The Financial Shift

A Stock Market for the Rest of Us? No Commissions, Direct ownership of stocks and No Minimums.

Loyal3's backers never tire of citing a Bain & Company survey that purports to find that shareholders make especially loyal customers. But there's a lot more going on here. The existing sales infrastructure makes it hard for people of limited means to build stock portfolios. Brokerage fees are grossly disproportionate for those buying a few shares at a time. The process can be intimidating for neophytes.

via online.wsj.com

BERK: Holman Jenkins in today's Wall Street Journal picks up on a theme we use at BerkAdvisory - "stock portfolios for everyone." Wall Street makes it hard for people of limited means to build their stock portfolios....with Folio Advisor and ValueAligned Investing we have solved that problem by bypassing Wall Street's sales infrastructure.

Buy Stocks of Great Companies to Retire Rich

Flight to So-Called Safety
From Morley Fool

Investors have lost faith in stocks, fleeing to bonds and their puny yields for protection. The S&P 500, which sold for an unearthly 28 times earnings in 1999, has trudged down to 13. You can see the role reversal of stocks and bonds in the following chart, which compares the yield on 10-year U.S. Treasury bonds with the earnings yield of the S&P 500 from 1999 to the present. The earnings yield is calculated by flipping the P/E upside down and dividing earnings by the stock price. The lower the P/E, the higher the earnings yield, and the better our return prospects.


The math is simple: Earnings yields on stocks are very high, while yields on bonds are very low. There’s a good deal more nuance to this whole “stock picking” business, after all, but the cold, hard facts that should guide our decision making still point to stocks as the place to put our money for the long haul. 


via newsletters.fool.com

Berk: Buy stocks of great companies - directly - to build wealth like the super wealthy do.

Behavior Gap: Don't Rely on Willpower Alone

Your Financial Decisions and Willpower

The tricky thing about willpower is that for certain actions, we don't hesitate. Things just happen. For some people, it's incredibly easy to avoid the dessert tray, for others not so much. Some athletes think nothing of heading out the door every morning to get in their five miles. For the rest of us, the thought of breaking a sweat keeps us seated on the couch.

The same issues exist with our decisions around money. Whether it's saving $100 for your kid's education each month or adding money to your 401k out of every paycheck, you shouldn't make this decision every single time it's supposed to happen. At the Times this week, I covered this topic of automating certain financial decisions, and one of the commenters, while agreeing in general, insisted that willpower still needed to be a part of our efforts.

Funny enough, a new book on willpower (Willpower: Rediscovering the Greatest Human Strength) has started popping up everywhere. While the authors make a strong case for things you can do to improve your willpower, one aspect of their research caught my attention.

Willpower, like a muscle, can get tired if you overuse it.

We have so many decisions we'll be asked to make about money, why tempt ourselves to fail on the easy ones? If you think of willpower like a muscle, then you know from past experience how difficult it is to keep going when you're exhausted.

So on the "easy" decisions, like saving regularly for your kid's education or your retirement, embrace the option to automate. Save your willpower for the really tough decisions, because they will come.

via us2.campaign-archive2.com

Berk: It's the most important thing to do -- start now and automate your savings - direct deposit right to your broker account every month.

Berk's Financial Shift Newsletter

Click on this link for the whole newsletter: 

Berk's Financial Shift for February

What you will find inside:

1. Tax-friendly States for Retirees

2. A Primer on Hedge Funds

3. Coping with Near-Term Fluctuations

4. Simple Steps for Late Savers

Front Page of Newsletter


Front Page of Newsletter

 

Would you rather clean a bathroom than plan for your financial future?

We all need to engage in some financial planning, but few of us are eager to do so. According to a study from the ING Retirement Research Institute, almost a third of us would rather clean a bathroom than plan for our financial future. Fortunately, there are many resources available to help us, though they're not all equally helpful.

via www.fool.com

BERK: Some of us go to school to be doctors, engineers or accountants.  Some of us learn a trade or start a business.  Some pursue careers in teaching or the arts.  And some of us learn finance. That's me.  Why do so many fear talking about money?  My guess is that you think that you are supposed to know all about it through osmosis I guess...but your not.  Get help.  I beg you my friends to get help.  If it fits I would love it to be me - I know I can help most of you.  But get help - even if you are in the business - you probably are not in the business of actually "investing".

This is the worst period in our lifetimes to be squeamish about getting financial advice.  The worst mistake is avoiding the stock market.  Stocks of Great Companies will be the center of successful retirements for our  generation.  Take one day out from cleaning bathrooms and talk to someone you trust about retirement investments and savings.....

Our homes will no longer be the retirement vehicles we had hoped.  That's gone - now is the time to learn and reorder our savings and investment portfolios.

732-800-2375 (BERK),  if you want to talk.  You don't have to be super rich to deserve great financial and stock market advice.

U.S. Treasuries: The Safest Place to Lose Money

Is the risk/reward for U.S. Treasuries attractive right now? Why?
We currently view Treasury bonds as a high-risk sector.  In the words of a colleague, it may be the safest place to lose money. (emphasis added)

This view might fly in the face of those who deem them to be the best shelter against market turbulence. Valuations at 100 times earnings was the tipping point for the tech market a decade ago. We believe a parallel may be drawn for U.S. government bonds. Interest rates on U.S. Treasuries are at multigenerational lows. The yield on the 10-year bond hit the lowest level recorded since 1953 in the third quarter and is about 2.0% currently. Even though interest rates could still go lower from current levels, we believe the upside potential for Treasury bonds is quite limited while the downside risk could be substantial if the economy finds its footing or if inflation becomes a concern again in the near future. We tend to invest over a cycle and try to avoid short-term trades.

via news.morningstar.com

Berk: Cash is trash. Invest that cash in the stocks of Great Companies