By JULIA ANDERSON
A friend asked me last week if I thought there would be a recession and when would it happen.
The answer to the first question is easy …yes, there will be a recession. Like the ebb and flow of tides, recessions come and go. The last one in 2007-2009 was a doozy. Housing values cratered, stock markets fell and as Warren Buffett says, we found out “who was swimming naked.”
Those who had jumped into the house bubble were burned. It took years for values to recover. Those who panicked and sold stock holdings lived to regret their decision because they’ve missed the bull market rebound.
People without cash emergency funds were hurt, especially if they lost a job.
But look at the recovery --- 10 years later, housing values are back, markets are at record highs and consumers are confidently spending. Record high employment and low interest rates continue to juice the economy.
Recessions are a natural part of the economic cycle. Let’s hope our next one will be mild compared to the financial crisis of ten years ago.
Should we worry about a recession coming soon? Worry is the wrong word.
Let’s just be prepared for one when it happens. There are signs that our beloved bull market is getting tired. Manufacturing activity is slowing, housing prices are flattening as supply begins to catch up with demand, and home-building is slipping. Wage growth has improved but still lags rising costs, especially for housing. First-time homebuyers are priced out in many of our major cities.
Farm income is in the tank. Boeing’s 737 Max problems are a national economic negative and banks continue to struggle to generate robust profit. There’s a lot to weigh about the economy -- pro and con.
To answer my friend’s second question about timing, I told her I did not think we would see anything like a real recession until after the 2020 Presidential election. History backs me up. The S&P 500 Index of the 500 largest publicly traded American-based companies has only had three negative years out of the past 21 election years since 1928. (Just for the record, I don’t believe in betting on cycles or trying to jump in and out of markets).
Meanwhile, market and money managers (Federal Reserve Bank) try to stay out of the political fray, to hold an even keel. No dramatic ups or downs, so no, a recession is likely at least 18-months to two years away.
Of course, there’s always the unexpected: The trade dispute with China could continue, North Korea could do something stupid, the United Kingdom is being rocked by Brexit. The Russians, the Syrians, Iran. There could be trouble on many fronts. But has the world been much different in the past 50 years? I don’t think so even though some of my friends think the world is ending.
U.S. markets and monetary system have survived. The entire American free-enterprise economy is not going to go out of business overnight. So, I told her to stay positive. A recent Bloomberg News analysts’ survey has the spread is the widest in years between those who are pessimistic about the economy and those who are positive. That confirms my view: hang in there but be prepared for what hopefully will be a mild recession.
Years from retirement? Stay the course.
For those who are working and managing their tax-deferred investments but are years away from retirement --- Stay the course, remain invested in stocks, let markets drop in a recession whenever it arrives. Don’t panic, don’t jump, don’t sell. This is a buying opportunity to reinvest your quarterly stock dividend earnings at a cheaper price. Your dividends buy more stock, they in turn buy more stock.
Already in retirement and managing your nest egg, now?
If you already are living on income from your investments, create a cash fund to draw from during a recession. That’s so that you don’t have to sell your investment principal at a discount to buy groceries if share values decline.
Draw out of your cash fund to get through the market downturn. Keep the rest of your portfolio in the market, continue reinvesting at a discount. How much cash should you have on hand? How about 12 and 18 months, worth? More if our government goes back to the Democrats and taxes go higher.
It’s been so long since we’ve had a recession, we might be a little out of practice. The next one hopefully will not be as bad as the one we remember so well.
"Better to trust the man who is frequently in error than the one who is never in doubt."
-- Eric Sevareid, New York Times commentator and reporter, (1912-1992)
By JULIA ANDERSON
Let’s say you are leaving your full-time job and taking your 401(k) nest egg with you. Are you going to manage it yourself or will you turn to an investment professional?
If you think you need professional advice, here are questions to ask a financial planner/adviser before giving them your life savings. Treat this process like a research project. Take your time. Don’t be uncomfortable asking the uncomfortable questions. It’s your money, your future and your retirement.
Nine questions to ask when choosing or re-evaluating a financial adviser
- How do you get paid? A commission on product sales, fee per transaction, or both? Ask for details.
- Can you manage my assets for a 1 percent or less management fee?
- What’s your background and experience?
- What’s the strength of the company you work for or with?
- What do your clients say about you? Ask for references.
- What are your checks and balances regarding risk vs. earnings reward?
- Will you put your investment proposals in writing?
- What are the potential pitfalls of the investment products you are offering?
- What do other professionals say about you?
