Fixing Retirement

Last week I criticized a writer for bad ideas regarding retirement planning. His ideas were basically the same old rehash of save more, be prudent with spending and hope you die young. I think you can and should do better.
Our ‘financial’ writer suggested dumping all your money into a fixed annuity. Bad idea. First of all you have to be invested in the market. If you are saving in fixed anything including money markets, certificates and passbooks someone should pass you a loaded pistol just so you can get it over with quicker.
Those clients who moved their investments into cash about a year ago are really miserable today. Those that stuck with it, gritted their teeth, closed their eyes and put cotton balls in their ears and nose are better off financially that those that didn’t. The reason you need to be fully invested is that while most of the time the markets act like two year olds who are having a tantrum or a crazy aunt on lithium there is nowhere else, including real estate, that the average investor can invest in to beat inflation and taxes for a positive long-term return except the market.
Here are the basics: If you were fully invested from 1989-2009 in the broad market index you’re average annual rate of return was 8.2%. If you missed just the best 10 days out of all those years you’re return plummeted to 4.52%, and if you missed only 70 of the best days out of 20 years you averaged a MINUS 6.52% return per year. You lost a lot of money by missing a few trading days over two decades.
The next step is to keep your investment moving parts to a minimum. Don’t buy into that goofy nonsense where you need 120 investments in order to be allocated or diversified. Keep things simple. If you have five or six mutual funds or ETFs you should be fine. Make it a rule to cut loose your losers, keep your winners and include as many dividend paying stocks and funds as you can.
If you’re taking income from your mutual fund investments use systematic withdrawal method. This allows you to use dividends, capital gains and share appreciation to maximize the amount of income. You can certainly take more income using this method than just using dividends. Most brokers don’t have a clue how to do this so call me and ask how to set it up.You can also do this with variable annuities. Income streams of 4%-7% are realistic and can be implemented quickly.
Another income withdrawal concept is to keep enough of your retirement plan money in cash and use that rather than selling shares of your investments.  This way you avoid fluctuations on that amount of money, especially during volatile or bear markets.
Take social security as soon as you can. Waiting does little except cost you money. Even if you have job you should talk to Social Security and have them analyze your benefits and see if it makes sense to start taking social security income right away rather than waiting.
Go back to every employer you worked for and double check that you did not forget or leave a pension, 401(k) or savings plan behind. You may be surprised to discover that a company you worked for some 20-years back may have a benefit waiting for you.
Finally, do a budget. I know I’m talking to the wall for some people but if you shop out your car, home and life insurance you may find yourself saving money without giving up benefits. Also compare internet, phone service and other vendors you use constantly. A dollar here and there and you may find yourself saving a thousand or two a year. When you use cash instead of a charge or debit card ask the business or professional if they discount for you paying with cash. Since a business has to pay a fee for credit or debit cards some will gladly provide you with a saving.
Hopefully you picked up one idea out of the above and it will work for you. If you have questions or need to talk to me you can call me at 877 783 7080 or e-mail me at pstanley@westminsterfinancial.com.

Tuesday Musings – First Quarter 2010

 

