Fidelity's Ironic Announcement and True Independence

Today's post is a two for one. 

The first is a comment about a recent sales flier I got from Fidelity just a few days ago.  It stated that now may be the time for US Equities (stocks).  Inside the brochure it details the various reasons, such as a rebounding housing market and a resurgence in manufacturing that may take place.  I find it ironic that Fidelity makes this announcement now, as the DOW is sitting at a new all time high.  Where was this announcement in March of 2009?  This is an all too familiar theme in the investment industrial complex.  As a retail investor you are "sold" what feels right at the time and seems to make sense.  If Fidelity was really on your side, they would have been saying this forever, and especially in 2009. But, from a sales perspective what is easier, telling people to buy stocks in 2009, or trying to sell them something safe like bonds or some alternative investment like commodities?  There is a difference between giving investors what they want and what will sell, and telling what they need.  Sometimes doing what is necessary does not feel good at the time.

Also, today I had to laugh on the way home.  On a local channel I heard a wealth management firm advertise how it was "independent" and not beholden to any large national financial firms.  It wasn't influenced "by the manufacturers of financial products".  Sounds nice, doesn't it?  But, then comes the fine print.  Any investment office out there is either a) a brokerage office, or b) a fee based planner.  If they have a broker dealer, they ARE affiliated with a larger firm and DO sell financial products. This firm that claimed to be independent, is, in fact not.  They are an Linsco Private Ledger (LPL) office.  Thus, they have to do things that LPL says it must do.  Secondly, they DO then also sell manufactured financial products.  If they really wanted to act in the best interest of the client, they would not need a broker dealer.  The only reason you need a broker dealer is to collect commissions on the sale of commissionable products (financial products).  So, in short, this ad was a sham in my humble opinion.  The firm is not truly independent, and it also does sell the very products it pretends to eschew. Now, no one outside of the industry is going to be able to tell you about this distinction, but that is our mission at Veritas- Investor Education.  Catch our next class on March 28th.

Value of an Advisor

Margaret Wittkopp brought up this article at our investor education class on Wednesday in Plymouth.  This is from Financial Advisor magazine, and was a study that tracked retirement plan participants going back from 1994 through 2008.  I like this study because it looks at the average investment results of different categories of investors that we commonly see, and how their actions have likely effected their bottom line. 

The yellow line is pool or group of participants/investors that had no plan.  They had no advisor, nor did they personally try to implement any plan.  This is the "head in the sand" group.  It is probably no surprise to anyone that this group performed the worst. At the end of this study in 2008, this group had far less money than any other.

The next line from the bottom is the self directed group.  This group was actively involved with planning their retirement, but they did it on their own.  The DIY crowd.  While I can only speculate, I am guessing the reasons for this is that they did not want to pay for the services of an advisor.  That mindset is pretty common actually.  With the wealth of financial "information" out there, many people feel that paying for the input of an advisor would be an unnecessary expense.

The green line represents people that worked with someone in the financial services industry, but not necessarily a comprehensive planner; like someone that may have sold you an annuity, or a few mutual funds.  You may even own an IRA through them.  Although they can provide financial products, they really aren't giving you tax advice or overall financial guidance.  This group trailed the self directed group until later in the 2000s.  Why?  My theory is this:  I am guessing many of the self directeds after 2007 and 2008 stopped contributing or pulled out of their plans in fear (remember the market in 08?).  By contrast, the group who at least had a casual advisor was able to stay the course.

The last and best performing group worked with comprehensive advisors, people who were not just there to sell them stuff, but who helped them look at the whole picture.  Sure, these people also probably paid the most in fees, but there is evidence to suggest that the fees they paid did earn results in the long run.  These investors also weren't afraid to engage their advisor frequently for advice and education. Don't ever be afraid to call your advisor or planner.  That is what we are here for.  There is a positive correlation between how much client/advisor interaction there is, and the ultimate client experience in the end.  Both the advisor, and the client have a responsibility in that regard.


