Peace and Prosperity in the New Year

New Year, New Opportunity

From a financial perspective, no one is sad to see 2008 close! The market volatility, bad news of the day and institutional failures may have left you frozen in your tracks.

With all this change, what are the smart financial moves now?

Join us for one or more of our four part, Peace and Prosperity in the New Year series. Over the next two months, we will inform (and make it fun along the way) you with the financial news you need to move forward with confidence in 2009!

Here are the details:

Peace and Prosperity in the New Year
Putting market volatility into perspective or How to open my account statements without having a heart attack!
When: Jan 16, 2009 1PM EST

Prosperity Planning
The best process out there for building confidence in your financial future ... come take a peek inside
When: Jan 30, 2009 NOON EST

Stocks and Bonds
What do I really need to know and how can it help?
When: Jan 30, 2009 NOON EST

Asset Allocation
The simple secret to building wealth that no one talks about
When: Jan 30, 2009 NOON EST

What you will learn:
• The best media sources to trust for truthful, empowering information
• How the financial crisis/recession will affect your investments
• How to bulletproof your portfolio and outlive your money (if you want to!)

If you are on our e mail list, watch for this announcement. If you are not on our list, e mail me at Mackey@CultivatingProsperity.com and I will send you a personal invitation.

May prosperity be yours,
Mackey McNeill, CPA/PFS IAR
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
859-331-7755
Mackey@CultivatingProsperity.com

Does Madoff make you mad?

The Madoff case it being described as the largest Ponzi scheme ever. All events, whether we perceive them as good or bad create opportunities for learning. So what can we learn from Madoff?

Andy Pulsfort, Investment Advisor at Mackey Advisors recently wrote a letter to our clients briefly describing the events and recounting lessons we all can garner from this tragic event.

Here is what Andy has to say:

Just when we were beginning to believe Wall Street couldn’t become more tarnished, the news of Bernard Madoff was unwelcomed into our homes and offices this week. The investment advisor and former NASDAQ chairman was charged with securities fraud and led away in handcuffs for it.

While the collapse of Wall Street has had dramatic effect on our country’s and our personal finances, it was driven by drifting from the financial basics:
1) Living within your means
2) Using debt wisely
3) Avoiding get rich quick schemes
4) Cash is king

Madoff’s case was illegal and deceptive. His firm accumulated a $50 billion loss for investors by collecting money from clients, investing them in counterfeit investment plans (with bogus statement to boot), and using new investor money to pay out any interest and withdrawals to existing clients.

What Madoff was thinking, we may never know; however it seems pretty obvious that eventually even this phony pot of gold would run dry. His investors, many of which would be considered super-affluent, should have seen this coming by using some basic precautions. So how do you safeguard yourself against this type of fraud?

Too Good to Be True

Have you ever been to a holiday party or family get together, when in the process of discussing investments someone shared with you “the investment of a lifetime”? It happens all the time, and is usually followed by something along the lines of “Oh, I have no idea what it is, but it got me a 20% return last year.” Buyer beware! Know where your money is going. If the name of the investment does not come up number one in a Google search, watch out. Your investments should be able to be checked in the newspaper and on the internet daily, if not instantaneously. Stocks, bonds, and mutual funds may sound boring, but it’s just the kind of boring Madoff’s clients wish they had.

Use an Independent Custodian

I have gotten a number of inquiries during the economic storm in regard to “Who has our money?” There is no lockbox in our office containing millions and we do not value any of the investments we offer. By using an independent custodian we eliminate a number of conflicts of interest. That third party is either Schwab Institutional or National Financial Services (Fidelity). These companies price the investments and provide statements to our clients. We have no input on the pricing or statements and that is the way it should be.

Understand Account Insurance

We all generally use life insurance, disability insurance, homeowners insurance, and even travel insurance. In fact the law requires that we have auto insurance. Why not investment insurance? I am not talking about guaranteeing the value of your investments, not that it wouldn’t be nice. I am referring to fraud insurance that most investors have free of charge to protect their accounts from just the type of activities Madoff was engaging in. The Securities Investor Protection Corporation (SIPC) insures each of our client accounts against fraud for up to $500,000 per account. If your account is greater than this, Schwab Institutional provides an additional $150 million per account through Lloyds of London.

This insurance will not protect your account from market declines, but it will make you whole again should your account be subject to securities theft or fraudulent transactions. We are proud that clients can select us based on our merit and expertise and not be troubled by unnecessary worry.

Since we were children we have been warned to watch out when something seems like too good of a deal to pass up. Sometimes it takes years to find out, and like Madoff’s clients, the consequences can be dearly. Whether large or small, take pride in the wealth and prosperity you have accumulated, invest wisely, and ask questions. Your heirs will thank you in the future and your psyche will thank you tonight.

Here’s to you and yours this holiday season!
Andy Pulsfort, IAR

Once again, we are called to practice prudent, practical cash management and to invest within the context of our own personal Prosperity Plan.™

Click here to read the New York Times on Madoff

May your investments always support your personal dreams and goals,
May prosperity be yours,
Mackey McNeill, CPA/PFS IAR
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
859-331-7755
Mackey@CultivatingProsperity.com

Why Don’t People Under 30 Save Anymore?

I recently did an interview with Craig Clough a staff writer for the web site LifeWhile. The article paints a grim picture for young adults today.

click here to read the article

And get help at www.FeedThePig.org

There is no time like the present to change a habit.

May prosperity be yours,
Mackey McNeill, CPA/PFS IAR
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
Mackey@CultivatingProsperity.com

Bob Veres offers great perspective

I haven't posted since December 3. Topics have swirled in my head these last two weeks, but I failed to find the time to put fingers to the key board.

Bob Veres writes a subscription based newsletter for advisors, summarizing financial news from a variety of sources. I read his posts regularly and find it one of the best ways to keep up with all the changes in my profession. As a student of the profession, Bob has a unique perspective on the current financial crisis, which he articulates well in this recent column in Financial Planning.

