Saturday, 9 May 2009

You have the right to profit from the upcoming inflation: here is how

Whether you like it or not, inflation is coming. Economic analysts agree that the newly-printed banknotes are bound to increase consumer prices, although nobody can tell precisely when this will happen.

The loss of purchasing power will possibly take place in a few months, maybe in a year. If you do nothing, it is going to catch you unprepared.

On the other hand, if you take sensible measures, you should be able to profit from the situation or, at the very least, minimize negative consequences on your life.

The theory behind inflation can be summarized in one sentence: If the amount of items and services produced in a country remains stable, while the number of banknotes increases, then the purchasing power of each banknote will become smaller.

As private individuals, we have to contemplate inflation as a problem to be dealt with. Complaining is unlikely to change anything, at least in the short term, so let us review what paths are open to us in order to escape the loss of purchasing power:
  • FOR YOUR INCOME: If possible, try to link your revenue to products or services whose price is likely to augment at the same or higher pace than inflation.
  • FOR YOUR CONSUMPTION: Anticipate your purchases of durable goods (such as a television set) and consumer goods that you can store at home (such as canned food) in order to benefit from current low prices.
  • FOR YOUR SAVINGS: Reduce to the minimum the amount of cash you keep and invest the rest in assets whose value is likely to increase faster than consumer prices.
What will be the exact rate of inflation in each country? At present, we can only speculate about that point, since there are so many factors involved. Price increases tend to spread around the globe, but History shows that the loss of purchasing power varies from country to country.

For this reason, in order to avoid investing your savings in one single currency, it makes good sense to buy shares of solid companies located overseas. The same risk-reduction strategy applies if you invest in shares of local companies that possess foreign subsidiaries.

Here are two examples that I am currently researching, today May 9th, 2009.

1.- HELLENIC TELECOM (NYSE:OTE). Did you know that despite a worldwide economic recession, the Greek economy is still expected to grow this year? By international standards, Hellenic Telecom is a small phone company, since it has only about 1 million customers, but it yields good profits.

In the current market, the price/earnings ratio of its shares is 8. Analysts are predicting a dividend around 5%.

2.- JOHNSON AND JOHNSON (NYSE: JNJ). This is a truly global company in the field of health-care products. The fact that Johnson and Johnson's profits are generated in different countries and currencies, makes this company a sensible bet against inflation.

Another positive aspect of Johnson and Johnson is that, even when facing a difficult economy, people are unlikely to reduce their consumption of pharmaceutical products. These days, the price/earnings ratio of the shares is about 12. Analysts are predicting a dividend in the range of 3.5%.

Whatever investment choice you make, check everything three times before making any commitment. Investing in shares, even of solid companies, involves substantial risk.

Precious metals and mining stocks constitute alternatives that you might wish to explore, but make sure to gather sufficient information before making a decision.

In any case, if inflation comes, keeping your savings in cash guarantees that you will experience a loss of purchasing power. As it often happens in life, doing nothing tends to be the worst possible option.

[Text: http://johnvespasian.blogspot.com]

[Image by Per Ola Wiberg (Powi) under Creative Commons Attribution License. See the license terms under http://creativecommons.org/licenses/by/3.0/us]

You have the right to profit from the upcoming inflation: here is how

Whether you like it or not, inflation is coming. Economic analysts agree that the newly-printed banknotes are bound to increase consumer prices, although nobody can tell precisely when this will happen.

The loss of purchasing power will possibly take place in a few months, maybe in a year. If you do nothing, it is going to catch you unprepared.

On the other hand, if you take sensible measures, you should be able to profit from the situation or, at the very least, minimize negative consequences on your life.

The theory behind inflation can be summarized in one sentence: If the amount of items and services produced in a country remains stable, while the number of banknotes increases, then the purchasing power of each banknote will become smaller.

As private individuals, we have to contemplate inflation as a problem to be dealt with. Complaining is unlikely to change anything, at least in the short term, so let us review what paths are open to us in order to escape the loss of purchasing power:
  • FOR YOUR INCOME: If possible, try to link your revenue to products or services whose price is likely to augment at the same or higher pace than inflation.
  • FOR YOUR CONSUMPTION: Anticipate your purchases of durable goods (such as a television set) and consumer goods that you can store at home (such as canned food) in order to benefit from current low prices.
  • FOR YOUR SAVINGS: Reduce to the minimum the amount of cash you keep and invest the rest in assets whose value is likely to increase faster than consumer prices.
What will be the exact rate of inflation in each country? At present, we can only speculate about that point, since there are so many factors involved. Price increases tend to spread around the globe, but History shows that the loss of purchasing power varies from country to country.

For this reason, in order to avoid investing your savings in one single currency, it makes good sense to buy shares of solid companies located overseas. The same risk-reduction strategy applies if you invest in shares of local companies that possess foreign subsidiaries.

Here are two examples that I am currently researching, today May 9th, 2009.

1.- HELLENIC TELECOM (NYSE:OTE). Did you know that despite a worldwide economic recession, the Greek economy is still expected to grow this year? By international standards, Hellenic Telecom is a small phone company, since it has only about 1 million customers, but it yields good profits.

In the current market, the price/earnings ratio of its shares is 8. Analysts are predicting a dividend around 5%.

2.- JOHNSON AND JOHNSON (NYSE: JNJ). This is a truly global company in the field of health-care products. The fact that Johnson and Johnson's profits are generated in different countries and currencies, makes this company a sensible bet against inflation.