 

Mutual Fund Final Four

I just thought I would update everyone on a little contest that I received in a piece of marketing material.  A certain mutual fund advertising company has created a final four mutual fund contest.  Just like the NCAA tournament, the field will be seeded with 64 competitors (funds), and after several weeks only one fund, the top performer, will remain.  (Unfortunately, we cannot pick the original 64).  Surely, the "prize" at the end of this for the winning fund is the fame of being the "March Madness" mutual fund winner.

Although certainly not a perfect experiment set up, I am going to fill out the bracket with the following way and see how things turn out in the end.  I will in all circumstances pick the less expensive over the more expensive fund.  The logic behind this is that if a fund manager is very "active" they will incur higher costs, which they will not be able to overcome.  I have no idea what the results will be, but it should be fun in any event.  Check back in a few weeks to see the results.

What Did We Learn in 2011?

A Year of Stormy Seas

Every year has its ups and downs, but 2011 had more than most, creating unusual volatility in the financial markets. We could describe it as a bit like being tossed on the ocean in a stormy sea, swooping up one moment, and plunging down the next. This volatility left many investors gasping for breath, at least figuratively, and maybe even feeling a little seasick!

The S&P 500 is only one of several indexes, but we’ll use it to illustrate these market ups and downs. For example, in a two-week period from July 25 through August 8, the S&P 500 lost almost 17% of its value. On November 30, it gained 4.3% in a single day.1 Yet by the end of the year, the S&P 500 was just 0.04 points lower than where it started—the smallest annual change in history!2
 
Global Events

The pro-democracy movement in the Middle East began in late 2010 with events in Tunisia and spread to Egypt and Libya in early 2011. Economically, the Libyan conflict was particularly significant because of the country’s key role as an oil producer. On February 22, after fighting broke out in Tripoli, the S&P 500 dropped 2.1%. This was its largest single-day decline since the previous summer. Crude oil prices rose 8.6% to reach $93.57 per barrel, the highest level in more than two years.3  Oil prices continued to rise through the end of April, when they began a six-month decline. The earthquake and tsunami that hit Japan in March devastated the Japanese economy and caused humanitarian and economic concern around the globe. The S&P 500 dropped for three consecutive days the following week, but it quickly recovered and went on to reach its high for the year on April 29.4 The real impact of the Japanese disaster for the United States played out over a longer period of time because of the decline in the flow of Japanese products.

Debt Concerns

The steep decline of the S&P 500 in late July and early August, mentioned at the beginning of this article, coincided with acrimonious debate over the federal deficit and raising the debt ceiling. The decline continued for a week after a last-minute agreement was reached, fueled by dissatisfaction over both the outcome and the unprecedented downgrading of the U.S. credit rating by Standard & Poor’s Ratings Services.5

The United States was not alone in struggling with debt in 2011. The European debt crisis cast a shadow over the global economy and contributed to many more ups and downs for the markets. After Greece announced it would be unable to meet its financial obligations, the S&P 500 hit its low for the year on October 3rd.6 Less than a month later, on October 27, news that European leaders had forged an agreement to address the Greek issue helped spark a 3.4% increase that contributed to the largest one-month rally of the S&P 500 since 1991.7

Obviously, world events can have a dramatic effect on financial markets. However, these effects typically dissipate fairly quickly. Long-term trends are rarely, if ever, driven by a single event.

Rather than focusing on market volatility, it may be more helpful to look at the long-term growth of the U.S. economy. In the third quarter of 2011, real gross domestic product grew at an annual rate of 1.8%. Although less than the 2010 growth rate, this was a substantial improvement, suggesting that the economy has continued to recover, albeit slowly, from the Great Recession of 2008–09.8

Persistent unemployment affects millions of Americans and has been one of the most significant drags on the economy and financial markets, so perhaps the best economic news of 2011 was that the unemployment rate dropped to 8.5% in December, the lowest rate since February 2009. If this trend continues, it may bode well for 2012.8

It will take some time to fully understand the economic impact of the stormy financial seas caused by domestic and global events of 2011.

