Then again, what do we know? Whatever the folks at “school central” (or whoever it is that runs the schools these days) decide, we just hope they don’t mess with September.

September was always when school started again. And starting again always meant something fresh. We loved that feeling.

The cool thing about school was you got to take everything you already learned and make something interesting and exciting out of it, even while you learned new stuff. How can you beat that? Come to think of it, it sure sounds like the sort of attitude we’re all going to need as we work our way out of this financial crisis.

Ah, see how September got us into a perfect frame of mind to think about all those ideas we’ve been writing about since this past January? Not only that, but we’re ready to get to work on some new stuff: where we go from here.

So where to start? Well, first let’s get everything on the table and see what we’ve got to work with. (We’ll include links to the original letters in case you want to refresh your memory.)

Once we do that, we still want to add two more things we think we’ll all need to help us through the coming months and years:

• Your First and Best Defense Against the Financial Crisis
• The 10-Year “Stealth” Bull Market That’s Escaped Everyone’s Attention

Let’s get started. So far this past year we saw:

– that the great credit bubble that grew over the last few decades had begun to deflate, at least to the extent that consumers slowed their spending – a bad turn for an economy that has been heavily consumer-driven since at least the end of World War II. {LINK}

– that one result of that credit bubble – a whole lot of borrowing and debt – was the “appearance” of prosperity: people used that credit to live beyond their means rather than save money and live within their means. {LINK}

– the ominous build-up of a great sovereign debt bubbleand the first rumblings of that bubble trying to deflate with the Greek debt crisis. {LINK}

– that municipalities will come under increasing financial pressure for the foreseeable future, with the possible result thatmunicipal bonds as investments will become riskier than they have been since the Great Depression. {LINK}

– why the real estate market, both residential and commercial, will continue to decline for the foreseeable future – and why it could take months or years for the real estate market to stabilize, never mind start growing again. {LINK}

– that it’s time to reassess the idea that owning a home is always the best way to live – along with the problems caused by a blind belief that every American ought to – virtually deserves to – own a home. {LINK}

– how to evaluate whether you can afford a home of your own, whether it makes sense to buy, and how to decide on what a good price is for a particular house. {LINK}

– precisely why the financial and economic crisis that began in 2007 isn’t over yet – and in fact has a long way to go. {LINK}

– a thorough breakdown of the various parts of the financial crisis and why this one is the worst since the Great Depression. {LINK}

– exactly where we are now in a surprisingly predictable cycle of events that were triggered by the subprime collapse in 2007. {LINK}

– what we need to keep our eyes on for the rest of 2010 to help us prepare for the coming months and years. {LINK}

Okay. That’s what we’ve got so far. Now let’s get into those two new items. You’ll find the first one surprisingly simple and obvious. As for the second item…well, we’ll see.

Some people think being frugal means being a tightwad, a penny-pincher, even a miser. It doesn’t mean that at all. In fact, there’s a whole bunch of Americans who’ve been “living cheap” and loving it. Even when they do pinch pennies at times, they’re having fun. Let’s see why.

Frugal living goes back to our Founding Fathers. Among Benjamin Franklin’s most famous quotes was “Waste not, want not.” Our forefathers worked hard to build our great country. They wouldn’t dream of wasting their money on what they called “trifles.”

Going even further back, the Bible says, “Why spend money on what is not bread, and your labor on what does not satisfy?” (Isaiah 55:2) Think about how hard you have to work to get the money you have. Now think about some of the ways you may have wasted that money in the past. If you’re like so many Americans today, you’ve probably got a laundry list of “things” you’ve spent money on. And you’ve probably got too much clothing, too many shoes, the latest electronic gadgets – well, you can finish the list. Is it all that satisfying?

If you’re undecided, here’s something interesting we can share with you:

And that’s exactly how you’re going to live once you understand the principles of frugal living. You will spend money when you get true value or true satisfaction from the product or service you buy.

Notice we said true value or satisfaction. Something has truevalue for you when it helps you lead a more fulfilling life. For example, will it improve your physical or mental health? Can it lift you up spiritually? Will your family relationships grow stronger? You get the point, don’t you?

Aren’t these better reasons to spend your money than just keeping up with the neighbors, having the latest cell phone, or satisfying some urge that will pass if you just take a deep breath before you buy?

