to OPEC futures in 1944, a special mission estimated Persian Gulf reserves at 16 billion barrels proven and 5 billion probable. By 1975, those same fields had produced 42 billion barrels and had 74 billion remaining. In 1984, geologists estimated a 5% probability of another 199 billion barrels remaining. Within five years, they had already appeared.

Bruce Fenton is a financial consultant, a writer, and the Managing Director of Atlantic Financial Inc. Bruce welcomes inquiries, comments, and questions. He can be reached by contacting The Fenton Report.

Kids and Money

by Wendell Cayton

I recently became an advisor to a group of grade and middle school students participating in a stock market simulation game. Sponsored by Cal State Hayward, the game allows student teams from around the country to invest a mythical $100,000 in stocks and mutual funds. The winner’s are the various age group teams with the greatest investment value at the end of the contest.

From my experiences helping families with their financial affairs, the real winners are all the participants who learn some rudimentary fundamentals about money, prices, markets, and economics. Unfortunately, this part of their education is often overlooked in their home life, where money matters, like sex, is often a taboo topic of discussion.

For too many children, home finance matters consist of a parent(s) sitting at the kitchen table, late at night, once a month scratching figures on a pad, and writing checks. This is always followed by a noticeable deterioration in mood, and proclamations beginning with the negatives, “We can’t afford,” “Have to cut back,” and “No more.” Money is something just not spoken about in polite company.

As a result, children grow up and enter adulthood with few positive ideas about handling money. At 18 they enter the adult world of money and fantasy when they are inundated with credit cards and ample temptations for spending. I relate this to giving a child a very powerful car… and no driving lessons!

The need for financial education for our children is quite clear. According to Dara Dugay, Executive Director of the Jump$tart Coalition for Personal Financial Literacy in Washington, only about 10% of high school graduates have learned personal finance. She points out that the average American is spending more than he or she is saving, a fact that reinforces the idea that children learn spending habits and not savings habits.

Fortunately there are a great many resources available to parents and students alike who want to learn about personal finances. Nonprofit organizations like Jump$tart, the National Endowment for Financial Education (www.nefe.org), and the National Institute for Consumer Education (www.emich.edu/public/coe/nice) have a wide offering of resources and educational materials.

Both parents and children might benefit from reading a number of the fine books now available on the topics of money and personal finance such as Robert Kiyosake’s Rich Dad, Poor Dad, or Willard Strawski’s Kids, Parents and Money.

Here are a few simple stratagems parents can undertake to get their children started out in the right direction:

First, have a simple plan with a few easy to understand goals. Write down several meaningful goals for the child to work toward. Help the child set up a budget to reach the goals. Help the child learn the principles of time, the value of money, and delayed gratification. Also, teach the importance of credit and the responsibilities that go with borrowing.

Second, teach the child the principal of saving first and spending second. I once knew a financial planner who liked to tell his listeners that there were two types of people: “Those who spend first and save what’s left, and those who save and spend the rest.” The truism of life is that the former always end up working for the latter!

Finally, relate financial matters to the real world. For example, instead of harping on children to turn off the lights, show them the power bill and let them calculate what it costs to leave on a light or the TV. Make it a participatory learning experience.

Interval Second Home Ownership

by Bruce Fenton

Ever dream of owning a home in Aspen?—haven for movie stars, sports heroes, and others of unimaginable wealth? Even there, where the common second home goes for middle to high seven figures, it may be possible for the common millionaire to “buy in,” thanks to a more affordable arrangement being offered by the Ritz Carlton organization.

According to demographic economist Harry Dent, author of The Roaring 2000s™, as the baby boomers approach the final trimester of their lives, they will seek out wide varieties of second-home living. Rapidly escalating current real estate prices in second-home communities from California to Florida bear out the accuracy of Dent’s predictions.

The boom in demand for recreational homes is also evident in the proliferation of shared ownership arrangements. These can take a variety of forms, ranging from buying “time credits” that can be used at a number of facilities to outright ownership of a specific property for a stated number of weeks or months a year.

Such interval ownership arrangements can be used to provide variety and meet differing interests for vacations.

Owning interests in recreation property is an ideal way to participate in the second home boom, providing one keeps in mind two important points.

1. Ownership of second home properties should never be considered an investment.
   In the first place, the prices of these properties will be the last to go up in a boom and the first to come down after it. In a slow economy, you may not be able to give away a second home!This is even more true of shared ownership interests.
   
   Moreover, the ownership cost of a second home does not compare favorably with renting properties at resorts you wish to visit. In most cases, it will take you from five to ten years of regular use to break even. When you add the association dues, maintenance charges, and exchange fees to the purchase costs, the total will generally exceed what you can expect to pay for comparable facilities on an as-needed basis. On the bright side, those maintenance fees do free you from the worry of property upkeep.
   
2. This type of ownership works best for the family with a variety of travel or recreation interests.

Shared ownership arrangements make it possible to take many different vacations. Ordinarily, owners can exchange time in one resort community for time in another, so there is opportunity to travel to a variety of places at a variety of times. For the “Type As” among us, this causes us to think and plan for much needed time away from work.

Major resort chains such as Ritz Carlton, Four Seasons, Marriott, Hilton, and Disney market many of these ownership arrangements. For as little as a couple of hundred thousand dollars, you can own a month at Aspen in the Ritz Carlton Club (if you don’t want the more popular winter and summer months!)

Still, for an opportunity to hang out at the J-Bar in the Hotel Jerome, the price isn’t bad.

Bruce Fenton is a financial consultant, a writer, and the Managing Director of Atlantic Financial Inc. Bruce welcomes inquiries, comments, and questions. He can be reached by contacting The Fenton Report.

Taking Off Weight

If living a longer, more active retirement lifestyle is appealing, researchers tell us to get up off the couch. A good workout every day can add up to four years to the life expectancy of most retirees, according to research published by Erasmus M.C. University Medical Center in the Netherlands.

Living longer is not the only benefit, researchers concluded. Their studies showed that exercise helps the mind, by improving overall well-being, reducing stress and depression, and working to cut the risk of Alzheimer’s and other forms of dementia.

