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tv   Your Money  CNN  January 22, 2011 1:00pm-2:00pm EST

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president obama has the stage to himself. if he can't convince the american people that more jobs are on the way, his own job could be in trouble. welcome to "your $$$$$." i'm ali velshi. it was one year ago the president used his state of the union to assure americans he shared their top concern. >> i realize for every success story, there are other stories. of men and women who wake up with the anguish of not knowing where their next paycheck will come from. who send out resumés week after
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week and hear nothing in response. that is why jobs must be our number one focus in 2010. >> number one focus in 2010. morning 1.1 million jobs added in 2010. 1.3 million jobs were added in the private sector. the reason we only come out with 1.1 in total is because there was a loss of 200,000 government jobs. that brought the final tally down. by the way, we prefer that our jobs are created in the private sector, because taxpayers don't pay for those jobs. steven moore is editorial write are for "the wall street journal." what do you as a conservative need to hear from the president tuesday night? >> well, congratulations, i think i'm finally having an influence on you. the private sector jobs are the ones we want. you played that clip from president obama and he could almost say exactly the same thing in this state of the union
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address. the economy is improving, no question about it. the stock market is strong. we're seeing recovery in manufacturing and a lot of industries, even housing seems to be picking up, but it still hasn't translated into the one issue americans care most about, obviously, which is their job. and if they don't have one, getting one. so this is the big problem. there's still 14.5 million americans unemployed. one last point. we've created 1.3 million jobs over the past year. the bad news is we need to create three to times that many start bringing the unemployment rate down. >> global editor at large with reuters, the question is whether or not the president says what stephen or anybody else would like him to hear, when you ask americans who they think has more influence over the direction of the nation, look at these results. 56% choose congressional republicans. 36% say president obama. so if unemployment is stubbornly stuck above 9%, 9.4% right now,
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does the president necessarily want to convince anybody that he has sway over or is responsible for where the country is going to be when he is up for re-election in november of 2012? >> i think that is a brilliantly astute political question and i think we're going to see something really interesting happening in this sort of dance between the white house and congress over the next year. because i think, you know, the republican-controlled congress is now going to face a really difficult question of how much responsibility do they want to be perceived to have over the economy, and also frankly in, you know, not to be too cynical about it, but do they really want the economy to get that much better? you know, if the economy is booming in 2012, job numbers are looking a lot better, i think that looks better for the democrats than republicans. i think there will be a delicate political dance and the main thing we'll see the president
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tries to do -- to be honest, we love to analyze policy and what does it mean and how can he create jobs. the truth is he can't do that much anymore. they did the big tax deal at the end of last year, that's -- that's their big bullet that they have already fired into the economy. his big job now, i think, is to show americans he cares. and that's what i think he's failed to do last year. >> who takes credit for it if things do actually get better? hang on a second, stephen, i want to bring managing director of the economic cycle research institute, often one who says it doesn't really matter what the president said. you have said the fear of a double-dip recession is behind us. this is a brand-new cnn opinion research corporation poll, and broken down by region. in the northeast, 19% of people think the economy's good, 81% say it's bad. in the midwest, 24% say it's good, 75% say it's bad.
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take a look in the west, 26% say it's good, 74% say it's bad. and the other side again, take a look at what they say in the south, 27% say it's good, 73% say it's bad. not a whole lot of variation across the country. as an economist, first of all, do you think that poll captures what people are feeling about the economy? as an economist, do you care much what president obama says about job creation on tuesday? >> all right. so the first thing about that recent poll, as bad as those numbers are, i suspect they're better than they were. because we were really in a hole and we're climbing out of it. and so what's really important when you're looking at cyclical move in the economy is the direction. so as bad as those numbers are, they number one, they're better than they were. number two, perceptions. typically these kind of quins tend, hey, how are you feeling polls, they tend to lag reality
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because it takes a little while to catch up to things that are shifting. and here we have an economy, there is no double dip. we've discussed that before. in fact there's a revival in growth. i think steve alluded to that in his opening comments, it's imminent, right in front of us. and so -- and it will include continued jobs growth. so minimally i think what you saw in 2010 you'll see again in 2011. you may see something a bit better in terms of job growth in 2011 and who takes credit for that? first off, nobody -- i think policy wonks in washington like to say that they control the business cycle, but actually it's the other way around. the business cycle, the private sector, controls the policy wof wonks. they're really much more in charge. have you to make i think a kind of a tactical decision, do you want to take credit or do you want to blame about it. >> let's bring stephen in, now that we've laid out, you know, who we think could actually do anything about this, what's your
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response? >> a couple points. one is, barack obama's going to knock this speech out of the park. he always does. he's a great communicator and there's no question that what he says is going to be comforting and reassuring to the american people. the real question is, is it going to work. and i do think we've seen reassuring signs the president has moved to the middle. the tax cut that he signed in december which is something i was always in favor of, i think is going to help the economy. look. i do -- the one thing i would disagree with is i think policy matters. i wouldn't be in the business i'm in if i didn't think the different policy choices didn't have impact on jobs. and the president governed way to the left with spending and now i think we'll see policy shift more to the middle and i think that's going to be the advantage of the president and the republicans. but one last thing, the president, it's always the president's economy. it's always no matter who runs congress, most people don't even know who runs congress. it's always the president who gets the credit or the blame.
