Making Money Alert
'Tis the Season -- To Be Worried
09/10/2008
To everything -- turn, turn, turn
There is a season -- turn, turn, turn
And a time for every purpose, under heaven
--The Byrds (and Ecclesiastes)
Yes, it's that time again. 'Tis the season, and I'm not talking about the holidays. The season I am talking about is what has historically been the most volatile season in the financial markets.
That season usually starts in September and continues through October. These two months are, historically speaking; when we've seen the biggest one-day declines and the most significant market lows (think Black Monday in October 1987).
So far in September, we are seeing volatility that's nearly off the charts. A 300-point Dow winning session immediately followed by a 200-point down day. So far, September has seen a 4% loss in the S&P 500.
Looking over the chart below of the S&P 500 index, my observation is this: If we break the July lows, we could see a major collapse in prices.
I am of the opinion that this could be the scariest fall we've seen in many years. That's the bad news. The good news is that any further declines could set investors up for a really nice buying opportunity -- especially for those who want to actively trade a small portion of their overall portfolio.
If we are able to hold the line here in terms of falling equity prices, then I expect a bounce back towards the 1300 level. As I have been saying all year, we are in a bear market, which means the majority of your portfolio should be sheltered from risk in cash and Treasury Bonds.
For those who want to take advantage of the volatility in the equity markets, then short-term trading using exchange-traded funds (ETFs) could be just the right choice for you.
Doing so has never been easier, thanks to my ETF Trader advisory service. Our track record of late has been superb, banking very nice gains in more than 80% of our last dozen trades.
To find out more about how to trade this volatile market, click here.
Need Income?
One of the biggest retirement dilemmas you'll face is determining how to create an income stream that has the opportunity to grow in a bull market -- while being protected from the ravages caused by a bear market.
Sure, there are a lot of income products out there that claim to help you generate income, but how do you know which one is the best fit for you? How do you know if one income-generating vehicle is better than another for your particular financial situation? If you need income, the answer just might be to consult an "income coach."
What or who, you ask, is an income coach? The short answer is -- me.
Right now I am offering a FREE, 45-minute income coaching session to help you get started in creating your own personalized income plan. If you want to put the power of knowledge -- and the power of outstanding income investing tools to work for you -- then call me at 888.300.3684 or e-mail me.
You can also visit my Web site, where you'll find out about exciting new retirement income products such as the Ameritas No-Load Variable Annuity with the Guaranteed Lifetime Withdrawal Benefit Rider, issued by my friends at Ameritas Life Insurance Corp.
The income coach is now officially on duty, so put me to work for you today!
ETF Talk: Bonding Toward Safety
Tuesday's huge drop in stocks and big spike higher in bonds should serve as a reminder that when it comes to volatile markets, bonds, not stocks, are often the better choice.
In fact, during periods of economic weakness, or when bearish sentiment on Wall Street seems pervasive, the prudent investor should choose safety ahead of rolling the dice and trying to chase stocks in hopes of a big rebound.
When it's time to duck for cover from a stock market backfire, U.S. government bond funds just might be the place to stay out of harms way. But some bonds aren't just used for protection. Some provide the twin benefits of dividend payments and a chance for capital appreciation.
To be sure, bonds and bond ETFs can lose principal. However, this usually occurs when interest rates are going up, and not when the Federal Reserve is trying to keep interest rates steady as it is right now.
The kinds of bond funds that I like include those that invest in the U.S. Treasury market. The full faith and credit of the U.S. government backs these bonds, and an investor cannot do much better than that to ensure the creditworthiness of a debtor.
One bond ETF that I want to bring to your attention is the iShares Lehman 20+ Year Treasury Bond (TLT) fund. I have recommended this ETF in my Successful Investing trading service since Aug. 11. The fund was up nearly 6% at press time for those investors.
This ETF pays interest monthly, and has produced a one-year total return of 13.62% through July 31. Although its performance for 2008 through the end of July was just 1.13%, that handily beats losing money in the stock market. Other pluses are that TLT has a low 0.15% expense ratio, and it avoids the risk of big price drops inherent in equities.
Of course, I still like the big gains that equity ETFs can offer as much as anyone, but I don't like taking on the concomitant risk - especially in a market environment such as we're living through right now. Investors really need to be cautious with their money right now, and TLT is great way to put caution on your side while also participating in some solid upside.