Yet the “health risk de jour” making headlines and driving fear into the heart of many is the risk of a breakout of avian, or bird, influenza. While the flu has had negligible effect so far, another, entirely preventable, affliction is estimated to kill more that 100,000 of us every year.

According to National Institute of Health figures and research published from conferences such as the ABC News® Obesity Summit held last year in Williamsburg, VA, obesity is far more deadly and a much bigger health risk. Despite the fact that life expectancies are increasing, as a nation we continue to put on weight; the average American is heavier than s/he was a generation ago.

Obesity could have a major effect on Medicare when obesity-related illnesses kick in, according to the researchers from several universities and hospitals. Life expectancy in the USA is now at a high of 77.6 years. If obesity continues to increase, researchers predict we could see the first reversal in life expectancy since the government started keeping track in 1900.

Changes in health care insurance … more restrictions from the health insurance carriers about what is covered … higher deductibles, higher co-pay amounts … spell increased financial risks to retirement plans if obesity is a problem.

Why the “bird flu” risks capture such attention, while an entirely preventable disease goes relatively unnoticed, is probably best explained by Peter Sandman, a self-described “risk communications consultant” quoted in Freakonomics by Levitt and Dubner: “The basic reality is that risks that scare people and the risks that kill people are very different.”

Sandman boils understanding risk down to a simple equation: Risk = Hazard + Outrage. He notes that people under react when the hazard is high and the outrage is low, and overreact when hazard is low and outrage is high. It is easy to see why a media-hyped outrage can bring increased attention on something less hazardous, while something like obesity, with low outrage, silently continues to steal life from a population.

Take this to heart: No matter how successful your retirement saving plan or how great your investment acumen, it will not matter if your health keeps you from enjoying your retirement. The New England Journal of Medicine® puts it simply: “The best way to avoid health problems in later years is to maintain a healthy weight. The keys to healthy weight are regular exercise and good eating habits.”

To stay active, try to exercise 30 to 60 minutes every day. Your exercise doesn’t have to be hard-core, either. Walking, swimming, and stretching are all good ways to burn calories and help you stay fit.

Try some of these activities to get moving:

• Go outside for a walk.
• Take the stairs instead of the elevator.
• Walk or bike when you can … save money on gas and benefit your body!
• Burn calories … tackle those household chores, such as vacuuming, washing the car, or cleaning the bathroom.
• Take up dancing … that’s good for burning 300 calories an hour.

Finally, focus on eating well, which doesn’t mean overindulgence from one diet plan to the next. Sensible will do. In the end the effort you make today will pay big dividends tomorrow … those dividends come tax-free!

Labor Day Thoughts

by Wendell Cayton

For the last week of summer I thought I would pass along a few observations and factoids that you might find useful to stimulate conversations as you finish off the hamburgers on the grill. So, let’s start with housing.

A sure sign the housing market is in a bubble … our river raft guide on the Colorado River spent 10 minutes trying to convince me that I could buy anything in Vail, Colorado, get rich, and retire on my gains. At least that was his own plan!

Who do you believe? … An analyst for the oil industry at Morgan Stanley is predicting oil prices will crash as global growth slows … while competitor Goldman Sachs is predicting a spike in prices to $100 a barrel, according to Worth Magazine.

Just in case you were wondering if we were getting down to our last drop … A Rand® Corp. study reported in The Denver Post® says oil-shale fields in Colorado, Utah, and Wyoming could eventually produce 1.1 trillion barrels of oil, but it would take 30 years before commercial-scale production would produce enough oil to make a bump in supplies. That’s assuming those folks who live out there are willing to make the necessary environmental concessions.

If you are thinking of moving to a more wealth-friendly (read: lower taxes) state, the Bloomberg Wealth Manager® suggests Alaska, Wyoming, Nevada, Alabama, and Washington. You might want to make extra effort to avoid Rhode Island, Nebraska, Idaho, Wisconsin, and New York, where taxes are highest.

The Wall Street Journal® reports that wealthy Americans are borrowing more on margin, against their homes and businesses, to buy stocks. Their source was a report from the Spectrem® Group. Maybe they see something that a lot of others don’t in the stock market!

And from The New York Times® comes this tidbit: more than 9,000 American homes employ a private cook. We have one at our home … me … and I can report that my wife pays next to nothing for the service!

Climbing a 14,000-foot peak in Colorado should be challenge enough; however, now you will be trespassing on private property at the top of Colorado’s Mt. Lincoln. A fellow out there began buying up old mining claims, including one that extended to the top of the mountain. One day a lawyer hiked by and casually mentioned that there was a liability issue with people crossing his property. So he put up no-trespassing signs!

The latest energy conservation plan being batted around Congress and a few states would start taxing drivers on how far they drive, where they go, and when. Shades of 1984 … the plan would force all drivers to install surveillance devices in their vehicles. Oregon is testing a system that would relay information from the odometer and GPS device to the gas pump. Stop and think for a minute what it would mean for the government to know when and where you drive every minute! Believe me, I was joking when I said I would like something like that for my soon-to-be teenage daughter!

Finally, our hearts and prayers go out to the folks whose lives have been devastated by Hurricane Katrina. I have a great deal of faith in the American spirit and our ability to take setbacks like this and recover, to the betterment of all.

To borrow a line from a favorite Clint Eastwood movie, “We will adapt, adjust, and overcome.”

Flat World

by Bruce Fenton

Columbus may have been the world’s greatest entrepreneur: He set out not knowing where he was going, didn’t know where he was when he got there … and did it all on someone else’s dime. He succeeded in proving that the world is round, but six centuries later author Thomas Friedman gives us reason to believe that the world is rapidly being flattened.

In his fascinating book, The World is Flat, Friedman lays out his version of the history of the 21st century. He sees us as being in the middle of a disruptive, dislocating technological revolution that is changing the world in profound ways … at warp speed.

Outsourcing takes on a whole new meaning according to Friedman. It is not about factories turning out products formerly made by American labor. It is about leveling the playing field by connecting together all the knowledge centers of the world in a collaborative process to innovate, build businesses, produce useful products and services, and raise the level of prosperity and innovation on a global scale.

