Isolde Brielmaier

Born to Austrian and Ugandan parents in Seattle, Isolde Brielmaier always had a strong understanding of various cultures. First falling in love with dance and attending a public school where the arts were heavily integrated into the everyday curriculum, she got the artistic bug early. “I danced very seriously through my early 20s,” Brielmaier says, “and always tried to balance that with being a good student.” But while attending high school in Germany, the long-term performer decided she no longer had an interest in pursuing dance full-time. Instead, she chose to become a full-time student of history and sociology at New York’s Columbia University and spent her spare time at the Dance Theater of Harlem and Alvin Ailey’s dance studio. However, it was her courses in art history that would become a major component in her life and career.

Curating small exhibitions in the SoHo section of New York, Brielmaier was eventually asked to teach at Vassar University. What was supposed to be a one-time thing turned into a five-year career as a visiting professor. In the past, Brielmaier advised athletes and entertainers in purchasing contemporary art, but she now operates as the as the chief curator of SCAD (Savannah College of Art and Design). Today she also curates international art exhibitions in the SCAD community and beyond. BlackEnterprise.com sat down with the art guru who broke down the top five things to consider when looking to break into the world of art.

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Support What You Love: Black Culture
Understanding the importance of artistic expression in the Black community, Brielmaier describes the No. 1 way people of color to invest in and give back to the arts is by supporting the culture. “[SCAD] does a lot of outreach not only to our own students, but to the broader community living in classes that might not have full-blown art programs and access to the kind of work we have,” she says. “We have the Walter O. Evans [collection]; it’s one of the top African-American art collections in the country. I’ve come in on my weekends to take students through. You’re building little art enthusiasts in a way.”

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Don’t Just Buy, Give Back

Noting that museums are not the only place where art lives, Brielmaier explains the importance of understanding the impact of art institutions, and the to support both monetarily and physically—just as anyone would do with their alma mater. “Institutions are not getting the financial support that they were getting [before] the economy [was] really rough,” she says. “And by that, I mean support our cultural institutions. If you have the means and the time, join a board, and if not, go to an institution and inquire if they have a young contemporaries group or a young collectors group. It’s a great way to meet people; to build a community in the arts; and really get in on the backend and see behind-the-scenes. I think is key. It’s a great way to start moving into other realms of art if you’re interested in investing.”

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Get to Know Experts in the Art World

Driving home the relevance of getting involved with an institution or art group, Brielmaier reiterates the need to know an institution and the benefits offered when doing so. “When you’re just starting out, joining a museum or a young collectors group is one of the best ways to go: A) You get invited to all their events, including their exhibitions and all of their openings and B) You’re also in the mix with people of like mind where information starts getting exchanged,” she says. “You also get to go to events and exhibitions where artists attend. You can work with an art advisor or art consultant, and they can open up their Rolodex and take you to galleries and set up appointments and they will assist you with successfully purchasing the work. And they’ll buy the work for you with your money.”

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Only Buy What You Love

There’s a big difference between a piece that’s worth $400 and $40,000 besides the price, but that can be hard to determine for a novice. That’s why Brielmaier stresses the importance of being knowledgeable about what you’re buying and why. “If you spend a lot of time collecting, it’s really nice if you like the work,” she says. “That’s hard for [people] in business to wrap their head around because they want to know, ‘Well, what’s the return on the dollar here,’ and oftentimes if you’re talking about a blue chip artist like an Andy Warhol, you don’t know, especially with some of these younger contemporary artists.” Brielmaier suggests researching an artist from exhibition history to where he/she went to school before making a purchase. But ultimately, “Go with what you like. It has to have that appeal to you, particularly because it’s going on your wall.”

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Know a Bad Investment When You See One

Brielmaier notes that it would be hard for any one person to say one art purchase is worse than another because all purchases are not based on ROI (return on investment). “I don’t want to say what’s a bad investment,” she says, “but what I would not recommend is jumping blindly into something, particularly if you’re talking about purchasing a work that’s very valuable.” Hesitant to ever tell anybody what not to buy, Brielmaier continues, “If it’s $400, to some people that’s a lot of [money] but when you start getting into really high [numbers] ask around. Look at the work, don’t just look at that work by the artist but look at the range of work to see if there’s some kind of continuity. And think about buying from a reputable gallery or someone who’s reputable—it could be an individual—but someone who has a history and relationship and has a reputation. Cover as many bases as you can before you take the plunge.”

