Monthly Archives: November 2013

Grooming Secrets of the NBA

This may have nothing to do with the art and science of financial management, but this story struck our fancy.  It turns out that pro basketball players crave skin care, pedicures and women’s deodorant (not that there’s anything wrong with that).

DeAndre Jordan is a 6-foot-11, 265-pound pro basketball player for the Los Angeles Clippers—and you’ll never guess what kind of deodorant he puts on before a game.

“I use Secret,” says Mr. Jordan. The 25-year-old Texan prefers the aerosol form of the product marketed to women because, he says, it is light and doesn’t leave behind any visible white residue. “I’m always powder-fresh during the games,” he adds. “I’m sure my opponents love that.”

For more grooming secrets, go here.


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Thanksgiving: remembering the Pilgrims


Each year the Wall Street Journal reprints the Pilgrim’s journey to the New World.

So they left that goodly and pleasant city of Leyden, which had been their resting-place for above eleven years, but they knew that they were pilgrims and strangers here below, and looked not much on these things, but lifted up their eyes to Heaven, their dearest country, where God hath prepared for them a city (Heb. XI, 16), and therein quieted their spirits.


When they came to Delfs-Haven they found the ship and all things ready, and such of their friends as could not come with them followed after them, and sundry came from Amsterdam to see them shipt, and to take their leaves of them. One night was spent with little sleep with the most, but with friendly entertainment and Christian discourse, and other real expressions of true Christian love.

The next day they went on board, and their friends with them, where truly doleful was the sight of that sad and mournful parting, to hear what sighs and sobs and prayers did sound amongst them; what tears did gush from every eye, and pithy speeches pierced each other’s heart, that sundry of the Dutch strangers that stood on the Key as spectators could not refrain from tears. But the tide (which stays for no man) calling them away, that were thus loath to depart, their Reverend Pastor, falling down on his knees, and they all with him, with watery cheeks commended them with the most fervent prayers unto the Lord and His blessing; and then with mutual embraces and many tears they took their leaves one of another, which proved to be the last leave to many of them.

Being now passed the vast ocean, and a sea of troubles before them in expectations, they had now no friends to welcome them, no inns to entertain or refresh them, no houses, or much less towns, to repair unto to seek for succour; and for the season it was winter, and they that know the winters of the country know them to be sharp and violent, subject to cruel and fierce storms, dangerous to travel to known places, much more to search unknown coasts.

Besides, what could they see but a hideous and desolate wilderness, full of wilde beasts and wilde men? and what multitudes of them there were, they then knew not: for which way soever they turned their eyes (save upward to Heaven) they could have but little solace or content in respect of any outward object; for summer being ended, all things stand in appearance with a weatherbeaten face, and the whole country, full of woods and thickets, represented a wild and savage hew.

If they looked behind them, there was a mighty ocean which they had passed, and was now as a main bar or gulph to separate them from all the civil parts of the world.

We have so much to be thankful for, let us remember those who made the road to where we are that much easier for us.

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Schwab and the 401(k) plan.

We mentioned in a previous post that Charles Schwab (full disclosure, we use Schwab as our custodian) is working to introduce an ETF 401(k).  We believe that there may be advantages for ETFs in retirement plans.  However, in an interview with the Wall Street Journal, Steven Anderson, the head of Schwab’s retirement plan business made a point that cannot be over-emphasized.

“There’s been a fairly significant shift of risk from employer to employee in the past 30 years. Individuals weren’t prepared at that point, nor are they prepared today to save for retirement. Low balances put a general stress on the system, forcing people to work longer and make do with less, and education hasn’t been the tool we’ve been hoping it would be.”

The 401(k) type plan – referred to as a “defined contribution” plan has largely replaced the “defined benefit” – or pension – plan for most employees.  As these employees age, it becomes increasingly important that they make smart decision about how their money is invested.  Since most people are not sophisticated investors, being able to get professional guidance is critically important.  Providing guidance for this generation is our goal.