But outsourcing is not simply jobs displaced across national borders. Friedman gives examples of how outsourcing is everywhere … permeating our entire economic and cultural fabric. For example, pull into a McDonald’s® off I-55 in Missouri and the voice speaking to you at the drive-in order window is not in the store … not even in the state … but hundreds of miles away in a call center.

The enterprising owner has figured out that by using one call center for a number of his franchises he can speed up the ordering and delivery process, allowing more cars to be served at a more efficient cost.

Call a JetBlue® reservation number and you are likely to be speaking to a housewife in Salt Lake City, working from her home. JetBlue CEO, David Neeleman, calls it “home-sourcing.” His airline employs over 400 agents, all working at home where they are 30 percent more productive, happier, more loyal, and have a lower attrition rate.

But it is on a global scale that outsourcing is contributing to the flattening of the world as knowledge and resources are being placed in the hands of the many, rather than the few, as was the case 20 years ago. As governments, businesses, and people communicate and interact, we are seeing the emergence of completely new social, political, and business models.

Friedman attributes this flattening process to 10 key events, the first being the tearing down of the Berlin Wall. As he so aptly puts it, “when the walls came down and the windows went up,” the balance of power in the world tipped toward democracy with consensual, free-market-oriented governance, and away from those advocating authoritarian rule with centrally planned economies. He wryly notes that Communism was a great system for making people equally poor while capitalism makes people unequally rich.

What’s important is that this event allowed people with huge potential to climb up the ladder of personal success and “be all that they can be.”

Nowhere is that more in evidence than in India, where the riches Columbus sought are rapidly being generated … albeit in a far different fashion than he envisioned.

When the British turned over their former colony to self-rule, Prime Minister Nehru looked north to Communist Russia for guidance on running his country and economy. For years India struggled with a managed economy. By 1991, running out of hard currency, leaders opened the economy and turned to a more capitalistic model. Three years later their economy was growing at seven percent and an economic tiger was unleashed.

Today, India’s economy is soaring due to technological innovation and services. According to a recent Business Week® article, by year 2050 they will own 17% of the world’s economy … next to a projected 26% for the U.S.

This has largely come about through the tech boom that has made possible sharing knowledge and communication on a worldwide level with people hungry to work hard and succeed.

The World Is Flat is a fascinating book. Friedman has done a wonderful job of looking at the transformational changes affecting us today. It makes for a great Labor Day read.

Bruce Fenton is a financial consultant, a writer, and the Managing Director of Atlantic Financial Inc. Bruce welcomes inquiries, comments, and questions. He can be reached by contacting The Fenton Report.

Using Your Gut Instincts

by Bruce Fenton and Jake Mazulewicz Ph. D

From undergrad business classes to Fortune 500 boardrooms, today’s legal and business environment focuses on analytical thinking: cash flows, statistics and round table discussions.

But how do we explain the staggering difference between people like Michael Dell, who grew Dell Computer from his dorm room to $9 million in sales in his first nine months, and the rest of us? Surely Michael Dell was not simply better at crunching numbers. Some researchers believe one answer may lie in the area of intuitive thinking.

In the high stakes, fast paced world of Los Angeles litigation, celebrity divorces and philanthropy, Stacy Philips, managing partner of Phillips, Lerner & Lauzon, sometimes helps her firm and her clients by relying on her intuition in addition to just book smarts.

Philips calls the use of intuition “critically important” and says “good intuition and people skills are far more valuable than anything else when it comes to any person’s success in both personal relationships and career.”

She is not alone.

A growing number of respected academic researchers and business thinkers are starting to promote similar thinking. Since intuition is a faster working, older and more developed part of our cognitive functions than analytical thinking, research attributing effectiveness to “using one’s gut” may account for some of the rapid growth and effective management of many companies, like Dell.

Despite its advantages, there is little or no training for executives in the use of intuition. In certain circles, mentioning intuition as a decision-making tool might draw a similar reaction to tea leaves or Ouija boards.

Leading executives make extensive use of intuition and gut instincts in their decision processes, sometimes without even being aware of doing so. Perhaps it’s the trust level you feel for a new business associate or the hunch you have about a new office location being “right.” There is evidence that these instinctual reactions are actually be the result of years of training and observation that becomes wired in to your subconscious not unlike the grace of a highly trained athlete.

Philips notes that people are born with a certain ability to size people up as well as potential to improve those abilities.

“I also believe that intuition can be a product of experience – that a person can develop more keenly honed intuitive skills by living life and doing his or her job,” she says.

Whether juggling her time with her many board meetings, media appearances and work on her first book, Philips has become used to trusting her gut instincts.

“My intuition is usually on target. I use it with regard to work, friends and family,” she says. “I use intuition as a guide to know when to push and when to pull back. I also use it to read my audience, whether that is with regard to a client, opposing counsel and his or her client, as well as the judge.”

Perhaps one of the biggest challenges with intuition is knowing when and when not to listen to or act on it.

Philips says she “always” trusts her intuition – “but I don’t always rely on it. I take the time to think more deeply – to consider all sides of an issue – before I decide how to proceed to resolve it.”

Another challenge, particularly in the world of highly educated attorneys, is to step outside the box and trust your inner resources even though most formal training in America overlooks this area.

Philips is an example of an achiever who has balanced both: educated at Dartmouth College and Columbia Law, she has her share of conventional textbook knowledge but also learned from growing up with a lawyer parent that there are other equally important tools inherent to human beings.

“The woman who worked as my nanny when I was growing up wasn’t highly educated, yet she was very wise and had impeccable instincts,” she says.

Every executive knows a similar example; the instincts that separate the achievers and the super achievers are there, they just need to be used, developed and used some more.

If you feel uncomfortable using intuition for crucial decisions, there is still hope. First of all, take a look at decisions that you already make that use intuition. Sometimes, these are hard to notice because they are so obvious.

A lawyer who decides to alter a case’s course based on the non-verbal reaction of opposing council or even from the look in the eye of a judge is using intuition that in some cases is very highly developed. Outside the courtroom, experienced attorneys might unconsciously use intuition in the review of documents or handling of clients. An experienced estate planner or tax attorney may be able to sniff out a problem document in an instant because the document does not have the right “feel” for them.

