In the News

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Remember Pearl Harbor!

Pearl Harbor will be forever engraved in our memory due to the severe loss of life that occurred on this “Day of Infamy” and the subsequent four-year war in the Pacific.

Even though we had radar, the Pearl Harbor operators were so poorly trained that Battleship Row was easy prey for Japanese dive-bombers. It was sheer luck that our aircraft carriers were at sea on training maneuvers. […]

By |December 7th, 2013|Categories: In the News|Tags: |0 Comments

Cyber Monday will Eclipse Black Friday

The Philadelphia police department created the term “Black Friday” in 1961 to describe the shopping induced chaos that occurred every Friday after Thanksgiving. Officers worked over-time directing traffic, helping accident victims, and making increased arrests. Merchants wanted a more positive term for the day, but they were too late, the name stuck.

Cyber Monday is a marketing term for the first Monday after Thanksgiving. Marketing companies created the term in 2005 to create increased visibility for online shopping. A few short years later, it is an established form of retail marketing. More than 129 million Americans will take advantage of the online deals on Cyber Monday in 2014. And, they will spend more money on Monday (average online spending is $194.46) than the previous four days of the Thanksgiving weekend (average online spending is $172.42). […]

By |November 25th, 2013|Categories: In the News|Tags: , , |0 Comments

New Paladin Service Exposes Financial Advisors Who Use Fake Credentials!

Paladin Research & Registry announced the launch of a new service that provides a one page research report and a peer group quality rating for […]

September’s Excerpts – The Prudent Speculator

“Individuals who cannot master their emotions are ill-suited to profit from the investment process.”     —Benjamin Graham

Nothing like suffering through the worst month since May 2012 to quickly swing the emotional fear/greed pen­dulum back into the worry zone. Yes, just as investors were beginning to tiptoe back into U.S. stocks, with actively managed domestic equity mutual funds actually enjoying a few weeks of net inflows in July, tempo­rarily halting a six-year exodus, the Dow Jones Industrials shed 4.1% on a total re­turn basis, the S&P 500 dropped 2.9% and our benchmark Russell 3000 dipped 2.8% during August. Though it isn’t a grand consolation, our four newsletter portfolios each managed to lose less than the index­es during the month.

Of course, the market averages are still up 15% to 17% this year, after posting returns in 2012 that were well above the historical norm, yet many folks seem convinced that stocks are no longer the place to be. After all, for the week ended Aug. 22, the American Association of Individual Investors Bull/Bear Sentiment Survey found that among mom-and-pop investors, optimists numbered only 29.0% and pessimists totaled 42.9%, compared to historical av­erages of 39.0% for the former and 30.5% for the latter. And the latest Investors Intelligence reading on invest­ment advisor/newsletter sentiment showed that the per­centage of those who are expecting a correction jumped 10 points to 38.1%, near several peaks seen over the past four years that have preceded sizable market advances.

Keeping in mind Warren Buffett’s admonishment to be greedy when others are fearful and fearful when others are greedy, we are quite pleased that sentiment gauges are showing elevated levels of concern. The latest num­bers on Exchange Traded Fund (ETF) flows for the month of August also warmed our contrarian hearts. The Wall Street Journal, citing data from Blackrock, reported that with just one day left in the month, $16.1 billion flowed out of U.S. ETFs in August, the worst domestic showing since January 2010. Certainly, some of those outflows were re­lated to fixed income ETFs, but the lion’s share (a net $13 billion) was withdrawn from the widely held SPDR S&P 500 (SPY) equity ETF. […]

By |September 5th, 2013|Categories: In the News|Tags: , |0 Comments

Mediocre Performance, Outstanding Marketing, and Concealed Investment Risk

Here is an interesting, if not telling, statistic. According to E.S. Browning, as reported in the 6 October 2012 edition of the Wall Street Journal, “Even as stock indexes have doubled in value since the market low in March 2009, investors have yanked a net $138 billion from mutual funds and exchange traded funds that invest in US stocks.” Mr. Browning further states, “[This] marks the first time since 1981 that investors have pulled money from U.S. stock funds for more than a year at a time.” While I am certain there are several reasons contributing to this behavior, I suspect crumbling confidence in the investment management industry is one. To be honest, it’s hard not to feel increasingly cynical toward the industry in which we operate. The data below paints a discouraging picture:

Fewer than 20% of mutual funds outperform their comparable index over time
A study on mutual funds using a statistical method called “False Discovery Rate” found that the percentage of active managers outperforming a comparable index, excluding luck, was only 14.4% in 1990 and has declined to 0.6% by 2006
An estimated one in five hedge funds blows up each year

Here are a few observations for your consideration:

Observation 1: The “investment edge” most firms claim is marketing hype.

It seems every investment fund claims the same investment virtues: deep and independent research, a large analyst team of seasoned professionals with deep experience supported by a bevy of ivy-league graduates, and superior valuation methodologies. If these assertions were true, then why do they not correlate to superior returns? The unvarnished truth is the vast majority of investment firms have mediocre performance but outstanding marketing expertise. […]

How to Pay Off Significant Credit Card Debt

I recently incurred a significant amount of credit card debt. How should I begin to pay it off?

The best way to pay off credit card debt is with a single lump-sum payment, which would allow you to get back on solid financial ground quickly, without having to pay additional interest. Sources of funds that can be used for a lump-sum payoff include any substantial windfall, such as an inheritance or employment bonus. However, most individuals find themselves getting into credit card debt due to a lack of funds in the first place, so this may not be an option for everyone.

If you have multiple credit cards that carry outstanding balances, the next best strategy is to prioritize your repayment and systematically pay off your credit card debt. Start by making a list of your credit cards, and prioritizing them according to their interest rates. Send the largest payment possible to the card with the highest interest rate. Be sure to continue making payments on your other cards until the card with the highest interest rate is paid off. You can then focus your repayment efforts on the card with the next highest interest rate, and so on, until they’re all paid off.

Another option is to transfer your balances to a card that carries a lower interest rate. Balance transfers can allow you to reduce interest fees and pay more against your existing balance. One of the dangers with this method lies in the fact that an excessive amount of balance transfers can end up having a negative impact on your credit score. […]

By |August 20th, 2013|Categories: In the News|Tags: , |0 Comments