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.