active management
Written by Dani, May 02nd, 2012
As many of you know, we have a comprehensive list of ETFs on our website. Our latest edition of the Fabian ETF report recently came out, summarizing 1200 funds and highlighting 100 new ETFs for 2012. To get a copy of our ETF report, click here.
Another great way to hear our strategies is through our exclusive teleseminars. Our next teleseminar is titled: Strategies for Growth in Uncertain Times, and will be presented by Doug Fabian, on Tuesday May 8th at 1:00 p.m. Pacific (4:00 p.m. Eastern).
If there is one statement we can all agree with – we are living in uncertain economic times. Half of the countries in Europe are in recession, China is feeling the effects of slowing global growth, and the U.S. is struggling with trillion dollar deficits that are needed to keep the economy afloat.
In what will likely be a very challenging summer for the markets, having the right strategies in place to both preserve and grow your capital is absolutely critical to your investment success. Now is the perfect time to decide how you should position your investment dollars to achieve your financial goals for the remainder of 2012.
In this special one-hour presentation, you will learn:
- Doug’s three favorite growth strategies over the next three years.
- How to stay ahead of inflation with your portfolio.
- A global economic update and how world events can impact your money.
- The latest product innovation in the exchanged traded fund world.
- Plus much, much more
While this teleconference is FREE, attendance is limited, so please be sure to register HERE and reserve your spot today.
Written by Dani, March 22nd, 2012
Over the next year:
- Obamacare taxes go into effect
- Bush tax cuts expire, so taxes will be going up
- Mandatory spending cuts at the federal level, for deficit reduction purposes
All of these factors will create a drag on economic growth, and are critical for investors to be aware of.
So why are we talking about the next three years, when so much is changing this year?
The answer is realistic, if not optimistic. We believe that our national habit of deficit spending will have to be dealt with in 2013 and beyond. If we don’t see sufficient austerity from the federal level, we think that interest rates will go up.
Because of this, we think that the next three years will be the most challenging many investors will ever experience. During the next few years, we think that risks will be deflationary, meaning asset values will decrease (think 2008).
It’s important to note that debt-related troubles are coming from more than just Washington D.C.. Deficit spending gets a lot of attention at the federal level, but many people don’t notice or know how much trouble local counties, cities and states are in as well. There are many places in the U.S. which are simply running out of money, which means austerity that is on its way.
Austerity doesn’t just mean lower income, it also means higher taxes. We are seeing the effects of high unemployment and austerity in Europe, and those problems (and with them, civil unrest) might be coming to the U.S. in the next couple of years.
You need to be aware and prepared for these challenges. It’s going to be very tough for any politicians to make good decisions on our behalf, and it’s critical that investors understand the risks in the market and what might soon be coming.
So, how do we achieve financial goals over the next three years? Our three-step plan is:
- Capital preservation should be your highest priority
- Monitoring and analyzing your portfolio positions in light of these risks
- Know your exit strategy
Despite rising markets, risk is extraordinarily high, and investors need to avoid getting lulled into complacency by a seemingly safe market.
(If you read this blog and enjoyed it, listen to Doug’s podcast this week for even more details on these topics, and please share this information with others who might benefit from our perspective.)
Written by Dani, March 13th, 2012
Stocks appear to be topping, and may have already peaked. There was a relief rally last week which we believe had much to do with the appearance of everything being OK (activity from the Federal Reserve, the controlled default in Greece, etc.), and not with the fundamentals.
One reason for continued investor confidence is that Apple Computer (AAPL) stock has been soaring. Also, American investors especially seem to be excited that it appears that America is decoupling from the rest of the world and they hope this means that we won’t be as affected by adverse global trends. However, we still believe that there is reason to be concerned, because of what we’re calling the triple threat.
The triple threat is:
- Europe is in recession
- China’s economy is slowing down
- U.S. profit growth prospects are slowing as well
Also, equities are going up, along with oil and bonds going up as well, so this is a very unusual circumstance. Bonds rising in value are usually associated with depression and deflation, but the stock market is soaring. Something strange is happening here, and John Hussman wrote last week that is a bad time to invest too heavily, based on historical similarities, and we agree. We encourage all of our readers to check out his piece on the market trends, here.
