I am a huge fan of the Walt Disney Corporation’s products. I shudder to think how much money I have dropped on their theme parks alone in the past five years. I think they do a wonderful job, have great assets and seem like a great company. So I should buy their stock, right? Hold Up Right There

“Good” Doesn’t Mean “Well Priced”

I think Disney is a “good” company for many reasons, but that doesn’t mean it’s a good buy. Many people make the mistake of buying companies because they like their products and services, without taking into account a pivotal aspect — price.

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Certainly you’ll agree that regardless of whether Disney is a good deal right now, it would be a much better deal at half the price and a much worse deal at double the price. So deciding whether to buy a stock without taking into account the price is very dangerous.

I have known many people who bought Starbucks in 2006 at $40 per share because they loved their coffee. Interestingly when the shares were trading at $10 per share in 2009 they didn’t want them anymore, even though they were 1/4 the price (it’s now trading at about $50). Obviously they weren’t using price as a indicator on whether they should buy or sell, which brings us to an even more important point:

Companies You Love Are HARDER To Value

Your analysis of whether or not to buy a stock you “love” will almost certainly be biased in the pro-buying direction. You’ll be looking for any excuse to pull the trigger. If I’ve learned anything it’s that when you’re feeling emotional about an investment, you need to do some more thinking before you make any moves.

This is Probably the Wiser Investment for Me

For me, it probably makes more sense to buy one of these lovely framed shares of stock than to invest in the company. It’s very hard for me to be objective about a company I love, and while this framed share likely won’t be a good investment, looking at it is probably a much better way to get my Disney fix than adding it to my portfolio.

I don’t think it’s a good idea to have a rule that you never invest in companies you love, but I do think that it’s probably a good idea to do some extra diligence in your research before investing. Make sure you’re being 100% objective before you make any decisions, and when in doubt err on the side of caution.

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Post from: Personal Finance And Investing

Should I Buy Disney Stock?

The unemployment statistics in America are confusing.  Sometimes you will see unemployment go down without jobs being created.  How can this be?  As it turns out there are many different definitions of unemployment and the number you see is only one of them.  In fact, if you don’t have a job for a certain amount of time, you’re considered to be “out of the workforce,” and no longer counted in the common measure.  As it turns out, long-term joblessness is a danger to societies and this has implications for many of us in our personal life.

Measures of Unemployment

In understanding the impact of long term joblessness, it’s good to understand how unemployment rates are calculated.  In America there are six different unemployment numbers, U1 through U6:

• U1: Percentage of labor force unemployed 15 weeks or longer.
• U2: Percentage of labor force who lost jobs or completed temporary work.
• U3: Official unemployment rate per ILO definition.
• U4: U3 + “discouraged workers”, or those who have stopped looking for work because current economic conditions make them believe that no work is available for them.
• U5: U4 + other “marginally attached workers”, or “loosely attached workers”, or those who “would like” and are able to work, but have not looked for work recently.
• U6: U5 + Part time workers who want to work full time, but cannot due to economic reasons.^[1]

So as you can see, sometimes a job seeker simply “gives up.”  They’re no longer counted in unemployment statistics, but they certainly don’t have a job.  As it turns out, this is actually the worst kind of unemployment, even though we don’t see it measured very often.

Long Term Havoc

A study by the Cologne Institute for the German Economy is one of many supporting the belief that the longer a person is out of a job, the less likely they are to return to the workforce.^[2] Their job skills atrophy and they lose hope.  They basically get locked into a self-reinforcing cycle of poverty.  You may know someone like this, who used to be in the workforce, but now seems unable to return.

Think of all the ways in which this affects people’s lives.  Think about what being in prison for a few years means for your odds of employment, even disregarding the effect the sentence will have on people’s willingness to hire you.  You have whole communities who don’t believe they can find a job and thus make it true in their own mind.  As a society this kind of long-term unemployment can be decimating, but it also has implications for you personally.

What Does this Mean For You

For individuals like you and I this is something to consider as well.  At some point it may make sense to take a job in which you are underemployed, just to keep your frame of mind as a “worker.”  Rather than become chronically unemployed, it may make sense to do some work that helps you keep your professionalism as well as the mindset of a worker.  This can also help with the bills a little bit.  The only concern is to make sure that taking some temporary work doesn’t deter you from finding a job that truly makes use of your skills.

Photo Credit: Hamner Fotos

Post from: Personal Finance And Investing

Long Term Joblessness

1. Wikipedia — Unemployment
2. German Think Tank Says Joblessness Behind Poverty

Everyone knows what you need to do if you want to get out of debt and create a savings account; you have to make more money than you spend. So if we all know this, then why are so many of us still in debt? If you’re still spending more money than you’re earning then it’s probably because of one of the following reasons:

• You don’t know how much you spend. It is shocking how many people there are who don’t track their spending. If you don’t know what you spend, you can’t be sure you’re spending less than you’re earning. Tracking your spending is the best way to avoid this problem. In rare cases, people don’t even know what they earn; tracking your income is also necessary.
• You don’t budget. Some people know what they’re spending. They know it’s more than they can afford. But they don’t budget so they only see the problem after the fact. Create a budget that relies on spending less than you earn. Then learn how to stick to that budget.
• You justify “emergency” expenses. The problem is that there are “emergency” expenses every month. You justify over-spending because you “need” to take the cat to the vet, get your home cleaned since your parents are visiting, buy a birthday present for the party that your child was just invited to, etc. Stick to your budget unless there’s a true emergency.
• You expect instant gratification. You want what you want when you want it. You’re willing to spend money to get it. If you want more than your income allows for then you’re in trouble. Learning to delay gratification until you have the money in hand to pay for what you desire can go a long way towards getting you out of debt. It’s also a great sign of maturity!
• You don’t know what you really want from life. People who know what their goals are can live in a way that allows them to achieve those goals within their income. If you don’t know what you want then you may spend money willy-nilly to try to find happiness in life.
• You haven’t dealt with your money issues. People spend money for a lot of reasons. They want people to like them. They want to show off. They want to buy whatever the neighbors have. They feel an emotional high when they spend money. If you haven’t dealt with your emotions around money then you might be overspending because you don’t understand why you spend. Deal with the real issues and the debt may disappear.
• You don’t earn enough. This is the biggest excuse that people use to explain why they’re still in debt. The truth is that you need to adjust your spending to your income. However, there may be times that you face this problem anyway such as during a bout of unemployment. Creating passive income streams, taking on second jobs or earning extra money by consulting or teaching are ways that you can help combat this problem.
• You’re just used to it. You may complain about your debt but if you’re not doing anything to change your spending then it may be that you’re just used to being in debt. Ask yourself if you want to maintain this habit forever.

You already know what you need to do to get out of debt. What problem is causing you to still spend more than you earn?

Guest post by Kathryn Vercillo. Kathryn is a writer for Promotionalcodes.org.uk which gives away online codes (like this La Senza promotional code) and also publishes a save money blog.

Post from: Personal Finance And Investing

Why You Spend More Than You Make (and What To Do About It)