It is an excellent read to bring calm, perspective and relevance to today's stock and bond markets.


click here to read the article

As always, your feedback is appreciated

May prosperity be yours,
Mackey McNeill, CPA/PFS IAR
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
Mackey@CultivatingProsperity.com

Letter to the President elect

Up early this morning, I found myself on the President Elect's web site, http://www.change.gov/ On the home page were these words, "Your story and ideas can help change the future of the country."

I decided to take that as an invitation and hit the contact us section. Here is the letter I posted to the transition team:

I am a CPA and financial advisor. My company, Mackey Advisors, primarily serves baby boomers in the middle market. The financial turmoil created by excessive leverage and lax or no regulation is being felt exceptionally hard on the middle class. Unlike the poor, they do not qualify (and do not want) government assistance. Unlike the ultra wealthy, this kind of market volatility impacts their day to day pocketbook.

Over the last few months our primary job has been to create calm and keep our clients from making moves in this market that seriously impact their future.

In contrast to the evening news, what is needed now are positive stories. Tell us how people are managing. What they are doing to survive and thrive in the recession. Find ordinary, everyday people who
are managing their life in fiscally responsible ways, and capture their
stories.

We need to use this time as a call to financial literacy. If people understood how to use credit, how to save, how to invest, we would not be in this mess. Wall Street certainly played their part. Personally I am sickened by greedy executive walking away with millions after praying on those who do not understand basic finance.

How do we solve this dilemma?

Do we continue to regulate Wall Street? Or do we empower Main
Street? I vote for some of both, but focus on the latter. It is like
the old adage, teach a person to fish and feed them for life. Let's teach people to understand money and finance, so that when they are offered these high commission, trash investments and loans, they say no.

Turn your thinking upside down. Focus on empowerment, personal responsibility and personal choice. This is your answer.

I welcome the opportunity to serve in this effort.

Mackey McNeill, CPA/PFS
President and CEO, Mackey Advisors
Member, AICPA Financial Literacy Task Force

Think about it, what better way to insure the future of our country and our citizens than thru empowering them to make good choices?

If you agree with me, I encourage you to post your own comment on the Obama transition site. Feel free to copy and paste any part of my comments into your post.

Click here to go to the Obama team's transition site

The AICPA has an advertising free web site, www.360financialliteracy.org full of great information and ideas on gaining control and empowering yourself for a more prosperous today and tomorrow.

At Mackey Advisors, we are playing our part every day with our clients. New for 2009, we will be offering on line classes and webinars on basic finance, along with our award winning course, Joy and Money 101. Sign up for our newsletter at www.CultivatingProsperity.com to stay in the loop of upcoming events.

Today and everyday, may prosperity be yours,

Mackey McNeill, CPA/PFS, IAR
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
859-331-7755
Mackey@CultivatingProsperity.com

Layaway: Everything old is new again

The summer I was 15 I decided to use a portion of my paycheck to make my first big purchase, a $30 birthstone ring from a local jewelry store. That was the equivalent of a week’s pay, so it was indeed a large purchase.

Since I did not have $30, I went to the store and put the ring on layaway. Every week, I took $3 out of my check to the jewelry store and after 10 weeks, just in time for the first day of school, I had my new ring. Of all the things I have purchased for myself, that ring still stands out in my mind as one of the most memorable and satisfying.

In speeches over the years I have told that story. Many young people have never heard of layaway. I talked about how layaway is an empowering process. Unlike using a credit card to make a purchase, when you use layaway, it is really yours. There aren’t any monthly payments at exorbitant interest rates that haunt you for years to come. And best of all, you can really enjoy your item, knowing it is yours!

I was listening to NPR the other day, and it turns our layaway is making a comeback. It turns out one of the blessings of the recession is people are getting clear that credit cards are not in their best interest. Halleluiah! Click here to see the whole NPR story

Turns out that layaway is also on the internet in e shopping format. Clothes, toys, electronics, security and the list goes on are all available. Check it out at http://www.elayaway.com/

May prosperity be yours,

Mackey McNeill, CPA/PFS IAR
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
859-331-7755
Mackey@CultivatingProsperity.com

Gratitude, better than a bail out

Tis the season for gratitude. Thanksgiving has always been my favorite holiday. What I love most about it is the simplicity of purpose, to give thanks. Of course, I adore the food too.

Recently I came to a new realization about gratitude. When you are present and fully participating in gratitude, fear is absent. You cannot be grateful and fearful at the same time.

Today’s financial crisis has many roots, but none as deep as credit that was too easy and lax or nonexistent regulation. The leaders of our country are working on the macro solutions to these macro problems. Other than making our views known to our elected officials, we personally can do little to change our plight at this macro level.

So where is the point of personal responsibility we each share in moving out of this crisis? We as individuals are lengthening and making the economic downturn deeper each time we turn our attention to fear. Fear is contagious. As we focus on fear we tighten up, physically, emotionally and mentally.

Fear can take over our thoughts and put us in a place of inaction. If we focus on eliminating fear, we just get more fear as anything we attend to increases in our lives.

That is where gratitude comes in. It is easy to find hundreds of things in every moment to be grateful for. Gratitude is free. It is easy. It is simple. We can participate in gratitude in our cars, in our home, at the office or in the shower in the morning. The more we practice gratitude the more good things expand in our life. As gratitude expands, we reduce the opportunity for fear to live and grow within us.

This is a way we can each take personal responsibility in making our economy better. Focus on gratitude. Fear will naturally fall away. And worst case scenario, let’s say my theory about the relationship of gratitude and fear is incorrect. Then you still win, your life will be more pleasant and happy as you focus what you DO have to be thankful for.

