Retirement preparedness of Baby Boomers

Alicia Munnell, writing in Smart Money, discusses the retirement preparedness of the Baby Boom generation.

The highlights:…while the boomers have been accumulating wealth at much the same pace as their parents, the world has changed in four important ways.

1) The prevalence of defined benefit pension plans has declined dramatically over the last 25 years.
2) Real interest rates have fallen significantly, so a given amount of wealth will now produce less retirement income.
3) Life expectancy has increased, so accumulated assets must support a longer period of retirement.
4) Health care costs have risen substantially and show signs of further increase, indicating a need for greater accumulation of retirement assets.

So, yeah, it’s somewhat discouraging to think that you will have to save even more since the onus of retirement has now been put entirely on your shoulders. It just points out the need to find a competent advisor early and get cracking. It might make a good resolution for the New Year.And this is why you really need to pay attention to your 401k . You can't afford to take big hits. Most of us have already taken 2-3 big hits over our lifetime

How bad were the market predictions?

These are the predictions of the "top" people at each firm on where the s&p would be at year end.

This is why I believe predictions are worthless. You have to have someone that knows what to do no matter what the market throws at you.

Is your investment professional right for you?

this is one part of an interview between Josh Brown and Lee munson-you can read it here:http://www.thereformedbroker.com/2011/12/21/the-return-of-lee-munson/

JB: Let's say I'm an investor, what's the number one sign I should look for to tell me whether or not the investment professional I'm working with is wrong or right for me? LM: Do you want an advisor that just farms things out to any wholesaler that provides steak dinners? Do you want an advisor that is old and outdated? What about a ‘nice guy’ that goes to your church? Screw all of this. The person in front of you needs to have some exposure to the actual process of running money. People who actually touch the stuff are not always the nicest guys in the room, you and me being a case in point.The bottom line: you have to find an advisor that sees you as the prime fit, not the other way around. Don’t hire someone that isn’t a specialist in what you are looking for. Both parties need to have a similar view or philosophy or the relationship will not work. You need an advisor that will succeed when you succeed, not when he suckers you into buying an expensive product.

Investor Sentiment during market cycles

So where are you in the cycle?

International trouble in your 401k

I've been harping on why I think you should be out of bond funds for quite some time now.
Here's something else for you to consider.
Do you have any clue how those international funds you're in have been doing?
Well let me clue you in...

On January 28, 2011 the
relative strength of EEM, which I use as a proxy for emerging market funds, went
negative against the S & P. EEM is the iShares MSCI Emerging Markets Index.

Since that time EEM is down 20.47% and VWO, which is the Vanguard MSCI Emerging Markets ETF, is down 19.45%.

The S & P during this same time period is down 3.23%

My point is that if you are not paying attention to your 401k and have money allocated to the
International sector, you are down around 20% in that part of your 401k just since January.

Doesn't it make sense to pay attention?

What I like to do with a sector like International, after having pulled my clients out back in January, is to have them start putting in their monthly contribution, which is a small
amount, into the International funds on their 401k platform.
That way, you are building up exposure to International on a small scale until the time comes to
redeploy money into that sector.

Reduced 401k exposure

Ok,the s&p hit 1230 today and we trimmed portfolios of around 25%.The s&p closed at 1236.47 so we'll see what happens.This is totally about capital preservation,my main indicator is still favoring stocks over moneymarket or bonds.The game plan for 401k's is to redeploy the money if we reverse back up,which at this point would be at 1260.If the relative strength changes to where moneymarket is favored we will move to total cash.

URGENT

An URGENT email was sent to subscribers on action that I wuld recommend for today.

If you didn't get it please email me

3rd bubble for your 401k?

You remember the dot com years where deep down you knew that aol wasn't worth $100 a share. And more recently you remember the financial crisis and deep down you knew that houses in your neighborhood were way overpriced. So you've seen 2 so called bubbles one in tech stocks and one in housing.

Do you remember what happened to your 401k during those bubbles?

So do you think you'd recognize another bubble when it comes along?

Well if the majority of your 401k is in bonds you could be moments away from another huge bubble.

Do you honestly think that interest rates are going to stay at zero forever?

Do you know what happens to the value of your bond funds if interest rates go up?

If you don't know the value goes down, as interest rates go up. So let's take it a step further, if interest rates are practically zero now they obviously can't go down much lower. So the value of your bonds has no where to go but down.

Are you savy enough to know when to get out of bonds? How savy were you during the last 2 bubbles?

More 401k advice on a 200 point down day

As per my last post i had some new clients that were totally out of the market put some money back in today. The dow was down 198 back below 12,000 and the s&p was down about 27 to 1234

So with these new people the plan is to at least hold this 25% until my main indicator which is a comparison of the relative strength of the s&p and money market turns to favoring moneymarket

With my other clients that are close to being fully invested the plan is to reduce their holdings by at least 25% if the s&p hits 1230 which could happen tomorrow.

This is how I manage a 401k. There is no tax consequence to moving the money around and the object is to grow my clients money and avoid the big downs.As I like to say smooth out the ride for them.

Any subscibers reading this need to be on the lookout for an URGENT email tomorrow in case the s&p hits 1230. Since I have started the subscription advice I won't post anything on here until next week sometime.

For informational purposes the s&p closed at 1238.16 back on 4/18/2001 approximately where it is today.So if you are a buy and hold type congrats, after 10 1/2 years your pretty much even

My 2 cents worth if your 401k is all in cash

I have advised a few new clients that have been totally out of the market that this is a good place to put at least 25% of their money back into a stock mutual fund. The s&p is at 1240.96 as I type this . They will be back in at the close so we'll see where the s&p closes.

401k advice

A lot of people either are afraid to ask for advice or just try to ignore the fact
that they need advice when it comes to their 401k
To help people make some kind of decision on whether they should be in stocks bonds
or cash I have started a generic recommendation service The cost is $50 per
month or if you pay for a year it's $500. There is a paypal button on the bottom of this blog.
When I say it's generic I mean I don't know your individual situation I don't know
what funds are available on your 401k platform. What I am recommending in this
format is something to at least give you a little guidance. If you go back and
read my blog posts. On 11/17 you will see where I recommended that you take defensive measures . I was recommending that you take some % out of your stock funds and temporarily put that money in moneymarket.
Than on 11/28 I recommended you redeploy it.
That's the kind of info I will email to you. I will also
send an email each week giving you a generic asset allocation for your 401k or IRA.
An example might be to have 80% in stocks 35% of that in small cap 35% in mid cap
and 10% in large cap the other 20% I would leave in moneymarket.
Since this is generic it is up to you to do with it as you feel comfortable
The real value is it will help when the market tanks like during the dot com years
or like the financial crisis years which we are sort of still in. You won't sit
there paralyzed not knowing what to do. You will get an URGENT email from me recommending you take some kind of action long before you suffer a 20% hit to your 401k.

Eating fish and Alzheimer's

http://www.rsna.org/Media/rsna/RSNA11_newsrelease_target.cfm?id=571

What a Market

What a crazy market.

My main indicator has been on a buy signal since Oct 21. My canary which is the s&p chart flashed danger when it broke down at 1220 and I took some money off the table. When the s&p chart turned back up at 1190 on August 28 I wrote that I was redeploying the money. And than yesterday we're up over 400 points. Now I know from talking to people about their 401k's and from the mutual fund weekly reports that there is a ton of money that has been pulled out of stocks and a ton of money that has gone into bonds(fixed income) The main problem is that the average investor doesn't trust their advisor because they've been screwed to many times in the past. And the average investor is pretty much clueless about what to do with their 401k So they are sitting in a bond fund or in moneymarket and will either miss the entire rally or finally get in right at the top and will swear never to invest again. Read my blog posts. I know the grammar sucks the spelling sucks the punctuation sucks but I think you'll see that I know what I'm talking about.

If you believe in buy and hold DO NOT read this

If you believe in buy and hold than don't read this

http://www.ritholtz.com/blog/2011/11/we-expect-the-stock-market-to-bottom-this-week-then-rally-for-a-combination-of-technical-and-fundamental-reasons/?utm_source=dlvr.it&utm_medium=twitter

If your thinking about retiring in the next 5 years and your financial advisor has you on that same roller coaster that you've been on you better talk to someone else if you believe this article

Time to redeploy

With todays big move up I am looking to redeploy the money I put into money market when the S&P hit 1220

My main relative strength indicator has remained favoring stocks over moneymarket but the S&P breakdown at 1220 had me pull some money off the table. With the up move today it reverses my S&P chart and I will be looking to put the money back to work.

Some of you will call this market timing-I call it trend following.

As I said before what harm has been done? Especially in your IRA or 401k. I was conservative and moved some money to safety now with the move back up in the S&P I can redeploy that money and the S&P is at 1195 as I type this,lower than the 1220 I got out at.

I now have to watch and make sure this is not a "dead cat bounce" So again if the s&p turns down and hits 1160 I will again take some defensive measures.

This is where the buy and hold followers go astray. They have problems knowing when to get back in so they advise their clients to never get out. It really is not that hard but in my experience (over 20 years) most financial advisors are more interested in gathering assets and making commissions than managing your money.