This is a podcast summary. For complete details on the items discussed today, please listen to the full audio here.
Written by Dani, February 23rd, 2012
We discussed gold and the buying opportunities to come in the teleseminar in January.
We think that gold mining stocks are going to be a good investment later this year, as there seems to be a disconnect between the price of gold bullion and gold stocks. Gold bullion prices are up, but gold miners appear to be under-performing so far this year. We think that gold stocks are vulnerable to a sell-off with the overall market if conditions begin to deteriorate.
We advise you to continue to exercise caution, but to keep gold on your investment radar, as it may soon become a great buying opportunity.
Here are three action items for every investor:
- The widely-held perception is that risk is low in the market, which we obviously disagree with. However, you should pay attention to the market sentiment and don’t be lulled into this false perception.
- If you own risk assets (those which are going up so far in 2012), have a plan to exit those positions if we start to see a pull back in stocks.
- We are advising caution. If you need more clarification on what makes this specific environment so volatile, please check out our blog from yesterday on the fundamentals of the market.
Also, please check out our special report for more information on how to invest wisely. If you have questions about your personal portfolio, give us a call at 888-300-3684
(Also, if you read this blog and enjoyed it, listen to Doug’s podcast this week for even more details on these topics, and please share this information with others who might benefit from our perspective.)
Written by Dani, January 27th, 2012
As we open the new year with the second Monday Market Update of 2012, welcome and thank you for listening. You can listen to Doug Fabian’s full podcast here, or keep reading for a summary of what we’ve discussed on the air.
We provide these blogs, podcasts and telecasts as part of our effort to inform and engage our friends and clients in healthy investing and rewarding financial growth. Feel free to skim through this blog for some highlights and listen to the full broadcast when you have time later – the information provided is not intended to give you be specific financial advice, but it will help you to make smart decisions with your investments.
Last week we talked a lot about Europe’s looming debt crisis, and this week we saw Europe still trying to fix their situation. Greece is in especially bad shape, and is about to go bankrupt, with austerity programs missing many of the fiscal targets they were aiming for. There is much concern that a meltdown in Greece will lead to the insolvency of European banks, and we still believe that “caution is the greater part of valor” in this instance.
One good note last week was the jobs report, which reported 200,000 jobs added on Friday – although we need 275,000 new jobs just to break even, so even that news is met with some caution.
Obviously, we continue to be a very uncertain economy, and uncertain world. Right now the trend of the market is very tenuous. We still believe that even with relatively positive news out of US, markets will go even higher, I think there’s 5% upside and 20% downside on a short term (next six months) standpoint in the stock market.
Remember last week we talked about patience in these areas, recognizing that the global economy is probably in a more serious recession than we currently feel. Be careful, as there is still plenty of risk for your hard-earned investment capital.
We want to talk today about your 401k, 403b, 457 plan, variable annuities, variable universal life – all of these are retirement products with some common traits. One of the questions we want to ask is: how do you allocate your retirement money?
The vast majority of Americans readjust their retirement allocations in January and don’t look at them for the rest of the year, so take the time to see what’s working for you and what’s not.
Look at what your personal allocations are – what are the individual accounts and how much is devoted to various allocations (stocks, bonds, etc.) What are your choices? Our first choice is cash. As Mohamed A. El-Erian said in his Wall Street Journal opinion piece this week, our investment strategy should be: “defensive, but agile enough to be offensive when opportunities emerge.”
To illustrate, you’ll notice that many large companies are dealing in what’s known as self-insurance, or sitting on large amounts of cash to insure themselves against a tenuous economy. We suggest that you take a similar approach right now – don’t be fully invested. Now is a time to be exercising some prudence, and hold cash so that if opportunity arises, as El-Erian wrote, you’re ready.
We suggest putting some of your portfolio in short-term bonds. They pay less in yield, but some interest is better than no interest. Also, if you have a Pimco total return fund option, that’s a good option, and if you’re going to have an allocation to stocks, make it very small.
Our clients have no allocations to stocks, in this uncertain economy. If these allocation decisions are difficult for you to make, or if you would like more in-depth analysis of what your options are, please call our offices so that we can take a look at your portfolio and help you with personalized options.
