People often look to Warren Buffett, one of the greatest investors of all time, for guidance what to do. But what about the opposite? The Oracle of Omaha has a great list of “no-goes” enumerated in this Bloomberg article:
- Don’t be too fixated on daily moves in the stock market (from Berkshire letter published in 2014)
- Don’t get excited about your investment gains when the market is climbing (1996)
- Don’t be distracted by macroeconomic forecasts (2004)
- Don’t limit yourself to just one industry (2008)
- Don’t get taken by formulas (2009)
- Don’t be short on cash when you need it most (2010)
- Don’t wager against the U.S. and its economic potential (2015)
- Don’t beat yourself up over wrong decisions; take responsibility for them (2001)
- Don’t have mandatory retirement ages (1992)
- “Don’t ask the barber whether you need a haircut” because the answer will be what’s best for the man with the scissors (1983)
- Don’t dawdle (2006)
- Don’t interfere with great managers (1994)
- Don’t succumb to the attitudes that undermine businesses (2015)
- Don’t be greedy about compensation, if you’re my successor (2015)
This year’s turkey dinner will cost you 24 cents less or -0.5% compared to last year. The average cost of a classic Thanksgiving Dinner for 10 people is $49.87 according to the American Farm Bureau Federation’s survey. The relative price stability of the turkey index mirrors the government’s Consumer Price Index for food eaten at home which decreased 2% over the past year.
The bird soaks up the lion’s share of the budget at 46% of the meal’s cost. The 16-pound turkey came in at $22.74 this year or $1.42 per pound. The price of most ingredients was quite stable compared to last year. Biggest losers: turkey down $0.30 (-1.3%) and miscellaneous ingredients down $0.37 (-11.6%). Biggest gainers: pie shells up $0.12 (4.9%) and rolls up $0.21 (9.3%).
The average cost of a turkey dinner has hovered around $50 since 2011.
25 Important Documents You’ll Need Before You Die
• Letter of instruction
• Trust documents
Proof of Ownership
• Housing, land and cemetery deeds
• Escrow mortgage accounts
• Proof of loans made and debts owed
• Vehicle titles
• Stock certificates, savings bonds and brokerage accounts
• Partnership and corporate operating agreements
• Tax returns
• List of bank accounts
• List of all user names and passwords
• List of safe-deposit boxes
• Personal and family medical history
• Durable health-care power of attorney
• Authorization to release health-care information
• Living will
• Do-not-resuscitate order
Life Insurance and Retirement
• Life-insurance policies
• Individual retirement accounts
• 401(k) accounts
• Pension documents
• Annuity contracts
Marriage and Divorce
• Marriage license
• Divorce papers
Learn more in this article
A recent survey by Fidelity shows that wives and husbands don’t share retirement-planning duties nor agree on the plan:
- Only 41% of couples surveyed handle retirement investment decisions together.
- Only 17% of couples say either spouse is prepared to assume sole responsibility of their retirement finances.
- Although women are more likely to outlive their husbands, only 35% of wives say they are completely confident in their ability to take over the finances. 72% of husbands feel they can.
- 33% of couples say they don’t agree or don’t know where they plan to retire.
- 62% of couples nearing retirement don’t agree on the age at which to stop working
- 47% of couples nearing retirement don’t agree on whether they will continue to work in retirement.
Here’s what you should do and know:
- Both husbands and wives should know where critical documents are kept
- Both need to know what to do if their spouse is no longer able to assist with financial decision-making
- Both should have an understanding of the family’s finances, savings, and investment goals.
- Both should become active in financial planning and meeting with the family’s financial and investment advisors.
- Both husbands and wives should talk about retirement and finances more often together for better agreement and mutual understanding.
It’s hard to not to riff on something political in the same week of that presidential candidates Hilary Clinton and Donald Trump squared off for their first debate. That’s exactly what Tony Isola did when he offered up his “financial products” version of Hilary Clinton’s uncomplimentary description of her opponent’s supporters (“basket of deplorables”).
Here is Tony’s list of products that are toxic to the retirement savings of our people and institutions:
- Equity-Indexed Annuities – How about an investment with limited upside but large potential for a substantial loss? Throw in a 10% sales charge and no dividend participation (50% of historic market returns) and we have the ingredients for a deplorable retirement scenario.
- Funds with 12b-1 Fees – Fund size and investment returns are negatively correlated. Investors are paying a fee to brokers designed to increase assets and reduce returns. Kind of like paying a restaurant to give you food poisoning!
- Proprietary Mutual Funds – This is cross selling at its most heinous. Never buy a mutual fund created by a broker’s employer- this is the ultimate perverse incentive.
- Non-Traded REITs – A false promise of safety combined with 10% upfront commissions, this is a true sucker’s bet. Just because something is not traded doesn’t mean it cannot go down in value. By the way, their publicly traded cousins have vastly outperformed this group over time, because of greater transparency and lower fees.
- Commodity Funds – High risk combined with low returns rarely ends well. These products specialize in something called ”Contango.” Investor translation: Nearer dated futures’ prices are lower than the longer dated ones, or more commonly known as buy high and sell low, rinse and repeat.
- Variable Annuities – These are often sold on the pretense of guaranteed income and tax-deferred growth. In reality, very few investors need this product fraught with complexity and egregious fees. These are often placed inappropriately in tax-sheltered accounts; investors do not need both a belt and suspenders.
- Front-Loaded Mutual Funds – Investors pay a premium of 5.75%, and an additional 1% a year in fund fees to purchase an investment that is almost guaranteed to underperform an unmanaged index fund costing .05%, annually. There is NEVER a reason to pay this fee.