May prosperity be yours,

Mackey McNeill, CPA/PFS IAR
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
859-331-7755
Mackey@CultivatingProsperity.com

Too big to fail

Yesterday the government decided Citigroup was too big to fail. I woke at four this morning thinking about this. Too big to fail. I guess that means once a company reaches a certain size, regardless of mismanagement, lack of leadership, lack of innovation, poor strategic judgment, or of any of the countless ills possible, it is entitled to a perpetual life.

I understand it would be scary, devastating to thousands of employees and their families and have countless consequences that we cannot predict if Citigroup were to go under.

What I am struggling with is what this really means. Does that mean that we not only have government entitlements, but we also have corporate entitlements? Do the taxpayers pay for both?

What is the scale at which one arrives at “too big to fail?” Who defines this?

How are the CEO’s of “too big to fail” companies held accountable?

The former CEO, Charles Prince received a 12.9 raise in 2007, just last year, to bring his total compensation to $25 million. Click here for the Market Watch 2007 story

Ok, in fairness, Prince lost his job. And most of us would be fine with losing our jobs if our final paycheck was $25 million.

A few people are now talking about forgoing bonuses for top executives as a condition for the government assistance. Which means the government now controls CEO pay in “too big to fail” companies? Read the Reuters story here

I am not saying I have the answers. I do have lots of questions.

New times, new territory. I would love to hear your comments.

May prosperity be yours,
Mackey McNeill, CPA/PFS IAR
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
859-331-7755
Mackey@CultivatingProsperity.com

What to do now?

Wouldn’t it be nice to turn on the news (or if you are like me, open your web browser) and get some normal, sane, understandable market results for the day?

Instead, yesterday the S&P 500 plunged to an 11-1/2 year low. Both the DOW and NASDAQ closed at their lowest points since March 12, 2003, which was just above the low of the last bear market.

Markets tend to over react at the top and at the bottom. I remember in the late 1990’s thinking, how can this be happening? Technology stocks were so over priced. Their valuations made no sense from a perspective of investment fundamentals. Fast forward to 2008, I find myself thinking the same thing in reverse. Stocks are so undervalued, why are they still plummeting?

When I teach my investment seminars, I say that the stock market, in the short term, is the emotional temperature of the collective. Valuations, P/E ratios, free cash flow and the hundreds of other fundamental measurements of stock prices, do not matter in the short term.

The only thing the market tells us on a daily basis is the whether the collective is optimistic or pessimistic about the future.

What is clear today is that the collective is pessimistic about the future.

In the long run, stocks trend toward the economic fundamentals. Earnings, cash flow and rational measures of value, clearly drive long term stock prices.

The second big truth of the market is that the past is clear. The future is always unpredictable. Timing the market is akin to attempting to determine if your spouse if going to be happy or sad today. Anyone’s guess is a good one and someone is going to be correct.

Barring any near-term recoveries, 2008 is likely to be one of the worst years in history for stocks (domestic and foreign) since the great depression. Unfortunately, other asset classes such as real estate, commodities and even many bonds have done poorly. While it is highly unusual for so many asset classes to fall at once, it is the current reality. Of course, this isn’t news to most of you. The question is how much further until the market hits the bottom and what to do now?

While there are many opinions, no one knows the future. The question for most people is what to do given what has happened and given the uncertainty of the future (especially near term). Much depends on your time frame and emotional constitution.

Previous bear markets have averaged 16 months. We are now 13 months into the current downturn.

The longest recession since WWII has been about 16 months. Assuming this recession started early in the year and it matches or slightly exceeds the longest postwar recession, it might be late spring to late fall 2009 before economic recovery begins. Since a stock market rebound typically precedes economic recovery, the market could rebound before then (historically, it's turned up 60% of the way through a recession). As with all observations, no guarantees are given or implied.

While it would be nice if we were at or near the bottom, there is a possibility that it could get worse. The stock market decline has probably anticipated a significant drop in corporate earnings but when revised earning estimates (likely lower) and actual earnings reports come out over the next month or two there may be further declines. Also, it’s normal for the stock market to overshoot on the downside (as it does on the upside).

It is helpful to look at what seasoned investors are doing. Here is a sampling.

Warren Buffett is buying.
Here are more details: Learn from Warren Buffett

Steve Leuthold, considered a perma-bear is bullish on stocks
Here is more information. Click here for Barron's article

Jeremy Grantham of GMO says, “…the odds are roughly two to one that stock prices will sink to new lows next year.” And he is buying because he does not attempt to time the market in the short term.
Click here for the complete article. Read NY Times, Market Bottom? piece


So what’s this all mean to me?

• Continue to stay out of the emotion of the day.
• Call your advisor (hopefully that is us) to review your needs and your portfolio.
• Look carefully at your personal situation. Is your job secure? Do you have any upcoming major expenses that can be deferred? What is your withdrawal rate from your portfolio?
• Keep the long term view.

As you know, staying power is an critical component to developing an investment strategy. Before anyone should commit money to the stock market, they need to have adequate reserves set aside for emergencies and financial commitments. One's time horizon should really be 5 to 7 years (or even better, the rest of your life).

Has this downturn made you realize you aren’t as risk tolerant as you thought? If so, it is time to change your stock/bond allocation? In general, if you're able to wait (financially and emotionally) we suggest not making any drastic changes now.

What we're doing now:

For retired clients, we will temporarily hold off on further rebalancing. Thus a 50/50 (stocks to bonds) portfolio which may have drifted to a 45/55 or 40/60 due to stock declines will be left as is, effectively making it a little more conservative for now.

For more aggressive clients who remain growth oriented and still have a long-term horizon, rebalancing probably continues to make sense.

For conservative and moderate growth clients, following a discussion of your personal situation, we are tweaking the fixed income investments and getting a little more conservative (giving up some longer term potential benefits in exchange for reduced short-term volatility).

We have looked at every client account for opportunities to harvest unrealized tax losses (losses that can be used to offset any gains or up to $3,000 or ordinary income). We are looking at opportunities to transfer funds from IRAs to Roth IRAs (for clients who have little income or significantly less income than normal this year). We are considering the estate planning opportunity of gifting.

