By Alijeffty Gonzales
Managing Partner, ACG Advisors

It was the Black Monday of 2008.

Stocks fell by nearly 9.0 percent on Monday — the worst single-day drop in two decades — after the government’s bailout plan, touted by its supporters as a balm for the current market stress, failed to pass the House of Representatives, setting off a fresh wave of anxious selling.

In yet another day that has shaken the embattled canyons of Wall Street, the Dow Jones industrials fell 777.68 points after it became clear that the legislation could not muster the support it needed to pass the House.

WHAT TO DO IF YOU ARE INVESTED IN THE STOCK MARKET?
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Finances On The Edge Photo by DeadAir

For the purposes of analysis and policy-making, there is no escaping the pounding on the table and the endless debates on what caused this crisis, who is to blame, what could have been done to avoid it etc. etc. But at the end of the day, reducing all that talk to doable measures is a process that could end to be as convoluted as the shadow play that caused this crisis in the first place.

Personally, I would rather focus on things that we all can do—now—to deal with what’s happening. After all, crises are part of life, whether financial, emotional, relationship, spiritual. They will happen, again and again. Only the details will change, but the fact that they will railroad our lives and make us shift our priorities will not.

An excellent series in the Philippine Daily Inquirer has been showing readers how different households are dealing with the crisis. Some are moving to condo units near mass transit systems to reduce travel time and stress, some are really cutting down on expenses especially dinners outside the home—even if they are only trips to fast food places.

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If you’re buying a house and taking out a loan to pay for it, you’re probably being asked to pay for mortgage redemption insurance, a kind of insurance that protects the bank in case of the borrower’s sudden death or disability. This also means, of course, that your beneficiaries don’t get saddled with a loan on the house in case the breadwinner, you know, goes.

An MRI is prohibitively expensive, and if you’re the average type of bank borrower, you won’t know that unless it’s too late. You may also fail to realize that there are other options, and would likely just sign the contract just to get the entire process over with.

Here’s a tip I learned from an insurance professional: ask your bank if you can assign a term insurance instead to the creditor. You will pay much less in premiums but get ample coverage. However, you will have to make sure that the insurance company you get your term insurance from is accredited by your bank.

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(Photo courtesy of Kleyr)

Since the Personal Equity Retirement Account (PERA) Bill was signed by President Gloria Macapagal-Arroyo last August 22, 2008, those who have been conscious savers and investors were fairly bursting at the seams with excitement.

Ah, the joys of tax-free savings and investments. It’s enough to make hearts skip a beat despite the gloomy global environment.

But wait. This news should be something that excites the nation as a whole. Particularly OFWs and their families. I don’t see that happening. Yet. Let’s see what we can do with that.
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The not-so-friendly bundle of grocery receipts have been winking at me for quite some time, so I finally got around to putting all the figures down into an Excel worksheet to make a Grocery Booklet—an exercise that reveal some pretty interesting lessons.

Here are some of those lessons:

From January to August, these items showed the biggest jump in prices:
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(Photo by Din Cordero)

Personal Finance Reminder: avoid busting your budget by shopping early for Christmas.

Early birds get more time to look for bargains, more time to stretch artistic skills to create unique and personal  (and less expensive) gifts, and avoid overcharging credit cards and paying hefty fees.

Sometimes, the late birdies do get rewarded, because retailers have been known to cut down prices at the last minute. But would you like to fall prey to an “if?”

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Last week’s pace was frenetic, and for most of the time, I tried to get all the market shrillness out of my head.

Talking to a friend over the telephone, we had a laugh about whether we would see a different world if we looked out the window, just because of the weekend that changed Wall Street—and the world’s financial markets—forever.

Grass was the same kind of green, my lonely Acacia tree was still a tree as lovely as a poem, bugs were still great magnets for my young boys, and all in all, I was happy to note that the sky wasn’t falling on my head.

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We’ve been too serious lately. Let’s play a little game. For the contrarians out there who like to buy when there’s blood on the streets, what are your favorite investments and businesses in this time of market shrillness and panic?

You don’t have to limit your choices to stocks or bonds. Some people don’t like them because they are too complicated and these people get by pretty well. An agri-industrial company was being interviewed on Bloomberg this morning, which seemed pretty much immune to the Wall Street fiasco, clocking in a 170+ percent growth rate year on year. Hmm.

Start voting and we’ll track what happens to the prices of those investments every month from now. May the best contrarian win!

Official and audited figures on Philam Asset Management Inc. (PAMI)—mutual fund business–investment portfolio as of Aug. 31:

GSIS Mutual Fund

Top 10 Holdings:
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So the US government is taking over American International Group. What now, asks one reader. Lines of clients at Philamlife branches, and similar scenes in other Asian countries have many people asking: Is my insurance policy now worthless? What happens to all the money I have paid? Should I withdraw my investments?

I asked several insurance and investments experts and found that there are only five things you need to know:

1. AIG is not directly responsible for the contract that you hold. The responsibility for that lies in the subsidiary whose contracts will have to be respected even by the Fed. It is thus perfectly possible for AIG to be taken over or even to file for bankruptcy, and your policy to be fine. Now even if Philamlife, being one of AIG’s profitable businesses, is sold, the Insurance Commission will require anybody who buys Philamlife to service claims now, or when the contract matures.

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