WILL THERE BE A MARKET CORRECTION?

There has been a lot of speculation of late about a correction in the stock market. Will the market correct in the near future? I really couldn't say, one way or another, with any degree of certainty. But one thing I do know for sure is, money that is not working has no chance at all to build additional wealth. That is why I like to keep my money working all the time. Once I've earned a dollar, it goes right to work. My paychecks are deposited into interest bearing accounts. Even the money I use to pay my bills are drawn from an interest on checking account, so I'm able to earn interest on the money until the payments clear the bank. My dividends that I recieve in cash are paid directly to my money market account, so they go right to work earning interest.

I read somewhere that one of the main reasons John D. Rockefeller was so successful in business was that he always maintained a large "war chest" of cash. In keeping with my philosophy of doing what the rich do to build your wealth, I've been increasing my own cash positions. Of course I maintain the cash in interest bearing money market, checking and savings accounts and while interest rates are extremely low right now, the cash is still working and earning even more money.

I've been sticking with my plan to cut investment costs by re-investing dividends to purchase more shares, thus avoiding commissions since there are no commissions on re-invested dividends. I did purchase some additional shares in BPT to take advantage of their great dividend payout. I'm also working on increasing my stake in Astrazeneca for my IRA account. They have fantastic earnings, a great dividend payout and a good deal of cash per share. I figure it can't hurt to own a few more of their shares.

At any rate, if and when we do see another correction in the stock market, I intend to be in a better position to take advantage of the lower prices and load up on more quality stocks for my investment accounts. I plan to follow Rockefeller's example and have a "war chest" of cash to take advantage of investment opportunities as they present themselves.

QUOTE OF THE DAY

"It's the little things you do that can make a big difference. What are you attempting to accomplish? What little thing can you do today that will make you more effective? You are probably only one step away from greatness." - Bob Proctor

J.P. MORGAN'S STRONG EARNINGS, AT WHAT COST?

J. P. Morgan posted surprisingly strong earnings, beating out most analyst's estimates. However, as a former credit card holder, I would have to question their business tactics, along with several other bank card issuers. I am a former customer because the interest on my credit card accounts soared to astronomical rates, even though my income and credit score remained basically the same. I also had a perfect credit record with both accounts, always paid over the minimum, never went over the limit and never made a late payment. None of this mattered to them apparently. Because when I called to inquire about the rate increase, they basically told me I could accept the increase or cancel my card. I cancelled both cards and will never do business with them again.

In all fairness, they are not the only card issuers to employ these type of tactics and I've eliminated most of my credit card accounts for that very reason. Kudos to Capital One and Juniper for showing some consideration for good customers! They are the only two companies whose credit cards I continue to carry.

So when I say "earnings at what cost", I'd like to point out that while these companies may increase earnings in the short term by gouging customers who are unable to pay off their cards and are forced to pay exorbitant interest rates, in the long term these same companies will hurt future earnings by losing business from some of their better customers. I sure wouldn't rush to invest any of my money in any of these businesses.

PART OF THE WEALTH BUILDING PROCESS

Recently I wrote about wealth building as being simply a process. Basically you first learn to turn your savings into more money and then you simply repeat the process over and over until you are wealthy. I sometimes forget that this type of thinking is lost on most of the people I work with.

I found myself a bit put out recently, when a couple of my co-workers were not as excited about a story I shared with them, about the sale I'd made of some rebuilt computers. One went so far as to comment, "Interesting story, " while rolling her eyes to express her true lack of interest.

O.K., so rebuilding 3 junked computers, and reselling them to double my money is of little interest to anyone but me. Maybe I am a little boring at times. What I didn't convey along with the story is what really excited me about the project. And that is, the fact that I doubled my money doing something I like to do. Although I have no formal training in computers and software, I have always been fascinated with solving programming conflicts and hardware malfunctions. What is even more exciting to me is that I always learn something new each time I repair another computer. This time around I learned how to fabricate a hard drive cage when I was unable to find a replacement part and I also took a computer that showed no signs of life and restored it to perfect working order.

But I guess the real point here is that if I were more concerned with telling a story that would catch and hold someones interest, I should make sure to point out the real reason behind my excitement. The fact that I doubled my money in less than a month is exciting enough, but the real story is that this is money that goes straight to my investment program. So not only did the investment double in one month, but the initial investment and the profit from that investment have been converted to dividend paying stocks. Now I will keep earning money off those 3 computers indefinitely! So what started out as a ho-hum story about making a few bucks, becomes a story about creating a cash machine that keeps churning out income year after year. It's almost like creating something from nothing. I took 3 junk computers, of no use to anyone and turned them back into useful products. The money I earned, plus my initial investment are now hard at work earning me even more money, but with no further physical effort on my part.

It's all part of the process of building wealth. You learn to make money and then you put it to work, so eventually, you don't have to work anymore.

WILL DOW BREAK 11,000?

The Dow ended higher today, but failed to break the 11,000 mark. I think it's more a matter of when the Dow breaks 11,000 than if it will. I'm pretty sure we'll see the Dow break the 11,000 mark and wouldn't be surprised to see it happen as soon as tomorrow. I still think we'll see a drop in the market around the middle of the year (June or July) but it's quite possible that may not happen. We'll have to wait and see.

Got a couple more annual reports in the mail today. I already wrote about my opinion on executive compensation being out of hand. If anyone has any doubts about this being the case, they only need to review their annual reports and consider how much space is taken up detailing executive compensation and how little space in detailing company business.

On a brighter note, the rise in the market has been a nice boost to both my investment accounts. I saw some decent increases in share prices in my portfolios. Especially recently added shares of BPT. While I purchased BPT for their dividend payouts, it's nice to see such a dramatic increase in price in such a short time.

Also happy to report that my earned income is on the rise. My most recent check from my new job is getting a lot closer to my old take home pay. A promotion and subsequent raise in pay helped in that regard. We've also seen an increase in business, which means I've been able to work extra hours as well.

While there is a lot of uncertainty going forward, in regards to recent government legislation and looming tax increases, I'm beginning to feel a bit better about future prospects for my retirement. Just got to roll with the punches.

LATE MARKET RALLY, JOBS REPORT

The rally in the market, late in the day, boosted the balances in my regular investment account and my IRA. I had returned to positive territory in my regular investment account about a month ago, recovering all I'd lost in the "great recession" and then some. My IRA account has always shown a positive return, although lately I'm only showing a 16% return overall (not counting dividends). Not a bad return on investment, but it had run as high as 24% late last year. Total returns were affected by new investments added at higher prices, since the market has recovered.

The jobs report comes out on Friday and I'm sure we'll see how that affects the market early next week. I'm slowing down on new investments in my regular portfolio until around June or July. I'll stick with reinvesting dividends in some of my core holdings and collecting the rest in cash paid to my money market account. I've noticed that the market tends to slump in the summer when people are busy with vacations and summertime activities. I plan to take advantage of any slowdown to add to some of my core investments, like Clorox and Campbell Soup, as well as buying additional shares in some of the energy limited partnerships I currently hold. My investments in the limited partnerships have done quite well price wise and pay fantastic tax advantaged dividends. Wish I'd bought more when the prices were lower.