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>> you made the point there's not as much as can you do now, if i'm interpreting what you're saying, you're saying when president obama took office there was more to be done by government. they needed to pick up the slack for businesses and individuals who weren't spending but at this point the cycle has kicked back in and doing what it's supposed to do. >> that was partly what i was alluding to and the other thing is we will now have real gridlock in washington, i don't think we're going to have any big decisions happen there. the one area we haven't talked about that i think will be very significant for the economy in this coming here is what happens at the state level. and as you guys all know, state budgets are in real trouble, and there are real signs that -- whether it's democrats or republicans in the state house, one of the things we're going to be seeing all state governments do is cut spending and that means cutting jobs. that's where some of those government jobs that you saw going away in those numbers you cite at the beginning -- >> there's going to be no
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bailout this year for the states sh that's for sure. >> so that will be interesting to see, what is the net impact of that. >> stephen, that's interesting because whatever you think has improved at the federal level has actually in some cases been shifted down to the state level, which for most of our viewers means the municipal level as well. that means like we saw in camden, new jersey, half the police force being fired. that means firefighters. >> yeah. >> that means garbage collection. that means pops and libraries. >> there's huge -- what the states and cities need most from washington is to get this economy moving. because if the economy starts growing -- by the way, we're starting to see signs, believe it or not, of increased revenue growth at the state level for the first time in two or three years. so there is some good news on the story but it's still going to be a tough year because there ain't going to be a lot of federal money coming to the states this year. >> all right. i know have you to catch a flight. thanks very much for being with us. don't go anywhere, the
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republican sweeping vi ining vi supposed to spell trouble so why is president obama's approval rate soaring? we'll talk about that on the other side. [ male announcer ] investing for yourself isn't some optional pursuit. a privilege for the ultra-wealthy. it's a necessity. find investments with e-trade's top 5 lists. quickly. easily. use pre-defined screeners and insightful trading ideas
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republicans on the ballot in the last midterm election spept a great deal of time trying to tie democratic opponents to the
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democratic leader, president obama. that was with good reason as the president's approval rating dipped as low as 42% in november. but as republicans took over this month the president continued to gain support. his approval rating now stands at 53 %. 11 percentage points higher. you look at numbers and not exactly -- not always just the policy of it, so has there been some fundamental change over the last five months that would lead to such a big jump in the president's ratings? >> yeah. in a word, there was a slowdown that started at the beginning of last year. it's run through the end of 2010, and right about here the economy has kind of had its soft landing or landing bottom being in the growth rate and it's starting to reaccelerate into 2011. and i think people are feeling that first and foremost in the jobs market. because if you're afraid of a new recession you're talking about actual job losses again.
