Category: Stock Market Investing

Are we living in the United States of Amnesia?

August 27th, 2014 by Pamela Yellen | Leave a Comment

It was announced that more than $1 trillion has been added to the value of American equities since the stock market hit a two-month low on August 7th. Americans’ wealth has reached a record high, thanks to a surge in the value of stocks and homes.

I’m sorry to be the bearer of bad news, but here’s a news flash: You haven’t made a penny in the stock OR real estate market!

tornpaper2

We’ve been here before…

Just like those glowing reports about how much Americans’ wealth had ballooned prior to the last financial crash, the new reports are pure fiction. Until you sell your assets and lock in your (hopefully) gains, you have nothing more than a bunch of eye-popping numbers on paper. Those numbers repeatedly sucker many of us into believing we have real wealth and financial security when we do not. [Read more…] “Are we living in the United States of Amnesia?”

30 Reasons Not To Worry
About A Market Crash

August 21st, 2014 by Pamela Yellen | Leave a Comment

My favorite financial journalist is Brett Arends, a regular contributor to The Wall Street Journal and MarketWatch. He’s one of the very few who doesn’t have his head up his you-know-what.

Anyhow, Brett just published a tongue-in-cheek article about all the reasons the stock market is just going to keep going up and up. And I strongly encourage you to read it here.

Some of my favorites of Arend’s 30 reasons not to worry include…

Yes, stocks look expensive compared with annual sales, net asset values, gross domestic product, the replacement cost of company assets, and the average earnings of the past 10 years. But none of that matters because valuation measures are completely irrelevant.
You bears “just don’t get it.”
The S&P 500 is almost three times as high today as it was in 2009. Therefore it must be three times as good a deal!
People who aren’t bullish are losers and sissies.
Everybody on Wall Street says this is a great time to buy stocks, and if they don’t know, who does? [Read more…] “30 Reasons Not To Worry
About A Market Crash”

What does Financial Independence
mean to you?

June 27th, 2014 by Pamela Yellen | Leave a Comment

With Independence Day right around the corner, I got to thinking about the real meaning of financial independence.

(Take our survey now and tell us what financial independence means to you.)

For retired Navy Commander and Bank On Yourself revolutionary Bob Chambers, it means,

Spending time with family and friends and having a predictable, life-long income that provides a comfortable lifestyle.”

If you’ve been a subscriber for a little while, you may recall that Commander Bob agreed to share the booklet he wrote, which he called “Financial Independence Made Easy,” after we received an avalanche of requests for it when I posted an interview I did with him.

Commander Bob has been a student of money and finances for many years, and his 20-page booklet is full of profound insights, including:

Are you a predictably irrational investor?

June 4th, 2014 by Pamela Yellen | Leave a Comment

Nothing defines humans better than their willingness to do irrational things in the pursuit of phenomenally unlikely payoffs. This is the principle behind lotteries and dating…”
– Scott Adams, creator of the comic strip Dilbert

UPDATED May 2016: With full confidence, I can say that you are irrational when it comes to investing.

I know this not from talking to your broker or your mother-in-law, and I haven’t hacked into your portfolio statements. I know this because you’re human.

What will happen in the stock market isn’t predictable. But one thing is absolutely for sure and for certain: Investors are predictably irrational. We’re not talking smart or stupid, sophisticated or naïve. We’re talking across-the-board irrational.

So maybe you’re thinking that you’re the exception. You think you can handle the volatility of the market by just gritting your teeth and praying everything turns out all right as you roll the dice in the Wall Street Casino. Or maybe you think that at the first sign of trouble, you’ll be able to bail out of stocks and into bonds or money market funds to lock in your gains.

Researchers say, “Nope, that’s not what’s happening…”

Dalbar 2014 QAIB Report Reveals the Truth About Investor Returns

April 30th, 2014 by Pamela Yellen | 2 Comments

I’m holding in my hands a hot-off-the-press Report from the well-respected research firm, DALBAR, Inc., about the actual returns investors have been getting in the stock market over the last 30 years. And it ain’t pretty… hot off the presses

The average investor in asset allocation mutual funds (which spread your money in a blend of equities and fixed-income funds) earned only 1.85% per year over the last 30 years!

These investors didn’t even come close to beating inflation, which averaged 2.8% per year.

The average investor in equity mutual funds averaged only 3.69% per year – beating inflation by less than 1% per year. (Was that worth the roller-coaster ride and sleepless nights?)

Mutual Fund Fees are Silent but Deadly Wealth Killers

April 18th, 2014 by Pamela Yellen | Leave a Comment

How would you feel if you discovered that every time you put $10,000 into your retirement account, $4,000 or more of it ended up going to pay fees over the next 20 years? And another ten years later, nearly $8,000 of your initial investment had vanished into other people’s pockets? High Fees

I’m guessing you wouldn’t be a very happy camper. In fact, you’d probably be mad as heck.

I hate to be the bearer of bad news, but this is exactly what’s happening to most investors right now. Which means there’s a VERY good chance it’s happening to you.

You see, I’ve been burning the midnight oil researching the fees in popular mutual funds – including the ones in many 401(k) plans – for a new course in financial literacy we’ll be rolling out soon.

The course will give you a step-by-step plan for ending all your financial worries in as little as 90 days… and it contains breakthrough strategies you won’t find anywhere else. I’ll be giving you more details about it over the next month or two, so stay tuned.

