Education Brings Economic Power

I was driving down Route 15 just across the river from Harrisburg, Pa. when I was shocked to come over the hill to see my daughter Stephanie featured on a bill board for Central Pennsylvania College. At that time, she just graduated with Honors with a BS Degree in Criminal Justice. She graduated at the top of her class. I stopped and got on my cell phone, called her, and asked her about this bill board. To her surprise, she knew nothing about it.

Today, she has an MBA and is a Resource Manager, reporting to the CEO of Credo Technology Solutions, Inc. One function of her job is to be over the Dept. that handles Contracts and the Human Resource Dept. She looks for people who have good computer skills. She places them in good high paying jobs.

Stephanie Tulloch, MBA

Resource Manager

Credo Technology Solutions, Inc.

Cell: 717-379-7297

www.CredoTechSolutions.com

With the economy going to "Hell in a Hand basket", I know few people tripling their pay and moving up in corporate America. I know fewer Black women who is doing that. But Stephanie is young and has the drive to make such moves. Recently, I visited her house on a Saturday to take her oldest son swimming. She was on the phone, completing a business deal. I had to wait until she was done so that we could leave to go swimming.

She reminds me of me! But she also reminds me of someone else in my family. Someone who lived a long time ago.

This is my mother born in 1923 with the name of Jean Julia Brown. She grew up in the Great Depression and during the Second World War. She married William Jackson Williams II. After the war, women took the position that they were to stay home and have children while the men worked.

My mother is the first daughter of John and Eliza Lucinda Brown. They are my grand parents. Most of my mother's child hood took placed at John and Lucy's house on Third Street in Steelton, Pa. They moved here after getting married at Free Union Baptist Church in Stony Point, Va., near Charlottesville, Va. They were on their way to Pittsburgh, Pa. were John Brown hoped to work in the Steel Mill. Instead, John ran out of money and had to stay in Steelton and work in the Bethlehem Steel Mill. What people did not know at the time, the Great Depression was starting. Dispite that, the Browns were able to move to another state, start a family, and get a job.

My Grandmother Born Eliza Lucinda Blue Dec. 23, 1899 - Died July 9, 1966.
They called her Lucy Brown.

Ex-slave Eliza Thorne and Stephanie's Grandmother 9th removed.

Stephanie is much like Eliza Thorne. Eliza was an ex-slave but believed in economic power. She was half Cherokee. In 1864 - 1865, Union troops liberated Culpeper, Va. They freed the slaves. Her master was more likely Russell Brown and during the Civil War Colonel Slaughter's family. Stephanie's family (Porter family) on her mother side still lives at the base of the hill where the Slaughter's had their plantation.

Eliza Thorne had three husbands in her life time. One was her slave husband, James Graves. the second husband was Robert West. The third husband Reuben Walker. Stephanie is a decendent of the Reuben Walker Family because Lucy's father and mother Eliza J. Walker and George W. Blue, married in 1895 at Free Union Baptist Church in Free Union, Va. The Walker's come from Eliza Thorne's third family. Here is why Stephanie is a hard core Baptist.

Virginia slave law allowed slaves to have a business and make money when they were not working for the master. Eliza had a skill. She was a Carpenter. She made furniture. When I was 21 years old, I had the pleasure of seeing some of the bedroom furniture that she made at Joseph Blue's home (brother of Lucy Brown).

Place the link below in your browser.

http://www.encyclopediavirginia.org/culpeper_County_During_the_Civil_War

Culpeper County 1860 - 1865

Russell Lewis Brown , born 1835 in Culpeper County, Virginia; died 1863 in Louisiana.

Russell Lewis Brown served in the C.S. Army

After the Civil War, Eliza Thorne bought a Conestoga Wagon, a team of horses and moved her family to Stony Point (Free Union) Va. Here, she bought eleven acres of land. All this just after the Civil War and at the start of the Post Civil War Depression. She was working against social odds. "Free Union" areas in Virginia were places where freed ex-slaves could live protected by the state from falling back into a slave status.

In the 19th and early 20th Centuries, it was legal to kill Native Americans. My Great Grandfather on my father's side of the family was killed coming home from work in Houston Texas around 1910. He was full blooded Cherokee. His crime? He had a job and the KKK did not want his kind in Houston. The KKK ran my father's family out of Texas. So it was foolish to admit that you were an Indian. It was better to say that your ancestry was from Africa than America. Eliza Thorne's education even as an ex-slave made it possible to live a better life than most freed people of her time.

