One thing amusing about “Audit the Fed” bumper stickers is most people can’t read a balance sheet. Even funnier is the idea of Congress performing the audit. Congress uses smoke and mirrors to balance numbers. The less political a Federal Reserve we have, the better off we will be. Sure, today’s economy is nothing like when I was born, but the United States has the world’s largest economy, the broadest bond market, and the dollar is the world’s reserve currency. All three benefit our financial welfare.
By the time we go to press, we may have a new Federal Reserve chair. What we don’t need and can’t afford is a nincompoop like former chair Alan Greenspan. Going back to the gold standard, a position Greenspan advocated, would be like farmers using mules. As an Ayn Rand acolyte, Greenspan turned a blind eye to the sub-prime loan fiasco and debt securitization in his foolish belief markets would regulate themselves. Libertarian ideologues ought to write books and stay away from important work.
Columnist Mal Berko called current chair Janet Yellin “nearly perfect for today’s Fed … the most qualified in Fed chair history.” Nominating Dr. Yellin for another term is a fiscal layup. Trying to find someone with her decades of experience coupled with her intelligence won’t happen. The world of high finance is a boy’s world, but the diminutive Dr. Yellin holds her own, and we need her to stick around. Statistically, women have better investing results than men. Men trade too frequently; women do just as poorly when they trade like the boys. We need Dr. Yellin’s cool hand at the Fed.
It’s been 10 years since the stock market peaked in early October 2007. If you bought Vanguard’s Total U.S. Stock Market fund then and did nothing more than reinvest dividends, your investment would have doubled. The gut-wrenching decline in 2008-2009 rattled everyone’s nerves; pick an asset allocation that fits your risk tolerance, goals and time horizon. Time in the market beats timing the market.
Correction and Clarification
The late Steve Goodman once penned a tune, proclaiming it was the perfect country and western song. David Allen Coe pointed out he left out mama, trains, trucks, prison and gettin’ drunk. Goodman corrected his error with an additional verse and created magic.
I made a mistake; credit agencies do not provide credit scores for employee screening. According to John Ulzheimer of Credit Sesame (Business Insider, May 27, 2014), credit agencies have a separate product for employment vetting. The Federal Trade Commission recommends temporarily lifting a credit freeze when applying for a job. Also opening any new financial account including a brokerage account will necessitate ending a credit freeze.
You can’t always get what you want, but Buz Livingston, CFP can help figure out what you need. For specific recommendations, visit livingstonfinancial.net or come by the office in Redfish Village, 2050 Scenic 30A, M-1 Suite 230.