Making Money Alert
DON'T FLUNK THE CLASS
02/20/2008
We're in a treacherous time for equities, and to prove just how difficult this market has been during the past three months, I want you to turn your attention to the chart here of the Diamonds (DIA). This exchange-traded fund (ETF) mirrors the price movement of the Dow Jones Industrial Average.
You see, most mutual fund managers must stay in stocks no matter what conditions are present in the general market. Their charters basically dictate as much, and because of this obligation to stay invested, most mutual funds have flunked when it comes to the test of protecting your assets.
Now some mutual funds get a much worse score than others, but how do you determine which funds failed, and which funds failed miserably?
The answer is by getting a copy of my latest Lemon List. The Fabian Lemon List allows you to see if your fund is failing the performance test compared to its peer group average.
To get your copy of the Lemon List, go to www.mutualfundlemonlist.com.
Of course, knowing if your funds are lemons is only half the battle here. You see, when it comes to managing the risk of a bear market, the onus is on you. You have to be responsible for protecting your wealth during bear markets, and that means you have to know how and when to get yourself allocated to the safety of cash when the time is right.
If you've failed to protect yourself from the current downturn in equities, you've flunked the most important test of all -- the one that puts you in charge of protecting your own wealth.
If you are still heavily invested in this market, I say don't flunk the class any longer. Get yourself some knowledge about how to move in and move out of stocks with a proven plan designed to sidestep the kind of equity market decline we're going through now.
To find out how you can stop flunking the test, click here.
Risk Management Mode
You've probably heard a lot about "risk management" lately in the financial media.
Many pundits are saying that the Federal Reserve is in risk management mode, meaning that they think the central bank is very concerned that we could see a system shock that disrupts consumer confidence and throws the economy into recession. Traditionally, the Fed should be worried about monetary inflation, but instead its members seem more concerned with facilitating a properly functioning market.
Now when it comes to risk management, there is not much you, the individual investor, can do about the Fed. What you can do, however, is make sure you have raised some cash by selling off at least some of your equity holdings.
The four most devastating words an investor can say is, "I can't sell now." These words usually get uttered when a stock, mutual fund or major market index collapses, causing the frightened investor basically to throw his hands up and just hang on to a big loss with the hope that the investment will someday fight its way back to break even.
If you are in this predicament, I sympathize. Fortunately, you still have time to act. Take advantage of whatever mini-rally happens in this market to lighten up on your long positions. You always can get back into equities, but it takes a long time to make up lost ground in an equity position.
Be smart here, and remember that now is the time to go into risk management mode.
Could China Be Lying About Its Books?
I read a disturbing article in Barron's this weekend about publicly traded companies in China that have set up shell corporations that trade in the United States.
What happens is that a Chinese company with lots of capital buys out a publicly traded small-cap entity here in the United States and does what is called a "reverse merger." The Chinese firm then runs its business through that corporation.
The article gets into a fair amount of detail about the specific accounting problems associated with these reverse merger situations, but the bottom line of the piece is to beware when these Chinese companies become public in the United States through reverse mergers. Their accounting can be murky, and conflicts of interest abound.
I highly recommend reading this article, which is available by clicking here.
Income Investors Beware!
Are you an income investor with a lot of money tied up in mutual funds designed to give deliver safe, solid returns?
If so, then behold the recent price movement of the Van Kampen Senior Income fund (VVR).
This closed-end mutual fund invests primarily in a portfolio of interests in floating or variable rate senior loans to corporations, partnerships, and other entities, which operate in various industries.
The company's investment portfolio mainly includes investments in companies operating in consumer discretionary, consumer staples, energy, financials, healthcare, information technology, industrials, materials, telecom services and utilities sectors.
As you can see, this income-oriented investment is not safe, and it's not steady. In fact, the price performance of this fund is downright ugly.
If you are an income investor, now is the time to re-evaluate all of your holdings. What you thought might be a safe and secure fund may be neither safe nor secure.