But in the meantime, what I discovered about what experts have called “the silent enemy in our retirement accounts” – fees that compound against you that are charged by mutual funds and 401(k) and IRA plan administration costs – will stun you.

Let’s start with the cost of popular Target Date Funds or TDF’s,” the “default investment” in many 401(k) plans.

Is Wall Street rigged?

April 8th, 2014 by Pamela Yellen | 3 Comments

How would you feel if you went online to buy something – for example, a TV that’s listed at $495.00 – but when you get your order confirmation and credit card statement, you realize you got charged $535.00 for it instead?

sticker shock When you inquire about the price hike, you’re given the run-around, but eventually you’re told that there was only one TV available at that price, and someone else bought it a split second before your order got processed. So they filled your order with the same TV at the then-available best price, which was higher.

And, they remind you, they have an “all sales are final” policy, so you’re stuck with the deal.

You’d probably raise holy heck, wouldn’t you? Or you’d vow never to patronize that company again, right?

So, you make your next online purchase from a different company… and the exact same thing happens! In fact, it happens every time you make an online purchase, adding up to significant lost dollars to you over time.

Well, as it was revealed last week, this is exactly what’s happening to stock market investors every day – and it’s been going on for years. And it’s costing every-day investors billions of dollars.

60 Minutes just did an exposé on it, titled “Rigged,” just as a much-anticipated new book by Michael Lewis called Flash Boys blew the lid off this latest scandal.

Lewis summed it up this way:

[Read more…] “Is Wall Street rigged?”

A profound lesson on investing from the Wolf of Wall Street

February 6th, 2014 by Pamela Yellen | Leave a Comment

If you haven’t seen the Oscar-nominated movie, The Wolf of Wall Street yet, I’m not necessarily suggesting you see it.

It’s based on a true story of Wall Street’s excesses, and it’s chock-full of graphic scenes of sex, drugs and debauchery. And it’s l-o-o-o-o-o-n-g – about three hours.

The WOLF of Wall Street Poster But whether you decide to see it or not, there’s a scene in it that is so profound, I’m going to spill the beans about it here. It’s the best ten seconds of any movie I’ve seen in quite a while, especially given the 1,200-point drop in the Dow over the last couple weeks. But first, here’s a little background info…

The movie, directed by Martin Scorsese and starring Leonardo DiCaprio, is based on the autobiographical book by Jordan Belfort, which details his rise and fall on Wall Street.

Belfort had just finished training at a major Wall Street firm, and on his first day as a licensed stock broker, the world markets crashed. It was “Black Monday” – in October, 1987.

The firm was one of many that soon closed down, and Belfort was out of a job. But not for long. He soon discovered a world of white-collar crime, taking over a Long Island penny-stock cold-calling boiler room, and was soon making millions by convincing investors to buy stocks his company had invested in, and then selling the stocks for a huge profit. The investors were left with worthless holdings.

Ultimately, after a Federal investigation, Belfort pleaded guilty to securities fraud and charges of money laundering. Rather than face decades behind bars, he became a government witness. He ended up serving 22 months in prison and was ordered to pay his fraud victims $110 million in restitution. He was also barred from the securities industry for life.

Believe it or not, today Belfort gets paid big bucks by major corporations to teach their sales reps “the art of Straight Line Persuasion – how to create instant rapport, control the sales conversation and close every single deal that’s closeable.”

Really! You can’t make up stuff this good!

And he hasn’t paid most of the $110 million he owes to his victims, but that’s another story.

Nothing has really changed on Wall Street, as I reveal in the article I wrote this summer, “A Month of Scams and Scandals on Wall Street.” And JP Morgan Chase just gave a 74% raise to Chief Jamie Dimon in a year in which the bank paid more than $20 BILLION in fines and other legal costs.

Now for the Best 10 Seconds in the Movie

How to become your own “banker”

January 10th, 2014 by Pamela Yellen | Leave a Comment

Over the holidays, I received a number of emails with good wishes for the New Year from subscribers who use the Bank On Yourself method to grow their wealth safely. Many also told me how they’re using their plans.

Derek Logan with his newborn granddaughter

One of those emails came from Derek Logan, a corporate accountant who is the textbook “poster boy” for someone who did all the right things we were taught to do financially, who decided to stop feeding the insatiable Wall Street Casino with his hard-earned dollars after seeing his retirement account value slashed in half several times.

Derek started his first Bank On Yourself plan about four years ago and wanted to update me on how he’s been able to actually use his plans to become his own “banker” during that time. Derek said he’d be happy to share his experience with subscribers to this newsletter, because…

It’s not about what I have done, but about what Banking On Yourself can do for anyone.”

This could be you… [Read more…] “How to become your own “banker””

Why half of households will STILL struggle in retirement

December 16th, 2013 by Pamela Yellen | Leave a Comment

Even with the run-up in the stock market and housing prices, half of all American households are at significant risk of not being able to maintain their current standard of living after retirement.

That’s the conclusion of a surprising new study released last week by the Center for Retirement Research at Boston College.

That’s only slightly better than the Center’s National Retirement Risk Index showed in 2010, in spite of a 45% inflation-adjusted increase in the stock market and a 6% increase in home prices since then.

In fact, the Center’s research shows the picture is even worse than in 2007, which is why the study concluded…
[Read more…] “Why half of households will STILL struggle in retirement”