It’s in these, intangible, difficult to explain areas that our greatest skills often occupy. On investigation, many managers find that their intuition was correct, particularly in dealing with people, an area so complex it is virtually impossible to make decisions using analytical means.

The next step to utilizing your inner natural resources is to track when your gut instinct tells you something and your subsequent action, over time, determine if there is a pattern. One way to do this is to keep a simple journal if you do not already do so. Entries list the date and might read “met potential employee, instinct tells me will work well even though salary request is higher than average” or “I have a feeling this client relationship could be a problem despite the revenue.”

With a couple minutes a day, after a few months you can accumulate an impressive and useable collection of data about our own inner natural resources. This data, perhaps some professional coaching and a keen sense of self awareness can form the foundation for making new use of a tool you have had all along and a tool that could be one of your greatest assets.

Bruce Fenton is a financial consultant, a writer, and the Managing Director of Atlantic Financial Inc. Bruce welcomes inquiries, comments, and questions. He can be reached by contacting The Fenton Report.

Adventure Capitalist

by Bruce Fenton

“Who will produce the goods we need and who will buy our assets in the future?” Wharton finance professor and best-selling author Jeremy Siegel, PhD, posed this provocative question to an association of financial planners in Philadelphia.

There are some some possible answers to this question in the book Adventure Capitalist by Jim Rogers. Rogers set a Guinness record for the world’s longest continuous car trip as he spent three years driving through 116 countries on six continents. His book chronicles the trip and provides observations on capitalist potential.

Rogers made a fortune on Wall Street as the co-founder of the Quantum Fund, a global investment partnership. He sold out and retired at 37, but he has elected to remain active with his own investments and a variety of media commentary positions. In 1988, he took his first trip around the world on a motorcycle.

Three countries he visited during that trip stand out as potential investment opportunities. Ireland has a younger, highly educated workforce that is more interested in working than carrying on the wars of their elders. After 150 years of emigration, the Irish are coming back home, and the country is also now playing host to a significant influx of immigrants. Companies from all over the globe are building plants there, and thanks to favorable tax laws, there is a high tech boom going on.

Rogers observed that the best capitalists were the Communist Chinese. They have a long entrepreneurial history, so even though they have only been a communist nation for thirty years, there are still plenty of businesspeople who remember how capitalism works. And the Chinese don’t take siestas—they have an incredible work ethic and are a quick study when it comes to learning from the expatriate class that is returning with capital and expertise.

Rogers did note a potential problem in Asian demographics—a shortage of girls. Boys outnumber girls by 20% in nations like China and Korea where “one child, one family” is now the custom. (From a girl’s perspective, though, this may not be a problem!)

In Africa, Rogers ran into the blight of Non-Governmental Organizations (NGOs). NGOs, in his opinion, accomplish nothing, spending money raised from charities and government sources in a quest to “save the world” and the bureaucracy that supports their opulent lifestyle while keeping them from having to get real jobs. Next time you are tempted to give clothes to some organization dedicated to fighting African famine, read Rogers’ comments about how our charitable efforts are handled.

But in Angola, he found promise. Decades of bitter civil wars have torn apart this country, but Rogers, ever the contrarian, still saw potential. As he noted, when things are at their worse, and despair its deepest, investment potential can be its greatest.

Everywhere Rogers looked, he could see entrepreneurial spirit driven by enormous energy and motivation just waiting to be harvested. All over Africa, he encountered people with talent and the drive to work from dawn to dusk—a work ethic no less powerful than that of the Chinese.

However, in too many parts of the world, he saw government corruption and an economic ineptitude that has destroyed potential for investment. He comments on how our misguided efforts at foreign aid have left countries like Ethiopia with a generation that has forgotten how to farm because we feed them instead. He spares little contempt for our foreign policy efforts in developing nations.

The answer to the question posed at the beginning of this column, I believe, lies in the future of the developing nations chronicled in Rogers’ book. Those nations with entrepreneurial spirit, work ethic and a young population will be the producers of the goods we buy, and they will, someday, have the money to buy the assets we wish to sell.

Bruce Fenton is a financial consultant, a writer, and the Managing Director of Atlantic Financial Inc. Bruce welcomes inquiries, comments, and questions. He can be reached by contacting The Fenton Report.

Ownership Society

by Bruce Fenton

The idea of “ownership society” did not originate somewhere on the plains of Texas or the back room of the White House. Matter of fact, if we look back to the birthplace of personal liberties (according to the French) it was Lafayette and friends who, in 1789, set forth in Article 2 of the Declaration of the Rights of Man that “The goal of any political association is the conservation of the natural and imprescriptible rights of the man. These rights are personal freedom, liberty, the ownership of property.”

The President’s concept of an “ownership society” puts the responsibility for an individual’s welfare on his shoulders and not the governments, essentially reversing 70 years of New Deal programs and policies. As owners we would become a nation of self-providers and self-funders for every economic need. We would own and fund our own pensions. We would own and fund our own health insurance. We would take responsibility for other government provided social services.

In his book Bullish on Bush: How George W. Bush’s Ownership Society Will Make America Stronger, author Stephen Moore adopts the view that through the miracle of compound interest, all Americans have the chance to become millionaires.

There are more than a few Democrats, and even a Republican or two, who have their doubts that the policies of the New Deal should be so hastily thrown out. With ownership comes the right to fail as well as to succeed.

Responsible public policy should take into account that not all men are created equal in the sense they have the ability to look after themselves. Not all families can automatically be turned into capitalists by making available tax favored saving accounts. For example on the lower end of the economic spectrum are families who need every penny to pay for basic survival and since these folks pay little or no tax anyway, they have zero incentive to become “owners” of social programs that used to provide them some social safety net for free.

Moore does make some interesting points with his concept of America as a society of savers and investors. With larger stakes in corporate America, we would be likely to identify with business and more likely to support policies, such as free trade, that “workers” have historically opposed. The additional emphasis on personal saving and investing would be beneficial to the economy and the stock market specifically.