As always, if you have any ETF-related questions, please contact me by clicking here. I plan to answer reader questions that are of general interest in a future edition of ETF Talk.
Estate Planning Mistakes: Don't Forget the Review
Over the last two weeks, we've discussed the seven biggest estate planning mistakes made by investors. In week one, we reviewed each of the seven. But in case you missed it, here's a quick list of each of these big mistakes:
- Not having an estate plan
- Not reviewing your plan annually
- Not placing your assets in your trust
- Not having the liquidity your estate needs to pay estate taxes
- Delaying decisions and planning due to tax policy uncertainty
- Not taking advantage of tax planning and wealth transfer strategies
- Failure to properly utilize life insurance as a planning and liquidity tool
Last week, we talked about the perils of not having an estate plan, but what if you already have an estate plan? Are you reviewing this plan each year? Have you updated your plan in the face of a major life change, such as a new grandchild or a change in income, or a new inheritance, etc.?
If you have not reviewed your estate plan for many years, it's almost certain that you have not thought about the issues of asset appreciation, liquidity, and estate taxes - issues that can, left uncared for, can destroy the fruits of your life's work.
That's why I strongly recommend that you review your plan as we approach the November election. I believe that the "death tax" will be going up again - regardless of who wins the White House.
So, ask yourself this: Do you really want to leave your family's wealth in the hands of attorneys and tax collectors? I don't know about you, but I can't think of anything more repugnant than to work hard all your life and then leave control of your assets to federal and state bureaucrats.
If you have substantial assets, you need to have an estate plan in place. Fortunately, my friend and colleague Kevin Yurkus, president of Fairway Capital, is an expert at helping high-net-worth investors manage their estate plans. Fairway Capital is a sponsor of my weekly radio show, and one reason why is because I trust Kevin's judgment when it comes to all things estate planning.
If you have assets over $2 million, you MUST listen to my new audio special report. In this report, we cover all each of the seven biggest estate planning mistakes, and we explain how easy it is to correct each one.
To listen to this FREE audio special report, click here.
A Simple Solution for Today's Volatile Markets
Today's stock market beast is not the same animal it was a decade ago. In fact, the pace of change has been relentless in recent years, and even the most conscientious individual investor has had a tough time keeping up with all of the financial market upheaval. If you're managing your own money, are you getting the results you think you should?
If your answer is no, then you need to make a change, and a good place to start is by checking out Fabian Wealth Strategies today. All you have to do is click on the link below for your introduction to our money management services.
As I always say, the only thing you have to gain is the life you desire.
The Election, the Markets, and Your Money
The presidential election polls are gyrating like the stock market these days. Sen. Obama had an eight-point lead after the Democratic Convention, only to see it slip away after Sen. McCain's surprise selection of Gov. Sarah Palin at the Republican Convention.
McCain has the momentum now, and he's actually in the lead in the national polls. But what if the financial markets gets worse? How will plummeting stock prices influence this election? More importantly, are you prepared for change in the economy no matter who moves into the Oval Office?
If you're worried about the election, the markets and your money, then I have just the seminar for you.
Join me and Fairway Capital President Kevin Yurkus on Thursday, Sept. 18, 2008, from 2:00 p.m. to 5:00 p.m. at the Ritz-Carlton, Phoenix hotel for the most important financial seminar of the year.
The risks and opportunities heading into this voting season have made this the most important election in recent memory. That is why Kevin and I are so concerned about the future of taxes, the markets, and your investments.
If you are a high-net worth investor who also is concerned about the current economic environment, you must come out on Sept. 18 and hear how you can prepare for the inevitable winds of change blowing into Washington, D.C.
Ritz-Carlton, Phoenix
2401 East Camelback Road
Phoenix, AZ 85016
This seminar is co-sponsored by Fabian Wealth Strategies and Fairway Capital. To register for this event, simply fill in your information by clicking here, or call 800.391.1118 Monday through Friday from 8 a.m. - 4 p.m. Pacific.
The Will to Succeed
"Successful people are willing to do what unsuccessful people won't."
-- Anonymous
I don't know who said this, but I sure wish I could take credit for it. You see, in life, often the difference between success and failure is taking that little extra step. Doing what your competitors won't, putting in just a few more quality hours at the office, or providing that extra bit of customer service often can separate the truly outstanding from the mediocre. My advice to you is, don't choose mediocrity. Choose excellence. Be willing to do what unsuccessful people won't.