The clients most impacted by this economy and stock market decline are those that are retired.

A prudent withdrawal rate is 3-5% depending on age, etc. One strategy for retirees drawing on their portfolios is to tap those assets that haven't declined significantly first (i.e. draw from money funds, short-term bond funds, longer-term bond funds).

We have run projections for all of our clients taking periodic or sporadic withdrawals to see how long-they could tap fixed income assets before having to sell equities based on the current withdrawal rate. On average, these clients could tap their fixed income investments to cover their monthly withdraws for 3 to 10 years (before having to sell significant portions of their equities in a down market). Of course, this strategy will gradually make the remaining portfolio more aggressive as the fixed income portion is a smaller portion of the portfolio.

If you are withdrawing funds from your portfolio (either periodically or sporadically) consider how the market decline has increased the rate of withdrawal. If you have been taking out more than 3-5% before the market decline, that rate (as a percent of the current value) is now higher. If you've exceeded our recommended withdrawal rate and have been taking out more than 5% (before the recent stock decline), we strongly recommend that you look for ways to cut back on expenses (particularly any discretionary spending). This is not sustainable for a long life expectancy.

If you’re not sure about your withdrawal rate, please call us. For those of you giving money to adult children, carefully weigh the impact on your own finances (if your withdraw rate is too high your money may not last as long as you do). We believe in Mom & Dad first, adult children second, and realize this is a hard pill for many to swallow.

After all this discussion, it is best to prepare for this decline to be longer than the norm and one of the worst markets in our lifetime.

Now more than ever is the time to consider a Prosperity Plan™. I have found no more effective tool to put and keep things in perspective that this. If you have a Prosperity Plan™ and we are managing your portfolio, updates are free! We encourage you to come in and review your goals, investment policy and spending. Whether the news is good or bad, putting it all into perspective for your life is the best way to sleep at night.

I know that market declines take an emotional toll. Please call us at any time. 859-331-7755

For after hours assistance, try one of these options (my current favorite is 7)

If you are obsessive-compulsive, please press 1 repeatedly.

If you are codependent, please ask someone to press 2 for you.

If you have multiple personalities, please press 3, 4, 5, and 6.

If you are paranoid, we know who you are and what you want.
Stay on the line and we will trace your call.

If you are delusional, press 7 and your call will be transferred to the mother ship.

If you're schizophrenic, listen carefully, a small voice will tell you which number to press.

If you are depressive, it doesn't matter which number you press. No one will answer you.

If you are dyslexic, press 6-9, 6-9, 6-9, 6-9.

If you have a short-term memory loss, please try your call again later.

If you have low self-esteem, hang up. All our operators are too busy to talk to you.

If all else fails, chill.

Please forward this blog on to friends, colleagues or anyone who might benefit from it. We welcome new clients who are looking for the kind of disciplined approach we offer.

May prosperity be yours,

Mackey McNeill, CPA/PFS IAR
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
859-331-7755
Mackey@CultivatingProsperity.com

Giving in the land of plenty

Over 2 billion people live on less than $2 a day. Think about it. $2 a day. From this perspective, the US financial crisis seems like a minor inconvenience for most of us.

I love the holidays and lots of presents under the tree are just plain fun. Over the years I have changed my buying habits, focusing more on the practical side of life. A few years ago I added in the tradition of making a tin of homemade cookies for each of my kids and their significant others. In many ways, they look forward to the cookies more than the presents. There is just more giving when it gets that personal.

This year I am adding another new twist to the holidays. I am honoring each family member with a MicroPlace donation. MicroPlace takes donations and investments and creates micro loans around the globe. These are small loans, say $20 or $150, allow people in poverty to start small businesses. They may buy a cow or buy inventory to begin a basket making business. I like the idea because it isn’t a hand out, it is a hand up.

Hand outs disempower people. Being a charity case does not engage pride or personal responsibility. A hand up, a micro loan, allows a person to lift themselves out of poverty. Empowering the individual to feel that sense of accomplishment and pride that naturally comes to us when we make our own way.

For more information on Microplace:
https://www.microplace.com/

For more information on world poverty:
world bank statistics

May prosperity be yours,
Mackey McNeill, CPA/PFS
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
859-331-7755
Mackey@CultivatingProsperity.com

Keeping perspective

The wild daily swings of the market make it difficult to keep perspective. We are certainly in a cycle of deep fear, as evidenced by the daily market volatility and continued downward trend of virtually every asset class.

A recent article in Fortune magazine by Brian O’Keefe offers keen insight backed by hard data. Brain offers good reasons to stay out of our emotion and keep focused on the long term.

Read the article

May prosperity be yours,
Mackey McNeill, CPA/PFS
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
859-331-7755
Mackey@CultivatingProsperity.com

Imagination, the forgotten gift

Imagination is the greatest gift you give to yourself. Yet, our culture that does not encourage or support imagining.

We are taught from an early age to “get real.” Remember back to your early years of crayons and blank paper? You were taught to draw what is, not what was possible. Ever try coloring the sky purple or a tree trunk blue? Likely you were quickly corrected and set on the “right” path.

Albert Einstein said, “Imagination is more important than knowledge. For knowledge is limited to all we know and understand, while imagination embraces the entire world and all there ever will be to know and understand."

What keeps us from imagining? Fears of failure, feeling unworthy of success, or focus on the “doingness” of life are all possible causes.

In this moment my own life is one of pure blessing. I have deep and loving relationships. I am financially secure and prosperous. My health is better than it has ever been in my life, and I am 53! And this is not where I began. Having quality relationships was not something that came easy to me. Prosperity too has been elusive. My health has been hampered by my environment and my history of childhood illness.

