![\"VIX2Years\"](\"https:\/\/www.technologyinvestor.com\/wp-content\/uploads\/2015\/01\/VIX2Years.jpg\")
<\/a><\/p>\nFor comparison, this is the S&P500 over the same two years. You can see little inverse correlation. When the VIX spikes, the market falls. Or when the S&P falls, the VIX rises. Hard to figure.<\/p>\n
Using the VIX to predict the market is a bit hard.<\/p>\n I like the stuff Restoration Hardware sells.<\/strong><\/span> We have some of it. In fact, Susan got another UPS delivery of Restoration Hardware stuff this morning. Poor house here I come. Their stock has done well. Good strategy. Buy the overpriced products. Make it up with the stock. That strategy worked with Whole Foods.<\/p>\n Fortune<\/em> magazine did a piece on the founder: “How Stephen Gordon made himself the Ralph Lauren of hard goods.<\/em>” This is the part I liked best:<\/p>\n A second look at Tony Robbins long book:<\/strong><\/span><\/p>\n I’ve been reading it on my Kindle. When I highlight a passage, Amazon does an amazing thing: It magically copies my highlights to https:\/\/kindle.amazon.com\/your_highlights. <\/strong><\/a>Congratulations to Amazon. That’s seriously brilliant and a very useful feature. Write it down.<\/p>\n Now to the book. It’s had a lot of press and is doing very well.<\/p>\n But the sad part of this book which I recommended recently, is that it actually has useful information —<\/p>\n + The huge fees levied by Wall Street in general and mutual funds in particular seriously hurt an investor’s return.<\/p>\n + The fact that so few mutual fund managers beat the S&P500, and worse, so few of them have their own money invested in their own mutual fund.<\/p>\n + Independent fiduciaries are better than brokers.<\/p>\n + Index funds make huge sense and Jack Bogle, who invented them, does a great job pushing them.<\/p>\n In fact everyone on Wall Street has something to push — the incentive is so mouthwatering. Even a successful motivation (also called life) coach and now author of a supposed independent, objective book on investing finds it hard to resist the temptation. He seems to be into or getting into all the new ways for investors to stash their money. Which leads me to a Ron Lieber piece in Saturday’s New York Times:<\/em><\/p>\n \u00a0Slippery Tips on Annuities From a Life Coach<\/strong><\/p>\n By Page 418 of Tony Robbins’s new book “Money: Master the Game,” which promises on the cover that its seven steps to financial freedom will be “simple,” I was sort of ready to put it down.<\/p>\n But then, he hits readers with this promise: “Turn the page, and let me show you the five types of annuities that could change your life.” And then, on 428, the zinger: “Upside without the downside.”<\/p>\n Those are magic words to investors, but they also cause skeptical people to watch their wallets. Moreover, the product that he is most excited about is something called the fixed indexed annuity, the subject of numerous alerts and bulletins from a variety of concerned regulators. Finra, the independent securities regulator, noted that the products were “anything but easy to understand.” To top it off, Mr. Robbins now has a stake in a company that makes money through the distribution of annuities and intends to help invent a new one, which he discloses in the book.<\/p>\n In the two months since his book came out and rocketed to the top of the New York Times business best-seller list, Mr. Robbins, a renowned self-help author, has been adamant that its specific financial strategies and tools are not his own opinion; he interviewed plenty of experts to get theirs.<\/p>\n But once you start trying to make money off a specific product, logic would dictate that you think it’s worthwhile (or at least lucrative). So what exactly is going on here?<\/p>\n Let’s begin with the fact that there is nothing wrong with annuities per se. At their simplest, money is turned over in the present to be distributed later, often in a stream of monthly checks. Social Security works that way. The Obama administration has long hoped to make it easier for people to turn the money from their own retirement accounts over upon retirement in exchange for a pensionlike annuity payment.<\/p>\n But fixed indexed annuities are something else entirely. There are untold varieties, but the basic premise is this: First, hand some money to an insurance company through an annuity salesman. In return, get a guarantee that you’ll get your principal back, at minimum, at the end of the term. Then, you get credit on top of your principal when the market rises without losing money when it falls.<\/p>\n How is this possible? It gets complicated fast, but the insurance companies begin by putting much of your money aside for safekeeping. Then, they buy options that will be profitable if the market goes up. If the market doesn’t go up, the insurance company eats the cost of the options when they expire. Given these costs and machinations, the insurance company has a variety of creative ways to limit how much of the stock market’s gain it will actually credit to you if you own one of these annuities.<\/p>\n In his book, Mr. Robbins describes fixed indexed annuities as an “elevator that can only go up.” The Securities and Exchange Commission, however, says the opposite quite bluntly: “You can lose money buying an indexed annuity.” The quickest way is by trying to pull your money out early. The insurance companies generally lock people into contracts, and if you need the money before the term is up, you pay what is known as a surrender charge. Some people could pay tax penalties under certain circumstances too.