It’s not like you’re never going to enjoy yourself, or spend money on something special and important, or even go on great vacations and travel in style. (In fact, most rich people we know will spend lots of money on vacations and travel.) Being frugal doesn’t mean living like a miser. It doesn’t mean being miserable. (And misers really are miserable!)

You’re simply going to stop wasting money on things that don’t provide value, some real meaning or real lasting enjoyment in exchange for the money you spend. That’s the way to practice frugal living.

Besides, a little frugal living and the next thing you know you’ll be saving, spending wisely – and maybe even investing more wisely too. And – in case you didn’t already know it –

You see, now you’ll not only save, but when you spend, you’ll spend wisely – on things that really matter to you, to your family – ultimately to your living a more fulfilling life.

The possibilities for living cheap are endless when you’ve got the right attitude and mind-set. And, again, don’t worry, you won’t shrivel up and become stingy. In fact, you’ll always have the money you need when you find something important to spend your money on, something that will have lasting value for you and your family.

We don’t have the space to get into too many specifics on frugal living, but we will suggest one simple rule to start the ball rolling if you’re not already living the thrifty life:

Now on to the second item we’re adding to our list today. We’re talking about gold.

You see, you’d never know that gold has been in a spectacular, some have called it historic, ten year bull market. The fact is, most people today don’t own any gold. They don’t really understand the whole point of owning some gold. Incredible considering that if stocks were in a ten-year bull market (don’t you wish!) people would be literally pouring money into the stock market – wouldn’t they?

There are many reasons why this sorry state of affairs has occurred in our lifetimes. One reason is that, since the 1930’s, just about all governments have given up on what was known as the “gold standard.” That was when your paper money derived its value based upon its relation to gold. For reasons we don’t have the time to get into now, governments decided not to stick with the gold standard anymore. In fact, in the United States it was illegal to own gold coins from 1933 until 1974. By that time, most people forgot that gold was once, in fact, used as money.

Then there was the gold “bear market” that extended from around 1980 until around 2000. For twenty years, gold – in terms of dollars – just didn’t go anywhere. It seemed like a kind of useless asset to own. And when you compared it to stocks, which were in a huge bull market in those years, you can almost understand why no one thought much of gold at all.

But how things have changed! Gold has been in a strong bull market since around 2000. It has “outperformed” every other asset class – stocks, bonds, even commodities (which have been in their own bull market) since then.

But even now, even when you can get some people to admit that there just might be some reason to own some gold, you’d be surprised how many just won’t buy any. Strange.

So maybe we can start getting you a little more comfortable with the idea now. If you’re a skeptic here, just stick with us for a couple of minutes and keep an open mind. Okay?

First of all, you probably do already own some gold. Maybe a watch, some jewelry? We bet you do own some sort of gold in some form. So it’s not like gold is some strange, exotic substance, right?

Fair enough. So why don’t we just introduce you to two fellows who’ve invested lots of their money in gold and see if maybe that’ll help you get more comfortable with the whole idea – bubble or no bubble.

The first guy is George Soros. We all know who he is. Soros famously announced he had invested in gold and then promptly announced that gold was in a bubble now – even as he was investing hundreds of millions of his own money in gold.

Yes, you read that right. George Soros has invested hundreds of millions of his own money in gold – and still he’s been quoted as saying that gold’s in a bubble.

(We wouldn’t take Soros’ bubble comment too seriously. Most likely it’s just him wanting to keep you from buying gold so you don’t drive the price up. He doesn’t want that just yet, since he’s probably looking to buy more. That’s how guys like Soros operate.)

Now maybe you’re one of those folks who don’t particularly like Soros. He’s a bit of a controversial figure. Okay, then how about John Paulson? Don’t know Paulson? He’s that hedge fund manager who famously made (I think it was) $3 billion – personally – betting that we’d have a subprime mortgage disaster. And, of course, he was right. Anyway, Paulson put a big chunk of those billions into gold.

The list goes on – a list that includes sophisticated professional investors who invest lots of money, to be specific, their own money, in gold . And here’s where we think you might start to overcome any prejudice or discomfort you might have with investing in gold.

You see, when it comes to professional investors, you’ve got the ones who put their money where their mouth is and you’ve got the ones who don’t. Soros and Paulson are the kind who put their money where their mouth is. They’ve invested in gold and aren’t shy about it.