In each of these areas of my life, I had to put aside what I thought I knew. Not in a gentle way, but in a tear it down and haul it to the dump kind of way. After clearing out what I “knew” about relationship, prosperity, and health, I began to imagine new possibilities.

Out of this space of imagination, I began to put structure and form in place. Gradually just like building a home, each piece built on the other until my dreams began to form solid structures that I now experience every day.

Imagination is even more important in these challenging economic times. It is easy to be caught up in the news of the day, or the negativity of your partner or neighbor.

Your life today was created by the choices you made in the past. Your life tomorrow will come into being with the choices you make today.

Are you going to limit your choices today to what you know? Or are you going to listen to the wisdom of Einstein and imagine the possibility of your life?

Nothing bigger was ever created without first imagining a bigger possibility. Is there anything in your life you would like to change? Imagine it so.

May prosperity be yours,

Mackey McNeill, CPA/PFS
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
859-331-7755
Mackey@CultivatingProsperity.com

Creating Community

Yesterday we created history. We elected the first African American President of the United States. I grew up in the segregated south in a time that now seems light years away. Thankfully so. Things needed to change then. And they need to change now.

The headlines today are filled with the challenges facing our new President. Certainly there are many, healthcare, financial reform, widening federal deficits, the Iraq war, just to name a few. And yet, to me the most important change we need is to recognize we are all in this together. We need to create community.

I am not talking about the kind of community where you notice who is living next door. I am talking about creating the kind of community where we begin to understand that we are interdependent organisms. Community, where there is an appreciation and respect for the common good. Where every action isn’t just about my personal welfare and my pocketbook.

We have been living in a time of tremendous me-ish. What is in it for me? How much money will I make? How does this affect my pocketbook?

For if we understood, deep down in our bones, that we are interdependent, how would we behave differently?

Would you volunteer at the local soup kitchen? Stop by to see your neighbor when they are sick? Become a big brother or big sister? Reach out to our co-worker when they are having a bad day? Be willing to ride the bus to work one day a week or once a month?

I remember when Jimmy Carter was President. In an address to the nation he laid out his concern for our national security given our dependence on foreign oil. The fastest path to short term energy reduction was conservation. To that end, we were asked to drive 55mph on the highway, and turn our thermostats down. The idea was that we would all sacrifice for the common good.

Here is the clip of that address:
http://www.youtube.com/watch?v=-tPePpMxJaA

Sadly, the next President, Ronald Reagan, reversed all of the conservation efforts President Carter had implemented. More importantly gone was the idea that we the people would individually inconvenience ourselves for the greater good.

All good things come home to roost. Let’s renew the idea of community. Let’s renew the idea of the common good.

Perhaps John F. Kennedy said it best, “Ask not what your country can do for you, but what you can do for your country.”

Enoughness

It would take six to nine planets to supply the natural resources necessary for everyone on earth to consume at the rate that we in the United States take for granted. We have only 1 planet. Everyone in the developing world wants to live like we do in the US. This is a problem. Many would say it is a crisis. Certainly our consumptive lifestyle is a major contributor to global warming, a fact that can only be reversed by intense and rapid changes in our patterns of living.

What is the missing link? It was a year ago at the SRI (Socially Responsible Investing) Conference that a Native People’s representative introduced the idea of enoughness. She was speaking about the values system differences between western cultures and native people’s culture. She said, “In the native people’s culture, we have a concept called enoughness.” Once you have enough, you quit taking. You leave the rest for later, for your use later, or for your children or their children.

We are now facing a recession, which will clearly be deeper and longer if we reduce our consumption. And isn’t it about time?

Human beings rarely make fundamental change until faced with an intense challenge. Perhaps one of the functions of this time in economic history is to delink our prosperity and our consumption. Perhaps we are being called to consider the idea of enoughness.

What if one of the possibilities of this time is to create an economy built on sustainable ways of living? Ideas like sustainable agriculture where we use the land in ways that don’t need massive amounts of chemicals and water to grow our food. Ideas like renewable energy where we use the unlimited resources of wind and sun to produce our energy needs rather than investing in coal, natural gas or oil, all natural resources with finite quantities. Ideas like buying food from local farms, rather than trucking food 1500 miles to a grocery store. Ideas like preserving green space. Simple ideas like using recycled glass instead of granite for our new kitchen counter top.

What if this economic challenge we now face is blessing us with the opportunity to ask, do we have enough?

Take Personal Action

Want to be a part of the solution? Are you ready to make a difference?

When we went to war, the President called for us all to assist in the effort by buying more stuff. Well, hopefully we are all clear now that buying stuff is not a way out of this mess.

For those who are ready for action, here are two ideas for what you can personally do to strengthen our economy.

1. Lobby Congress to allow for loan modification in bankruptcy. We must stem the tide of foreclosures if we are to reverse the current negative economic cycle. This recommendation comes from The Center for Responsible Lending. http://www.responsiblelending.org/
   Your personal interest is aligned with the greater good in this case. With every home in your neighborhood that goes into foreclosure, your home loses $3000 in value, on average. Learn more at:
   http://www.responsiblelending.org/issues/mortgage/subprime-mortgage-crisis.html
   
2. Ask lenders you do business with to tell you their home owner’s preservation rate. Hold lenders accountable for their actions.

May prosperity be yours,

Mackey McNeill, CPA/PFS, IAR
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
859-331-7755
Mackey@CultivatingProsperity.com

Feel the Fear

Have the market events of the last few months given you pause? Has the media convinced you that the Great Depression II is at hand?

The press is saying, “This time is different, the market will never recover.”

Are they correct? Possibly

I have spent the last 6 days around some of the best minds in the investment industry. Universally they are saying, “This is a buying opportunity unlikely to repeat in our life time.”

Are they correct? Possibly

As much as we would like to, we do not know the future. What is coming is uncertain.

What I see is unprecedented opportunity. However, it may not be the kind of opportunity you are focused on. Ponder these ideas as possibility.