• Wha happened to 2000 $ gold? Yes, a rally last week as gold ceased its move lower. Combination of strength in dollar and higher Treasury yield moved gold. Not sure if it will last.
• For the week big Market move after the pillage of the middle class. 48% of Americans think, according to the WSJ, this is a bad health plan versus 36% it is a good idea. 
• Teddy K killed Nixon’s national health care bill in 1974, according to Ben Stein, speechwriter at the Nixon White House. Now TK’s labeled the Father of National Health Care. Dems think they now have 32 million voters locked up.
• Market Up for the quarter after a not so stellar start in January. Stocks stall as markets hit 18 month high- up 4% for the year.  1,2,3,4… that’s it.
• Health care taxes- brokers look at munis for their higher income client accounts. Starting 2013 new Medicare tax 3.8% on wages and other forms of income. It isn’t unreasonable to assume upper middle class taxpayer being dinged into the 50% tax rate.
• If you have a Medicare Advantage plan under the new health care act your insurer may cut extra benefits or increase co-payments. Also, those earning $85,000 or more will pay higher Part B premiums. (It is unclear if that includes pensions, social security and unearned incomes).
• China not ending their stimulus until recovery is certain, according to central bank governor Zhou. Article in Time with photo essay of an entire empty NEW city in China.
• New York Times, bastion of liberals, reported Obama declares that the health care bill marks the end of the age of Reagan. Obama’s campaign pledge of creating a ‘bottom up economic growth as opposed to the trickle down economic growth.’ (I’ll let my economic experts explain that to me.)
• $700 billion in high yield corporate debt coming due in 2012. Opppppps.
• Todd Harrison reports, ‘We are in a cyclical bull market within a secular bear.’ My comments –Todd is full of bull since no one knows for sure until it is behind us and we are finished with it or it is finished with us.
• Good Question! Why are the emerging markets of the 90s the same emerging markets today?
• Retirees 75 and over spend almost 50% less than those 65.
• Citi has tough time with its yard sale. Shorts at work here. BofA forced FORCED by MA AG to rework mortgage loan balances for 1,000s.
• Has anyone been in a Sears or K Mart lately? You neither? Lambert lambasted in Businessweek.
• Home Depot I visited packed on a Saturday morning. Employees admit more shoppers, especially the weekends over one year ago.
• Thursday market wheels come off. Several clients call asking for ‘More speed, Scotty.’ Where? The dollar strengthens, Greece & Germany feud and boom a triple point day goes ‘poof’! Friday 65 easy up points goes away as does the day- traders start to take money off the table.
• 3 More Banks fail making it 41 YTD.
• Have you registered for Saturday’s webinar? Go to link at website. Today last day,
• We all welcome Spring!

Careful In Who You Trust Fixing Retirement

 

If there is a secret in having folks believe in you it is to pretend you know more than you do or anyone else. That’s why news anchors don’t act silly on camera. Investment writers do the same thing only on paper. They pretend to know stuff other people don’t.

Financial writers, in most cases are simply writers reporting on money, often find themselves needing to fill space and put together some awful information and pass it on as gospel. One of them finally got to me.

This particular scribbler sets the stage in a recent article by writing that the last bull market had an extraordinary run beginning in 1982 but few people have the proof of having taken advantage of that bull. There are millions of baby boomers, he wrote in the WSJ, and only about one-third can retire and be comfortable, one-third have saved less than $50,000 and the other third cannot dig up enough change to buy the morning newspaper.

He goes on to explain that indeed you and I can do something about retirement and he proposes his ideas as fixing our future. But, after examining his ideas I think you’ll agree that our self-styled expert has been working a tad too close to the gluepot.

Delay your retirement and keep working. As if we haven’t heard this one. If you are self-employed working out of your basement, no problem. If you’re like most people that needs a steady paycheck, benefits and is over 50 the choice of whether to work or not is usually not up to the worker. As anyone knows how tough it is to get and keep a job.

Scale back your retirement costs. Smell the coffee, Bosco. Most retirees have a home, utilities, car, insurance, food and maybe a pet. Paring back expenses may only mean eating less, turning down the heat and increasing the insurance deductibles to an unhealthy level; or maybe dropping Rover off at a strange corner sans collar. Retirees, as workers, students and others, have already scaled back. A good many are at the bone already.

Say the hell with it and toss all your money into an immediate income annuity and spend everything you got. This is an idea best coming from the teeny-weenie-itsy-bitsy mind of Suzie Orman, but it wasn’t. Fixed annuity benefits, as anyone in the money management business knows, are based upon current interest rates and if someone is dumb enough to buy one now they are getting it at the worst possible time. The highest income annuities usually confiscate all your cash at death so nothing is left for your heirs or spouse. Yes, there are other annuity options but remember our ‘expert’ suggested wanting and getting the highest annuity income benefit.

Save, save and save some more. People are doing that. Unfortunately most people don’t know what to do with their money once they have it. Those boomers at the bottom third of the survey will never develop the discipline or stability to save consistently. Those with substantial assets will do just fine and the middle third will always need a helping hand and a guided plan on how to manage wealth. Saving alone doesn’t accomplish the goal.

Next week I’ll give my suggestions to create a better and less loathsome retirement plan.

If you have questions on anything contained in this blog write pstanley@westminsterfinancial.com or call Paul at 877 783 7080. Forward this blog to a friend or relative who you think may find it useful.