Now we’ll move on to the series we started last week: personal finance exercises.
We believe that the most successful people are on top of the issues of the day. Being well-informed and staying well-organized will help you to succeed, so for the next few weeks we will be outlining six exercises for you to stay informed and ready to make good decisions. Those six exercises are:
- Making a calculation of your net worth
- Taking inventory of financial assets
- Understanding your cash flow projections
- Examining your expenses
- Making sure you have an updated estate plan and living trust
- Taking stock of all insurance policies – health, life, long term care, annuities, etc.
Last week, we took less than an hour to calculate your net worth – in order to grow your net worth you have to know where you’re starting from.
This week, we’ve moved on to the second item: take inventory of your assets. Everyone knows how great it feels to clean out unnecessary clutter, and you need to do the same thing with your assets. Look at individual positions and see where you are. List each position, look at how it performed, look at your asset allocation, look at whether it’s a good idea to sell and be defensive with our cash, or hold and then decide what to reallocate.
Don’t be afraid to make changes – remember we are being defensive with our investments, and it can be a good idea to take a small loss if something is underperforming. Look at how your mutual funds perform versus their peer group and get rid of anything that isn’t up to par.
All of these exercises are relatively easy, and you need to start the new year off right by looking at this. Again, if you need guidance on what needs to be held or bought, how this inventory works and our advice for your assets, don’t hesitate to get in touch with us.
Once you know what you have to can set clear, reachable goals. Tune in next week for more on Doug Fabian’s Monday Market Update, and the next exercise to preparing yourself for a successful investment future. (Also, if you read this blog and enjoyed it, listen to Doug’s podcast this week for even more details on these topics, and please share this information with others who might benefit from our perspective.)
Written by Dani, January 26th, 2012
As we open the new year with the first Monday Market Update of 2012, welcome and thank you for listening. You can listen to Doug Fabian’s full podcast here, or keep reading for a summary of what we’ve discussed on the air.
As we look back at 2011 (and forward to 2012), the biggest financial news item is the crisis in Europe. After all, the U.S. is not doing that poorly, and was seen as a safe haven for investments by many in the global marketplace. In many ways, even though certain industries are looking up (biotech and healthcare are up 10% each, for example) others, like banks and big financial services firms took heavy hits in 2011. Essentially, this means that we are still in a state of capital preservation, and we will need to take the global slowdown seriously, particularly in Europe.
Europe represents a significant portion of global economic activity, but it is saddled with some serious economic issues, like debt load, not enough income through taxes to support outflow and a generally stagnant economy. Basically, if Europe was a business, it is not a good one to invest in, because it is too expensive to buy in to at this point.
One great example of this appeared in our hometown paper, the LA Times, on New Year’s Day. The front-page story opens with these vivid descriptions: “…’It’s as if someone is “holding your throat and choking you slowly.’ That’s how one analyst vividly describes the squeeze on lending in Europe these days. Scared by the euro debt crisis and a flat-lining economy, banks have been tightfisted with their money, refusing to issue many of the loans that companies desperately need to keep their operations running smoothly or to take them to the next level.”
The article continues:
“Here in Britain, Prime Minister David Cameron’s office reckons that banks have already entered a second ice age. In other parts of Europe, especially the weakest of the 17 nations that share the euro, credit has also begun freezing up, analysts say. The squeeze has sent businesses scrambling for new ways to finance their activities and fostered an alternative market that bypasses Britain’s big ‘high street’ banks in favor of lending houses and venture capitalists.”
We all know that all companies need access to capital, and when those credit lines are removed, as is happening in Europe, this is a problem for business.
Unfortunately, many of these economic problems have been coming for some time, but governments don’t tend to share bad or politically incorrect news very well. This means that we generally don’t have all the information until it’s too late, which is why Fabian Wealth Strategies is encouraging our readers and listeners to really pay attention to these news reports and other signs of distress. Even though the U.S. is still doing OK, there is bound to be blowback because of Europe’s crippling issues – we encourage you to not be impatient or underestimate the real problems.