• We demand accountability and transparency at all levels of corporate governance.
• We no longer accept the premise that investing in Altria and then donating to an anti-smoking campaign makes sense. We insist on going good AND making money and no longer see these as mutually exclusive options.
• We hold corporations accountable for their social record.
• We recognize that no or lax regulation does not work. The ethical players in the industry come together to produce meaningful regulation that provides consumer protection from excessive greed and fraud.
• We live in world where one of the fundamental principles is living within your means. Saving money is the cool thing to do. Excessive debt, at every level, personal, corporate, and government is frowned upon.
• We focus our attention on breaking our dependence on consumption to drive our economy. Instead of buying more stuff, extracting more limited natural resources to put things in our homes we may or may not use, we focus those resources on rebuilding our aging infrastructure, educating our youth and building a green energy economy.

What do we need to do to attain this possible future? Feel the fear. Do not react to the fear. Feel the fear and let it pass thru you, like a gentle breeze. Take the energy that was fear and use that energy for the greater good. Use your imagination. What would you like the new financial world to look like?

Be a part of the solution, not a part of the problem.

This is a time of change and possibility. Carpe diem!

May prosperity be yours,
Mackey McNeill, CPA/PFS, IAR
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
859-331-7755
Mackey@CultivatingProsperity.com

Today’s Realities are from Yesterday’s Visions

George Gay opened this morning’s SRI conference session. He spoke of vision and goals.

The goal of Socially Responsible Investing (SRI) is a healthy, socially just, environmentally sustainable society. I have rarely seen fewer words with such depth and power.

Each time I attend this conference I come away with a head full of new ideas and a heart filled with stories of profound societal changes made by inventive and creative social entrepreneurs. This is the place where the idea of choosing between doing good and making money is seen as foreign. In the SRI world there is no choice. The possibility and the reality is to do good AND make money.

No longer a new paradigm, but certainly one that has plenty of room to grow. Based on the last SRI trends report, http://www.socialinvest.org/resources/research/ About 1 in 9 dollars invested in the US uses one of the three tools of SRI.

Those three tools are:

1. Screening – excluding or including assets based on social screens such as environmental, social justice or values.
2. Shareholder Advocacy – speaking directly to companies where change is desired and/or filing shareholder resolutions requesting change.
3. Community Investing – directing capital to underserved populations in the US and globally for the purpose of providing opportunity where none currently exists
   
   Learn more about SRI at www.socialinvest.org
   
   If you want to go quickly, go alone.
   If you want to go far, go together
   African Proverb
   
   May prosperity be yours,
   Mackey McNeill, CPA/PFS, IAR
   President and CEO
   Mackey Advisors
   www.CultivatingProsperity.com
   859-331-7755
   Mackey@CultivatingProsperity.com
   
   
   

SRI in the Rockies Day One

Yesterday was the kick off to the annual SRI (Socially Responsible Investing) in the Rockies Conference. This is the largest gathering of its kind, bringing together financial planners, investment advisors, mutual fund managers, separate account managers and others involved in the goal of permanently marrying the broader social good with profitability and financial return.

This year’s conference is in Whistler Canada, a break taking town in the Cascade Mountains and future home to the 2010 winter Olympics. The town itself is a leader in the sustainability movement. Sustainability has been expressed as meeting the resource needs of the present without compromising the ability of future generations to meet their own needs. Another way of looking at sustainability is to consume resources no faster than the earth can reprocess them.

Find out more about Whistler sustainability movement at:

http://www.whistler.ca/content/blogsection/4/226/

Learn more about SRI in the Rockies at:

http://www.sriintherockies.com/

Over the next few days I will be sharing summaries of the sessions. Stay tuned!

May prosperity be yours,
Mackey McNeill, CPA/PFS, IAR
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
859-331-7755
Mackey@CultivatingProsperity.com

Perspective

I spent the last two days in Dallas, Texas with a PFP (Personal Financial Planning) Study group sponsored by the American Institute of Certified Public Accountants, AICPA. This group consists of CPA financial planners dedicated to serving clients with the utmost integrity, care and concern.

Our purpose is to share our wisdom with each other, and to provide best practices for our profession. This was my third time with this group and I am amazed each time by the incredible technical talent in the room. More importantly, I am humbled at the quality of compassion each individual brings to their clients.

We participated in a conference call with a well respected economist and also shared our views with each other. My take-aways from our discussions were:

• The current economic crisis is an extreme cycle of fear. This time is not different, just the reasons are different.
• No, this exact set of circumstances has not happened before. And yet, the economic conditions occurring today have happened before.
• Markets always cycle. The cause of the cycle may be different, but the cycles come regardless. Timing and length of the cycle’s ups and downs is the unknown.
• This is a consumer lead recession making it likely that this downturn will be deeper and longer than the 2001 recession where we saw no contraction in spending.
• This recession could be shallow or deep. There are too many variables to determine at this time.
• The actions the government is taking are appropriate and will assist in the recovery. It will take time for these actions to reflect in the financial markets.

Over and over it is clear that to predict the financial markets is folly. What we must do is understand our clients’ goals and prepare investment and financial plans that clearly provide for their cash flow needs in the short term while positioning their portfolios for growth in the long term.

As I left Dallas, I was clear that that our asset allocation approach to investing wrapped inside our award winning Prosperity Planning™ services put us in the top echelon of our profession and in sync with the best of the best in our industry.

While that may not make the news of the day any easier to hear, it provides me with the confidence to keep showing up and doing the best every day for our clients.

May prosperity be yours,
Mackey McNeill, CPA/PFS, IAR
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
859-331-7755
Mackey@CultivatingProsperity.com

What choice are you making?

In my book, The Intersection of Joy and Money, I discuss five truths of money.

One of those, and perhaps the most powerful of the five, is “Choice is the ultimate power.”


These are extraordinary economic times. The airwaves, internet and newspapers are full of fear. We have a choice. React to the fear or respond to the situation.

