Independent, Fee-Only Financial Advisor

Independent, Fee-Only Financial Advisor

Friday, October 21, 2011

Half full. Half empty.

Economic news lately has sounded fairly good. Little improvements here and there haven't always been better than expected, but they show slow growth, avoiding another recession. Despite all of this, people are very pessimistic. The media can reflect this pessimism. I noticed in particular, this article from Bloomberg.
This is a perfect Half Full/Half Empty problem. The headline of the article states that payrolls declined in 25 states. Well, we have 50 of them, so that leaves 25 states where payrolls didn't decline. Exactly half of the story is good news, exactly half is bad news. In fact, it only takes the second paragraph to note that the jobless rate decreased in 25 states.
Classic pessimism for completely neutral news. Otherwise, most news has been positive!

Wednesday, October 19, 2011

Always watch the fees.

Fees can eat away at any investment, no matter how good. High mutual fund fees have come down in recent years with the proliferation of low cost index funds. Broker commissions have come down with competition from online brokers. This is a boon for customers, every dollar paid in a fee is a dollar that is not coming back.
Some banks just don't get it. Recently, Bank of America, Citibank and others announced that they will start charging fees for merely having a checking or debit card account. People started to move their money. Bloomberg reports that about 30% of people will switch if their bank charges fees. I already have. The Move Your Money Project was originally started to help people move away from "too big to fail" banks now has new life facilitating people moving away from high fees on checking and savings accounts.
At New Perspectives, we keep our eye on fees. We argue for our clients to get their fees reduced and reimbursed when unfairly charged. We focus on the most effective, and lowest cost methods of investing and saving.

Wednesday, October 05, 2011

spot the difference

Steve Jobs has died.
Information travels fast today. Online, a tweet can be seen by millions of people an instant after an event. Hundreds and thousands of journalists or bloggers can catch on to any item and post their opinion in minutes. Somewhere, there are computers reading this information, processing this information - trading on this information.
Moments after a statement was put out by Apple. Nasdaq futures started to tumble. Generally, these indices correlate pretty well - especially after hours. Apple (AAPL) is the largest component of the Nasdaq 100 index, even after a rebalancing this year trimmed it down. At the end of the day today, AAPL was more than 14% of the weight of the index. Bad news for Apple is bad news for the Nasdaq 100.
The death of Steve Jobs is a sad occasion indeed. Computers trading on the latest information have no idea what what is going to happen at Apple - they only see negative words associated with AAPL.