street signsWith markets entering a period of significant volatility this past week, CNBC was curious what type of discussions I’m having with clients.  I told them, in short, that I’m talking about ways that we, as investors, can benefit from market losses.

Date: October 17, 2014
Appearance: Gaining Through Market Losses – CNBC
Outlet: Street Signs on CNBC
Format: Television

3 Ways To Gain From Market Losses

Originally in ForbesEven if you get your daily news from one of those celebrity tabloid shows, you have probably still heard that the market has been more than a little crazy in recent weeks.

Indeed, the typically overstated “surge” and “plunge” headlines have been less hyperbolic of late, as the Dow Jones Industrial Average burps out daily gains and losses in the hundreds of points. But over the past several trading days, the results have been all red, and since Sept. 18, the market has taken back more than 6% of what it’s given so far this year.

Is this volatility the precursor to another market gutting? Or perhaps it’s just a momentary ebb in advance of a continued upward flow?

The answer is yes.

The market is in the business of rising and falling, and of making fools of those who attempt to predict which it will do next. But be sure that we will feel both the pain of another big drop—perhaps sooner rather than later—and the euphoria of another unprecedented gain.

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Whether this very recent pullback happens to be the beginning or the end of something, most investors have already lost enough to benefit from it.

Benefit? Yes, you did read that correctly. Here are three ways to gain from market losses:

3 Reasons to Avoid ETFs: Advisor

Originally published CNBCExchange-traded funds—commonly referred to as ETFs—are all the rage. While there are several excellent reasons to use an ETF over the seemingly archaic traditional mutual fund, they are not a universally preferable solution.

First, to be fair, let’s review a few reasons why ETFs can be a better solution than mutual funds.

ETFs generally have lower associated costs than comparable mutual funds. This isn’t news, I know, but since costs are one of the few variables over which we have control as investors, I don’t mind flogging this deceased ungulate.

ETFs

The expense ratio is the most obvious cost reduction. For example, the legendarily inexpensive Vanguard 500 Index Fund has an expense ratio of 0.17 percent, while Vanguard’s S&P 500 ETF has a barely noticeable expense ratio of 0.05 percent. This makes ETFs an ideal choice for investors making a sizable, broadly-based, one-and-done purchase.

What Is Your Fool’s Gold?

Originally in ForbesMy son gave me a present. To be fair, I don’t think it was until after he realized the gift was monetarily worthless, but I appreciated it nonetheless. It’s a big hunk of the mineral pyrite, also known as fool’s gold. My son’s gift has value to me far beyond its function as an excellent paperweight. And, ironically, its worth to me is continually rising. It’s become a constant reminder to orient my life away from that which only appears valuable and towards that which truly is.

We all have our own versions of fool’s gold. It’s generally the stuff that, while largely worthless, receives an undue amount of our time, attention and investment. What’s yours?

Fools Gold

Here are three ways to spot it:

1)   Fool’s gold consumes time you’ve dedicated to other things. Not more than one paragraph into writing this post (on this topic, no less!) I found myself entering this Google search—“what is the best banjo ukulele”—and then navigating to this page, then this one.

KiplingerThere are so many great reporters out there, but only a handful who are truly experts in their subject matter–Kim Lankford at Kiplinger’s Personal Finance is one of those, and her area of expertise is insurance.  I recently talked to Kim about how a household could begin to determine how much life insurance they should have.

Read the article by clicking HERE.

Appearance: “How much life insurance to buy?” – Kiplinger’s Personal Finance
Outlet: Kiplinger's Personal Finance
Format: Magazine

The Real Danger In Overstating Returns (Like PIMCO)

Originally in ForbesAs if PIMCO needed any more bad press, The Wall Street Journal reported this week that the Securities and Exchange Commission is investigating whether the bond giant “artificially boosted the returns of a popular fund aimed at small investors.” While we should all be attentive to the results of this probe—because I’d bet my lunch money that its implications will be felt beyond just PIMCO—there is an even deeper issue to consider. And this issue has a more direct impact on our individual portfolios and money management choices. The real danger in overstating returns, and indeed the root of most financial missteps, is self-deception.

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“How’s your portfolio?”

