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Clarity Coaching Tips

Here you will find many tidbits of coaching and financial information that often needs to be clarified for most American investors. Some of the information is very basic and in the form of a current market update. Some of the information is timely topics, based on current social political and economic climate. Some of these are strategies, ideas, and concepts that we have picked up through the years and implemented in our practice. Basically a soup to nuts area of information on all things financial.

 

Check out our Clarity Coaching Video Clips and the “It’s Your Money” podcasts for more tidbits that might pique your interest.

Knowing When to Fold’em

12/07/2011 by

An “irrational quest for safety drove all kinds of nutty economic and investment behavior in 2011.” So said the Chairman and Chief Investment Officer of the brokerage firm, T. Rowe Price, a couple of weeks ago at a media conference in New York, as reported by Advisor One, an on-line investment newsletter for financial professionals.

He went on to say that “irrational thinking explains … why people are terrified of risk and volatility.” I can understand the frustration. When the markets take a downturn, many advisors and their investor clients sell their investments and park their money in cash. In other words, they sell when the market is low, and want to wait until prices rise before they get back in.

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The Gift That Keeps on Giving

11/23/2011 by

The holiday season is upon us, which means gift shopping, visiting family members and planning for end of the year events. It’s easy to get caught up in the holiday mayhem year after year, and before you know it too many years could pass while you put off planning for your financial future.

We live in a fast-paced, high-energy society that is constantly on the move and always looking for shortcuts. As a result, certain aspects of our lives are often put on hold until a more convenient time when life isn’t so hectic. The fact of the matter is that life is always busy and sometimes we have to force ourselves to pay attention and take care of the important things now, so that we won’t pay the price down the road.

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Get That Monkey off Your Back

11/04/2011 by

“A blindfolded monkey throwing darts at a newspaper could select a portfolio that would do just as well as one carefully selected by experts.” – Burton Maikiel, from A Random Walk Down Wall Street.

This observation from Maikiel prompted the WSJ to run a Dartboard Contest to test this theory. Over a ten year period, starting in 1988 and ending in Oct 1998, there were 100 such contests in which the results of monkeys throwing darts at a stock page were compared with the results of the best and brightest of Wall Street. Slam dunk for the “pros”, right?

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Risk: Just the Facts Ma’am!

10/27/2011 by

How much risk is in your portfolio? Seems like a pretty straight forward question. Well…do you know how much risk you’re taking on or are you just taking a ride on the “Trust Express”

You’d think this is something most investors would be demanding to know. Yes, there is a mathematical formula that measures how much risk is in your portfolio. It’s called standard deviation and it measures how volatile your particular portfolio is. It absolutely blows my mind that there is so little talked about this vital measurement in the investment world. Most people have never even heard about it.

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Rational…Lies! Shell of Truth Stuffed With Emotion

10/14/2011 by

Global broad based diversification. Investors make big mistakes when markets are volatile.

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Innovation Will Prevail

10/07/2011 by

Innovation will prevail you know we lost a very important figure in American culture and in world history yesterday with Steve Jobs passing, someone who has had a tremendous impact on the world. If you were asked to think of an innovator, my guess is Steve Jobs name would come up often. I wonder what he and his company, vendors, and suppliers contribution to innovation have equated to in tax revenue, 49000 people work for Apple which is worth 37 billion. Steve stimulated our economy in part, when an innovation becomes in demand, revenue ensues. I believe that Steve Jobs was an example of compassionate capitalism.

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Trading Treadmill

09/21/2011 by

Trading Treadmill….avoid the hype
I ran across a recent press release this morning from Business Wire that announced some activity for Charles Schwab Corporation in August. I found it interesting that there was a large in-flow of new assets that came into Schwab about $62B and what I really found curious was the amount of trades that were taking place. Trades are up substantially in August about 57% in and 35% in July. Now what reasonable explanation can justify this amount of activity? Why is this happening? FEAR, FEAR, FEAR!

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Everyone Loves Market Volatility ​!!! When it’s up?

09/13/2011 by

A friend and fellow Investor Coach from NJ shared a story of a recent trip.

