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How Has YOUR Dollar Done This Decade?

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Be afraid, my friends. Be very afraid. If you have no fear, click on the image above for a larger, clearer picture of what’s slouching toward Bethlehem.

That thing came in a report from my money managers today. It tracks the value of a dollar invested in my portfolio from June 30, 2000 forward.

Now, if you take a ruler and lay it horizontally across the page so that it passes through the start point on the left-hand side of the page and stays parallel to the x-axis, you will see something alarming. In all that long, eventful decade, only a tiny little nubbin pokes up above the top of your ruler.

That’s right. A dollar invested in my vast holdings was worth a dollar or more for two out of ten years, between third-quarter 2005 and third-quarter 2007. For the other eight years, it was worth less than a dollar. Sometimes significantly less. In third-quarter 2001 it was worth about 68 cents. At the end of June 2010, when this report was generated, that year-2000 dollar was worth about 85 cents.

Suspicions confirmed. Some time ago, it occurred to me that the amount in my investment account was about the same as the amount I recalled coming away with from the divorce, some 20 years ago. Statements from those days have been packed away, and offhand I couldn’t say where they are. They may even have been discarded. But the figure that sticks in my mind is…well, just about the figure on the bottom line of the statement that comes in the mail once a month.

Still think long-term investment in the stock market is the way to grow your savings? Read on…

On the phone with the investment guru:

“Is there a reason to believe keeping money I will need to live on for the rest of my life (which we may sincerely hope will be short) in the stock market is a good thing to do? Unless these funds grow or at least quit losing money, there won’t be enough for me to live on. I can’t keep on forever putting in 16-hour days, 7 days a week to scrabble together $15,000 a year, which is what happens when  you’re ‘self-employed.’

“Should we be considering some other investment strategy? Maybe we should take a chunk of dough and pay off that damn mortgage on the downtown house, so I don’t have to worry about where 10 grand a year is going to come from to pay for it. If M’hijito pays rent to me, then about $600+ a month would come from him to me, instead of me having to fork over $800 a month. After the kid moves on, I could probably rent that place for $1,000 a month. Or sell my house and move into it, banking $235,000 in the exchange.”

Well, of course, the very idea is anathema to an investment manager. Put your money in real estate, and he doesn’t have anything left to manage!

The conversation that ensued was eye-opening. The firm has moved large amounts of funds into income-producing instruments, which my guy says are returning 7 percent just now. So even though the apparent value of the securities appears to drop, they’re still bringing in cash.

Couldn’t prove that by me, but then you can’t prove much by me.

He then said that the consensus among his partners is that the future of investing is off-shore; that effectively the U.S. economy is done, and smart money is going to emerging economies. He believes China’s economy will surpass America’s within ten years. The jobs we have lost in construction and manufacturing—where the bulk of job losses have been—will never come back. Jobs in the service sector, which is where most of the remaining employment resides, are poorly paid and will never be anything but poorly paid.

If you thought the middle class in this country is disappearing, you thought right. A young person, he suggested, would do well to look for employment overseas. Americans are in demand in Hong Kong, he said, although given Americans’ reluctance to learn languages other than English, Canada or Australia is probably a better bet. He would, he added, seriously consider moving to Canada if he were younger (and hadn’t yet started his family and career) or older.

Not scared enough? Well, put on your 3-D glasses and look up your address on Zillow. For jacking up your adrenalin level, that beats any chainsaw movie.

My house, whose value held steady through the bubble-burst at $235,000, has suddenly dropped to around $200,000. The downtown house house is between $50,000 and $60,000 underwater. Real estate values have not stabilized; they continue to drop steadily. When I mentioned this to Investment Dude, he said yeah, his place also had fallen in value even more than it already had, which was plenty; he and his wife managed to get a refinance, but only because no appraisal was required—the lender accepted a recent valuation. If they’d had to have the house appraised, they could never have gotten a new loan.

So…how has your investment dollar been doing? Dollar, heck… Can you spare a dime?