So what can we take away from all this? Is it time to get out of the water and tie your boat to the dock?

Absolutely not!

I hope you saw from the examples here that domestic and global events are random and unpredictable. Many investors did see some losses in their portfolios last year, but consider this: If you got out of the market because the S&P 500 took a 17% dive, you missed the subsequent upturn. Would you, or anyone, be able to accurately predict the optimum time for getting back in?

Volatile times call for a disciplined, steady plan of action, a time to make sure you are truly diversified, and not (as is the case for far too many American investors) simply holding a lot of “stuff.” The only way to know this is to take a good look inside the funds in your portfolio.

Times of feeling a bit “seasick” are NOT times for an emotional response. The wisest course is to follow a sound, disciplined investment strategy based on your long-term goals, personal situation, and risk tolerance.  To schedule a look "under the hood" of your investments, or to talk further about this, call Jeremy Burri or me at 920-893-5262.

Margaret Wittkopp
Financial Advisor/Coach
Investment Advisor Representative

1)Yahoo! Finance, 2012, for the period 12/31/2010 to 12/31/2011. The S&P 500 Composite Index is generally considered to be representative of U.S. stocks.
2) CNNMoney, January 3, 2012
4) The Washington Post, July 13, 2011
5) Standard & Poor’s, August 5, 2011
6) CNNMoney, October 3, 2011
7) CNNMoney, October 27, 2011; October 31, 2011
8) U.S. Bureau of Economic Analysis, 2011

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material partly prepared by Emerald Connect, Inc.


The painting, A Ship in Stormy Seas, is by Mantague Dawson.  To purchase it, click here.

IF NOT CLASS (Community Living Assistance Services & Supports Act) — then WHAT?

CLASS, the provision of the 2010 Health Care Reform Act that asked all employers to enroll their employees into a government-run long term care insurance program, has been dissolved.

If you are a business owner, you might be surprised to learn that long-term care benefits now rank as important to employees as life and disability…maybe, in time, even above the healthcare benefits you may currently provide.

Some Myths & Truths about long-term care to consider:


Myth: My employees are not concerned about long-term care benefits.

Truth: 77% of Americans age 30 to 65 think they should know more about long-term care than they currently do.

Myth: Employees do not value this benefit as much as other benefits currently offered to them.
Truth: Employees today, especially if they are Baby Boomers, are vowing to do things differently after seeing their parents’ savings swallowed up by nursing home care, and/or experiencing the stress and financial burden of spouses or children serving as caregivers.

Myth: Medicare will pay for any long-term care needs during retirement.

Truth: Encourage your employees to look at Page 4 of their annual Social Security statement which reads, “Medicare does not pay for long-term care, so you may want to consider options for private insurance”.

Myth: The risk of a financial burden to an employee from benefits an employer currently offers (health, disability, life) supercedes long-term care risks.

Truth: 3 in 900 (.33%) = Odds a having a car accident

21 in 900 (2.3%) = Odds of being admitted to a critical care unit

630 in 900 (70%) = Odds of needing long-term care

Myth: Long-term care is primarily for nursing homes.

Truth: Long term care plans have evolved with much emphasis and greater benefits being placed on staying in your home (even paying family members as caretakers) vs. a nursing facility.

Myth: Long-term care benefits are too expensive.

Truth: Rates are based on age and health (the younger you are and if in good health) the lower the rates will be and why there are many advantages to consider during one’s working years. Also, there are group discounts available, even if offered on a voluntary basis. And, the Wisconsin Partnership Plan offers tax deductions to individuals and business owners who purchase long-term care insurance. The cost may be 100% tax deductible for business owners. Plus, one can purchase “limited pay” policiesso that insurance protection is paid-in-full prior to retirement age.

In the wake of the dissolving of the CLASS Act, however, an urgent question that may remain unanswered is “If not CLASS, then what?

Consider offering Long-Term Care Benefits to your employees. To find out more and explore some options, call me at 920-893-5262.