In 2012, Gilbert expects to see positive moves in Europe and in U.S. employment and the housing market. “I’m looking for modest, single-digit appreciation in the stock market after a flat-to-down 2011. Interest rates are still low and earnings are continuing to grow—giving stocks a more attractive valuation,” he says. Gilbert says Europe’s recovery is uncertain, but policymakers are making progress. He sees the recent strong U.S. growth continuing to increase employment and predicts that the housing market will touch bottom this year.

All this, he says, can assist market stabilization. A manager of Integrity’s Munder Veracity Small-Cap Value A fund (VSCVX), Gilbert says, “Stocks offer a better risk/reward vis-à-vis bonds—in particular, the small- and mid-cap stocks that are more exposed to domestic growth.” He offers black enterprise three of his top company picks.

GENESEE & WYOMING Inc. (GWR) is a shortline and regional freight railroad company that has been acquiring railroads in Australia and North America. GWI has grown its earnings by making purchases that boost its network and lower operating costs. The Greenwich, Connecticut-based business derives 33% of its $829 million in operating revenues from Australia, where GWI transports raw materials from the continent’s interior to ships headed to China. Although China’s growth has slowed, Gilbert says demand for material provides a tailwind for GWI earnings.
STOCK PRICE $57.31  •  P/E: 16.12

DANA HOLDING CORP. (DAN) is a $7.2 billion global leader in supplying axles, driveshaft, and heat-exchange and thermal bypass technologies. Gilbert says the company is benefiting from increased demand for big trucks such as Chevrolet Kodiaks, Ford F-350s, and tractor trailers. The weak economy of recent years had stifled demand, but now the mix of accelerated depreciation tax changes and greater economic activity has lifted the company’s production schedule to meet orders. Gilbert notes that Dana’s CEO has paid down debt. If consumers buy more SUVs, as they’re projected to, Dana’s earnings may increase 15%, says Gilbert.
STOCK PRICE $15.17  •  P/E: 6.61

RYLAND GROUP (RYL) is a leading $797 million market capitalization homebuilding company. The NAHB/Wells Fargo Housing Market Index has risen to its highest level since June 2007, and housing inventories are down from 10 months of sales to a more normal six. Gilbert says this shows that more consumers prefer a 4%, 30-year mortgage over rental housing. He acknowledges that housing is regional but says that, on the aggregate, home prices have reached a plateau. Ryland projects orders growing about 15% and regaining profitability. In 2011, Ryland’s net loss was $29.9 million. To halt declines, the company has left underperforming markets and is now focusing on communities in the mid-Atlantic and in Southern California, where it’s headquartered. Gilbert says these moves may allow margins to double this year.
STOCK PRICE $16.88  •  P/E: 15.08

Conventional wisdom questioned how stocks could be so high when the economy was still widely perceived to be in a funk. In my opinion, the real wonder was why stocks hadn’t already gone to new highs—because the economy was already well on its way.

You read that statement correctly. Despite all the headlines and the real problems we have—unemployment, the European debt debacle, the housing crisis—the U.S. produced more wealth last year than ever before. First we’ll put numbers to the story and then examine why stocks and the economy aren’t always in sync.

Let’s focus on the economy and stocks over the last five years. The size of an economy is measured by its gross domestic product—the market value of all the goods and services it produces in a year. In 2006, the GDP of the United States was $13.3 trillion. Last year it set a record, an estimated $14.8 trillion. Over that five-year period, GDP cumulatively grew approximately 11%, but it never changed more than 5% in any one of those years and fell only once—a 1.7% drop in 2009. The stock market, represented by the Standard & Poor’s 500 Index, told a very different story. Since the end of 2006, the S&P 500 has been flat for the whole period, but made massive shifts in-between. In three of the five years, it posted double-digit moves, losing 37.0% in 2008, gaining 26.5% in 2009, and rising 15.1% in 2010.

So that’s the conundrum: If the economy and stock market are connected, how can one go up fairly smoothly more than 10% over a half-decade, while the other jumps all over the place but ends up going nowhere? After all, when you buy stock in a company you hold the right to the profits the business generates. And the S&P 500 Index does contain 500 of America’s biggest businesses—so if the economy is doing well, those companies are, too.

But as legendary value investor Ben Graham wrote in The Intelligent Investor (Collins Business; $21.99): “The stock market is a voting machine rather than a weighing machine. It responds to factual data not directly, but only as they affect the decisions of buyers and sellers.” His point is not that the market only tracks sentiment—fundamentals will win out over the long term. In the short term, however, stocks are heavily influenced by emotion, opinion, and so forth. So while a mature economy like ours rarely grows or shrinks more than a few percentage points a year, the stock market often makes double-digit moves.