Ask yourself what your gut-level comfort is with this adviser. Do you come away feeling good about what you’ve learned, where you’re headed when you meet with him/her?
Don’t hire or continue to use a financial adviser just because they are nice. Do the math at least a couple of times a year. How are your investments doing in comparison to the performance of the S&P 500 (the 500 largest publicly traded U.S.-based companies)?
If the S&P is up by 15 percent year-over-year but your holdings are up only 7 percent in the same time frame then you need to be asking some tough questions. You might do better on your own or by switching advisers.
Studies show that women, while good at budgeting, bill paying and saving, may be less confident when it comes to investing and managing long-term savings. Get in the game, learn the basics. Make sure you are getting the best performance from your investments --- with or without an advisor.
By JULIA ANDERSON
Because of planned and unplanned travel, I have been away from sixtyandsingle.com. The unplanned trip took me to Thailand for a month earlier in the year because of my younger son’s life-threatening bacterial infection.
It was an emergency mission that ended well with him making a good recovery after three weeks in a Thai hospital hooked to an IV-line pumping antibiotics into his body. We were there to support him emotionally, and financially. It's what parents do when kids are in trouble.
It could easily have ended badly. One in three people who contract these fast-moving bacterial infections die. Because he was young and the bacteria seemed most interested in his outer skin layers rather than muscle, he survived. Once out of the hospital, we stayed with him for another two weeks to make sure his recovery continued. From all this, we learned a great deal about Thailand and appreciate why its beaches, charming people and great cuisine attract travelers from around the globe. Thai restaurants in the states are great, but second best to the fabulous dishes we enjoyed while in-country.
Did anyone say, coconut milkshake?!
Interestingly, Thailand has an excellent health care system, especially if you have the money to pay for it at the higher end. A hospital stay for our son that would have cost a quarter of a million dollars or more in the states, came in at about $20,000. We see why people travel to Thailand for medical and dental procedures. They get excellent health care services at a big discount and have a vacation while at it.
Within a month of returning from Thailand, we launched our long-planned Great Motorcycle Adventure with Ken leaving for a solo ride ocean-to-ocean West to East on his BMW K 1600 GTL touring motorcycle. He made the trip in less than three weeks using a southern route (California, southern Colorado, Oklahoma, Arkansas and Tennessee to North Carolina) with stops along the way to stay with friends and family. A nephew lives in Charlotte, N.C., which made it easy for me to fly east to join Ken there.
After putting his toe in Atlantic, he and I began our journey west. Sitting on the bike behind Ken works great for me. I describe the experience as similar to downhill skiing and riding a horse. As a passenger, you must concentrate on the road ahead, lean into curves. That’s while getting the thrill of speed, of wind in your face and being outdoors.
As the passenger, I could enjoy the countryside in ways that don’t happen in a car – winding leafy country roads in Virginia and Tennessee, gorgeous farmland and attractive small towns in Kentucky, Missouri and Kansas and the wide-open country of the Rockies in Colorado, Wyoming and Idaho.
It was a thrilling trip made better by finding the graveyard head stones of my great-great Crabtree grandparents on my mother’s side in Virginia, findng the birthplace in Tennessee of my great-grandmother Orlena Kyle Anderson on my dad’s side and her husband’s headstone (my great-grandfather Moses Anderson) in the Wills Cemetery outside Peculiar, Mo. (near Kansas City)
As one of my Facebook friends remarked about my trip posts, “You have family and friends (living and dead) all over the country.”
I am a lucky woman. My son is on his feet back in the states and working. Our motorcycle ride was a thrilling life-time experience that came off without bad weather or mishap. I am thankful that I have my health and enough resources to pull it all off. Onward!!
By Julia Anderson
Gather the (authentic) family history.
Find the receipts (if they exist).
But ignore the myths and legends about grandma’s favorite table lamp or other long-admired piece of furniture or art.
These are first-step recommendations from Gary Germer, a licensed Portland-Ore. appraiser and recent guest at Smart Money, my public television program. (Smart Money with Gary Germer on YouTube, ( click here)
Germer of Gary Germer & Associates does estate sales, sells items through private brokerage and organizes special events for clients. He evaluates and appraises fine art, antiques and personal property.
He helped us with the basics: How to determine the worth of such possessions as that watercolor that once hung in a favorite aunt’s guest bedroom and is now yours. Whether it’s worth restoring? Or should it (or can it) be sold? And how to do that.
With the vanguard of baby boomers aging into their 70s, many want to do something with their stuff --- either give it to a deserving niece or grandchild or sell it. Or could it be donated to charity with the benefit of a federal tax write-off?