Paulette Ruminski
Insurance Advisor Coach

Five Tips To Avoid Investment Fraud

Bernie Madoff

Sharing some excerpts from "Five Tips to Avoid Investment Fraud," an article from Ryan C. Fuhrmann , CFA

December will mark the three year anniversary of when it was first discovered that Bernard Madoff defrauded his clients for as much as $50 billion, in one of the largest financial Ponzi schemes in history. The money management industry sustained a significant black eye to its reputation as a result of Madoff's fraud. Unfortunately, there are likely to be future thefts of client funds, though likely not on Madoff's scale. As with any industry, certain players in the investment field will resort to cheating, in an attempt to get ahead. Below are five issues to consider identifying, and best avoiding, investment fraud.

TUTORIAL: Don't Be A Victim Of These Investment Scams

Too Good to be True Returns

An article in The Economist, written shortly after the Madoff scandal broke, cited smooth investment returns as a potential warning sign, given that markets are inherently volatile. In the case of Madoff, investors began to question the steady "returns" of approximately 1 percent per month he posted, in a period of abnormally-high market fluctuations. He even lulled the SEC and many large, well-respected financial institutions into complacency, with supposedly savvy risk-control procedures. Excessive returns compared to benchmarks should also be monitored; in 1981 Dennis Grudman ran off with funds he attracted from some 400 investors, by reporting short-term returns as high as 85 percent.
Background Checks

Another key safeguard includes reference checks, which should be standard when entering into any business relationship. Of course, many Madoff investors were referred from friends and colleagues, but others did end up avoiding his dubious services, after performing due diligence and related background checks on his character and operations. Other financial services industry regulatory bodies can also assist in checking out the background of an investment manager. This includes the Financial Industry Regulatory Authority's (FINRA) Broker Check network, which is available online.

Outside Custodian

A key reason that Madoff was able to operate undetected for many years, was that he operated as his own broker-dealer. This allowed him to falsify trade information and statements that were sent out to clients. Using an outside financial firm as a custodian can help allay these concerns, as the outside party becomes responsible for key back-office functions, including the execution and settlement of trades and the preparation and mailing of client statements. Large, well-respected firms that serve this function include Fidelity and large custodial banks, including State Street and Northern Trust. Clients can also go directly to these custodians to verify asset levels and returns.

Skin in the Game

The phrases "skin in the game," "eating your own cooking" or "putting your money where your mouth is," all refer to the extent that an investment manager has his, or her, own money invested in the same strategies as clients. This serves a number of benefits, including confidence in the manager's own strategy to aligning manager and customer interests, such as avoiding taking excessive risk to keeping fund expenses as low as possible. For commingled assets, this can consist of money committed to the manager's own hedge or mutual fund. There is no set rule for the percentage of the manager's own capital invested along with clients, but the higher, the better. Well-respected managers and businessmen, including Warren Buffett and the managers of the Longleaf Partners, have significant portions of their personal wealth invested along with their investors.

Other Considerations

Additionally, the illusions of secrecy or exclusivity and/or the inability or unwillingness to clearly explain an investment strategy, should be met with suspicion. Finally, and perhaps not completely in jest, Lucy Kellaway, a popular journalist in the "Financial Times," has speculated that a menacing name could indicate the degree to which an individual can be trusted. In her words, Bernard Madoff "made-off" with client funds, while Michael Milken "milked 'em" out of their funds, while at the helm of Drexel Burnham Lambert.

The Bottom Line

There is no fool-proof strategy to avoid investor fraud, but there are a number of approaches investors can take to minimize the risk of an outside manager using his, or her, hard-earned funds improperly. Taking these five tips into consideration is a good step in protecting yourself and your investments

Who Wants to be a Millionare?

Our friend, Michelle Matson, shares some info about what it actually takes to be a millionaire. It is possible for many of you! (This is the Michelle Matson who joined us for our recent "Dressed to Invest" event; pics available under out EVENTS tab up top.)