In the 1970s and 1980s, I had the pleasure of walking around part of Eliza Thorne's land before it was finally sold off to developers around 1986.

David is tenth removed from Eliza Thorne

When I brought her oldest son back from swimming, Stephanie's one year old was crawling around the living room. He spotted Stephanie's smart phone on the end table and decided that he had to use it. He pulled himself up so that he could stand up to play with the phone. Stephanie keeps her phone locked so that he cannot just help himself. But surprise, it took him no time to unlock the phone. He proceeded to use it.

David as he showed me that he can operate a Smart Cell Phone

Just as he was about to make a phone call, Stephanie came into the room and snatched the phone from him. David started to cry because he had some serious business to conduct on her phone. So this song is for him. Place the link below in your browser and play.


http://www.myspace.com/louisarmstrong5/music/songs/nobody-knows-212168?ap=1

I am sure Eliza Thorne sung it when things went wrong and David has been wronged by Stephanie.

What is Education to You?

Harrisburg High on Market St. Harrisburg, Pa.

Measured by Pa. State test scores,

School District is last in the commonwealth in education.

Education is personal. It all depends on what you want to get out of it. It can be self directed, "one on one", classroom, or computer base training.

Some people think that a good public or private education will get you into a good college. Some think that a good education is measured by test scores. Yet other people think that a good education will land you a good high paying job. What is a good education to you?

To me, a good education is something that I can use to make money and will allow me to keep money. It is also something that will allow me to defend myself in legal, financial, health, and political matters.

I made my living mainly from programming computers of major corporations as well as county and state government agencies. The income from these jobs allowed me to buy homes and cars, put food on the table and clothes on my back, as well as raise children. But not like many young people today, most of my education came free from my employers by way of company education benefits.

I went to public school in West Mifflin near Pittsburgh, Pa. From 1967 to 1972, I researched what I had to do to make a living in future economic times. Notice I said future not present. People who live for the present are doomed to fail because our economic situation changes about every 2 to 3 years. That is why people who see or hear what jobs are popular this minute, end up spending a lot of money just to be unemployed with a high education debt.

When I was in high school, I knew that working in the mills around Pittsburgh was not going to put food on the table for long. All people at that time had to do was look at the development of industry in other countries to know that supply of production will go up and demand will not, causing a slow down in production in this country. It will also cause companies to lay off and put mill workers in the street. Only if you can support any business at any time would it be profitable to get into a profession, trade, or some specialty labor to support yourself for a long period of time.

This is something that public and most private schools are not design to teach you. They are design to teach you how to read, write, and do math for the local businesses in your local area. They are not design to teach you to think on your own. Most colleges and universities are not design to teach independent thinking either. So in other words, schools, (public, or private and most colleges) are factories that produce human programmed robot laborers for the local work force.

When I was a small boy (3 to 12 years old) in the 1950s, I would get up early on Saturday morning (6:00 to 7:00) and watch the old documentary shows that the networks used as fillers. I did not know that I was educating myself in economics, production, and human resources. It was teaching me to think independently of the local industrial leaders. To me, it was just another TV show. This is why by 1967, I was able to look at my situation and figure out what I wanted to do and get what I wanted out of education.

My College Years

While many of my child hood friends hung out and wasted time, I taught myself COBOL programming and took computer courses in high school. As their parents talked about how racist it was to push Black children into technical trades, I went out and got trained in a trade while in High school. I worked in the computer industry by day and had my employer pay for my college courses at night.

While working and going for my General Studies Associates Degree at Allegheny Community College, I explored other interest such as Business and Estate law, financial markets, the real estate business, accounting, and many other disciplines. Then I went on to get my BS degree in Management and Computer Science from Robert Morris College.

At that point I was ready to do many jobs for many companies. I had knowledge of just about every financial market and how best to take advantage of them. I could raise and manage my children to know how to take advantage of their educational opportunities to pursue what they want to do. Because of my studies, I am in a position where I am least likely to be taken advantage of by corporations and individuals on the job, at home, and in society.

I had to defend myself in court against companies and individuals over the past 40 years, saving me money or getting back damages. I saved a lot of money in legal fees. I made a lot of money using my credit cards. I made a lot of money in the financial markets and bought three homes.

Education for the Next Generation

I have two children. The youngest has a different idea of education than I do. She always wanted to be a model. That is what she geared her life around and that is what she does. Making money is not a priority for her. She hangs out with the famous people of her time.

The oldest daughter’s idea of education is much different. She makes way more money than I do. Her idea of education is geared around making money, helping people, and obtaining economic power. She can do math that I don't understand. She does things with computers that I never dreamed of doing.

