Is Online Trading & Technology Helping You?

November 10, 2011 By Leave a Comment

We have so many ways of avoiding all the “extra” information that comes out way. Think about it for a second – we don’t open any emails that we think are spam, we delete most of our messages without even reading them, we throw away half our mail without opening it, and we fast-forward through television program commercials with our current DVR or Tivo systems.

When it comes to our investment decisions and what to buy, sell or trade, having information is very important. Would you ever think of making a decision without being informed? NO!

Having said that, allow me to provide some information that will help ALL of you when it comes to investing decisions. I like facts vs. fiction. This will help you too.

FICTION:

You can use online trading & technology to help you make smart investments with better than market returns?

FACT:

DALBAR, a financial services market research firm, states that “investor behaviors continue to fall prey to market forces.” For the 20-year period through 2010, annualized returns for equity investors were 3.83 percent and 2.56 percent for asset allocation fund investors, compared to the S&P 500 return of 9.14 percent, according to DALBAR’s 2011 Quantitative Analysis of Investor Behavior. For the same period, DALBAR reports that fixed income investors earned 1.01 percent, versus the Barclays Aggregate Bond Index annualized return of 6.89 percent.

FICTION:

Online trading allows me to be in control and make better investment decisions.

FACT:

According to DALBAR, one of the reasons investors fall short in their average return is their reactions to market movements and news. Its study found that investors in stock mutual funds held their funds 3.22 years on average in 2009 versus 3.27 years in 2010. These rates are far short of the number of years needed to benefit from a long-term, buy-and-hold investing strategy according to DALBAR.

SUMMARY:

What can investors do to break their bad habits? If you’re uncomfortable with dramatic changes in the value of your investments, you may have a low tolerance for risk. You’ll want to keep that in mind as you develop your investment plan. It’s okay to re-evaluate your tolerance for risk over time, especially after the bear market of 2008-2009, but you want to make sure changes are based on your appetite for risk and volatility over the long term, not on today’s emotions.

Another piece of advice: Don’t follow the herd. It’s not a good idea to buy any stock or fund just because everyone else is piling in. Likewise, avoid selling holdings when the market drops. Find some way to tune out the noise of the market. Don’t let greed and fear take over. And don’t tinker with your well-thought-out investment plan. If you stick with your plan and keep your emotions out of your investments, you’ll be rewarded down the road.

WHAT SHOULD YOU DO?:

Get your own FREE Retirement Analysis that will answer all the questions while eliminating the emotions of online trading & technology.

Filed Under: Financial Lies & Truths, Investor Traps Tagged With: , , ,

The First Deadly Investor Trap!

February 8, 2011 By Leave a Comment

Of the 7 Deadly Investor Traps, this is the one that traps more investors than any other.

Gambling With Your Money

I don’t gamble at all. Period. However for some, not all gambling is bad. If you enjoy taking some disposal income (that you can afford to lose) to Las Vegas that may be fun for some of you.

Where I take issue is when people gamble and speculate with the financial wealth that they need for their retirement or financial future.

The key distinction here is because the brokerage community, the news programs, the financial magazines, the mutual fund companies all the blur the line between speculating and gambling.

Most individuals are gambling and speculating with their money – and they don’t even know it. They actually confuse gambling and speculating for prudent investing.

How does this mistake happen?

This problem happens because the media and the financial community have a form of what I call an “unholy alliance” bonded together. You often turn on these financial shows and see this so called “expert” or this so and so “analyst” talking about their forecast for the future. They talk about what stocks they like and which ones to buy or sell.

The media needs this type of attention because that’s what gets people to tune into their shows. This speculation and forecasting attracts people and this makes the advertisers very happy.

Quite often when you tune into these financial shows, guess who the advertisers are? They are the financial community at large, running ads on their mutual funds, or their managers, or their broker dealers. This is truly what we call the fox guarding the chicken coop. These mutual fund managers who tell you what’s going to happen in the future need to keep these myths alive because that’s what keeps their own coffers full. That’s what keeps you trading. That’s what keeps money rolling into their companies.

This is so difficult for most investors to admit. But most investors fall into the gambling trap.

Next, I will share with you the 3 warning signs that will tell you if you are gambling or speculating with your money instead of prudently investing.

Filed Under: Investor Traps Tagged With: , , , , , , ,

Is What You See Really What You Get

December 7, 2010 By Leave a Comment

Many investors who buy several mutual funds (equity or fixed-income) with different names and objectives believe they are diversified.

When they market drops, to their horror, they lose much of their money.

Many funds give their managers the freedom to buy whatever they think will be the proverbial goose that lays the golden egg.

This only confuses investors.

Dozens and dozens of mutual funds from the same brokerage house can have vastly different names, but own the same companies. This is NOT good for you.

Mutual funds can be a great investment – with the proper structure.

But what YOU see if often NOT what you get.

Question for you: Have you ever had an Independent Analysis done on your portfolio to determine the right mix, the correct risk, and to show you what you really own?

Start right here by downloading my FREE Investor Awareness Guide.

Filed Under: Investor Education, Investor Traps Tagged With: , , , , ,

Do You Have Proper Risk Exposure?

November 1, 2010 By Leave a Comment

Most investors have very little exposure to the risk and return dimensions of distressed and small company stocks.

Because most financial advisors and their companies spend so much time picking stocks and trying to predict their future movement, they put very little emphasis on broad diversification and portfolio design.

Independent analysis of thousands of portfolios indicate one sure thing:

Advisors and their companies invest most of their money with the Large-Cap (S&P 500 type) companies. This will raise portfolio risk (standard deviation) level and diminish returns.