13 Years of Buy and Hold

So they have been telling you to just buy and hold-no one can time the market -what have they told you about this? You put your money in an s&p index fund in your 401k and you did nothing over 13 years--this is where you stand

S&P 500 Index Wed, Nov 23, 2011

Closing Price: 1,161.79 Open: 1,187.48 High: 1,187.48 Low: 1,161.79

Now, let's take a 13-year trip back in time, shall we...

S&P 500 Index Wed, Dec 16, 1998

Closing Price: 1,161.97 Open: 1,162.83 High: 1,166.29 Low: 1,154.69

Why do you make it so hard on yourself?

You have $300,000 in your 401k.

The market declines by 15%-so you lose $45,000 and now have $255,000

To get back to your $300,000 your going to need to earn 18%

Instead if you have $300,000 and the market declines 15% but you were smart and listned to some good advice and took 1/2 of that $300,000-$150,000 and moved it to moneymarket

You still lost 15% but you lost that only on the $150,000 still invested--$22,500. So you have 277,500.Now to get back to that $300,000 you only need to earn 8%

You've been thru this drill before in 2008-

Buy and Hold--WHY???????????

The 2 basic assumptions of advisors that advocate buy and hold as an investment philosophy are 1) that most people either aren't smart enough to know when to get in and out of the market or 2) they the advisor fit into reason #1.

If your paying an advisor that either advocates buy and hold or rebalancing WHY? Isn't that something you can do on your own?Why would you pay a fee for that?

Now don't get me wrong , this has been a very difficult market but does it make sense to just sit there and watch your money, your 401k go down day after day What possible harm could you do if you moved it to cash until the trend changed.

And please don't believe that line that the advisory business perpetuates, if you get out you won't know when to get back in. You can't time the market.

No one is trying to time the market. But when the ship is sinking don't you think you should get off?

Another drop in stock market-Are you going to watch your 401k take another beating?

Do you remember what happened to your 401k in 2008?

Your not going to let that happen again are you?

No one knows if this is 2008 all over again but wouldn't you feel better if you were protecting your principal?

Take a look at the funds your invested in with your 401k-Are there any that haven't performed very well/ Move the money to cash.

Weren't you sorry you didn't take defensive action back in 2008? Please don't let that happen again

Is this your stockbroker?

I've worked at major brokerage firms--I've seen these guys--This is so true!!!!

http://iheartwallstreet.com/2011/03/15/your-stockbroker-the-alpha/

Market Volatility and the Priorities of an Adviser

http://blogs.wsj.com/financial-adviser/2011/11/17/market-volatility-and-the-priorities-of-an-adviser/

Be very careful--Could be Big Danger ahead

Hitting 1220 on the s&p 500 just now is not a good sign.

I would be extremely cautious here-and once again I am looking to lightnen up considerablt.

I've harped on this before but I am moving to a higher percentage of cash with a lot of my accounts especially 401k's and IRA's where ther are no tax consequences.

Wary savers get mixed signals from advisors

Article on what advisors are recommending

http://www.reuters.com/article/2011/11/16/us-column-personalfinance-idUSTRE7AF2E620111116

Would you stick with a losing football coach?

If your a sports fan and the coach of your team has one losing season after another would you want to get a new coach? In fact most fans are even more impatient than that. If your a Maryland fan you might already be calling for a new football coach after one season. What effect does it really have on you? But you've been investing for however many years and how many winning seasons have you had? So why do you stick with a financial advisor that has a game plan that has one losing season after another ?

Are you making these mistakes with your 401 k?

I have been an investment advisor for over 30 years. It is astonishing to me that the mistakes I see individual investors making in the management of their company 401(k) accounts. These common mistakes most time fall into the following three categories.The first mistake is not taking the time to be aware of “what they own now” in their company retirement plan account. Many of the new prospects I talk to about providing retirement plan advice don’t even have a clue about their current investment holdings.These retirement plan participants don’t remember the reason their in the funds that their in. They also can’t tell you what kinds of stocks and bonds these mutual funds own.
Most importantly, they think their diversified but in a lot of cases own different mutual funds in their 401 k plan that own the exact same stocks and bondsThe second mistake I see is that company retirement plan participants think that they have the financial expertise to make the right investment decisions in their company retirement plan account.In truth, the vast majority of individual company retirement plan participants don’t have the necessary investment knowledge and experience. Even if they did, the day-to-day gyrations in the stock market take much more time to monitor than most company retirement plan participants can commit to.When you car needs repair, you take it to an automobile dealership. When you don’t feel well, you go do the doctor. In a world full of specialists, investment management decisions should fall into the same category.The third biggest mistake I see in talking with hundreds of company retirement plan participants over the years is that they think they have to remain 100% invested in the stock market at all times.As I have written about in this space before on several occasions, the “buy-and-hold” mutual fund myth has cost individual company retirement plan participants upwards of 40% of their company retirement plan value twice in the last three years.When you go to the casino to gamble, the casino wants you to “play every hand” you possibly can. The reason is that the more times you gamble the better odds the casino has to eventually take all your money away.The stock market many times is the same way. If you stay in the stock market 100% of the time, the better the odds are that you will be fully exposed to stocks at the top of the next economic or stock market cycle.

Your 401 k is no different than your House

Does it make sense on any
level to be out of stocks when the market is rising, or in stocks when the
market is falling?

Let's compare it to the
real estate market. I'm pretty sure most of you knew real estate was valued
insanely high back in 2007/2008. Unfortunately, most of us didn't take advantage
of it and sell our house at that time and rent for a few years because selling a
house is a huge undertaking. But the trend changed, and real estate has pretty
much been falling ever since. Stocks / equities are really no different. The big
advantage is that obviously they are a lot more liquid and easier to buy and
sell.

But just like real estate, there is a definite trend. Doesn't it make sense to ride that trend?
Why, when the trend is down in a liquid asset, would you ever just sit there and
watch it go down? Just suppose for a moment, back in 2008 when the stock market started falling, when the trend was turning down, you sold all the mutual funds in your 401k and put the money into moneymarket funds? How much more money would you have right now? Go back and pull out those 2007 /2008 401k statements and see what the balance was. What's
the balance today? And don't forget to figure out how much you have contributed
since 2007/2008.

There's no reason to buy and hold. Don't believe that garbage. You are way smarter than that. Trends.
You've seen it in real estate; you've seen it in the mutual funds in your 401k.

Take advantage of the
TREND!!

Are You Prepared For The Next Market Decline

We have had 2 major market declines over the last 10 years.

Given today's markets an appropriate question to ask is whether the markets will continue to snap back fromfuture declines so rapidly.

Concern about the state of the world and the fact that governments seem to be running out of bullets to bail out the markets and the economy.

With your time horizon ticking away,can you afford the risk that the next major decline may NOT be followed by a recovery?

Are you prepared to sit there in a strategy(buy and hold,rebalancing etc.) that has failed you during the last 2 major market declines?

You need to find someone that knows how to manage risk more effectively.A strategy that allows you to participate in rising markets and reduce losses in declining markets.

Target Date Funds Doesn't Equal Guaranteed

Here is an article from the Wall Street Journal that references a study that showed that over 1/2 of the respondents thought that target date funds would guarantee that their retirement income needs would be met

http://blogs.wsj.com/totalreturn/2011/11/07/target-date-doesnt-equal-guaranteed/

Isn't it time for you to get real about your 401k?

YOUR 401(K):

It's not a flat tire that you must get fixed immediately in order to drive your car.It's not a broken water heater that must get fixed immediately so you can take a hot shower.

But..... if your 401k is broken, you might not be able to pay for fixing those other things down the road. And down the road comes a lot faster than you think. As painful as it may be, take a look at your 401k statements from 5 years ago, and even 10 years ago. Now, consider how much money you have put in over those years. Are you happy with the results? Over those years, were you proactive or were you only reactive? Meaning did you only do something, like move all your money to a money market after the market was down 20%? ... And then did you neglect to open your statements until the market was back up, 2 years later? I know; I've seen it all over the last 20 years....it's easier to worry about fixing that $1000 water heater, than to worry about that $100,000 401k account that you are going to NEED down the road to pay for that water heater repair!Don't wait, get your 401k repaired immediately. Find someone to give you advice on when to be in the market and when to be out... and not just someone that recommends an allocation, only to never be heard from or seen again.

Who is managing your 401k risk?

One of the great joys I get in this business is talking to participants in 401K's and feeling the relief that they get knowing that they don't have to manage their investments alone.A lot of participants were under the impression that the mutual funds in their retirement plans which are professionally managed,had a built in management strategy in different market environments. They figured that these managers had a game plan to protect their retirement account values when the stock market begins to decline.They seem surprised when I tell them that its not true. These managers don't manage stock market risk . If it s stock fund they are managing stocks ,not market risk. That job is left to you.Unfortunately most retirement plan participants are not qualified to manage this risk. The sad part is that they don't know that until their account drops by a large amount.Its really no different than calling a plumber to fix a leak or taking your car to a mechanic for a tune up. The only difference is that cost is a minor out of pocket expense while mismanaging your 401K can cost you thousands of dollars down the road

Target Date funds

This is a good article on target date funds. My take on them is they are better than nothing but if you have a competent advisor I would think you'd do much better.