She has an Associate Degree, a BS Degree in Criminal Justice, and an MBA. She thinks independently and is part of the people in the business world that calls the shots.

When she was in her early 20s, some lady stole her pocket book and took her money. She charged that lady with the crime took her to court and prosecuted her by herself. The court was impressed and so was I. She was going in and out of the country without my knowledge or blessing. I found out when she came home one day to tell me that she was getting married to a man that she met in Jamaica.

Today, she has multinational business and family contacts. Her world is more complicated than I never known could be possible.

Education Starts before Birth

I started teaching my children before they were born. I would talk to them while still in my wife’s body. So I should not have been surprised when my children started talking at 2 months old and counting before 2 years old. This is a practice that my oldest daughter followed and I hope that this practice will continue for generations to come.

At age 4 my grandson started practicing to be the fastest person in the world. He is now 6 and my oldest daughter’s oldest son is already known in the US and around the world thru his blog in the Track and Field World. He can run 6 miles and is second seed (USATF SUB-Bantam) in the north east United States. He is 6 in the 1500 meter in USATF Region 2 Outdoor Track and Field in the US.

When he goes to the track to practice, people assume that I am making him do a practice that even college people would have trouble doing. People will question him on the track to see if I am abusing him. Recently, a group of ladies asked him what he was doing and my grandson replied, “I am in training.” They came over to me and told me what he said. My reply, “He is in training. He wants to be a world class athlete and he is educating himself to be just that. I am his transportation and his coach. He decides what he wants to do.”

My second grandson just turned one year old. He wanted to show me something one day. He can’t talk that well but he can work a smart phone. He showed me how it worked from the pictures to the music, to the videos. For a year, he taught himself by watching my oldest daughter use the phone while she breast fed him. I was shocked and surprised but that is what education means to him.

The Corporate Bond Wars: Portfolio Size

Here is Larry Denham opinion about Portfolio Size. He gives neither one the advantage.

Bond Funds: Most bond funds have an initial minimum investment of $5,000 and allow the investment of any dollar amount above the initial minimum. Hence, an investor is able to make a fixed income investment in a bond fund with a relatively small amount of money. Nor does the investor have a size constraint other than what prudence dictates by way of diversification needs and asset allocation strategies.

Individual Bonds: Most individual bonds are sold in $5,000 denominations and may be purchased in much larger blocks depending on the investor’s net worth and available funds. However, in my opinion, portfolio size of much under $100,000 doesn’t give an investor adequate opportunity to achieve an acceptable level of diversification either by issuer, bond type or maturity.

In my opinion, the smaller the portfolio size, the greater the chance of diversification problems. However, diversification can be over come by buying one or two bonds of a particular issue. You can have a portfolio value of $20,000 but have 10 issues in the portfolio. No, most bonds are not sold in $5,000 denominations. Many bonds sell in increments of one to five bonds or $1,000 to $5,000 denominations. Again, you must do your homework.

You don't need $5,000 to buy into a bond fund. With Close End Bond Funds, you can buy one share of the fund. For example, if you bought one share of DREYFUS HI YIELD STRATEGIES (DHF) on Wednesday August 10, 2011 at 10:30 AM, it would have cost you $4.28 yielding 12.16%. Many Open End Bond Funds start at $1,000. So I disagree with Larry here.

So I agree with Larry if we are talking about investment grade bonds but disagree if we are talking about non-investment grade bonds. Portfolio size does not matter as much as what you have in the portfolio.

With all this going on in the market today, you are probably wondering how I am doing. Let’s take from the height of my IRA Portfolio on May 10, 2011 to Aug. 11, 2011, my IRA has fallen in value by 4.58%. You seen this much of a fall in the stock market on a single day in the 5 days before this day.

As a matter of fact, in this same 3 month time, the Dow Jones Industrial Average fell 15.49%. Many people are looking at worst falls in their personal, IRA, and retirement portfolios than 15.49%.

But keep in mind, I rarely sell my bonds. I wait until maturity. So, I only loose money in my portfolio if a company goes bankrupt or the few stocks that I have never recover. This is how my portfolio is protected in falling markets.

You will see in the next blog that people who follow my strategies, diversify with far less than $100,000 in Corporate Bonds making up their portfolio.

The Corporate Bond Wars: Liquidity

Here is Larry Denham opinion about Liquidity. He gives the advantage to Bond Funds.

