Too Good to Be True? Don't be Tempted.

We're all susceptible to investment fraud.  It can happen to anyone.  Even an esteemed financial advisor.  In this month's issue of Financial Advisor magazine, Mitch Anthony, a well-known consultant to financial advisors and the bestselling author of The New Retirementality, writes about how he was duped by a real estate developer who created a Ponzi scheme. Worse, Mitch was led into this scheme by a trusted advisor, his CPA. Neither had reason to believe anything was wrong with the deal they invested in.  Mitch lost almost a million dollars, and his mother lost her life savings. He admits feeling shame and embarrassment.  An investment professional should be immune from such vulnerability, right?

Not really because it happens all the time.  Someone you trust recommends an attractive investment opportunity.  You think, there's no way this person would intentionally steer me wrong.  Likewise, Mitch and his CPA had no reason to believe they were being duped.  After all, dividend checks were arriving on a monthly basis.

Mitch admits that when he first me first met the “real estate developer,” he was “initially underwhelmed, and the developer had the comportment and cadence of a snake oil salesman.”  He also said, “This developer's nomenclature was hard to follow, but he said all the right things.  However, there was something about the delivery that lacked credibility.”  Nonetheless, Mitch invested in a “development.”   If only he had trusted his initial gut feeling.

Several years later, Mitch was pitched another ‘investment” by the developer, a retirement community in Florida. The developer offered him promissory notes (which are illegal in most states) and “economic interest” agreements in the projects. He was also promised returns of 18%--a huge red flag because returns are never guaranteed. But the hook was already set because Mitch had had “success” with a previous development.

When the whole deal eventually collapsed, Mitch sought legal help and restitution but was told by his attorney that he and his mother would probably lose all their money that they had invested with this con artist.  Mitch's attorney tried contacting an attorney in Mason City, Iowa, the town from where the developer operated. He soon learned that almost all the lawyers in that town were retained by the con man, thereby insulating himself from local law suits.  He also had built a “confusing, dizzying maze of LLCs and had shielded his assets in other people's names.”  The con man had ripped off many people in Iowa and had not paid a penny back. Restitution was not going to happen.

You may be thinking, “What can I do to avoid being conned out of my money?” One suggestion is to invest in a diversified portfolio of thousands of publically traded investments, such as stocks and bonds. Sure, they can go down in value, and you may lose principle but losing everything is highly improbable.  Then, recognize the ways of a con man. Typically, they don't offer publically traded investments and try to sell you a “free lunch” offering unrealistic returns with little to no risk. Often, these con men are part of a community and may even be members of your church and temple. This is called affinity risk where almost everyone you know in a particular community is doing it. Like Bernie Madoff, these con men are clever and understand people like to be part of a common group. But really they view us a lemmings, ready to follow each other off of a cliff.

The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Lincoln Investment.  The material presented is provided for informational purposes only. Nothing contained herein should be construed as a recommendation to buy or sell any securities. As with all investments, past performance is no guarantee of future results. No person or system can predict the market. All investments are subject to risk, including the risk of principal loss.

Advisory services offered through Jeffery A. Bogart Investment Advisor, Registered Investment Adviser.  Securities offered through Lincoln Investment, Broker Dealer, Member FINRA/SIPC. Jeffery A. Bogart Investment Advisor, Sila Wealth Advisory and Lincoln Investment are independent and non-affiliated.

Over There

If we're not hearing about yet another high-profile man who's been fired for inappropriate behavior, we're hearing about the stock market. It seems as though every day the media reports that the stock market has reached a new, all-time high. Even our president gushes about it almost daily on Twitter.  (Let's keep it real, though:  Presidents have a limited impact on the economy; a successful economy isn't exclusively dependent on one branch of our government).

As I write this, the Dow broke 24,000 for the first time.  If you're lucky enough to participate in financial markets, let the good times roll. However, the media is not telling us the whole story. There are, in fact, other kinds of investments which, year-to-date, are out-performing the broad U.S. markets, and they are both in the international realm.