Also, don’t feel pressured to be in the investment game daily. Like the old song says, you “need to know when to hold ‘em and when to fold ‘em”, and when we take a step back and note the many forces at work in the marketplace, we’ll be better informed and wind up with better results. Remember, patience is a virtue!
Plus, in this podcast, we are going to help you understand strategic advantage and timing of your investments – in other words, we won’t just tell you to be “patient” forever, but we’ll help you create a plan in which that patience pays off.
We believe that the most successful people are on top of the issues of the day. Being well-informed and staying well-organized will help you to succeed, so for the next few weeks we will be outlining six exercises for you to stay informed and ready to make good decisions. Those six exercises are:
- Making a calculation of your net worth
- Taking inventory of financial assets
- Understanding your cash flow projections
- Examining your expenses
- Making sure you have an updated estate plan and living trust
- Taking stock of all insurance policies – health, life, long term care, annuities, etc.
Today we’ll focus on making a calculation of your net worth, because implementing any strategy requires knowing what you have and what to do with it. You need a starting place for your financial affairs – a calculation of what you own, what you owe, and what your plans are for growing what you have.
So ask yourself these questions, to get started on this exercise:
- How much cash in the bank do I have? (not investments, just cash)
- What are your real estate holdings worth?
- What retirement plans do you have and what is each one worth?
- What’s your small business worth?
- What are your liabilities? Credit cards, loans, mortgages, etc.
- Count your two types of assets: liquid (stocks, bonds, etc.) and illiquid (real estate or other assets that are not easily converted to cash) How much do you have of each?
Once you know what you have to can set clear, reachable goals. Tune in next week for more on Doug Fabian’s Monday Market Update, and the next exercise to preparing yourself for a successful investment future. (Also, if you read this blog and enjoyed it, listen to Doug’s podcast this week for even more details on these topics, and please share this information with others who might benefit from our perspective.)
Written by David, March 14th, 2011
Do you have idle cash languishing in a savings account or money market account earning less than 1%?
If so, you may be missing out on excellent opportunities to achieve both steady income and capital appreciation generated by your hard-earned assets.
The Federal Reserve and banks around the country have dropped the yield on short-term savings and money markets rates to rock bottom levels in an effort to stimulate the economy. Long-term CDs and Treasury bonds don’t give you the flexibility to keep your money liquid, and as such they represent a hazard if interest rates were to rise.
According to recent government data, the inflation rate in the U.S. is close to 1.6%, which means that your purchasing power is diminishing if you are not able to achieve a total return in excess of this baseline. And that’s the official inflation rate, which doesn’t take into account rising food prices and soaring energy costs.
So, what do you do with that cash on the sidelines that’s earning next to nothing?
You put it in an actively managed income portfolio from Fabian Wealth Strategies.
Now more than ever, you need a conservative investment strategy designed to generate monthly income as well as preserve investment capital. At Fabian Wealth Strategies, our Steady Income portfolio is comprised of highly liquid investments with a balanced mix of dividend-producing stocks and investment-grade bonds.
Our proactive approach to asset management allows us to be flexible with the portfolio in the event that interest rates continue rise, or stocks abruptly turn lower. We accomplish this by monitoring our portfolios on a daily basis to determine what we believe is the best asset allocation mix to achieve your income-generating goals.
We welcome your calls at (800) 391-1118 to discuss how we can help you turn your idle cash into an income-generating machine.
Sincerely,
Doug Fabian
President, Fabian Wealth Strategies
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Fabian Wealth Strategies, Inc. is a registered investment advisor with the U.S. Securities and Exchange Commission. Doug Fabian is a registered investment advisor representative. The information expressed in this email is for educational purposes only and should not be construed as a recommendation to buy, sell, or hold any specific security. Investing involves the risk of loss. Consider the risks, fees, and expenses before making any change to your investment portfolio.
Written by David, March 31st, 2009
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 the all of the financial market upheaval.
If you’re managing your own money, are you getting the results you think you should?
Or, is your money being managed by a stockbroker or investment advisor who insists
you “buy and hold” stocks even while Wall Street—and your portfolio—get savaged by
a malicious bear?