- Over-Niched ETFs – Healthcare Shares Dermatology and Wound Care ETF and Pure Drone Economy Strategy funds are all that needs to be said. The prosecution rests its case.
- Hedge Funds – 2% annual fees combined with 20% of yearly profit makes it pretty hard for investors to bring home any type of meaningful positive returns. While there is a small minority of hedge funds that are worth the steep price, they are either closed or have account minimums that rule out everyone except for the Bill Gates’ crowd.
- Market Linked C.D.s – The ultimate vanilla investment has been hijacked by Wall Street. Unless you enjoy paying a 3% commission and having the possibility of losing principal due to early withdrawal, run away from anyone who approaches you with this nonsense. Purchasing a complicated structure that will underperform your Credit Union’s basic offering is a deplorable choice.
Vote for transparency, low fees, and an investment advisor who will look out for your best interests!
source: Tony Isola
As the Republican National Convention wraps in Cleveland and the Democratic National Convention is about to start in Philadelphia, this is a timely opportunity to remind you that you shouldn’t mix your politics and your investments.
Salespeople and product-sales organizations are very astute at selling during political stress. They usually find a hook to sell their products…products that in most cases are not really in your best interest.
As Mike Piper points out in the Oblivious Investor, fear is a powerful sales tool. Salespeople exploit a person’s political views to instill fear and ultimately sell undesirable financial products. Those products are not only intrinsically bad, they come with a huge cost.
The pitch goes something like this,
- [Political event X] just happened or is likely to happen.
- As a result, the economy will take a nosedive.
- You should buy my product to protect yourself.
This strategy is popular because it appeals to people of vastly different political views. To lure in investors with left-leaning views, the pitch evokes a narrative that the markets are rigged by the financial elite. To draw in the right end of the spectrum, the pitch emphasizes over taxation, over regulation, or excess government spending.
The technique is also popular because it can be used to sell just about anything…
- The economy is going to hell, and that’s why you should buy gold.
- The economy is going to hell, and that’s why you should buy my market-timing newsletter.
- The economy is going to hell, and that’s why you should buy this annuity.
- The economy is going to hell, and that’s why you should invest in my hedge fund.
If the fact that someone is trying to play you with a sales pitch designed to sell any product to two contradictory sets of beliefs isn’t enough to drive you away, consider this. For the recommended product to be right for YOU the following conditions have to be met:
- The salesperson’s political prediction must be right
- The salesperson’s economic prediction must be right
- The salesperson’s product must indeed be a good solution to the proposed scenario
Good luck getting all that to be true!
- Wall Street Greed – “At the close of the day’s business, they take all the money and throw it up in the air. Everything that sticks to the ceiling belongs to the clients.” Merrill Lynch Structured Notes, anyone? Yes, the customers got to keep 5%.
- The Value of Market Predictions – “It seems that the immature mind has a regrettable tendency to believe, as actually true, that which it only hopes to be true.” 90% chance ‘Remain’ wins the referendum… OOPS!
- Financial Salesman Having an Answer to the Unanswerable – “Now if you do someone the single honor of asking him a difficult question, you may be assured that you will get a detailed answer. Rarely will it be the most difficult of all answers – ‘I Don’t Know.’” Market pundits who were completely wrong on Brexit, telling you what to do now.
- Data Mining and Confusing Causation with Correlation – “There have always been a considerable number of pathetic people who busy themselves examining the last thousand numbers which have appeared on a roulette wheel in search of some repeating pattern. Sadly enough, they have usually found it.” Long-term capital management had it all figured out, until they didn’t.
- Valuing Paper Trading, or Simulations, over Real Life Experience – “Art cannot convey to an inexperienced girl what it is truly like to be a wife and mother. There are certain things that cannot be adequately explained to a virgin either by words or pictures.” Trading Academies advertised in the media will make you rich like the Trump University graduates who are now real estate moguls.
- The Value of Individual Stock Picking – “They told me to buy this stock for my old age. It worked wonderfully. Within a week I was an old man.” Kittens and monkeys throwing darts routinely outperform stock pickers.
- The Aversion to Holding Cash in Clients’ Accounts – “To them having a sizable cash balance in an account for any length of time is unbearable. Suppose stocks should go way up? They would be left high and dry with nothing but some dirty money.” Money markets give you nothing. MLPs work as bond substitutes; they will provide a terrific yield with little risk.
- Churning Clients’ Accounts – “The man who chooses to take his money and churn it furiously either below or above Chambers Street, cannot in any way predict his fate, save for a single assurance. So long as any of the money still clings to the sides of the churn, he will not be bored.” Managed mutual funds have an average turnover rate of approximately 85% and underperform the markets basic indices.
- The Folly of Choosing Market Beating Funds – “The subject of choosing profitable financial investments does not lead itself to competence. There is almost no visible supply. If there were, it would have been discovered long ago.” The odds of an individual investor in 2016 picking a fund ahead of time, that will outperform the market over the next decade, are close to zero.”
- Chasing Hot Stocks – “The pathetic fallacy is that what are thought to be the best are, in truth, only the most popular – – the most active, the most talked of, the most boosted, and, consequently, the highest in price at that time. It is very much a matter of fashion, like Eugenio hats or waxed mustaches.” Ten stocks to buy right now!
NorthStar Capital Advisors would like to take this special occasion to thank you, our loyal clients and friends, as Sunday we celebrate 10 years of financial planning and investment management. We have come a long way since we rolled out our objective and disciplined approach to investing in 2006. Our success is attributable to clients and friends who faithfully support our business and receive great service and advice in return.
We deeply appreciate your loyalty, support, and trust over the past 10 years. We hope you and your family have a safe and happy holiday!
With heartfelt thanks,
Chris Mullis, Jimmy Irwin & David Berger
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