 

Doomsday Inflation Crisis

 

Fear sells. When you were a kid it used to be fairy tales like Little Red Riding Hood and the wolf. Today millions get scared to death listening to talking heads tell them how the world will end with our savings evaporating in a nano-second because of excess government spending.

In my entire professional lifetime the worst kept economic secret has been how government spending will eventually lead to odious inflation.

Without a doubt inflation and higher taxes are on the horizon as sure as there’s a Foo in Egg Foo Yong. The problem is that no one knows exactly when higher taxes and inflation will arrive. Its not an exact science this predicting of economic events. No one really knows for sure, especially the ubiquitous ‘they’ who pretend they do- but they don’t.

I am reminded of the Y2k crisis where people stocked cellars with bottled water, dehydrated food, wine and olive oil (according to some olive oil was to be the currency of the future), and plenty of ammunition for the automatic weapons to be used to repel the coming hoard of neighbors who were not as far sighted as those hunkering in their basement bunkers. At the stroke of midnight, we were told, the world would turn into the Night of the Living Dead as rampaging PTA and Kiwanis members ravage their own neighborhoods. ATMs would stop spitting out cash. Banks and brokerage firms would lose customer accounts into some sort of ether. We would all be beggars selling each other apples from opposite street corners. Why even airplanes would fall from the sky because of the computer glitch.

I was told that the creatures running loose on the day of reckoning would be far scarier than anyone you’d ever bump into, even at a Blockbuster store after midnight.

And here we are a decade later doing it again.

If there is anything we Americans love more than Wheel of Fortune, cold beer and apple pie it’s a good conspiracy. We buy into this stuff so easy I am amazed that we won any wars let alone the big ones. A little disinformation goes a long way with us.

Here’s the deal – if you want to believe in cabals, secret societies and two guys in Jersey who really control the world, good for you. It just doesn’t happen to have any veracity except to entertain those of us who also enjoy Ghost Hunters and Bill O’Reilly. One’s scary and one’s not.

Sure this tax-flation is serious stuff. There are ways to prepare and deal with it. There are a lot of other serious issues such as jobs, home sales, jobs and jobs.

Register for my webinar on inflation. Go to my website www.primaryplanner.com and do it now. I’ll help make it sensible and easy to understand and not so scary.

If you have any questions on anything contained in this blog write Paul Stanley at pstanley@westminsterfinancial.com or call him at 877 783 7080.

Chasing Yields In Convertible Notes

Fed Chief Bernanke told a group of congressmen a few days back that the Federal Reserve was going to keep interest rates low until the economy got on a firmer footing. This, of course, is great for banks but lousy for retirees and ultra-conservative savers who are earning almost nothing for putting their money to work in Treasuries, CDs and money market funds. Low rates also leads to perfectly normal people doing silly things with their money and investing into areas that they think they understand but they really don’t until it is too late.

I am writing about Reverse Convertible Notes. They sound like convertible bonds but they’re not. Convertible notes are big ticket commission items and lots of unsuspecting people are snapping them up thinking they’re going to get double digit returns but the truth being they’d be lucky to get their principal back.

Convertible Notes are equity investments coupled with a short-term note. They are the opposite of what fixed income investors would be buying if they really knew what it was they were buying.

Here’s how they work: An investor buys a one year reverse convertible note for $10,000 and it is ‘linked’ to ABC stock. (It can be any stock listed on the exchange. Usually it is a company that is well recognized in name but most amateur investors are unfamiliar with the company stock.) Let’s assume that ABC stock at the time the investor buys the note is trading at $10.00 per share. The bank or brokerage firm promises the investor a 15% return. If the price of ABC stock at the end of the one-year maturity date is at or above the $10.00 a share price then the investor gets his or her $10,000 plus interest of $1,500.

But, if the price of ABC is below the $10.00 at the maturity date, let’s say it falls to $5.00, the investor gets the number of shares of ABC that he could have bought at the time of his investment plus the interest of $1,500 for a total of $6,500.

There are also more complex arrangements with convertible notes but they all boil down to the same thing, most conservative investors don’t understand what they are buying. The odds, depending on the structure, can be on the losing side rather than on the winning.

