Merry Christmas...

In the old days, it was not called the Holiday Season; the Christians called it 'Christmas' and went to church; the Jews called it 'Hanukkah' and went to synagogue; the atheists went to parties and drank. People passing each other on the street would say 'Merry Christmas!' or 'Happy Hanukkah!' or (to the atheists) 'Look out for the wall!'

~Dave Barry ~ "Christmas Shopping: A Survivor's Guide"

Tiger Woods - Prenuptial Agreement

Everything is negotiable. Even prenuptial agreements.

This week, Investment News reported that Tiger Woods wife, Elin Nordegren, was renegotiating her multi-million dollar prenuptial agreement. According to published reports, the current arrangement requires the couple to be married for at least 10 years before Ms. Nordegren could collect $20 million.

The updated version appears to have a $5 million immediate payment. And, there could be an additional $55 million added to the overall agreement.

Perhaps I'm a little naive. I understand the benefits of prenuptial agreements for estate planning purposes. However, a young, vibrant, couple shouldn't be addressing financial matters as it pertains to their marriage. There are bigger issues to address.

Yes, I understand individuals of this magnitude have to protect their brand name and earnings potential. The brand name has already been tarnished, so perhaps just the future earnings from golf events are at stake.

Renegotiating terms of a marriage is a bad omen. Their two children may be the glue that makes them stay together - if possible. If there weren't children involved, I'd venture a guess this marriage would be over. Tiger would move on and do his thing. And, as reported by the New York Daily News, Elin would probably retreat to her recently purchased estate in Sweden.

Holiday Book List 2009

Okay, so it's not the Oprah Book Club, but I cover different topics anyway! So without further delay, here are my favorite finance books and then some for 2009. Some new, some old, and in no particular order!











Where Men Win Glory: The Odyssey of Pat Tillman- Jon Krakauer

The bestselling author of Into the Wild, Into Thin Air, and Under the Banner of Heaven delivers a stunning, eloquent account of a remarkable young man’s haunting journey. Like the men whose epic stories Jon Krakauer has told in his previous bestsellers, Pat Tillman was an irrepressible individualist and iconoclast. In May 2002, Tillman walked away from his $3.6 million NFL contract to enlist in the United States Army. He was deeply troubled by 9/11, and he felt a strong moral obligation to join the fight against al-Qaeda and the Taliban. Two years later, he died on a desolate hillside in southeastern Afghanistan.

Zen In The Markets - Edward Allen Toppel

A veteran trader takes a Zen approach to the stock market, applying fundamental principles of Zen Buddhism in place of traditional economic thought and encouraging investors to put egos aside and listen to the marketplace in a tested method for success.

Market Wizards: Interviews with Top Traders - Jack Schwager

How do the world’s top traders make millions of dollars in the markets – sometimes in a matter of only weeks or even days? That’s precisely the question Jack Schwager was trying to answer when he interviewed 17 superstar money-makers including Richard Dennis, Paul Tudor Jones, Ed Seykota, Marty Schwartz, Tom Baldwin and others. After reading this best-selling book, you’ll know what ingredients enable these top traders to consistently work their financial magic in the markets while so many others walk away losers. One of the top-selling trading books of all-time!

The Greatest Trade Ever - Gregory Zuckerman

“How Paulson and a handful of contrarian investors pulled off this once-in-a-lifetime coup is the subject of The Greatest Trade Ever ... a fascinating and believable counter-narrative to the growing pile of books recounting the disastrous mistakes made by many of the supposedly smartest minds on Wall Street. It is also a surprisingly dramatic work...In The Greatest Trade Ever, Zuckerman skillfully shows how Paulson and a few cohorts anticipated a disaster and figured out a way to profit.”--BusinessWeek

Rich Dad, Poor Dad - Robert Kiyosaki

Anyone stuck in the rat-race of living paycheck to paycheck, enslaved by the house mortgage and bills, will appreciate this breath of fresh air. Learn about the methods that have created more than a few millionaires. This is the first abridged miniature edition of Rich Dad Poor Dad. The full-length edition has sold millions as a New York Times bestseller. As proven by the runaway success of The Secret and like titles, changing one’s thinking to influence one’s fortune sells big, and forms the basis of rich dad’s advice. Learn to think like a rich dad and let your money work for you!

Who Moved My Cheese - Spencer Johnson & Kenneth Blanchard

Change can be a blessing or a curse, depending on your perspective. The message of Who Moved My Cheese? is that all can come to see it as a blessing, if they understand the nature of cheese and the role it plays in their lives.

Who Moved My Cheese? is a parable that takes place in a maze. Four beings live in that maze: Sniff and Scurry are mice--nonanalytical and nonjudgmental, they just want cheese and are willing to do whatever it takes to get it. Hem and Haw are "littlepeople," mouse-size humans who have an entirely different relationship with cheese. It's not just sustenance to them; it's their self-image. Their lives and belief systems are built around the cheese they've found. Most of us reading the story will see the cheese as something related to our livelihoods--our jobs, our career paths, the industries we work in--although it can stand for anything, from health to relationships.

The point of the story is that we have to be alert to changes in the cheese, and be prepared to go running off in search of new sources of cheese when the cheese we have runs out.

How Charts Can Help You In the Stock Market - William Jiler

As classic and timeless as Graham & Dodd's Security Analysis, William Jiler's How Charts Can Help You in the Stock Market is the must-have primer on technical analysis.

