Friday, May 24, 2019

Look before you leap


Why annuities are hot again
Trump cancelled the Fiduciary Rule which protected us from the worst abuses of the high-octane industry sellers. Sellers can collect 6-10% of your annuity purchase price so every high-net worth customer needs an annuity. This is one of the highest payouts for most sellers. The Rule made certain demands on sellers to prove their annuity with up to 15 years of surrender charges was your best deal for retirement income. Yes some contracts allow you to participate in market upswings and limit your loss, but your gains are cut off by contract limits and the ongoing costs. These can go up to 3.35% depending on your choice of options. Since the alternatives, which may be better for you, provide much less income for the seller, you can understand why Obama’s Fiduciary Rule was abolished. Yet, you can have income and growth at lower cost and maintain control.

Your portfolio could have beat Yale’s investment gurus without the cost
David Swensen, the longtime investing chief at Yale University, got $4.7 million in compensation in 2017, making him the highest paid at Ivy League schools. His helper got $3.5 million. Yale has posted a return of 11.6% in the five years through June 2018, the second-best gain in the Ivy League. If you had followed Warren Buffett’s advice, you would have earned 12% for that period. You don’t need a high-cost broker/advisor or firm. You need common sense. If you pay more, you earn less—up to 63% less over time. If you pay a salesperson, you lose money. If you try to trade or time the market you earn 3.79% over time according to DALBAR scorekeepers. Yale does not do fast trading or market timing. Compare the holdings of most pension funds like CaPERS: 50% equities using low-cost passive index funds. Even for pros, it isn't about stock-picking. It's about owning the market over time.

Financial regulators ID 61 firms as high risk for cheating clients
FINRA proposes to watch rogue firms for irregularities. They attract sales people with questionable histories.  Regulators allow sellers to move from firm to firm despite client- abuse patterns. "The most critical is a pattern of disclosures," he said. "For example, a broker could have an unauthorized trading complaint that is recent but seems benign. But when you look at the broker and the movements he has had, say four or five different firms, and he has faced similar allegations at those firms but in a different time frame with different customers, the pattern seems to be emerging, so we are going to take a closer look." FINRA does not try to weed out the violators—violators are found by us when we complain. Regulators have a list of high-risk brokers using industry and disclosure data, and then begins its analysis. The list is not available to us. All we can do is check FINRA BrokerCheck and the list of barred brokers. We are the victims but most perps just move on to new firm.

Is ‘factor-investing’ right for you?
New name but old gimmick to try to predict the future. Brokers/analysts claim they are customizing your portfolio using whatever you need—“higher returns or lower risk, such as momentum, value or size.” They say they use factor analysis to find a fund “less expensive versions of your current portfolio.” I am a little skeptical since brokers or advisors are hired to ‘earn’ money from your money. Others claim they use it to find a fund “to reduce investment risk.” And you thought that was what your advisor did all the time for their 1-3% fees and charges. "If we get risk right, the returns will take care of themselves over a long period of time, and we know that staying in the market is the important part." ‘IF’. Assumptions work in a strong market and an advisor can show the ‘factor analysis’ to keep us in the market. But this new name and fees for choosing value, size, momentum, quality, price, dividend yield and volatility cannot make the future predictable. The average managed-account investor is still earning less for every period: only 3.79% over time instead of the market index rate of 10-12%.

Where do your broker-advisor fees go?
The first thing I learned working in a brokerage firms is that senior management must get rich from your advisor or broker. Don’t kid yourself (or let them try to), they are after a big chunk of your money. You may be investing for the benefit of you and your family but so are they but they’re taking theirs from yours. Are you surprised by how much you are paying annually for James P. Gorman, Morgan Stanley taking: $28,168,639; Jim Cracchiolo, Ameriprise Financial: $22,310,000; Timothy Sloan, Wells Fargo: $18,400,000; Terrence P. Laughlin, Merrill Lynch: $17,796,226; Walter W. Bettinger II, Charles Schwab: $15,627,607; Paul Reilly, Raymond James: $12,453,375; Ruediger Adolf, Focus Financial Partners: $11,637,251; Dan H. Arnold, LPL Financial: $7,128,351; Ronald J. Kruszewski, Stifel Financial: $5,287,305; Judson Bergman, Envestnet: $4,200,366; Thomas A. Nally, TD Ameritrade Institutional: $3,521,305; Richard J. Lampen, Ladenburg Thalmann: $3,115,271; Robert D. Oros, H.D. Vest: $1,464,473. Fidelity is owned by the Johnson’s so we don’t know how much CEO takes. Half of investors now in low-cost indexes: https://www.amazon.com/Pimps-Wall-Street-money-middlemen/dp/151525254X

Seventh biggest mortgage lender in the country is us
We are ‘giving’ our kids over $39,000 for a home. The average U.S. home price in 2018 was $310,000. Many parents can’t help themselves and provide help even though it may leave them with a shortfall now or later. After all that chunk of retirement money could have provided $300,000 in 20 years. Most loans become gifts since the children are tackling new family, student loans of $30,000 on average and finding full-time careers. One alternative is to save with your children—match their savings/investing—dollar for dollar until they have the home down payment. Another solution: folks might find it easier to take out a HELOC on their own home to make the kid’s down payment. Home equity loans are deductible and perhaps have a lower rate than the student loan. Make a deal: exchange your old car for their new one. New cars can cost $40,000. If they don’t buy or make payments on one, they can invest that $400 a month instead. Remember, an easy down payment gift provides no ‘skin in the game’ for them.