The other ones – the ones who don’t put their money where their mouth is – aren’t investing in gold. They’re a whole different breed of investment professional. They invest “other people’s money.” There’s an acronym for that: OPM. They typically work for large (and not so large) institutions. What they do reminds us of the saying that old-timers tell you about the typical broker: they never buy their own (to use another acronym) BS.

That’s why out of all the money “professionally” invested out there, there’s only about 0.7% of the total invested in gold. That’s it. Trillions (I think it’s up around $55 trillion) invested, but only about $400 billion invested in gold and ETF’s that represent gold, and gold mining shares. Just a drop in the bucket. (Doesn’t sound much like a bubble to us.)

So if you’re you’re asking yourself if or why you should invest in gold now, we suggest you maybe think first about those sophisticated, rich investors – the ones like Soros and Paulson who’ve actually put a boatload of their own money into it. And maybe you can ignore the investment professionals who just invest OPM, other people’s money. They’re the ones who aren’t investing their own money.

Just a suggestion.

Anyway, we’ll talk more about gold in the future. Just think about what we’re saying here and chew on it for a while. It might help you answer that question: “Why invest in gold?”, or maybe even “Why invest in gold now?”

For now, we hope you’re gearing yourself up for the future. This financial crisis comes with a lot of scary baggage: Will we slip into another recession – or worse? What happens if millions of Americans stay unemployed – for years? What happens to all those houses – and all those people – who are going through foreclosures on their mortgages now?It’s a long list.

But there’s another side to this crisis. We’ve been trying to bring you that other side – at least a snip here and there – in most of our letters over the past couple of years. And we’re going to continue doing that as we keep rolling along in the coming months and years. It’s got to do with how more people – and maybe a lot more people – are starting to think about what’s really important. Here’s another example:

We want to share something with you that was passed on to us by one of the readers of this letter. Maybe you’ve seen it. It’s called “The Mayonnaise Jar.” If you haven’t, it’s worth a quick read…

When things in your life seem almost too much to handle,
When 24 Hours in a day is not enough,
Remember the mayonnaise jar and 2 cups of coffee.

A professor stood before his philosophy class
and had some items in front of him.
When the class began, wordlessly,
He picked up a very large and empty mayonnaise jar
And proceeded to fill it with golf balls.

He then asked the students, if the jar was full.
They agreed that it was.

The professor then picked up a box of pebbles and poured
them into the jar.. He shook the jar lightly.
The pebbles rolled into the open Areas between the golf balls.

He then asked the students again if the jar was full. They agreed it was.

The professor next picked up a box of sand and poured it into the jar.
Of course, the sand filled up everything else.
He asked once more if the jar was full. The students responded with a unanimous ‘yes.’

The professor then produced two cups of coffee from under the table and poured the entire contents into the jar, effectively filling the empty space between the sand. The students laughed.

‘Now,’ said the professor, as the laughter subsided,
‘I want you to recognize that this jar represents your life.
The golf balls are the important things – family,
children, health, friends, and favorite passions.
Things that if everything else was lost and only they remained, your life would still be full.

The pebbles are the other things that matter like your job, house, and car.

The sand is everything else –The small stuff.

‘If you put the sand into the jar first,’ He continued,
there is no room for the pebbles or the golf balls.
The same goes for life.

If you spend all your time and energy on the small stuff,
You will never have room for the things that are important to you.

So…

Pay attention to the things that are critical to your happiness.
Play With your children.
Take time to get medical checkups.
Take your loved one out to dinner.

There will always be time to clean the house and fix the disposal.

‘Take care of the golf balls first —
The things that really matter.
Set your priorities. The rest is just sand.’

One of the students raised her hand and inquired what the coffee represented.

The professor smiled.
‘I’m glad you asked’.

It just goes to show you that no matter how full your life may seem,
there’s always room for a couple of cups of coffee with a friend.’

Wishing all you “Golf Balls” a beautiful October,

P.S. – I hope you find the thoughts and ideas in these letters interesting or maybe even helpful. If you do, you can find more on my Just visit my blog. I’ve been taking a look at “How You Get Deflation and Inflation at the same time”; “When China Will Surpass the U.S. as the #1 Economy – or Not”; “Why the Stock Market Keeps Going Nowhere.” You’ll find all the latest posts if you click here.

Richard S. Esposito, ChFC
Lighthouse Wealth Management LLC
405 Lexington Avenue, 26th Floor
New York, NY 10174
Tel: 212-907-6583/Fax: 866-924-1952

Email: resposito@lighthousewm.com