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The KISS Principle

We often fall so in love with the tools we have at our disposal that we feel compelled to use them.  Investors have so many choices and investment vehicles that they often overcomplicate their financial lives.  This can work very much against them.

IRAs, 401(k)s, life insurance, annuities, trusts, 529 plans, hedge funds, options – and the list goes on – all have their uses.  However they often are neither the best nor the simplest way of solving our financial problems.  They are frequently recommended by people who make fees or commissions for selling them, but can have unintended consequences for the unwary.

Before getting involved with any investment strategy or vehicle, make sure you understand it thoroughly and know both the advantages and disadvantages.  Get unbiased advice from an advisor who doesn’t have anything to sell other than his expertise.  We’re biased in favor of fee-only RIAs.

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Americans Retiring Early, Then Running Out of Money

The headline is from an article in “The Street”  which discusses why Americans are often confused about retirement.   Genworth, the insurance company, surveyed adults nearing retirement age.  Genworth reports that Americans are “retiring earlier … but underestimating retirement expenses” once they arrive — both the result of “unrealistic” expectations.

The Genworth data reveals that 52% of pre-retirees expect their living expenses to decrease in retirement, but actually, 65% of retirees saw their costs rise in retirement. Genworth says health care costs are the main culprit, along with real estate and “money spent on dependents.”

Only 12% of retirees interviewed by Genworth say they had enough money to meet those higher living expenses.

Put it all together and you have a scenario in which millions of Americans will retire not knowing they lack the necessary funds to survive in retirement — and may not have the financial means to close that money gap in their 60s, 70s and beyond.

The best way to prepare for the financial aspects of retirement is to obtain the services of a financial planner and investment advisor who has experience in guiding people in retirement.  We specialize in this area, are expert in guiding retirees, have literally written the book on this subject, and would be happy to provide the guidance you need.

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Better 401(k) plans

We have just returned from Schwab IMPACT 2013 Conference where we had an opportunity to meet our counterparts thought the country and listen to some world-famous speakers.

One of the topics was retirement plans and specifically 401(k) plans which are the primary way most people in private industry are putting money away for their retirement.

Charles Schwab Chief Executive Officer Walter Bettinger on Monday called for a transformation of the 401(k) industry by slashing fees and providing participants with objective and customized advice autonomous from the plan’s consultants.

“It’s finally time to put the interests of the average hard working American first,” Bettinger said in a speech at the National Press Club in Washington, D.C.

This ia an initiative which we heartily endorse.  While we leave it to plan sponsors and mutual fund suppliers to lower fees on their funds, we are doing our part.  First we have created a program that provides workers with guidance on how much each fund charges in fees, and how to construct a portfolio inside each 401(k) that meets their specific objectives.

Bettinger said the two-pronged plan would mean more jobs for investment advisors because of the greater demand for more time consuming, individualized financial plans.

Looking at target-date funds, he said they should go away because they allocate investments only on a single factor—age.

“They are better than nothing but not as good as customized advice,” he said.

For guidance on your 401(k) plan, call us at 757-638-5490 or 877-322-5490, or visit our website.

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St Regis New York Overhaul

King Cole Bar & Salon

I have not been to New York in years, but one of THE places to see and be seen is the Old King Cole bar at the St. Regis Hotel, rumored to be the birthplace of the Bloody Mary.  The St. Regis has decided that they really don’t want old duffers like me around, preferring a younger, trendier and more international clientele.  To that end they have spent about $90 million to refurbish the bar and dining room.

At the restaurant at the St. Regis New York hotel, the white tablecloths and oversize flower arrangements are gone. In their place: metal-studded chairs, zebra prints and funky topiaries.

The transformation of the hotel’s restaurant, bar and lounge into the King Cole Bar & Salon, which opened this week, is part of a $90 million renovation of the 109-year-old hotel.