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We can clearly see this relationship in the 2007–2009 bear market and subsequent recovery. During the Great Recession the economy contracted 5% while the bear market saw the S&P 500 Index fall 10 times that. Yes, some of that fall resulted from rational investors adjusting their estimates of business growth. But a lot of the drop was simply the result of panic—people selling falling stocks out of fear that they would fall further. In recovering from this overdone fall, stocks have more than doubled.

What does this mean to you, the individual investor? First, when you invest, stay focused.  If you’re buying a piece of a business, concentrate on whether the business continues to be profitable and grow—not on whether the stock is up or down over a week, month, or year.  Second, keep your emotions from being influenced by market behavior. If the market is up or down a lot, take a peek at GDP. If the national economy has only gone down 2%, does a market drop of 25% say more about the economy or about the psychology of the typical investor? And, as always, remember the long term. Over decades businesses tend to grow and the economy tends to expand, so for most investors it makes more sense to buy than sell when the business cycle temporarily contracts.

Bluntly stated, we are driving in reverse. The yawning wealth gap between African Americans and our white counterparts has grown to its widest level in more than 25 years. Today, white households, on average, have a net worth 20 times that of African Americans; in 1984, that ratio was 12 to 1. What does that mean in dollars? The typical black household has roughly $5,700 in wealth compared with about $113,000 for the typical white household. Moreover, more than a third of our households have zero or negative net worth versus about 15% for whites.

It’s time to shift gears. I truly believe young people hold the best chance for getting on the road to building significant wealth and, in turn, sustaining this process to pass it on to future generations. It’s sad to say that many of my contemporaries have engaged in freewheeling spending, made a meager attempt at investing, and failed to protect their assets—placing them and their families in a financial hole that will take years, if not decades, to climb out. You, however, can avoid similar pitfalls.

First, realize the difference between wealth and income. It may sound rudimentary, but many of us confuse the definition of net worth—what you own (assets such as your home, savings and checking accounts, and stocks and mutual funds) minus what you owe (liabilities such as your mortgage, auto loans, and credit card debt)—with wages and  earnings. Depending on how finances are managed, many professionals with six-figure incomes can—and do—have a negative net worth.

Second, change your behavior. Despite a financial crisis, a recession, and a weak recovery over the past few years, some still have yet to learn the harsh lessons that come with conspicuous consumption. In fact, a friend of my son tried to convince me that waiting several hours to buy a pair of $180 Air Jordan XI Concords—you know, the sneaker frenzy that resulted in violence and arrests—was actually a good investment. He told me how reselling “the kicks” would eventually produce a tidy profit of $50. I quickly shared with him the value of an investment with a much greater long-term return for his 200 bucks: 10 shares of GE stock with reinvested dividends.

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Ostentatious living is not the path to building lasting wealth. Last time I checked you can’t use a diamond medallion for a down payment on a home. I have yet to find any institution of higher learning that accepts a pair of retro Air Jordans for tuition. And just try to deposit a set of $5,000 rims as investment capital. Bottom line: Trying to design a future through voracious consumerism or absentee investing is sheer madness.

Instead of purchasing such quickly depreciating assets, learn this four-letter word: Save. Through focused, long-term investing you’ll benefit from the power of compounding and as a result, your money will grow exponentially. But you must stick with it. Those who pull their money in and out of the stock market due to volatility tend to produce real capital losses while others who sit on the sidelines realize zero capital gains. Just look at the activity of the Dow Jones industrial average over the past few years: On March 6, 2009, the index fell to 6, 547, at the time a 12-year low; exactly three years later, the index closed around 13,000, a four-year high. To further make the case for intelligent investing, on that same day in 2009, you could have purchased a single share of Apple stock at $86; three years later that same share of Apple was trading at $542—a 530% return.

My message is clear: Delay immediate gratification so that you can maximize your future. Use your greatest competitive advantage to gain wealth: time.

So, in September 2010, Tucker opened a ShareBuilder.com account and began investing $50 a month in individual stocks and bonds, including Standard & Poor’s depositary receipts and iShares Barclays Aggregate Bond Fund. Her contributions now total $200 per month and her online account is valued around $3,000.

A novice investor, Tucker used the first six to eight months to get comfortable with making buy-and-sell decisions, relying on tools such as a profile-analysis feature that helped determine her risk tolerance. “They asked about my goals and how risk averse I was,” she says. ShareBuilder (a service of ING Direct) then gave her investment suggestions. By getting a feel for what makes the market move and how to use ShareBuilder to track high-performing securities, Tucker says her comfort level has increased substantially.

