You’re Approved!

Well, Suze Orman has launched her very own pre-paid debit card, branded “The Approved Card”. Approved for what, do you think?

Suze has done a pretty good job over the years of selling books and air time for CNBC, and  to give her credit, educating lots of folks with some fairly solid, generic advice. Key word here is generic. Her advice is not specific to you. And let’s face it, she is essentially an entertainer and author.

I’m hoping that readers of this posting don’t use debit cards, but I thought I would explain some of the basics…

10 Questions. Again.

This is most frustrating for me. I continue to come across individuals who have had less than satisfactory results from working with a financial advisor…

I had a meeting yesterday morning with a friend. He wanted to learn more about my business, and see if it made sense for me to help him manage his accounts. One of them, a trust account for one of his two sons, was being managed by a full-commission broker. This broker managed to turn $9,000 into $3,000 in just one short year. Oh, and by the way, he charged $75 a trade, and traded frequently in and out of micro-cap positions, that is common stocks of very small companies.

I had coffee last week with a woman who was looking for a fee-only advisor. She told me about meeting earlier last year with two very nice and apparently capable guys, who she thought were fee-only. After 3 meetings and about 4 hours of her time, they finally suggested that she purchase a variable annuity. They were not fee-only. Fee-only advisors do not make any money from commissions or transactions.

I had dinner last year at my sister’s house. A friend from high school was visiting. She asked what I was doing now,  and came close to an audible gasp when I told her how I charged for my services and what my fees were. She told me that she paid her financial advisor just $100 the previous year. Her advisor is an insurance saleswoman at John Hancock, and my high school friend had no idea what she had in her portfolio or how much in commissions her “advisor” was making.

I met a woman earlier this summer. She is a widow. We were having a delightful conversation at a mutual friend’s home. She asked me what I did for a living, and when I told her she literally took a step back, away from me, and her entire demeanor changed to the negative. It seems that her “advisor” at the time of her husband’s death executed a couple of transactions that made perfect sense for him, but none for her…his client.

Do you see any pattern here?

Forecast: Unexpected and Surprising…

Did you hear why God made weathermen? To make economic forecasters look better.

It seems almost every day someone is asking me what I think is going to happen this year. Will the economy improve? How will stocks do? Is it a good time to buy gold?

I wish I knew. It is a tricky business predicting the future. No one knows what is going to happen this year (naturally, I have an opinion, and I’m going to make you read all the way through this post to get to it).

It’s fun going back in time to read what some economic forecasters thought 2011 would bring…

What I Wish For you…

I had a long telephone conversation last night with a dear friend from college. We caught each other up on the past few months of our lives, and had plenty to say. Unfortunately, he told me that his sister, not yet 50, is sick again with cancer. She is not expected to survive this bout.

And so I reflected a bit. Though I have had many challenges this year of 2011, I am happy, healthy and living life each day. There are many that care for me, and most of those I care for are doing well.

My business is helping folks plan for the future. I believe a plan is essential for making the most of what we have right now, and feeling comfortable about what may or may not occur in an unknown future. I find more and more, however, that I am focusing on helping my clients get more out of the present. To realize the blessings they have, and to stay flexible with their plan.

My wish for each and everyone one of you is just that:  live in the present and enjoy all the little pleasures that come your way, have a plan for the future and keep it flexible.

Merry Christmas…

Numbers and The Buffett Rule

I like numbers. There’s a concreteness to them. I enjoy digging down and understanding what’s behind them. I find  a sense of order from understanding. The most important lesson I ever learned about numbers was from my dad. He told me to be suspicious of people who use numbers to tell a story. He said that in skilled hands, numbers can tell whatever story the author wants.

Do you think there is more to The Buffett Rule?  You know the one. The one that President Obama has been touting on his jobs-bill  crusade. The one where Warren Buffett thinks it is unfair for him to pay a lower tax rate on his income than his secretary.

Well, I’d like to dig a bit, open the hood and have a generous look-see at the numbers behind Mr. Buffett’s claim and President Obama’s rhetoric…

Want To Be A Landlord? Really?

Many are looking for ways to boost income while staying relatively safe. Some are figuring that rental income from ownership in some present-day inexpensive real estate will fit that bill. After all, home prices are down.  And out.  And, sorry to say, rentals make a lot more sense than buying for a bunch of us. I think this is a good time to buy income-producing real estate. If you can.

But how?

Many have tapped out or drawn down cash reserves, and few assets are worth selling at today’s depressed prices. So, where to find the cash to take advantage of low, low prices for homes…

How about your IRA?

But not in the sense that many purveyors of self-directed IRAs would have you follow. No, not at all.

Is It Safe?

Is it safe? I can still hear those soft, yet utterly chilling words asked by actor Sir Laurence Olivier in the movie “Marathon Man“. Is it safe?