Investment managers, with fingers and toes crossed, say there is nothing wrong with this investment as long as savers are aware that they may receive stock rather than principal. Easy for them to say. Not too many investment professionals would be buying these investments for their parents retirement account or for their kid’s education fund. Once the stock ends up in the hands of the unsuspecting ‘fixed income’ saver they then have the additional problem of having to hold the stock for an extended period of time and pay a sales commission to sell, if and when it reaches its original price.

Don’t think professional managers are immune from the possible losses of convertible notes. The government of Singapore Investment Corporation recently lost $5 billion, of an $11 billion investment, buying 9% convertible notes tied to UBS.

Bottom line is to avoid investing in what you don’t understand no matter how good it sounds. If you have questions call your advisor to see if the product is what it is before you plunk down some hard earned cash.

If you have questions on anything contained in this blog write to Paul Stanley pstanley@westminsterfinancial.com or call 877 783 7080.

Tuesday Musings-March 3rd Week

• Technical's and fundamentals don’t matter. Managers buying biggest names simply to stay fully invested. Fast Money calls it a Melt-Up.
• For the Week –We were up. Friday saw the beginnings of the breakdown. India raised rates out of the blue and India ETFs weakened as news cascaded into domestic market causing confusion. Eight Up Days couldn’t make it Nine. Commodities off. Gold can’t hang on. Oil may breakdown further going into this week. Palm can’t compete. The Ides of March brought a mixed market complicated by Senator Dodd who introduced a regulatory bill that, among other things, calls for curbs on banks’ proprietary trading. It also introduces a consumer watchdog to ensure people get clear information on loans, credit cards and other financial products. The four major banks were down slightly on the news. It also removes ‘too big to fail’ concept from government support. Taxpayers may not get 100% of their money back from GMAC while General Motors promises to make good on government bailout payback. GM may show profit 2010. CIT Group, recently emerged from bankruptcy, has a New Book Value well above years prior and still higher than current market. Wednesday stocks continued higher on Bernanke pledge to keep rates low for an ‘extended’ period of time. PIMCO manager El-Erian said there are other methods besides interest rates that the Fed can tighten, notably not renewing the 1.2 trillion dollar mortgage backed security purchasing program slated to expire end of this month. China may float their currency according to recent WSJ report on Thursday.
• Opps, the euro weakened as rift between Greece and Germany widens. Basically Germany is fed up acting as Europe’s ATM and let the rest of the coalition know it. Greece may have to go to IMF. Saturday news was kiss-kiss again. Go figure.
• Watch oil – we may see significant weakness before the summer driving season. Oil up on Wednesday close. Starting to fall apart on Friday. Oh, I already reported that.
• Germany may have to send intelligence teams to snoop on hedge funds that are speculating in the euro. This was said by Germany’s Finance Minister after Spain reported their secret service investigating attacks on their country by unnamed investors.
• Buy and Hold, again, may be dead? Here we go again as more commentators with more time than sense speak of stock picking versus buying a fund or ETF and hanging on while a portfolio manager does the heavy lifting. Many funds are now employing defensive portfolio measures.
• Transports Up! New Home sales at lowest in 50 years. Recoveries in past lead by new home sales.
• Good News – Labor Department reports consumer prices stagnate. Recovery may continue without need of rate hike by the Fed. Inflation cooled in February with the so-called core index increasing 0.1% in line with forecasts, the smallest gain since 2004.
• Hottest job in recession…err..depression is life insurance agent. Traditional companies recruiting like it was the 1950s.
• Cisco new router, introduced this past week, (cost $90,000) could allow everyone in China to make video call at the same time.
• Money markets waived fees valued at millions will take steps to get them back when rates improve. Current money market 0.8% average. Savers lose big after deducting taxes and inflation.
• Legg Mason’s Bill Miller positive about the market and favors tech and financials.
• Dividends are making a comeback.
• 37 Banks closed. This week’s FDIC losses come to $600 million.
• Finally, do yourself a favor and read Michael Lewis’ ‘The Big Short’.