Like Tucker, many people think they don’t have enough money or knowledge to invest, but that’s often not the case. “An online platform will usually provide you with a lower cost or fee structure than would a full-service brokerage firm,” says M. Camille Winfrey, a financial solutions adviser with Merrill Edge, an self-directed online investing platform owned by Bank of America Merrill Lynch.

Moreover, online solutions typically provide access to extensive research and analysis, as well as tools to help you determine when to buy and sell.

In just four years, they have paid off all but about $6,000 on their two-bedroom condo in Hinesville, Georgia. “Growing up we always knew the importance of owning versus renting,” Brian says. “We talk about growing our net worth, and paying off our condo is a beginning for us.”

In the U.S. Army, Brian was deployed to Iraq for a year soon after he and Robin wed in 2006. “I didn’t have any bills over there so my $4,000 monthly pay and living allowance could be saved easily,” says Brian, who, after completing his military duty, returned home with $30,000. The couple used $11,000 of that for the down payment on their $54,000 condo. Over the last four years they’ve been disciplined enough to live mostly on Robin’s $37,000 salary as a customer service team leader at a water treatment company. They’ve applied Brian’s military stipends to their mortgage principal. Their mortgage and association dues come to $560 a month.

Brian now earns $27,000 as a corrections officer for the State of Georgia. The McLeans are expecting their final military lump sum payment of $6,000 this spring and plan to pay off the balance on their condo.

“We will pay it off this month and move on to bigger and better things,” says Brian, who with his wife is looking to upgrade to a single-family home for which they’ve set a budget of $125,000. They plan to rent out their condo and take out a Veterans Affairs loan that requires 3% or less for a down payment.

The McLeans have only $8,400 in savings. They also have $6,600 in student loan debt from Robin’s education at Georgia Southern University that she pays $110 toward each month. They have $7,500 in credit card debt, toward which they pay $220 each month (Brian, $150; Robin, $70). “Our financial challenges deal mostly with debt,” says Brian.

The couple’s long-term goal beyond homeownership is to save $30,000 toward their 5-year-old daughter Autumn’s college education. The State of Georgia currently offers scholarships to residents who attend school in-state, but Robin isn’t depending on one. “You had to get a 3.0 GPA when I graduated, but now the new governor has raised it to 3.7 [for a full scholarship]. So it will be harder for her,” she says.

The couple hasn’t given much thought to retirement planning. Brian just began his job in June and contributes 1% of his salary to his 401(k). Robin has been on her job for five years and had not thought about retirement planning before speaking to the financial planner for this contest. “I could kick myself now for not contributing,” she says. Her job matches up to 5%.

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The Advice
Black Enterprise and Millicent Eubanks, associate vice president–investments at Wells Fargo Advisors in McLean, Virginia, offer this advice:

• Stop making extra payments on the mortgage. By paying off their condo now they are just shifting liquid assets (cash) to real estate assets, but not earning anything. “For those who use real estate as a primary means of building wealth, if something happens, the real estate isn’t liquid,” cautions Eubanks. The McLeans should use the $6,000 they’ve earmarked for paying off the condo to eliminate their credit card debt instead. “Paying off credit cards will increase monthly cash flow, making more money available for savings to create a stronger financial position,” Eubanks explains.

• Start saving systematically. The McLeans should wait at least a year before they look to purchase a new home. In the meantime, they should build a larger cash reserve to cover a suitable emergency fund (six months’ worth of expenses) and also a down payment. The McLeans have become accustomed to stashing lump sums of money. That will stop now that Brian is out of the military. The couple needs to discipline themselves to save from their income. “It will be important to start with an amount they can sustain,” says Eubanks. “The habit is more important than the dollar amount.” The McLeans should put the $2,000 winnings from the contest toward their cash reserve as well.

• Begin making retirement contributions immediately. Brian’s employer matches 50% of a 2% to 5% contribution; Robin’s employer offers a 5% match. “Right now, they’re leaving money on the table,” says Eubanks. “There is well over $2,000 a year available to them that they are not getting.” If they invested up to their match amounts, in 10 years at a conservative 5% rate of return, they could have more than $50,000 in their combined accounts. By retirement age, this strategy could amass more than $700,000 in their nest egg.

