Talk to Your Mortgage Company

I talked to a friend today.  He explained that he was able to negotiate his mortgage lower and was able to get his credit back on the road to recovery.  Just call them up and ask what they can do.  It may take a while so give yourself some time to talk.

How to Be a Better ETF Investor

Article by Tom Lyden

ETF's Trade Like Stocks Feel Like Mutual Funds

Here are my ETF's.  I started this portfolio in March.  This is a MOCK portfolio.  That means it is not real.  It is fake.  I used actual (ETF's) to create the portfolio.   Read up on ETf's I think that they are a good way to diversify your portfolio.  Do not take these funds and then go and say that I recommended them to you.  I am not recommending anything here.  I am saying that If I would have put $5,900 in theses (ETF's) in March of 09, I would have $6,582 today.  Please, Please, Please, check out the article in the like above for more information on  (ETF's).  Click here or on the title to read a nice article about ETF's. 

• Investment return is not gauranteed.  You may loose money when investing.  This is not a recommendation to invest.  If you would like to know more please contact your financial advisor for more details.

Here it is!!

All prices are 15 minutes delayed

Symbol Last Price Quantity Cost Basis/ Share Current Value $ Gain % Gain Portfolio Share % PBW 8.38 50 7.52 419.00 43.00 11.4% 6.4% PHO 13.62 25 12.49 340.50 28.25 9.0% 5.2% PBD 12.29 50 10.99 614.50 65.00 11.8% 9.3% PIO 12.48 50 11.54 624.00 47.00 8.1% 9.5% PWND 11.99 50 10.56 599.50 71.50 13.5% 9.1% RWO 21.78 25 19.45 544.50 58.25 12.0% 8.3% RWR 33.52 15 27.00 502.80 97.80 24.1% 7.6% KBE 16.10 50 15.10 805.00 50.00 6.6% 12.2% XLV 24.13 25 24.40 603.25 -6.75 -1.1% 9.2% XLK 17.08 50 15.90 854.00 59.00 7.4% 13.0% XHB 13.50 50 11.49 675.00 100.50 17.5% 10.3% 6,582.05 613.55 10.3% 100%

The Best Stocks to Watch

The best stocks to watch for next week are........  Who frickn knows.  What a week in the market. There is so much ging on.  Please be careful to learn before you burn your money up in the market.  Find a strategy, at a low cost to you and work with it.  I am going to follow Bank of America this week and see if it stays under 10 dollars per share.  As a matter of fact.  Make a list of all of the companies that the USA is backing, or "Owns now", and watch what they do for a week or two.  Look at the 52 week highs and 52 week lows in the stock.  That way you can see how high it got over the last year and how low it got as well.  Pick a price to sell.  Don't get greedy, if the stock is at $10 and it goes to $15 you made money.  You have a capital gain of $5.  You have to pay 15% capital gains tax on that $5 that is .75.  You made $4.25.  You follow?  So if you bought 100 shares at $10 per share you spent $1,000 your $1000 went to $1,500.  You made $500 minus short term capital gains tax (Fed & State) about 20%, You made $400 bucks. Getting greedy means you let it get to $20/share and forgot to sell and it droped down to $5. Now you lost -$500 bucks where you could have made $400.  You got it?, good.  I am not giving investment advise I am just saying that we can make money in this market but do not get greedy. 

Churning: Same Money Different Product

There are so many ways that investment professionals get paid.  They get commissions from many different products as well.  Most all of these practices are legal and ethical.  There are some that are not.  Sometimes you will get an advisor or insurance agent that will keep investing the same money over and over and over again.  This is called churning.  It is a way for advisers to continue to make a commission on the same money by taking the money that the client gives them and putting it in an insurance product or investment product.  Then after a period of time, the advisor takes that same money out of that product and puts it into another product.  The advisor just made two commissions on the same money.  sometimes taking clients out of products is the right thing to do.  In today's times there has been a large amount of panic selling because of the economy.  There has been a big push for customer service.  There has been interest rate reductions on certain products.  So it is just a feeding ground for investment and insurance people to have the opportunity to churn products that they have already sold within the last 6 to 12 months.  I am not saying you should buy and hold no matter what.  I do not agree with that strategy.  It does not work for everybody.  I am saying that you must look at the incentive behind why an advisor all of the sudden wants to get you out of a product that they just sold you 6 months ago.  