Reaction is important energy. It keeps us safe from danger. Reaction energy is quick, habitual, instinctual and is hard-wired in our system. And thank goodness! Without the ability to react, we would plow into the rear end of the car in front of us when it stops suddenly.

The challenge comes when we use our reaction energy when what is called for is responding energy. Responding energy is slow. It considers the situation, makes a choice and then takes action.

Watching the market go into free fall in early October, it is easy, and perhaps instinctual to react. What is called for is to respond. To take a broader view, look at the data, history and reality of the moment and make a conscious choice.

Warren Buffet in a recent New York Times article said it this way, “Be fearful when others are greedy, and be greedy when others are fearful.”

Click here for the complete article.
http://dealbook.blogs.nytimes.com/2008/10/17/buy-american-buffett-says-he-is/

May prosperity be yours,

Mackey McNeill, CPA/PFS, IAR
President and CEO
Mackey Advisors
www.CultivatingProsperity.com
859-331-7755

Mackey@CultivatingProsperity.com

Finding Common Ground

If you know me, you know I consider myself a progressive.

I also see myself as tolerant of other people’s views. But under closer examination, maybe not so tolerant.

My friend, JoAnne Hilliard of Lexington KY sent me this link to an insightful and engaging video that provides profound insight into our moral selves. After watching it, my heart filled with compassion for those I have often seen as unwilling to change or maybe even stubborn!

I live my life, very comfortably, as a change agent. The video helped me see that that is a world view and gave me compassion for those in my life who are not so change embracing.

As we approach the election with widening division within our country, we have to ask ourselves, “How do we gain compassion with each other, so that after November 4th, we move forward together to solve the challenges we face?”

This video is a great start to that conversation.

Like most TED presentations it is about 20 minutes, so grab a cup of tea, relax and enjoy.

Jonathan Haigt on conservative and liberal openness
http://www.youtube.com/watch?v=vs41JrnGaxc

Want to be wealthy? Act the part.

While the masses are frozen in panic over falling stock prices, those who know how wealth works are cherry picking the bargains.

Buffett has called the current mess an "economic Pearl Harbor." He recently said, "In my adult lifetime, I don't think I've ever seen people as fearful economically as they are now."

Berkshire Hathaway, Warren Buffett’s flagship company, had $44 billion at the beginning of this year. By the end of June, Buffett had spent it down to $31 billion in deals including Berkshire's purchase of Marmon Holdings, the Mars purchase of Wrigley, and the Dow Chemical (NYSE: DOW) takeover of Rohm & Haas (NYSE:ROH). He has even purchased auction-rate securities at bargain prices.

Lately, he's been accelerating his purchases even further. Buying names such as Constellation Energy, Goldman Sachs, and GE.

You don’t need to mimic Warren Buffett’s specific purchases to gain wealth. What is most important is to learn from his behavior. When valuations were right, he bought stock, regardless of what most people were doing. He avoided he herd and stuck to his discipline.

And it isn’t just Warren Buffett who is profiting from the current fear cycle of the market. Almost every day one of my wealthiest clients call asking, ‘Isn’t this a good time to buy more stock?’ They aren’t caught up in the news. They are watching the fundamentals and seeing opportunity.

What can you learn from the wealthy?

• One of roads to wealth is to focus on the economic fundamentals of the market, and avoid the emotions of the market.
• Understand your investment philosophy and methodology – have a plan – and stay the course.
  
  May prosperity be yours,
  Mackey McNeill
  President and CEO
  Mackey Advisors
  www.CultivatingProsperity.com
  859-331-7755
  Mackey@CultivatingProsperity.com
  

What are you waiting for?

Financial planning works!

On Monday following the worst market close of since the Great Depression, I met with a retired client couple to update their financial plan.

We reviewed their goals, updated their resources, including reducing the asset picture to the closing values of October 10, 2008. We focused on two things:

1. Their plan was originally built to provide for sufficient low volatility assets to provide cash flow during this market downturn. Were they still on target?

2. Did they need to reduce their spending based on the market correction? If so, how much?

The answer to the first question was yes, they did indeed have sufficient low volatility assets to provide cash flow for the next four to five years. This gave them the freedom and time to allow the equity portion of their portfolio rebound.
As for a spending reduction, updating the plan reflected a need for a 10% reduction in spending, pre tax.

They left with a renewed sense of confidence in their future.

Given the power of this incredible process, why don’t more people take the time to plan?

There are two main reasons. One, people do not understand the benefit of the process. Two, there are misperceptions about the process.

The process turns upside down conventional thinking about investing.

In old style investment services are either one, advisory services focused only on asset performance or two, transactional investment services focused on buying and selling. Where are you in this picture? The answer is you are not in this picture. In the old model, investments decisions came first, and customer outcomes came second. Customers made investments and later built their goals around the outcomes of the investment process.

In progressive financial planning (our unique planning process is Prosperity Planning™) goals are addressed first. The investment plan, plan being the operative word here, is built under and in support of the client’s goals. What a great idea! I determine what I want and determine what actions, strategies and tactics are most likely to assist me in creating the goals I really want (and deserve) in my life!

The other stumbling block is misperceptions or myths about the process. Here are three I see most often.

Myth One, I can’t afford a plan.

Truth, The mostly likely result is that planning will save you money by avoiding mistakes or removing actions not in accordance with your goals. What if you are the exception and receive no monetary benefit from planning? What is the fair value of peace of mind? The impact on your health, happiness and sense of security that comes with a clear and actionable plan is priceless.


Myth Two, It is boring to talk about money.


Truth, In our award winning Prosperity Planning™ process, YOU do the plan. We facilitate, educate and guide, but the plan is yours. Every step of the way is interactive. Clients leave with comments like, “That was fun!” “I feel so much more confident.” “For the first time my spouse and I are on the same page with money!”