Annuities: Buyer MUST be Aware

This is the first of several articles we'll be sharing from time to time about annuity products.  This one is from Margaret Wittkopp, Investment Advisor Representative and President of Veritas Financial Services.


When financial markets head downward, many investors become fearful and look for “guarantees.” Every day I am bombarded with offers from insurance companies that promise me, “easy sales and BIG commissions” for selling indexed annuities and other “stuff.”

Annuities are retirement savings tools backed by life insurance companies. Annuities can sound great, but there are many reasons for caution when purchasing annuities. These include: loss of control (once you annuitize, your decision is final), sometimes unfavorable tax consequences, and hidden costs and fees. These include either “back end” surrender charges (called Contingent Deferred Sales Charges), which can last as long as 20 years and be as high as 13%, or “front end” charges (commissions). You will pay an “add on” charge for each benefit rider. Hidden mutual fund fees are also charged in sub accounts. These charges are buried into the cost of your annuity contract and take away from your returns. Make sure you can calculate your total fees and that they are not excessive.

Annuities offer “guaranteed income.” To receive just $12,000 yearly ($1,000 a month), you would need to invest $264,000 in an immediate annuity at age 60. If you die before age 82, the insurance company keeps the remainder of your investment—not your intended beneficiaries. Consider inflation and longevity--what will $1,000 buy in 20 years? How long will you live?

Here’s something to think about, using data from 1973-1994. Twelve thousand dollars is about 4.5% of $264,000. Invested in a moderate, balanced Free Market Fund, you could receive 4.5% (that same $1,000 a month), and by age 82 your yearly income would have grown from $12,000 to $64,000. Your portfolio value would be $1,486,000.

Complex insurance products and nice-sounding terms like “indexed annuities," “living benefit riders,” and “guaranteed withdrawal benefits” are the trendy thing today. These products make it seem as if you cannot lose. Unfortunately, you may not really win either.

Remember, insurance companies are in business to make a profit. They calculate the risks to assure they do not lose. Annuities can be a useful investment tool if you've exhausted all other tax-deferred retirement plan options, but the buyer must be aware. Companies are collecting outrageous (and needless) charges, and most commission-based financial advisors are highly motivated to sell these products to you. Want to know more? Have questions about your financial future? Call us at 893-5262.

What Does Independence Mean to You?

America's Independence Day celebrations will be taking place this weekend.  We wish you a wonderful and safe holiday!  Independence is a glorious thing.  I value my independence as a citizen and also as a financial professional.

Veritas (Latin for truth) is the name of the company I founded after many years of working in the financial industry. I had discovered, to my increasing discomfort, that much of what I and my fellow financial advisors were taught was not really the whole truth. I was urged to sell products that increased the brokerage company’s bottom line but were not necessary in the best interest of our clients. I was also encouraged to push the next “hot mutual fund” or “safe” or "guaranteed" product, and I was unknowingly promoting actions that increased the costs of investing for my clients.

Veritas is an RIA (Registered Investment Advisor) which means we are an independent firm. We have no affiliations that require us to watch a bank or brokerage company’s bottom line. This give us increased control over fees and costs—savings we can pass on to you.

What else makes us different? Here is a brief comparison of retail financial products, mutual funds and/or other actively-managed funds at traditional financial firms:

• High turnover rates (undisclosed fees)
• Market timing (speculating with your money)
• Stock picking (gambling with your money)
• Track-record investing (past performance has ZERO correlation with future performance!)
• Overlap (not true diversification, just lots of ’stuff”)

In contrast, the Free-Market Platform we use at Veritas is:

• Focused on appropriate asset allocation & true diversification
• Grounded in Nobel-prize-winning academic research
• Focused on efficient market return
• Has NO hidden costs

Our independent status means more efficient investing, no revenue sharing (kickbacks to favored companies), no “smoke & mirrors,” genuinely individualized financial coaching, and an opportunity to gain greater peace of mind.

We serve clients who are as serious about their investing as we are. Are you ready to make your financial future a priority? Call 920-893-5262 to find your how you can become a more successful investor.

