Stock Buybacks: An Investor's Friend or Foe?

I’m betting you’ve reined in your spending during the recent economic recession and the continuing uncertainty that still plagues global economies. Our household certainly has! But even with the reduction in consumer spending in the past few years, it’s a sad fact that most households have seen their net worth fall. According to the Federal Reserve, during the third quarter of this year, Americans saw their net worth decline about $2.4 trillion—primarily due to dropping values in our homes as well as in our investments.

But on the corporate front, things are much brighter …

Taiwan: Almost Ready for Prime Time!

When I was growing up, the “Made in Taiwan” stamp was a reason for derision, as it denoted inferior quality goods, but those initial exports—which began stepping up in the 60’s—set the stage for the Taiwan of today—a growing economy, fueled by advancements in technology.

While China garners most of the attention of investors interested in cashing in on the tremendous growth that Asia has seen in the past few decades, investors would be amiss not to recognize the growing importance of Taiwan on the word stage.

As I’ve pointed out in recent articlesSurprising Places for 2012 Investing: Paraguay | InvestorPlace, in 2010, Taiwan was the fourth fastest-growing economy in the world, with a GDP improvement of 10.8%. The slow global recovery took a bite out of that expansion this year, but Taiwan’s GDP growth is still estimated to come in at about 4.5%, followed by a 4.2% increase next year.

Qatar—Not yet an Investor’s Dream

Qatar is mostly surrounded by the Persian Gulf and has only one land border—Saudi Arabia. The country is an absolute monarchy, ruled by the Al Thani family since the mid-19th century. In geographic size, Qatar may be small—166^th in the world—but its vast energy reserves pack a huge wallop, economically.

As I mentioned in last week’s column, Surprising Places for 2012 Investing: Paraguay | InvestorPlace, according to the CIA World Factbook CIA - The World Factbook, the state of Qatar’s growth in Gross Domestic Product (GDP) led the world in 2010. And its GDP per capital—at $179,000—also ranks number one.

Expanding by 16.3%, Qatar’s economy is “fueled” by oil and gas, amounting to 50% of GDP, approximately 85% of the country’s export income, and about 70% of the state of Qatar’s government revenues. Qatar has proven oil reserves of 25 billion barrels, which are expected to last at current output levels for more than half a century. And its natural gas reserves make up 14% of the globe’s reserves—the third largest in the world, after Russia and Iran. Qatar continues to invest heavily in energy, with estimates for the next decade ranging around $120 billion.

GDP Growth Hot Spots: Some Surprising Ideas for 2012 Investing

The CIA World Factbook CIA - The World Factbook was recently updated with 2010 estimates of Gross Domestic Product (GDP) growth rates for countries around the world. In case you’re interested, the U.S. is ranked number 127, with an estimated 2.8% GDP growth for 2010.

According to the list, these are the six countries  whose GDP growth is outpacing the rest of the globe:

Country	2010 GDP Growth Estimate (%)	Largest GDP Sector (%)
Qatar	16.3	Industry-71.8
Paraguay	15.3	Services-53.9
Singapore	14.5	Services-71.7
Taiwan	10.8	Services-67.5
India	10.4	Services-54.7
China	10.3	Services-43.0

Tax Tips for Year-End

Don and I had dinner with a newly-widowed friend last week. She has a great job and, fortunately, she and her husband were excellent financial planners, so that gives her some degree of comfort during a very stressful time.

But the shock of her husband’s death was just beginning to settle in when her financial advisor threw her into another tailspin: Beginning next year, she’s going to be paying more money in taxes now that she is “newly single”! It’s not something that had even crossed her mind, but it will cost her quite a bit, unless she takes some steps to minimize 2012’s tax bite.

Thankfully, she has a good financial planner! And while many of us do consult financial advisors, many more folks are self-advised. That means that you have to take charge and make the right moves to prepare your finances for the year ahead.

What’s Europe Got to do with It?

My partner, Don, is a really good investor. He began saving money as a child, with his first job, a paper route. And over the years, he has actively participated in his previous companies’ 401k plans, and later, his self-administered IRA.

Today, he is a successful, self-taught, investor, focusing his investments on fundamentally strong companies in growing industries. He has never worried too much about market volatility or cycles, since he was investing for the long-term—until now.

Lately, he’s been on a tear, ranting about the incredible volatility that U.S. markets have been experiencing, as a result of the European debt crisis—and how that volatility is impacting his portfolio. He plainly states, “I don’t care about Europe, and even less about Greece, and I don’t understand why what goes on 5,700 miles away can so violently disrupt our markets!”

I hate to be the bearer of bad news, but I told him, “get used to it!”

Just as the old “buy and hold” strategy for investing has gone the way of dinosaurs, investors must realize that expecting the U.S. stock markets to continue behaving as if we are the only game in town is also an extinct proposition.

Take Charge of your Financial Future!

I’ll have a lot to say tomorrow about the “Santa Clause Rally” that the markets have recently been experiencing, Europe’s role in it, and my projections for its sustainability, but today I want to begin my weekly “Financial Fitness” column.

Once a week, I intend to discuss financial planning with you. Now, before you get that dazed look in your eyes, consider these old adages, which I think do a great job of summing up the initial stages of financial planning: “Those who fail to plan, plan to fail”; “Pay yourself first”; “Time is on your side”; and “Don’t throw free money away”.

You may not want to believe them, but I can give you scores of examples of why they work.

And I’m going to address each of them in the next few weeks. But today I want to talk about a couple of friends and business acquaintances who have recently shared their personal stories with me, whose situations are a lot more common then you may think: Middle-aged and not much money stowed away for retirement.