You can avoid this by asking your advisor or insurance person a few questions:  1.  What is your commission on this transaction?  2.  What was it the last time we moved this money?  3.  What are my costs associated with moving the investment?  4.  What are my benefits?  The advisor will have answers  and you can believe or not believe his or her responses.  One way to know if an adivsor is NOT trying to churn, is if you have already had this conversation the first time you invested the money in the first product.  Honest advisors usually tell you upfront that if it dose not work out we will move it to something else down the road.  They will also volunteer the information about how much they will make on each transaction.  I am not recommending any investment of any kind, I am just saying ask questions before you make fast knee jerk reactions in an economy and market place like the one we are all living in today.

TAX Deadline

It is a big deal to file your taxes.  Do not delay file today.  No later than 12:00 midnight.  The IRS will not forget about you if you do not file.  It will not go away especially if you have to pay.  It's okay, we have all gone that way.  So, just give them what they want.  File today.

Surprise

Is there any surprise that the market is starting off down today.  There shouldn't be.  It is a simple game of make a profit take a profit.  Who has time to day trade?

Good Friday $3 Billion Dollar Profit Wells Fargo

Happy Friday. It is a wonderful feeling to know that Wells Fargo has made $3 billion dollars of profit in 3 months. Wow!! We can all rejoice right? Didn't Wells Fargo get some kind of government assistance? So.......if they borrowed more than $3 billion how did they make $3 billion? Don't get it twisted, the banks are winning but are they lending any of our tax payer money that they borrowed? No! They are keeping the tax payer money as a life raft. The Wells Fargo CEO said clearly that they made a profit. When asked about the plan to pay back the money to the tax payer, he first said he did not want to comment but then immediately turned around and said they plan on paying it back. When? We will never know. Is this transparent? I do not think so. So if they are making $3 billion then we better see higher dividend paid to the stock holders. The stock is relatively cheap right now. If we put in $10,000 will they guarantee that our money will be worth more in three months? No they will not. Keep it in perspective, if Wells Fargo made $3 billion over the last three months then they should give the tax payer's a check and share the wealth. They are still foreclosing on homes, they are still reluctant to lend if your credit score is not over 700, or demanding huge down payments if your score is below 700. I hope my Friday is as "Good" as Wells Fargo's. When this market fully recovers we all will be a little more trusting. As for now.......?

Commission Confession: Investment Knowledge is The Key

Commission Confession: Investment Knowledge is The Key

Investment Knowledge is The Key

We will be brief.  If you do not know what you are investing in you should learn it first before you invest.  Take it from me, I have been on both sides.  The investment side, as the provider and the side of the investor.  I have to agree that we should take responsibility for our actions.  This rule is applicable only if the provider of the investments has accurately stated the good and the bad about the investment.  If the experts of the investments are unwilling to be truthful about what you are getting into then you should walk.  If you feel you have not learned enough do not invest.  If you are ok with what you know, then your decision to invest should be easy.  Go ahead an do it.  Remember there are no get rich quick ideas.  There are only ideas.  Some good, some bad, just get the education first.

Some people say how can you trust the advisor that is giving you the advise.  That is easy.  Any advisor who is giving you advise should also disclose his or her motivation for trying to get you to invest.  The motivation is money.  Ask for a disclosure of what he or she is making and then ask if there are any other products out there that he or she can offer.  Ask what the commissions are on those products as well.  If the commissions on some other product is lower and better for you the advisor will have some explaining to do.  Get the picture?  Good.  

Don't Be a Fool

Wow, did you hear stocks are soaring.  All the big players in the market are just putting in millions of dollars.  Bull!  I mean c'mon people.  Who is really making money in this market?  I will tell you who, the people who have the millions to lose before they make any money.  The normal investor puts in $5,000 and makes $200 one day and loses it right back the next.  The risk level is so extreme in these kinds of markets for the little guy it is almost impossible to make any money.  I am going to break it down for you.  What do all those guys on tv say?  They say don't bail out of the market you will miss the up side potential.  Listen that is only with new, fresh money.  Not with the money that has been beaten down since April of 2008.  The Dow Jones Industrial Average was at 12,612 April 7, 2008, it is 7,769 today and may end up lower when trading is done for the day.