Who among us wants to feel like a failure? We’ll generally avoid experiencing this sensation at all costs. So, absent conspicuous success, we permit ourselves to believe that we’ve at least not failed, frequently through self-deception.

Lessons In ‘The Happiness Of Pursuit’ From Chris Guillebeau

Originally in Forbes“People have always been captivated by quests,” writes author Chris Guillebeau in his brand new book, The Happiness of Pursuit. Chris, for one, is most certainly one of those people. His book celebrates the completion of a personal quest to visit all 193 countries in the world before his 35th birthday.

PursuitAre the rest of us captivated by quests as well? Absolutely. But is the whole concept of questing, journeying and generally living life as an adventure something anybody can pursue? Or are we merely relegated to living vicariously through Chis and his band of fellow travelers? After all, the rest of us have obligations, right? Nine-to-five drudgery is a responsibility. To some, it’s even an honor. We’ve got spouses, kids, mortgages, car payments and PTA meetings. We can’t be gallivanting all over creation in search of enlightenment.

Or can we?

Chris has some pretty strong feelings on that—so strong that the stated lesson of the first chapter in his book is: “Adventure is for everyone.”

Perhaps it depends on how we define a quest? Here are Chris’ criteria:

  • “A quest has a clear goals and a specific end point.”
  • “A quest presents a clear challenge.”
  • “A quest requires sacrifice of some kind.”
  • “A quest is often driven by a calling or sense of mission.”
  • “A quest requires a series of small steps and incremental progress toward the goal.”

By these measures, running a marathon would assuredly be considered a quest for most. How much more, then, is John Wallace’s feat of running 250 of them—in a single year?

Wallace is one of many questers featured in The Happiness of Pursuit, but most of the others’ exploits are far less headline worthy. Chris endeavors to bring the notion of questing closer to home by featuring a largely “ordinary” cast of characters, and in so doing, he succeeds.

Boomer Esiason’s Advice For Millennials: Plan For Tomorrow, Live For Today

Originally in ForbesBoomer Esiason is busy—I mean, really busy. “Starting next Tuesday, all the way until after the Super Bowl in 2015, I think I’ve got about four days off,” he told me.

Why, then, was he anxious to talk about financial planning and life insurance?

It’s because he has a message for today’s youth: “Protect your future and make sure that whenever adversity strikes, you are prepared for it.” Prepared, among other things, with the appropriate level of life insurance. 

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But how did one of the National Football League’s great quarterbacks and commentators become an advocate for life insurance and the spokesperson for Life Happens, a nonprofit dedicated to increasing awareness of the importance of planning with life insurance? 

Back to School — Back to Financial Fundamentals for 3 Generations

Originally in ForbesAs kids head back to school, adults spanning several generations set their sites on getting their financial house back in order.  What are the most important financial planning considerations in three major demographics—Millennials, Generation X and Empty Nesters?

Millennials:  First things first – Before making any big financial commitments, like buying a house, figure out what you want life to look like.

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  • Are you in a relationship and looking to “settle down,” or do you highly value freedom and flexibility?  If the latter, you shouldn’t be buying a house or committing to a job that is geographically tethered.
  • If you’re in your twenties, the primary factor that will influence your financial success is how well you establish yourself in a career.  Invest in yourself, and that will likely help you invest more money in the future.
  • Save as much as you can in tax-qualified retirement accounts at this phase of life, because once you get settled down and have kids, your expenses will rise dramatically.
  • Don’t default to 100% equity portfolios just because you’re young.  After getting burned by the market crash of 2008, many Millennials got scared away and didn’t benefit from the subsequent market rise.  Your portfolio should likely be predominantly stocks at this age, but consider some fixed income exposure to keep from losing your shirt (and abandoning your strategy) in a downturn.

As the kids head back to school, many of us are getting back to work on our personal financial plan.  I talked with Susie Gharib about the most important considerations for Millennials, Gens X & Y and Empty Nesters on the Nightly Business Report on PBS (produced by CNBC):

Date: August 26, 2014
Appearance: Back to School, Back to Work (on Your Finances)
Outlet: The Nightly Business Report on PBS
Format: Television