Bond Funds: With bond funds, liquidity is readily available. If a person needs money for an unexpected expenditure or desires to change asset allocation percentages, an investor may sell shares of the fund at anytime at the current NAV less redemption fees, if applicable. As previously mentioned, depending on interest rate levels, the sale could result in a potential loss of principal. Liquidating a portion of the bond fund changes the amount of the fixed income investment and does not change the characteristics of the fund portfolio.

Individual Bonds: Individual bonds can also be sold prior to maturity. The prices for bonds sold in the secondary market are influenced by prevailing interest rates and like mutual funds could be sold for more or less than the original investment. If some bonds are less liquid than others, those bonds may be subject to greater price volatility.

It is important to note that short term objectives and short term investments should not be mixed with long term objectives and long term investments. Hence, liquidity is best accomplished by holding money in short term cash instruments in order to provide funds for unexpected needs. Fixed income objectives should then be met by separately purchasing bond funds or individual bonds that will be held to maturity.

In my opinion, this is what is wrong with individual bonds. Investors can get cash out of a fund in less than one business day. Most individual bonds are bought and sold on the “Over the Counter” market. An investor may put a bond up for sale and may never sale the bond. Most bonds on the exchanges such as the New York Stock Exchange may sell a bond in one business day.

I agree with Larry Denham. Don’t invest money in corporate bonds if you are going to buy a dish washer with the money in 15 days. On the other hand, don’t put your money in a checking account when you are going to use it to retire with, 30 years from now. Use the proper investment products and strategies when trying to achieve your objectives.

By the way:

As the morning of Aug. 5, 2011 started, I noticed on the market open that it was down over 300 points. As I found out, that was the best time of the day. Upon one person finding out that their stock IRA was in serious trouble called me up to tell me that the economy was in the “shitter.” Later that evening, a person who knows very little about financial markets thought that he was teasing me by asking, “How are your stocks doing?” So this morning Aug. 6, 2011, I thought that I would tell everyone how my stocks are doing.

As of the morning of Aug. 5, 2011, my Bond Portfolio is up 5.14% YTD. If you count my yearly contribution, it is up 11.9% YTD. The market measured by the Dow is down 3.16% YTD. At this rate, this looks like the third year that my bond portfolio is going to beat the market. My portfolio has less than 5% stocks. So my Portfolio went down .92% vs. the Dow being down 4.31% for the day. I protect myself on the down side of the market by investing in individual bonds and very little stock.

As I said in 2008, I believe that we are in the first Great Depression of the 21st Century.

The Corporate Bond Wars: Interest Rate Risk

Here is Larry Denham opinion about Interest Rate Risk. He gives the advantage to Individual bondholders.

Bond Funds: Because bonds in a bond fund are constantly being bought and sold, there is no specific maturity date for the money invested in the bond fund. Like all fixed income investments, the money held in the bond fund is subject to interest rate risk (an inverse relationship exists: when interest rates increase bond prices decrease and vice versa). Hence, when shares are liquidated they are sold at the current net asset value (NAV); and, depending on interest rate levels, the sale could result in a potential loss of principal. Generally, the risk of price volatility and fluctuating principal is higher for bonds with longer maturities.

Individual Bonds: Individual bonds have a defined maturity date. Interest rate risk is avoided by purchasing individual bonds with the intention of holding them to maturity. The market price of any fixed income investment fluctuates prior to maturity based upon the level and direction of interest rates. As a result, barring a credit default, if a bond is held to maturity it provides principal protection by being redeemed at par value, regardless of prevailing interest rates.

In my opinion, this is the basic problem with bond funds, no maturity. That leads to the Investor being at the mercy of the fluctuations in inflation and interest rates. With individual bonds, the shorter the maturity, the less likely you will be affected by interest rate risk. If you keep the bonds to maturity, the investor is only affected in an “out of control hyper inflationary cycle”. In most cases, the bond holder is not affected at all.

Loves Financial Contract

I had a friend who wanted to get married. She was in her 40s and wanted a husband badly. She wasn’t much to look at. Let me put it this way; she was someone that would hurt your eyes to look at. But for some reason, she thought that if she could land a husband, she would not be alone for the rest of her life. She met this man on the internet and in a week’s time, she was getting married. I told her that she should try to find out about this person before she gets married. She told me that I was just jealous and did not want to see her happy. She got married to the man in a matter of weeks.

The woman may not have been attractive to most people but her father left her a house, land, and money. The marriage lasted almost one year. Before she filed for divorce, her husband sold her house and land. He spent most of her money. He started beating her senseless. He got a divorce settlement of one half of what she had left. In the end, she had no money and was homeless.