It's my strong belief from doing this for over 20 years,that avoiding the big downs and being in the right sectors during the upswings makes a huge difference. i just don't get the target funds because I don't believe in that whole asset allocation thing. It makes no sense to me to be in a bad sector just for the sake of asset allocation pies. It dilutes your growth if your "recquired" to have some % of your assets allocated to a declining sector. Just my opinion.

http://www.thestreet.com/story/11297102/1/is-your-target-date-fund-suffering.html

S&P up over 9% over 20 years-Average Equity Investor up 3%

The Dalbar study, which consolidates data from
the Investment Company Institute, found that over the twenty years ending in 12/31/2010, the average annual equity return for investors was only 3.27%, while the S&P500 was 9.14%.

You can't snooze with this market

Well if nothng else you got to admit that there is never a dull moment with this stock market.

As I write this the market(dow) is down 262 points. The reasons the 'experts" give is anything from Greece to Italy to the collapse of MF global.

The fact remains that the trend for me is still up. The s&p 500 would have to go to 1190 for me to even consider that the trend has changed. It currently is sitting at 1220. For me this is a chance to add to my postions and if I'm wrong my stop point is not that far away.

So here is my game plan. i will be looking to add on this downdraft. If it breaks 1190 than I will have to wait for it to reverse and than I would need to see if it makes a higher high which would mean it would have to hit 1300 or higher .After it reverses, if it fails to hit 1300 and than reverses down again ,it will in effect have made a lower high.At that point I would be moving some money to cash and sit and wait.

Why I'm in the market

In my opinion the key to investing is very simple be in the market when the indicators are positive and be out when they're negative. Now your thinking that sounds great but what Indicators is he talking about? Looking at the s&p chart would be where I'd start. Is it rising is it making higher highs and higher lows which is positive or is it making lower lows and lower highs which is negative. Now its not always going to be black and white and its during those periods you have to be very patient,you might get whipsawed a little bit but in my opinion it's better than taking the big hit to your portfolio.

That is a great starting point and at least gives you some kind of guide. It makes absolutely no sense to stay fully invested when you see it trending down. And it makes no sense to be totally out of the market when it's trending up. This is something you should definitely consider for your 401k. There are no tax consequences to selling. Let's say you have $200,000 in your 401k, and the market starts trending down. What sense does it make to ignore it? Why not move at least some part of it to cash? And let's say the market quickly reverses, what harm have you done? You've preserved your capital. And you get back in and you follow the same process. If you avoid the big downs like the aftermath of the dot com years or the real estate bust you'll be way ahead of the game. Instead what happened is you got so freaked out you pulled all your money out of the market and are now sitting in moneymarket earning zero or in bonds to afraid to do anything. You either need to learn how to manage your money or find someone that knows what there doing .

I know alot of people are out of the market and have sworn never to get back in. With moneymarket at zero and 30 year bonds at a little over 3% stocks are not something you should ignore. You just need to find someone to teach you what to do or find someone competent to manage your money.

Right now the market is trending higher. It went as low as 1080 area and ran up to the 1230 area.It than proceeded to pull back to the 1200 area before reversing back up to the 1290 area. So you can see that presently its made a higher low and a higher high. Until than changes its a good idea to be in the market.

Who are the real Millionaires

This is pretty interesting

http://systematicrelativestrength.com/feed/

Even more has come out of stock funds and into bond funds

So far this year investors are piling into bond funds and out of stock funds.

So I guess they think interest rates are going to continue to go down or they think that bonds are safer than stocks.

When they get their October statements they might be surprised at the value of their bonds

If not now than when?

If not now than when?

If your out of the market which I know alot of people are than now is the time you should be considering going back in. If your listening to the news as your indicator than you'll probably never get back in. But if you look at a simple chart like the s&p 500 you can see its making higher highs and higher lows. That alone is a good reason to get back in. Now don't get me wrong things can change at anytime that's why I keep emphasizing that you have to have a plan of what to do when things are going up and what to do when things are going down

This is the part most people miss and when I say most people I'm referring to most advisors. this is why they tell you you can't time the market,that you have to stay the course.Because they are either to lazy to follow what's going on or they are to busy trying to sell someone else instead of managing your money.

Why you need to be very careful of analysts

This is one reason that you need to find someone that knows what their doing. Someone that knows how to read a chart.

This stock was over $300 in july and has been pretty much on a downward trend ever since,yet the chart to the right shows that out of 32 analysts only 5 had it as an underperform and ZERO had it as a sell.

The stock is netflick and today alone its down over $40 at $77.

Are you in or are you out?

One of the main reasons brokers,financial planners etc say to stick with the plan is that investors that got out of the market never know when to get back in. I am pretty sure that anybody that got out of the market,and if you look at the mutual fund flows,a lot of money has come out this year, hasn't gotten back in.. Now there sitting there thinking should i get back in, or i know if i get back in the market is going to crash.

This is why a simple plan of when to be in and when to be out comes in handy. relative strength is a pretty good indicator of when it is a good idea to be in and when its prudent to be out or at least more cautious.

As you can see from the chart above the flow of money has been out of us equity and into bonds for the most part.

Why asset allocation doesn't work in case you haven't noticed

from Mike Shell-- I love this

Asset allocators may try to use similar terminology to describe their methods of asset allocation which are actually not at all a part of active risk management as we define it. Deciding on a policy for spreading capital across different assets and markets is not active risk management. The only risk that asset allocation strategies manage is selection risk: the possibility of an individual position losing value. If you don't have a large exposure to that stock, you may not have a large risk exposure but you'll also have little exposure to a capital gain. Active Risk Management tactics may increase and decrease the exposure to gain and loss by buying and selling. Asset allocators are more concerned with eliminating the risk of a individual position by diversifying it away. Asset allocators diversify away the "alpha" which is the excess return that is possible from a large winner and they seek only the market-driven risk and reward (the beta). Asset allocators are therefore fully exposed to the largest risk: market risk. During bear markets and financial crisis that have occurred many times in the past, all markets tend to fall together at some point. When markets like stocks, bonds, real estate, all fall together diversification and asset allocation methods are of no use in controlling downside losses. The only way to actively control downside losses is to change the exposure. Active risk management systems that control risk are necessary before large losses occur.

Time to jump back in the water

Well it finally happened the trend based on comparing the relative strength of the s&p 500 to money market has turned in favor of stocks. It had turned down to favoring money market on august 4th when the s&p was at 1200.07. During that time the s&p had gotten as low as the 1080 area. Currently it is at 1238.25, up 3.18% from where I got out. But like i've said that is my main indicator that means to be very cautios when going into equities. i also pay close attention to the actual s&p chart and when that turns up I start edging back in. So I was cautious,meaning worrying about capital preservation but I didn't miss all of rise.

The game plan from here is to look at small cap,mid cap and large cap and determine which of these 3 sectors is the strongest and overweight that sector with less money in the other sectors.

I will also look at strong individual sectors,such as gold,oil, whatever and allocate smaller amounts to those individual sectors.

My plan is to now be of the mind set to buy the dips.

Be aware that experts can be wrong, and that you yourself can be wrong.

This is a nice little article that talks about being careful with who you do business with

http://blogs.wsj.com/marketbeat/2011/10/20/investors-beware-overconfidence-and-not-just-your-own/

Rebalancing article

Here is another article from the wall street journal that talks about rebalancing your portfoilo.

http://online.wsj.com/article/SB123637573235256849.html

The gist of the article is sometimes it works and sometimes it doesn't.

What does work is staying with what is working until its not working anymore.

Doesn't it make more sense to stay with what is outperfoming rather than take money out of it and put it into something that isn't working.

Using relative strength and following the trend just seems so much smarter.

when you look at all of these different studies they talk about if you "did it over 10 years or 20 years" but the point is that you and I are for the most part concerned about NOW--meaning if it goes down 20% NOW but history shows that if you hold it over 10 years you will be up some % by the 10 th year--do you really care? do you know what's going to happen as far as your needs during that 10 years?

I was there during 2001 and 2002 when the tech bubble burst and people were retiring only to see their portfolio's drop by 20-30 -40 %--The s&p went from the 1500 area down to the 800 area. Do you think those people could afford to wait until today to get anywhere near back to even?

Now doesn't this make sense?

This is what I believe is the right way to manage your money

http://license.icopyright.net/user/viewFreeUse.act?fuid=MTQxOTY1OTI=

The times they might be changin

We're getting close to a change in plans

Following the plan means its almost time to get fully invested into stocks. As I have said my plan is quite simple. When the relative strength of stocks when compared to the relative strength of money market favors stocks I get fully invested. We are very very close to that happening. Once that happens the next step in the plan involves allocating money to the strongest sectors. I use a comparison of large cap mid cap and small cap as my first comparison. The strongest of those 3 sectors gets overweighted. Meaning in simple terms if I was going to use only those 3 sectors instead of putting in 33 1/3 into each I would put maybe 50% into the strongest. It makes little sense to allocate equally. I continue to monitor the relative strength of all sectors to stay with the strongest sectors.