The venerable King Cole Bar, opened in 1932 and said to be the birthplace of the Bloody Mary, has long been one of the city’s most popular watering holes. But the buzz tended to stop at the bar door: The adjacent restaurant, formerly dubbed “Astor Court” (named for John Jacob Astor, the hotel’s first owner), was sleepy in the evenings.  To draw more of the bar’s energy out into the lounge and restaurant, designers connected the spaces visually by yanking a central seating area and massive flower arrangement. The result: Diners now have an unobstructed view of the bar’s famed 30-foot-long  Maxfield Parrish mural, which shows Old King Cole on his throne.

King cole bar

Next time in New York, stop by, have a Bloody Mary and pretend to be French.  Bring plenty of money.


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The Five Cars the Richest Americans are Buying

According to a recent survey in the Wall Street Journal, here are the top 5 cars the super-rich are buying

  1. Tesla Model S  (popular in Silicon Valley where it’s made)
  2. Mercedes-Benz E Class (popular in New York)
  3. Jeep Grand Cherokee (popular in beach towns)
  4. BMW 3 Series (Coral Gables is filled with them)
  5. Ford F series pickups, especially the big F-250 (popular with the “ranchers” in places like Aspen)

So if you want to pretend that you’re a mega-millionaire, don’t buy a Bentley, pick yourself a more affordable car from this list.

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Working Longer May Help You

Via Mareen Hook of the HOOK LAW FIRM.

Well, science has now confirmed what intuitively we may have suspected. Working longer than the typical retirement age can benefit you, not only financially, but also with increased mental acuity. “For each additional year of work, the risk of getting dementia is reduced by 3.2%,” said Carole Dufouil, a scientist at INSERM, the French state-sponsored health research agency. The results shouldn’t surprise us. Experts have long advised older people to keep active physically and mentally. The study is particularly important, because it was a large one involving almost 1/2 million people in France. Usually, the larger the sample size of a study, the more confidence is placed in the results of a study. This is true of polling or whatever else is analyzed. France has accumulated quite a body of research on the subject, because of the interest and importance that its former president, Nicolas Sarkozy, placed on it.

The French scientists had a lot of information at their disposal, because of information that is collected by the state health system. They used the records of more than 429,000 people, most of whom were self-employed in trades such as baking and woodworking. On average, they were 74 years old and had been retired for an average of 12 years. These subjects were selected, because they had not developed dementia within 5-10 years of retirement. This meant that their results could not be attributed to the fact that those who decided to retire, did so because they were already showing signs of dementia at the time of retirement. While 3% of the subjects did have dementia, they found that, for each additional year of work, the odds of developing dementia decreased. For instance, a retiree at age 65 had approximately decreased the probability of acquiring dementia by 15%, when compared to a fellow retiree who left the work force at age 60. Quite impressive results which might have implications for mandatory retirement ages.


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The risks of performance chasing.

FINANCIAL PLANNING MAGAZINE has an interesting article on performance chasing.

One of the unfortunate habits of some investors is regret over not having invested in some hot stock, or hot fund.

Assuming a person could accurately pick each year’s winning asset class at the start of each year, and devote an entire portfolio to that asset class, that investor’s 15-year annualized return would have been an astounding 32.25%, with a standard deviation of annual returns of just under 19%.

By comparison, an investor who simply hunkered down in the S&P 500 for the entire 15-year period experienced an annualized return of 4.39% and a standard deviation of 19.1%.

As a result of this tendency some people will invest their entire portfolio in the previous year’s best-performing asset class.  By buying last year’s winning asset class:

…  the 15-year return plunged to 2.71% for an investor using this strategy during the 15-year period, while the standard deviation of annual returns increased to 23.7%.

So how would the investor who prudently created a well diversified portfolio fare?

The ending outcome of simply investing in all 12 asset classes each year (and then rebalancing at year’s end back to equal allocations) resulted in a 15-year annualized return of 7.95% and a standard deviation of 12.8% – far better than what the S&P 500 by itself generated.

Of course that diversified portfolio can’t match the “perfect” portfolio, but our crystal ball is broken, so we’ll settle for the “good” rather than the “perfect.”





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