Looking on the bright side of the story, she was so fat that her stomach fell to her knee caps before the wedding. When she was divorced, she was skin and bone because she did not eat in almost a year. She called to tell me that I was right all along about her marriage and I never heard from her after that. As for the ex-husband, he was already off stalking another victim even before the divorce.

You don’t have to have millions of dollars to become a victim. A house, bank account, or even a job will due for many predators. The economy all over the country is going downhill and has been for decades. People are starting to become desperate and will do anything to get money. Marriage is an easy way to get it if the predictor has far less than the victim. Romance is something that happens in the movies. True marriage is a business and should be treated as such. If the marriage works out until death, you are blessed and lucky. If not, you better have a fall back plan to save your assets such as a Prenuptial Agreement created before the marriage. If your mate does not want to create one then that is your first clue that something is not right with your union made in heaven.

Recently, a woman wanted to see me and wanted to spend some time with me. Almost immediately she wanted to marry me. I told her that I was not interested in a marriage. That did not matter to her. Somehow she was going to change my mind. One day she told me that she wanted to show me a real estate deal that she found. I told her that was not into real estate but she insisted that I look at it anyway. It was a trailer that she found and she wanted to live in it. I could pay for it and she would live in it. She claimed that it will appreciate over the years and I could sell it later and make my money. I just stopped talking to the lady because all she wanted was money and a place to live from a Sugar Daddy. That Sugar Daddy was not going to be me. Not only do you have men succubus but many woman act the same way.

The idea that most churches preach is that you get married for love and the marriage is sanctioned by God. Many people believe that and also think that their spouses would never do anything to hurt them. If you fall for this idea and if you have assets that are substantially more than your ideal mates, you can end up like my friend, penniless and homeless. Some find themselves dead, set up by the sweet newlywed.

Two things to remember;

1) marriage is a financial legal contract enforceable by law,

2) God never had Adam and Eve go to a courthouse for a marriage license or go through divorce proceedings.

Courts do not care whose fault the divorce maybe. All they look at is the couple’s balance sheet and income statement to determine the two individual’s net worth after the divorce.

http://www.cnbc.com/id/41193264/

The link above is for Divorce Wars Story on CNBC

Conclusion: The Corporate Bond Wars

This is the view of Larry Denham, senior vice president and business development officer for Zion’s Bank.

So what’s the answer? Is it more advisable to invest in bond funds or individual bonds? Is the answer still determined by the summation of each investor’s individual circumstances and investment objectives? Let’s suggest an answer by reviewing some of the more obvious conclusions and allowing the reader to decide his or her own investor profile.

If an investor;

(a) desires as much diversification as possible in order to protect against default/credit risk,

(b) is looking for a quick entry into the fixed income market with the on-going convenience of automatic reinvestment of interest earnings,

(c) chooses not to be involved in the underlying investment decisions,

(d) understands interest rate risk and that there could be a loss of principal if interest rates are higher when shares are sold, and

(e) is willing to pay management fees and fund expenses………

Then you want to buy a bond fund.

On the other hand, if an investor;

(a) has at least $100,000 or more of investable, fixed income assets,

(b) wants to retain investment control,

(c) desires relatively predictable income,

(d) intends to protect principal by holding bonds to maturity, and

(e) is looking for lower expenses by virtue of buying bonds online directly from the secondary market.…..…

Then you should buy individual bonds.

It is Larry Denham’s opinion that gradually more and more investors will be attracted to the advantages of purchasing individual bonds. And as investors learn the ease of buying individual bonds online, the investor shift from buying bond funds to buying more individual bonds will likely accelerate.

Nevertheless, decide which type of investor profile you are and start investing!

My Opinion

I agree with most of what Larry says. However, you don’t need $100,000 to get into buying individual bonds. I got started with a few thousand dollars in my IRA. So did my friend (see my friends chart at top) decades ago.

Online brokerage commissions are as low as $4.95. I pay about $10.00 at my online firm. As of today, looking at my friends account on the morning of Aug. 18, 2011, it was worth $97,499.41. It is down from its all time high but that is due to the bonds in his portfolio selling at a premium. Now they sell at or a little below par giving my friend an opportunity to buy more of the same bonds at a more reasonable price.

With his portfolio of junk corporate bonds, you can see how much that stock market crash affected my friend.

But let me add that these investments such as individual bonds or mutual funds are not guaranteed. You still pay your money and take your chances.