• 401ks,  Adams Financial Concepts,  Return on Investment

    Strategic Versus Tactical Investing

    When it comes to investing, one of the biggest questions in my mind is strategic versus tactical management. Before we can discuss the merits of one or the other, I think we should clearly define both. Strategic management focuses a financial portfolio on a group of assets. Tactical management changes the asset classes of a portfolio depending on the economy. So, which is better? In theory, tactical management sounds wonderful. You get in when the market is low and out when it is high. Unfortunately, this does not consistently yield the maximum returns to investors. Correctly guessing the exact moment to jump in and out of the market can have…

  • 401ks,  Current Events,  Return on Investment

    Questions For Your Financial Advisor

    Over the next few months, many investors will sit down with their financial advisor to look over their portfolio. Before the meeting, ask yourself what kind of investor you are. Do you simply want lower risk and higher returns that will beat the rate of inflation? Or do you want to succeed? Do you want to outperform the market? I believe my clients want to win. They want their wealth to grow significantly. If this sounds like you, I encourage you to ask your Financial Advisor the big questions. For me, they are the following: Look At The Real Dollar Terms The first question you have to ask is, how…

  • 401ks,  Return on Investment

    Plan for Long-Term Success

    Take care of the customer and everything else will take care of itself. This simple principle has led to decades of success at Albert Lee Appliance. Albert Lee III, President of Albert Lee Appliance, joined me on About Money last Friday. He said he tells his staff, “I’m not your boss. The customer is your boss.” Albert’s grandfather, the company’s founder, taught him this from the beginning. “He always said, you need to listen to your customer. They’ll tell you what you’re doing right and what you’re doing wrong,” Albert said. Despite the Great Recession, Albert Lee Appliance has expanded, opening new locations to serve additional customers. How was this possible? Long-term planning.…

  • 401ks,  Return on Investment

    Investors Should Keep Their Expectations High

    As an investor, do not lower your expectations. Some such as Charles Ellis, author of Winning the Loser’s Game, think you should. He found that 80 to 90 percent of money managers underperform the market. His conclusion? Investors should lower their expectations. He’s not alone in his findings on under performance. Burton Malkiel, author of A Random Walk Down Wall Street, found over 80 percent of money managers underperform the market. Robert W. Baird & Co also found that over the last 10 years only 370 out of 4,000 money managers beat the Standard and Poor’s 500 (S&P 500) by an average of one percent. Do these success rates, or lack thereof, scare you?…

  • Adams Financial Concepts,  Mile High View,  Return on Investment

    Identifying the Value of a Company

    If you and Alice Canlis were side by side in a small hatchback driving across North Dakota, would she kick you out or would you become best friends by the time you reached Chicago? Mark Canlis, co-owner of Seattle’s renowned Canlis restaurant, believes none of the 90-plus person staff at Canlis would find themselves hitch hiking in his mom’s dust. What does this have to do with financial investing? I’ve talked a lot about the qualities of successful businesses. Through interviews and evaluations, I’ve broken down what I believe are the top two qualities: people and inventiveness. As an investor, you need to look at how a business owner obtains these qualities.…

  • Current Events,  Return on Investment,  Uncategorized

    Flash Trading

    In 2008 very few people had heard of credit default swaps, overnight repos, or collateralized debt obligations (CDOs).   Many of the firms that brought those financial creations to the market have brought dark pools and high frequency trading. Firms doing high frequency trading execute over half the orders in the stock market and probably place over 95% of the orders. Dark pools account for another 25-30% of trades. That leaves less than one out of four trades being done “the old fashioned” way. I believe it is important to understand what is going on and to keep the focus on the longer-term to build wealth and income. I first licensed…

  • 401ks,  Return on Investment

    Fiduciary or Not?

    As a business owner, if you offer a retirement plan to your employee’s you are a plan sponsor and therefore a fiduciary. Even if you hire an advisor, the Department of Labor (DOL) considers you a fiduciary. As such, you are held legally responsible for your plans compliance. Why is your role suddenly such a big deal? In 2008, the DOL had just 100 enforcement officers to oversee roughly 485,000 plans. Retirement plans, such as 401(k)s, were rarely audited unless there was a complaint. But after the Great Recession, it became painfully obvious retirement plans were not functioning as they were intended. The DOL has said that 77 percent of…

  • 401ks,  Adams Financial Concepts,  Return on Investment

    Fees

    Do you know what your broker is charging you? The North American Securities Association recently published a survey of 34 big and regional brokerage firms and found their fee disclosures were complicated and ranged from 1 to 45 pages. While the disclosures met the technical requirements of disclosure, they were anything but straight forward. The disclosures were often in documents some people put at the side of their bed to read when they needed something to bore themselves to sleep. Fees are important because they can reduce performance. A 1% increase in fees will reduce a portfolio’s value by 17% over 20 years. A portfolio of $100,000 that grows an…

  • 401ks,  Return on Investment

    Diversification or DeWORSification

    I believe one of the main reasons money managers underperform the market is diversification. Robert Haywood from the University of Denver showed that if you took most money managers’ top ten stock picks, they outperformed the market. But, when you add the other 100 plus stocks , which most money managers have, their results decline significantly. I call this, deworsification. Sometimes, less is more. Evaluating each company and its potential for innovation and growth is extremely important to ensuring successful investments. R.W. Baird did a study in which they examined over 4,000 mutual funds. They found only 370 produced an annual average of at least one percent better than their benchmark over a period…

  • Mile High View,  Return on Investment

    Baltimore Stock Broker

    To repeat from the beginning: Suppose you received a letter from a financial advisor who told you a certain stock was going up over the next several weeks. You watched the stock, and sure enough it went up. A few weeks later that same financial advisor sent another letter to say another stock was going to go down over the following few weeks. Sure enough, as you watched, the stock did go down. Then that same financial advisor sent a third letter to tell you to watch another stock that was going to go up. Sure enough it did. With the next letter the financial advisor told you to watch…