Tuesday Musings 2nd Week March

• CNBC reported the bull market has officially survived one-year and odds are it'll keep on trucking. Historically there was one bull that lasted only 392 days and that happened in 1948. With some 9 trillion dollars of investor money on the sidelines there is plenty of room to grow. Monday, March 8Th saw the markets go sideways as AIG sold to MetLife their foreign insurance company. Equity mutual funds reported their cash reserves the lowest since 2007. This has been the quickest decrease since 1991. Jerome Dodson, President of Parnassus, estimates the S&P 500 will climb 6-9% this year. Tuesday markets languished and finally moved mid-afternoon. Cisco announced revolutionary product and over-hyped their latest $90,000 router. Cash rich Cisco plans on hiring 2-3,000 people over the next few months. Oil and gold both moved lower. China repeated that it is and will continue to be a responsible investor in U.S. Treasuries. Yi Lang, director of China's State Administration of Foreign Exchange, also said gold doesn't offer good long-term returns because of price swings. Tighter monetary policy may also be in the cards for China as inflationary pressures saw CPI soar 2.7% in February. Wednesday markets flat with metals off and crude up 60 cents. Markets spent the day awaiting news from Citi which continued its run into Thursday. The financials lead with metals again flat. S&P rallied to its highest level since 2008. Michael Holland of Holland and Company said market fundamentals have been improving. DOW up 45 points. Friday saw the markets with no direction as analysts and investors looked for any news to either buy or sell. Gold down. For the week markets up, making that 2 in a row.

• Another Market pullback in the offing? From Barrons Streetwise the Mystery Broker is at it again and suggests something of the size and magnitude of the earlier 2010 drop of 9%. No bear call.

• Lalalalalalala....according to Jack VanDerhei of Employee Benefit Research Institute, only 46% of all workers have tried to calculate what they need for a comfortable standard of living in their 'golden' years. People just don't want to think about it, said VanDerjei. The workers who have less than $10,000 in their retirement plans grew to 43% of all workers.
  
• Keith Goddard, CEO of President Capital Advisors, in a Barrons interview explained the value of buying blue chip companies, comparing a 6 1/2% dividend with a 3 1/2% 10-year Treasury yield. Ahhh, pretty much a no-brainer.
  
• Americans net worth increased albeit slightly, an increase albeit is an increase nonetheless. However, still below pre-depression levels.
  
• What stocks, you ask, are loaded with cash? Apple, Cisco, Dell, Toyota, Ford, Nokia and Sprint-Nextell. Some have debt, some don't, some you should buy now, some you shouldn't. And you thought investing was easy?
  
• Global oil demand UP says those with the bestest crystal balls. Forecast is driven by China's increased demand. Gas should be UP at the pump again this summer.
  
• Fertilizer stocks soared after Potash Corp reported a sharp increase in potash demand. Across the board potash company shares, which have been sluggish at best, soared 3-11% Friday.
  
• City of Detroit sold $250 million in junk bonds. The bonds are backed by future revenue sharing payments from the state. Demand was double what was available. Most of it, if not all, institutional.
  
• Three more banks were closed last week bringing the total for the year to 20 and 195 since the depression started.

  Have you registered for my inflation webinar? Go back to my website and register, please. The meeting will last less than an hour and we'll discuss the coming inflation crisis and what you should do.

  If you have questions on anything contained in this blog please write to Paul Stanley at pstanley@westminsterfinancial.com or call 1-877-783-7080.

Insurance or Investment?

Back in the 70s and 80s buy term life and invest the difference was all the rage. It became an instantaneous sensation like cheap wine in a box and Dorthy Hamill hair styles. Traditional life insurance companies were astonished that suddenly American consumers turned their noses up at good old fashioned, high commission, low cash value whole life insurance, in favor of pure protection and a crack at getting stinking rich. Why it was positively un-American, according to the insurance executives and drove them nuts and their math whizzes to the drawing boards.

Salespeople, labeled Termites, by those holier than thou traditionalists, sold the concept and excited an entire generation of consumers on how they could have a cheap death benefit but also an investment where they could earn seven or even ten percent by buying mutual funds that invested in the American economy.

Buy low cost term life and invest the difference into a mutual fund was and is a great idea except for one problem - people wouldn't do it for the long term. They would agree to the concept, drop their existing insurance in a heartbeat but after a year or two decide that it wasn't for them. The money earmarked for investment was directed into custom bowling balls, Vegas weekends and a new side by side refrigerator.