To recap where we've been over the last year:

On 10/5/2010 when the s&p was 1160.75,. relative strength was favoring stocks over money market. On 8/4/2011 there was a change to where money market was now favored and it was time to get out of stocks. The s&p on that date(8/4) was 1200.07. approximately 3.38% higher.

today as I type this the s&p is 1211.28 . What i did avoid was the big sell offs that sometimes turn into much larger selloffs.

The change hasn't occured as of yet . As I have been saying i use other indicators to try to get back in before the main change in relative strength. As of today i am approximately 20-30% invested in stocks.

Your bond fund could lose 25%

I know alot of people have been moving their money into bonds thinking there safe.

This article points out that a 3% rise in interest rates could lead to a 23% drop in the 10 year bond and a 40% drop in the long bond

http://www.smartmoney.com/invest/stocks/how-to-bet-on-rising-rates-1317917417577/?link=SM_clm_sum

The Market aand where I stand

On aug 4, my main indicator which is comparing the s&p 500 to cash on a relative strength basis went to favoring cash.. What this told me is that to be safe you needed to be out of the market and in cash. The s&p on august 4th closed at 1200.07. Since that time,over 2 months ago, the s&p has gotten as high as 1230.71 and as low as 1074.77. As I write this the s&p is at 1194.45 even after a big day like yesterday.My indicator is still favoring cash over equities but some of the charts are starting to look better.

As always its all about Capital Preservation. I'm not interested in trying to guess the bottom. When my indicators turn there will be time to get fully invested

Hot to get rich

I don't know if it works but i'm grateful i'm sharing it with you

http://www.jamesaltucher.com/2011/10/how-to-use-gratitude-to-get-rich/

Average mutual fund lost 16.7% in 3rd qrtr

Don't you think you should be doing something about this? especially with your 401k. Wouldn't it have made sense to move the money into cash when the trend turned down?

http://www.fundmymutualfund.com/2011/10/average-us-mutual-fund-lost-167-in-q3.html

steve jobs

Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. —Steve Jobs, 2005

Predictions are worthless

This is a great article and something I have harped on before, predictions are worthless

http://systematicrelativestrength.com/2011/10/05/expert-forecasts/

Employees of mutual fund company suing their employer???????

How pathetic is this? Employees of Ameriprise are filing suit against Ameriprise because of the funds in their 401k? What does that tell you?

http://moneywatch.bnet.com/investing/blog/fund-watch/how-bad-are-these-funds-their-employees-sue-for-being-made-to-own-them/701/

I'm probably wasting my time but What the Heck!!!!!!!

If you've ever read this blog I'm pretty sure by now that you know I can't write and worse I'm a lousy speller and grammatically I'm clueless.
The only reason I write this is to try to convey 25 years of experience. I've made plenty of mistakes along the way but I've also learned a lot. Hopefully there is someone out there that says" hey, this guy writes like a 5th grader but he seems to know what he's talking about. "
I've been trying to point out the absurdity of those financial people that say you can't time the market. They use that as their justifcation for sitting with mutual funds or stocks as they lose value day after day. They might be right about timing the market but that's not what I try to do. I look for trends and try to be on the right side of that trend. The trend is down has been down and to sit there and watch value go down everyday is just plain stupid.I'm sitting on a pile of cash and when the trend changes I'll be ready to redeploy that money. Will I get in at the bottom ? Absolutely not. Did I get out at the top? Absolutely not. But guess what? There is a lot of meat on that bone between tops and bottoms. And I can pretty much assure you that my clients are sleeping good knowing that I value capital preservation above anything else.

There are 2 kinds of financial advsiors,which one do you have?

There are 2 kinds financial advisors. One kind says you can't time the market, you buy and you hold and it'll all work out. The other kind says ,the trend is down let's lighten up and when the trend turns positive we'll redeploy the cash we took out.
Which of these 2 would you rather have manage your money.
In fact why do you even need the 1st guy? You can buy and hold on your own

And if you have the first kind, how has that worked out for you?

Recession unavoidable?

this guy is not very positive

http://finance.yahoo.com/blogs/daily-ticker/going-lot-worse-ecri-achuthan-says-recession-unavoidable-141929160.html

Who knows if he's right or wrong-the key point as far as investing goes is that the market is in a down trend.

At this point in time you should be very concerned about capital preservation

A financial test for all to take

Ok, here's a test for you, these are the closing values for the s&p 500 at month end:

3/31/ 1325.83

4/29 1363.61

5/31 1345.20

6/30 1320.64

7/29 1292.28

8/31 1218.89

9/30 1131.42

Can you tell me what is happening? Come on its really not that hard to figure out

Well i'll tell you and now you'll know more than most--THE TREND IS DOWN

John Bogle says stocks aren't cheap but buy them anyway

This guy just doesn't get it. Some of the things he says I can't even understand. Because someone is selling that means someone is buying so everyone is a long term investor-or something like that'

What is so hard to understand that there are trends-trends up and trends down--when the trend is down you stand aside when the trend is up you get back in--hardly rocket science.

He says stocks are not cheap,which I could care less about, but he says buy them anyway. If he believes that why doesn't he wait until there cheap?

You can watch the video here:

http://news.yahoo.com/video/breakout-25481852/john-bogle-on-stocks-bonds-and-timing-the-market-26768952.html#crsl=%252Fvideo%252Fbreakout-25481852%252Fjohn-bogle-on-stocks-bonds-and-timing-the-market-26768952.html

Want to boost your 401k return by 3% a year?

http://moneywatch.bnet.com/investing/blog/fund-watch/want-to-boost-your-401k-returns-by-3-percent-annually-heres-one-way/699/

what if you don't have a 5 year time horizon?

http://seekingalpha.com/article/296205-what-if-you-don-t-have-a-5-year-investment-horizon?source=feed

This addresses on of my pet peeves--when a financial advisor quotes returns over a 5 or 10 or longer time period-that means absolutely nothing to a person at this particular place in time

People who got 401 k advice got higher returns

http://www.marketwatch.com/story/401k-savers-who-seek-advice-get-higher-returns-2011-09-26?link=MW_story_latest_news

This is what i specialize in

Investors Abandoning Stocks

from the WSJ tonight:


…across the financial markets, a sea change is taking place. Investors are abandoning the time-tested “stocks for the long run” optimism that dominated since the late 1980s. Instead, there is a widening belief that the mess left behind by the housing bubble and financial crisis will be a morass to contend with for years.

If you are a believer in sentiment,this is actually a bullish signal

6 things to know before choosing financial planner

http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2011/09/23/6-things-to-expect-in-a-financial-planning-engagement

I am not a financial planner--I manage your money

Does your 401k have a self directed option?

Most of the people I talk to don't know-worth looking into

http://www.foxbusiness.com/personal-finance/2011/09/23/pros-and-cons-self-directed-401k/

Buy and Hold-or Captial Preservation?

For the week, the Dow was down 6.4%, the S&P 500 was down 6.6% and the Nasdaq was down 5.3%, the worst week since Oct 2008

Your 401k--What to do

this is stolen from ric lager who writes a lot better than me

Right now is another once-every-few-years opportunity to stop and take a good hard look at exactly what you own in your company retirement plan account. If you own a mutual fund that you don't understand, now is the time to sell it and put the proceeds into the money market fund.
It makes no long-term sense whatsoever at this time in both the world and U.S. stock market cycles to try to "buy-and-hold" stock mutual funds in your company retirement plan account.

You don't have to relive the dramatic stock market losses of three years ago in your 401(k) plan. Get enough of your current company retirement plan balance out of the stock market now and into the safety of the money market account.

The current stock market decline will eventually come to an end. The most profitable way to take advantage of the bottom of this current stock market cycle in your 401(k) account is to have a money market balance to invest when the stock market begins to rise again.

Annuities-If your thinking of buying the latest hot product -READ THIShttp://blogs.wsj.com/financial-adviser/2011/09/21/the-phantom-menace/

http://blogs.wsj.com/financial-adviser/2011/09/21/the-phantom-menace/

Update to my update with dow down over 300 points

So how fast things change or do they?

In my last post I was saying how there was nothing happening etc etc. Well since than things have changed rapidly. The s&p which was basically flat since my indicator said that money market was favored is now down 5.5%.

Sitting with about 75% cash is feeling very nice to my clients this morning.

On a side note, i was talking to another financial advisor the other day,and we were comparing strategies. He was the buy and hold kind. i tried to show him how i operate and he said I was a market timer. I tried to tell him that that was not really true. I don't try to time the market I try to follow the trend. When the trend is down I am out, when the trend is up I'm in.

His comeback was that if you get out you don't know when to get back in. i tried to show him that I am not guessing on tops or bottoms. What i do is follow the trend,I nevr get in at the exact bottom nor do I get out at the exact top but there is alot of room between the bottom and the next top and the top and the next bottom that I am glad to partake of.