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and that's just -- i don't think, the nation as a whole, i think as that fear recedes, some confidence comes back. in the only for those looking for jobs but maybe even more importantly for people who have jobs. and they almost are permitted to go out and spend more. so you saw at the end of the year spending really ramp up not only for the wealthy but also for the middle and lower income levels, and that's continued into this year, and if people are buying more you have to produce more you have to hire more, you have to pay more, and it's the virtuous part of the business cycle. >> the opposite of with a we talked about for the last three years. president obama tapped general electric ceo jeff immelt to lead the president's council on jobs and competitiveness, he's just changed the name of that council. you just spoke with jeff immelt. what is the job he's going to do and can he actually do anything? >> so you're right, i
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interviewed jeff on wednesday, and i think this is a really brilliant step by president obama and one of the things that helped to explain why his popularity has really increased. we've seen since the midterms and even before that the president really working to reach out to business and to create a sense that he is probusiness. you know, projobs and he gets the fact that the economy can only grow if business is growing. i think appointing jeff immelt, who is a lifelong republican to be in a way his chief business adviser. >> right. >> is really significant. what's also significant about it is we've seen a lot of people with financial backgrounds close to the president, bill daley recently who was at jpmorgan has just come in to be his chief of staff, ge i think occupies a different space in people's minds. it's a company that believes in manufacturing. and when i spoke to immelt on
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wednesday, his view was for the u.s. to compete in the global economy it has to have an export, a manufacturing and export-led strategy. and that's with a we've seen, not just china do but actually if you look at around the world, which is the western industrialized country faring the best, the answer is germany. and the germans, you know, for decades have had a real focus object export-led growth. so i think we're going to hear that from the white house. >> although they've lost their top spot to china now and the reality is unskilled labor in china costs less than $1 an hour. tell mep if that's -- great, we've never had a real good manufacturing policy in this country and we've been losing manufacturing jobs for 15 or 20 years now, is that really where our future needs to be? >> partly. okay? i this i if we -- we should certainly reinvent that sector, and i think it already has been reinvented, to tell you the truth.
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a lot of the manufacturing sectors have become very lean, very competitive, hyper productive, and they're actually profitable. and as you have currencies starting to normalize a little, there's a lot of inflation in china, so they might let that currency rise a bit, that's going to even help more. i'd be careful of saying we want to become like the manufacturing floor for the world again, because when you look at cycles, and i think it's important that policy starts to figure out some of the basics about cycles, because i really don't think policymakers get it, but when you embrace, say, manufacturing sector and if we were all kind of exporters, we would be very cyclical, much more cyclical than we are now. meaning we would have big booms and big busts. >> great to see you both. two big challenges cutting the deficit and creating jobs, can both be done at the same time?
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bringing down the unemployment rate and bringing down the deficit. two tasks high on president obama's priority list. which do you tackle first? larry summers told cnn's fareed zakaria last week that the president has done it right, focusing on accelerating economic growth. >> if we had attempted that
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first, if we had attempted deficit reduction as the first, as the first step, the likelihood is that we would be looking at a much weaker economy and as a consequence, ultimately we'd be looking at much larger debt problems. >> david walker is founder and ceo of the comeback america initiative, former u.s. comptroller general. he believes very strongly in deficit reduction and debt control. david, unemployment around 9.4%. is this a realistic time to tackle the deficit? or do we still have to wait a little longer beforehandling that deficit and bringing down the debt? >> we need to do two things. we need to do what it takes to try to stimulate economic growth, create jobs and reduce unemployment while at the same point in time create a plan to deal with the truth rather than threaten this nation's future and those are the deficits that lie ahead that we have to come to grips with because they
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literally could bankrupt this country. you need a plan. >> part of that plan was the big commission that the president put together that came out with its report just before the end of the year. what did you think of that plan? >> well, the commission i think did a great job in building the case for the need for fundamental reforms where everything was on the table. >> right. >> they noted it was a spending rather than revenue problem and now what is the president going to do with that plan? it was his commission, what is he going to do with the recommendations? >> that's one of the things i'd like to hear from him in the state of the union, it's not going to be shelved or put aside. let's talk about why it's important to reduce the deficit over the long-term. ultimately if we do not reduce the deficit your taxes go up, the services that the government is able to provide for you would decrease dramatically and the government's flexibility to respond to crises like the one we saw in this past recession, would also decline. these are all bad things, to say
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the least. there's a great, great article on cnn money, if we just let this go, roland martin, if we let this go, we will have eight cents left of every dollar to be able to spend on government priorities. should the president focus on the deficit before we see a meaningful drop in unemployment, roland? >> look. i don't understand why republicans and democrats don't understand that you can actually do both. so let's have some honest here. the debt commission was a republican idea. when the president said fine, create it, republicans didn't want to do it so therefore he had to do it himself. so they failed their fiduciary responsibility to the american people. but also the american people should stop lying to u.s. every day. the cbs poll this week showed it best. they don't want any increase in taxes. but they also don't want any cut in social security and medicare.