This transition has already begun, if we look back to the decade of the 80s. IRAs became a part of the American savings scene. Corporations ditched defined benefit plans in favor of the 401k…leaving the worker the option, and responsible for, saving for their own retirement. More people than ever became stockholders either through retirement plan investing or personal savings.

The great boom of the 90s saw an expansion of numbers of American shareholder/investors. Unfortunately, while wide, the expansion was not deep according to the Federal Reserve survey that shows half of all households have financial assets that total less than $20,000.

The Bush concept of ownership has merit and will have broad appeal…providing policy makers don’t pull the rug out from under those who need societal assistance and a leg up in life. I like the idea of each of us accepting personal responsibility for our lives. But as the French Monarchy learned the hard way…too big a gulf between those who have and those who have not eventually leads to radical revolution!

Bruce Fenton is a financial consultant, a writer, and the Managing Director of Atlantic Financial Inc. Bruce welcomes inquiries, comments, and questions. He can be reached by contacting The Fenton Report.

Retirement as it Should Be

by Wendell Cayton

“When are you going to retire?” I recently asked a friend I have known since we were kids growing up in Yakima, Washington.

“Shoot, I’m never going to retire, I’m having too much fun,” responded Cliff Hollenbeck. “When I go, its going to be on a beach, with a camera in my hand, taking pictures of gorgeous models… and my last words will be, ‘Get the film.’” Cliff is a very successful, well-known, international travel photographer, author, moviemaker, and certainly capable of kicking back into retirement mode at any time.

In many respects, his attitude toward retirement is representative of the changing attitudes about retirement and how one should live the final third of a lifetime.

Life expectancies have made tremendous gains over the last century, more than any other time in history. In 1900, life expectancy was around 47. Today it is around 77, and for a male reaching age 65 it is closer to 80. Many of us will live more years past age 65 than we spent working!

And, as Cliff’s comments suggest, retirement today is not your father’s retirement! More and more retirees, having accumulated enough wealth to afford the lifestyle of their choice, are choosing to pursue active second careers. This has a very positive effect on the economy since these people are highly productive, and highly capable of continuing to contribute to our economic system.

I recently met a man who had retired from the software industry 4 years ago. He and his wife retired to Hawaii where they spent the last four years building a drop-dead, gorgeous home with all the toys and electronic gadgetry you can imagine. He was selling his home when we met, so I asked the obvious, “Why?” His response was simple. He and his wife built the house and then looked at each other and asked “What now?” So they have decided to buy a coffee farm and build a new house… a non-productive retiree returning to productivity.

Economist Harry Dent in his book, The Roaring 2000s Investor, redefines retirement as a “time of freedom when you can do what you really want, what is most meaningful to you, after you are freed of the obligations for career and child rearing… a time to pursue your highest lifestyle and goals.”

Dent goes even farther by suggesting that we consider moving into this phase in our life, which Maslov called “self-actualization,” earlier rather than later. He makes a point of noting that the most important dimension of a person’s financial plan should not be merely how to financially survive retirement, but how to create the lifestyle and life work that is most desirous, that most closely matches your dreams and aspirations, and most contributes to society.

I often find myself thinking that life is a little backwards—when we have the money to enjoy climbing mountains, traveling around the globe, or playing 36 holes of golf every day, we’ve run out of energy and physical capabilities to do so. When we have all the energy and physical resources to pursue those activities, we haven’t the money or the time.

“What would you do if you had ten years to live and $10 million in the bank?” asks Jim Collins, author of Built to Last. If you can answer this, you are beginning to get a vision of what life can be… a goal for your future we might say.

Retirement should be more than dying rich, never having enjoyed the freedom that wealth can bring. If that happens, chances are the kids will take your money and party… all in your honor!

Traditional Thanksgiving

by Bruce Fenton

We can find much to be thankful for as the season of Thanksgiving descends upon us. Perhaps we could start by being thankful that our stock market is showing life and a little upward momentum, but maybe we should be more thankful that we even have a stock market. Many people consider the stock market a malignant casino, rigged to take all of their money. In fact, it embodies the very essence of what makes our capitalistic system work. It gives us a way to finance the business enterprises necessary to our way of life. It also gives us a place to share in the risks and rewards of an entrepreneurial market place.

While Thanksgiving has come to be a commercial waypoint between Halloween and Christmas for the retail industry, it actually has some deep historical roots in capitalism. Had it not been for early venture capitalists, we might never have come to know Thanksgiving as we know it today.

The Pilgrims who celebrated the first Thanksgiving in America were fleeing religious persecution in their native England. In 1609, a group of Pilgrims left England for the religious freedom of Holland. Presumably they learned a thing or two about capitalism from the Dutch, the preeminent capitalists of the time. After a few years, their children were speaking Dutch and had become attached to the Dutch way of life. This worried the Pilgrims. They considered the Dutch frivolous and their ideas a threat to their children’s education and morality.

They couldn’t leave Holland without money, so they approached an early group of English venture capitalists, the Merchant Adventurers, who agreed to finance their journey. In exchange, the Pilgrims would work for their backers for seven years. As any modern-day entrepreneur can tell you, the terms and conditions faced by those earlier counterparts were not much different than the situation today--money with strings attached!

The rest is history. On September 6, 1620, the Pilgrims set sail for the New World on a ship called the Mayflower. They sailed from Plymouth, England, and landed at a place they named Plymouth Rock. The historical event we know today as the “First Thanksgiving” was a harvest festival held in 1621 by the Pilgrims and their Native American neighbors and allies.

Thanksgiving has acquired significance beyond the bare historical facts. Without it to “officially” kick off the Christmas shopping season, economists would have nothing to theorize about, the stock market would have little to cheer for, school would go a full week instead of three days, all NFL games would be on Sunday, and only the turkey population would celebrate.

