Why 2022 is not like the 2008 Financial Crisis

By Jonathan Cameron, CFP®

We have not seen a prolonged stock market decline like this since 2008! The year 2022 has been an awful year in markets. You don't have to go far for the media to remind you of this every hour on the hour. But this is not 2008, of course. Here's what you need to know now:

  • How is this time different?
  • How is it the same?
  • What can you expect now, in the second half of the 2022?  

Read on.

How is this time different? 

To that our answer is -- in almost every way. Let me explain:

The underlying cause of the 2008 Global Financial Crisis had to do with real estate. More specifically, it was a catastrophic mortgage crisis that cascaded to the rest of the financial system. Let's review what actually happened during this tumultuous period in markets:

In the 1990s, in a push to completely stamp out the practice of redlining (a terrible bank practice where inner-city families were once systematically denied mortgage applications and other loans) and to...

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Bitcoin Part II - Inflation Hedge

By Glenn J. Downing, MBA, CFP®

I began Part I - New Asset Class with this statistic:  one in five people in the US have invested in or used cryptocurrency.  As Bitcoin becomes more widely accepted – indeed, Fidelity is offering it in 401K accounts – it is high time for me to write about it. 

And there’s a lot to write.  I’m going to break this up into two blogposts:  Part I covers the foundation of bitcoin and how it works, and here in Part II I answer the question, Why crypto currency?    

Fundamentally Bitcoin is one of many cryptocurrencies.  It is an asset.  It is bought and sold through various exchanges called wallets.  It can be used to pay for goods and services.  These transactions happen on the blockchain. 

The Gold Standard

In 1981 the US came off the gold standard, meaning your currency is backed by nothing beyond the ascription of value of millions of people.  Currencies...

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Bitcoin Part I - New Asset Class

By Glenn J. Downing, MBA, CFP®

I was astonished to hear this statistic:  one in five people in the US have invested in or used cryptocurrency.  That means that Bitcoin is indeed a thing, and it is time for me to write about it. 

And there’s a lot to write.  I’m going to break this up into two blogposts:  here in Part I I’ll cover the foundation of bitcoin and how it works, and in Part II - Inflation Hedge I’ll answer the question, Why Bitcoin?    

Fundamentally Bitcoin is one of many cryptocurrencies.  It is an asset.  It is bought and sold through various exchanges.  You hold Bitcoin in accounts called wallets.  It can be used to pay for goods and services.  These transactions happen on the blockchain. 

Cryptocurrency

Lots to break down here.  First, the concept of a cryptocurrency.  This is a currency backed only by the value that people ascribe to it.  Right away I can...

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Necessary vs. Discretionary

by Glenn J. Downing, MBA, CFP®

The foundation for any sort of financial planning begins with cash flow management.  Income -expenses = dollars available to be invested toward future goals.  We’ve worked with people from all walks of life who have cash flow issues, including those with very high incomes.   It all comes down to the same thing:  you have two choices.  Increase income or cut expenses to make savings happen.

 To frame the thinking here, I challenge clients to separate out necessary spending from discretionary spending.  Necessary spending is just that:  what must I spend to house myself, feed myself, clothe and groom myself, and get back and forth from work.  Bare bones, in other words. 

 The exercise I bring to my readers then is this:  Let’s look at every expenditure you’ve made in the last several months.  Now sort them:  necessary or discretionary.  Here’s a...

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My Deepest Condolences. You've Lost Your Spouse.

By Glenn J. Downing, MBA, CFP®

We all know it is coming – that at one point Till death us do part becomes a reality.  What a sad time - someone dear to us has gone away, never to return, and will be missed greatly. 

Do Nothing Until You Really Need to

As a financial planner, I hope that the couple has already done the basic legal estate work, i.e. the proper documents are in place, so the transition of property can occur smoothly.  For the surviving spouse I have this advice:  Do nothing until you really need to.

In some cases, particularly after a long illness, the surviving spouse already has a good idea of what life going forward will be like.  But it is still a shock.  My counsel is to go through a cycle of birthdays, holidays and anniversaries without your loved one.  Let it settle in that you are no longer married.  In time, you’ll find your way forward.

