Bond funds and bonds, could be real trouble! Before you know it, they'll boil and bubble!
The massive rush into the bond market this year could be the top of a bubble that will sink many investors who believe (wrongly) that bonds are always a safe bet when allocating your retirefunds.
On the contrary, bonds can bubble like any other investment, and that bubble is starting to become so obvious, a bust may be lurking as early as this fall.
The bond market is beginning to send out warning signs and you ignore those signs at your financial peril. Last weeks stock rally, as short as it was, came at the expense of the bond market, and in your case (retail investors) bond funds.
Anyone reading these posts knows full well my aversion (distaste, distrust and dissatisfaction) of the managed mutual fund industry, and that, my friends, surely includes managed bond funds. (see: Average investors getting screwed)
Those fund managers will make their outrageous fees until the exodous (which they will lead) when this market pops, and it will pop. You my friends, will be left holding the bag of worthless paper once more, unless of course, you get out now while the getting is good.
The first sign of any interest rate hikes will tip this baby elephant over the cliff.
Don't wait for that, because the big dogs will see it coming long before you do and they run a lot faster than you can.
You can thank me later this year. Meanwhile, take stock of some of the undervalued stocks starting to come alive as a fall rally becomes more and more plausable. If you don't believe the rally has legs, then you should consider these solid, dividend paying stocks for your retirefund.
George Carlin said it best " It's a big club and you're not in it".
They feasted for years on your mortgage, and now the gluttons of wall street are morphing into vultures as they ready themselves and high end investors, to feast on your life insurance policy. Vultures or Vampires? It's hard to say, one will eat your flesh and one will suck your blood.
Sometimes I have to wonder if Wall Street and Bay Street serve any good purpose at all, except to siphon off value from the blood, sweat and tears of average workers and small businesses.
On Sept 5th, Jenny Anderson of the New York Times laid out in an article how Wall Street investment bankers are getting "back to business as usual" as they have, after searching high and low for another carcass to munch on, finally found one big enough to possibly fill their insatiable appetites for at least another few years, or until the next fiasco breaks.
I guess $38 Billion per day, every day, during the last quarter, just wasn't enough for Goldman Sachs to live on. After all, they are paying billions to their executives in the form of bonuses, so I guess they have bills to pay just like the rest of us. It is definitely a problem of perception I believe. Their perception is a return to "the good old days", while our perception is a return to uncertainty, bankruptcy, lost homes, lost jobs and lost dreams.
After selling billions in Credit default swaps, $2 Trillion in Exotic Derivatives no one could understand, and Mortgages sold to people who couldn't afford them, then packaged up by investment bankers who sold them to unwary investors in pieces and insured by foolish insurance companies like AIG, you would think that another scheme of the same sort, with potentially huge numbers (The market tops out over $26 Trillion so even a small piece of it will be enormous), would be out of the question at this point in history. However, if you are a vulture, you don't really care who's carcass you feed on, only that you feed!
People who own life insurance policies depend on them for much of their retirement income. It is precisely those who are targeted. The tastiest morsels are those middle class families with family members who are ill, or financially bankrupt who decide to "sell" their life insurance policy to make ends meet while they try to pay exorbitant fees for their health care, as their insurers abandon them.
Apparently, the ones who die the soonest, are the best food for these vultures!
You may have even noticed some of their offspring, invading those town hall meetings about health care and squawking about socialist medicine being their ruination.
Ruination indeed. Ruination of the middle class, instigated by the vultures of Wall Street.
(Contributed) This article by R.H. (Rick) Coyle is from his recent newsletter to his clients. Rick is an old friend and fellow Karate enthusiast who I trained with for many years. He is also a 30 year veteran financial planner, investment advisor and coach with Dundee Private Investors Inc.
Article:
I was recently looking at some pictures of a white water rafting trip I took with my wife ten years ago. As I was remembering the excitement and fear I started to think it had a lot in common with financial Planning.
First there is a starting point and a destination you are heading towards, the journey contains a lot of emotions, it can be hard work, and a lot of fun.
We had three choices; the Dead River (pretty calm), the Kennebec (has a little excitement), and the Penobscot River which had several Class 5 rapids to navigate. Which one you choose reflects your appetite for risk and excitement and the speed in which you make it to your destination.
We chose the Penobscot River which had the most excitement of course. Now you can choose to take the trip on your own or with a guide. We chose the guide because we did not have the knowledge or the skill to make this trip on our own. Our guide was experienced, looked fit, and gave us a brief talk on what to expect before we headed down the river. His experience and calmness inspired confidence in us and we were comfortable following his directions. He kept his instructions and strategy for getting down the river quite simple (kind of like a good financial planner).
Now there is more then one way to get down the river. You could swim it, which our guide did occasionally on his day off, you could canoe it, kayak it, or raft it as a group. We chose the raft (safety in numbers/diversification).