On a more serious note, as a nation we do have many reasons to be thankful. The original festivals of thanks were celebrated centuries ago by the Greeks, Romans, Egyptians, and Chinese, to name a few, who gave thanks to various deities for bountiful harvests. We live in a great land, under a system of government that has endured for two centuries, allowing us to use our many freedoms to improve our lives and those of others throughout the world. We are living longer and healthier lives because of the advances of medicine. We worship and speak as we please. We have the right to choose our leaders. We have the freedom to pick our own friends. Have a happy Thanksgiving, and remember to give a little thanks to some early venture capitalists!

Bruce Fenton is a financial consultant, a writer, and the Managing Director of Atlantic Financial Inc. Bruce welcomes inquiries, comments, and questions. He can be reached by contacting The Fenton Report.

A Little About Leadership

by Wendell Cayton

The headlines and articles in the papers couldn’t have offered a starker contrast. On one hand, icons of corporate malfeasance were being charged with looting the companies they ran. On the other, a true icon of leadership died of a heart attack.

Corporate America could use a few more of the latter.

One by one, executives from Enron, World Com, and now Tyco are being held accountable for their misdeeds and breach of fiduciary responsibility to all the stakeholders in their businesses. The history lessons that will be written and studied in future graduate school classes, hopefully, will also include the positive side of what real leadership is all about, as evidenced by the contrasting icon.

I grew up with this man as an idol. Complete with the high top, black football cleats, and the flattop haircut, I dreamed of playing quarterback and leading my teams like the great Johnny Unitas. The operative word here is “leading.”

Unitas was probably not the best athlete, nor the most physically gifted, to play quarterback in the NFL, but he is acknowledged by many to be the best ever at his position because of his leadership skills. When the chips were down, and the game was on the line, he was the general who inspired and led his troops time and time again to victory.

Unlike his more contemporary peers, he practiced his profession with neither pouting nor preening. He never went on strike for higher pay; he worked for the same employer 17 of his 18-year career. He remained involved in his community, giving back much in the way of service and his quiet leadership.

When I flipped the page of the Wall Street Journal, after digesting the day’s criminal activity, another article caught my eye. The president of the Federal Reserve Bank of New York chided corporate executives and their boards to get executive compensation back to reasonable levels.

He cited a study that found the average chief executive officer’s pay had increased from 42 to 400 times that of the average production worker over the past 20 years. Calling it “infectious greed,” he noted that the reward system for compensation was getting out of line. Makes one question the motivation of those running some of the great companies of our land, doesn’t it?

Great leadership doesn’t necessarily have to be measured in money. It is about passion, vision, and the charismatic ability to get others to work hard to excel and achieve common goals.

There are many examples of great leaders for us to learn from in both public and private life. Generals Eisenhower, Patton, and my particular favorite, USMC Lewis “Chesty” Puller, come to mind. The corporate leaders who built great businesses such as A.P Gianinni of Bank of America, Gordon Moore and Andy Grove at Intel, Bill Gates at Microsoft, and Scott McNealy at Sun Microsystems all built great companies by inspiring others and by being leaders…while not “looting” their companies in the process.

In times like these when the numbers of business don’t always add up, stock prices are down and you are beginning to question the wisdom of continuing to own pieces of corporate America, look around for the leaders. These are the people who want the ball (or puck), who can motivate others to higher productivity and excellence, and who have the ability to make champions out of their business.

Scam Artists

by Bruce Fenton

The headlines of the Wall Street Journal® feature were eye-catching . . . “Confessions of a Scam Artist.” This August 9th piece by Glenn Ruffenach featured a lengthy prison interview with Eric Stein, a scam artist who bilked 1,800 investors out of $34 million.

Financial scams have a way of popping up when regulated markets for stocks and bonds offer investors little return or less hope. The granddaddy of scam artists, Charles Ponzi, realized this when he bilked investors out of $15 million in 1920 (that’s about $150 million in today’s dollars). At that time, the stock market was in a dive, and the country was going into a very sharp, but short depression.

Ponzi sold investors a “too good to be true” investment scheme. He made it work by using new money coming in to pay off earlier investors. Eventually investigators discovered the fraud, his house of cards collapsed and he went to prison. His technique of enticing new money into a fraud by paying off earlier investors bears his name, a “Ponzi,” and is at the heart of most modern day scams.

Eric Stein started out with a legitimate business proposition that needed money. He discovered that he could raise money by employing sophisticated telemarketers and promoters, and by packaging his idea into a glamorous, can’t-miss, proposition.

While his business faltered, his fund raising prospered. He paid original investors their promised returns from new money coming in. But, like Ponzi, he soon caught the eye of investigators and wound up in prison.

His promoters found the new money by targeting groups they considered the most vulnerable . . . people close to retirement or who had recently retired. These are folks who have been hammered by the stock market, perhaps never had a business opportunity when they were younger, and dreamed of an easy income source.

The French have a slang term for these targets . . . “mooches.” A mooch is someone with the right personality traits . . . they’ve got to have a deal. Typically, they’re in their 50s, or they’re entrepreneurs who have accumulated some wealth. Their names can be purchased from list companies.

List companies find mooches by soliciting information in shopping malls, for example, where one might be asked to fill out a simple questionnaire, or off the Internet where the unsuspecting are asked for information in return for free products or services. These names are sold for up to $100 a name to professional sales promoters.

Stein found that it was not necessarily the unsophisticated or economically uneducated that made easy targets. His favorite mooches were white-collar types with lots of cash . . . doctors and particularly dentists were at the top of his list. Small business owners who are risk takers also were easy marks.

As he told the WSJ, it’s all in the packaging. Make it easy to understand, make it glossy and professional, make it sound good, wrap it in phony testimonials, pay off the first ones in the door and soon their neighbors will follow with cash in hand.

Mr. Stein left the author with these tips. Never talk to a financial salesperson on the phone whom you don’t know personally. Don’t respond to unsolicited business promotions sent through the mail or by email. Never purchase unregistered securities. Never purchase any financial product that is described as “low risk, high yield,” or “safe” because a friend, relative, religious leader or fellow parishioner has recommended the opportunity to you. Finally, never answer any survey or enter a contest while shopping in a mall or while online.

Bruce Fenton is a financial consultant, a writer, and the Managing Director of Atlantic Financial Inc. Bruce welcomes inquiries, comments, and questions. He can be reached by contacting The Fenton Report.

