The Dividend Daily

According to Mastercard’s (MA) SpendingPulse unit, preliminary holiday spending data reflects what some experts believe will be the slowest growth in spending since 2008 (when the recession began). As trading volume slowly begins to build up toward year-end, it will be interesting to see how investors react to any further signs of consumer caution. With salary growth continuing to be constrained, it’s certainly no surprise that discretionary income will be affected, even around the holidays.

Looking at stocks that moved on the retail sales note, we saw credit card processing giants Mastercard (MA) and Visa (V) pulling back. Apple (AAPL) shares were down once again as we keep hearing conflicting data on how well the company did when all was said and done with holiday spending. Retail names like Coach (COH), Gap Inc. (GPS), and Limited Brands (LTD) were also down in today’s action.

Source of Funds & Some Tough Love

Plenty of big questions surround how investors will ultimately be treated once the fiscal cliff talks finally end in some sort of resolution. Unfortunately, Washington sees investors simply as a source of funds to help maintain the government’s spending habits.

This point brings me to the reality of today’s economic worries. Anyone with a decent-sized family can probably share a tale or two of financial dependency. It seems like more folks than ever are moving back in with parents or other relatives — many times with a spouse and kids in tow. Often times a job loss is to blame for these hardships. In other cases, families have just built up a pile of debt so high that they can’t climb out from under it. When you (as a parent or grandparent) are recognized as a “source of funds,” it’s pretty hard to turn your back on loved ones. But if you don’t set up a timeline or other rules to govern the assistance you’re dishing out, you risk doing some potential damage to your own long-term financial outlook.

Sitting around the holiday table among plenty of family members, you’ll hear the struggles of relatives who made bad career choices, bad education decisions, bad investment decisions, and in some cases, bad spouse choices (picking the right mate is often understated by financial experts). It was once thought that going to a parent or grandparent for financial help would only come in times of emergency, but these days, it is almost expected there will be a backstop for almost any mistake people make. It simply comes down to bad planning and decision making if you ask me!

This point brings us back to the policy makers today, as they look for any and all sources of funds to keep the economy stitched together. Rather than letting a normal recessionary cycle play out, we just see policies in place that only dig a deeper hole for taxpayers to eventually foot the bill for. It’s certainly not fair, and this financial irresponsibility is something that needs to be accounted for sooner than later. Look no further to the family examples above to see how well the strategy of constant bailouts works out over time. Generations before us grew up with “tough love” and they credit that concept as exactly what they needed to learn those early lessons. It’s time to revisit this mindset before things get further out of hand!

Thanks for reading everybody. I’ll see you tomorrow!

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