How to Find Opportunities from Blood, Debt & Fears

How to Find Opportunities from Blood, Debt & Fears

By Frank Holmes, CEO and Chief Investment Officer
U.S. Global Investors

My long-time friend and mentor Seymour Schulich forwarded an email to me that puts today’s U.S. government debt mountain startlingly into context. By removing several zeros, one can place the debt situation in terms we all can understand—that of a family’s income and expenses.

A family who takes in an annual income of $21,700 but spends $38,200 will soon be in dire straights. The large outstanding balance on the credit card only exacerbates the situation. Clearly, spending cuts need to be made, but eliminating only $385 from the family’s budget would be a drop in the bucket. Either a substantially higher amount of income needs to be made, or the family will have to learn to live with less.

Of course, the fiscal situation is more complicated when it comes to a “family” of 311 million. It is only one part of a large conundrum for the global economy.

Gold is “Sole Beneficiary” in this Economy

Don Coxe, global portfolio strategist, points to the Shanghai Composite Index and Bombay Sensex which are currently at one-year lows, indicating that investors are not feeling confident even in these relatively strong markets where GDP is growing. In this environment, Coxe believes gold is the “sole beneficiary.”

We’ve discussed several times that another driver of gold prices has been real interest rates. Take a look at the chart from Gold Stock Analyst (GSA) depicting the price of gold going back to 1968. In each case when real rates (calculated by subtracted the 12-month moving average of the year-over-year change of CPI from the 12-month moving average of the 3-month Treasury bill) went negative—in the 1970s, the first years of the new decade, and off and on from 2008 until now—gold has had a dramatic rise in price.

A negative real interest rate means that a hypothetical $100 investment in a T-bill is worth, for example, $98.90 a year later, i.e. you’ve lost purchasing power. Investors seeking yield have fled to gold in these instances.

Conversely, when interest rates turned positive in the 1980s, gold trended downward for the next 20 years.

Despite gold’s dramatic bull run over the last 10 years, the yellow metal is only twice as high as its 1980 price. In comparison to other economic yardsticks since 1980, this is miniscule. Ian McAvity, editor of Deliberations on World Markets, says that federal debt, the S&P 500 Index and even GDP has grown much faster than gold over that same timeframe.

The gross U.S. federal debt of $14.3 trillion is 17 times its 1980 level. In 1980, the S&P 500 was at 105; today, it trades around 1,100. A gold price of $1,808 seems paltry as it is only 2.5 times the 1980 high of $738.

McAvity extrapolates the relative growth rate of the yellow metal, indicating that if gold doubled from its current high, it “would nearly ‘catch up’ to GDP, while it might take a quadruple to match the S&P, or even a six-fold gain from here to catch the growth of debt.” Multiplying the largest of these figures by the current price of gold means prices could theoretically go to $10,800. By these standards, gold is hardly a bubble.

Gold these days has become so “legitimized,” helped by negative real interest rates, that the metal now directly competes with stocks for a share of investors’ portfolios, says the GSA. We applaud this development, as we have always thought investors should allocate a small portion of their portfolio to gold. However, we argue that a gold ETF is not always a wise choice, particularly when it is treated as a short-term trade, like a stock.

4 Energy Stocks With Little Or No Debt : DRQ, DVN, EPM, UNT

Energy investors that remain concerned about the possibility of a second economic contraction, but still want to have equity exposure, should look for companies with stronger balance sheets that are sure to emerge intact from a double-dip recession.

Many companies didn't survive the last recession as falling cash flows along with large and maturing debt loads took its toll on a number of public companies. The energy sector is particularly susceptible to this due to the cyclical nature of both the business and commodity prices.

Exploration and Production
Devon Energy (NYSE:DVN) has a solid balance sheet that has been enhanced over the last year with the proceeds of a large restructuring program initiated by the company at the end of 2010. This program involved the divestiture of offshore and international properties and netted approximately $8 billion in after-tax proceeds.

Devon Energy ended the second quarter of 2011 with $7.9 billion and $6.7 billion of cash and short-term investments, bringing net debt down to $1.2 billion. Devon Energy's net-debt-to-capitalization ratio of 5% is conservative and should lead to a less volatile stock price relative to more levered companies.

Evolution Petroleum Corporation (NYSE:EPM) goes one step further and has no debt on its balance sheet as of the end of the company's third fiscal quarter. Evolution Petroleum Corporation is active mostly in Texas and Louisiana and has the majority of its proved reserves and production from an enhanced oil recovery operation at the Delhi Field in northern Louisiana.