Net net he was happy to put his clients in mutual funds and whatever happened happened because the market always comes back.

There is no reasoning with these people

Update

Since there is really nothing happening i thought I'd give a quick update.

My main indicator is still favoring being in cash as opposed to being in stocks. It turned to money market when the s&p was at 1200 on 8/4/2011. As I write this over a month later the s&p is at 1197 basically flat.

Since that time there have been a few positives. the qqq which is the nasdq 100 has turned positve against money market as has rsp which is an etf that is an equal weighted version of the s&p.

All in all I remain approximately 25% invested and we'll see what happens.

The trend is your friend and capital preservaion-remember those 2 things and you can't do to bad.

Anyone interested in getting a new perspective on their investments, you know where to find me.

This in a nutshell is financial planning

The safest and best way to avoid a retirement shortfall is simply to save more, save longer, and invest better. If your assumptions are conservative and your investment results are favorable, you might end up with extra capital. That’s a high-class problem to have. If your assumptions are too aggressive, you’ll end up like all of the public and corporate defined benefit plans: under-funded. The further you are away from collecting Social Security, the less likely it is you’ll see all of it, so you can’t count on that to bail you out.

I can't help you with the 1st two but I can help you invest better.

if your sitting with bonds you shoould take heed

http://mobile.bloomberg.com/news/2011-09-13/the-risks-lurking-in-treasury-bonds.html?cmpid=bit

Why trend following? Or why aren't you still listening to 8 tracks

The way I manage your money is to follow the trend.
What does that mean?
Do you remember when Sony came out with Betamax and it was exciting to rent movies to play at home. Than came VHS and you didn't want to own a Betamax. The trend changed. Now we get movies on demand or mailed to us. The trend changed.You'd be foolish to stick with that VHS machine.
Do you remember 8 tracks than came cassettes than came cd's. The trend changed.
Investing is much the same. You don't want to be in stocks when bonds are in favor. You don't want to be in large cap stocks when small cap is in favor. The trend changed and you need to change.

goldman sachs slashes its year end s and p target from 1400 to 1250.

Do you think they use one of those magic 8 balls to make their predictions?

Buy,Hold, Regret--so says this article

article from the Economist

http://www.economist.com/node/21528907

Carnac says...

good post from systematic relative strength-it makes apoint that i have harped on--all the major brokerage houses try to make predictions of where the market is going ,what the gdp will be and as this article shows what the price of gold will be-and its a moving target-they can't predict any better than Carnac(you have to be old and have watched johnny carson)

http://systematicrelativestrength.com/2011/09/12/moving-the-chains/

This is all you need to know to navigate the market

As with most things in trading, the least accepted methods are also the most efficacious. One of the least accepted trading methods by both academia and the financial media is the concept of trend following. In it’s most elementary form, trend following is about being long when markets are rising and being short when they are declining. There are no forecasts or shoulds. There is only the current trend and what is.

One of the most effective journalists to popularize trend following is author Michael Covel. He almost single-handedly has raised the consciousness of investors around the world to the effectiveness of trend following. He has brought many of the world’s greatest trend followers to light, and I cannot thank him enough for that.

If trend following was widely accepted, there would be no need for about 95% of the people employed in the securities industry. Needless to say, this fact alone is one of the main causal reasons that trend following is out of the mainstream. Most simply ignore it’s incomparable track record in both rising and declining markets.

Michael Covel has provided the research and the data to a mass audience to show what we trend followers are all about. I cannot express properly how grateful I am for Michael’s efforts. His impeccable journalism is rare in any context, but especially in the field of trading and investments. As a result of his work, the great achievements of trend followers can no longer be ignored nor viewed as just an anomaly.

Michael R Gibbons
Managing Partner
Gibbons’ Trading LLC

2008? rememeber when you lost 40% of your money?

I'm starting to see articles with predictions that this is going to be equal to or worse than 2008-2009. Here is one example:http://www.businessinsider.com/prepare-now-there-is-so-much-that-could-push-us-into-another-2008-crisis-2011-9
Do you remember those years? It wasn't that long ago and you probably have erased those years from your memory as far as your investments go.
So are you prepared if it is another 2008 or are you still using the same guy that you relied on back than,the guy who told you to stick to "his" plan of buy and watch your money disappear and than pray that it comes back by the time you need it?
Wouldn't it make more sense to take some kind of defensive action to preserve your capital now so that you can grow it when conditions are more favorable?
If you'd like to explore alternatives to what your doing now you know where I am

Do you know who will inherit your 401k? your IRA?

You and your heirs could be in for a big surprise

http://www.marketwatch.com/story/family-feuds-who-inherits-401k-or-ira-2011-09-07

Is this how you've been investing?

this was taken from http://systematicrelativestrength.com/feed/

“Investors overweighted equities when they were hot, panicked when they crashed and are still sitting on the sideline,” Mr. Matson said. “They bought high, sold low and most won’t get back in until the market returns to all-time highs, repeating the same disastrous pattern.”

I’m sure these free-range clients think they are doing the right thing, but good investing is not emotionally reactive. You’ve got to settle on a proven, profitable long term strategy—we happen to like systematic relative strength investing—and then lean against the emotional currents. When you are feeling particularly fearful, perhaps you should increase your bet. When you are feeling quite self-satisfied, it might be time to consider a little diversification. Or you could just hire a competent advisor.

Are you finally ready to do something about your money?

It's so easy to keep things as they are. Making a change is not easy.
And when it comes to money people for some reason would rather ignore it,I guess their hoping it will resolve itself. Even though they know they should be doing something most people just ignore it. There's no sense of urgency like when they need that brand new car.
Are you finally ready to face the fact that the same old is really not working that you need to make a change. Are you ready to finally start to have someone manage your money that knows what their doing?

How do those august statements look?

So those august statements are startng to roll in. Some of you are probably not going to open them and those of you that do will probably throw them in the drawer and pretend they don't exsist.
Now were heading into the really exciting months september and october.

You can't keep on doing what your doing,you need to think about capital preservation.

If your tired of taking the big hit to your portfolio why don't you try something different? You can't just keep ignoring it you need to be proactive.If you believe that crap that it'll come back,i'm a long term investor,etc etc. you are a fool and i'm pretty sure deep down inside you know there must be a better way.

Since June I have been preaching that you need to take some off the table and I'm hoping some one listned heeded that advice.

If you want to be able to open your septemebr and october statements you know where i'm at and i'd love to show you how to manage risk.

POWER BACK ON

so after 130 hours BGE finally got my power back on-I thought comcast sucked but i'm now putting BGE in the top spot-These people a are truly morons The power went off saturday at 9:15--we called at that time and figured that was that-so yesterday i send an email to the county executive ken ulman who got right back to me and had one of his people get bge to email me-their email says something like this-thank you for contacting us-our records show your power has been restored.WHAT the F***K are you talking about? my power has not been restored--this just blows my mind--everytime you respond to them they send you the same freaking email--they can't tell you anything--net net-the power is back on--i was on my way to the library to log on when i passed like 5 trucks from alabama power around the corner doing whatever it is they do and the power is on As far as the market goes All the point and figure indicators have turned positive and this down today could be just a normal pullback. Rsp which is the equalweighted s&p just turned back positive agains moneymarket on a relative strength basis. I have bought for clients some rsp this morning. My main indicator is the spx vs moneymarket and that has yet to turn back to positive. As usual capital preservation is my main objective so i am prepared for anything

IRENE

So it's been 45 hours without power and bge now says no later than Friday with some not getting power until Saturday . Does this seem ridiculous to anyone else? The next time there's a hurricane I'm heading to Salisbury .or ocean city . They didn't lose there power at all. Where is our egomaniac governor or our midget county executive asking what the freaking problem is . They say trees , than what the he'll do they do when there isn't a hurricane? What's s art is this was a category 1!!! what happens when it's a category 2 or 3? We better learn how to rub rocks together to get fire with bge as our provider .I'm pretty sure omalley and ulman are trying to figure out how to tax those of us that are using generators. I'm pretty sure their pissed about that. So the market had a pretty good day today. I read where some are worried that volume was light. Whatever!
It was a good day and I'm pleased to be 20% invested .
We'll see what happens from here .

trend following-read and you might learn something

If you have any interest in trend following this article will be of real interest.

If you want to just go on doing what you've been doing than don't bother reading this

http://pragcap.com/on-the-importance-of-understanding-trend-following

Is the Bull back?Some are full of BULL

I have no clue if the bull is back or not-One of the guys i follow that runs a hedge fund and is FULL of BULL-the guy is on fast money real money and loves to take your money makes some kind of prediction every day-

If you read whats going on with this rally most of the comments I have read is that the volumn is to light -its a dead cat bounce etc etc etc.

I am 25% invested-the rally gave all of my accounts a nice little bounce-Is this the beginning of a big rally? I don't make predictions I follow the trend-The main chart I follow is the relative strength of the s&p 500 vs. money market and that chart is still favoring money market--My early warning system chart is the s&p 500 chart--That chart is showing a bounce off the "bottom" a pullback and than a higher low-which is good--we'll see where it goes from here

If anyone is telling you the bull is back you might want to tell them that their full of "BULL" at least until the market reveals itself.

