The Civil Life

The second wave of the credit crisis is hitting the U.S. banking system, affecting even well managed and conservatively financed banks, even credit unions whose membership is made largely of federal employees.  The first wave, of course, was made of institutions, like Countrywide Financial and Bear Sterns, who were caught up in the subprime lending fiasco where money was loaned irresponsibly to people who were unlikely to pay back the loans in a tough economy.  In the second wave, banks who did not engage in subprime lending are being hit, and hit hard.  You’ll want to take a close look at your bank and double check that your deposits are properly insured by the federal government.

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Peter Lynch, the famous stock analyst, famously said that you should spend as much time picking a stock as much as you would spend buying a refrigerator.   What are the characteristics of a good stock?

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For federal workers, this month is a 3 payday month instead of the normal 2. If you haven’t set aside your “extra” payment yet, what are you going to do with it? I have to admit that whenever I get an extra pay period, I go to Best Buy and look longingly at the flat screen TVs and the laptops. But I (or my wife) usually stops to figure out how much it’s going to cost us in the long run. For example, if I had an extra $1000 and put it in the stock market, I’d have about $30,000 in 30 years if the stock market keeps up its average 12% post World War II return. That makes for a lot of laptops in the future if I can keep myself from buying one in the present!