The traditional insurance industry meanwhile countered with insurance contracts that married both the term and investment sectors together. In what were then and now called variable life the insured could decide where they wanted their saving portion to be invested. What policyholders were doing was assuming the risk management that used to be the function of the insurance companies. The insurance cash value accumulation was vital to maintain a level premium and death benefit. Back in the day that's what clients paid the insurance companies to do. With the new products, and in most cases, people did not know that they were now responsible for their own risk management. Buying a variable product became much like going to the big box store and doing all the heavy lifting and paying the store for the privilege of doing so. Led by insurance agents, who for the most part, couldn't define a dividend from a cap gain, a lot of people who were supposed to manage their cash value accounts simply spread their money around a lot of different indices that they didn't understand and then put everything on cruise control. It didn't surprise too many people in the industry when these policies crashed and burned and a lot of dissatisfied customers were dialing 1-800-LAWYERS.

Now, after an absence of several decades, whole life insurance is again emerging as a respectable product. It has guarantees. You don't have to worry about internal investments or choosing which sector you want the cash value to be invested in. Your premium goes into one pool of fixed income investments and there is always enough cash to pay death benefits or cash someone out if they need or want to. It's the perfect dumb product like the passbook savings that will be there when you want and need it. The best thing of all the risk is back to whee it belongs at the insurance company whose name is printed on the policy tucked away in your sock drawer.

But now some folks are back to their old tricks and selling whole life as an investment. I just read a WSJ article where the writer fairly gushed over the tax-deferred investment returns on whole life. I have to let you know that life insurance is not an investment. It never was, is and folks could get more than their hands slapped for saying or writing so. Fifty years ago that's exactly how whole life was sold as a conservative long term savings plan that just happened to have a death benefit. The states insurance commissioners cleaned it all up and made it clear that life insurance is a death benefit that is meant to be a replacement of income or economic loss. The increased savings inside a whole life policy acts as a hedge in order for the insurance company to be able to provide a fixed premium for a level death benefit. Removing the cash value decreases the death benefit. And, as we know from buying pure term life costs increase as people age and get closer to mortality.

If you want to buy whole life insurance do it because you need the protection for a long period of time, not a tax gimmick or someplace to store dollars from the taxman. It's that simple.

If you have questions on anything contained in this blog write to Paul Stanley at pstanley@westminsterfinancial.com or call 877 783 7080. Share this blog with someone you know.

Musings On Tuesday -A Great Start For March

• Markets opened the month with a tentative gain and built momentum only to give up some near the close. Still an impressive first day Monday, March 1st, Tuesday lost most of the glimmer, although stocks traded in a narrow range with Ford beating GM in total sales for the first time in...well, a long time. MSCI Emerging Markets have had some life in them gaining 4% the last few trading sessions. India, in particular, has seen some increases in manufacturing and exporting. Only 2 points on the DOW at the close. Wednesday locked in losers brought on by the health industry and guess-who called for a vote on you-know-what and said he was seeking to push the 'long and wrenching debate; over health care...His words alone sent the markets lower. Cat, GE and Alcoa all up for the session. Thursday was up and down and finally the markets ended up 47.48 on the DOW. Emerging markets ended their four day rally down 1/2, the dollar rose. Commodities fell on the dollar strength. Friday a better than expected job report as analysts, brokers and investors were bracing for bad news buoyed the broader markets into a triple digit day closing the first week of March on a positive mood.


• Barrons wished investors all a Happy Anniversary Monday and stated that even with the 2009 rally the S&P 500 is no higher than it stood in 1998 and 27% below its 2007 high of 1565. Look to the market to reach 1300 by end of year. Bully.


• Gold may still face stiff headwinds in the coming weeks, so says Mark Hulbert of MarketWatch. This is only a short term situation. Reasons is that there is too much 'creeping optimism;, Gold got more than a little giddy-up Monday and Tuesday and not so much the rest of the week.


• Missing something in that sandwich? Tomato prices are soaring, from $6 a box to over $30 - blame the Florida weather.