• Seek ongoing professional help. “The great disadvantage of the DIY [do-it-yourself] strategy is that it requires people to be very knowledgeable about the subject matter at hand,” says Eubanks. “Most very wealthy people have a team of professionals who advise them on a range of issues related to building, protecting, and transferring wealth. It is especially important for the McLeans to establish relationships with a CPA and an attorney.” Eubanks notes that, had they been working with a certified public accountant, they might have been informed about the tax benefits of keeping a mortgage. Since they have a minor child, the McLeans should hire an attorney and draft a will and estate planning documents.  They need to have not only the basics in place (will, power of attorney, living will) but also to make decisions about who would care for their daughter if they were unable to. They can choose one person to manage the physical custody of the child and another to manage the financial assets.

• Protect your family through the use of additional life insurance. With the addition of the new home, the McLeans should be looking to have life insurance that would pay a death benefit that would pay off the mortgage, educate their daughter, and provide supplemental income to the surviving spouse. Based on their age and financial situation, term insurance probably offers the best solution. The cost associated with obtaining adequate coverage is less than $80 per month (given that they qualify as a “preferred risk”). 

One professional seeks to turn this popular craze into productive (and lucrative) lessons on investing, promoting financial literacy among those who love sports and brackets. Robert Wilson, vice president at Blazer Capital Management L.L.C, has created March Money Madness, an investing-focused game that allows players to put stocks head to head.

BlackEnterprise.com caught up with Wilson on how he linked a love of sports with advocating financial literacy, how his celebrity sports clientele inspired his idea and how youth can learn more about investing in creative ways.

BlackEnterprise.com: What inspired you to create the March Money Madness?

Robert Wilson: In my financial advisory practice, I work with professional athletes and entertainers. I also speak to kids a lot about financial topics, but I found that all they wanted to talk about were my celebrity clients. Instead of pushing back on that, I decided to fight fire with fire by trying to find a way to leverage their interest in sports and entertainment to teach them about important financial topics.

That’s how March Money Madness was born. I developed the game in an effort to leverage the popularity of the NCAA basketball tournament and brackets that so many people fill out before the tournament. It’s estimated that 40 million people fill out at least one bracket for March Madness, so I felt as though there was a huge interest that I could play off of.

How exactly does March Money Madness work?

Players sign up for the bracket challenge and pay a $5 entry fee. The top prize this year is 50% of the entry fees, so the more people play, the more the winner can take home. I have an ambitious goal to educate 100,000 people this year. If 100,000 people join the challenge, someone can walk away with $250,000 to pay off debt, go to school or start the business of their dreams.

After each round, the players receive an e-mail and video recap of the market action from the week including an analysis on why each particular stock won (or lost) its match-up and the factors that led to the outcome.

Today, the list and pairings of the 64 stocks included in the challenge will be announced, and players can begin making their picks.

Players must make their picks for the first round by 9:30 a.m. (the time the stock market opens) on March 12.

The challenge works in a round-by-round format. This means players make their picks for each round, rather than picking the winners for the entire tournament up front. This allows players who didn’t have many correct picks the first round, for example, to still be engaged in the competition since their entire bracket will not be ruined by a bad first round. Because points increase for each round, anyone can win.

To further explain this: Let’s say two first-round match ups were Apple vs. Microsoft and Google vs. Yahoo, and the winners of these two match-ups will play in the second round. You picked Microsoft and Yahoo to win their first round games, however, Apple and Google were the actual winners. You would get no points for your incorrect picks for those first round games, but because the game is in a round-by-round format, you can pick between Apple and Google for the second round match-up. If you had to make all of your picks for the entire tournament up front, you would not have an opportunity to get points on this second round match-up because neither team that you picked in round 1, made it to round 2.

Note: Players do not actually “buy” stocks in their account with March Money Madness.

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Robert Wilson, creator of March Money Madness

What types of stocks are included in this and how are the match-ups chosen?

The bracket is broken down into four sectors: technology, financial, consumer, and industrial. Sixteen stocks from each sector are chosen for the competition. I choose the stocks in an effort to have some that are widely familiar to people (Nike, Apple, General Electric, etc.) mixed in with a few stocks that are less familiar and will require research. (See the entire list of 64 stocks from last year’s bracket here.)

How does one choose which stock will do better than the other?

This is what makes the game challenging and fun! Just like the games in the NCAA tournament, the outcome of these short-term match-ups are somewhat unpredictable, but doing your homework will help you make an educated prediction.

For example, if a company is releasing their quarterly earnings during one of the rounds and you expect that they will beat estimates, then you probably want to pick that stock because its price will likely go up.

If there are negative news stories affecting a company, then you may not want to pick that stock, as the news will likely negatively affect the stock price.