What happens when a live Qwest guy shows up

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How many weeks are we into the ongoing Qwest DSL drama? I’ve lost track. Finally, yesterday Qworst sent a living DSL technician. John alarmed at first sight: tall, dark, and dreadlocked. On second glance, it became clear that John actually is tall, dark, and handsome, with a quiet and gentle demeanor that quickly charms the stranger. He is, I recognized, one of those rare men who can be called “sweet” without insult.

He also has an intellect, the first I’ve encountered since the DSL puzzlement began. He, too, was puzzled: why did Qworst Call Center Dude #3, the Josh, send him out with a new $100 modem, which indeed was identical to the modem I had been sent for free by Qworst’s Philippines subcontractors and been told by #3 to return. More puzzling: there was no reason to replace the existing modem, which works just fine.

After some experimentation, John concluded the problem was not in the modem but in the phone line. He set out to discover what was going on. He climbed around the yard for a while, but eventually tracked the matter into the garage. While he was outside, I started to hear an irritating little “beep” repeating about every three seconds—probably, I thought, his equipment at work.

Pretty quick he resurfaced.

“Hear that alarm?” he said.

“Alarm? You mean the beeping?”

“Yeah.”

“I thought that was your gear.”

“No. That’s your burglar alarm. Something’s wrong with it.”

The burglar alarm system has been turned off for a good year. After it became clear that the Perp was not going to commit all the mayhem my lawyers predicted he would, I discontinued the monthly subscription.

When I tried to mess with the control panel to see if I could turn it off, I felt something like an electric shock. He said, “That’s odd.” On further investigation, he announced the sensation wasn’t electricity: it waswater! The burglar alarm is mounted to the wall next to the water heater. Some part of the copper spaghetti above the water heater (lines to the swamp cooler; lines to the refrigerator; lines to parts unknown) had sprung a tiny leak, and it was spraying a fine, invisible mist. Lo! On the concrete floor below the burglar alarm panel, what should we see but a little puddle developing.

Dang. He now climbed up to the main panel and disconnected the burglar alarm system. This did nothing to stop the Chinese-water-torture beeping. We called the burglar alarm company: no answer, midafternoon on a business day. We punched buttons. Nothing. But—no cops; that’s good. Finally, he took out his wire cutters, pulled open the cover, and cut a fine fat white wire.

That stopped the alarm. Amazingly, it did not stop the telephone service, as friends have told me messing with a hardwired burglar alarm will do.

Then he said—get this!—”I don’t understand why they ordered this modem. You don’t need it. You don’t need any of this. I’m canceling this service call.”

So, I got the DSL fixed and the burglar alarm shut off just as it was starting to register its dismay at being sprayed by the defective plumbing: free of charge.

Such are the glories of having a live human being respond to a service call.

Along about 8:00 p.m., another live human being—the Plumber Extraordinaire—showed up to figure out where the water was coming from. Over the phone, he’d already coached me on how to make it stop, a maneuver that entailed shutting off the hot water to the house. In 100 degree heat, you don’t need a whole lotta hot water, anyway.

He replaced the two-year-old flex line, one of the many benefits of globalization we Americans now enjoy. Annoyed, he showed me a brand-new flex line that he had been about to install at another customer’s house: it sported a two-inch-long split. Then he handed me a bill for $75. I was glad to pay it for his long after-hours time.

Customer service personnel outsourced half-a-globe away. Plumbing supplies that break before you can install them. Think of it. Let those who question whether globalization equals the Third-Worldization of America think of it.

Celebrate America: Shop Local

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Did you realize that for every two jobs a huge national retailer brings to your town, three jobs are lost? Yes. As local businesses, unable to compete with WalMarts and Home Depots and Applebees, close down, more jobs are lost than gained.

Have you ever noticed that megaretailers raise their bargain prices once most of the local competition has been driven out of business? Check prices at your nearest surviving Ace Hardware (you’ll have to drive a ways to find it)-you may be surprised to find Home Depot’s prices are actually higher on many products.