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the house republican conference put forth2.5 trillion in cuts, did not touch the fence. and so you can't keep sitting here lying and playing games here. but also we also have to be honest. we talk about spending. well, guess what? the republicans sat here and wanted tax cuts in the stimulus bill. one-third of the project was tax cuts but they still didn't like it. we got tax cuts for the rich, we say it's good for them but also don't put money in infrastructure. so make up what you want, because frankly it's confusing. >> david makes this point always, he makes the point you're going to have to attack this on a few fronts. i want to give people an idea of what i was just saying, take a look at the expected federal tax revenue in 2020. okay? according to the government accountability office. 92% of revenue will go to pay for, as roland just said, social security, interest on our debt, medicare and medicaid, leaving 8% or eight cents on the dollar for everything else.
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so the reality is if you don't talk about medicare, medicaid, social security and defense, you are left with very little to actually cut. how do we deal with this? >> ali, everything has to be on the table. social insurance reforms, defense and spending, comprehensive tax reform raising more revenue among other things. here's what we need to do. we needless government consumption spending, more targeted investment, renewed innovation and partnership with the private sector. in addition to that, we need statutory budget controls as part of raising the debt ceiling limit that will have meaningful pay as you go rules without trillions in loopholes, tough spending caps that does not exempt defense and homeland security and in addition to that specific debt to gdp targette that's will kick in in 2013, 2014 with tax cuts if congress does not act.
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>> left one thing out. >> david's been consistent in saying that. roland, is that going to happen? >> he left one thing out. you need politicians with guts. we saw this week where the mayor of camden, new jersey, said, we've got a $26 million shortfall. police and firefighters and city employees, i need you to have a pay freeze and pay more for health care. they said no. whacking 45% of the police force, now people are upset. jerry brown has been saying tough love. david paterson in new york saying, you've got to change, albany said, no, don't want to listen to you, now cuomo is saying i might have to shut the government down. so the taxpayer, the average person has got to stop demanding more, more, more, but then saying i don't want to pay taxes. if you don't want to pay more taxes you're going to have to slow down spending and also stop spending and making priorities as to what we really care about. >> yep. i think you both agree on that. thanks to both of you, david walker, roland martin.
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a lot of discussion about the debt coming up. and lots to talk about china this week, is china a growing threat to america or a growing opportunity? we're going to head to beijing to find out if the people of china really believe that america is in decline. you know . and how to fold 'em. and from national. because only national lets you choose any car in the aisle...and go. you can even take a full-size or above and still pay the mid-size price. here we are... [ male announcer ] and there you go, business pro. there you go. go national. go like a pro. ♪ my country ♪ 'tis of thee ♪ sweet land ♪ of liberty ♪ of thee i sing [ laughs ] ♪ oh, land ♪ where my fathers died ♪ land of the pilgrims' pride ♪ from every mountainside ♪ let freedom ring
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all eyes were on hu jintao's visit to washington and to the united states last week. our viewers all know this is the most important economic relationship in the world. but what do you think about it? teak a look at this. a recent abc news/"washington post" poll say 61% see china as a threat to american jobs. just 29% see china as an investment opportunity. so as china's economic growth continues at the pace that it's going, what does that mean for the fear of america's economic future? stan grant is our senior correspondent in beijing joining us in the middle of the night because he knows about this
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better than anyone. stan, tell me how the chinese perceive america. do they see themselves as in remarkable economic assent and the u.s. as in decline? >> reporter: you know, there is a real sense here in china that the u.s. is in decline, although it is still obviously very important in that china is continuing this inexorable rise. the economy grew over 10%, it's likely to continue this year, and there is a real sense of that self-confidence. you can feel that here in china. you saw that with hu jintao in his visit to the united states. they're recognizing this as a state visit. so there is that sense that china can eyeball the united states now and can't be pushed around. they still do look to the united states, though, as obviously a big market to sell into. it is the biggest market they can target for their goods and they're still attracted to u.s. culture as well. i spoke to a chinese rock singer
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during the week and this is how she put it. chinese people don't mistrust the united states, but they think the u.s. mistrusts them and doesn't understand them. >> very interesting way of looking at it and one thing we have to continue to understand is these are two nations that need each other to some degree. richard quest is host, basically saying you need us too. listen. >> china's extraordinary economic growth has lifted hundreds of millions of people out of poverty. and this is a tribute to the chinese people. but it's also thanks to decades of stability in asia made possible by strong trade with america and by an open international economic system championed by the united states of america. >> okay. stan and richard, i want to hear