What can people learn about investing from March Money Madness?

What’s great about the competition is that you can test out your hypotheses about what makes stock prices move in the real market, and this experience can help you become a better investor.

After playing the game, players should be able to:

—Read and understand stock market information in the newspaper (USA Today, local paper, etc)

—Know where to go to find information on the market (Black Enterprise, WSJ, Barrons, Smartmoney)

—Know how to research past stock prices (Google Finance, Yahoo Finance, Morningstar)

—Understand issues that affect stock prices (revenue, earnings announcements, interest rates, unemployment reports, etc.)

—Gain a comfort level with the movement of stocks in the market (less fear of investing)
Know where to go to open an brokerage account if they want to start investing.

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What’s your response for people who might liken this to gambling?

Some people feel as though the stock market in general is like gambling. However, your odds making money on your investments are much better than your odds of winning at the casino, especially when you do your homework and research the stocks that you want to invest in.

I don’t view this challenge as gambling at all. People join the challenge because they want to learn about the market, or they have some level of knowledge of the market and want to test their ability. This is no different than someone going to buy a book at Barnes and Noble because they want to learn about investing. I’ve just turned a traditionally boring subject, into a fun, educational, social experience and have given individuals an incentive to learn by providing prizes.

You did this last year. What was the outcome for the winners?

Many people who have played the game in the past knew nothing about the stock market.  Joining the challenge pushed them to read the Wall Street Journal and other financial publications and Websites in order to do the research needed to make their picks. They began watching the market and gained some level of comfort with seeing stocks go up and go down. Ultimately many of them decided to open brokerage accounts with eTrade, Schwab and other firms to start investing in the market with real money.

How does social media play a role in promoting, marketing, and participation in MMM?

Absolutely! I am using Facebook, Twitter and e-mail marketing to help reach my goal of 100,000 players. Since I’ve created an incentive where the more people play, the more the winner can take home, there is an inherent incentive to share information on the challenge and to get friends to play along with you. I will also be partnering with a few individuals with large social media followings by making them “VIP Players” in the challenge that folks can match wits with and compare scores. For example, author and businessman Gary Vaynerchuk (@garyvee) has close to 1 million followers on Twitter and he will be a VIP player in the game that individuals can play against. His inclusion in the game and promotion of it via his social media accounts should help with the popularity of the game.

Games have become inherently social, and I hope that MMM is no different. Because people can form groups to play against their friends, my aim is to create a social experience where people can learn about the market together and encourage each other to become more knowledgeable about their finances.

Dameon Proctor isn’t one of them. Proctor hopped on the bullion express two years ago. The 35-year-old information technology consultant in Washington, D.C., who just completed his M.B.A. in finance at Johns Hopkins University, says he was persuaded to buy gold after he examined its historical value. “I talked with two friends about gold, and it seemed to make sense in the aftermath of 2008.” Proctor moved 25% of his IRA portfolio into shares of the SPDR Gold Trust ETF (GLD), which stockpiles bullion.

Proctor is quick to point out that he is a very moderate investor, rarely touching his 401(k) account allocations. But when it comes to his IRA and ShareBuilder accounts, valued at $8,000 and $5,000, respectively, he has a higher risk tolerance and is a more active trader. He uses analytical tools and resources such as Investors.com to screen his stock picks. Until very recently he regularly added to his gold position with monthly $100 purchases using ShareBuilder, an online stock trading account. He is currently researching and mining his next prospect. To date, he has $4,000 in total invested in gold.

Indeed, in the last few years, gold bugs have had the upper hand. Gold reached a high of $1,921 per ounce in September; moreover, it’s been increasing in value for more than 10 years.

Demand for gold increases when investors are worried, especially that the dollar and other major currencies may fall in value. So, it comes as no surprise that a series of shocks—the 2008 crash and concerns about massive budget deficits and the possibility of inflation in the U.S. and other large Western economies—have contributed to gold’s recent run.

But that’s not to say that the gold ride has glided along smoothly in one direction alone. In September 2011, the price of gold tumbled 11%.

Certified financial planner and chartered financial consultant Ivory Johnson remains bullish on gold when it comes to his clients. “The U.S. budget deficit, the euro crisis—there are several reasons why investors have to plan for the possibility of additional volatility going forward,” says Johnson, director of financial planning at Annapolis, Maryland-based Scarborough Capital Management, a wealth management firm managing more than $1 billion in assets. “If that comes to pass, you want some assurance in the form of hard assets that won’t lose value like paper currency.”