This is another chance for those of you that never got out to lightnen up some--CAPITAL PRESERVATION is the name of the game

How I operate and what I believe

I didn't write this but this is exactly how I operate and what I believe

1) I believe the market is healthy 2 to 3 times a year. I will always do my
best to expose your portfolio to the strongest stocks I can find during
market uptrends. When I see warning signs, my number one goal is to play
defense and protect your portfolio.

2) When the market is in a downtrend, I go to cash for one simple reason: 4
out of 5 stocks follow the general direction of the market. In other words,
I don’t care how good the company is, when the market is under selling
pressure, the majority of stocks get hit.

3) I realize there are many different investment styles, but for your
actively managed trading account, I find this philosophy to work best in
order to preserve capital and achieve strong compounded returns over time. I
try my best to keep your account near its highs because a -10% decline takes
an +11% gain to recover the losses. That scenario is at least manageable,
however, if we were to ride stocks down -25%, it would take a +33% gain to
recoup the losses, a much more difficult task.

4) Currently, I’m not sure how long this correction will last…NO ONE KNOWS!
The average Bull Market lasts 16-24 months, and we just had one from March
2009-June 2011. The average Bear Market can last 3-9 months. I’m guessing we
could have a strong rally sometime in the 4th quarter, especially since 9 of
the last 11 4th quarters have seen strong uptrends. I’m not too worried
about predictions because they’re all useless in my opinion. Instead, I will
focus on the day-to-day price action of the market and slowly expose your
portfolio as conditions improve.

5) I will occasionally take small positions when I see potential trading
opportunities. For now, I plan to keep us mostly in cash.

6) Another reason I go to cash is to protect confidence. Too many times in
the past, I would do well during market uptrends, only to give back a
majority of my gains during corrective markets (such as the one we are in
now). By protecting capital AND confidence, I will be ready to take
advantage of the new uptrend when I see healthier signs.

7) I used to get discouraged during market downtrends, but now I embrace
them. Why? Because when the correction is over, I am confident that we will
identify the new “leading” stocks that have potential to increase rapidly in
price. Until then, patience is very important.

Market thought

My thought on the market as it now stands:

"Better to be outside wishing you were in, than inside wishing you were out."

You can always get back in--when your in and it's down it's much harder to get out

For those keeping score

Another great week for those of us sitting on cash. The s&p is down 4.7% for the week.

When the trend eventually changes back to positive while those that are of the buy and hold ilk will be praying to get back to even.

For those of us with cash,we'll be looking to increase our 401k's value, our IRA's value and our overall net worth.

Now I'm not wishing the market goes down but it is what it is and i'm sorry,anybody that is just sitting there with a buy and hold mentality or i'm in it for the long term mentality or a follow my plan mentality gets what they get.

Remember its all about CAPITAL PRESERVATION.

If you'd like to discuss you know where I am.

surviving a crash

http://www.thereformedbroker.com/2011/08/19/downtowns-rules-for-surviving-a-crash/

I particularly like this one:

4. Ignore the asset-gatherers and the brokerage firm strategists, their job is to calm markets and soothe investors. Let's say Morgan Stanley runs $1 trillion in stock market wealth for investors. And then let's say they felt there was serious trouble ahead. Do you really think they would ever make the sell call? Can Morgan Stanley really say "Sell 20% of your equities"? No. Because that would be $200 billion in supply hitting the stock market at once - they would crash it all by themselves! Too Big To Keep It Real has always been the problem with the wirehouse advice model.

Avoid declining markets -and market timing and risk mgmt is possible

This new paper from Mebane Faber of Cambria Investment Management takes on one of the myths of buy and hold investing:

"we examine market outliers in financial markets. How much effect do these outliers have on long term performance? Can the investor prepare for these anomalies, or are they truly 'black swans' that cannot be managed? In this issue we examine numerous global financial markets on daily and monthly time frames. We find that these rare outliers have a massive impact on returns. However, these outliers tend to cluster and the majority of both good and bad outliers occur once markets have already begun declining. We critique the "missing the 10-best-days" argument proffered by advocates of buy and hold investing, demonstrating that a significant majority of the 10 best days and 10 worst days occur in declining markets. We continue to advocate that investors attempt to avoid declining markets where most of the volatility lies, and conclude that market timing and risk management is indeed possible, and beneficial to the investor."

http://www.businessinsider.com/interesting-paper-on-market-volatility-2011-8?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29

Market down 330 points and not one call from a client

When you have a plan that makes sense you can sit back and relax.

When your only 25% invested because the market has been trending down the phone never rings.

If your calling your financial advisor right now to ask him what you should do than you should be calling someone like me instead to ask what you should have done weeks ago.

I can tell you what your salesman--i mean financial advisor is going to tell you-and you know what he's going to say as well."stick with the plan"--ask him if the plan had you losing 15% or more

Shipping Wine Into Maryland

Since I'm sitting with approximately 75% cash here is something that should be of interest to all wine drinkers in the state of Maryland

This great democratic state has finally let its citizens ship wine into the state.

Here is a list of wineries both within and outside of the state that , after paying the state all kinds of fees, are allowed to ship wine

This is a perfect example of the freaking government having its nose in our business for no reason.

Can you imagine how much time and money was wasted while these morons debated something as ridiculous as allowing us to have wine shipped to us.

http://www.bizjournals.com/baltimore/news/2011/08/11/which-wineries-are-shipping-to-maryland.html?ana=twt

Timing the market vs Following the trend

Market timing vs following the trend

I think it's very important that you understand the difference.
Market timing is in my opinion trying to guess what the market is going to do. It's actually what analysts do.
When they say a stock is a buy at $25 because based on their analysis it is worth $50 they are timing the stock. If it drops to $15 their timing was obviously wrong. When a brokerage firm says the s&p will be up 12% for the year they are timing the market.
On the other hand someone that follows the trend doesn't time the market or an individual stock. He watches the movement and when it's going up he follows the trend higher. When the movement reverses he gets out of the way because the trend has turned down.
Doesn't that make more sense than just sitting there and watching your money disappear because some analyst made a prediction that is wrong?

Are you getting screwed by your mutual fund and or advisor?

http://mobile.nytimes.com/article?a=828281&single=1&f=126

Are you going to keep losing money?

Ok, here is a very simple example of why you have to stop doing what you've been doing.

Lets say that in your IRA or your 401k you had accumulated $100,000 on 1/1/2008 the s&p was at 1468.36

On 1/1/2009 the s&p was at 931.80 down 36%-so your $100,000 was now only $64,080

On 1/1/2010 the s&p had climbed back to 1115.10 a gain of 20% so your original $1oo,ooo was now worth $76,800

On 1/1/2011 the s&p continued to climb and was now at 1257.64 up 13% so your original $100,000 is back to $86,784 your only down 13% in 3 years

But look at the numbers you were down 36% than up for 2 years 20% and 13% a total of 33% over those 2 years but your still down 13%

As of friday the s&p closed at 1178.81 down 6% so far this year so your original $100,000 is now worth $81,577--so in 3 1/2 years your down 18%

The sad part is that some of you are going to do the same old thing. this doesn't even take in to consideration the dot com years back in the 2001 area.

And when you look at your 401k don't be fooled in thinking your not doing as bad as these numbers, take into consideration your contributions over all these years..

If you'd like a 2nd opinion on what you should be doing you know where to find me

Stock market backup plan

http://bucks.blogs.nytimes.com/2011/08/08/your-neglected-stock-market-backup-plan/

This is the same thing I harp on continuously-You have to have a plan

When the market is chugging along everybody gets complacent but thats the time you definitely need to have a plan of what to do when things turn down

If you can't do it you need someone like me

You know where to find me

5 reasons your financial advisor sucks

https://www.wealthfront.com/blog/10-signs-bad-investment-advisor/

I learned # 1 on this list a long time ago thats why i only manage money

I was a CFP but i discovered that financial planning was save as much as you can

earn as much as you can on what you save and above all CAPITAL PRESERVATION

If the guy thats selling you insurance is managing your money --what can i say?

who does this sound like?

yesterday when the market was down over 400 this person said i wish i would have sold some when it was up 400 the day before.Today that same person is saying -wow its up over 400 i'm sure glad i didn't sell yesterday

If this person is YOU wouldn't it make some sense to sell part of your holdings,especially in your ira or move part of your 401k to cash?

I moved 20% of my clients holdings into the market yesterday but thats it-I'm still holding a ton of cash and I feel real good about it.

If you'd like to discuss you know where I am

Looking for yield and growth???

I don't know about you but getting .92% on a 5 year govt bond just doesn't do it for me

I guess I could buy a 10 year and get 2.17% but again seems pretty risky

I can buy ibm stock right now and get a yield of 1.8%

Mcdonalds is yielding 2.8%

coke 2.8%

proctor and gamble 3.5%

kellogg 3.3%

boeing 2.7%

dow chemical 3.4%

This is obviously not for eveyone there is risk thaq the stock price will go down but I'm hopeful that it will far outperform a 10 year govt bond that is yielding 2.17% as I write this

Are you one of this guys clients?