For real safety and a proven plan to manage your income assets, I invite you to check out my High Monthly Income advisory service. So far this year, we've managed to sidestep the hit most dividend-paying equity funds have taken, and we've done so by sticking to a strict plan.
Now more than ever, you have to act in defense of your own money. For more on what my High Monthly Income service is all about, click here.
By The Time I Get To Phoenix
By the time I get to Phoenix she'll be rising
She'll find the note I left hangin' on her door
She'll laugh when she reads the part that says I'm leavin'
'Cause I've left that girl so many times before—Jimmy Webb, "By The Time I Get To Phoenix"
The great balladeer Jimmy Webb, who wrote most of his big hits in the 1960s and 1970s, always strikes a chord with me whenever I plan a trip to Phoenix, Arizona -- which is where I'll be on Wednesday, Feb. 27, to present my seminar: Managing Your Financial Assets in 2008.
Of course, I could call this event something like "Financial Survival 2008," but my optimistic nature wouldn't permit that kind of breach into pessimism.
This event will be held at the Ritz-Carlton, Phoenix, on Wednesday, Feb. 27, from 6:30 p.m. to 8:00 p.m.
This event is not simply about portfolio management or about what funds to purchase right now. Rather, this event is all about properly managing all of your financial assets in what has started out to be a crazy year for the equity and housing markets.
In this seminar, I will teach you how to navigate the tumultuous economic environment in the face of a real estate bear market, a slowing economy and a falling U.S. dollar. We'll cover strategies and tactics on how to optimize your small businesses, your retirement accounts, annuity accounts, taxable portfolios, life insurance and much more.
My opinion is that we all need to be circling the wagons and protecting our assets from what has proven to be some very serious market damage in this young 2008.
The best part of this workshop is that it is absolutely FREE. The only downside is that this seminar will fill up VERY fast. If you want to attend, you must act now.
The Managing Your Financial Assets in 2008 seminar is sponsored by my asset management company, Fabian Wealth Strategies, and by Fairway Capital. Kevin Yurkus, president of Fairway Capital, will make a special presentation on the most common mistakes millionaires make -- and how to avoid those mistakes.
Kevin is an expert on estate planning and asset protection. He'll be presenting strategies that will help you profit from what could be the beginning of the biggest bear market of our lifetime.
The Managing Your Financial Assets in 2008 seminar is designed for investors who have a million dollars or more of net worth, and for those who:
- Own highly appreciated real estate
- Own a small business
- Have stock portfolios in excess of $500,000
- Have retirement accounts in excess of $500,000
- Are working with brokers, planners or advisors who aren't protecting their assets
- Are preparing for retirement
- Do not yet have an estate plan, or who haven't updated their estate plan
- Own life insurance policies in excess of a million dollars
Both Kevin and I will be on hand to answer your questions and spend the necessary time to make sure that you understand how to grow and protect your assets in 2008 and beyond.
Once again, this event will be held at the Ritz-Carlton, Phoenix, on Wednesday, Feb. 27, from 6:30 p.m. to 8:00 p.m.
Reserve your seat now! Seating is limited and this event will sell out.
To sign up for this event, click here, or call us at 800.391.1118.
Pay Attention To Words
"An enemy generally says and believes what he wishes."
—Thomas Jefferson
The author of America has uttered many pearls of wisdom, but the above message really applies when contrasting our current presidential candidates. The one thing I've noticed is the big difference in the rhetoric between Republicans and Democrats over what is undeniably our biggest challenge as a nation -- combating the threat of radical Islam. If we take the time to actually listen to our enemies and the harm they wish to inflict upon us, we should all be very worried. As Jefferson warned, an enemy says and believes what he wishes. Now it seems to me that only the Republicans are talking about the threat jihadists and terrorists pose to our country. I have yet to hear the words "radical Islamic terror" from either Barack Obama or Hillary Clinton.
Wisdom about money, investing and life can be found anywhere. If you have a good quote you'd like me to share with your fellow Alert readers, send it to me, along with any comments, questions and suggestions you have about my radio show, newsletters, seminars or anything else.