Friday, April 29, 2016

Investment Basics: 'Bear'ly Making Sense of a Bull Market

As a beginning investor, sometimes you can listen to the news or hear market re-caps, and be utterly confused by the lingo. You may have heard reference in the past to the concept of a 'bear' or a 'bull' market. Even outside the New York Stock Exchange, they have a statue of this lovely beauty:

Looks friendly.

So what is the difference between a bull market and a bear market and how did they get those names?

Interestingly, the difference between the two boils down to their method of aggression or attack. A bear when poised to attack takes it's paw and swipes downward. For bulls, it's exactly the opposite. Think Pamplona and the running of the bulls for a minute. Bulls will move their heads low and thrust quickly upwards, hoping to skewer unsuspecting runners with their horns. So what does this have to do with the market? Both animals' attacks are supposed to symbolize the movement of the market and investor confidence (more about that in a moment). In a bear market, you would expect to see market prices decline, while in a bull market, the opposite would be seen. Some investment experts cite a 20% decrease in value from the peak of the bull stock market as the sign of the bear market. 

The animal choices are also not completely random. Some of the first commodity traders were bear skin sellers. After selling orders of bear skins, the traders would hope that the price would go down on the skins before they purchased them. They would still charge their customers the same cost, thus making a larger profit. They would actually hope for a 'bear' market and would use that to turn a profit.

Investor Confidence
As seasoned stock market watchers know, much of the stock market movement is tied to what is referred to as Investor Confidence. Investor Confidence can make or break a stock. The stock market often has normal shifts up and down, as individual stocks also move up and down. Certain stock groupings, such as the NASDAQ or the S&P500 are groupings of stock that are than measured in their market increases and decreases. These indices are generally thought to be good representations of tracking the market as whole. If overall, investors are less hopeful about the future of the US economy the stock market tends to take a hit. If a company projects positive earnings or makes a change in leadership, this may increase investor confidence and cause a rise in pricing.
Larger impacts, like consumer spending, reports from the Federal Reserve or the unemployment rate are all items closely watched by investment firms and factor into decisions to buy or sell. CNN Money has a different way of talking about Investor Confidence. They have a model related to Fear V. Greed. On the Greed side, investors are purchasing rapidly and the overall stock market sees a rise (bull market). The Fear side, is when many investors question the values of their stocks and sell rapidly (bear market). For many of us, the sell-offs of the Great Recession are not yet distant memories, where many portfolios lost tens of thousands of dollars in short periods of time- a reminder that fear and lack of confidence has large repercussions. 
  What a load of bull...
Does the idea of investor confidence and the rise and fall of the market seem arbitrary to you?? I'm with you! You can go crazy watching the major indices, like the NASDAQ or the S&P. Most agree that the US Stock market has been in a long-stretch of bull market, without a 20% decline that has been seen in the global markets. While global stock markets have entered the bear market- US markets seem to still be in bull territory. Watch any Market Watch though and there are predictions of doom and gloom on the horizon. But would a bear market be so bad?
Think of a weak stock market as a 'sale' rack - with deals to be found for the savvy investor. I am always thrilled when I purchase something half-off or on clearance so why shouldn't I also be stoked by the idea of paying less for a stock that one year ago was twice the price? This is where that weak stock market- or a bear market, can be good for you! You have the chance to build your portfolio without spending as much, if you are making good investment decisions. For me- we have a monthly amount that we put into a ROTH investment account- we put the same amount in each month, but our money stretches farther in a bear market, than a bull market. When eventually the market turns from Fear to Greed again, the hope is that those investments will increase dramatically!
How Confident are YOU in the Market? Do You Think A Bear or Bull Market is in the Future?

Saturday, April 9, 2016

Gardening Update 1: Need for Seeds

First gardening update: the seeds are bought and in the ground!

And by ground, I mean in individual garden soil pellets, positioned under heat lamps in my warm house cuz it's too freaking cold outside still to actually plant them in the ground!

As some of you may remember from this recent post- I am asking the question this summer "Can veggie gardening save you money??". As part of that, I decided to start seeds indoors prior to planting outside. There are a few good money saving reasons for this:

1. It saves me from having to purchase plants later at the garden store, which can get expensive. Seed packets are generally about $1-$2 and can grow 10+ plants while garden stores often charge $5-$10 for starter veggie plants.

2. It allows you to grow different varieties than are commonly sold. Last year I grew these fantastic mini-watermelons, that I grew from seeds. They took off in my yard, but I never would have found them at a Home Depot!

So far my grand total of costs has been $33, which includes seed purchases. I did have the grow lights left over from previous years so I repurposed those. Search on Amazon and you can find some reasonable set up for less than $50 depending on the size of the light that you are looking for. While it will have some cost for you at first if you use them year by year, it can be worth it. If you have a lot of windows, you may not need them, but the window placement in our house doesn't lend itself to good seedling growing so plants lights were the best solution.

So about a week or two after planting, here is how my seedlings are doing:

This tray is primarily tomato varieties- beefsteak, and vine tomatoes, but also has a little okra and cantaloupe thrown in. YUM.

Hope it's beginning to feel like spring wherever you are!!