The best returning asset class of the year is emerging markets and non-U.S. developed markets. "Emerging markets" simply means investing in countries that have certain risk (usually in developing countries).  The investment is expected to achieve higher returns but is accompanied by greater risk. Some of these risks are currency, lax corporate laws and even political risk, which applies to South Korea.  In every respect, South Korea is a developed country but, alas, has a crazy neighbor to the north. A few other countries which are considered emerging markets are China, Taiwan, India and Brazil. 

Represented by the Dimensional Funds Core Equity Emerging Market Portfolio (DFCEX), the return through November 20, 2017, is a whopping 31.87%.   While the return sounds great, emerging markets are the most volatile of asset classes, and I usually invest no more than 6-7% of my clients' portfolios there.

The second best returning asset class through November 20, 2017, has been developed international markets. The Dimensional Funds International Core Equity fund has a year-to-date return of 23.9%. This type of investment includes countries in developed markets such as Japan, the United Kingdom, Germany, France, etc.  These kinds of investments are in modern, stable countries with mature economies.  They tend to be less risky compared to emerging markets.

The U.S. financial markets may grab the headlines, but there's (literally) a world of opportunity out there. But the case for international investing goes beyond recent returns. The benefits are further diversification and potentially overall higher returns. Although diversification doesn't guarantee you protection from loss, it's the best way I know of to protect yourself from down markets.  And like most things, markets tend to cycle.  

Another consideration for international investing is the number of companies in the U.S. stock markets has been shrinking. For example, the Wilshire 5000, an index used as a proxy for all U.S. securities with readily available pricing data, holds just over 3,600 stocks as of the start of this year.  That's down from more than 7,500 in 1998. Fewer investment options could make it harder for investors to find adequate investment opportunities. According to Dimensional Fund Advisors, the number of companies listed on global stock market exchanges, though, has increased from about 23,000 in 1995 to 33,000 by the end of last year. So while the number of companies in the U.S. has shrunk, the number of companies worldwide has exploded.

A common question I hear from my clients is:  Should a retiree invest internationally?  My answer is a resounding "yes!"   One reason is that the U.S. markets have been on a run for over eight years while the international investments have been lagging the domestic equity markets. Hence, the valuations are lower in the international investments. Which may mean they have more room to grow. With a whole world of investments and potential growth out there, why not attempt to take advantage of it?  

Emerging markets are sought by investors for the prospect of high returns, as they often experience faster economic growth as measured by GDP. Investments in emerging markets come with much greater risk due to political instability, domestic infrastructure problems, currency volatility and limited equity opportunities (many large companies may still be "state-run" or private). Also, local stock exchanges may not offer liquid markets for outside investors. International investing involves special risks, including, but not limited to, currency fluctuations, economic instability, and political uncertainties, not typically present with domestic investments. 12/17

Third Quarter Report

Please click the link below to review our third quarter report for 2017.


Cousin Irving Strikes Again

Posted on October 20, 2017

My cell phone rang, and I felt a pit in my stomach because my caller ID told me it was my cousin Irving. Against my better judgment, I answered the call.  And he was stark raving mad.

“Dude, I told you we are going to be in a nuclear war!” he screamed. Mind you, he told me awhile back a nuclear war wasn't' going to happen because Trump took care of the problem.  (Take a wild guess who he voted for last year).  I calmed him down, but then he got real excited about his money and said, “I see the smart money' has moved to bonds. Dude, how did you know that was going to happen, and what kind of analytics did you use to determine this?”  I told him I didn't use any analytics.  “That's BS,” he said.  “You must have one of those fancy Bloomberg terminals to trade ahead of the market.”  “No, Irv,” I replied, “those are for professional traders.”  “But that's what I thought you were,” Irv said.  “No, Irv,” I replied, “I'm a planner, not a trader.”  “But on our last call, you predicted this would happen.”