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from you on this one, richard. he told china, give us the due credit for where you are today and he also kept on saying to china, we want to sell you stuff, we want to sell you cars and airplanes. tough words. what leverage does the u.s. actually have when trying to ensure that the u.s. continues to gain from china's growth? >> it reminds you of your old grandparents saying so what have you done for me lately. look what i've done for you in the past. the truth is this of course both parties know they need the other. but from the u.s.'s point of view, they have to rethink issues like competitiveness and the sort of products that are manufactured and at what price they're sold. forget the idea of the yuan being under valued, that will take time. the core point and we're seeing it as president obama has changed the name of his advisory council to put competitiveness into its title talking about
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jobs. ultimately the chinese will become the largest economy and simply by size of country and population. but being biggest does not mean being best, and the u.s. still has an enormous, enormous amount of mileage once it gets going. >> although this is a world in which bankers hold more sway than bullets do stan, we spent time on the american perspective. give us the chinese perspective on the visit. what did hu jintao who's going to be leaving office over the course of the next couple of years, what did he need to achieve? what were his goals and how was it seen in terms of what he accomplished? >> first of all, the fact this visit took place, the fact it's being billed as a state vitsit the state dinner that he had, that didn't happen during george w. bush's tenure, there it was
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only an official visit, symbolism is very important. look how the chinese are reporting it here, they're saying he's contributing to world peace. this has been a testy relationship, as you know. richard's touched on some of the issues of the currency issue, the trade imbalance between the u.s. and china, but also the tensions over photocopnorth kor they're saying is hu jintao trying to right this relationship. >> richard, you've seen it all. did anything about this visit and the meeting between president's hu and obama, anything surprise you or impress you in particular about it? >> i think it was the size and scale and hoopla made of the visit. these men have met numerous times, or at least at heads of state level, the u.s. and china's met. whether it be apec or g-20, they certainly know the arenas.
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but for the two to actually have such an important state visit, it's a reflection, whichever way we look at it, turning point, break through, whatever you want, that there's a g-2, and that that bilateral economic relationship is going to define -- and for one simple reason, ali. because the u.s. may hold the leadership, if you like, particularly in relation to the transatlantic and the european sphere, but china, asean, apec, they need each other. >> i've spent a lot of the week talking about how americans can profit from or benefit from the growth in china. one of the things we talked about was kids learning mandarin in schools in the u.s. i asked one teacher how do you convince students the importance of learning mandarin or understanding china? she says i tell everybody at the first opportunity they get, go to china.
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go to beijing. go to shanghai. what did she mean by that? i know what she meant but tell our viewers, for an american gets off a plain in shanghai and drives downtown, what will that tell them about economic growth? >> reporter: you'll see an enormous city in shanghai. you'll see a space age city in many respects, a city of great wealth but still more so of many, many challenges. there's still a lot of poverty in china and that's a big gap. the american will see opportunity. i was just in shanghai a week ago and we spoke to americans living there and are making a killing there. these are people running restaurants. these are people restoring buildings. they're teaching in schools. they're making good money, and as they said to me, this is the land of opportunity. this is not a backboarder anymore. these cities are big, they're cosmopolitan, they're sophisticated. the chinese are more aware.
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the u.s. has the advantage in terms of technology and skill but that's rapidly -- china is rapidly bridging that gap as well. as china becomes more skilled, that's going to put more pressure on the u.s. to actually improve and be more competitive to be able to hang on to those jobs they've got. before i go, remember this. over the past 20 years, exports to china from the u.s. have multiplied 12 times. this is still a very big market. it is still open to some degree, it is there for the taking for u.s. companies. >> it is a real treat for us to have both of you on here, two of my favorite guys be stan grant, richard quest, i think the three of us need to meet up somewhere in the world again soon and talk business as it were. good to see both of you. thanks so much. >> thank you. >> thank you. back home, it is official. comcast and nbc universal will soon be one company. are there way that's this mega media merger could actually make a difference to you? i'm going to talk to you about investing in the media when i come back. hey, rufus.