Diversified Energy
Unit Corp (NYSE:UNT) also has a better balance sheet than many of its peers, with a debt-to-capitalization ratio of 12% as of June 20, 2011. The company has nothing drawn on its credit facility and only one debt issue outstanding with a maturity date in 2021. Unit Corp is involved in exploration and production, and contract drilling and midstream, giving investors exposure to three separate areas of the energy complex.

Oil Services
Dril-Quip (NYSE:DRQ) has $79 million in debt and $250 million in cash as of the end of the second quarter of 2011, bringing this oil services company into a negative net debt position. Dril-Quip is a supplier of subsea products and equipment and has no leverage to the North American drilling cycle, which tends to be more cyclical during downturns than the offshore cycle.

The Bottom Line
Companies with little or no debt are usually safer plays during a recession, but investors should understand that the financial measures used above are incomplete as well as static and backward looking. A more comprehensive examination would involve additional measures of leverage and one that is prospective for the company's net cash flows over the next year. Also, during market panics, investors tend to sell off all stocks in a cyclical sector, regardless of individual fundamentals, which means there are few places to hide in the energy sector.

5 Year Gold Charts

Top 5 Mistakes Job Hunters Make

The job search game has changed quite a bit over the past decade; applications are now processed online, and social media accounts are becoming just as valuable in reviewing applicants as the actual resume. Before you presume that the old rules don’t apply, however, check out these classic errors that could be costing you the next big job opportunity. (Find out how to decide between these two financial professions. See “3 Ways To Attract Job Opportunities“)

Going Out of Your League
It’s nice when you feel confident in your abilities, and most employers will applaud any self-assured applicant over someone who needs continual coaching to perform. By applying for a job that you are seriously not competent to do, however, you waste your time in submitting the application and the time of the hiring manager. When HR departments continually receive applications from prospects that practice serious “wishful thinking,” it can turn them off to considering you for any future and better-suited opportunities, as well. Keep your job searches to just those you are actually competent to handle, and keep your CV out of the shredding machine.

Running from the Past
If you called up a past employer and anonymously asked what they thought of your performance, what would they say? Unfortunately, it just takes one historical error (or perceived lack of performance) to taint the perception of all future employers. Your best bet is to make sure that you leave your jobs on good terms, but if that isn’t possible, find out what they are saying about you before you continue the job search. professions.

Ignoring Your Weaknesses
No one is perfect, so forget about trying to pass yourself of as faultless at your next interview. In fact, the traditional advice of “make a strength seem like a weakness” may backfire, as many hiring managers have heard one too many claims of workaholic tendencies and trying too hard at a career. Instead of playing the same game, it may be best to present your case honestly, and explain how a past weakness has actually been resolved in your life. For example, you used to be slightly unorganized, but a change in processes has allowed you to be more productive at your past job and even enriched your home life. Showing that you can solve problems and make a lasting change may be more valuable than the interview “doublespeak” HR teams are becoming numb to.

Failing to Find Out about the Company
Doing a little research about the job you’ll be applying for isn’t just smart, it’s essential. When finding data to present in an interview or on an application, however, avoid reciting useless facts and one-liners from the latest press releases. Instead, seek to answer questions such as: What kind of charity groups is the company aligned with? Does the CEO have a unique hobby that you also care about? Will there be any new projects in the coming months that could specifically benefit from your expertise? By giving your demonstrated knowledge of the company a personal touch, the hiring manager will be forced to see that you can do more than memorize quotes for their website; they will realize that you are willing to understand the vision for their business.

Not Following Directions
Last, but certainly not least, is the most avoidable of all mistakes, and it involves a skill that should have been learned in Kindergarten: do what the application process tells you. While we would like to think that there is some secret code to getting your application to the top of the pile, it more than likely involves timing, a little luck and following directions to the letter. If the employer explicitly states “no phone calls, please” - by all means, don’t call! If a resume is required instead of a CV, you have better do what they say. Failing to follow directions does more than send your application to the trash bin; it demonstrates your inability to complete a basic task - something a future employer will not take lightly.

The Bottom Line
As competition for jobs increases, it’s important that you not waste time by making major errors in the application process. Slow down, stay on task and make informed decisions in the jobs you choose to aim for. Attention to detail really does count! (It’s not just your friends who can find your information – potential employers may visit as well. Check out 6 Career-Killing Facebook Mistakes.)