“Irv,” I sharply retorted, “I'm not Nostradamus.  I can't see the future.  My “research” is based on human nature, market history and a few people who won Noble Prizes for their research saying it's good to combine stocks and bonds.  When things get tough and uncertain, money often flows to bonds.  The safest bonds are issued by the US government.”   And Irv shouted, “But interest rates are low and bonds have no returns these days.”   I felt like saying, “No sh*%t, Sherlock,” but I kept my cool.  “Irv, it's obvious that rates are low, but I still view bonds as a form of insurance in case stocks go down.  Also my clients are okay with this.”

“So, have you moved all your clients' money to bonds?” Irv asked.  “Irv,” I said, “they already have had bonds mixed with stocks.  It's predetermined.  I don't move money back and forth. That would be an attempt at market timing which no one has ever been consistently successful with.”

Irv then blasted, “But the guys on CNBC said stocks are going to be hit hard!”  Then I said, “Good for them Irv.  Remember bad news sells.”  Irv blurted, “So you don't believe in their prediction?”  “Not really, Irv.  If they knew, why do they need a job?” I said.

I realized it is never productive to argue with an attorney, and I knew this conversation was not going to end well.  So I lied and told Irv I had a client meeting that I had to prepare for.  Ahh peace and quiet at last.



Minimizing the Risk of a Data Breach

Posted on October 20, 2017

We're all aghast about the Equifax breach.  After all, Equifax is one of the three pillars holding up the entire credit system of the United States (Experian and TransUnion are the other two).  It has all our financial data including our banking information; our loans for our cars and mortgages; our student loans and yes, even our mother's maiden names.

In spite of the fact that we've been hearing about breaches for the last several years (Yahoo and Target to name a few), this one is more astounding because criminals hacked into the data of 143 million Americans.  That's virtually every adult including you and me.

Although you may be unable to prevent a data breach, consider these three suggestions in minimizing the risk of a data breach:

1. Review your credit record at least once every year. It is free once a year at the website  You may want to check your credit report more, and although there is a fee to do so, it may provide you with peace of mind knowing that all is well with your credit and data.

2. To freeze or not to freeze. One thing I would advise is to think twice about freezing your credit report. Recognize the implications of doing so.  As you might know, when you freeze your credit report, it prevents anyone from accessing it–including you!  If you do choose to freeze your account, you'll receive a PIN code, and the only way you can unfreeze it is to use your PIN code. Suppose several years go by and you need to purchase a car.  But you lost your PIN code.  Also, freezing your account after you've been breached may not be so beneficial; the thieves already have your data and information about what you bought and where you live.  Besides, your mother's maiden name can't be changed.

3. Identity theft protection. This is probably the most proactive thing you can do. Good identity theft protection will keep you up to date on what's happening with your accounts and even your investments. Identity monitoring services are usually sold with recovery services.  You'll be alerted when personal information like your bank account, Social Security number or driver's license is being used in ways that generally won't show up on your credit report.

Credit breaches are the risks of living in an electronic world where money moves at the speed of light.  If your data was stolen in the Equifax breach, try to relax; you can't control it.  What's more, the likelihood of a crook accessing your data out of 143 million Americans is about the same odds of your winning the lottery.  Pretty slim.

My Cousin Irving's End of the World Investment Strategy

Posted on August 30, 2017

I got a call recently from my cousin Irving (not his real name, of course), and he was quite perturbed. I asked him what was wrong, and he wanted to know if the insurance company that managed his 401(k) is safe. I said, “What the heck are you talking about, Irv?  It's a huge company, and as far as I know, it's solid.”  Irv then asked, “If I put all my money into the guaranteed account, is it safe?”  I told him that his money is as safe as the company is, and since the company's always advertising on TV with celebrities singing catchy jingles, I think it's in good shape.  “But,” I said, “if you're that concerned, do your research and check out the company's finances.”

I asked him why he was so anxious, and he started ranting.  He believed that the United States was going to be in a nuclear war with North Korea.  He went on to say that it's actually Russia that is backing North Korea, and they will enter the war, too.  I told Irv that he was being a little reactionary, but he persisted and wanted to know where his money would be safe. “Well,” I suggested, “U.S. bonds may be a safe–but not guaranteed–place to be during an economic or political crisis.”  Irv immediately shot back, “Bonds suck, and they aren't getting any return, so I sold all my bonds several months ago.  Now I'm invested 100% in stocks.”