With stock prices  still inflicting daily pain or joy, much like Sir Laurence’s dental pick or camphor, I bet many of you are asking that very same question today. Is it safe to buy stocks? I bet you would love to know the answer…

Well, as always, it depends upon your situation, objectives and tolerances. I think for some the answer is yes. For some, the answer is no. For me, I am adding to some of my positions. And adding to positions for some of my clients. And, I am in the enviable position of having two new clients with nothing but cash, money received from a divorce settlement…it’s a bit like being a kid in a candy shop, as both have at least 15 years before either one plans on needing this money and there are what could be some very promising buys on good companies.

Here are 5 individual companies and 3 exchange traded funds that might make sense for you. Might…

Is It That Time Again?

Has anyone else noticed how quickly the summer has disappeared? It’s been like snow melting in July. Believe me, Halloween is just around the corner, followed right on its heels by Thanksgiving and the Christmas shopping season. Next will be New Year’s Eve and the start of 2012. As much as I hate to mention it, now is the time to prepare for April 15, 2012.

Run through these few income tax items with me to help ensure you will pay as little as possible next April…

The Jubilant/ Despondent Mr. Market

Anyone noticed that the stock market has been a little bipolar lately? It seems that Mr. Market has not been taking his meds.

The Dow Jones Industrial Average, a price weighted average of 30 US companies, has fallen by some 15% in the last 3 months, more than 10% since the beginning of the month, down around 600 points on Monday, up then down then up over 400 points on Tuesday, down over 500 points yesterday and back up over 400 points today. What is a rational investor to think?

There is only one thing to think, one thing to learn, one fact to take away…markets are not rational. Let me repeat, markets are not rational. Markets are driven by people, and people are emotional beings. Subject to herd mentality and bouts of irrationality. Fear and greed. Perhaps markets are efficient over the long term, that is priced correctly, but certainly not over short time horizons.

Can you find some way to take advantage of human irrationality? To actually make money in a market like this? Two suggestions:

The Big Mo…

Momentum  (mō men’tem),  n., 1. force or speed of movement; impetus:  The car (markets) gained momentum as it began to go downhill.

Momentum is a powerful force in the stock market. Once it gains a foothold and traction, it will typically rise a stock or asset class higher than it should go, or drop a stock or asset class lower than it should go. We are now witnessing downward momentum. In a big way. Fear and pessimism has gripped the market, or more precisely traders and investors, like a cold dread, with hand-wringing anxiety. Keynes’s haunting refrain lingers in the air:  “Markets can stay irrational longer than you can stay solvent.”

So, what is an investor to do?

The Force Is At Work…

Remember Obi- Wan’s  explanation after narrowly escaping near certain capture by Imperial Storm Troopers?… “The Force can have a strong influence on the weak-minded…“

Not to suggest that too many of us are weak-minded, but too many of us do stupid things with our money. Why?

I Need A Good Title For This…

Did you hear the one about the credit rating statistician…

I wish I did know a good joke about the credit rating agencies. Lord knows most of us could use a smile these days. Speaking of these days, it seems that most every other day or so a new headline screams, “US Debt To Be Downgraded” or “Rating Agencies Take a Closer Look At Greece”. Just who does this “downgrade” or “takes a closer look”?

Fundamental Is as Fundamental Does

Let’s take a little trip back in time. I want to re-visit high school science. Remember the periodic chart of elements? It is a tabular display of all the known chemical elements, and is presented by the increasing values of atomic numbers, more specifically by the numbers of protons within a respective nucleus. So, the chart begins in the upper left hand corner with Hydrogen, which has 1 proton. In the bottom right corner is the heaviest known element, Ununoctium, with 118 protons. Let’s now flip the chart over so that Ununoctium is on the top left and Hydrogen is on the bottom right. In our new version, the heaviest element is first and the lightest element is last. This is how most investment indexes are assembled, with the largest companies at the top and the smallest companies at the bottom. This is referred to as market-capitalization weighting and means that the largest companies have a greater percentage weight, or representation,  in the index than smaller companies. Unlike the natural order of atomic weighting in science, market-cap weighting for investment purposes is purely a human construction. But is it the best way for you to invest your hard earned dollars? Maybe, or maybe not…

Baseball Affinity

The recent Forbes magazine had a story about affinity marketing, slick and colorful brochures,  and a product too good to be true and too complicated to be understood.

Let’s start off with Tom Candiotti. After a 17-year career as a pitcher for major league baseball, he found himself on the short end of investable assets, that is cash and fairly liquid securities, and two young-ish kids to deal with and get though college. Enter retired fellow big-leaguer Todd Stottlemyre, who just happened to have passed his state insurance exam and was now an employee of venerable Merrill Lynch. Stottlemyre convinced Candiotti that Merrill had the perfect product to solve his concerns…

Lightening Never Strikes Twice…

Not too long ago, a re-airing of The World According To Garp was on TV. I flipped back and forth among channels and caught  portions of the movie. There was one scene where Garp was looking a house he wanted to buy. As they were thinking about the home, the neighborhood, etc., a small plane faltered in flight, the engine sputtering, and the two-seater flew right into the second floor. Garp immediately pronounced, “We’ll take it…Honey, it’s disaster-proof! Nothing bad can possibly happen again”. If only…