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The Money Compass: Where Your Money Went and How to Get It Back


"Good for the Navigator/Grimaldi to be able to see the rocky economic shoals through the Wall Street fog and Washington smoke screen."—Gerald Celente

Protect what you have and start rebuilding your wealth

Here is your roadmap to financial stability in today's hazardous markets. It's no secret that during the Great Recession and its aftermath, small investors were the big losers. If you lost half of your net worth or more, you're not alone. So where did the money go, and how can you make sure it never happens again? Read The Money Compass to find out. The short answer is that you need to understand what's going on in the world of finance, otherwise government policies and special interests can — and will — continue taking your money.

The unprecedented economic situation we face today affects every aspect of our lives, even if we choose to ignore it—and we ignore it at our peril. Inside, Mark Grimaldi and G. Stevenson Smith make sense of money matters large and small:

  • Mortgages and the housing market
  • Predatory credit card "perks"
  • Retirement funds
  • Exchange-traded funds
  • Repeal of the Glass-Steagall Act
  • Collapsing public education systems
  • Federal debt

Navigate these issues and more with the help of The Money Compass. Straightforward expla- nations and outside-the-box advice will get you and your family back on track. With a new perspective grounded in financial realities and new strategies for managing debt, taxes, and investments, you'll be ready to stay afloat and profit from economic uncertainty. Expert Economist Mark Grimaldi forecast the 2008 downturn, and he is predicting more difficult times to come. Don't let the next financial collapse take you by surprise.

Mark A. Grimaldi is a Certified Fund Specialist, co-founder of Navigator Money Management, Inc., and Chief Economist for the Navigator family of newsletters. In 2009, he launched The Sector Rotation Fund (NAVFX), a pure no-load mutual fund. Mark serves as Vice President of The Prestige Organization, Inc. Mark correctly forecasted the housing depression, the gold rush, 10% national unemployment and in January 2010 said "In 2010 the DJIA will have it's first 1000 point down day ever"!

G. Stevenson Smith, PhD, CPA, CMA, is the John Massey Endowed Professor of Accounting at the John Massey School of Business at Southeastern Oklahoma State University. He formerly worked for the Securities and Exchange Commission in Washington, D.C., as a financial analyst. Dr. Smith is the author of three books on nonprofit financial management, including Cost Control for Nonprofits in Crisis.

Preface xi

Acknowledgments xiii

Chapter 1 Introduction: The Invisible Hand of Confiscation 1

The Fourth Branch: K Street Government 2

More Income Tax and More Debt, Too 4

Monetization of the Debt: Say What? 8

The Last Biggie: Repeal of Glass-Steagall and Gamblers Gone Wild 11

Summary 13

References 14

Chapter 2 Greenspan and the Growing Bubble 15

Simple Plans Often Become Complicated 17

Moving On . . . 19

The 36-Day Election 24

My Takeaway Is More than Fries 28

Summary 30

Reference 30

Notes 30

Chapter 3 Drop the “U” Out of “Housing” and You Get What America Got 33

2000 to 2006: The Perfect Storm 35

Oops, Almost Made It 38

2007: All Fall Down 40

2008: The Year of Reckoning 44

The Fat Lady Sings: “It’s Not Over” 46

2009 to 2012: The Road to Recovery? 48

Looking Ahead 49

50-Year Mortgages 50

What to Do Next? Let’s Buy a House 51

Summary 54

Reference 55

Notes 55

Chapter 4: Credit Cards: Let Me Have It NOW! And They Did 57

The New Law 58

Let’s Skip a Payment 59

The Contract 60

How Is That Interest Rate Figured? 62

The Credit Card Tax 67

Tipping a Hat to Debit Cards 68

Getting Back 70

Summary 74

Notes 74

Chapter 5: Who Are Target-Date Retirement Funds Targeting? 77

A Ticking Time Bomb 84

The Dawdling SEC 86

What Can You Do? 87

Chapter 6: Four-Oh-One-Kay Tales 89

The Truth about Your 401(hey)! 90

Meet Mr. Uninformed and Mrs. Navigator 91

Mr. Uninformed and Mrs. Navigator, 10 Years Later 93

A Little More Sizzle 95

One Exception 97

Four Reasons to Invest in After-Tax Accounts 97

Summary 99

Chapter 7: Exchange-Traded Funds 101

Is Mr. Bogle “Indexing” the Problem? 101

What Is an Index Fund? 102

Why Invest in an Index Fund? 103

Giving Up Downside Protection 104

Giving Up the Ability to Lock In Profits 105

Why Not Buy and Hold? 107

So What’s Wrong with ETFs? 107

How Much Should You Pay for an ETF Trade? 110

The Benefits of Professionally Managed ETFs 110

Ranking ETFs the Grimaldi Way 111

Summary 112

Note 114

Chapter 8: Who Took My Money Now?

The Collapsing Education System 115

The Feds and State Government 116

The Vendors 117

School Administrators, Relatives, and Cronies 119

The Boosters 121

Teachers, Sex, Unions, Drugs, and More Fraud 123

Parents 128

Students 129

So What Are You and Yours Losing? 130

Are There Choices? 131

Summary 134

Notes 135

Chapter 9: Staying Poor in America 137

Rich or Poor? 138

What Else? Business Models Have Changed Our Way of Earning a Living 141

Other Factors Making Americans Poor 143

Spend It if You Got It or Pretend to Be Rich Until You Are Poor 144

Governmental Solutions 146

Private Solutions 147

Summary 150

Notes 151

Chapter 10: The Federal Debt Bomb: Hold Your Breath (at least try) 153

Government Choices and Me 156

What Am I Going to Lose in These Policy Choices? 164

So How Do I Keep from Losing My Shirt—or at

Least Survive an Inflationary Environment? 169

Summary 171

Notes 171

Chapter 11: Navigating the 2014 Recession 173

Beginnings 174

Behind the Accolades—Accurate Forecasting 177

The 2014 Recession 180

Recession Rules to Live By 181

Navigate Carefully 184

Appendix The Grimaldi Forecasts 186

January 2008 Navigator Newsletters 186

February 2008 Navigator Newsletters 189

March 2008 Navigator Newsletters 189

June 2008 Navigator Newsletters 191

November 2008 Navigator Newsletters 192

May 2009 Navigator Newsletters 194

Chapter 12: Changing Job Patterns and You 197

How Could This Happen? 200

Did You Leave the Middle Class on Purpose? 202

The Job Recovery from the Great Recession 203

Societal and Economic Effects 204

A Possible Solution? 207

Summary 210

Notes 210

Chapter 13: Gratuity Government: Should I Take the Free Butter? 213

Taker Trends: Get Wise and Do Less for Yourself 215

Entrance to the Land of the Takers 216

Transfer Payments and a Hypothetical Monthly Budget 223

Summary 225

Notes 226

About the Authors 227

Index 229