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Crazy isn't it?

Do you remember those rock tumblers for kids from the 60's? Put a bunch of rocks in them, with some secret ingredients, plug them in for a week and the stones emerged polished--supposedly. If you are feeling like your investments are not emerging as the polished stones you wanted and you would like to get your investments out of the rock tumbler, read on. 










Traditional Economic Theory vs. New Economic Understanding

Traditional Economics looks at what people should do based upon cost benefit analysis. Over the last 10 years the conversation has expanded to include looking at what people actually do. The study of neuroeconomics and psychology of economics are the resulting new fields.


The psychology of economics, as many of you may suspect, has much to do with that dreaded four letter word: fear, and it's bunk mate: greed.  Yet, if you listen to what is happening in the financial markets, the answers come back in numbers: what is up, what is down, guessing about hitting bottom.  While policy makers are speaking in terms of "confidence" and "panic", the reality is numbers can and do convey different meanings when it comes to the market: panic or the real value of a stock--but which is it? And  if it is panic, then how does one ascertain real value of a stock or fund?


Think of it this way: the financial system has been given the diagnosis of cancer.   We see symptoms of it, but the ability to stop and ask questions ("What kind of cancer?" "Where is this cancer?" "How do we treat this cancer?") has not been prevalent in our conversation.  Why?  Because the patient is in fear, running around in the street in its hospital gown screaming it has cancer. And the doctor is only telling the patient to "calm down".


We never make sustainable choices in fear. We don't make sustainable choices by being in denial about our fear either. And clearly, as the failure of traditional economics points out, people do not behave rationally when it comes to money.


These last few exasperating weeks of financial news are a good example of what our fear-thinking looks like, and what the market looks like when trying to establish worth or value. It is that rock tumbler all over again--stocks bumping and beating against each other and perception--with the hope that what will emerge are only quality investments. Wouldn't that be nice? For the market to become a place investors can trust, we need to take a good honest look at our self and how the market operates.


   Fear, greed, ignorance are the current psychological structure of our free market system. Long term, folks have always done well in the market because worth and value can be measured. Short term they tend to "lose" (remember the infamous trend of the day trader?), because fear and greed tend to be stronger in the absence of information. Here are three suggestions for you to get out of this tumbler of up and down and feeling at the mercy of something uncontrollable. 




Rule Number One


We need to grow-up!


I know that sounds harsh.  Before you decide just how offended you are going to be, let me explain. It is never pleasant to look at our "shadow", but this is where fear and greed run amuck.


When confronted with our shadow the proper response is to inquire, "What are you here to teach me?" "What role do you have in my life, situation or present circumstance?"  If we are willing to turn into it and be with it, we have the opportunity for profound growth and change.

  A basic part of our shadow has been "too busy". A recent study of investors showed that 67% did not understand  their investments. 70% had not created a will. 79% didn't know what their parents' financial plans for retirement or long term care. 65% didn't balance their personal checkbook. 89% didn't discuss the fundamentals of money skills with their children . The reason? "time". In the 21st century, we appear too busy to take care of business.  Then, when we do decide we want to address important issues, we want the information in "simple" "easy to read for dummies" formats. Some how, we want the need for our learning to end with our traditional schooling.


Once we decide to pursue continuing our education, our next step is realizing  the answer is NEVER going to come from the same mind that created the problem (yes, that famous Einstein quote!) This is the essence of growing up: totally responsible for what you do, what you know,  what you chose not to know, and that which you do not yet know. I'll just ask you to notice your ego mind and the resistance it has to this concept. Notice how tempted the ego is to be the victim of circumstance.


Here is one common sentiment of this shadow voice:

"The problem is too many people who didn't have down payments or good credit were allowed to buy houses"

In essence the shadow loves to blame--"It happened to me!" the shadow screams!


Here's the reality:

These mortgages were

collateralized and packaged into securities with lax regulations. And the risk analysis for these funds used the wrong information (historical) to see how they would preform. Had this not been allowed, or the risk of the investment made "plain" their effect on the market would be entirely different.

  Whose job is it to know the risk of an investment?


The essence of growing up: cast off the immature notion that we can hand our money, (or lives, health, children or anything else that is "ours") to someone else and they will "take care of it". Any authentic guru, adviser, or mentor always teaches you to be independent and wants to wean you off the need for them and back into your own Innate Wisdom.


Rule Number Two



Adopt New Thinking! 




All actions are based in what and how we think.  If we don't like the results of our actions, we need to change our thinking!  "How?" you ask.  Expose it. In a kind, non-judgmental way, replace old unproductive thinking ("I don't know anything about the market, that is my financial planner's job) with responsible thinking (I need to become literate enough to hold my planner accountable if my investments are preforming askew compared to the general market).