While in Europe with his wife a earthquake and then hurricane hit the East Coast and they couldn’t get home. All flights from anywhere in Ireland to anywhere in the United States were canceled, So, he bought a newspaper, The Irish Times to be specific, and a cup of coffee, to settle down for a long wait.

While browsing through the paper, an article jumped out at him entitled “Investor ‘prediction addiction’ now most relevant.” He shared that he was pleasantly surprised at the positive portrayal of our Investment Philosophy that he found in the article.

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Gold…Irr​ational Exuberance​!!!

08/24/2011 by

The television or radio nowadays is being bombarded with advertisements to “buy gold.” Firms selling gold now have a huge cash influx and are using it to attract more buying creative marketing. You will hear that it’s the “new gold rush” and get in now because “prices will continue to go to through the roof.”

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Market Volatility Leads to Big Investor Mistakes

08/17/2011 by

The month of July (and now August) must have been the worst nightmare for advisors who recommend market timing (otherwise known as tactical asset management) as the investment method of choice to their clients.

Market timers, of course, have to be right two times – they try to predict not only when to get out of the market, but also when to get back in. This is an impossible task during normal times, and doubly so last month.

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Now what? Panic?

08/08/2011 by

Burton Malkiel had a great article in today’s WSJ. Malkiel is a highly regarded professor from Princeton and the author of the investing bible, A Random Walk Down Wall Street. Here’s a link to the article:

http://online.wsj.com/article/SB10001424053111903366504576492512709525754.html

The title really says it all….Don’t Panic About the Stock Market, Investors who resist the urge to get out during rough times like this will be glad they did.

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Memo to Financial Advisors: Women Are Not Men!

08/08/2011 by

Supposedly, Freud once posed the question: What do Women Want?

It seems to me the Financial Industry is still trying to figure that out. (But then again, aren’t most men?)

Smart Money reports that over 70% of women feel underserved and dissatisfied with the financial-planning services they receive.

This crazy economy has handed advisors a golden opportunity to reach out to women…who know they need help and, according to the question I get most often, are desperately looking for advisors they can trust.

Here’s where I believe the financial industry has missed the boat. Advisors are talking to women just like they do men…because the financial world is based on the male model of communication. Big mistake.

Women are not men!

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Einstein’s Insanity

08/02/2011 by

You’ve probably heard Einstein’s definition of insanity…doing the same thing over and over again and expecting different results.

Seems that the majority of sophisticated institutional investors as well as individual investors could be deemed insane by Einstein’s definition. Seems like most people are looking for the money manager with the “hot” hand. This usually ends up with very disappointing results. Yet, investors continue the same process over and over again.

Listen to this short video were Larry Swedroe discusses this phenomenon.

http://moneywatch.bnet.com:80/investing/video/why-good-fund-managers-get-poor-results/6250481/?tag=video-river;video-load-river

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Little Known Secret of Fund Managers

07/29/2011 by

What’s the Little Known Secret that many mutual fund managers wish you didn’t know? You won’t believe itwhen I tell you. Many mutual fundmanagers do not invest in their own funds. Kind of unbelievable, isn’t it!

Investment News, a trade publication that guys like me readat the breakfast table, recently ran an article about a new Morningstar study.(Morningstar is a company that tracks and rates mutual funds.)

According to Investment News, the Morningstar study foundthat only about 40% of fund managers actually invest in their own funds.

Would you like to know what percent of mutual fund managershad ownership stakes in the study Morningstar conducted two years ago? It was 49%. Not exactly going in the right direction.

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Home Bias Investing

07/13/2011 by

Whenever I review a prospective client’s investment portfolio, I rarely see one that is truly globally diversified. The biggest problem I see is that most people are woefully over-weighted in US stocks. To make matters even worse, its usually exposure to just large US company stocks.

Their advisors might have placed them into General Motors, GE, Verizon, Proctor & Gamble, Johnson & Johnson, and similar large stocks.

The problem here is that the investor thinks he or she is properly diversified, but in reality, they have several sectors representing only two asset classes. So when one of the stocks rises, generally they all rise. But when one drops in price, more often then not they all drop. The result: unintentional wild swings in account values.

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