Caution Wet Paint

It happens every time. Tape a wet paint sign to a wall and as sure as there are yellow daisies you'll have some folks poking, touching and checking if the paint is indeed wet. Signs warning of High Voltage, Ice on Road and Flammable are other bug lights that attract the nitwits. There are rules where a pedestrian should and shouldn't cross the street, yet every day someone somewhere is knocked down by a vehicle because they crossed in the middle of the block or against the light. Railroad crossings are notoriously dangerous yet you read about a locomotive plowing into someone who just didn't believe in all the bells and wooden barriers coming down and tried to get to the other side of the rails.

Brett T. Arends, in the WSJ, lists some financial rules folks should pay attention to. Admitted these are old, tired and not so exciting rules of money management but you can bet there will be people who ignore them simply because they feel rules don't apply to them. These same folk think rules are indeed made to be broken and take pride in that philosophy until the train wreck.

Here's a story where I did everything but set my hair on fire to warn a client from doing something financially suicidal. Ages ago my Michigan client was cold-called by a telemarketer selling Texas oil partnerships. That alone should have been a flare going off in the living room. It gets better, or worse, depending on your viewpoint. After agreeing to have the telemarketer guy send him a bunch of materials my client did the one smart thing and asked me what I thought of the deal. I called a few experts in the oil biz I happened to know and was warned that my client should stay away from the partnership because the investors were also assuming all the risk. I called my client and was telling him this and in the background I heard a strange whirring noise and asked him what it was. 'Why, I;m faxing the forms to sign up for the oil partnership,'my soon to be ex-client said. A few years later, sure enough, I got word that the deal went south and my ex and all the others who signed up found themselves on the hook for an enormous amount of money.

Getting to the Brett T. Arend's rules of wisdom in his February 4th WSJ article.

• Be wary of long-term bonds. When interest rates increase these blow-up quick.
• Make sure you're globally diversified.
• Maximize your 401k, 403b and all available tax shelters.
• Double check and get a cheap fixed mortgage.
• Get rid of your credit card debt(this is mine).

  If you happen to know how, check your portfolio risk, or call your investment planner and have him or her do it for you (call me if you have problems or need more help). No one needs to take extraordinary risks through investing. There are ways of getting good returns without assuming double or more risk of the market. The secret to a long life and a healthy investment portfolio is precisely the same, moderation in all things.

  If you have questions about this blog or anything contained in it call Paul Stanley @877 783 7080 or write to him at pstanley@westminsterfinancial.com. Refer your friends, co-workers to this site. Email your address to be kept up to date with financial news and updates.