THE TIME VALUE OF MONEY

How To Make Any Financial Decision. The key is a thorough knowledge of the time value of money. In six plus years of post high school education no one ever taught me that concept. I was in my late 30's when I was introduced to the concept and I immediately felt that I had the "key to the vault." With a $75 calculator and a thorough knowledge of this concept, you can make any financial decision from the right mortgage to finance a property, to whether to lease or buy a car, or which investment is appropriate for your circumstance. Further, there are assumptions you make which are different for everyone, allowing you to customize an answer for any client's situation. I won't go into detail but suffice it to say that 30 years after I learned about this concept, I decided it was not nearly as empowering as I thought. In order to modify the statement to make it more important, you simply have to turn the words around. It's not the time value of money that counts, it's the money value of time. That insight occurred to me this year when I turned 70. It became even more important this week end as I visited the hospice where my brother-in-law is ready to call his earthly journey to an end. It's sad to realize the time we've wasted worrying about things that don't matter in the least. Time isn't money, time is your life. Don't waste a minute of it.

A Word About Those Evil Oil Companies. Most of us have trouble holding down our anger every time we fill our gas tank lately. Even Bill O'Reilly accuses the oil companies of gouging consumers by holding prices at unfair levels. Surely a company like Exxon with a value of some 400 billion can force prices to levels that won't cripple our economy. Guess what. America doesn't have any big oil companies. Exxon with all it's billions is dwarfed by the really big oil companies, all of which are owned by foreign governments or government sponsored monopolies. In reality, Exxon is only the 14th largest in the world. Exxon buys 90% of its oil from the really big oil companies who, by the way, control 94% of the world's oil. Surprised? I was.

What About Those Windfall Profits? Oil companies are earning a lot of money, and the owners are getting rich. Sure, Exxon earned 43 billion this past 12 months bet those owners are rolling in dough. Don't believe it. The market value of a company is easily determined by multiplying the number of shares outstanding by the current share price. Since the first of the year, Exxon's value has decreased from $485 billion to $400 billion. That's 17.58%. They aren't the only one. Marathon Oil, a smaller $62 billion company has dropped to less than 45 billion, a 28% drop. Conoco-Phillips and Chevron-Texaco show similar trends. Of the four companies I researched, the total loss in market value since the first of the year, was $128.13billion, runs into real money sooner or later. Despite their huge earnings, they must have problems of which the public is unaware.

I Am Not A Huge Fan Of These Companies. Their executives obscene amounts of money but so do Rush Limbaugh, Al Gore, Bill Clinton, Shawn Hannity, and Carmelo Anthony. It is impossible for most of us to comprehend how anyone can be worth that much money. Some oil company executives are guilty of fraudulently taking money from their constituents but so are some politicians, communication company executives, and investment bankers. When our economy has problems, there is a rush to find out who is at fault. After all, it can't be us. It has to be someone else. In this case, there blame for enough people to go around, not the least of which is the "man in the mirror."