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Sense on Cents Central Station

Posted by Larry Doyle on April 22, 2011 8:14 AM |

A few years back when I had just launched Sense on Cents, I would host formal weekly exchanges with readers. This forum, entitled Sense on Cents Central Station, allowed readers an opportunity to ask questions, make comments, or shout from the mountaintop (how many currently feel like saying, “I’m pissed and I’m not going to take it anymore!!” More than a few I’ll bet.). Are there specific financial or economic topics you would like me to address now? Ask away.

Given all that is going on in our world and in each and every large city and small community within our own country, I firmly believe people want a voice and to know that somebody is listening. You have it right here. What is on your mind? Speak out. Inquire. Do not be bashful. Are there questions you have as you navigate your own personal economic landscape that I might be able to address? Collectively we can help each other.

As a disclaimer, I am not a financial planner.

Sticking with the theme of this thread, “All aboard….”

  • Ted


    I would welcome hearing what you think is going to happen to interest rates over the near term and then out 5 years. Thanks.

  • LD


    In the near term, I believe interest rates will remain low as the economy continues to have significant excess capacity and slack. Despite the fact that food and energy costs are rising, I do not think the Federal Reserve is going to move interest rates for at least another year.

    The Fed may end up WAY behind other central banks in terms of raising rates to stem inflation (more so overseas) and our dollar will continue to decline in value. This will be a political issue in the 2012 election. The Fed will ultimately have to raise rates to provide some support for the dollar.

    The fact that the Fed raises rates will not mean that longer term rates will increase. Our yield curve (difference between short term rates and long term rates) is historically very steep now. When the fed inches rates higher, longer term rates should not go up as much and the curve will flatten.

    Down the road say in 5 years? Great question. Will we have become Japan and drowning in debt. Will our rates scream higher as we have a sovereign credit crisis? Will the economy rebound strongly? Will we end up somewhere in between? I would venture to say that we will have moderate growth at best and continued high deficits. Rates will move higher but only marginally that is 1-2% higher from current levels.

    Great question. Thanks for asking.

  • Pat

    If you were looking to allocate money to the market currently, where would you put it. I think the stock market is overvalued but it doe not seem to want to correct. Rates are so low that you get little income from bonds. Emerging markets? Investing there in the face of rising rates? I do not know about that.


  • LD


    Great question. As with any investment, the first question that needs to be addressed is “what are you trying to accomplish?” If you are looking for what may be the best overall relative value while preserving a degree of safety, I honestly believe some short to intermediate maturity bond specific municipal bonds is the place to go.

    I much prefer to buy specific bonds with defined maturities than a bond fund which effectively perpetually rolls forward. What is the risk is these muni bonds? Both interest rate risk and credit risk? The bonds may decline in value as rates inch higher but I do not think rates are poised to scream higher and I would recommend that these bonds are held until maturity. Do not buy the bonds with cash you may need within the next few years. Credit risk? Time to do the homework. I much prefer revenue bonds which generate cash flow to service the debt from very reliable sources.

    There you go. Hope this helps.

  • Steve,


    As an individual, how would you recommend I gain exposure to gold? Do you think gold is a buy at $1500/oz?

    • LD

      Gold has certainly attracted a LOT of attention lately. That said, gold is up 6% on the year (less than the major market equity averages). I personally view gold as a very speculative vehicle and an overhyped, ‘crowded’ play.

      I would much prefer to gain exposure to a Commodity Index. For more info please access this commentary from the fabulous site Seeking Alpha.

      I would prefer to have a reasonable and/or representative percentage of a portfolio exposed to a basket of commodities than merely an outsized position exposed to one commodity such as gold.

      Gold at $1500? The market is the market.

  • Pissed

    Thanks for the opportunity to release some steam.

    I am “pissed off” virtually every time I hear a politician in our country speak. I puke when I hear and see Obummer at his teleprompter and then whenever I see Republicans speak, I come away thinking, “this is the best we got.”

    Man oh man, no wonder why our country is so challenged.

    What a pack of imbeciles.

    Thank you…I feel better.

    • LD

      You are welcome. You have plenty of company.

      I personally think the manner in which campaigns are financed in our nation leads to a LOT of quality individuals choosing not to get involved. I wish and hope we would move toward a Canadian electoral process.

      We have selected pols from both sides who are outstanding. I just do not believe we have the depth NOR the level of true independence needed. Seemingly all pols are beholden to the money that got them in office. We need to get the money out of the process.

  • Taylor


    How does a young relatively new (3 years) financial services professional go about learning the best way to serve and give clients value? Where do you see financial services heading? What is the best way to give value to middle class America?



    • LD


      GREAT question. I think almost every young person coming into the business has the feeling and impression that they need to be able to razzle and dazzle their clients. They do not. In fact, I truly believe that in trying to do so they hurt their chances.

      What do young pros–and old pros as well–need to do? Shut up and listen to the client. Find out what the client needs to get accomplished in HIS business and then help him solve HIS problems. While a sales manager may breathe down your neck to produce NOW, the key to a long term successful career are:

      1. developing as many strong relationships as possible.
      2. never stop learning…read, read, learn, learn…ask more experienced pros for helpful advice and insihgts.
      3. help your clients solve their problems. You will generate sales in the process but the sale needs to be the offshoot of the help provided NOT the immediate goal or target.