Jim Rohrbach writes:


Have you noticed that there are some “experts” on TV who say they knew what the market would do what it did on Monday and Tuesday? I was watching CNBC on Tuesday evening and there was a guy on there who said that he knew on Sunday what the market would do on Monday and Tuesday. He said, “I predicted that the market would be down 2%.” I bet this guy can also pick the winners in every horse race after he receives the next day’s newspaper. This guy manages money for clients. They asked him what he was advising his clients to do right now. Want to guess what his answer was? You guessed it. He said he would tell them that he was in for the long haul and that they should relax and stay with their positions because everything was going to be okay. They told that same story in 2008 while their clients saw their portfolios drop 50%. I think it’s time for these birds to come up with a new and better tune. They can’t tell people to time the market because we all know that it can’t be done. So we will just tell them to remain fully invested at all times. Then they can collect their commissions, smoke their pipes, and drink their beer. After all, it’s not their money that is being lost.

This is how you make money

If anyone took my advice and got out of the market your now sitting with a pile of cash--Feels real good doesn't it?

Well with the market down 400 I am going to start edging back in--as much as maybe 20%--If the charts start firming up I'll put a little more in over the next few days or weeks

If the charts start breaking down again it'll be easy to get out with a small position

Once the relative strength of the s&p 500 turns positive against moneymarket I'll be fully invested.

If you'd like a 2nd opinion on how your money is being managed you know where I am

fun,fun,fun till...

ok so we had a big rally in the last 1/2 hour yesterday and the market was up 400-not unexpected since it was down 600 the day before-so if your feeling good about that rally your only down 200 points from 2 days ago.

The fed yesterday said they probably won't raise rates for 2 years--2 years!!!!!!!!

what that tells me is the economy is in big trouble-people are buying 5 year treasury bonds and getting less than 1%--i'd rather put that money in my desk drawer.

Looks like a down opening at this time 9:04am--

If your still 100% invested you might want to take off some--this is way to volatile for the average investor .there will be plent of time to get back in when things calm down

2nd chance or 3rd or...

Well as I write the s&p is up over 30 points,the down up over 200

If you've been nervous about the marke this is a chance for you to lightnen up.

The fed is meeting and there will be some kind of announcement at 2:15-Have no clue what the market reaction will be and neither does anybody else.

The market could zoom or it could turn around and fall like a rock.

The only thing I know right now is the trend is down--If yesterday was the bottom than I will be prepared to redeploy some of my cash when I see that the trend has reversed. In the meantime I'm sitting this rally out.

Repeat after me- CAPITAL PRESERVATION CAPITAL PRESERVATION CAPITAL PRESERVATION

Down another 600-Don't make this worse than it already is

The market could zoom tomorrow or it could be down another 600 points-You don't know,I don't know no one knows.But what I do know is the trend right now is down.

From May 2 (the yearly high)until today, the s&p is down about 18%-Thats not good but right now you would need a 22% rally to get back to even.

If you wait until your down 25% your going to need a 33% rally

Can you afford to take that chance.

I know I know your financial guy told you to sit tight your a long term investor you have a financial plan, you need to stick with it. And what i'll tell you IS GOOD LUCK. How did that work for you back in 2008,oh yeah it only took you until 2011 to get back to even, maybe even be up a little bit-So do you want to go through that drill again?

o

If you'd like a 2nd opinion of where you stand or what you should do You know where to find me

roller coaster or cut and bail?

Over the last few years I said there were basically 2 kinds of investors. There were those that just ride the market up and down really with no kind of plan of what to do so they just sit tight and hope when they need the money the market is on an upswing. Since the market turned up in 2009 they have been feeling pretty good having recouped all their money and more.I hope their not planning on retiring in the next year.

Then there are those that got the crap scared out of them and never got back in the market from 2008.These types also have no kind of plan of when to get back in or of when to get out so they do nothing.

Since th market turned up and the trend became one that favored stocks they were looking pretty bad since they missed all the gain.

Well folks here we are again-The s&p has given back approximately 15% from its May 2011 highs.

So once again we're at a crossroad-Will the roller coaster people be right and the market will go back up(I know it always does--eventually) before it goes down 20-30%. Or will the people that bailed and never got back in be vindicated.

The truth is that both of these groups have a chance to benefit here. The ones that are in should have or should now lighten up and wait and see what happens. A 15% loss from the highs is not that bad,but if it turns into a 20-30-40% loss than their like a rat on a treadmill-running fast but getting nowhere.

The ones that got out need to be ready to start edging back in when the trend starts to turn up.

The problem for both groups is they really have no plan of what to do.

Are we having fun yet?

So that was quite a week in the market and now with the usa credit rating being lowered we get to have more fun next week

I hope there is at least one person out there that heeded my advice and reduced their exposure to the market. If you did you now have some cash and the next test will be when to get back in.

This is why the average financial advisor tells you to just follow "their" plan,no one can time the market,if you get out now you won't get back in so on and so forth.

I agree that no one can call a top or a bottom but i's not that hard to know when you should be cautious and whn you should start testing the water again.

My plan as of right now is to start getting back in slowly when the s&p hits 1185.What that means is I will redeploy some money at that level,not all of it.This is subject to change if we go down further before turning up.

I keep harping on it but CAPITAL PRESERVATION should be your main concern.

If you think a bottom is in think again

http://www.marketwatch.com/story/bottoms-rarely-look-like-thursdays-rout-2011-08-05?siteid=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A%20marketwatch%2FnewslettersAndresearch%20(MarketWatch.com%20-%20Newsletters%20%26%20Research)

If your getting this kind of advise you are in serious trouble

This is the kind of crap that is being peddaled to clients out there-this is taken from some financial planners website:

"Based on the number of calls I am receiving from worried clients, I am guessing most of you are feeling some concern regarding the steep slide in the market. The stock market has now corrected over 10% from its recent high. This happened because of today’s 500 point drop.

Market crashes are normal. Volatility in markets is normal. Markets are irrational.

Volatility is the price a market investor pays for the possibility of a return greater than the 1% return a safe and secure savings account will earn. Nothing fundamental with the companies you own has changed from two weeks ago when the markets were higher. What has changed is that people are feeling fear and trying to calm the anxiety they are feeling by “getting out.” It’s predictably irrational.

About 80% of our clients weathered the crash of 2008 – 2009 without making a change in their portfolios and were rewarded for their patience. They’ve seen positive returns over the past three years in excess of those they would have seen had they gone to cash in 2008. The 20% that sold some stocks at what turned out to be the bottom of the market in 2009 now painfully understand how selling at the wrong time can negatively impact your returns.

Historically, summer is a bad time for the market while winter is generally favorable. I’ve told clients since April to expect their great returns of the first four months of 2011 to look a lot worse by September. The market hasn’t disappointed.

So, my advise is boorish and predictable. If you are going to do anything, INCREASE your exposure to equities right now, rather than decrease. Stocks are on sale. They may be even more on sale by October. No one knows. What you don’t want to do is make the big mistake and sell out during a market correction or crash."

What he's telling his clients is he has no freaking clue what he's doing and shouldn't be offering advise to anyone.
He's saying those clients that didn't do anything back in 2008 finally got back to even 2 1/2 years later. And he's basically telling them to do the same thing again because the market according to him is going down thru october. so what am i missing here,if he actually thought that wouldn't he smart advise be to get out of the market until oct? Why sit and take a 20-30% hit and than fight to get back to even over the next 2 years and do it over and over.

This kind of crap irks me to no end.

I've been warning since july 11 to take some defensive action

please tell me why every financial planner,cfp whatever that I run into on twitter,linkedin or in the real world is preaching that you can't time the market, you have to stay with your plan,i don't know hat the hell i"m doing(i just through that last part in ,they would never admit that.

Look folks this is not rocket science.But if you just look at the technicals,the charts you can get a feel for where the trend is going.

what possible harm could have occurred if you would have moved some part of your money from your IRA's and/or 401k into cash for a period of time. The worse that could have happened is the market kept going up and you didn't get the full monty. the best thing that could have happened is that you now have cash to buy at lowere levels.

Of course these financial planners will tell you "no one knows when to get back in-or my favorite "you can't time the markets.That is a total bunch of crap. You don't have to time the market,all you need to do is watch the trend,its not that difficult.

I have an open invitation to meet with anyone that has the slightest interest in finding out what I do. I am not a guy thats going to pressure you. I want to work with people that are interested in growing their assets.

Why me?

