Why You Should Shift From Profits To Protection

SmartStops Comment: We couldn’t agree more with this author.

From Seeking Alpha, Contrarian Profits
The bulls are back out in force, as the hiccups from a few weeks ago seem a distant memory. Indexes have resumed breaking records on a regular basis, and all seems right with the world.

Great – trust me, few things make me happier than a happy market. I like making money as much as the next guy.

But I’m also a little more suspicious than the next guy. And right now, that suspicion is warranted.

… Today, the average price-to-earnings ratio of an S&P 500 stock is a hair below 19. The long-term average is right around 15. We’re solidly sitting in overbought territory. Stocks are expensive right now.

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More at Seeking Alpha: Why You Should Shift From Profits To Protection

Blackstone’s James Says Debt, Equity Markets Overvalued

“We’re between the bottom of the seventh and the top of the eighth,” Marks said in a Bloomberg Television interview last week. “It’s time for the seventh-inning stretch. You have to have plenty of defense on the field today.”

SmartStops Comment:  Defense is the best Offense!

View complete article at: http://www.bloomberg.com/news/2014-09-09/blackstone-s-james-says-debt-equity-markets-overvalued.html?cmpid=yhoo

Is Your Advisor Adequately Explaining All Your Risk?

  • Market Risk?
  • Interest Rate Risk?
  • Liquidity Risk?
  • Volatility Risk?
  • Credit Risk?

A new article by Paula Vasan titled “Talking About Risk? Advisors, Industry Must Do Better“, takes the industry to task claiming investment risks are not well understood by advisors and not being well explained to clients.

Be aware when your risk is on the rise with SmartStops.net Equity Risk Alerts.

Is Best Buy really a “sell?”

Best Buy has had to deal with competition from online stores.

Best Buy has had to deal with competition from online stores.

The past year has been a dramatic time for electronics retailer Best Buy (BBY). After nearly tripling its stock price, peaking at $45 a share in November 2013, the company's stock plummeted almost 30 percent after releasing its fourth quarter earnings report. The store had weak sales during what should have been a strong holiday season and fell far short of its goals. 

Over the past decade, Best Buy and similar retailers have faced difficulties competing with websites like Amazon.com (AMZN). The theory is that consumers use brick-and-mortar stores like showrooms. After finding the products they like, customers then take their business online. Read More…

Will Bernanke’s exit postpone the taper?

Bernanke will be leading his last Fed meeting this week.

Bernanke will be leading his last Fed meeting this week.

This week, Federal Reserve Chairman Ben Bernanke will be overseeing his last Federal Open Market Committee (FOMC) meeting. Many financial analysts and economic experts are speculating whether the transition from Bernanke to incoming chair Janet Yellen will cause members of the Federal Reserve Board to reconsider tapering its bond-buying program. 

The Fed began the taper in December by reducing its purchases by $10 billion. The central bank is expected to make a similar decision this month – spending $35 billion on treasury bonds and $30 billion on mortgage-backed securities. At the Fed's last meeting, Bernanke indicated that the Fed would continue to move at a similar pace in 2014 as it did in late 2013. 

"I think the Fed is desperate to extract itself from quantitative easing, and it will continue to scale back the program and end it this year," said Bernard Baumohl, chief global economist of the Economic Outlook Group, to MarketWatch. 

He speculated that it would take a major event to push the Federal Reserve off course. This month has already experienced poor jobs numbers and a stock market slump and that has not seemed to phase Bernanke and his colleagues, Baumohl added. 

Under the current taper plan, the bond-buying program will be finished by the end of 2014. One finance expert, Jennifer Vail of U.S. Bank Wealth Management, told the source that she expected purchases to be done by September because the bank is ready to "get out."

The end of the bond-buying program could have an effect on your investments. By using SmartStops' investment analysis and portfolio management software, you can keep your risk to a minimum. 

Should you participate in your company’s 401(k)?

Should you join your new employer's 401(k) plan?

Should you join your new employer’s 401(k) plan?

Changing jobs often comes with new benefits, pay structure and a different 401(k) plan. Whether or not to join your new company's retirement plan is an important decision that you may have to make several times over the course of your working life. 

Here are a few factors you should consider when judging a new 401(k) plan: 

Fees – Some employer-sponsored retirement plans charge extra fees to cover administrative expenses. This may not be an issue for employees at larger corporations, as they are able to negotiate lower fees. Smaller firms, however, often do not have this advantage. Retirement plan providers are required by law to disclose information regarding additional costs, so be sure to read your plan's summary for more details. 

Investment options – Does your employer offer a diverse and solid group of stocks in its plan? Many financial advisors recommend that you consider the following when reviewing your plan's investment options: 

  • Expense ratio – If the plan costs more to maintain than the assets in it are worth, you may want to pass on this 401(k). 
  • Manager start date – 401(k)s often contain mutual funds. You should make sure that they have managers with a tenure of at least five years. 
  • Returns history – Look at your retirement plan's five and 10-year return ranking compared with similar funds in its category. The plan doesn't have to be at the top of the list, but it should be in the top half. 

Match contribution – If your employer matches any part of your contribution, you will want to confirm the stipulations of this program with your benefits manager. Some companies don't begin to match until after the employee has been working there for a set period of time – usually between six months and one year. There may also be a certain percentange of your income that you will need to deduct to qualify for your company's retirement plan. 

Roth option - Consider taking a Roth 401(k) option if your company offers it. You will pay taxes on contributions, but you will be able to make tax-free withdrawals. This may be a good idea if you anticipate that your future tax rate will be higher than your current one. As an alternative, you could put your money in a Roth IRA if your company doesn't offer the similar 401(k) program. 

Even if your employer's 401(k) is less than ideal, it may be the best option for you especially if you are a high-income earner. You should try to take advantage of every tax-deferred savings plan that you can. 

Wise investing and preparation for retirement involves being an active manager of your assets. With SmartStops' investment analysis software, you can keep your risk to a manageable level. Explore our website to learn more. 

Is there any truth to the ‘Super Bowl Indicator?’

Should you follow the Super Bowl Indicator?

Should you follow the Super Bowl Indicator?

On Super Bowl Sunday, an unlikely group of people may be the most vocal fans at your local bar: Wall Street traders. At this time every year, news pundits and financial analysts often bring up a stock market prediction scheme known as the Super Bowl Indicator?

The basic theory is that the stock market will post a gain for the year if a team from the National Football Conference (NFC) beats its American Football Conference (AFC) opponent. This year, market watchers will be rooting for the Seattle Seahawks over the Denver Broncos. 

So is there any truth to the Super Bowl Indicator? Since the Super Bowl's inception in 1967, the indicator has been correct 37 out of the past 47 matches – a 78.7 percent success rate. In that sense, yes, there is a correlation between the Super Bowl outcome and market performance. But any student of basic statistics can tell your that correlation does not necessarily indicate causation. 

In a 2013 MarketWatch piece, analyst Mark Hulbert raised skepticism on the theory saying: 

"Not only must an indicator have a good track record in order to make it worth following, but there also should be a sound theoretical explanation for why the pattern on which it rests should exist in the first place. And I am aware of no such explanation in the case of the Super Bowl Indicator."

He also noted that during the years that the indicator predicted incorrectly, it was often very wrong. The most infamous example occurred in 2008 when the NFC's New York Giants defeated the New England Patriots. That year, the stock market fell nearly 39 percent. 

Instead of concerning themselves with fad indicators, wise investors should consider actively managing their assets with portfolio risk management software.


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