Now more than ever, individual investors need expert guidance and continuous “eyes
on” monitoring of all of their positions, not just occasionally, but every trading day. The
simple fact is that in today’s market environment, you’ve got to have an experienced
ally on your team if you want to successfully navigate these treacherous market seas.
At Fabian Wealth Strategies, we believe that innovation is at the forefront of each
client’s success.
Click here to learn more about how Fabian Wealth Strategies can help you manage your assets according to your goals in a simpler, easier and more cost-efficient way than ever before.
Written by David, January 12th, 2009
According to the SEC’s Office of Investor Education published statistics, over 50% of investors seek the advice of some type of advisor when making financial decisions.
If you have an advisor managing your money after a volatile year of losses in 2008… how do you know you have the right advisor? It may never be more important than right now to take a closer look to make sure your money is getting the best advice.
The problem is that most investors really don’t know the right questions to ask their advisors.
- How do you know that your interests are being served well by your advisor?
- How do you know if the kind of investments your advisor recommends actually align with your goals?
The only way to know for sure is to ask the right questions. Unfortunately, most investors just aren’t as financially literate as they need to be, and this could cost them even larger asset losses in 2009.
To help you get better information with any advisor to make your best decisions possible, we’ve compiled a list of the 20 Best Questions to Ask Your Advisor.
Current Portfolio Positions at the End of 2008
1) What was the total performance of my account in 2008?
2) What is my current allocation to equities, fixed income and cash?
3) What was the performance of each individual position in my account, e.g., mutual funds, stocks, ETFs?
4) What was the cost of holding these positions, i.e., expense ratios?
5) What was my total cost paid on my investments for the year (including fees and commissions)?
Evaluating the Advice
6) How would you assess my performance relative to the S&P 500 Index in 2008?
7) What were the best and worst performers in my portfolio last year? 
How would you evaluate your advice to me in 2008?
9) What changes did you make in light of the profound changes in the economy and stock market?
10) What changes are you planning for my account in 2009?
Advisory Fee, Management Fees and Transaction Costs
11) What is our advisory or management fee arrangement?
12) What fees are you receiving from my investments, i.e., commissions and/or 12b-1 fees, etc.?
13) What are the ongoing costs of my investments in mutual funds or annuities?
Looking Forward in 2009
14) What is your or your firm’s overall market outlook for 2009?
15) Do you expect the recession to get better or worse this year?
16) Do you expect the stock market to get better or worse this year?
17) Do you have any defensive tactics in place if things do get worse?
18) What are your investment themes for 2009?
19) What will the government’s proposed economic stimulus package mean for my investments, interest rates and the value of the U.S. dollar?
20) Why should I continue investing with you in 2009?
The goal of these questions is to help you get enough important, relevant and reliable information to help you make educated financial decisions. We believe an educated investor will be the most successful investor.
If you are not satisfied with the responses you get from your advisor to any of these questions, use these questions to look for an advisor that can satisfy you with competent answers.
Now more than ever, individual investors need expert guidance and experience. In today’s quick-changing and complex market environment, we believe every investor needs to have 5 very important advantages working for them to manage their assets wisely:
1) Active Management – establish a clear “sell-discipline” on every holding and then monitor every day
2) Transparent Investment Vehicles – demand a clear understanding of all fees and use exchange-traded funds to keep fees low yet extensive diversification options
3) True Alignment with Client Interests – advisor should have NO hidden rewards, incentives or compensation tied to any ONE investment
4) Pay as You Go – not larger fees paid upfront… rather fees should simply be amortized monthly
5) No Penalty to Exit – be sure to never be required to pay “exit fees” such as redemption fees or surrender fees
At Fabian Wealth Strategies, we broke the mold of traditional asset management firms in two very distinct ways. Our investment philosophy is that risk must be managed carefully – large losses are unacceptable. As the investment world continues to change, investors must be able to adapt accordingly to stay ahead.
Our second mold-breaking feature is our near-exclusive use of cost-efficient investment vehicles. Exchange-traded funds (ETFs) make up the majority of our investment positions. Why? Because ETFs offer diverse options, terrific liquidity and fees are very clear and transparent.
Call Fabian Wealth Strategies at (800) 391-1118 or visit www.fabianwealth.com to discuss these questions and for more information.