Margaret Wittkopp
Veritas Owner and President
Investment Advisor Representative

Investor Education: What's In It For YOU?

At Veritas, one of our primary purposes is education. The more informed you are about how investing works, the less you will be swayed or distressed by the ups and downs of the stock market. If you stay fully invested, truly diversified, and maintain the proper asset allocation, you CAN withstand the fluctuations of the market—and may even profit from them.

Margaret and Jeremy, our financial coaches,  often talk to people who say  they are doing all right because their financial rate of return is about the same as everyone else's. While we understand the kind of malaise that can set in when things just seem overwhelming or unchangeable, now is NOT the time to be complacent. What you don’t know can hurt you, and what you do know can help you! If you take advantage of the many educational opportunities we provide, you can become a more informed investor—and most importantly—you can gain true peace of mind about investing! 

Each month we offer another class from our Investor Education Series along with a complmentary lunch or dinner at the Mill Street Grill, Plymouth's newest restaurant. Most classes last about an hour or so. One hour out of a month to gain genuine understanding and peace of mind is worth making time for—don’t you think? We do too, and that is why we will keep finding ways to help you be a wiser, more confident investor.

Click on the "Learning Opportunities" tab in our blog header to see a list of classes offered in 2011.

Call us at 920-893-5262, or enail Dorcas at dorcas.george@veritasinvesting.com or Cathy at cathy.knuth@veritasinvesting.com and we will be happy to send you a reminder postcard when new classes are coming up. 

We are also happy to provide complimentary workshops for your group, workplace, or other gathering and can offer classes designed for financial novices to seasoned investors (what you don't know can be surprising), for couples, and for high school or college-age groups.  Just give us a call to explore options.

After the Crash: is the Sky Falling?

Margaret Wittkopp
Veritas President and Financial Coach
Investment Advisor Representative

On the wall at Veritas Financial Services hangs a photograph that my daughter, who was living in Virginia, sent me. It is not particularly impressive, just a car parked at a curb. The street and the nearby grass are dusted with about a half inch of snow. More about that in a moment.
Are you feeling skittish about the stock market? Do you wonder if you might be better off putting your hard-earned dollars in a certificate of deposit, your savings account--or under your mattress?

No, I wasn’t serious about the mattress, but I often talk to investors who are fearful about their portfolio. And who could blame them? After all, here are a few headlines from leading financial publications and newspapers. They probably will not surprise you:

1. “Wave after wave of selling again moved down prices on the Stock Exchange today and billions of dollars were clipped from values.”
2. “The…volume of retail sales went down an estimated 10% last year."
3. “In one hectic week, the paper value of the 1,545 stocks listed on the Big Board plunged by $30 billion—which is more than the GNP of Australia, Sweden, and Ireland.”
4. “The U.S. banking system has been stretched very nearly to the limit.”
5. “The recent crash bears an uncanny resemblance to the crash of 1929.”
6. “Most Americans have lost faith in the stock market.”

What may surprise you about this gloomy list of quotes is that the first one is from 1929, the next is from 1947, then 1962, 1974, 1989, and the last one is from 2002.

I could share many more such headlines, but the point is that market ups and downs do not mean that the financial sky is falling. They happen.

The reason stocks have historically returned more than fixed income over the long-term is precisely because stock holders endure the volatility of the market. Without the volatility (risk) that goes hand-in-hand with stock ownership, the returns associated with stocks would diminish, and so would the attendant wealth.

There are many positive things that we can learn from a look at investing history, including the crashes. Here are just two: First, there is ALWAYS a recovery, and second, the highest historical returns follow a crash. In fact, the single largest recovery followed the single largest crash! What happened to the investors who decided to “put their money under the mattress?” Right. They lost.

Remember the photograph story? My daughter sent it to me for a laugh. She was astounded that a snowfall that would hardly merit a passing comment in Wisconsin managed to shut down the entire city of Norfolk, VA. The picture hangs on the office wall to remind me of a very important fact: IT IS ALL ABOUT PERSPECTIVE.

