Sunshine-Empire & EmMax

"...Move out of stocks or gold because I think they've been too hot and will crash soon", or "put some money in X because I think it's going to be hot soon." If I had a dollar every time I heard such things from clients, prospective clients, or people at a gathering after they find out that I'm a financial adviser, I could retire to the French Riviera right now, only to be seen by my family and friends during the holidays and hunting season.

In the past 20 or so years, the general public has gained access to various information, tools, and calculators that in the past were only available to financial professionals. Go to the website of a major discount broker and punch in some basic information and all the work will be done for you without having to understand all of the nuts and bolts. Most people get so much educational material thrown at them by their 401k/403b plan, one might begin to wonder how we're able to replace all the trees that had to be cut down to print it all. Data dating back to the beginning of financial markets shows that guessing market movement consistently is just not doable Couple that with the often repeated fact that 80% of mutual fund managers fail to beat their indexes, and the table that shows how being out of the market on a small handful of days in a decade or two decade span will miss most of its gains, one wonders how an individual can overlook such facts, but they do so again and again to their own chagrin. Why? I don't know but I'm going try and tackle it. Bear in mind though, I have no PhD in Psychology, just empirical observation.

WHAT IS MARKET TIMING?

One might think it includes pulling all of your money out of a particular asset class (stock/bonds/gold/real estate etc.) when one thinks or feels it's going to go down and re-investing it back in when one thinks it's going to rise, and while that is definitely market timing, it's an extreme version that not many people engage in due both to better education, and various rules and penalties that were put in place to dissuade this type of behavior. The definition of market timing that I go by is to change the strategic allocations of one's portfolio based on an "ungrounded" barometer such as market gyrations or a recommendation by an "expert" in some type of media, instead of by a more "grounded" barometer such as a change in life situation or a genuine change in risk tolerance. If, for example, your portfolio has a current stock allocation of 40%, but you decide that the market is due to rise due to some perception you have or some talking head on CNBC has, and you change the allocation to 45 or 50% based totally on that perception, you are a market timer, like it or not.

WHY DO WE TIME THE MARKET?

Better yet, why do we try timing the market when we logically know it has resulted in failure time and time again? Partly, because of the same reason we buy lottery tickets or visit the casino when we know the odds are stacked against us, optimism. We inherently believe that we're special. Besides, mom told us so. We're smarter, and have better resources than our neighbor, our "experts" are better than his "experts." Why else would the actively managed mutual fund market still be raking in new money? Why else do huge sums of money move out of said funds AFTER the market tanks, and move back in AFTER the major move upwards? Because we know when the turnaround is coming, and no matter how wrong it turns out to be we continually do it.

Another reason is control. In today's turbulent times, people's yearning to be in control is greater than ever. With all of the stuff out there that is out of our control, wars, the national debt, natural disasters, disease and sickness, we all desire one or two portions of our life be controllable, our money is one of those portions. The only trouble with this belief is that the global financial juggernaut is so huge, that trying to fight it is futile at best. Even if you could get information as timely than the Big Boys (pension funds, insurance companies), your tiny little order falls down at the bottom of the pecking order getting filled.

HOW DO WE STOP?

Well if I knew the answer to this exactly I'd probably be on the payroll of every pension plan in the world, but unfortunately all I can to is offer some personal suggestions. First, don't get a steady diet of cable business news or constantly spend time on financial websites. That's just as bad as going in to your favorite store to look around when you're tight on cash for the month. In either case you're going to convince yourself you need something and the time to buy is NOW! Go into an online broker's site or pay an independent adviser or financial planner a flat fee to help you set up an allocation (if that's all you want the planner to do.) Once you implement the plan, re-balance the portfolio on a regular basis (quarterly, semi-annually, or annually) but other than re-balancing LEAVE IT BE! I don't care if Ahmadinejad is threatening to blow up Israel, Congressmen and women are having an old west style shoot out in the Capitol Building, and Obama is shooting over par in his golf game that day! DON'T TOUCH THOSE ALLOCATIONS!

Another thing you can do is be honest about your risk tolerance. While stocks have the highest real rate of return over time, they do fluctuate, and while most people can stomach a little market turbulence with at least a small portion of their money, maybe you can't. If stock market volatility in any measure is to much for you to bear, DON'T INVEST IN THE MARKET. Yes, it pains me to say that, and no,you may not have as much money in retirement because you weren't able to keep pace with inflation. But if market gyrations cause you not to eat or lose a lot of sleep, you won't make it to retirement age anyway, better to be poorer but still alive I would say.

In closing, pick a strategy, stick with it, and don't confuse brains with a bull market. You, nor I, nor the gurus that try and sell you their stock picking course at 2 a.m. are that good that we can predict where that market is going to go on a regular basis.