Money and Trees

by Bruce Fenton

“Money doesn’t grow on trees,” long a parental favorite for ducking the inevitable Friday night contribution to a child’s night out, is worth talking about to investors. As market manias heat up…be it real estate, stocks or the get rich scheme de jour…out of the closet come those characters that would have us believe that money does, in fact, grow on trees.

The crowd selling books, seminars, tapes and schemes on how to get rich the easy way generally neglect an important part of the money making equation…money not earned by wages or gifts but the result of investment activity comes with a price we call risk.

Today, the "get rich quick schemes" focus on real estate activity. When real estate slows down and the stock market heats up the focus will shift to stocks, options and futures. If jobs were scarce as they were during the recession of the early 1990s we would probably see a proliferation of multilevel marketing schemes.

It has always been puzzling that those promoting money orchards would be willing to give away the keys to the orchard just because someone shells money for their expensive seminars, books and tapes. If it is that easy, why put on high pressure seminars and write books when one could stay home and manufacture money using the methods contained in the tapes? The answer to the above is likely that the real money is made selling seminars, books and tapes.

For example, Robert Kiyosaki has written a series of books, Rich Dad, Poor Dad, that will are designed to get readers pumped up for success. Mr. Kiyosaki has his fans and detractors. Go to www.programcritique.com for a taste of both. Just keep in mind that some of his anecdotes are fictionalized, and according to the web site, www.intellibiz.com, his poor dad was not poor and his rich dad did not exist.

Another favorite is Wade Cook who first made the scene in the 1990s with his seminars on wrap-around mortgages. Tax law changes, and a fired up stock market inspired him to move his money printing presses to the stock option “orchard.” His early seminars advised attendees that if they were willing to fork over $3,250 for his complete seminar, he would show them how they could make 20% or more a month trading stock options. At that rate an attendee would have been more than Bill Gates if they stuck to the program for five years or so!

Alas, Mr. Cook turned out to be more fraud than prophet of wealth. He filed for bankruptcy in 2001, citing extraordinary “trading losses” not to mention contempt citations from the FTC and pending lawsuits from a number of state Attorney’s General.

Then there was Donald Bickerstaff, a jolly, personable Scotsman from San Rafael, California. Bickerstaff’s approach was a lot simpler. He didn’t charge for his wealth protection seminars…he just wanted your money. In return he gave his investors handsome statements showing wonderful returns on their investments.

Little did his investors know, but their money went for racehorses in England, a fancy spread near San Diego and a very lavish lifestyle. According to his trial records, Mr. Bickerstaff’s investors took an $11,808,931 hit, before they marched him off to jail.

The moral of these stories is simple, when someone says that you can make a barnyard full of money for little effort and a small check to their treasury; Take it for what is most likely found in barnyards…and certainly not a tree growing money.

Bruce Fenton is a financial consultant, a writer, and the Managing Director of Atlantic Financial Inc. Bruce welcomes inquiries, comments, and questions. He can be reached by contacting The Fenton Report.

Christmas Crisis

by Wendell Cayton

We are struggling with a bit of a crisis coming into Christmas. Against the resolute forces of skilled spin masters, we are doing battle to preserve something important—the recognition that Santa is real!

My earliest childhood memories focus on Santa Claus; my first memorized poem was “The Night Before Christmas.” Santa has been a part of my life all these years, and I want to preserve him for my daughter. But as any parent can tell you, the forces against innocence and the goodness of Santa are difficult to combat.

Last night, I went Christmas shopping. Amid the lights, snow and carols, we discussed Santa’s existence. She is unsure on the subject, having been informed by the neighborhood intelligentsia that he is not real. I told her I’d check him out on the Internet and report back.

I found that Santa Claus is one of the world’s most widely recognized symbols. Almost every industrial culture has a version of him, and his existence can be traced to ancient times. Where he came from depends on whom you ask.

The idea of seasonal gift giving was first recorded in ancient times among people whose beliefs were based in nature. The ancient Norse, for example, embraced Winter, humanized as a being who might intercede on their behalf for the milder season. At the close of the harsh weather, the entire community shared their remaining food and supplies in a glorious feast to honor the benevolent Winter Spirit.

“Sinter Klaas” came to America with the Dutch in the 1600s and was immortalized in 1823 by Dr. Clement Clarke Moore’s poem “A Visit from St. Nicholas” (now generally known as “The Night Before Christmas”).

Germany’s Kris Kringle and Italy’s La Befana, traditionally the benevolent bearers of gifts to children, were assimilated into Moore’s version of Santa, and before long he was visiting homes worldwide on Christmas Eve, delivering presents to worthy children.

Great Britain’s Father Christmas is a hybrid of the Spirit of Christmas and the vision of Santa Claus created by Moore.

St. Nicholas, AKA St. Nick, was actually a bishop who lived in the Asia Minor city of Myra around 300 AD. He was known for his generosity (he supplied three bags of gold as a dowry for three poor girls) and his love of children (one of his miracles was raising some murdered children from the dead).

The most contemporary version of Santa known by the world today was solidified in the 1930s through an intensive ad campaign by the Coca Cola Company, who used Norman Rockwell portraits of a jolly, weight-challenged, red-clad Santa Claus.

Wherever he came from or wherever he lives, he is a being who inspires us to believe in the concept of a benevolent, kind advocate for children and humanity. Throughout Santa Claus’s many evolutions, he remains the keeper of hope for a kinder, less selfish world.

He is protested by some and promoted by others as the epitome of rampant commercialism and voracious consumerism. Nevertheless, Santa continues to inspire our hearts as a symbol of the real nature of giving—that the greatest gift of all is not wrapped in bright paper, but is the act of giving itself.

Putting my parent hat back on, I emphasized to my daughter that Santa does keep track of those who have been “bad or good . . . so be good for goodness’ sake.”

From one Santa believer to another, may you have a Happy Holiday and a great New Year!

Be Thankful

by Bruce Fenton

Last fall, my family and I stood looking at Plymouth Rock next to the harbor where our early founding fathers disembarked almost four hundred years ago. Little of the Rock remains today, and the tiny ship they called home has been replaced by a replica, but the freedoms they set out to find are strong and flourishing. For this, we can be thankful.