Another positive aspect of Johnson and Johnson is that, even when facing a difficult economy, people are unlikely to reduce their consumption of pharmaceutical products. These days, the price/earnings ratio of the shares is about 12. Analysts are predicting a dividend in the range of 3.5%.

Whatever investment choice you make, check everything three times before making any commitment. Investing in shares, even of solid companies, involves substantial risk.

Precious metals and mining stocks constitute alternatives that you might wish to explore, but make sure to gather sufficient information before making a decision.

In any case, if inflation comes, keeping your savings in cash guarantees that you will experience a loss of purchasing power. As it often happens in life, doing nothing tends to be the worst possible option.

[Text: http://johnvespasian.blogspot.com]

[Image by Per Ola Wiberg (Powi) under Creative Commons Attribution License. See the license terms under http://creativecommons.org/licenses/by/3.0/us]

The art of minimalism and disengagement: throwing away what doesn't work


A new fashion is sweeping the world. It is destroying the work of generations and rendering old certainties unsafe. If it gets you, it won't let you go unchanged. Even if it doesn't, your environment won't remain the same.

This destroyer, more lethal than a virus, is the idea that you are responsible to remedy other people's mistakes.

“Men can perish out of excessive endeavours to preserve what has little value,” wrote Chinese philosopher Lao-Tzu in the year 520 B.C. In our days, it seems that many are indeed willing to waste their lives by devoting endless efforts to helping people who refuse to be helped.

Have you ever wondered why human beings spend time on activities that have zero chance of leading to positive results? These three are examples of hopeless situations:
  • Correcting the same mistake repeatedly instead of eliminating its cause once and for all.
  • Cleaning up the mess that other people have created and that they could have easily prevented if they had listened to your advice.
  • Making countless attempts using the same ineffectual method and feeling depressed about negative results.
“In life, difficult problems result from complicating simple problems,” observed Lao-Tzu. “The wise man prefers to solve problems when they are small, so that they never have a chance to grow.”

In this light, let us take a critical look at any situation that demands our urgent attention. How many of those have developed out of our failure to disengage at a time when less tension was involved?

Minimalism and disengagement are rational responses to excessive demands on our time, energy, or resources. No matter how you look at it, welcoming more trouble than you can handle is not a policy conductive to happiness.

Helping others is fine if you can afford it without jeopardizing the basis of your existence, but it becomes a delusive precept if it brings you too close to the edge.
  1. When a borrowed weight becomes too heavy to carry, consider returning it to its legitimate owner. Disengage and do less.
  2. When you are working without measure on matters that consume every hour of your leisure, reassess their importance and reduce them to proper size. Restrain and minimize.
“Wisdom is not about curing disease, but about keeping it away,” reflected Lao-Tzu. “From experience, we learn the pain that goes along with disease and how to prevent it from happening in the future.”

Overcommitment and anxiety are the plague of our culture. Stay out of their way by refusing to play any game likely to extinguish your flame.

[Text: http://johnvespasian.blogspot.com]

[Image by Jeff Kubina under Creative Commons Attribution License. See the license terms under http://creativecommons.org/licenses/by/3.0/us]

The art of minimalism and disengagement: throwing away what doesn't work


A new fashion is sweeping the world. It is destroying the work of generations and rendering old certainties unsafe. If it gets you, it won't let you go unchanged. Even if it doesn't, your environment won't remain the same.

This destroyer, more lethal than a virus, is the idea that you are responsible to remedy other people's mistakes.

“Men can perish out of excessive endeavours to preserve what has little value,” wrote Chinese philosopher Lao-Tzu in the year 520 B.C. In our days, it seems that many are indeed willing to waste their lives by devoting endless efforts to helping people who refuse to be helped.

Have you ever wondered why human beings spend time on activities that have zero chance of leading to positive results? These three are examples of hopeless situations:
  • Correcting the same mistake repeatedly instead of eliminating its cause once and for all.
  • Cleaning up the mess that other people have created and that they could have easily prevented if they had listened to your advice.
  • Making countless attempts using the same ineffectual method and feeling depressed about negative results.
“In life, difficult problems result from complicating simple problems,” observed Lao-Tzu. “The wise man prefers to solve problems when they are small, so that they never have a chance to grow.”

In this light, let us take a critical look at any situation that demands our urgent attention. How many of those have developed out of our failure to disengage at a time when less tension was involved?

Minimalism and disengagement are rational responses to excessive demands on our time, energy, or resources. No matter how you look at it, welcoming more trouble than you can handle is not a policy conductive to happiness.

Helping others is fine if you can afford it without jeopardizing the basis of your existence, but it becomes a delusive precept if it brings you too close to the edge.
  1. When a borrowed weight becomes too heavy to carry, consider returning it to its legitimate owner. Disengage and do less.
  2. When you are working without measure on matters that consume every hour of your leisure, reassess their importance and reduce them to proper size. Restrain and minimize.
“Wisdom is not about curing disease, but about keeping it away,” reflected Lao-Tzu. “From experience, we learn the pain that goes along with disease and how to prevent it from happening in the future.”

Overcommitment and anxiety are the plague of our culture. Stay out of their way by refusing to play any game likely to extinguish your flame.

[Text: http://johnvespasian.blogspot.com]

[Image by Jeff Kubina under Creative Commons Attribution License. See the license terms under http://creativecommons.org/licenses/by/3.0/us]