• Thinking of strapping on a six shooter, pard? Well, Starbucks says you can mosey on in as long as your piece is unloaded. I didn't know this but 43 states allow folks to walk around packing heat as long as their weapon is unloaded. I am not one of those bleeding hearts that doesn't want anyone not to own a tank or bazooka of choice but some old geezer strapping iron and sauntering into the local CVS to pick up a tube of ointment is where I draw the line. Who knew?


• Consumer confidence nose-dived in February but retailers reported solid gains. A wide economic range of retailers from Nordstrom to Target reported sales that beat analysts' estimates.


• Greece successfully sold bonds and deflated critics Thursday. David Callaway in MarketWatch blames the crisis on George Soros and friends (see last week's blog), and says the crisis is over.


• Herbert Allison, a Treasury official who oversees the $700 billion financial rescue plan, said to a Congressional hearing this past week, that there is no too big-to-fail government policy guarantee. Testimony stoppped when some observers swear Allison's nose grew two inches.


• March 15th Bloomberg Businessweek reports on a possible Bear in a China Shop. A billion investment dollars have moved out of China equity funds so far in 2010. The Shanghai Composite Index is down 6%. And Central bank Gov Zhou says that 'eventually' the Yuan will move away from its current 'dollar' exchange policy. When that happens no more cheap tees, shoes and tidy-whities.


• Please mark your calendar April 3rd at 11 AM for my Inflation Crisis Webinar. All you need is a computer and phone and you never have to leave your home or office. More info on my web site. Promise you won't miss it. Probably last 30 minutes. If you have a second right now go to my web site and register.

  If you have any questions on anything contained in this blog write to Paul Stanley pstanley@westminsterfinancial.com or call him at 877 783 7080.

Best Fund Wealth Builders & Destroyers

The one subject I've tried to get into and just haven't been successful to share with you is the crystal ball method of money management on where this market is going. The broker-dealer I'm licensed with pays for an advisory service that gives the brokers an idea on where the market is since many times we, as brokers, can't. Each Tuesday we get together over out phones and computer screens for a webinar and review what happened the previous week and what we can look forward to looking...well, forward. Lately this service has signaled that the market is in a 'bear confirmed' mode but that's confusing since ever since it signaled a bear the market has moved substantially higher. I expect it will move lower in certain sectors before re-starting the climb back up. This is healthy for the markets since it gives either buying or selling opportunities and nothing moves in a straight line forever.

But because my crystal ball has some electronic fritz that prevents me from being a full fledged card carrying investment soothsayer like so many of my brethren who know absolutely everything, I rely on mutual fund managers to help lead my clients safely through the financial mine fields. It's a lot easier doing research this way and its worked fairly well until 2009. For those of you who remember 2008 rolled into town like a sailor on a weekend bender and couldn't get its bearings. I invited one of the smart guys from American Funds to talk to my clients and he informed us that the market malaise in 08 would be short, a Democrat would be elected and everything would be swell (not exactly his words but close) by the Fall of the year. Well, if you're going to be wrong you may as well be really wrong because he was and so was the entire industry.

Since a good portion of the invested assets of my clients are with the American Funds there was a good amount of angst upon my clients and myself until the March 2009 recovery, or bottom, depending on your viewpoint. Naturally no one really knew that was the bottom but certain smart people now say they knew, which of course they didn't.

One always second guesses oneself when anything happens that disrupts and investment plan and I wasn't different.

While all this was going on I preached two things to clients: One don't sell into the panic and Two hold your current investments until we have some recovery. Most of my clients listened. Strangers who came to me thought I was nuts.

It turned out it was good advice. It wasn't anything special, it was common sense.

Now is the time of year when reports are made on which mutual fund family created the most wealth and which fund families were the biggest wealth destroyers over the previous decade. But before I report on that I have to remind you that the hottest fund family in the 90s was Janus. It collected 20% of each mutual fund dollar. In other words out of every five bucks one went to Janus. People wanted big returns, did not care about risk, and Janus was the address you went to. I remember several people telling me to go peddle fish, or worse, because the returns our portfolios were making did not come close to that of Janus.

So who had the worst 10-year wealth destroyer record? Why it was Janus Capital Group, Inc. with an investor loss of $58.4 billion. Putnam Funds came in as number two and flushed away$46.4 billion of investor hard earned money and Invesco AIM lost $10.1 billion.