If the new thinking is a different shade of the same shadow, it is obviously useless. This is the second area I see folks struggle with. My clients are given tough challenges, homework that if they do not complete-- I fire them! If the process of sorting, discerning, and unlearning old habitual thoughts is easy and comfortable, then you are doing something wrong. The payoff to this hard work (either as an individual or a couple) is a life with a sustainable foundation. The world can go crazy and you are still okay.


Two of my mainstay pieces of homework are: The Voice in the Head Journal and the Gratitude Journal. The Voice in the Head Journal is about awareness. The left hemisphere of our brain is home to language, linear thinking and the ego/personality. In the comfort of this 'home" most of our thoughts from day to day are the same--about 96% of them. If this doesn't blow your socks off, look deeper.  It means that we are not the thinker of our thoughts. Thoughts take over and "think" them selves, as automatic, repetitive unconscious chatter that gets us more of the same that we have in our life now--even if we don't like it! Maybe now you can see why I hold my clients' feet to the fire when it comes to this journal. Thoughts about money, who's responsible for taking care of our money, our relationship with money all determine our financial success.


The second piece, the Gratitude Journal is necessary to produce the balance the Universal DNA is always supporting us to achieve. We do some things right! We have good relationships. We achieve dreams. We make a mean meatloaf. We give of our time, talent, or treasure to those who need it.  If we want more of what is right, then we need to focus on it. WE NEED TO FEEL IT!!  Consistently, lovingly gratefully, feel it! . To create the life of our dreams, this list is more  important than the shadow list (things we don't want in our life.) These gratitude nuggets are the ingredients for the life we do want. Maybe you only have one or two items to go on this list right now. I promise you, if you make this list faithfully every day, more will come. Try it--I double dog dare you! 




Rule Number Three



 Ask Good Questions!!



You have to learn to ask good questions. If you get a diagnosis of cancer, do you wilt in the doctor's office and say my life is over? No. You listen to what the doctor says, and then you go do your own research, get second and third opinions, do more research and find what combination of treatments work for you.  This can only happen with the tenacity of good questions.


Part of the service I offer my clients is teaching this skill. Assessing your emotions, the psychology of where you are in your circumstances, and learning to ask good questions anyway. (Pssst! The first good question: "What is a good question?") If you would like some coaching on how to ask good questions, email me and I will send you a general list of questions to help get you started. 

My Two Cents

on the Current Crisis

  We have been battling a financial cancer for decades. Just like in cancer, when a rogue cell decides it wants to do its own thing--with no regard to the consequences to the rest of the cells and body; our economic favoritism to the few at the expense of the many has brought us to yet another opportunity to evaluate this  collective shadow, this cancer. 

From the Savings and Loan debacle of the 80's, to the junk bond scandals, to the World Comm and Enron implosions, to the dot com bubble bursting, the cancer has been with us.  Our failure has been the weakness of our collective psyches. With each debacle and recovery, we want to think we have been cured. As a cancer survivor I know the feeling of wanting a "cure" all too well. I would be foolish to stop my check-ups--no matter how much time they take and the interruption I feel to my life. Healthy vigilance is what allows most survivors to survive.   As Thomas Jefferson said:  "Constant vigilance is the cost of freedom".

We treated our financial cancer "episodes" like strep throat--an acute illness instead of the chronic, systemic one it actually is. Every time we have "treated" the symptom, the disease has come back bigger and stronger. My grandma would say, "Stop callin' that cat with the black stripe a cat! I smell skunk!" Meaning, we are not correctly identifying the problem.

Are there good places for your money? Yes, but if you want to hand your money to someone and have it be safe, then moving your money around is pointless. You will only get more of the same.  First you need to work on your self:   Grow-up.  Think clearly.  Ask good questions.

In a notable FINRA study of investors, 10 questions were formulated to gauge investor savvy. 65% of investors thought their portfolios were insured, of the 10 questions, no group of respondents scored more than 50% correct. If your children scored that low on their tests, they would be failing school. Over two-thirds of respondents (69%) described themselves as being "somewhat knowledgeable" about the market.  The glimmer of hope in the study: 97% of respondents wanted to learn more about finances and investments.

Do you know what a Collateral Debit Obligation (CDO) is? Do you know what a Credit Default Swap (CDS) is?  One was modestly regulated, and the other has never been regulated. These two instruments, along with ignorance have created the un-holy trinity of our financial implosion.