They (financial advisors/companies) desperately believe if they can simple pick the best stocks and managers, they won’t have to embrace true diversification into small and value stocks.

Why do most advisors maintain a majority of large “Blue-Chip” companies in their client’s portfolios? There are several reasons. Most claim it’s because of the dividends and their payout rates.

The majority truth is it allows for an easier sell to investors, thus increasing commissions to the person and company who sold it to you.

Everything we have learned about expected returns in the equity markets can be summarized in three dimensions:

  1. Stocks are riskier than bonds and have greater expected returns. (Market)
  2. Small/large stocks. Small company stocks have higher expected returns than large company stocks. (Size)
  3. Value/growth stocks. Lower priced “value” stocks have higher expected returns than higher priced “growth” stocks. (Price)

Are you missing these dimensions in your portfolio? It’s a very high probability you are. Don’t miss out.

To learn more, DOWNLOAD my Investor Awareness Guide right here from our website.

To your investing success and Happy November!

Filed Under: Investor Education, Investor Traps Tagged With: , , , , ,

Being Diversified Means Looking Different

September 2, 2010 By Leave a Comment

I have been teaching for years that there are investing myths the financial industry wants you to believe so they can make a larger buck or two.

One of the “myth” conceptions that is talked about all the time but rarely followed is diversification.

Just because you have a lot of “stuff” in your portfolio (bonds, stocks, mutual funds, etc.) does not mean you are properly diversified.

Let me explain…

Most investors are narrowly diversified into top performing funds or classes of the last five to ten years. In fact, most are narrowly diversified only in U.S. companies and nearly ignore all global exposure. They often feel diversified but they are not.

To be diversified means including classes or types of funds in your portfolio that did poorly over the last five or ten years. If you do this, your portfolio will look and perform very differently from your neighbors’ or friends’ portfolios.

Proper diversification spreads risk across various asset classes, global exposure, with varying return characteristics or dissimilar price movements.

Simply said: they don’t do the same thing at the same time.

Don’t take my word for it. Take a look and listen from an expert who just recently spoke about true diversification:

Click HERE to Watch and Listen

Filed Under: Investor Traps Tagged With: , , , , , ,

Active Managers Put To The Test

August 27, 2010 By Leave a Comment

Advocates of actively managed strategies argue that managers can apply their knowledge and skill to enhance your investment returns.

What does the data say?

Filed Under: Investor Traps Tagged With: , , , , , ,

How Can You Determine the Quality of Your Financial Advisor

June 22, 2010 By Leave a Comment

Here is an article that is taken from Articlebase.com:

This is one of the most frequent questions we are asked by investors who use Paladin Registry services (PaladinRegistry.com) to find and evaluate financial planners and financial advisors. They want to know how they can determine the quality of financial professionals “before” they select them.

Wall Street companies make this process difficult because a high percentage of their advisors are inexperienced, poorly trained, and have histories of abusing investors to make money. If you had this information, you would not buy what these advisors are selling and that would have a negative impact on Wall Street revenues and profits.

Unfortunately, advisors do not have mandatory disclosure requirements. Wall Street companies spend millions on advertising telling investors they believe in full transparency for advisor backgrounds. Then, they spend millions on lobbyists fighting all forms or potential disclosure. Companies make more money when they do what is best for them versus investors.

Given this background, how do you determine the quality of advisors before you select them? Following are a few tips that will dramatically reduce your risk of selecting a lower quality advisor who omits or misrepresents information to gain control of your assets.

Advisor Characteristics
Be sure to review specific criteria that impact advisor competence and ethics.

  • Select advisors who are Registered Investment Advisors or Investment Advisor Representatives because they can provide financial advice and services for fees.
  • Do not select advisors who only hold securities licenses: Series 6, Series 7. They are limited to selling investment products for commissions
  • No matter what they say, they are not paid to help you achieve your financial goals
  • Select advisors who are acknowledged fiduciaries because they are held to the highest ethical standards in the financial services industry.
  • Do not select non-fiduciaries because they are sales reps who are held to lower ethical standards
  • Select advisors who have clean compliance records at FINRA.org.
  • Do not select advisors who have investor, company, or regulatory complaints on their compliance records
  • Select advisors who are compensated with fees for their knowledge, advice, and services and are willing to disclose all sources and amounts of their compensation.
  • Do not select advisors whose only method of compensation is commissions
  • Do not select advisors who refuse to divulge their total compensation from your assets

Read more: http://www.articlesbase.com/personal-finance-articles/how-can-i-determine-the-quality-of-financial-advisors-2569208.html#ixzz0rb2GXNhA
Under Creative Commons License: Attribution

To learn more, download your FREE copy of my Investor Awareness Guide. Just type in your first name and email address and you will have it now!

Filed Under: Financial Lies & Truths, Investor Education, Investor Traps Tagged With: , , , , , , ,

Dispelling the Myths of Investing – Myth #4

July 28, 2009 By Leave a Comment

I have brought you 4 of the investing myths that destroy the potential returns on your portfolio. This one is the silent killer – The Cost of Investing

Filed Under: Investor Traps

Dispelling the Myths of Investing – Myth #3

July 22, 2009 By Leave a Comment

You may not be doing this, your broker may not knowingly be doing this, but this is probably going on in your portfolio and it’s effecting your potential.

Filed Under: Investor Traps

Dispelling the Myths of Investing – Myth #2

July 13, 2009 By Leave a Comment

Most investors find that picking stocks and mutual funds doesn’t work. They then resort to picking stocks and mutual funds based on past performance. This is very dangerous and damaging to your portfolio returns.

Filed Under: Investor Traps
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