Christian Halas is owner and wealth manager with Halas Consulting located in Pittsburgh, PA. Halas Consulting prides itself in providing unique and objective solutions to various insurance, investment, banking, tax, and estate issues faced by individuals and small businesses. Investment services provided in conjunction with Venn Wealth and Benefit Services, a PA Registered Investment Advisor. Christian can be reached via email at chalas@venn.us with any questions or comments on this article.

Labels: Heres, Market, Should, Trying

With our government staring down the barrel of nearly $62 trillion in unfunded liabilities, it's easy to see why Social Security has become such a hot button issue today. That's $62 trillion that the government has obligated itself to pay out in benefits, but it doesn't have a dime of this money in its coffers at the moment.

That's money that has been withheld from our paychecks in order to pay past users of the Social Security system. When the Social Security program was instituted in 1935, there were approximately 15 workers paying into the system for every person who was receiving benefits.

Those numbers have steadily shifted until today we only have 2-3 workers paying into the system for every person receiving benefits. Fewer and fewer workers are pulling the wagon, while more and more are riding in the wagon. Obviously this is unsustainable growth in the long run.

The question people have been asking for years is "At this rate, how long can we expect the program to remain solvent?" The answer from our government has always been some variation of "No worries, we've got it covered-for now."

Students of the Missed Fortune strategies would be wise to pay very close attention to my next point.

Government leaders thought that Social Security wouldn't be operating in the red until 2042. After closer examination of the numbers, that date was revised to 2017.

But even that estimate was overly optimistic!

The reality actually hit home in October of 2009 when the government paid out several billion dollars more in Social Security and Medicare benefits than they withheld from people's paychecks. There is no denying that we've already crossed the threshold of operating in the red.

This means that the nation is facing a dire situation with Social Security. The trustees of Social Security have estimated a current unfunded liability, in tomorrow's dollars, in excess of $100 trillion. In plain language, that means that the federal government has obligated itself to pay over $100 trillion in future benefits, above any taxes it expects to receive right now.

That's how much would have to be spent right now, at U.S. Treasury rates, to pay the future liability owed to Social Security recipients who've faithfully paid into the system during their careers.

While there are any Americans that depend deeply on Social Security, there are others who are not so dependent upon the program. Regardless of which camp you find yourself in, you must understand that what happens with Social Security has the potential to affect all of us.

How the government chooses to address the projected shortfall of revenue to fund these promised benefits will affect our taxes as well as future legislation.

This reality will prove a major challenge for many Americans, but it will also provide a clear opportunity for those who wish to take charge of their financial future. Instead of relying on the government to take care of our retirement and our health, we can take ownership and be proactive about our retirement planning so we're no longer dependent upon Social Security or our government having to provide for us.

But it is essential to act now, before future legislation and higher taxes have a chance to cut further into our personal finances and retirement planning. Knowing and implementing the Missed Fortune strategies is a great place to begin.

Labels: Radar, Security, Should, Social

It's not easy to decide whether you should invest in contemporary art, gold, or fine, especially if you're just starting. Ideally, it's a good idea to have an investment portfolio as diverse as possible, yet that's also hard to do when first starting.

Invest in Gold If You Want to Protect Your Assets

Generally, investments in gold are not thought to have that much potential to bring in loads of money right away, but are rather regarded as ideal investments for protecting your possessions. Gold has been, is, and will continue to be for years to come highly valuable. So individuals wishing to withstand economic turmoil can convert their assets into gold, knowing that the price of the precious metal is unlikely to decrease substantially. Gold is considered a fairly safe investment, its value being constantly on the rise, as demand grows and production dwindles.
Invest in gold especially if you have a large quantity of highly valuable assets whose future value is doubtful.

Invest in Contemporary Art If You Want Both Protection And Revenues

Alongside fine wine investments, contemporary art investments are one of the most tricky to pull of. Yet they can be highly rewarding, not only financially, but also spiritually. The thing is you have to enjoy art, and to have an eye that spots good art, the only one which is worth investing in. To invest in contemporary art you do need money, yet comparatively less than with other types of investment, say gold for example. The wonderful thing about art investments is that you can make a lot of money from a piece which you have previously purchased at a bargain. Of course this is easier said than done. Ultimately, having a knack for art is a must if you want to invest in contemporary art profitably.

Invest in Fine Wine if You Are Willing At Any Moment To Drink Your Wine

Generally safe and profitable, fine wine investments are increasingly popular especially in the UK. The revenues from such investments have almost tripled between 2005 and 2010, indicating a healthy market mostly unaffected by the economic downturn. Yet fine wine investing is not easy to carry out: it requires a deep knowledge of wine makers and their bottles, buyers, traders, and insiders. You can invest in fine wine with fewer risks than in most other types of alternative investments, but this only if you're a wine lover who will be just as happy drinking his own fine wine as selling it (in case the investment goes bad).

If you are looking for best investment opportunities such as fine wine investments or gold investments, seek an expert advice at Compare the Financial Markets.

Labels: Contemporary, Invest, Should