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this week the federal communications commission and the justice department signed off on comcast's merger with nbc universal. there's been a lot of debate about what this mega deal will mean for consumers. now there are a list of conditions placed on the new
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company. read about those at consumers are still concerned about higher cable prices and fees for content that used to be free. but what about the other side? what about investing in this new company? or other stocks in the pamedia sector? director of u.s. equities for tcw a firm ma mtwo largest medi holdings are comcast and cbs, the third is time warner, parent company of this network. comcast is in the news, this deal with nbc, the takeover, really, of nbc universal. do you like this deal and do you think investors can benefit from it? >> we do. comcast is transforming itself from a cable bdistribution company into a full diversified media company now with content and distribution. >> how does that make a merged company, let's say, more valuable than those standalone
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companies? one that's a cable distribution company, one that's a content company? >> it's being vertically integrated, meaning you have the content that needs to be distributed and that's more powerful as a company. >> and that's -- is that something that provides them with enough savings that the investor can benefit from that? >> absolutely. they can make better programming for their customers. they can target audiences better because they have the distribution and the content. >> compare that to the other companies out there, like cbs, like time warner, parent of this company, like disney, who do you like right now? >> our largest holding is comcast and we look at these stocks typically on price to cash flow. comcast typically trades at a discount because it was seen really as a cable or adjusted distribution company. typically the content companies are -- have a higher value and they trade at typically a range of seven to 13 times price to
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cash flow, and with this acquisition of nbcu, comcast now can really power its way into a higher valuation range. >> another one of your big holdings is cbs and you like that stock for investors as well. >> yes, we do. we think they took advantage of the low interest rates to refinance their balance sheet. they have a steady stream of income from their distributions which are the tv stations, as well as having the content of the studios and broadcasting. >> great dramas on. anything in the media area you are steering clear of right now? >> i think that, you know, it's good to be diversified. i think some companies have propelled themselves, like the discovery channel with the oprah channel, so they're very expensive. our background is a relative value background so we're looking for a little bit more value for future growth. >> and for our viewers who are sort of novice investors, when you say value, you mean a
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company that is -- whose stock price is lower than others in its space. compared to how much it earns. >> you're exactly right. in fact the media companies are generally later cycle companies so they typically trade at discount to the overall market on a price to kpash flow basis certainly comcast and cbs and even time warner are attractive valuations. >> great to talk about you about this. thanks for being with us. >> thank you so much, ali. >> you'd like to think you're smart about money already, right? we all would. but our next guest would say even smart people do dumb things with their money. i'll explain, next. etfs? exchange traded funds? don't just give me ten or twenty to choose from. come on.
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my next guest is an old friend, a business journalist and author of "moolala" bruce ellery joins me from new york. welcome back to new york. the book, you emphasize that people need to figure out first what their money is for before they learn how to manage it. why does that make a difference? >> because that's their vested interest. no one wants to do the boring stuff. and managing your money can be really, really boring. but when you have an answer to the question of what my money is for, people do it. so people say money is for adventure, freedom, travel, for my kids. when you're clear on that, there's a way higher probability that you're going to do the boring stuff, signing up your 401(k). >> so if money is just for saving that's not really all that motivating. >> insufficient. it's like saying marriage is for security. >> right. okay. good point. that's a good way to do it. we're all familiar with the food pyramid which tells you how you
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should eat. you sort of developed a pyramid that explains how to manage your money. you're really looking to make this very, very simple for people. let's start with the foundation of the pyramid which is the heartbeat of all business. >> yeah. >> you say it's the heartbeat of people's money. cash flow. >> yeah. if you're not earning more money than you're spending, stop right there. you've either got to revenue, like a business does, or cut your expenses, like a business does. you have to do that in your own life. if you haven't done that, there is no point in listening to your uncle frank who's telling you about this hot oil and gas that you should get into. you need to focus on your cash flow. nothing else is relevant. >> okay. christine says this all the time, you say it too. this is the next important thing is handling your debt. >> that is a 19% return in a heartbeat. and so many americans carry massive amounts of credit card debt and then they're distracted by all this other talk about ponzi schemes and q4 bank numbers when the only thing at that level of the pyramid they
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need to do is nail that credit card. >> there are very few investments that will give you the return of paying down your debt as you said you might be paying 19% for. now, after you've handled cash flow and after you've handled debt, then and only then do you start thinking about the next level, savings. >> 10% of your gross income. a lot of people say, bruce, all of this is so complicated, how do i keep track of it all. there's so much to think about. there isn't. save 10%. are you doing that? yes or no. i do these call-in shows and people ask me all sorts of questions. i take them through the priority pyramid and i am ruthless about this. if you focus on this in order, you'll have a way higher probability of getting a handle on your money. >> at some point you've got to keel with taxes. >> yeah. they're a big chunk. even in america they are a big chunk of money. you've got to look at ways to offset that. >> now you get to the part that i love the most. >> yeah. >> it takes a while to get there, but then it's about investment. then you really have to do
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something to grow your money. >> and specifically, this is the part you're not going to like so much, getting the performance of the benchmark index. i'm not talking about shooting the lights out, i'm talking about getting the performance of the s&p 500 or the dow or whatever your bench mark is over time. you know what, if you do that, you're ahead of 90% of people. >> and those benchmarks historically do quite nicely. >> yeah. >> they'll return 10% or more in the average year over time. that's fine. if you're growing your money at 10% over time, you're doing quite well. >> you're a rock star. >> don't look for the hot stock tip, just do what the market does. now, once you've done all that, you massage it a little bit to try and tweak it? >> yeah. sector stuff, maybe you want to work on some international stuff, alternative energy stocks. you're opt mieimizing your retu. a lot of people get to the top and say i don't like that stuff. i don't want to spend the time there, which is perfectly fine, because again, if you're getting the performance of the benchmark, you're doing pretty well. if it's not your thing, then don't fuss about it.