Find the Way Forward

And what is the way forward?  How will I...

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When Oh When Can I Retire?

By Glenn J. Downing, MBA, CFP®

You want to retire in a few years, right? And you know you haven't saved enough.  But there are bills to pay, and at the end of the month there’s nothing left.  In fact, there’s often a shortfall.  What can you do?

 Short answer:  a lot.  If this is your situation, you’ve let your money be your master rather than your servant.  To turn it around so that your money accomplishes what YOU want it to is going to require a change of thinking and some effort on your part.   

Necessary vs. Discretionary Spending

Here’s the change in thinking:  In your mind separate out spending that is necessary from spending that is discretionary.  In other words, what do you need to spend for food, clothing, and other necessities – car payment, various insurances, etc. 

And then think about what is discretionary.  What do you spend by choice and not out of necessity? ...

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IRA Rollovers: In Your Best Interest?

By Glenn J. Downing, MBA, CFP®

Increasing Regulatory Scrutiny

An area of increasing regulatory scrutiny is retirement plan rollovers to IRAs. This is a common transaction, and done every day, but it just might not be in your best interests.  Why?  Several factors:

Reasons Why NOT to do a rollover IRA

  • If your plan at work is covered by ERISA legislation (Employee Retirement Income Security Act) – typically a profit sharing or 401K – it has complete creditor protection, no matter the balance. An IRA will have limited creditor protection, typically up to the amount needed to maintain your lifestyle. 
  • Loans are permitted from employer plans. No loans ever from IRAs.
  • Early withdrawal penalties of 10% apply to retirement plans before age 55. It is age 59 ½ for IRAs.  So if you are age 55, separated from service, and rolled your retirement funds into an IRA, you’ve just given yourself 4 ½ years of 10% withdrawal penalties.
  • If you are...
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Stock Options and Restricted Stock Units (RSUs)

By Glenn J. Downing, MBA, CFP®

What might an employer do to incentivize the workforce?  Make his employees owners.  Gives them an entirely new perspective on the job.  What employee-owned businesses do you know?  Does Southwest Airlines come to mind?  The flight attendant pouring your coffee may very well be a millionaire in SW stock if employed there long enough.  A little closer to home, how about Publix, where shopping is a pleasure?  Publix is a privately-owned company, but with a strong employee-ownership policy – and it shows.  People who work in Publix are actually helpful, and actually greet shoppers!

Employee-Owners

In our practice the main two ways we see employers accomplishing the goal of employee ownership is through  stock options and restricted stock units (RSUs).  The first involves the employee making a purchase of employer stock; the second is a direct stock grant to the employee.

In the stock option, the...

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Am I My Brother’s Keeper?

 By Glenn J. Downing, MBA, CFP®

You may have noticed in all CameronDowning email signatures this text:

                                      Where 5% of all revenue is donated

                                        To homeless assistance in Miami.

What’s behind this?  I thought my readers might find the story interesting.

Shortly after Jonathan Cameron and I founded CameronDowning in 2014, I read a piece in the Wall St. Journal about companies that fulfilled their ethical obligations to the community by giving money to charitable endeavors off the top, rather than as planned gifts.  This really caught my attention.  Lots to consider here. 

An obligation?  As a business do we have an ethical obligation to the community at large?  After all, one...

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Fair is Where You Go to Ride Rides

By Glenn J. Downing, MBA, CFP®

Child:  But Daddy – that’s not fair! 

Daddy:  Well, son, life’s not fair.  Whoever said it is lied to you.  Fair is where you go to ride rides. 

Anyone who’s ever been in one of my CFP® classes has heard me use this expression, and indeed I picked it up in one of my own CFP classes.  Yes, the practice question you’re trying to answer may not be fair, but the CFP® Board tests you with questions like this, so toughen up.   

Fairness, Justice, and Equity

I’ve been thinking about fairness lately, along with justice and equity, and the different shades of meaning in the words.  I think of fairness in terms of fair play, i.e. the referee applies the rules even-handedly to both teams with no partiality.  Justice, on the other hand, speaks to issues of right and wrong in our relationships with one another.  Right behavior is just behavior, and wrong...

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