I tried to explain to Irv that combining stocks and bonds is a good thing because each will have its day in the sun, and historically, when stocks go down, bonds usually go up. But Irv wasn't buying any of it. He told me that he also sold his Euro-Pacific fund (which, by the way, has been doing quite well in the last year) because of a nuclear war risk.  I said, “Irv, if there's a nuclear Armageddon, your money won't be worth much anyway.”

Nonetheless, Irv persisted with his Magical Thinking argument that he could time the market, pick the best funds and get a great return with no risk. I told Irv his reasoning goes against the research of many economists who have won Nobel prizes for their studies of market behavior.

Our disagreement was rapidly devolving, but I tried one more tactic.  I reminded Irv that he was going to retire soon, and he should be more concerned with income rather than trying to get the best return. Irv yelled back, “Dude, all you do is stick to your orthodoxy–your discipline of not trying to pick the winners and not trying to outguess the markets. What kind of advisor are you, anyway? I retorted, “Irv, I think you just answered your own question.”

Like I always say, investing should be boring.  If you want excitement, try hang gliding.  If you want to gamble with your money, go to Vegas.

Two Insurances that Can Save Your Life: One is Cheap, The Other is FREE

Posted on August 18, 2017

You've finally arrived.  To get here, you worked hard, saved and made sacrifices to ensure that you would not outlive your money.  Now you expect to live a long, healthy life.  Ahhhh...Retirement.

To celebrate this milestone, you plan a once-in-a-lifetime European vacation. One where you'll experience all the great sites, art and culture in France and Germany, including their fine cuisine and wines.  Your final destination, though, promises to be the most meaningful.  You'll explore your ancestry in Romania, specifically the region of Transylvania.

So far, the trip has been dreamlike, but in an instant, your life changes. The car you're riding in flips over.  You are in the backseat, but you didn't fasten your seatbelt (like so many of us neglect to do when we're backseat passengers).  You wake up in a remote hospital to find out that your neck and back have been severed.  If you survive, you'll be paralyzed.  To make matters worse, the authorities want to arrest your brother, who was driving the car, for causing the accident and injuring you, even though no other cars were involved.

The whole scene is unimaginable, and it starts to resemble Dante's Inferno with the nine rings of hell.  Because you are in a developing country, the healthcare is barbaric compared to ours in the United States.  There are very few qualified surgeons, the aftercare is atrocious and the hospital is filthy.  What's more, when you are moved into the Intensive Care Unit after surgery, you discover it isn't air-conditioned, and Romania is in the midst of one of its worse heatwaves on record.  Your caregivers open the windows to let some air in. You slip in and out of consciousness, and death may be a preferable outcome.

Sadly, this is a true story, and it's happened to someone I know.  Some things, like accidents, are unavoidable.  However, if you're traveling overseas, you can better protect yourself by purchasing a travel health insurance policy which may cover any medical expenses you might incur away from home.  Some policies may even cover an air ambulance back to home or to a nearer, more modern country with better medical facilities.  Policies like this typically cost under $200 per person for a couple in their sixties.  That's your fist lifesaving insurance, and it's pretty darn cheap!

The other “free” insurance is your seat belt.  Buckle up even if you're riding in the in the back seat. Many of are guilty of not doing so, especially in taxis or Ubers.  It could save you or someone you love.


How My Hip Surgery Got Me Thinking about What I'm Retiring To

Posted on June 7, 2017

I had my hip replaced last month.  After spending three days in the hospital, I spent a couple weeks at home recovering.  And I was bored.  Really, you can watch only so many reruns of Gun Smoke or CNN's nonstop coverage of Drumpf and Comey before all your energy is depleted.  The hospital certainly isn't a resort, but, unlike my house, it's buzzing with activity.  Just ask anyone who's ever tried to settle into a long nap during a hospital stay.

Anyhow, I'm on my way to a full recovery.  While I was home, however, I had time to think.  That is, think about my retirement.  Not that I'm planning on retiring any time soon, but my recovery has given me time to envision what I want my retirement to look like.  And that vision doesn't include old TV westerns.