Johnson, who is one of the friends Proctor consulted, believes that gold should be part of a well-diversified portfolio of investments—stocks, REITs, and mutual funds—spread across various sectors. He currently recommends that his clients place roughly 20% of their portfolios in gold because of the debt crisis in Europe and the possible political impasse regarding the U.S. government’s debt. He says that investors with a higher risk tolerance should keep an eye on gold and other precious metals.

Naysayers see it differently. “Because it’s close to impossible to put a value on gold, it’s difficult to say what role gold should play in a portfolio,” says Christine Benz, director of personal finance for Morningstar, the Chicago-based mutual funds research firm. “I don’t think gold is a ‘must-own’ for most portfolios. To the extent that investors own gold, I’d probably rather see them do it within the context of a broader commodities investment.”

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For this reason, Benz says one option is the iPath DJ-UBS Commodity Index TR ETN (DJP), which spreads its assets across a basket of other commodities—oil, copper, and corn—in order to track global markets for natural resources and raw materials.

There are several approaches to investing in gold on the market depending on your overall aims. One is to hold exchange traded funds such as GLD that trade like stocks and invest directly in gold bullion. That works best if you’re looking to hold a stake in the precious metal itself as a way to protect your portfolio from inflation or panic in the financial markets.

A second tactic is to buy shares in gold mining companies, essentially a bet that growing demand for gold will translate into profits for companies such as Barrick Gold (ABX), Newmont Mining (NEM), Goldcorp (GG), and AngloGold Ashanti (AU). The ETF Market Vectors Gold Miners (GDX) is one way to spread your money in all the major mining companies. Mutual funds are also an alternative for the sector. Two, First Eagle Gold (FEGOX) and Tocqueville Gold (TGLDX) have earned four-star ratings from Morningstar.

Both offer investors exposure to both miners and bullion. The downside to this strategy, however, became apparent this year when fuel and labor costs dragged miners down. A Morningstar category average for equity precious metals funds was down nearly 21% for the year, a far cry from the run-up in gold prices over the same period.

Johnson remains steadfast. He points out that inflation could develop soon since Western governments including the U.S. are busy accumulating debt. “Paper money isn’t backed by anything of value,” he wrote in an article in October. “It should strike [investors] as ominous that when a real asset was in demand, gold was held in the highest regard.”

1 AGL Resources/Nicor (GAS) This recently merged entity created the nation’s largest natural gas-only distribution company. Before the two companies announced their merger in December 2010, AGL Resources and Nicor separately provided dividend yields of greater than 4%. Don’t expect spectacular growth, but look for continued dividends to smooth out the ride. There will be continuity at the top since AGL Resources Chairman, President, and CEO John Somerhalder II will head the combined company; Nicor CEO Russ Strobel has retired. Somerhalder has promised that the cost of delivering natural gas won’t increase for three years. Natural gas is a commodity, so its costs change in response to supply and demand. Longer term, expect natural gas to increase market share which should only help this new entrant to the S&P 500. Target price is $47.50.
PRICE AT REC.: $41.04  •  P/E: 15.78

2 Apple (APPL) Look around you—Apple products are everywhere and influencing competitors in areas of style, software, use, and service. And Apple won’t be disappearing anytime soon, despite the death of its visionary leader, Steve Jobs. Investors will expect Apple to keep chugging along, as it updates and tweaks new products for the foreseeable future. Baker says that everyone in his house owns something made by Apple, and that’s increasingly likely in your home and office, too. Apple has a pretty significant cash position, and one can expect continued growth from iPhones, iPads, and iTunes. Although more tablets have entered the market, the Cupertino, California-based company should do well even with a smaller share of a bigger pie. At a price above $400 a share, it’s a dollar-cost average buy anytime it drops. It is worth the present pain, for long-term gain. Target price is $505.
PRICE AT REC.: 421.73  •  P/E: 15.24

3 ExxonMobil (XOM) While oil will remain the most widely used fuel, overall energy demands will be reshaped by a continued shift toward less carbon-intensive energy sources—such as natural gas. With a current P/E ratio of 10.04 this stock looks undervalued. ExxonMobil’s sheer size gives it tremendous economies of scale. The company has a solid track record of dividends and a strong management team. Truly a global brand, ExxonMobil gets only 31% of its revenues from the U.S. This diversification is a buffer to economic risk from volatile markets. Target price is $92.
PRICE AT REC.: $85.50  •  P/E: 10.30

Are you behaving wealthy? (Image: Thinkstock)

As 2012 begins, you are probably reflecting on different facets of your life and may even be drafting a plan to make improvements.  In fact, you may be making a renewed commitment to get your financial life in order this year.  If financial independence is your goal, let me suggest the following quick assessment to get you started on your journey to wealth.  Grab your purse and answer these seven questions to assess whether you are a woman behaving wealthy.