Donald Coxe Call Notes (September 2, 2011)

Don Coxe Conference Call Notes (September 2, 2011)

- One look at the Shanghai (topped 2008) and Bombay exchanges (two tops in 2008 and 2010) makes one wonder whether or not some of the really serious problems around the OECD are just being masked, particularly in context of discussions surrounding global GDP. The incredible rally in the S&P500 forces the question of whether the Capital Asset Pricing Model is broken. Most of Europe is skirting negative growth; Canada just printed its first negative quarter. What does that say about what is really going on in the global economy?
- Remark: If the Capital Asset Pricing Model theory (CAPM) is no longer valid, the only asset that should be increasing in value is gold.
- Coxe noted that as we get further into the fall season, there will be shift back to “bedrock” thinking, and a dismissal of the usual, now out-of-date indicators.
- Dollar General’s CEO commented recently that consumers are strapped with high fuel costs and high food costs.
- gold’s rally is a negative indicator for the economy in general, and it is the only indication that the CAPM, and as such, is not actually in a rally.
- banks have been using Bernanke’s money to buy back their own stock.
- Coxe remarked how rapidly markets rolled over following the official termination of QE2, however in reality it was due to the fact that global manufacturing hit a wall, with everyone cutting back in raw materials and inventory.
- Economists were raising estimates at the same time as The Journal of Commerce Index of Sensitive Industrial Materials dropped!
- Broader indices are now in sync with this, reflecting this reality.
- Coxe commented/refuted reports that Canadian banks are suffering from the same problems as the European banks, noting that the Canadian banks don’t have the exposure to high risk bonds that European banks have, and hence, under Basel II, European banks come our much weaker, and Canadian banks come out stronger, given they have more equity.
- Investors should be careful about exposure to equities.
- gold miners are very cheap relative to bullion
- out of 197 subgroups, Coxe remarked that Agricultural Chemicals were #1, and gold miners were #3 – therefore investors should be overweight Agriculturals.
- Corn will most likely be in a shortage this year due to the weather
- Corn and soybeans are most important in the context of animal protein.
- If the Keystone Pipeline suffers from serious delays, he does not hold out hope for the Obama administration, where the jobs outlook is concerned.

Question and Answer
Q: Is the Brazilian rate cut a canary in a coalmine?
A: Brazilian policy makers have a history of hyper-inflation, and the move is courageous. Brazil’s central bank is in a much better position, and they have garnered a great deal of respect.

Q: Thoughts on gold’s performance since the 70s?
A: In the past, miners were the only way to really play gold, and there were no ETFs then. In the past there were few profitable gold miners, prior to gold reaching $100/oz. and they enjoyed subsidies. He believes one group (hedge funds) have been arbitraging gold bullion via ETFs vs. gold miners. Gold miners are now for investors, no longer just a speculation. Coxe sees that miners are very cheap, and things are very different now vs. the 70s.

Q: What is considered cheap gold-in-the-ground, for a miner?
A: It depends on the deposit. If if costs $1,200, then $600 valuation for reserves in the ground would be attractive. Look at reserves and the increases that are happening. You get a free call option on gold reserves increasing in value as the price of gold increases, when you invest in “cheap” miners.

Q: Any comments on the off-book financing at Chinese banks, and what is the impact on those banks?
A: You can hide a lot of stuff when you have double-digit growth, but you’d better be virtuous if your growth is 0%. China’s growth is no longer in the double digits, but its still 4 times better than anywhere developed; their currency is very strong as a special factor and they have a 35% savings rate, and will likely be able to handle any problems that come as a result of these debts in question.

Q: What were the catalysts that caused narrowing between bullion and gold bullion ETFs in the past?
A: The impacts are 1) the existence of ETFs and 2) hedge funds. The existence of bullion ETFs has had the greatest impact. Recognition that any deposits located in dubious countries can come forward very fast – As we get down to 1 gram/ton of gold deposits, it becomes very complicated to calculate the bullion vs. gold equities question of narrowing. Hedge funds have been a wild card, using short term earnings, and don’t seem to understand gold equities, and as a result the gold stocks get smashed. Any minor disappointment on earnings will impact gold equities severely.