Most of us don't spend nearly enough time thinking about what we want our retirement to look like.  Instead, we tend to create this grand vision of what we think retirement will be like.  Most of us have been misled to believe that retirement is nirvana with endless days playing golf or sitting on a beach sipping drinks with umbrellas.

If you're 5 to 10 years out from retirement, now is the time to start exploring the meaning of your work.  What role is work playing in your life? If you're like most, you tend to undervalue the benefits of work in your life.  They go well beyond collecting a paycheck.  French researchers have found a link between delaying retirement and reducing the risk of Alzheimer's and other mind-robbing diseases.  For each additional year you work, you reduce your risk by 3.2 percent.  What's more, working longer also contributes to longevity.  On a recent retirement webinar, the facilitator cited an 11% (!) increase in life span for each additional year people work.  As an investment advisor, I'd say that's a pretty good return.  What it all comes down to is staying engaged.  It's the engagement with life that helps prolong life.

Let's be clear.  Just because you're leaving work, doesn't mean you're retiring.  Sure, you know what you're retiring from, but what are you retiring to?  Our parents' generation maydownload (1) have said, “When I retire, I'll never work again.”  But today's retirees are striving for more of a balance.  Most people are happiest when they find the perfect balance between purpose and pleasure.  Ironically, our pleasure (or leisure time) draws its meaning from work.  For instance, we all know someone who can't wait to hit the golf course on the weekend.  His tee times are usually earlier than he's rolling out of bed during the work week.  But golfer beware:  there's a diminishing law of returns on leisure.  And when we retire, every day will not be a Saturday.  The thing you're looking to for joy and fun can over time make you grumpy.  Do you really want golf to become your job?

In the past, my clients may have asked “Do I have enough money to retire?”  Or “Have I had enough?”  Now, clients are more apt to ask “Will I have enough to do?”  All of us, whether we're a multimillionaire or someone who will be living on little more than our social security, will have the exact same amount of time to fill each week—168 hours.  If you don't have a plan for maximizing your time, the next stage of your life may not be as fulfilling as you had envisioned.

Finding powerful reasons to get up in the morning will be as important in your retirement as funding it.  Don't confuse leisure with happiness.  People tend to lean on leisure for fulfillment.  But we really can't be happy without pleasure and purpose.  There are plenty of people who wake up seeking pleasure only to return to bed empty.  Successful retirees do things that they're curious about.  They do things that bring value to others and meaning to themselves.  They've explored the meaning of work in their lives and find a way to make it a part of their retirement.

Two Schools of Retirement Income Planning

Posted June 2, 2017

My job description is pretty straightforward: Manage your money so that it will last as long as you do. Making that happen, though, isn't as clear-cut. In my business, there are traditionally two opposing positions about creating retirement income plans. One is guaranteed income, and the other is investing your money. The first, of course, is all about safety. For clients who are risk adverse, guaranteed income might be the better way to go. For those, however, who want to maximize their wealth by seeking a higher possible return, there is the Total Return philosophy. The latter is holding a diversified portfolio* of stocks and bonds with no guarantees on what you will earn. I'm not an all or nothing person. I believe that you can live your best life now and have the quality of life you desire later by integrating both philosophies.

First, let's define what I mean by guaranteed income. Maybe I shouldn't call it “guaranteed” because nothing is guaranteed in this life. “Safety-first” may be a better description. Nevertheless, it comprises Social Security, defined benefit pensions, bond ladders, reverse mortgages and possibly income annuities. The objective of a safety-first retirement income planning strategy is to ensure that your monthly expenses–the necessities–will be met whatever the market conditions are. This safety-first strategy may sound appealing to you, but most safe investments do not keep pace with inflation. Prioritizing your goals is the main ingredient of this strategy.