“The first thing is to get together any family history on things,” Germer said. “Where did it come from? Are there receipts for the item stuck in a drawer that could help determine authenticity and real worth? Any information on the piece is important,” he said.
But keep in mind, Germer warns, that family legends may not be reliable when someone says they were offered X dollars in the past for something. Or if a family member is certain that grandma’s lamp was made by Tiffany.
To determine value, use a licensed appraiser, not an estate sales company or an antique dealer, Germer said. And never sell the item to the person who is doing the appraising because of the obvious conflict of interest.
“That’s like laying down in front of a train,” he said. “I am careful to never buy things I appraise. I will represent it but not buy it.”
Contacting a national auction house is another way to get an estimate on value and whether something is worth selling or donating.
Who to contact:
Appraiser: This person should be a certified member of the Appraisers Association of America and a well-established professional, qualified to appraise fine art, jewelry and personal property. Check out the association web site at www.appraisersassociation.org for its code of ethics, history and mission statement. Experience is important. Look for someone who has been doing appraisals for a long time and understands market trends.
Auction houses: Sotheby’s, Christie’s, Heritage and Bonham are national auction houses that buy and sell fine art, antiques, jewelry, coins, furniture, collectible guns, watches, wine and more. Items usually sell on consignment. Typically, an auction house will charge a 10 percent commission to the seller on the sale, called a vendor’s commission. Buyers also may pay a commission known as the vendor’s premium. Some smaller auction houses have specialties. For instance, PBA Galleries in San Francisco, buys and sells rare and fine books, maps and other paper materials.
“Auction houses should be willing to give you the pre-sale estimated value of an item,” Germer said. “Send them your photos and background on the item. Ask them what the estimated bid would be.”
Should you invest in a restoration? This is a matter of personal preference either because of the sentimental value of the item to you or your family or because a careful restoration would greatly increase the value of the item that you intend to sell or donate.
“Grandma painted it is a good enough reason to re-frame her watercolor and upgrade the faded matting,” Germer said. “A restorer will give you an estimated cost for the restoration, if you send a photo and tell them what you want done.”
To recap the process: Gather authentic family information about the item. Include receipts (if available).
Find a reputable appraiser to determine value, then decide if restoration is the next step before selling or donating the item or handing it off to someone.
What’s hot? There's a lot that's not
Meanwhile, families often have wacky ideas about how much something is worth, Germer said.
The Internet, changes in generational tastes and smaller living spaces have combined to roil collectible markets. Big brown furniture, formal dinnerware, glassware and china dishware have longbeen unpopular. A recent New York Times report said that “compared with the heyday of antiques collecting (in the late 90s), prices for average (furniture) pieces are now 80 percent off.” Instead, there’s growing interest in contemporary design, custom creations and pop culture. (Ideal Home)
“The list of items losing value is a lot longer than the list of things gaining in value,” Germer said. “Lately, natural things like rocks, taxidermy and anything to do with science is collectible. Butterfly collections are collectible.” Millennials are into house plants.
Those under 40, he said, also seem enamored with early 20th Century technology – manual typewriters, old adding machines, stuff with gears, vacuum tubes and push buttons.
In the old days (20 years ago), there was fun in collecting, he noted. “It meant going to antique and collectible shows, browsing vendor tables, making offers and bringing home treasure,” he said. “It’s not a treasure hunt anymore because you can go on eBay and instantly find what you want at a lower price.”
Germer advises that if you decide to sell something on eBay or Craig’s List to do your homework on pricing and avoid using the word antique in writing it up. “Antiques are stuffy. Vintage is a much better word for marketing,” he said. “Vintage is quirky, kitschy and fun.”
Appraisers and restorers
in the Portland, (Ore.)–Vancouver, Wash. area.
Calling for an appointment works best as they are not always in their labs and sometimes are focused on their work.
Appraisers and consignors:
Gary Germer & Associates
407 N Broadway
Portland OR 97227
Soltesz Fine Art
Goodman Appraisal Services
Pacific Gem Lab
Certified Jewelry Appraisal
Painting and frame restoration:
The Cultured Pearl
(Best for cleaning and basic restorations of paintings)
(aka Steve and Harvey)
1110 NW Flanders
Lucas Conservation Lab
(Best for full restoration/conservation work of paintings)
2015 Todd Rd
Vancouver, Wa. 98661
Susan Scott-LaRue (Best for work on paper, watercolor, lithographic prints etc.)
c/o Aurora Gallery
1004 Main St
Vancouver, Wa. 98660
(Lab is at her home, but she meets clients at Aurora Gallery, Vancouver).