If you would like to learn what else history’s market crashes have taught us, Jeremy or I would be glad to talk with you about your investments.  If you are out of the area, we still may be able to set up a meeting, or perhaps we can connect on Skype. 

Just give us a call at 920-893-5262. 

A Simple Way to Help Your Family

This post is reprinted from our main website.

If you have a current will, count yourself among the minority of Americans who have done their heirs an important service.

A will’s primary purpose is to help convey titled property. It’s not a good place to communicate your wishes regarding personal matters or to provide specific instructions for your survivors in the event that something were to happen to you.

A letter of instructions can help your family cope during a difficult period by providing information that has no place in a will — such as the location of the will itself.

Where’s the Will?

A letter of instructions doesn’t need to be an eloquent treatise on the meaning of life and the importance of family. Its job is to guide the survivors, so it can take the simple form of a list or the casual tone of a letter to an old friend.

Here are some common topics to address:

• Where to find important legal documents, including wills and trusts, birth and marriage certificates, insurance policies, deeds to real property, and vehicle titles

• Bank and retirement account numbers, and the location of safe-deposit boxes and tax returns

• Contact information for people to notify, such as lawyers, accountants, and clergy

• A list of creditors and any bills that need to be paid in order to keep the household running smoothly

• Instructions for the funeral and any pre-arrangements with a funeral home and/or cemetery

• Your wishes for the distribution of personal possessions, jewelry, heirlooms, and other keepsakes

Once you have drafted a letter of instructions, tell key family members where it is kept and leave copies with trusted advisors. Take the time to review it regularly to help ensure that it contains the latest information.

What Did 2009 Teach Us?

Financial Coach, Margaret Wittkopp
This is what Emma Johnson of MSN had to say in a December 28 column.

DOW 36,000? So Much for Predictions!

A decade ago, some stock market soothsayers forecast that the 2000's would bring staggering gains. Even more staggering now is how wrong they were. These people owe us, right? The analysts, the pundits, the experts. Every year they look into their crystal balls and tell us how to invest, whet to invest, what to expect, and what the future looks like. Sometimes we listen to them. Yet, much of the time, it's all stunningly wrong.

We couldn't have said it better ourselves! Here is what Margaret Wittkopp had to say in our quarterly newsletter.

As the year began we continued to experience the greatest continuous bear market (a decline that began in 2007) since the Great Depression. A turning point was finally reached on March 9, 2009.

We learned there will likely be no “quick fix” for our economy. And I found out that our investing philosophy works!

• Market timing does not work!
• Stock picking does not work!
• Track-record investing does not work!

The financial industry talks a good game about Modern Portfolio Theory and the value of being diversified, but how do they apply it? Sadly, most of the time it is “business as usual,” and the emphasis remains on actively-managed funds. That works well for brokerage companies. Remember the big bonuses to CEOs? It doesn’t work so well for the individual investor.

A strategy of waiting out the market doesn’t work so well either. The road to the bull market is littered with the bodies of those who waited for just the right buying opportunity or just the right prognosticator. It was just about a year ago that Bernie Madoff admitted to his multi-year Ponzi scheme.

Sometimes we are more comfortable with our long-held illusions than with TRUTH. Remember when everyone believed the earth was flat and that the sun revolved around the earth?

So what does work? Our approach remains the same. Be fully invested at all times, with the right asset allocation and risk tolerance, and you can receive market rate of return over time. If you have long-term goals you won’t likely be hurt as much as the investor who sits with cash while the market rebounds well over 50% (as it has done since March 9th). Proper asset allocation and a truly diversified portfolio can tolerate (even profit from) fluctuations in the stock market.

How does your portfolio compare to the market as a whole? Would you like to find out? Call us for an individual Free Market Investment Analysis (FMIA). Make 2010 the year you gain peace of mind about investing!

If you would like to receive our newsletter, just let us know. Email Dorcas at dorcas.george@veritasinvesting.com to join others who want to learn the truth about investing.