Being smart with $$ - Data mining works looking backward but not so much forward

In late December I highlighted how CNBC said the stock market historically rises by over 1% in the last 5 days of the year compared to less than 0.2% for other 5-day periods.  An opportunity???  I also pointed out that it is likely data mining as statistically speaking, SOME 5-day periods HAVE TO outperform.   So how did the market do in those last 5 days of 2014?  It fell by 1%.  As always, be careful what you believe out there.  And call me if you need SENSIBLE advice.

- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com 

Being smart with $$ - More $ may not = more happiness

Studies show that people get happier with their lives as they have more money but only up to a point. After their basic needs are met, people get happier by a smaller and smaller amount as they have more money. And at a point, adding even more money no longer makes them happier. So instead of shooting for interstellar growth with your portfolio, just shoot for one nearby star. You are more likely to hit that attainable target and less likely to fall all the way back to Earth.
- Larry Pike, CFA, Client Priority Financial Advisors LLC
- www.clientpriority.com

Being smart with $$ -- Passive beats active

Last year Passively Managed Mutual Funds (aka Index Funds) returned 1.2% more than Actively Managed Funds according to Money Magazine (through 11/2014). Makes sense.  That's about the amount of the fees Actively Managed Funds take out to pay the managers.  Individual investors did even worse, trailing Index Funds by 2%.  Individuals have a knack for panicking and selling low or jumping into a winner after a stock has already risen all it's going to.  The most boring choice wins again.

- Larry Pike, CFA
- www.clientpriority.com

Being smart with $$ - Take investment advice with a grain of salt

Do you like salt? Well, at least one grain should be taken along with most investment advice you receive. I read 2 finance magazines today.  Money Magazine has an article "Why China is Over." Kiplinger's Personal Finance has an article "Time to Buy Chinese Stocks."  Both written by smart people.  They took the same information and came to opposite conclusions.  So remember, next time you read about an investment tip, ask for the single-grain salt dispenser before acting.

- Larry Pike, CFA
- www.clientpriority.com

Larry Pike, CFA quoted in an article

Larry Pike, CFA of Client Priority Financial Advisors LLC is quoted in a budgeting article in the online student publication "Student Health 101". Don't know where your money goes? Try budgeting.
Click or copy this link to read:  http://readsh101.com/0115/demo.html
Click the arrow on the right to get to page 19.
Larry Pike, CFA
www.clientpriority.com

Being smart with $$ -- 2014 Recap

Dear Clients and friends:

I would like to wish you a happy new year and a prosperous 2015.

The year that we now leave behind us was a positive one in the financial markets. After a huge increase in stock prices in 2013, many feared that 2014 could be a year where we would give back some of those returns. And if you were someone who likes to time the market, you may have sold some or all of your stocks at the beginning of last year.  As it turns out, the overall U.S. stock market returned 10.5% in 2014. Large stocks did better than small stocks and high dividend payers outperformed those that don't pay out much of their income. International stocks, were negative for the year by 7.7%. REIT funds returned over 25% and bonds returned a respectable 2.9%. A model portfolio for a family with school-aged kids returned approximately 7.5% overall.  Results for other portfolios with different risk profiles would vary. 

As briefly mentioned above, timing the market in an attempt to take advantage of a sector that you believe will outperform, can be dangerous. The most experienced stock market investors have a very questionable record in timing the market. Those who reduced their stock positions at the beginning of last year missed the strong performance in stocks. No one can predict how each sector of the financial markets will perform in 2015 and last year's winners may be next year's losers or they may again lead the pack.   Therefore we must continue to maintain the portfolio that is right for our personal circumstances. Maintaining a diversified portfolio prevents the kind of catastrophe that would occur if your portfolio was made up entirely of one market sector and that sector substantially underperformed.

It is useful to periodically rebalance your portfolio such that you make adjustments to maintain your target weights for each sector. Rebalancing is generally recommended every 6 to 12 months except in the case of large market moves where you might want to address this more frequently.  A change in your personal circumstances would be another reason to address your financial plan sooner.

If you are someone who is still saving for a goal, you may note that contribution limits have increased in many savings vehicles for 2015. New limits are shown below:

401(k)                                                $18,000401(k) catch-up                                $6,000IRA and Roth IRA                              $5,500 (unchanged)IRA and Roth IRA catch-up             $1,000 (unchanged)Income limit to contribute to a Roth IRA (married filing jointly)                    $193,000(single)                                              $131,000

I am available by phone or email anytime if you have questions or require assistance so don't hesitate to contact me.  And remember that references are the greatest thank you I can receive if you believe I have helped you.

Warm regards, 

Larry Pike, CFA
Client Priority Financial Advisors LLC www.clientpriority.com

Being smart with $$ - Happy new year

January 1, 2015

Wishing your portfolio a happy new year. It had a pretty good 2014. A simple portfolio of 60% US stocks, 10% international stocks, 5% REITs and 25% bonds returned 7.5% last year. Hopefully you did that well. If anyone wants to guarantee me that return indefinitely, I will gladly accept it. 

- Larry Pike, CFA
- www.clientpriority.com