First published in 1962, it was the first book to explain how all investors can use charting to more profitably time both their buys and sells and is globally renowned to this day for helping traders and investors use the tools of technical analysis to increase their profits.
Featuring a new Foreword by the investing experts at Standard & Poor's, this special reprint edition will be an excellent resource for beginners as well as a vital reference for experienced technicians. Technical traders will look to it for:
*Tips for removing the mystery from the use of technical analysis
*Easy-to-understand definitions of technical analysis topics
*Examples and explanations of essential configurations, patterns, and formations

Andy Rooney: 60 Years of Wisdom and Wit - Andy Rooney

Chairs. Neat people. Ugliness. War. Over six decades of intrepid reporting and elegant essays, Andy Rooney has proven a shrewd cultural analyst—unafraid to question the sometimes ridiculous, often surprising facts of our lives. Rooney’s great gift is telling it straight, without a hint of sugar coating, but with more than a grain of truth and humor. His take on America? “It’s just amazing how long this country has been going to hell without ever having got there.” On food? “There’s more dependable mediocrity than there used to be.”

Andy Rooney: 60 Years of Wisdom and Wit brings together the best of more than a half-century of work (including long-out-of-print pieces from his early years) in an unforgettable celebration of one of America’s funniest men. Like Mark Twain, Finley Peter Dunne (Mister Dooley) and Will Rogers, Andy Rooney is a classic chronicler of America, a writer for the ages.

Cyber Monday 2009

I'm not exactly sure how Cyber Monday came about, but I could venture a guess. Since the Internet boom of the late '90's, the world wide web became main stream America. Retailers simply figured out another way of selling their goods.

We now refer to the savvy companies as 'bricks & clicks' type businesses. Come to think of it, doesn't every company have a website and a store front? Everyone from Target to Sports Authority to Home Depot to WalMart fits the bill. Perhaps the only TRUE online company is Amazon.com. They have a wonderful online presence, a wide variety of merchandise and no traditional bricks & mortar stores.

Retailers are a crafty lot. I'm sure Cyber Monday was a marketing idea that caught on. Someone should get rewarded for their efforts. However, it kind of seems like a Hallmark holiday to me. Plenty of advertisement and conversation, but no significant meaning.

What do I know though? In due time, today may become a national holiday. Stranger things have happened.

SmartPhones... Convenient & Expensive

Technology is a wonderful thing. We have DVR's to record our favorite shows. We have satellite radio to allow us to hear high quality broadcasts. And, we now have Smartphone- iPhone, Blackberry, Palm & Droid - which allow us to communicate with anyone, anytime and virtually anywhere.

As a Financial Planner, I must admit though, this may not be as great a thing as people think. Yes, the new phones are convenience and offer flexibility. We can talk while we drive (some would argue this is NOT a good thing). Check emails sitting on the beach. And, even use the phone to listen to music, watch movies or get directions (GPS).

All this convenience comes at a price! My late father would surely say, "How did I manage all these years without a smart phone?" Not only do you have to buy a phone. The monthly service fee is the killer. When I last checked, a Blackberry with Verizon service started at $89.99 per month or $1,080 per year before taxes. Ouch! It's bad enough my cable provider charges me just about $1,000 per year. I like annuities that pay me, not cost me!

You can then get killer applications.... or apps... as they are known. They make it even easier to spend money. Starbucks, Gap, Avis, Pizza Hut and eBay all offer customized programs to... dare I say it... increase their bottom line.

Unfortunately, an increase in their sales is generally a decrease in your savings.

Smartphones are a wonderful innovation. They are compact, can increase work productivity and offer the 'cool' factor for some. But, don't kid yourselves... they can be expensive.

Stock Market Volatility 2008-2009

"It was the best of times, it was the worst of times..."

Charles Dickens

I wonder if Charles Dickens knew how appropriate his quote from 'Tale of Two Cities" would be in describing the stock market volatility of 2008-2009. Last year concluded with the S&P500 losing 22% in Q4. It then continued it's losing ways in Q1 of 2009 and dropped another 11%.

The S&P500 has only experienced two consecutive double digit quarterly decreases in 38 of the past 200 quarters... or just 19% of the time. So, for the lucky soles who managed to pick the end of 2008 as a good starting point, they quickly found themselves down 30+ percent in six (6) short months.

Fortunately, the tide turned in mid-2009 and the S&P500 gained 16% in Q2. It then managed to follow this up with another 16% gain in Q3.

Is this volatility unprecedented? Pretty much. It came close in 1983, but the fact remains in the past 50 years the market has not experienced four (4) consecutive quarters with double digit changes.

Challenging Conventional Asset Allocation

We are creatures of habit. We tend to do things that are familiar. We eat at the same restaurants. Shop @ the same stores. Drink the same brand of coffee. Have similar daily routines. And, watch the same TV shows.

Investing tends to be the same. We'll invest more domestically than in foreign markets. Is this a smart economic decision or once again a 'familiarity' issue? You can argue your case either way.

However, you can make a pretty good argument for not following the heard. For instance, if you lived in China, Norway, India or Brazil would the local Certified Financial Planner (CFP) recommend you invest 60%-70% of your money in US stocks? I doubt it. The simple answer may simply be invest where the best opportunities lie within your risk tolerance.

Most asset allocation models will have an emphasis on large US based companies. They'll state the benefits of diversification, quality of earnings (GAAP Standards), transparency and multi-national appeal.

MFS Investment Services has a nifty online calculator for determining your asset allocation(see the left margin for calculators and planners). Even if you test conservative, they recommend a 35% exposure to US stocks. If you are aggressive, you can have an 80% exposure. No model has foreign exposure greater than 20%.

I think it's time to challenge conventional wisdom. This may sound contrarian. But, think about it. When is the last time you saw a 401k plan offering a REIT option? How about a commodity fund? Or, maybe even a gold fund? It simply doesn't happen. Yes, things have evolved whereby some plans offer REIT's these days. But, most plans continue to offer the same asset allocations they did 10 years ago.

Times are changing and portfolio management is evolving. Thinking outside the conventional box could lead to greater returns over the long haul with less risk.