Jay Taylor: Turning Hard Times Into Good Times

The Prosecution of George W. Bush (or Whom?) for Murder

Eric Sprott: Financial Train Wreck Coming Soon! Got Gold? Better Yet, Got Silver?

Eric Sprott (www.sprott.com) and James Turk, Director of the GoldMoney Foundation, talk about how there isn't enough silver in the silver market to back existing "paper silver" commitments. Sprott thinks that "silver will be the investment of this decade".

They talk about the dynamics of the gold market and how it has entered the second phase of its bull market. They look at ETF, central bank and coin demand. They also look at the huge paper-to-physical mismatch. Eric calculates that only 0.75% of financial assets are currently in gold.

They discuss the importance of owning physical, not paper gold, and keeping it yourself or with a trustworthy company that gives you direct access to it. They talk about GATA and the significance of the work they do. They also talk about Sprott PHYS and PSLV and how they allow holders the option to redeem their physical metal, unlike most other ETFs.

They talk about fiat currencies and their flaws. The dollar, the euro and how bank leverage has built up since the Fed was established in 1913, setting the stage for a huge crash. Eric talks about bank failure Friday, the numbers released by the FDIC and all the signs pointing to the coming train wreck.

They talk about the attempts to prevent liquidation of bad assets and how governments are throwing good money after bad. Eric then talks about the 3 conditions that he thinks are necessary to see gold as overvalued, and how we are very far from that point at this stage. Both James and Eric see gold as reaching a parabolic phase before the bull market runs its course. They also comment on how little confidence most mining companies have in gold. This interview was recorded on August 4 2011 in London.

Eric Sprott is a shareholder of GoldMoney.

Money: How to Get It and Keep It

By Doug Casey, Casey Research

Even if you are already wealthy, some thought on this topic is worthwhile. What would you do if some act of God or of government, a catastrophic lawsuit or a really serious misjudgment took you back to Square One? One thing about a real depression is that everybody loses. As Richard Russell has quipped, the winners are those who lose the least. And as far as I’m concerned, the Greater Depression is looming, not just another cyclical downturn. You may find that, although you’re far ahead of your neighbors (you own precious metals, you’ve diversified internationally and you don’t believe much of what you hear from official sources), you’re still not as prepared as you’d like.

I think a good plan would be to approach the problem in four steps: Liquidate, Consolidate, Create and Speculate.

Step 1: Liquidate

Chances are high that you have too much “stuff.” Your garage, basement and attic are so full of possessions that you may be renting a storage unit for the overflow. That stuff is costing you money in storage cost, in depreciation and in the weight of psychological baggage. It’s limiting your options; it’s weighing you down. Get rid of it.

Right now it has a market value. Perhaps to a friend you can call. Or to a neighbor who might buy it if you have a yard sale. Or to some of the millions of people on eBay. A year from now, when we’re out of the eye of the financial hurricane and back into the storm, it will likely have much less value. But right now there’s a market. Even if most people are no longer wearing those “He who dies with the most toys, wins” T-shirts that were popular at the height of the boom, there are still buyers. But the general standard of living is dropping, and mass psychology is changing. In a year or two, you may find there aren’t any bids and the psychology of the country has changed radically. People will be desperate for cash, and they’ll all be cleaning out their storage units (partly because they can’t afford the rent on them).

Liquidate whatever you don’t actually need – clothes, furniture, tools, cars, bikes, collections, electronics, properties, you-name-it. You’ll be able to re-buy something like it, or better, cheaper. Just as important, you’ll feel light and mobile. Unburdened by a bunch of possessions that own you and weigh you down. It will definitely improve your psychology, which is critical to the next stage. And the cash it generates will be helpful for the rest of the plan.

Step 2: Consolidate

Take stock of your assets. After Step 1, that should be a lot easier, because you’ll have less junk but a lot more cash. You’ll already feel more in control and empowered. And definitely richer. But your main assets aren’t money or things. It’s the knowledge, skills and connections you possess. Take stock of them. What do you know? What can you do? Whom do you know? Make lists and think about these things, with an eye to maximizing their value.

If you’re light on knowledge, skills and connections, then do something about it – although if you’re reading this, you probably already live life in a way that builds all of those assets daily. But there’s always room for improvement. Think the Count of Monte Cristo. Or, if you’re not so classically oriented, think Sarah Connor after she met the Terminator.