Not far from the Rock is Plimoth Plantation. The first homes of the Pilgrims have been re-created there and populated with actors who convincingly play the parts of the early settlers. They wear the same rough, homespun clothes, speak the same language, cook the same food and generally go about living on their plantation the same way those settlers did long ago.

Visitors are free to roam the plantation and visit what passed for early homes. When you stick your head inside these thatched-roof structures with dirt floors and open fire in a corner and think about these primitive living conditions, you have to marvel at the settlers’ determination to survive and succeed in their quest for religious and political freedom. That they did only serves to underscore how lucky we are as a nation.

We may not have a perfect political system. Nor do we have a perfect economic system—an economy can be efficient or just, not both. But what we do have is the most stable political environment and economy the world has ever known, with our rights protected by an enduring Constitution and body of law drawn up by the great-great-grandchildren of these early settlers. For that, we can be thankful.

A number of years ago, I was working with several cohorts from Switzerland on a business venture. They asked me the simple question, “How long will it take to form a corporation?” I explained that as soon as we could have an attorney draw up the papers and register our corporation with the State of Colorado, we were in business. “It could be done that afternoon if I could pry our attorney off the golf course,” I reported.

They were surprised we could start a business that quickly, because in their country, they do not have the freedom to start a business enterprise without going through a number of layers of government approval, a process that could take up to a year. We take for granted the fact that we have entrepreneurial rights, almost unfettered by bureaucratic red tape, to take our ideas for legal commerce and make them a reality. We are often constrained only by market forces and our own creativity. Under a similar lack of boundaries, the early Pilgrims quickly became entrepreneurs and began the capitalist system that is the envy of the rest of the planet. For that, too, we can give thanks.

Outside the walls of Plimoth Plantation sits a tiny Wampanoag Indian village. These Native Americans shared their land with the strange new visitors. They taught them how to hunt on land and in the sea. They taught them how to cultivate and grow the food they would need to survive.

The descendents of these Native Americans still exist today—as a matter of fact, they own a good deal of the real estate known as Martha’s Vineyard. A number of them were my family’s hosts in their village, where they shared their culture and way of living with Plantation visitors. Without their shared survival secrets, the seeds of our great nation would have had a difficult time sprouting. For this as well, we can be thankful.

I hope that the tradition we call Thanksgiving recognizes the efforts put forth by a small group of people a long time ago to give us all that we have and enjoy today. Keep that in mind, as I will, when you sit down to dinner . . . and be thankful.

Bruce Fenton is a financial consultant, a writer, and the Managing Director of Atlantic Financial Inc. Bruce welcomes inquiries, comments, and questions. He can be reached by contacting The Fenton Report.

Children and Money

by Wendell Cayton

Our children hold our economic future in their hands. As frightening as that may seem, the fact is how they learn to handle money and how they learn to save (rather than spend) will shape the ultimate financial success of our retirement years.

If they learn to save rather than spend, interest rates will stay low and the stock market will remain strong. If they learn self-reliance they will be a productive economic force rather than an inflationary drag on society, all of which makes our retirement savings more valuable.

As a society steeped in the virtues of higher education and entrepreneurial spirit we are poised to put vast stores of wealth into their hands. For example, a child born today, whose family is fortunate enough to save $5,000 per year for the next 18 years in preparation for college, at age 18 will have more than a quarter of a million dollars to manage!

But that is just a small piece of the pie. The younger generations are expected to inherit more than10 trillion dollars from their parents’ estates within the next forty years. That wealth can either be productive or destructive . . .depending upon their management skills!

Fortunately there are some excellent resources available for both parents and children to learn money skills.

Willard Stawski, a stockbroker in Grand Rapids, Michigan, developed a system to teach children money management skills, The Cash University Money Management for Kids. It’s a kit that includes an audiotape explaining the program and various tools such as an Allowance Calculator, an erasable board with a section to list chores for making money and a section for negative behaviors that lead to deductions. The child receives his own checkbook, which can be used to write a check to a parent for an immediate cash need and to track funds. In addition, there is a College Savings Board to list special chores for the child to earn college education funds. The kit is targeted at kids ages 4 to 9 and sells for $24.95. Contact: phone (800) 209-4800 or www.cashuniversity.com.

If you want to put that home computer to use for something besides games and email, here are a few Web sites that teach children and young adults about money and investing.

• Investing for Kids is a site designed by kids that covers a wide variety of topics. It is divided into three levels: beginner, intermediate and advanced. It features a nifty stock market game as well as a bulletin board for questions and comments.
  
• Kids Bank.com was developed by a bank and teaches about money and banking through the use of cartoon-like characters. This is a great spot to start the younger set learning about money, where it comes from, and how it works.
  
• Young Investor, (this site is no longer available) teaches the basic concepts of investing through various character guides, from which the child can choose. It contains a handy library with financial articles and a dictionary of financial terms, as well as tips for parents on how to teach their children about investing.
  
• Independent Means is a site targeted at girls under 20. The content focuses on entrepreneurial as well as investment skills. The emphasis is to teach financial self-reliance to young women. A feature on the site that I found especially meaningful is a book titled No More Frogs to Kiss by Joline Godfrey (Harper Business) which discusses 99 action plans to financially empower girls. This is a must–visit site for parents and their daughters!

Harry Dent, the often-quoted author of “The Great Boom Ahead” and “The Roaring 2000s”, has forecasted a sharp drop in the stock market sometime after the year 2010 as baby boomers stop saving and investing and begin spending. The X factor in his predictive models is our children. Will they be productive? Will they be savers and investors? Will they handle their money, and that which they inherit from us, wisely? If they do, the severity of Dent’s predicted down market will be greatly reduced to all of our benefit. Therefore it makes sense to invest in educating our children now . . .they are our future!

Christmas Blessings

by Wendell Cayton

We still believe in Santa in our home. With a nine-year-old, we refuse to give up our collective childhoods. Taped to the fireplace is her note to Santa. She thought this year, sin