In contrast to this risk-adverse strategy is holding a total return-driven portfolio comprised of the right mix of stocks, bonds and cash. We're talking about asset allocation which doesn't guarantee that you won't ever lose money but may keep the losses palatable. Here the objective is to maximize the likelihood of successfully meeting your overall lifestyle goals and attempting to outpace the ever-rising cost of living. However, designing the best asset allocation model or portfolio can be complex. You need to look at your time horizon and your tolerance to risk. Your mix of stocks and bonds should be determined by the amount of money you need to withdraw from your accounts.

I've been helping people retire for nearly 30 years and know that investing during your retirement years is trickier than saving for retirement. Retirees tend to worry that their money is at risk in the stock market, or they're not being conservative enough. Outliving their money is an even greater worry. However, as you near retirement age, you should be weighing personal concerns with other realities that you may not have considered. For instance, we're living longer. It's not unusual now for retirement to last 30, even 35 years. Also, the cost of living continues to rise. Factoring in an average historical inflation of 3%, your retirement income needs may triple over a 30-year retirement! If you're 80 years old, I doubt you want to go back to work to support your lifestyle.

Balancing all these factors can be challenging. For sure, you don't want to be financially teetering in your retirement. That's why I advocate for using both schools of thought in creating retirement plans. Guaranteed income acts as an insurance to cover your monthly expenses, and a return-driven portfolio, with solid investments, may give you a better opportunity of not only increasing the value of your portfolio but outpacing inflation.

Retirement income planning is a long-term strategy for helping you sustain your lifestyle. It's really about helping to make sure that you won't run out of money after you retire and that your money keeps pace with inflation. If you're five to ten years away from retiring, consider meeting with a fee-based financial planner to design a quality retirement plan that will lay the foundation for your retirement income. You want to be ready for the ordinary costs and the uncertainties in the next stage of your life.

* While there is no assurance that a diversified portfolio will produce better returns than an undiversified portfolio, and it does not assure against market loss, a diversified portfolio may reduce a portfolio's volatility and potential loss. In reference to general account obligations and guarantees, such as is present with some annuities, the ability for the insurance company to meet these obligations to policyholders are subject to sufficient capital, liquidity, cash flow and other resources of the insurance company. A bond ladder, depending on the types and amount of securities within the ladder, may not ensure adequate diversification of your investment portfolio. This potential lack of diversification may result in heightened volatility of the value of your portfolio.

Retiring On Purpose

Posted on April 11, 2017

I ran into a friend recently who's a hairdresser. He's been in the business now for 50 years and has seen it all from the bouffant to the bob. After owning his own salon for as many years, he's looking to sell it—on one condition: He stays as an employee. Despite being nearly 75, he has no plans to retire. Like he says, “What would I do every day?”

His story's not that unusual. According to a June 2016 Pew Research Center analysis of employment data from the federal Bureau of Labor Statistics, more older Americans – those ages 65 and older – are working than at any time since the turn of the century, and today's older workers are spending more time on the job than did their peers in previous years.

This is a new era of retirement revolution. Pensions and corporate stewardship have gone the way of the dinosaur. For some, not working isn't an option; however, many are choosing to stay in the workforce—and thriving. As someone who's been helping people retire for the past 25 years, I've witnessed the change in attitudes first-hand about retirement. Today I'd be negligent if I planned a client's retirement assuming that he or she will be leaving the workforce at age 65. As a financial planner, I must get a sense of my client's true age. By that, I mean his biological age, not his chronological age. For instance, I may have a client who's 62, but he feels more like 50. He'll have no intention of retiring in a few years. Like my hairdresser friend, he refuses to be defined by his age.

For me, the planning has evolved from retiring to retiring on purpose. We're living longer, and we want to stay relevant. If you're 5 to 10 years out from retiring, finding a reason to get up in the morning will be as important as the financial planning. Think about it: What if every day was a Saturday? Sure, the first several might seem blissful with days spent on the golf course or shopping at Target, but after a while, you'd probably get bored. Carlos Santana, the famous guitarist said, “The only thing that has ever made me feel old is those few times where I allow myself to be predictable. Routine is death.”