Part of this process is to look at what you’re now doing. The chances are excellent there’s a better and more profitable allocation of your time. Even successful rock stars tend to reinvent themselves every few years. You don’t want to get stale. That leads to Step 3. (more)

The Misery Index: Measuring Your Misfortune

When the economy takes a tumble, economic prognosticators turn to the numbers, comparing the downturn to past recessions. The decline of major stock market indexes, such as the Dow Jones Industrial Average (DJIA) , the Standard and Poor's 500 and the Nasdaq are closely tracked. In addition, major economic indicators such as the unemployment rate and gross domestic product (GDP) are monitored and opined upon. While these indicators certainly provide insight to captains of industry and Wall Street titans, the Misery Index reflects the country's economic health through the lens of two items that matter most to those of us on Main Street: inflation and employment.

The Misery Index, created by economist Arthur Okun (and often incorrectly attributed to Robert Barro), is calculated by adding the inflation rate and the unemployment rate. Government statistics provide both numbers, with the yearly change in the Consumer Price Index (CPI) serving as half of the equation and the national unemployment rate serving as the other half.

The index is used to characterize the current economic condition. The main assumption in this index is that an increasing unemployment rate and high inflation have a negative impact on economic growth.

Fame In the 1970s
The Misery Index gained its fame in 1976 when Jimmy Carter disparaged his competitor for the oval office, Gerald Ford, by suggesting that no man responsible for giving the country a Misery Index as high as that seen during Ford's presidency had a right to even ask to be president. Four years later, the Misery Index topped 20 and set a high-water mark that still stands today. Carter was swept from office when Ronald Regan asked the American people: "Are you better off than you were four years ago?"

A Look Back at Misery

Year	Inflation Rate (%)	Unemployment Rate (%)	Misery Index
1973	6.16	4.86	11.02
1974	11.03	5.64	16.67
1975	9.20	8.48	17.68
1976	5.75	7.70	13.45
1977	6.50	7.05	13.55
1978	7.62	6.07	13.69
1979	11.22	5.85	17.07
1980	13.58	7.18	20.76

More Recently
The Misery Index declined in popularity after Reagan took office, largely disappearing from popular reference until 2008, when the credit crisis struck and unemployment rose. Suddenly, misery was back. Steadily climbing unemployment numbers and an uptick in inflation revived interest in tracking the nation's misery.

Misery's Return

Year	Inflation Rate	Unemployment Rate	Misery Index
2007	2.8%	4.6%	7.4
2008	3.8%	5.8%	9.6
Source: Bureau of Labor Statistics

How Bad Can It Get?
When unemployment is on the rise and the specter of inflation rears its ugly head, "how bad can it get?" becomes a popular question. While there is no definitive way to answer this question, there are some historical precedents to consider.

In 1980, the national inflation rate hit 13.58% when it peaked under Jimmy Carter. The Misery Index also peak in 1980, hitting 20.76 for the year. National unemployment peaked in 1982 at 9.71% under Ronald Regan.

The national statistics, however, are somewhat misleading. While they provide an average for the nation, they do not reflect reality at the more granular level. Consider that in early 2009 the unemployment rate in the state of California topped 10%. At an even more granular level, El Centro, California posted the highest unemployment rate in the nation at 22.6% in December, 2008 (more than double the 11.1% seen in Detroit, Michigan). By comparison, cities such as McKeesport, Pennsylvania saw unemployment hit 13.7% during the decline of the steel industry in the 1980s.

What You Can Do
While none of us can fix the economy or stop the ax from falling if our job is on the line, we can all take steps to prepare for the worst case scenario. Living within your means is the first step.

Once you have the spending under control, it's time to save. Take a look at Are You Living Too Close To The Edge? if a missed paycheck will make your finances collapse, and read Build Yourself An Emergency Fund for help determining if you have enough savings to cover the costs of unforeseen crises.

Planning ahead also comes into play when your job is on the line. If you must leave your job, The Layoff Payoff: A Severance Package will help you go out fighting for the best benefits you can get, and Taking The Lead In The Interview Dance will guide you as you learn the steps that will help lead you to a new career.

Andrew Maguire: LBMA Shorts Will be Forced to Take Losses

With gold trading near the $1,900 level and silver above $42, today King World News interviewed London Whistleblower Andrew Maguire. When asked about key developments in China regarding the Pan Asia Exchange Maguire stated, “Silver and this 11 kilo gold contract, international rolling spot contract, are the game-changers. This is not going to be welcomed by the naked short LBMA bullion banks. These are competing contracts, but the difference is they are 100% backed by physical metal. That means that this metal will have to be purchased one to one as these contracts open, and not just listed as a paper entry (as the LBMA does in many cases).”