Like my favorite college football play-by-play announce Keith Jackson used to say, 'Whoa, Nelly!'

And the best Wealth Creators? Listed in order American Funds $191 billion, Vanguard $189 billion and Fidelity $153.1 billion. Of course there is no guarantee that these folks can do it again but a winning 10-year record with two of the biggest meltdowns in economic history sandwiched in the last decade counts for something. Remember, these were the best of ALL fund families. The cream, the bestest, the ones you'd want to buy today if you hadn't already. And before you pooh-pooh this report remember these funds beat out such outstanding managers as Legg Mason, T Rowe Price, Templeton and PIMCO, as just a few quality managed funds.

Now before one of you smarter than me folks steps up and says something like size matters, I agree. Those funds did the most because they were the biggest. Which is why annualized returns of all the funds counts for something and American Funds returned 4.1%, Vanguard 2.9% and Fidelity 2.1%.

I report a lot of bad and serious news and today I just wanted you to know we did good and I am really happy.

If you have questions about anything contained in this blog write Paul Stanley at pstanley@westminsterfinancial.com or call 877 783 7080. Please pass on this blog and address to someone who you think could benefit.

Musing on Tuesday End of Month Wrap-up

• Finishing touches are being applied to my client April inflation fighting webinar. We all know some form of inflation is coming we just don't know how bad it will be. I'll give ideas and suggestion. It'll all be done by phone and computer. Tell your friends and I'll have more news coming. You won't have to leave your home or office.


• Last week started off on a sour note with oil up, gold down and markets off. Commodities rolled over and no rate hike from the Fed as we look forward to the balance of 2010. Big Ben testified in front of a Congressional panel insisting that rates will not increase soon. This means Treasuries are still appealing if bought right. More being heard from Japan as they prepare their first IPO in many years, one of their insurance companies is going public. Wal-Mart entered the on-line video biz by spending $100 million buying an existing company. Tuesday saw the markets spiral into a triple digit loss as consumer confidence evaporated. Wednesday was the bounce with Bernanke pledging no rate hike. Thursday's 188 point drop in the DOW recovered most by end of day losing a scant 53 due to jobless claims and credit problems overseas. Friday ended up as did the month.


• According to Mark Humbert at MarketWatch the stock market is neither extremely over-nor undervalued right now. He said, Right now.


• General Motors may be the hottest IPO of 2010. The government wants out with almost a 61% stake along with the Canadian government and UAW health-trust making up another 30%. Clients with an interest in this should call me now.


• A brilliant little puff piece on whole life insurance written in the WSJ last week broke rules that if I or anyone who is licensed to sell the product either wrote or said what the writer Leslie Scism did they'd be slapping the cuffs and making me walk the prep-way. Yes, I'm talking they're writing about life insurance as an investment - which we all know it isn't.


• The pain in Spain is mainly following the woes of Greece. Same story different accent. George Soros and fellow hedge funders gathered at dinner (I kid not) to launch a massive attack against the Euro. Using 20-1 leverage this could be a huge assault.


• Citigroup, Inc. is about to sell a hedge fund business, their fund of funds management with about $4 billion in assets. U.S. government ownership in the banking giant has decreased from 27% to 23%. As we seeing a slowly emerging healthy Citi, or a company attempting to get out from under government ownership at any cost?


• A world of worries as some suggest a China bubble, and recent articles expose empty skyscrapers in downtown Beijing. Brazil too overvalued in the near term but, according to Martin Jansen of ING Investment Management, (his words) could be a double in 5 years.


• Almost 10% of 8000 FDIC-insured banks in trouble. Losses on commercial real estate will account for more small to mid-size banks to topple in 2010. Locally, Flagstar??


• AIG delays IPO with MetLife. GMAC plans IPO to repay US. Even if cash raised through IPO could take several years to completely repay according to GMAC Carpenter. NOTE GMAC...the bank not the car company.


• The sour economy has spilled over into the coffin business. Casket sales are down and cremation's are up.


• Finally, Ronald Howes, Sr., 83, inventor of the Easy Bake Oven passed away 10 days ago. He created Easy Bake at Kenner toys in the early 60s. There is no truth to the rumor that Ronald requested to be cremated in one of his own inventions.