We started off in calm water for about an hour and then navigated a couple of class 2 rapids which were pretty easy and raised our excitement levels. The higher the number the more intense the rapids are. Class 6 is the highest. You could feel your pulse staring to accelerate and your senses heighten as we headed into a Class 4 Rapid known as guide killer hole. We were paddling hard taking direction from our guide and all of a sudden I was in the water wondering what happened. My life jacket (kind of like an Insurance policy ) kept me a float as I sucked in a couple of mouthfuls of water and decided to pick my feet up and enjoy the ride, knowing that eventually I would reach calmer waters (kind of like the Stock Market ).
Eventually the raft caught up to me and they pulled me on board to find out that my wife had also gone into the water as well. She thought it was so romantic that I jumped in to save her. With both of us back in the boat we headed to land to enjoy a steak barbecue and look at the Class 5 rapids we would be heading into on a full stomach right after lunch.
Knowing what to expect at this point helped, however as I looked at the thundering rapids I did briefly entertain the thought of bailing and not going through with the rest of our plan for making it to the end of the river (goal). The final stretch of our journey to our destination was intense and exciting and we all made it while staying in the raft. At the end we turned the raft around and paddled back into the rapids and surfed the white water. What a blast!
As we approached our exit point and could see the opening in the trees and our bus to take us back to the cabin it was a feeling of relief and self satisfaction that we faced our fears and accomplished our goal.
There were a number of things that made it a successful trip. First you had to actually start it. As Nike says "Just do it". Second you had to overcome some fears and third you had to stick to the plan despite some obstacles and set backs. Finally in deciding to go for it you made yourself as aware of the risks as possible and then managed them. We did this by first checking out the company we used, selecting a confidence inspiring guide, and wearing a life jacket and a helmet. After doing all of this we were able to focus on enjoying the journey as well as the good feelings and personal growth that come with achieving your goal.
Rick Coyle is a Financial Advisor/Coach with Dundee Private Investors Inc. He has 30 years experience in Financial Services. The opinions expressed in this newsletter are the opinions of Rick Coyle and are not to be construed as the opinions of Dundee Private Investors Inc or any affiliated company. The statements in this newsletter should not be construed as specific advice and may not be appropriate for your unique situation. Rates of return indicate past performance and past performance is not necessarily indicative of future performance. Mutual funds are not guaranteed or insured.
Rick can be reached at 902-678-1727. Email rcoyle @ ns.sympatico.ca
"Look After the Pennies and the dollars will look after themselves"!
That is a mantra that I have preached on these pages and, once again, it will prove it's worth to you if you take this simple suggestion to save yourself "thousands" of dollars on your credit card bills.
The truth about credit card balance insurance. - If you have recently obtained a credit card, you probably have unwittingly purchased this insurance and it will cost you literally thousands of dollars over years. (On average approx $300 per year) Many of you don't even know that you have this insurance, or that the premium is being included in your credit card balance every month, unless of course, you are watching your pennies.
Here it is in a nutshell! When you apply for a credit card, and you are approved, you may or may not hear the selling agent say to you that there is included a "one month free" premium for "balance insurance"! It will usually be blurted out quietly, almost as an after thought along with the caveat that it can be canceled with a phone call. In 95% of these case, it is completely unnecessary and here is why!
Firstly, it is not balance insurance. It is "payment" insurance. You must lose your job to collect on this insurance. Then, it only pays your "monthly payments" and not your balance. For instance, if you lose your job and have a balance of, let's say, $5,000, the insurance will pay your monthly payment until you are again gainfully employed. However, credit card policy stipulates that, if you don't pay off your balance every month, they will charge interest (often 19% or more) on the "entire balance". In other words, that interest will probably add more onto your card than the insurance paid off "and" it is repeated again the next month.
This, coupled with the Nonsense of keeping a credit card balance , will cost you dearly over time. Banks and credit card companies brag to their shareholders about making billions from this lucrative insurance. However, it is only lucrative for them, and not for you. Do yourself a big favor right now.
Call your card company and ask if you are paying for this insurance. If you feel you don't need it ( everyone's circumstance is different) Cancel it immediately and then, if you are as incensed about it as you should be, demand they pay you back every sent of the premiums you paid without knowing you were even paying them. Your retirefund demands it!
They may or may not pay you back, but with the millions who are unwittingly paying for this service that most don't need and didn't ask for, it is usually cheaper for the card company to just pay back the 1% who demand their money back and keep the controversy to a minimum. They make a lot more money that way.
"Look after the pennies, and the dollars will look after themselves"!
In a nutshell, if you qualify for a credit card which often costs you 19% or more, then you would also qualify for a line of credit which usually costs 1 or 2% above prime. If you absolutely cannot pay off your expenditures every month, at very least, you should carry the balance on your line of credit and NEVER on your credit card!
This is a simple strategy which can save you huge amounts of money over time. Now do yourself another financial favor (after you secure the line of credit). Call your credit card company and advise them that you are shopping around for "best rates" and ask them directly to drop your interest rate. Many companies will drop it to as low as 10% just to keep you as a customer. Some won't! That's OK because that is why you are "shopping around for best rates"
Stop the nonsense now! Start being smart!
"Look after the pennies, and the dollars will look after themselves"!
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