Andrew Maguire continues: Read More @ KingWorldNews.com

Three Things I'm Teaching My Children About Wealth

Ellen: Hi, Tom. So, today I want to go over some basics of finance.

Tom: What’s on your mind?

Ellen: As you know, I read all the emails our readers send us. We get so many letters from people who don’t know the first thing about investing. It got me thinking about what kind of basic advice you’d give to a total novice.

Tom: Like what I’d teach my kids?

Ellen: Yeah. Like what are the first three ideas about wealth you’ll instill in your kids?

Tom: I’ve given a lot of thought to that actually, even though my kids are still babies. The very first thing that I want my kids to know is that they are not entitled to money or wealth or anything for that matter, even Christmas presents. They’ll have to earn it. So many people these days think money is an entitlement. You see it every day in the news. But you also see it on the family level. Kids act as if they are somehow entitled to food, toys, video games, and even a roof over their heads. But why should they be? Just because they have parents, it doesn’t mean they should get everything they want…or anything at all for that matter.

So first of all, I’m not going to pay my kids an allowance.

Ellen: Why not?

Tom: Because an allowance would reinforce the sense of entitlement. They can make money by earning it: doing the dishes, making the bed, mowing the lawn...there are a million things. And my wife and I will pay them generously for doing those things. But I’m not going to just give them money.

Ellen: Okay, so are you going to charge them rent, too?

Tom: That’s not a bad idea.

Ellen: Okay, so what comes next?

Tom: The second thing that I want them to learn is the power of compound interest. Just to explain compound interest, let’s take, for example, $100 at 10% interest. At the end of a year, you’ll have $110. During the second year, you’ll earn interest on $110 instead of $100. In the third year, you’ll earn interest on $121…and so on. The numbers get enormous over time, simply because you’re earning interest on your interest.

It’s the only mathematically-certain way I know of to produce a fortune. And because time is the most important element in compounding, it’s an incredibly powerful idea for children to understand.

So, as soon as they’re old enough to understand some arithmetic, I am going to sit down with the classic compounding tables and show them how it works. After that, assuming they have the discipline to follow through, they will get rich. There’s no doubt about it.

But, on the flip side, I’ll also show them that compounding works on debt as well—which is why I hate debt. When you owe money, it compounds because you owe interest. That accumulates on top of the original debt. The debt balloons.

There are two types of people in this world: people who pay interest, and people who receive it. I’m of the latter. I have no debt, no mortgage, no credit cards, and no car payments. And I want it to stay that way.

Ellen: Wow, that’s pretty impressive.

Tom: I don’t believe in spending money that I don’t have. Debt is an expensive indulgence.

That’s the next thing I am going to teach my kids: when you’re pondering a debt, instead of looking at the interest rate (like I think everyone does), you should look at the total amount of interest you will have to pay in dollars over the lifetime of the loan. Once you look at it like that, it suddenly hits you how expensive borrowing money really is.

For example, say you borrow $100,000 with a thirty-year mortgage at 7%. Over thirty years, you'll end up paying $140,000 in interest to the bank. In the end, you’re out $240,000 for a house that cost less than half that. Not a good deal.

Ellen: Okay, but what if you don’t have $100,000 lying around?

Tom: You rent. If you don’t have the money to buy a house, you shouldn’t be buying one. That's the way it is in almost every other country in the world.

Ellen: So are you going to tell your kids that they should, under no circumstances, borrow money?

Tom: The only reason I’d ever use debt is to finance a business or a productive asset. And, I’d only do it if the asset generated a greater return than the debt cost. You could argue a house is a productive asset because it does produce rent if someone lives in it (so I can see how, in that case, a mortgage might make sense). But, I would still never incur debt to finance anything except a business.

Ellen: Anything else to add?

Tom: May I recommend a book?

Ellen: Sure.

Tom: Richard Maybury wrote the best books on finance for beginners I know of. He calls it the Uncle Eric Series. Each book is a collection of letters to his imaginary thirteen-year-old nephew. The whole series is great. It covers history, politics, economics, and law. For finance, I’d recommend Personal, Career, and Financial Security and Whatever Happened to Penny Candy?

Ellen: Thanks, Tom.