BUDGET BATTLE IN WISCONSIN

As I watched a news report yesterday about the ongoing budget battle in Wisconsin, where protesters were marching around the state capital, it struck me just how brave the state politicians in Wisconsin are.  In the face of massive protests they have chosen to ignore what some would consider political self destruction and instead have taken a stand to address the issue of out of control deficit spending.  I won't go in to what is fair or unfair about budget cuts, that is a pointless and endless debate.  The cold hard facts are, Wisconsin, along with most of the states of the nation, simply does not have the revenue necessary to fund unlimited entitlement programs for its' citizens.  We find ourselves in such dire straits as a nation, due to the simple fact that we've long ignored the problem of federal and state governments spending way more than they take in.  I say "BRAVO!" to the politicians with enough courage to finally address the issue.

No, the solution is not without consequences, the budget cuts will hurt some more than others.  However, it is something that has to be done and the sooner the better.  As I watched the protesters in Wisconsin, I couldn't help but wonder how many of them would be willing to have their taxes increased by the amount it would take to fund all the entitlements and programs they're protesting for?  My guess would be very few, if any.  Wake up people!  If you constantly spend more money than you take in, you're going to wind up in financial disaster.  It's the same for federal and state governments.  They have to make cuts and we'll just have to live with it.  Better to spend your time in a more productive manner.  If you're not part of the solution, then you are part of the problem.

Tough Times Call For a New Strategy

When faced with tough economic times, it is important to review your investment strategy and make adjustments in accord with the changes in the direction of the economy. With seemingly no end to massive government spending in the foreseeable future and no provisions made to pay off excess debt, with the exception of some ill advised tax increases, I've decided to take a different approach. Robert Kyosaki, one of my favorite best selling authors, says that the rich make more money in a downward trending market than one that's going up. So I've taken a position in Proshares TWQ exchange traded fund. It is a leveraged ETF that shorts the Russell 3000 index of stocks. While I believe the stock market will eventually recover, I'm hedging my bets by shorting the market.

Another idea I'm looking at is investing more money in foreign shares. I like the fact that the government of Brazil is cutting spending to address their budget shortfalls, as opposed to increasing deficit spending the way our government has. While working with some good people from India on my last job location, I also came to appreciate their strong work ethic and entrepreneurial spirit, something we could use a whole lot more of in the U.S.. So I will be looking at ways to invest in India as well.

While this does represent a new approach to my investment goals, my overall strategy is still the same. Which is, to build a well diversified portfolio of dividend paying stocks to generate a steady stream of present and future income. There is always a way to reach your goal, you just have to find it. During these tough times, as investors, we need to stay on top of changes in the economic environment and change our strategies accordingly.