1.  How many different credit cards do you have in your wallet?

Count the number of credit cards (exclude your debit cards).  If you have more than one credit card, then you are likely overspending and incurring debt.  Debt is the enemy of wealth and financial independence.  By spending tomorrow’s money today, you are giving up your future freedom.  On the other hand, financial freedom is built from consistently spending less than you earn.  Thus, a woman behaving wealthy spends on the basis of what is important and pleasurable to her on her current income.  Are you on the road to achieving wealth?

2.  What is the value of your purse and its contents?

Add up the value of your purse and its contents.  For example, if your purse costs $500, your smart phone costs $350, your wallet costs $200, your cosmetics cost $250, and your iPad costs $750, then the value of your purse and its contents is $2,050.  Now, ask yourself if you have invested that amount into savings or retirement accounts over the last month?  In this example, if you have invested at least $2,050 in the last 30 days, then you are building wealth.

3.  Is your cash organized by denomination and facing the same way?

Open your wallet or purse and look at how your cash is organized.  Cash arranged orderly is characteristic of a person whose financial life is organized.  However, cash bills in disarray reflect a disorganized financial life.  As you know, focusing through clutter and chaos is difficult.  Be a woman behaving wealthy and organize your cash, financial files, documents, and accounts.

4.  Do you have an up-to-date daily, weekly, or monthly to-do list in your purse?

Whether you maintain your to-do list in a traditional day planner or in an electronic gadget is not important.  What is essential is that you have a plan for what you would like to achieve.  A current to-do list reflects that you have identified, quantified, and prioritized your financial goals.  Researchers have proven that you are 45% more likely to achieve your goals if you write them down.  Are you on the road to achieving your goals?

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5.  Do you have protection plans on the electronic devices in your purse?

Protection plans protect you from loss or malfunction of your gadgets.  Let’s say that you lost your $300 smart phone and you need to replace it.  With a protection plan, you have the option of receiving a free replacement or one for small fee.  Protecting your gadgets is analogous to protecting your assets.  Everyday, you face innumerable risks and, thus, some degree of risk exposure.  A woman behaving wealthy protects her assets – loved ones, income, health, and property.

6.  Do you have an emergency card in your purse?

An emergency card details your healthcare emergency names and numbers (e.g., hospital, doctor, dentist, pharmacy, health insurance plan, insurance policy).  It also holds your family’s contact information (e.g., spouse’s, parent’s, and kid’s contact numbers) in case of an accident.  The best time to prepare for an emergency is before it happens.  If you have an emergency card, then you have taken steps to create a preparedness kit.  Women behaving wealthy are also prepared for the occurrence of other unfortunate instances.  Have you selected a custodial and financial guardian to care for your children in case a tragedy befalls you?  A woman behaving wealthy has a plan in place that protects her loved ones in the event of misfortune.

7.  Are your receipts and important papers (in your purse) organized by category?

The receipts and important documents in your purse can represent additional income and savings for you if you apply them to decrease your taxes.  Many purchases are potential deductions from and credits to income taxes.  By consistently categorizing the expenditures you make that are potential deductions and credits, you are employing tax-reduction strategies to increase your income or wealth.  Taxes are another detour on the wealth-building journey, as they erode your investing power.  A woman behaving wealthy has the objective of retaining as much income as possible, which can then be redirected to more savings.

After Peeking in Your Purse, are you a woman behaving wealthy?

Congratulations are in order if your answers to six or seven of the above items indicate you are on the journey to wealth! However, if your purse audit suggested that you aren’t quite on your desired road to financial independence, don’t worry! Take action today and transform your financial life by completing Women Behaving Wealthy’s FREE Wealth Assessment at www.womenbehavingwealthy.com.

Dream it.  Plan it.  Live it.

Wealthy Women are rarely born that way. Most wealth is created. Robin A. Young creates Wealthy Women. It is Robin’s mission to educate and empower women to embody the necessary habits that create wealthy lives. Hence, Women Behaving Wealthy™ was born. Over Robin’s 12-year career as a Wall Street executive and financial advisor, she has adeptly integrated her academic training and investing experience with sound financial principles and a unique customized approach. This approach has allowed her to successfully manage the portfolios of over 500 millionaires and hundreds of other investors.