Besides keeping you alive (That's true. Oregon State University found that people who continue to work past 65 have an 11% lower chance of death from all causes), the benefits of working into an older age are numerous. Of course, there are the financial benefits. The more years you work, the less money you'll need take out of your retirement accounts. And you can delay taking your Social Security. For each year you delay between the ages of 62 and 70, your benefits grow by 8% annually.

The mental benefits are just as important. Working longer keeps your mind sharp. Like the saying goes, “Use it or lose it.” It also keeps you connected to other people, decreasing the chance of isolation. Moreover, and perhaps most important, working can give you a purpose, a sense of identity, a reason for getting up in the morning.

If you still need a little inspiration or motivation to retire on purpose, just look to some of these stars in their 70s: Helen Mirren, Robert DeNiro, Betty White, Morgan Freeman, Dick Van Dyke, Al Pacino, Mick Jagger. Like Mick said, “How Can I Stop?”

Did You Miss the "Trump Bump?"

Posted on March 13, 2017

Okay, admit it. Whether you're an ardent supporter or never-Trumper, weren't you a little nervous Donald Trumps's victory would cause the markets to crash? My clients on both sides of the spectrum were anxious. I even have a friend, who's an avid Trump supporter, call me and ask if it was too risky to get back into the market.

As we all know, markets hate uncertainty, and on election night, futures dropped like a rock. It was scary, very scary. I happened to be at a mutual fund seminar on election night, and the speaker, who's a fund manager, didn't sleep a wink the night before. Even professionals were afraid! But the next morning, something short of amazing happened: The market rebounded and continued to do so through the end of the year. The Dow Jones Industrial Average shot up 1,500 points. Since then, however, the excitement has dissipated, and the markets have been flat.

The question going forward is, “What will happen to the markets and the economy now that Donald Trump has been inaugurated as our 45th president?” No one really knows, keeping in mind a caveat that presidents have a limited impact on the economy. One main reason is our Constitution grants the power of fiscal responsibility to Congress, not the president. The Federal Reserve System, a quasi-government entity, may have more power over the economy than either Congress or the president. The Fed is responsible for many key aspects of the economy such as monetary policy, economic stability and supervising and regulating banks. And then there is the economy itself. The U.S. Gross Domestic Product (GDP) is around $18 trillion which covers a multitude of financial sectors and is often driven by consumer confidence; that is, people's optimism in buying things. (Seventy percent of our economy's activity is consumer spending). As you can see, managing the economy through government entities is disparate and complex, and a successful economy isn't exclusively dependent on one branch of our government.

The stock market, a leading economic indicator, reflects and digests all this information and adjusts accordingly. For instance, an up market usually means good times are ahead, and a down market often precedes a recession. It is a separate entity from the political landscape, and the general trend is upwards with, of course, some down and flat periods, too. The chart below tracks the growth of a dollar invested in the S&P 500 from January 1926 through June 2016.



 You can see that the general trend has been up no matter who was president at the time.

Like a baseball manager who often gets the blame or credit for his team's wins and losses, a president gets the blame or credit for the economy and stock market. But betting your hard-earned savings on how the market will react to Trump occupying the White House is fool's gold. Back in 2009, many people got out of the stock market because they thought President Obama was going to ruin the economy, and the stock market would never recover. What more do I need to say?

Retirement is an Artificial Finish Line

Posted on February 24, 2017


I received the following alert on my phone from the New York Times this past weekend: “Today's women are much more likely to work into their 60s and 70s often full-time. And they're doing it because they enjoy it.”

This may not mean much to you, but as a financial advisor who's been helping people retire throughout most of my career, I appreciated the notice. It reaffirmed what I already know: Retirement is an artificial finish line.

Women and men are discovering that retirement is not a natural life transition. It's an idea that's been inflicted upon us by corporations and society. We've been indoctrinated into thinking that when you turn 65, it's time to punch out and live a life of leisure. This may have worked for the previous generation, but that mindset is no longer sustainable. Pensions and institutional stewardship have gone the way of the dinosaur, and today more than ever we have to assume control over our own retirement planning.

Retiring is about more than just having enough money, though. It's a major life transition that many people struggle with, and the struggle often has more to do with a static lifestyle than not receiving a regular paycheck.