Is the American middle class doomed?
If you think you are middle class, you are, according to some writers. But since the 1980s, the productivity gains have all gone to the top 1% of earners (23.5% of all income; up from 8.9% 30 years ago). It now takes two workers, usually well educated to create the same lifestyle as the average family in the 1950s and the 1960s. Wages are LESS than they were in 1973! Many of our children are creating extended family groupings like in the 1800s. Only the ‘robber barons’ could afford a home of their own. We go further in debt trying to keep up. Work operations change very quickly—keeping up our skills requires continuous learning—we never had to do that before this generation. Generations live in mobile homes now. Walmart may be the best paying job in town so food stamps are necessary. 62% of us don’t have enough for an emergency when it comes. It feels like we are on the road to serfdom.
According to one writer, its elements are: (i) internationally, capitalism is restructuring and U.S. global hegemony is fraying; (ii) domestically, the post-WW-II good-life of the “American Dream” is slipping away; (iii) politically, democracy is eroding, a casualty of big money and voter suppression; and (iv) legally, law enforcement is being increasingly militarized. Only the corporations and wealthy have the power to actually do anything. Many of them are propped up by ongoing tax breaks and subsidies from tax payers. Even our reps in Congress are powerless without the dough to stay in Washington so they follow the rule of money. Our government leaders are above the law we are subject to, just like serfs. We don’t even fairly elect our own president anymore. Scalia taps Bush.

Need a graduation gift?
The greatest gift you can give is financial knowledge. No matter how much your young graduate makes, it is up to YOU to show them the Buffett investment strategy. Make sure they can make and manage money. At my first job, I had no clue which investment to use for my 401k contributions and company match. The HR person told me to put it into the 'safe' stable value fund. That was the worst choice at my age I learned later when I got my securities’ licenses. If I had followed their advice I would have ended up with about $150,000 instead of a Wealth Reserve of $877,233 about 33 years later.


**************

Make America, “The Don”, Great Again
Truth isn’t truth, his lawyer says

Two Americas: A Banana Republic? Do we really want an infant king? Daddy Putin!

***********************

How Govt wastes our money: Congress spends $1.3 Trillion we don’t have! 
Not invade Iran today: CIC says there is ‘no indication anything has or will happen.’???
Trump made up ‘threat’ from Iran to send war ships to impress base. What’s next?
Trump admits he is ‘stable genius’: Proof—just ask his employees- Kellyanne, Larry, Sarah, Oh My.

Senators pass 2 bills in 2 mo: lay them off until McConnell retires—saves $10 million.

Farmers’ socialism; beer makers lost 40,000 jobs: Trump like Putin makes winners/losers
Trump Mob gives tariff waivers to the firms they like: others on hold.
TX GOP cancels disaster relief for fires, floods and hurricanes. No reason for ‘no’.


SCAMS/SPINS:
What would GOP do if DEMs refused to provide info they requested from WH? Arrest?
Why are those who defy subpoena NOT in jail now? Are all GOP above the law? Trump?
Pelosi: Trump “engaged in cover-up” so is that ‘high crimes and misdemeanors’?
EPA to ‘cook the books’ on coal pollution so report less than 1400 deaths per year.

If All the President’s Men can ignore the law, are the wealthy far behind? Biz espionage?
Wealthy skipping IRS audits—all 5 auditors working on ‘Trump audit’?
GOP fails to block China’s car maker in US transit: Follow the money. Buy American???

Don Jr will tell all in new book even if from prison: follow the money
Coal industry may be shut by insurers not govt to control storm damage claims

No more low dose aspirin: bleed in skull
Trinity Healthshare called sham ministry: deceptive practices.
Life Partners Protective Life caught overcharging older investors in resale scheme.

“Credit reporting, credit repair services” category with most complaints at CFPB.
Morgan Stanley’s Tim Prouty caught using complex risky strategy: client wins $519,000
Randy Rodberg; Andrew Costa; Claude Mosely; Marcus Bray caught Woodbridge ponzi.
BBT caught overcharging own employees in 401k: breach fiduciary duty.

Portfolio Advisors Alliance, Allen, Wasserman caught selling fraud private placement.
Daniel Pacheco, CA caught selling speculation on ‘cryptocurrency’ pyramid scheme.
Argyle Coin Jose Angel Aman caught selling Ponzi “fancy colored diamonds.”

TurboTax Uses A “Military Discount” to Trick Troops Into Paying to File Their Taxes

Weinstein pays $44 million for crimes but no jail time: Moguls cost of doing business?
Trump Mob lining up pardons for friends and partners: ‘Mobsters dream come true.’

‘No man is above the law’ … well up till now. Dictators nullify courts first, then votes.

Jobs:
Where did our pay increases go since 1980?: the famous 1%ers took productivity gains.
Walmart next day delivery for free on $35 orders; Amazon $49 delivery free some ZIPs.
Ford cuts 1200 from management; 7,000 worldwide.

Canada Mexico workers rejoice! Trump lifts steel alum tariffs.


Who owns your account now?
tap-to-pay credit and debit cards issued by banks try out on NYC subways


Bezos keeps all your transcripts of Alexa recordings even after you ‘delete’ them.

Miracle:


17 y old student set to graduate from Harvard just days after high school diploma.

IAN
41 Watchung Plaza, B242
MontclairNJ   07042
973.746.2014
Alerts 

No comments: