If you want to grow your investments, get a well-rounded view of the markets and understand these uncertain times, you want to sign up for our teleseminar today. You can sign up HERE.
Also, please check out the other resources available for our readers:
Hear Doug Fabian live at the Money Show in Las Vegas next week
Life insurance and annuity reviews also available
This week on the podcast, Doug Fabian read several emails on the air and addressed listener concerns. If you’d like an opportunity to hear Doug’s take on your questions or opinions, please send an email to askdoug(at)dougfabian(dot)com
Also, if you want to see and hear our perspective in person, hear some other great speakers and enjoy a getaway in Las Vegas, sign up for the Money Show, May 14-17 2012. Doug will have six different opportunities to present and it’s always a great event, so please check out moneyshow.com to register.
Another great way to stay in touch is our free e-newsletter, the Making Money Alert, and also our special report for advice on how to invest wisely in 2012. As always, if you have questions about your personal portfolio, please call us at 888-300-3684 and one of our advisors will be glad to help.
(This is a podcast summary. Please tune into Doug’s podcast this week for even more details on these topics, and feel free to share this information with others who might benefit from our perspective.)
As we analyze what’s happening internationally, we think that the upside momentum is waning in the markets. Our experience leads us to believe that this is because of nervousness about Greece’s ability to pay its creditors by the March 20th deadline.
We are not all doom and gloom, but we are realists, and we think that this is not the right time to take hold of investment opportunities. We are advising caution in a risky market; if you need more clarification on what makes this specific environment so volatile, please check out our blog from last week on the fundamentals of the market. However, we do believe that buying opportunities are coming soon in 2012.
Also, please check out our special report for more information on how to invest wisely. If you have questions about your personal portfolio, please call us at 888-300-3684
This is a podcast summary. For more complete details, please listen to the full podcast here.
Doug Fabian’s next live public speaking event will be in Las Vegas at the Money Show, where we’ll have about six different opportunities to present. Please check out moneyshow.com to register or for more information. Also, if you’re not already receiving it, be sure to sign up for our free e-newsletter, the Making Money Alert, here.
The world is running out of ways to fund itself
We believe, as we’ve stated before, that there are some serious structural and fundamental risks in the market this year, and potentially for some time to come.
Major risks (what we believe will affect your portfolio in the next 90 days):
Secondary geo-political risks (things to be aware of, but probably won’t immediately affect your portfolio):
On the Drudge Report yesterday, we saw this story about the state of the United Kingdom’s finances, and it’s not pretty. The story starts off:
“In a stark warning ahead of next month’s Budget, the Chancellor said there was little the Coalition could do to stimulate the economy.
‘The British Government has run out of money because all the money was spent in the good years,’ the Chancellor said. ‘The money and the investment and the jobs need to come from the private sector.’”
We believe, and our research shows, that Britain has some major structural problems, similar to what we face here in the U.S., and stories like the one we just referenced should help us prepare for what’s to come in the markets.
All of the issues we’ve mentioned before, and the fiscal problems around the world, are affecting our economy and our ability to weather economic storms. All of the countries that matter (all countries with sizable economies) are involved in deficit spending right now, which we think is unsustainable and will lead to more economic risk. We believe that the U.S. is probably two years away from a significant debt crisis, which is why we are advising investors to be more aware of risks than they’ve ever been before.
If you need more information on how to protect yourself, don’t hesitate to call us at 888-300-3684.
Stock prices are up this year despite weak fundamentals: weak job growth, weak economy, zero percent interest rates and a recession in Europe. We believe that these weak fundamentals are going to come into play soon. In 2007 and 2008, the market ignored the fundamentals and only focused on the technical side, which was, as we all remember, a very dangerous environment.
Speaking of fundamentals, the European debt crisis, specifically in Greece, is coming to a head right now. Our opinion is that the bail-out bandage is on, but it won’t take much to come off again. Austerity makes growth very difficult, even though the current “grand plan” calls for the Greek economy to start growing next year.
Remember, that Greece has been in a recession for five years. Frequent strikes and riots are a risk, tax revenue is still a difficulty, and so even though the headlines say that Greece is fixed, there is almost sure to be continued pain in this area.
We advise caution in the market for the following three reasons:
We are still taking a cautious approach, but we believe that opportunities for growing your portfolio are coming later in 2012.
For more information on these opportunities, please check out our special report for our advice on how to invest wisely. If you have questions about your personal portfolio, please call us 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.)
For a complete recap of our January teleconference, please click here. We encourage you to listen to the teleconference as well, and you can do that by clicking here.
As we’ve stated before, these are volatile, tricky markets. We still believe that the long-term market trend is heading down even though the short-term might trend upwards. However, we think that Europe and its impending financial crisis will be a key player in any investment, whether you are prepared for it or not.
In the teleconference, I talked about the investment themes of gold and emerging markets, and both of those are showing great promise for the beginning of this year. If you’d like more information on those markets and what our predictions are for them, please listen to this podcast in its entirety and/or the teleconference.
Bonds are still performing quite well and we’re impressed with the action in the bond market. Interestingly, it seems that the bond market is telling us that the economy is weak, but the stock market is telling us that everything is OK. One of these markets obviously has to be wrong, and it will be interesting to see how this plays out this year.
European Update:
Many countries in Europe were downgraded last week, which means that these countries will have higher interest rates for any further borrowing.
Greece has been negotiating the payment of their bonds, and their refinancing negotiations fell through last week as well, which means that they’ve encountered yet another hiccup in getting their financial issues worked out. This is a negative piece of news for Europe as a whole.
Also, Germany is experiencing a slight recession and slow-down at the end of 2011, despite being the strongest economy in Europe.
As we’ve said before, we believe the problems in Europe will affect U.S. investors, so this is something that we are watching closely. If you are concerned about the impact of a European recession on your investments, please listen to the teleconference for a more complete discussion of our strategy in 2012.
Personal finance exercise, part 3:
We believe that the most successful people are on top of the issues of the day and have a plan of success. 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:
Two weeks ago, we took less than an hour to calculate your net worth. Last week, we talked about taking inventory of your assets.
This week, we are figuring out how to understand your cash flow projections. Going through these inventories and personal finance exercises will help you to understand what you have and what that means. Also, this will hopefully give clarity to anyone who might have to manage these accounts in the event of a family tragedy or other emergency. It’s just a good idea to look at these things every now and then, and today we’re going to examine our income.
Income can come from a paycheck (W-2 or 1099 income), rental or royalty income, an investment, a pension or some other source. Figure out how much income comes in monthly, whether it actually appears monthly or not. See what those income sources are, and what you expect those income sources to be and produce in the coming year. Cash flow projections is one of the key issues of financial planning – if you’re not happy with your current cash flow, how can you make it better?
Instinctively, we know that cash flow can make or break your wealth management choices, but most people don’t actively try to fix problems with their cash flow. As you figure out how to achieve your cash flow and income goals, remember that we are here to help you make these decisions and work out solutions to your personal financial situation.
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.)
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:
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.)
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.”
“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:
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:
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.)
If it looks like a duck, swims like a duck and quacks like a duck—then it’s probably a duck.
We’ve all heard this little common-sense gem, yet when it comes to investing, many people have a hard time telling the ducks from the swans. Nowhere is this case of mistaken identity more pronounced than when it comes to recognizing what most so-called “active” investment advisors are doing with their clients’ money.
The way I see it, most investment advisors claiming to be “active” managers are just buy-and-hold sheep in Armani clothing.
What do I mean by this? Well, I explain it all in detail in my new special report, The 7 Dirty Little Secrets of Asset Management.
This report shows you why so many common investment strategies that purport to be active management are basically just different twists on the same old worn out—and thanks to the recent bear market—now thoroughly discredited investment philosophy.
If you want to find out if your portfolio is being put in jeopardy by buy-and-hold pretenders, click here.
I am constantly being bombarded with questions about exchange-traded funds (ETFs). Basic inquiries such as just what ETFs are, how they work and how they can be used in an investment portfolio are some of the most common I deal with each week.
Now because I want to be sure that you know all of the basics about these fabulous investment vehicles, I’ve decided to do a short video presentation explaining exactly how ETFs work, their history, and how they can be a huge benefit to your portfolio.
I believe that ETFs are the greatest wealth-building tools for your portfolio because of their diversity, low cost and transparency, and you owe it to yourself to make sure you know just how great ETFs can be.
To find out more about ETFs, and to watch my presentation, click here.