Monday, April 4, 2016

Your TV Watching is Breaking Your Wallet

About a month ago, Mr. Frugal Rock and I had a glorious weekend. It was one of the first nice, warm weekends after the cold stretch of winter, and we spent a lot of time outside, hanging around with friends and working on our projects. In talking about our weekend Sunday night while lying around our living room, we had a revelation. We hadn't watched any television.

While never having been excessive (I think) in our television viewing, I will admit to a heavy binge-watching streak, especially on weeknights after a tough day. With the endless ability to continue watching shows, thanks to streaming services like Netflix uploading whole seasons at once, it can become easy to overdo it. You may not be a House of Cards fanatic (like your's truly) but for all you March Madness fans out there, don't pretend like you haven't been watching endless amounts of basketball games in the past few weeks and pouring over the highlights each night after the day of play is over. Plus for the Frugal Rock home, we both have our own shows- (HOC for me/Tom Goes to the Mayor for Mr. FR) so this is also time where we are spending time apart doing our own thing. I'm not a believer that couples need to spend ALL their time together but ignoring your partner can get a bit excessive when you are trying to cram through 13 episodes in a short amount of time.

So how much Television is 'normal'? The way to find out is the Bureau of Labor Statistics National Time Study. This fancy tool takes a look at how Americans spend their time. Yup, all of it. Seriously, they quantify the amount of hours Americans work, cook, clean up the house, do leisure time, etc. And most interesting they break it down by gender, age, employment and other factors. Feel free to us the time study next time you want to talk with your partner about gender inequality over household chores. :)

According to the Bureau of Labor Statistics National Time Study (take a peak if you've never looked at it) on the average night, employed childless adults (that's me!) watch just under 2.5 hours of television. Employed adults with children watch about 2 hours. Those numbers increase on weekends and holidays. According to the 2014 time study- Americans spend about half their leisure time watching television. That means that about 1/2 your free time that isn't designated towards work, commuting or household tasks is associated with your television screen. This does not include all the time you spend on your computer or phone so 2.5 hours is just strictly television, not including other screen time you may also have.

But Isn't Watching Television a Frugal Pastime?

But wait, can watching Television instead of going out actually cost you MORE money? Turns out that this is a real phenomena.

This is very similar to research that's been done correlating television and obesity by Harvard's Department of Public Health (check it). The study found that sitting and unhealthy snacking that is common during television viewing may also be influenced by the amount of unhealthy food adds, that are targeted to you during the commercials. Not surprisingly one finding was that ads on television influence our habits- which is what they are meant to do! According to the above mentioned link, 'children who watched cartoons with food commercials ate 45 percent more snack food while viewing than children who watched cartoons with non-food advertising'. Don't think that as an adult that you are that much more immune to the influence of advertising and product placement- increased television watching in adults is also linked to obesity. So it can wreck your waistline, but can it impact your wallet?

Television watching can also wreck havoc on your personal finances- and not only if you are watching the shopping channel. Advertisements are there to make you realize all the things that you can't live without- the more you expose yourself to media content, the more likely it is to influence you. Even product placement has gotten a bit extreme lately with more shows featuring tech gadgets or cars purposefully put there to make you want to buy.

I found these numbers really interesting but honestly wasn't going to do anything about it until Mr. Frugal Rock threw down this gauntlet: no television on weekdays. I'll admit to initially being skeptical about his seriousness, but he persisted. And like the middle schooler I am at heart, I thought if HE can do it, I can do it. Nothing like a bit of good relationship one-up-man-ship to keep things fresh! Now I don't want our 'no-TV' time on weekdays to lead to more eating out, going shopping or any other non-frugal pastimes, which prompted this question:

But what do you do with all that extra time?

Now my first reaction when we stopped watching television on weekdays was that we will have so much more time for all of our favorite things. Cooking elaborate meals on a weeknight? Decadent! I also naively thought- I will exercise so much more! I bet you all know how that's working out...

I found the reality at first a bit more challenging. After a long day of work, it can be hard to think about what you want to do. It can seem like expending energy that you just don't have to even come up with an alternative.

Sometimes I find myself making excuses and saying, "I don't have time to..." and realize that it's just something I say to get out of an activity I don't want to do. There are plenty of things though that I enjoy doing or things I have always wanted to do and have been putting off. Sooooo, I made a list. It's been one month of no TV on weeknights and we are going strong!

Think of the things you've been putting off...what could you accomplish with 2.5 extra hours every night?

Fear of missing out?

What will we talk about with our friends/coworkers?! This was actually a pretty big concern that I initially joked about but had some real life thrown in. Your favorite shows, and what you enjoy watching on your own time, can often be an easy social bonding tool- think about how you can talk the next day with co-workers you hardly know about the big game the night before, the Oscars, or even that knew episode everyone has been waiting for. This was a phenomenon that we encountered when we stopped going out to the movie theater ($18 for tickets to the movies??!). While we still talk about movies or shows we enjoy- we no longer have the bragging rights for what the newest/coolest show or story is...and that's okay. If anything it helps us curate what we do want to spend time watching since by the time we get around to it, the reviews are long in!

Can you see yourself chucking the TV?
So how about it? Do you think that your TV watching habits are excessive or about the norm? Do you think about getting rid of your television screens altogether or this a pipe dream?