I think Annaly’s done going down. Saying this violates my rule about not trying to catch falling knives. Saying this also will incur the wrath of half my readers who believe that a 14.85% yield is “too good to be true.”
So be it.
When to get rid of a money manager:
1. When his results gnaw at your inner psyche.
2. When his purchases seem to make little sense. He’s buying stuff you wouldn’t. Or worse, he won’t tell you what he’s buying.
3. When he keeps telling you “to be patient.”
4. When he won’t refund his fee, despite the fact he’s losing you money. You’re losing. He’s winning. You’re being abused. STUPID.
5. When you realize there are precious few managers with the skills, the work ethic or the moxie.
6. When you awake one morning and figure “Heh, index funds and muni bonds would do better than this do-do.”
7. When your frustration finally says “I can do this. And I can devote the time to learning it.”
And you can.
My friends swear by this book.
Asset allocation accounts for over 90% of the return variability of mutual funds.
Asset allocation is the only factor affecting your investments that you can actually influence.
Index funds typically do better than picking individual stocks.
Hence, it makes sense to have broad diversification and re-balance regularly.
Rebalancing consists of bringing your diversification back into line.
The book was published in 2000 — a long, long time ago.
Are your brokerage accounts insured?
Commodities and futures accounts are not. Bond and stock accounts are, sort of. There are wrinkles. Some are fully insured up to many millions. But some brokerage firms have only enough insurance to cover $400 million for all their customers’ accounts — that’s in total. If your brokerage company dips into your monies — as MF Global clearly did — you should get your monies back. Maybe.
First, there’ll be a wait while “they” sort out the mess. Second, the receiver may take his cut before you get any or all or your money back.
There are two conclusions:
1. Harry still can’t figure out the entire story. Nothing about this murky world of the insurance of customer accounts is simple or clean — no matter how many acres of paperwork they give you.
2. Don’t keep a lot of money in one brokerage account. Open many. Just like you don’t trust one bank with all your money, don’t trust one brokerage company.
Do I really think you should be worried?
Yes.
I got caught on auction rate preferreds. Some of my readers are still caught in MF Global. The lead receiver lawyer is making over $850 on sorting out the MF Global mess. At 40 hours a week, that’s $1.8 million a year.
What they like and don’t like about the iPhone 4S.
Susan loves her iPhone 4S. She loves telling Siri to call someone — sometimes even me. I still have the iPhone 4. AT&T won’t give me a deal to upgrade. I’m reluctant to commit to another two years with AT&T, though they are improving. Michael needs to get a new phone, but worries about the battery life and lack of 4G LTE. This chart tells what others like and don’t like about it the 4S.
Charlie Rose interviews Seth Klarman.
Click here.
The latest Economist contains its Technology Quarterly — my favorite section.
Get it.
In fact, the Economist is still the best magazine around. And that’s an objective opinion.
The latest time I issued one of these was years ago. Susan and I were walking down the street with our daughter Claire.
I said “Objectively speaking, Claire is the most intelligent and gorgeous child in the entire world.”
Susan responded, “Objectively speaking?”
Harry Newton who bets his experience with Groupon is not unusual. I bid on a pizza. I paid. I never organized delivery. I’ve not bid on anything else — though I get several offers each day. I am mulling “the full body Brazilian hot wax.” Woody Allen said if I became bisexual, that would double my chances for a date on Saturday night. Were I not happily married, it would be a hard decision — bisexuality or a Brazilian hot wax? Oih veh, worse than finding a good money manager.
VectorVest has gone bullish, sort of. Their wonderful recommendation:
Prudent Investors may buy stocks long only if the market is rising.
Aggressive Investors and Traders should play the market with a bias to the upside.
Groupon’s stock sucks. It’s down significantly.
Groupon is a fleeting fashion. Google and Apple are real busuinesses.
Approx. 10% of the male population is gay. Therefore, Woody is wrong in saying that your dating chances double. They increase for sure, but don't double.
Bisexual means you like men and women. Therefore Woody's math is right.
Hi Harry. Berstein's website keeps all the research up-to-date. Look here: http://www.efficientfrontier.c…
Some pretty savvy investors that I know also swear by The Intelligent Asset Allocator. One of the few books they all seem to agree it's a “must have” for your personal library.
Which is worse: Groupon or Yelp? Good reasons to get rid of your money manager…it's so hard to find a good one that's why I read your blog. Do you really think the average person (even with time) can do it themselves? Investing today is so much about timing but I guess that's where a good Stop-Loss rule comes in.
Take it slowly. Ease into it. Read. Read. And think: “If they're pushing it, why? What's in it for them?”
You CAN do it yourself. Stop buying individual stocks (too risky), buy index funds allocated across all the categories recemmended by Bernstein. Make changes ONLY when your allocation targets are off by 10%. This guarantees you will buy low and sell high with the least amount of risk. To determine your risk profile, do the questionnaire here: http://www.ifa.com/surveynet/ This will tell you what % of your net worth should be in cash and bonds.