Of course this is just my humble opinion. I encourage you to develop your own opinion.

In the current financial situation, there is plenty of blame and finger pointing to be had--from the rating system for stocks and bonds that is corrupt, to the lack of oversight, to the immoral choices made with the facade and protection of "free market capitalism." This isn't a political question.  Cancerous cells wanting to be well would ask this question!  Until we really know what is happening, and our part in it, we can never see the situation clearly.

Just like a cancer patient, who inevitably realizes there is no one thing they can do for a "cure"--it is always a process of treatments, diets, exercise, attitudes, thoughts, beliefs and yes, a power greater than ourselves that gets us through to the cure. So too, our financial cancer must undergo the same rigorous process. This can only happen with sober adults having grown sick of the boom and bust cycle, who are willing to look at their power and their shadow,  and humbly ask for guidance and healing in our part in the global correction.

I see evidence daily, despite temporary circumstances and events that the natural order of the Universe is one of balance. How long we take to move back to balance is always up to us. Once in balance, we can choose to stay there or go "back to sleep"; thus relinquish our vigilance and move out of balance again.

If nothing else has come from this global financial meltdown, we have considerable evidence that we are one earth, one economy, one people and all of us need to be well or none of us are well.

If you have any questions or comments for Dr. Karen, please e-mail her at:



Dr. Karen Monroy holds a PhD. in psychology, and a Masters Degree in Economics and Business. "I teach, write, and guide clients to Sustainable Prosperity." Says Dr. Monroy, who is a pioneer in the field of Spiritual Psychology, and Nuero-economics.  Dr. Monroy explains to clients the structure of their minds--from a neurological, psychological and spiritual perspective clients learn to work WITH their own nature, not AGAINST their nature.


Dr. Monroy teaches Money IQ Skills, Money EQ skills and a spiritual basis for moving through the world of form.  Dr. Monroy believes all of us learn about these concepts in the world of form--or Earth School-as she calls it-- as one aspect of our spiritual path. 


Dr. Monroy is also the author of two upcoming books: Mommy, What is Rich, and Expanding your Money IQ-- Spiritual and Emotional Intelligence for Earth School.


















Upcoming events:


Financial Boot Camp for Teens!



This class gives teens concepts of  "hard money skills" and emotional skills to deal with money. We meet for three sessions to examine how ideas from our family of origin, society and culture  influence decision making and thoughts about money.


Participation is limited to 10 in a class. 


Click here to email Karen for more information.


Click here to be put on the waiting list for a new class.























Expanding Your Money IQ Reads:



The Great Risk Shift: The Assault on American Jobs, Families, Health Care, and Retirement--And How You Can Fight Back
by Jacob S. Hacker 


 This is an easy read on the "bigger" picture of economic pressures and the results on "the average Joe".





by David Herbert Donald. (Re-read)


With the approaching 200th anniversary, it seemed fitting to remember the moral compass he had despite his personal trials.





Hot, Flat, and Crowded: Why We Need a Green Revolution--and How It Can Renew America by Thomas L. Friedman


He has a great writing style, making urgent issues easy to digest. Big fan of "green" being the engine of our new economy.






International Economics: Theory and Policy  (8th Edition)

by Paul R. Krugman and Maurice Obstfeld




The Conscience of a Liberal

by Paul Krugman



For the first time in 50 years the Nobel Prize for Economics went to one recipient: Krugman (a Princeton scholar)  It would be great if one of the folks running for president gave him a ringy-dingy!























Dr. Karen, with prime rate being reduced again, should I be thinking of refinancing?


ANSWER: No. Prime rate and m*rtgage rates are like second cousins. They are influenced by difference market pressures. Do not make the mistake of trading a low fixed m*rtgage intere*t rate for a Home Equity Line of Credit rate based on prime rate. Unless, you plan on being in your home a year or less. In that case you could save a bunch of moolah. 











Fall is a good

 time  for:


  * Setting budgets for  holidays



   * Evaluating children's school budgets and spending



  * Shopping for seasonal sales (grab that new garden hose--it is 50% off!)



  * Protecting your largest investment: your home. Even if it makes your budget tight now, you will save worry, aggravation and head ache down the road. Really short on funds to winterize your house? Network with local churches and neighborhood organizations and offer to trade your skills (good at computers and programing? Know a lot about animal training?) for the work you need done.















Other Interesting Factoids from the FINRA Study






Almost all (97%) said that is is important to increase their investment knowledge.

Almost half (45%) said that they could have avoided a negative experience in the market IF they had known more about the market at the time.


Box 777, Princeton, NJ 08543
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