Think about it: No one teaches us how to retire. I really don't know of any retirement training classes being offered. On the other hand, retirement planning is a service that's plentiful. But that's more about funding your retirement; it's not about creating a vision of what you want the rest of your life to look like. In fact, finding powerful reasons to get up in the morning during retirement will be as important as the financial planning.

This past week, Aretha Franklin announced that she's retiring. In a statement she said, “I'm not going to go anywhere and just sit down and do nothing. That wouldn't be good, either.” Well, if it's not good for Aretha, it's not good for you, either. What Aretha is really aiming for is a balance. A balance between vocation and vacation. That's what we should all aim for to enjoy a successful retirement. After all, I don't think any of us want to withdraw completely from the track of relevance.

To achieve a healthy balance between vocation and vacation requires planning. Did you know we're more apt to spend time planning a two-week vacation than we are to spend time planning a possible 30-year retirement? Unlike a vacation, retirement is not the ultimate destination anymore. Stop buying into the destination myth because your life isn't going to stop moving the day you retire. I'm reminded of that commercial in which everyone is assigned their own personal retirement number. The people in the commercial are so happy to know how much money they'll need to retire that they write it on a large cardboard sign, attach a stick to it and carry it around with them all day long. Well, if my client's life means nothing more than a number, then the planning will be about the destination. But let's not reduce our lives to a story of numbers. Our lives are about more than that.

For most of us, working will no longer be an “all or nothing proposition.” It will be more of a “how much” proposition. In planning for a successful retirement, one with a balance between vocation and vacation, we need to start asking ourselves questions beyond money. How will you invest in yourself and your time?

So, You Want to be a Real Estate Tycoon

Posted January 12, 2017

A client of mine recently inherited some money. She's happy with her investments but has been itching to buy a real estate investment property. An old friend of hers, who is a real estate agent, found her a newer property close to a prestigious medical school. Because medical residents need a place to live for several years, it almost seemed like a no-brainer; however, I became skeptical when the real estate agent told my client that she would realize a 13% return on her investment (ROI).

Besides the outlandish ROI quoted by her agent, my other concerns were that my client had never owned any property, not even her own home, and the unit she was considering purchasing was in her hometown, several thousand miles away from where she lives now. I have to admit, though, that the property was very appealing and sounded like a good investment to me—until I saw the numbers.

By “the numbers,” I'm referring to a spreadsheet created by her accountant that looked at this piece of property as a business plan rather than the beautiful home that it is. And boy, did the numbers tell a different story! Her accountant considered all the expenses such as loan service, property taxes and management fees and then compared it to the potential income. After all was said and done, her ROI was not 13%, but 2%. What's more, the business plan had projected only $250 each year for home repairs and upkeep. As any homeowner knows, maintaining a home is very expensive. I had to shell out $700 right before the holidays for just minor repairs on my own home.

My client also consulted another friend who is a very successful real estate developer. He told her, “You live too far away, and the numbers are telling you not to buy this property. Never fall in love with anything that can't love you back.” (I love that last piece of advice)! He also told her to keep looking for property close to where she lives and be patient. “Wait for a good deal because you make money on property when you purchase it for the right price.”

But numbers don't always tell the whole story of people's dreams, desires or other advisors, for that matter. In the end, my client consulted with a very successful and astute businessman–her father. He felt that the property had better than average appreciation potential because in that particular metropolitan area, people are migrating back from the suburbs to the city. Essentially, they are sick of spending their valuable time in traffic. Her father also pointed out that the property is in proximity to the headquarters of several very large corporate headquarters, and she may get $500- 1,000 more each month in rent. But, ultimately, what it came down to is my client said she needed something new in her life and starting a new business would offer that.

Regardless of the outcome, this story is a good insight to the financial planning process. My clients and I are partners; I'm in it with them for the long haul. I give them what I believe is the best advice for where they are in their life planning and where they want to be. Of course, they are not required to follow my advice, and I don't take it personally if they don't. The goal is to have them succeed financially and to help them do it on their own terms.