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if it is your thing, great. but you have torn your way to the top of the pyramid. >> so that's brilliant because people come to me without having looked at any of that stuff on the pyramid and tell me do you think i should sell this stock and buy that stock. your point is, wait a minute, have you handled everything below that before you start to tweak or optimize right at the top of your pyramid. >> absolutely. and i'm not even going to talk to you about that stuff until you've done the stuff at the lower levels. >> bruce, you've written an entire book on this. it is based on the feedback that you've gotten from working with people. what do you think? tell my audience what the biggest impediment to achieving financial success is likely to be. >> they're not clear on what their money is for, the context for money and they also mismanage the level of complexity. no offense, but they listen to the media and i think i should know what the dow did, it doesn't matter. what matters is what is within their circle of control. >> okay. in that case, what can we do better? what should i do better to feed that? if people are misreading what we're telling them, what should
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we be telling them more of? >> we have to keep focusing on these base messages. and hopefully have some fun while we're doing it. that's why i called the book "moolala." it's not about money itself, it's about the tool. so often people disconnect their dreams with the financial fuel that will bring them to life. >> that is excellent. bruce, thanks so much. i've been looking forward to this book for a long time. you are a guy that thinks that if people are not getting the message, it's not worth putting the message out, so i hope lots of people get it. the book is fantastic. i've got a message for president obama, but since i don't think i'll be making it to the white house this weekend, i'll share exactly what i would tell the president next. pm. no other medicine, not even advil pm, is more effective for pain and sleeplessness. motrin pm.
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time now for the xyz of it. ahead of the state of the union on tuesday night, i have written
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the president a letter which i'd like to read to you. dear mr. president. i saw a survey put out by a decco asking americans who they'd most want to trade places with. 11% would like to switch with you. you tied martha stewart and game in third behind steve jobs and warren buffett. let me say i do not envy the position you're in and i wonder how bad that 11% has it that they would want your job. that said, you did want your job. you campaigned hard for it with your eyes wide open about what a mess you'd inherit if you got it. that mess is now yours. as you and your potential opponents gear up for the 2012 presidential election, it's going to get harder and harder to focus on the tough and unpopular job of governing. i commend you and congress on the great compromises you reached in december, and hope that the next two years holds more of the same. the stock markets have enjoyed your presidency so far, and the housing market continues to improve, although foreclosures continue to plague us.
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but what we really hurt the most in is job creation. it must frustrate you that as much as you'd like to, you can't really create jobs. business has to create them. what you can do and what you are doing is to continue to reach out to business leaders, leaving no room for those who call your administration anti-business. and please, mr. president, say something in your speech to acknowledge the growing crisis of those millions of americans we call the 99ers. americans who have been out of a job for more than two years and have exhausted the maximum 79, 89 or 99-week limit on state and federal unemployment benefits. your end-of-year deal with republicans to extend the bush era tax cuts in exchange for extending unemployment benefits did nothing for those who are the worst off, largely forgotten, and growing. as i said at the start of this letter, i wouldn't wish your job on anyone, and i certainly wouldn't want it, but like most americans, i wish you good luck. sincerely, ali velshi.


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