      I think the financial services industry is trending in this direction because SO MANY clients are no longer trusting of firms and individuals who were not there for them.

      Value to the middle class America? An honest effort and work for them not against them. RESPECT THEM!!

      I hope these insights help. Please do not hesitate to ask anything else whenever you’d like. Spread the Sense on Cents.

  • Rich


    Any chance the debt ceiling does not get passed?

  • LD

    There is always a chance but it is a slim one. Look for more political posturing from both sides. It has already started. Ultimately the ceiling will be passed. I am not a believer that meaningful deficit reduction will occur. I have not seen the necessary and sufficient fortitude and character to make these things happen in Washington and in our nation in a LONG time.

    Maybe my expectations are too high but what I see is not impressive.

  • Liam


    What is your take on the value of the Euro at this juncture?

    Thanks very much!!

    • LD


      The Euro has benefited from the fact that from a monetary standpoint the EU has started to take its medicine. What do I mean? While the debt strapped nations of Greece, Ireland, Portugal, and Spain primarily are languishing from their excessive debts, the EU recently started to “take its medicine” in the form of raising interest rates to stem off inflation that we are all experiencing.

      The UK is likely to do the same soon as highlighted in this recent WSJ article, BOE (Bank of England) May Have to Raise Interest Rates Faster Than Expected.

      Given the more aggressive postures by central banks in the EU and in the UK, the Euro has benefited while our greenback suffers at the hands of our federal reserve which clearly has no problem seeing it decline in the belief that it will help our economy. The rising gas and food prices resulting from the weakened dollar are not doing a lot for consumers or the economy currently.

      All this said, the Euro has performed tremendously well vs the dollar and will likely continue to trend higher. Next stop 1.50.

  • interested

    There is a man sitting in prison because of the powerful, who laugh at us all because they know he and others have no control over their outcome, they do. We see it in your blogs and your frustrations and articles published, and no one will or has done anything with the abuse. I commend you all for your continued fight, unfortunately it is sad to see no one in power is listening

    • LD


      All that is needed for the forces of evil to triumph is for enough good men to do nothing.

      I will continue to write. I encourage you and others to spread the Sense on Cents. Our children deserve nothing less.

      Yes, the crowd in Washington and the state capitols hear our voices. I know they do because I hear from them and I know they read my work.

      I vote and you do as well.

      The internet is having a decided impact on our national debate. Keep fighting.

      You inspire me.


    • There is a man sitting in prison because of the powerful . . .

      most certainly is:
      but who’d you have in mind –or, how many?

      or, more and more certianly, how many more . . .

  • fred


    When I was younger, the dream that propelled my hope was that someday I would do something to change the world.

    Now, twenty-five plus years later, I have yet to leave my mark on history. However, I have not lost hope by thinking that maybe I’m a slow starter or possibly a late bloomer.

    As the years have past, a sense of personal mediocrity has slowly grown and begun to replace that feeling of special purpose. I have modified my expectations for changing the world, to changing the world by changing a life. My lowered expectations now seem more attainible because I can now achieve success even as an underachiever.

    Anyway, as a very practical person, I have often wondered what purpose there is to my posting responses on your blog. Can my thoughts and ideas have any lasting influence or is my involvement simply a venue to articulate and vent my feelings?

    Upon reflection, I do get something from the experience of contributing, my participation creates in me a sense of empowerment akin to the casting a ballot on election day; even if I believe my posts have no lasting significance, my participation in the process proves to me that I care, justifies my right to an opinion, and has the potential of having an impact on someone else capable of influencing real change.

    Ideas come to me from everywhere, I was listening to sports talk radio the other day, they were discussing Will McDonough, a successful national sports writer. Will was said to “have a knack” for getting important people to take his calls and “uncovering a story”. Will was asked how he became so successful as a sportwriter and his answer, “by always providing more information than I expect to receive within the context of friendly conversation. I start digging at the top to open the doors (and get the facts) at the bottom; my first calls are usually to the commissioner and the owners which then gain me access to the general managers, coaches, agents and players. I have always worked hard to become more than a sportwriter to the people I talk with, I want to be thought of as a friend, who can be trusted to keep a confidence.”

    LD, as with WM, I believe you have a “knack” as a communicator with the necessary knowledge, incites and personal integrity that might help you gain access to the “movers and the shakers” in politics and finance. It is my hope that through your actions and accomplishments here at Sense on Cents, I might become empowered and gain feelings of personal success for having participated in the process.

    Keep on punchin, but maybe you can start workin some combinations.

    • LD


      Thanks very much for your very gracious comments. I do not know about the “knack”. I wish I had a “knack” for running faster, a better golf game, and a wide array of other pursuits.

      The simple fact is when I launched this blog, I hoped that I might be able to help people. If even only one individual benefited, then my goal would be achieved. Rest assured, your extremely valuable insights are very helpful in achieving that goal. I thank you. Does there need to be even more than that? I am not so sure.

      I think back to the remarkable paper that your son wrote. There is no doubt you are doing the right things. As I attest in my commentary this morning, the world needs forces of good and virtue to stand up and speak out. I think we and many others are doing that in our own little corner of the world via this blog. With a little bit of luck, perhaps that corner can grow ever wider.

      I like the idea of the combinations, hopefully those will come to pass. We will certainly work those into our routine and regimen.

      Thanks again for the support and keep spreading the Sense on Cents!!

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