<\/p>\n Prudent consumers who encounter all of this for the first time might want to seek out an expert who has no financial stake in their choice; annuity salesmen make large upfront commissions on fixed indexed annuities. So I asked Glenn S. Daily what he thought of the products, since he picks apart a variety of insurance products and makes recommendations for anyone who wants to pay him an hourly fee to do so. His feeling? “I have not ever found any that I am willing to recommend,” he said.<\/p>\n Why not? His process is to imagine how he might defend himself if he were sued, even though he’s never been sued. He would need to prove that he’d considered appropriate alternatives (say, buying and selling options on one’s own) and compared them with the product being offered. But building those models is extraordinarily complicated. He pointed me to a paper that a math professor and her colleagues recently published. In it, the writers noted that researchers who had worked in the area couldn’t even agree on how best to build a model, and the fact that the products have only existed for two decades or so means that there isn’t much historical data to go on.<\/p>\n I figured a full-time annuity salesman might have a sunnier view. When I called Stan Haithcock, he answered with his usual greeting: “Stan the Annuity Man!” And his opinion of fixed indexed annuities? “If they are not regulated soon, they are going to go down in history as one of the most overhyped products in the history of financial services,” he said. He expects a class action to emerge soon over another common aspect of the products, something called a guaranteed lifetime income rider.<\/p>\n I hoped that Mr. Robbins and his partners might offer some clarification, so I did what he suggested in his book and went to their website, lifetimeincome.com, to try to enter some of my own numbers and compare a few annuities. The site’s calculator didn’t work for me, so I called the phone number on the site.<\/p>\n When I reached a representative, he told me that the calculator actually only bases its output on a single product. “It’s a generic product, to be honest,” he said. “I don’t even know what the product is.”<\/p>\n Hey, no problem, I told him. What I was really curious about was an enticing new fixed indexed annuity that Mr. Robbins, in his book, said that he and his partners had pushed insurance companies to begin creating. It would let people buy in at younger ages than most current fixed indexed annuities, invest a little at a time and still get guaranteed lifetime income and growth linked to the stock market. The representative didn’t know anything about that product but offered to connect me with Vince Virga in Bayonne, N.J., who could hook me up with something he referred to as a laddered annuity strategy using multiple annuities from different companies. “You may have heard him on the radio,” he said of Mr. Virga. I had not.<\/p>\n None of that was part of Mr. Robbins’s book, and when I told him about my experience in a phone conversation this week, he agreed that annuity ladders were not what he had in mind for the world. Indeed, the annuity he promised in the book does not exist yet because the first insurer withdrew right after the book went to press. He and his partners are working with another insurer now and expect the new product to emerge in the third quarter of this year. By diving into the financial services industry headfirst, Mr. Robbins has drawn plenty of criticism for potential self-dealing, but he said that taking a stake in an existing company was the best way to advance a new solution for consumers.<\/p>\n Mr. Robbins is clear both in the book and in person that fixed indexed annuities are only one part of an overall asset-allocation strategy. He said he believed that people should invest in index mutual funds, which is more than defensible. But he also said he felt strongly that the purpose of investing was not to produce assets but income, say for retirement. And to him, an annuity with some kind of guaranteed payout will ultimately appeal more to millennials spooked by the stock market gyrations of the last decade than a standard 401(k) or similar plan.<\/p>\n We shall see. Meanwhile, the word that people in technology circles use for coming-soon offerings like Mr. Robbins’s best-of-everything annuity is “vaporware.” I hope it will one day emerge from the ether and do all it promises to do. But I don’t know if I would bet on it.<\/p>\n Ron Lieber’s article is here.<\/strong><\/a><\/p>\n \u00a0 Bad Jewish humor to brighten an overcast, cold Winter day<\/strong><\/span><\/p>\n + My mother is a typical Jewish mother. Once she was on jury duty. They sent her home. She insisted SHE was guilty.<\/p>\n + Any time a person goes into a delicatessen and orders pastrami on white bread, somewhere a Jew dies.<\/p>\n + An elderly Jewish man is knocked down by a car and is brought to the local hospital. A pretty nurse tucks him into bed and says, “Mr. Gevarter, are you comfortable?” Gevarter replies, “I make a living….”<\/p>\n + Three Jewish women get together for lunch. As they are being seated in the restaurant, one takes a deep breath and gives a long, slow “oy.” The second takes a deep breath as well and lets out a long, slow “oy.” The third takes a deep breath and says impatiently, “Girls, I thought we agreed that we weren’t going to talk about our children.”<\/p>\n + A waiter comes over to a table full of Jewish women and asks, “Is anything OK?”<\/p>\n<\/a><\/p>\n<\/a><\/p>\n<\/a><\/p>\n<\/a><\/p>\n