A study of the effect of chain stores on the economy of Andersonville, a suburb of Chicago, showed that for every $100 in consumer spending with a locally owned firm, $68 remained in the Chicago economy, but only $43 remained from $100 spent in a chain store. The same study showed that 70% of residents preferred to shop in local stores and 80% preferred shopping in traditional urban business districts to big boxes. Nationwide, experience has shown that chain stores drain tax revenues through ill-considered subsidies, leave shopping areas blighted, and actively work to drive local companies out of business. Meanwhile, the carbon cost of pointlessly hauling food and other goods around the world continues to skyrocket. And as we know, we no longer can trust that our food is safe, nor our pet food, nor our children’s toys…

It is past time to fight back.

Stalking the Local Merchant

I was pleased to find a fight-back weapon here in my state: a coalition of businesses has come into being to foster local commerce and to encourage people to shop locally. The retail landscape here has become so homogenized it’s hard to find local stores. Most of our wonderful independent bookstores were hounded out of business years ago, people mysteriously developed a penchant for taste-alike restaurants, our fine local hardware shops closed their doors within months of Home Depot’s arrival, and now Phoenix, like every other major American city, looks just like every other major American city. Cookie-cutter commerce has brought us cookie-cutter cities full of cookie-cutter people. And so, it is excellent to come across an organization that will tell you where to find local shopping.

So far, I haven’t located a national clearinghouse or umbrella organization for such groups, but a little googling suggests they’re all over the country. As you might expect, smaller municipalities, recognizing that chain stores threaten their job base and the very character of their towns, are resisting vigorously. Taylor, Texas, for example, has a lively shop-local movement; there’s one in central Illinois and another in Cape Cod.

But larger cities are also starting to join battle: Salt Lake City’s Vest Pocket Business Coalition complements Utah’s statewide organization. New Orleans urges citizens to patronize local businesses, and Brooklyn has an active shop-local movement.

No doubt there are many more. Visits to just these few websites will show you the endless good reasons to buy on the local economy as much as you can, and most of them list locally owned businesses. Try googling “shop local” and the name of your city or state.

The Costs, the Benefits

Does shopping local cost more? Possibly, since megacorporations have no qualms about undercutting local competition-at least until the competition is gone. But we’ve already seen what abandoning our local economies for huge box stores has done to the quality of life in our cities: we have lost what makes our towns our towns, as every city in America has come to look alike. We’ve lost jobs and wages. We’ve lost nearby shopping and quality neighborhoods. As the cost of fuel has risen, the cost of flying and trucking food from far-away megasuppliers is making the most ordinary food items unaffordable. And now, in the era of globalization ushered in by vast corporate interests and their political allies, we are enjoying unsafe food and toys, engineered obsolescence of big-ticket items, less and less choice and variety in the products offered to us, longer drives to fewer stores…to say nothing of carefully orchestrated corporate invasion of our privacy.

Penny wise and pound foolish, with a vengeance! Some things are worth paying for. One of those things is our way of life.

I for one intend to start shopping local whenever I can reasonably do so. I hope you’ll all join me at your local merchants’ stores.
It’s simply good for America.

2 Comments left on iWeb site:

BeThisWay

Excellent article!We just discovered our local Ace Hardware, and it’s less than three miles away!Husband and I both enjoyed browsing their shelves, and the prices were sometimes lower, sometimes higher, and sometimes the same as the Big Boxes.The customer service blew the Big Boxes away…

I much prefer the local farmers market to the big grocery stores, even though they are pseudo-local.Local, neighborhood restaurants are often sooo much betterthan the chains.I think people like to eat at chains so they know what to expect.Levels of cleanliness and quality are assumed to be good.

Sometimes I have to choose price, but when they are comparable I’m going to make the effort to shop locally whenever possible.

Jeff

I agree!This is a great article and highlights the most important reason to shop local and support American businesses … because it keeps jobs, and our money, in the States where it belongs.