What separates me from most people that manage your money.
Most financial advisors make assumptions about what's going on in the world, how the economy is doing etc and stick to those assumptions. For example, they or the firm their working for predict the s&p will be 1600 by year end. Then when the market is going down they tell you to stay the course, it's just a correction, you can't time the market. If you get out you won't know when to get back in.
I on the other hand rely on what is. I understand a normal correction and I also understand when you need to take action to preserve capital.
Now is one of those times to be cautious. If the market reverses I know what to do.
There are going to be rallies, big rallies in all likelihood. But for right now the trend is clearly down. I'd much rather be safe than sorry.
You can always get back in when the time is right, when there is more clarity that the market is going up.
If your wrong you lost a little of the upside but you have all your capital.
Why take a chance that you could lose 20% or more of your capital in a downward biased market

Read this only if you are concerned about your 401k or any other investment

Today there was a change in relative strength of rsp versus monymarket-rsp is the equalweighted s&p 500 etf.

This is the 1st time moneymarket is favored over rsp since 7/25/2010.

What that means to me is you better think about protecting your money.If you have a 401k its time to move into more cash,ira's the same thing.

This is the time to think about preservation of capital.There will be a time to get back in if you follow the trend and pay attention to relative strength

This is my opinion only and for my clients only. You need to make your own decesions and hopefully have a financial person that knows what to do.

Good Luck

Dow flirting with 12000 and 30 year bond yielding 4%

So they just passed the debt ceiling extension and the market is down 130 points-The dow is flirting with 12000 again and 30 year bonds are now yielding less than 4%.
Are you willing to put your money in a 30 year bond to get less than 4%?
More importantly are you willing to watch our money go down the drain again?
Have you discussed with your financial person what your going to do if the market keeps going down?
Have they called you?
You can't just sit there with your head in the sand,no one knows whats going to happen but you have to have some kind of plan as far as when to get out and preserve your capital its just the prudent thing to do

If you'd like to discuss you know where to find me

Prediction-Joe average is about to get screwed

This is how investors get screwed.

Right now there fleeing the stock market and going into bonds.The 10 year treasury is yielding less than 3%--3%--now tell me who would tie up their money for 10 years for less than 3%-only people that think there will be no economic growth,the economy sucks and will suck for quite some time.
Anyway, As their pulling money from the stock market and putting it into bonds the market is going to have a huge rally then all of a sudden interest rates start going up and the 10 year bond that was yilding 3% is now up to 5%.These bond holders see the market hitting new highs and at the same time their losing value on their bonds because a 10 year bond yielding 3% is worth less than a 10 year bond yielding 5%.
So what do they do? See,this isn't rocket science,they sell their bonds at a loss and go into the stock market near the top and guess what? Their screwed again


See I can make wild ass predictions just like those fancy wall street strategists.And just like them I actually believe in my prediction.But unlike them i am going to follow the trend of the market. I might make a prediction but I sure as hell am not locked into it.

Down down down and the flames went higher- Part 2

So back on july 11 I advised taking some kind of defensive action and I'm pretty sure the one other person that reads this blog did nothing.
July comes to an end with the s&p down 3.9% for the week and 2.2% for the month.
On top of that comes this story from the great predictors that I have told you are clueless

WASHINGTON (MarketWatch) -- Leading economists on Friday began marking down their growth estimates for the rest of 2011 in response to data showing first-quarter growth of just 0.4% and second-quarter growth of 1.3%. Deutsche Bank lowered its third-quarter growth estimate by a percentage point to 2.5% and cut its fourth-quarter estimate to 3% from 4.3%, IHS Global Insight said third-quarter growth will be probably less than 2% and possibly less than 1% vs. its prior 3.4% forecast and Capital Economics said a 2% third-quarter view is "more plausible" than its prior 2.5% forecast. "Previously, we highlighted the possibility that the economy was on the brink of a growth recession - a sustained period of below trend growth typically accompanied by rising unemployment," said the Deutsche Bank economists. "The disappointing Q2 GDP results and downward revisions to the prior three quarters lead us to believe that this indeed is the case."
Gee what a freaking surprise. Next you'll start hearing from the great brain trust of market predictors that will start lowering their predictions on where the market will end the year.
I can't emphasize enough that you have to find someone that knows what there doing,knows how to read charts,knows how to take defensive action.
Capital preservation-no one knows whats going to happen when they get this debt ceiling straightned out and anybody that tells you differently is full of crap

steve jobs should run treasury

Here's something to keep in mind as you follow this evening's congressional debate over the debt ceiling.

According to the latest daily statement from the U.S. Treasury, the government had an operating cash balance of $73.8 billion in at the end of the day yesterday.

Apple's last earnings report (PDF here) showed that the company had $76.2 billion in cash and marketable securities at the end of June.

In other words, the world's largest tech company has more cash than the world's largest sovereign government.

That's because Apple collects more money than it spends, while the U.S. government does not.

Are you one of the people taking all your money out of the market?

This is always so interesting to me.

The problem is most people just guess where their money sould be. They have no reliable way to decide and thus rely on the news or what they hear from someone else.

They get in at the highs and they get out at the lows and they do it consistently.

Trust me there are way better ways of making your investment decesions.

Anyway,here are the latest numbers and you can see people are fleeing stocks and piling into bonds.

Your 401k allocation needs fixing so what are you waiting for?

Your a lawyer, a doctor, an engineer, a programmer, a recruiter, a administrator, a salesman or whatever and you don't pay any attention to your investments, especially your 401k allocation.
It behooves you to call me. I want to help you. Think about it, you might call a plumber for a plumbing problem, a lawnman to cut your grass, a roofer to fix your roof, an electrician to fix your electrical problem.
Then why not call someone to fix one of the biggest problems you have, one that effects the rest of your life, one that your ignoring, your 401k allocation.

Bad advice from firms that should know better

it only took me 20 years to learn this

http://moneywatch.bnet.com/investing/blog/fund-watch/bad-advice-from-firms-who-know-better/672/

The 401k mindset vs the new car mentality

I met with a couple of prospects this week . One is a relatively new investor who has about $20,000 in his 401k plan but has no idea of what funds he is in or why he is in them. The other was someone who has about $500,000 in their 401 k but guess what, he also has no idea of what funds he is in or why he is in them.
The new investor when I ask him about his plan tells me he is young and retirement is so far away he doesn't see any point in worrying about it. The other guy is thinking about retirement but he also pays little attention to it except to see what the monthy account is worth.
It makes a huge difference to be in the right sectors and to pay attention to the overall market.
Since 3/2009 when the indicator i use turned up to favor stocks over bonds or cash the s&p is up 77%,the barclays aggregate bond fund is up 6.83%.So someone please tell me why your not paying attention or at least finding someone to help you pay attention. Whats ever more startling is that the small cap index is up 0ver 140% and midcaps are up 121%.
The really sad part is that both of the fellows above could have quite a bit more money if they would find someone that knew what they were doing.
Both of these felllows drive brand new bmw's and were telling me how much time they put in to doing the research to get the best buy.
So they spend hours worrying about buying a depreciating asset but spend no time managing an asset that they need to appreciate throughout their life.
If this hits home at all you need to talk to me and at leat let me show you how I can be of help.

If your looking for yields of 8% and more

Here's an idea if your looking for higher yield.Absolutely not as safe as those 10 year govt bonds yielding less than 3% but these have performed pretty well.
Do your own research

PASADENA, Calif. & LISLE, Ill.--(BUSINESS WIRE)-- The Boards of Directors of Flaherty & Crumrine/Claymore Preferred Securities Income Fund Incorporated (NYSE:FFC - News) and Flaherty & Crumrine/Claymore Total Return Fund Incorporated (NYSE:FLC - News) today approved new regular monthly dividend amounts to be paid in August.

The new regular monthly dividend rate for FFC will be $0.136 per share, which equates to an annual dividend of $1.632 per share. This new monthly dividend represents an increase of approximately 4.6% over the prior monthly dividend.

The new regular monthly dividend rate for FLC will be $0.1395 per share, which equates to an annual dividend of $1.674 per share. This new monthly dividend represents an increase of approximately 3.3% over the prior monthly dividend.

The August monthly dividend will be paid on August 31, 2011. Record and expected ex-dividend dates will be announced early next month.

Donald F. Crumrine, Chairman of the Boards of the funds, said “We are very pleased that both funds continue to deliver on their objectives of high current income. The continued recovery of the funds’ net asset values allowed them to increase their borrowings throughout the first half of the fiscal year. Earnings from that additional borrowing, together with very low borrowing costs, allows the funds to earn additional income that can be distributed to shareholders.”

FFC and FLC were organized in 2003 as closed-end, diversified investment companies. FFC invests primarily in preferred securities with an investment objective of high current income consistent with preservation of capital. FLC invests primarily in preferred and other income-producing securities with a primary investment objective of high current income and a secondary objective of capital appreciation. FFC and FLC are managed by Flaherty & Crumrine Incorporated, an independent investment adviser which was founded in 1983 to specialize in the management of portfolios of preferred and related securities. Flaherty & Crumrine also manages two other U.S. closed-end funds: Flaherty & Crumrine Preferred Income Fund (NYSE:PFD - News); and Flaherty & Crumrine Preferred Income Opportunity Fund (NYSE:PFO - News).

Website: www.fcclaymore.com

Contact:
Press and Analyst Inquiries:
Flaherty & Crumrine Incorporated
Donald F. Crumrine,
626-795-7300