Myth Three, Only those with substantial assets benefit from a financial plan.

Truth, Planning is for everyone! The fastest path to wealth is first determining that you want to be wealthy- the first step in the planning process!


Mackey Advisors offers award winning Prosperity Planning™ services to clients of all asset and income levels, as well as investment advisory services for planning clients with invest-able assets of $300,000 or more.

Why not begin to change your life today? Contact me at Mackey@CultivatingProsperity.com or 859-331-7755 ext 103

This time is different

This time is different. These four words are the fastest path to losing money in the equity markets.

In the 1990’s more than a few people came in my office with technology stock picks, the hot stock of the day. As I looked into these companies, I discovered that for the most part these firms had few if any customers and therefore minimal sales. They had a “burn rate” that is how long it would take at current expense levels to exhaust existing capital! These firms had no track record, no customers, no assets, brand or otherwise, and certainly no profitability.

When I would explain to clients that we don’t buy assets such as these for their portfolios, they would reply, but this stock is gaining 5 to 20% a day in market price. “This time is different,” my clients would explain. The Internet is the future, which is how we need to invest.
These “no asset, no customers” stocks went on to lose all their value and the overall Nasdaq lost 80% of its value in the tech bust.

Over the long term markets are driven by fundamental economics, earnings, assets, cash flow and growth. Over the short term, markets are driven by fear and greed. The 1990’s was an intense greed cycle. Greed cycles are followed by bear markets. The technology bust began a bear market which sustained itself for three straight years.

Today we are in a fear cycle. I am again hearing, “This time is different.” Only we are on the opposite end of the cycle, this time we are moving down with fear, just like we moved up with euphoria in the 90’s.

Equity valuations are incredibly low with many quality stocks trading at values and multiples not seen in years. Fear cycles are followed by bull markets. Now is the time to buy, not sell equities.

This article from the New York Times gives a helpful, much needed perspective in these challenging times.

May prosperity be yours today and every day,

Mackey
PS
The link may require a log in, but it is free! Enjoy
http://www.nytimes.com/2008/10/12/business/12stox.html?em

The Challenge of Fear

Change is not bad, it is just change.


When I was young, whites and blacks went to separate schools. The summer before we integrated the school system, emotions ran high. The KKK burned a cross on the courthouse square. African Americans marched peacefully in the streets. Fear was rampant and the police imposed a 9PM city wide curfew.


The first day of school came. As we assembled, everyone was a bit nervous. The bell rang and we walked in the door. Life was different but it was not over. A new order was born and this change completed its cycle. Old order, change, new order, which becomes old order, change, new order, which becomes old order, change. It is natural cycle.


We have no more reason to fear change than we do the old order or the current order. Nor does holding onto the fear of change assist us in any way in living peaceful, joyful lives.


Over the last few months, financial institutions we have long considered mainstays in America have disappeared. We are experiencing a tsunami of change. Out of change comes new order. This is not a possibility. This is the natural law of the universe.


It is easy to be scared by the financial news of the day. As an investor, fear is not your friend. Many investors will go over the waterfall of fear and fall into panic, sell their stocks and move into bonds or cash.


All great investors have two things in common. The first is discipline. Successful investors have an investment philosophy based on solid research and experience. They stay out of the emotion of the day on Wall Street and execute on their philosophy.


The second thing great investors have in common is that they avoid economic forecasting. In a recent CNBC interview, Warren Buffet, the world’s richest man, said, “I have never made any money on economic forecasting.” It isn’t about knowing when the economy is at the bottom. It is about staying the course and following your discipline.


Remember, if your asset allocation is appropriate for you, what is happening on a daily basis on Wall Street is not a game changer. Equity markets are for long term investors. Even if you are in your 60’s, your investment horizon is long term based on today’s life expectancies.


This is a wakeup call. On the national level, now is the time to consider your vote, write your Congressperson, and make your voice heard.


It is folly to think we do not need regulation. Until we are willing to hold the higher good above our own self interest, we will continue to need smart, sane regulation.


Recessions aren’t fun, but they are incredible opportunities for self reflection, clarity and growth. Wake up to your own way of making financial decisions. Wake up to your own use of debt. Of buying things you don’t really need with money you don’t really have. Wake up to your own financial plan.


Practice non attachment to those things you cannot control. Focus instead on what you can control your personal choices. Do not expend needless worry on those things you cannot control. Continuing to do so adds to the energy of holding these patterns in place.


If you have been practicing good financial discipline, living within your means, using credit wisely, and investing according to your personal goals, continue this practice.



Be clear on your short term cash flow needs. Review your plan with your advisor.


So what are the practical steps to take now?


1. Take inventory of your emotional body. If your emotional body is not in alignment with your data body, your emotional body will win. We are not really rational beings. Most of our decisions are made from our unconscious habits. This is why financial education alone, that is more data, does not work. The unconscious habits of the person is the mirror who is blocking your personal prosperity. The willingness to become the observer of your emotions creates a solid foundation for change.


2. With your observer in place, keep a long term view. Step back and see the historical perspective on equity markets.


3. Develop and stick to a budget. If you don’t know how to budget, get help. Spend time considering your wants and needs, and carefully separate the two. Notice if spending is a way of satisfying an emotional need. If so, you will need to find alternatives ways to satisfy that need or your budget will fail.


4. Discover your personal goals. What do you really want? What is important to you? What legacy are you called to leave? What are you passionate about?


5. Build a financial plan around your goals. Don’t wait until you have money to create a plan, create a plan so you will have money. Plan your work and work your plan. You interact with money every day. It is the tool you use to acquire the things you want. It is what you exchange your life energy for every day at work. Give it the importance it deserves in your life.


6. If you are not a do-it-yourself financial person, get quality advice. There are plenty of local, fee only financial advisors that can assist you in developing a personal financial plan for your life.


E mail me at Mackey@CultivatingProsperity.com with questions or concerns.