The other piece to the puzzle is that these big time investors have the ability to get out when they make money at a lower cost then the small investor.  It is called economy of scale.  They put in $1,000,000 and make $200,000 and get out.  They pay the broker on both ends.  They also may have losses to take against the gains they have.  Oh yeah, did I mention that they have enough resources to play the market on the other side.  Yes that's right, when the market goes down they make money as well.  

So do not be foolish, only invest what you know you can lose without getting hurt financially. Do not, I repeat do not sit around and do nothing if you are in this bad market.  Always adjust your portfolio to your specific current tolerance level of risk.  Just because you heard them say buy and hold is the way to go, that does not mean your risk level has to hold.  If you cannot take the heat get out and wait to get back in.  This is not a recommendation by any means because I do not know everyone's situation and I am not telling anyone what to do.  All I am saying is that what we see on CNBC is not what we see everyday in the normal investment world. 

Life insurance has surrender charges.

Most people purchase life insurance so that the loved ones they live behind will not suffer financially. I believe that life insurance is a way to create family wealth. When a family receives a life insurance settlement that is substantial it can generate a whole new life style for the family. The choice of the kind of policy is not as important as the amount of the death benefit. The key is to make sure that whatever policy you purchase is in force at the time of death of the insured.

People who purchase life insurance have to make sure that they are getting what they are told they are getting. What do I mean? When I talk to people about policies that they have purchased they seem to think that it really makes a difference if their policy builds cash value. They also think that the interest rate will be whatever the agent says it is at the time of sale. Then they think it is some kind of investment. Oh, I also here people say that they would like to borrow from the policy if they need the money.

Agents have to let people know that life insurance is not an investment. Insurance agents have to sell the product that the company they are with encourage them to sell. How much would they sell if the clients they serve knew that these policies have surrender charges. So you cannot get your money out as easy as the agent may tell you.

Mutual Fund Commissions

Financial advisors make money off of mutual funds in a few different ways. There are three basic types:

A shares
B shares
C shares
No Load Funds

Examples:

$100,000 invested into a mutual fund that has a front load or A share will net an advisor about $5000 bucks. If the A share has an upfront load or sales charge of 5%. Oh by the way the $5,000 is deducted from your $100,000. You invest $95,000.

$100,000 invested into a B share pays about the same to an advisor. The difference is 100% of your money is invested upfront. You invest $100,000. Here is the catch there is a 6 year surrender charge on your money. You take it out you get charged! The surrender charge schedule looks like this. 6%, 5%, 4%, 3%, 2%, 1%.

C shares are bad all the way around because the advisor gets a low pay out, about 1% and the client gets a 2% surrender charge and a 1% asset mange fee each year.

These funds are called loaded funds. No load funds are less expensive but the management fees are pretty high. They are still less expensive than the loaded funds. The advisor gets no pay from the no load funds. Which means if you need help with your investment you get an 800 number and customer service people to talk to. They are usually pretty knowledgable.

People have been trained to buy mutual funds because they are diversified. Yeah right! They go down just as fast as stocks in a really bad market. So you just have to know the incesntive behind the sale of a fund. Always ask the advisor how much they get paid on the fund before you purchase it. Make sure they tell you about the 12-B 1 fees they receive.

WYIDE

Missing Regulation

Just got back from talking about estate planning.  Is the estate tax going away?

So now GM is heading for bankruptcy.  Would it not be a good time buy GM now.  I say be careful.  It is just so crazy.  If you missed the bottom at 6700 in the Dow then you missed a chance to make some money.  There is no way to predict this market.

Here we go again.  Another down day in the market.  I just can't take it.  One year from now it will look really good.  I hope to still be in the industry.  It is so hard to make money because if you are an ethical advisor your clients do not have much to invest in.  So we just have to hang in there.  The insurance companies are cutting the product lines available to the public and they are cutting the commissions on the old products as well.  It is hard.

Does anyone know why advisors have to sell you certain products from the companies they work for?