The Year of the Ram: What the Chinese Zodiac Says About Long-Term Wealth Building
According to the Chinese Zodiac, 2015 is the Year of the Ram. It’s sometimes translated as the Year of the Sheep or the Year of the Goat, but really, a bighorn mountain ram is no fluffy domestic sheep, so that’s kind of like confusing a bull and bear market.
However, perhaps 2015 should be called the Year of Plummeting Oil Prices. They have fallen 40 percent since July 2014. Of course, the real story about oil isn’t how far prices have fallen; it’s how fast they have fallen. When prices will hit bottom is anyone’s guess. Not even the astrologers can figure it out.
Or perhaps it should be called the Year Gas Prices Fell Below $3.00 Dollars a Gallon. In fact, the latest numbers indicate that gas prices have dropped below $2.00 a gallon in 13 states. Gasoline is cheapest in Missouri, but gas prices are the least of the state’s concerns right now.
Plummeting oil prices and cheap gas have led to a mini-stimulus for the economy. Still, it’s safe to say consumers shouldn’t get used to bargain-basement prices on gas. When cheap oil gives everyone an economic boost, it leads to higher demand, and the smallest changes in supply and demand cause price swings.
There’s something of the myth of Icarus to the current oil market.
After a decade of windfalls and hundred-dollar a barrel oil, Gulf countries are preparing for tough times as oil prices continue to drop. As it stands, the six nations of the Gulf Cooperation Council (Saudi Arabia, Kuwait, Bahrain, Oman, Qatar, and the United Arab Emirates) are forecast to lose $350 billion a year at current price levels.
If the current oil market has taught us one thing, it’s that if you fly too close to the sun, you’ll get burned, like Icarus. It’s also taught us it’s important for countries to diversify their economies.
But lets get back to Chinese astrology. It's said people born under the sign of the Ram, er, the Sheep, try to be economical in their daily life. They approach sensitive business issues cautiously and circumspectly.
At the same time, they’re worriers. They’re pessimistic, moody, indecisive, and generally puzzled about life. Their lucky numbers are 0,2,3,7, and 8, but chances are you’ll never see them in a casino placing bets at the roulette table.
Every Zodiac sign describes strengths and weaknesses. In other words, people, like the market, are volatile –quick to change in sudden and extreme ways - which in turn makes long-term investment and wealth building difficult.
Hucksters and the Allure of Get Rich Quick Schemes
Get rich quick schemes have been around forever. In Holland, in 1637, single tulip bulbs sold for ten times the annual income of a skilled laborer, and everyone the from Amsterdam to Rotterdam tried to make a fast buck. Historians consider “tulip mania” to be the first example of an economic bubble.
Hucksters sold snake oil in the United States until the 1906 Food and Drug Act put an end to it.
Jordon Belfort –the Wolf of Wall Street –favored penny stock scams.
Bernie Madoff preferred Ponzi schemes.
In 2008, real estate flipping became an overnight fad. The trend collapsed as soon as the real estate market showed the subtlest signs of rebound.
All of these examples represent the dark side of American entrepreneurialism. On the other side of the coin, you have a socially awkward kid named Mark Zuckerberg dreaming up a social network site in his Harvard dorm room, or a Silicone Valley start-up whose origins come about after two guys have couple of beers at a summer barbecue.
Statistics say the self-employed make up less that 20 percent of American workers, but they constitute nearly 70 percent of the people who make up the millionaire class.
However, these millionaires aren’t the inventors of Facebook, Twitter, Amazon, or eBay.
They’re men and women who run normal businesses. They own pest control and paving companies. They own hotels and mobile home parks. They’re the men and women who live next door to you.
Approach Wealth Building Cautiously and Circumspectly
Those born under the sign of the Sheep try to be economical in their daily life. They also approach sensitive business issues cautiously and circumspectly, and there’s nothing more sensitive than preserving and building wealth.
1. What does being economical in your daily life mean?
It means frugality and living below your means is one way to build wealth. Don’t fall for the latest get rich quick scheme. Don’t jump on the bandwagon because soon the band will be playing a different tune.
There’s no way you’re going to build wealth by having debt. Debt is bondage, and we’re not talking about Fifty Shades of Green Bondage, either. Whether it’s a credit card balance or a mortgage, pay it off.
Remember Aesop’s fable, “The Tortoise and the Hare?”
When it comes to building wealth, slow and steady wins the race. RAs and 401(k)s are importing in building wealth. Employer contributions may not seem like much at the beginning, but they add up over time.
2. What does approaching business cautiously and circumspectly mean?
Wealth building is about growing the amount of money that comes your way. What makes money make money? Well, it’s simple really: Money. While the idea is simple enough, the execution can be difficult.
However, look at it this way. It you make $125,000 per year but live off $90,000, you have $35,000 dollars to save or invest. Make the money work for you. Instead of investing in trendy stocks, invest in safe ones. Lets call them “tortoise” stocks. Steer clear of snake oil no matter how convincing the seller is.
Or you can take those lucky numbers -0, 2, 3, 7, and 8 –and head to the Monte Carlo Casino. But we wouldn’t suggest that –it’s too volatile. And nor would the Ram, or the Sheep.