Green's Furniture Hospital
916 SE 20th Ave.
Portland, Ore. 97214
503 234 9378
Smart Money shows on YouTube:
Disposing of Guns, Ivory and Gold
IRS Gifting Regulations on Tangible Assets
Smart Money: Trash or Treasure?
American Society of Appraisers
International Society of Appraisers
By JULIA ANDERSON
My first box of clothes from Stitch Fix,
the online clothes styling service, arrived this week.
Of the five items in the box, I kept three, a pair of dark blue Capri pants and two tops, one with quarter-length sleeves with white stripes on black,
he other a tailored, lighter summer blouse. Total cost -- $190.
I signed up in desperation.
Nordstrom abandoned me a couple of years ago when the company closed its mall retail store nearest to my house. To shop Nordstrom, I now must drive an hour, one-way.
The change has been a difficult adjustment. I have been a card-carrying Nordstrom shopper since the ‘70s when I lived in Seattle. Sadly, I care about Nordstrom, which has faced challenges with the shifting online retail environment and its marketing strategy.
I loved the stores. Going to Nordstrom-land always made me feel better. I could usually find something of quality, something in my price-range (my upper price range). Of course, there were the extras – tissue-paper wrapped items, fragrances from the cosmetic counter, accessories and superb customer-service.
As a full-time working baby boomer, Nordstrom was my go-to place for business-dress suits, shoes and blouses. And when I needed the occasional elegant dress for a fund-raiser gala, Nordstrom would come through.
The chain began my abandonment long before the mall store closed. The merchandising mix changed as an attempt to attract younger customers. Prices moved higher. I began to walk out of my favorite store without finding something that “brought me joy.”
An unsettling disappointment.
Then Nordstrom was gone from my town. Since then, my purchases at Nordstrom have dropped to one or two items a year. Stores can still have what I need when I want quality -- a pair of well-made black leather sandals (for $200), for instance, or a black all-occasion wool scarf for travel ($100). A pair of fleece-lined green suede boots caught my eye, but that $230-purchase was more than a year ago.
Honestly, Nordstrom is too expensive for most of us. I've been priced out of its market. The mailed catalog has always been out of reach.
Macy’s, Target and Kohl’s are all I have left. But Macy’s just turned the upper half of its top floor into a junky discount bin. Seems like a race to the bottom. I've never bought much at Target or Kohl’s or J.C. Penny’s. The quality is not there.
I have done better finding what I want at a curated consignment shop called Gather in Seattle’s Columbia City neighborhood when visiting my son. A couple of locally owned women’s shops in my hometown offer some hope.
Since the Great Recession I've saved money on clothing by buying workout clothes, outdoor zip-up sweatshirts, outer rain wear and stuff for gardening at Goodwill. Why spend $30 on a cotton blouse or $20 an exercise bra when I can find them for $5 each at Goodwill?
Full disclosure: I no longer need business suits or heels for work. I retired from the full-time job nine years ago but continued to work from home (sometimes in my bathrobe). Lately, I have been writing and publicizing my book, “Smart Women Smart Money…..”. When I speak to groups of women about financial literacy or host my monthly Smart Money public television show., I want a look that says I'm on the ball. (click here)
But as the years have ticked by I have found retailers no longer take me seriously. They are missing the boat. Baby boomer women are NOT OLD and do NOT want to look frumpy and old.
Enter Stitch Fix
Clothes shopping was once fun for me, a stress-reliever, a way to find something nice, on sale. I could be in the moment, day-dream about what might look good, give my work-a-day world a lift.
I’ve told Stitch Fix everything about me….my weight, height, hip measurements, bra size, how I like to dress. There was nothing in my first box that knocked my socks off.
My hair stylist (nearly 20 years younger than I) told me last week that she quit Stitch Fix because she found the clothes a bit boring. “They just couldn’t figure out that I wanted more style, a more edgy look.”
Hum, if she can’t find happiness with Stitch Fix, I wonder can I?
A new box of clothes arrives next month.
Meanwhile, I just clicked the buy-now button at Amazon.com to replace the Estee Lauder lipstick I’ve been wearing this year. That’s better than driving into town, searching the cosmetic counter at Macy’s for someone to help me, only to find out that that particular shade of lipstick is not in stock.
The lipstick ships tomorrow!
I meet women all the time who face job and money transitions and who want to do them right. It’s about building confidence and taking charge of the future. This is your money. No one cares more than you do!
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