Welcome to 2010!

January 28th, 2010

After a wild couple of years and an amazing 2nd, 3rd, and 4th quarter of 2009 - we’re finally in 2010. This alone seems like a milestone achievement of epic proportions considering where we were not more than a couple years ago.

2008 was nothing more than wealth destruction at it’s finest, in more ways than one. Real estate values plummeted, equity markets sank, jobless numbers rose, GDP shrank, the dollar became weak, and commodities were highly volatile to put it mildly! 2008 marks a year of despair and discontent.

2009 started off the same, people continued to make the wrong decisions at the wrong time. Average investor mentality prompted selling at what we look back now as the bottom. I know, there were investors who couldn’t remain grounded in their financial plans. Fear took over, greed was long gone, and a return of principal was all they wanted even if it meant abysmal interest rates and locking in paper losses. That proved to be an incredibly detrimental decision for the masses of individual investors throughout the world who made similar decisions.

What proved to work, which has proved to work time and time again for decades, is staying grounded in a solid plan. Those with near term cash needs separated in conservative money market and CD type of investments were able to weather the storm. In fact those same clients were able to re-balance their portfolios on the way down into first quarter 2009, and subsequently later at much higher levels later in 2009. For investors who stayed focused on their plans - the gains were tremendous as portions of equity positions were bought at depressed levels, and subsequently portions were sold later in 2009 at higher levels. All along, maintaining enough cash and CD investments to cover near term cash liquidity needs.

A bad year(s) coupled with bad decision making can lead to a lifetime of lost net wealth…

After nearly 15 years as a financial advisor (March 15 marks my 15th year since starting with then “Dean Witter Reynolds” and subsequently “Morgan Stanley” - as an advisor) 2009 will go down in the history of my career as one of the most successful advising experiences ever. In the grand scheme of things - I will always look back on the focus and fortitude it took my clients to endure the most difficult and challenging period for net wealth volatility since the decade of the great depression.

The trust clients placed in the process and long term focus I provided them is unequivocally my Firm’s most valuable asset.

That leads me to today, WELCOME TO 2010!!! Remember, we are investors, not speculators. We implement and manage focused and concise plans to achieve goals over long periods of time while reducing risk and volatility to a level each client is comfortable with. We CAN NOT predict the market movements, we DON’T try to manipulate investments to take advantage of “what we think will happen”. Truth is, no one knows.

Here’s the hook though, as Americans IT IS IN OUR BLOOD to think we know better, to think we can predict what investments or managers or assets will outperform. We ARE the greatest nation on the planet, if this drive to always outperform WASN’T in our persona - we wouldn’t be the greatest nation on the planet!

So, I propose to you NOT to try and guess where the markets are going. DON’T let fear and greed lead your investment decision making. ABSOLUTELY NEVER deviate from a solid long term plan UNLESS your financial situation changes. TURN OFF THE NEWS and the “talking heads”. For every analyst who says we’re going down, there’s another saying we’re going up. They don’t know anymore than you or I do.

What we DO KNOW HOWEVER, is that in the context of a well thought out longer term financial and investment plan (as you all know I share the mantra 5 years, 5 years, 5 years with many of my Fee-Only advisor counterparts), the strategies of minimizing costs, taxes, and turnover, consistently re-balancing at opportune times, monitoring your financial situation for adjustments to your longer term plan, updating your financial plan regularly, and staying focused on what works IS THE BEST WAY TO ACHIEVE FINANCIAL SUCCESS!

So prepare for a drop in your account values, prepare for another rocky year. I don’t know where we go from here, up, down, or sideways. I do know that we have a strategy in place based on you and your financial needs that is solid (if you question that statement to the slightest degree call me IMMEDIATELY so we can review your plan in person together AS SOON AS POSSIBLE!).

Now that you’ve had a chance to review your year end performance reports, please contact me at 702-987-1607 or greg@redrockwealth.com if there have been any changes to your financial situation I should be aware of OR if you have any questions we haven’t covered in your financial and investment management reviews.

Welcome to 2010!!! A year I hope to be filled with peace and financial prosperity!!!

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FDIC Insured Money Market Option

October 21st, 2009

TD Ameritrade is now offering an FDIC insured money market option which is yielding (albeit abysmally low!) a substantial amount MORE than the US Government money market option (which most Red Rock Wealth Management clients have). For this reason I’m moving all client money market options into the FDIC Insured Money Market account.

The FDIC Insured Money Market is a sweep fund, meaning money automatically flows in and out of the fund to earn maximum interest by keeping your money working for you.

It’s a good option to have and all clients will be taking advantage of it. You may notice some changes on your statements referencing this fact, please don’t hesitate to call or schedule a meeting to review.

Greg

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Active Mutual Fund Managers Report Card

October 19th, 2009

Report Card for Active Managers

Morningstar recently announced the introduction of a new “Box Score” report analyzing the performance of actively managed US equity mutual fund managers. Morningstar’s analysis starts with a universe of 22,000 US equity funds and prunes the list by aggregating multiple share classes and eliminating exchange-traded funds, sector funds, bear market funds, long/short funds, and lifecycle funds. They also exclude funds deemed to have a “passive-like” investment approach, specifically citing Dimensional strategies. All funds available for purchase at the beginning of any particular time period under review are included, so the results are free of survivor bias. Morningstar compares results to their own stock indexes, which seek to capture the returns of the nine distinct Morningstar style boxes (large cap growth, mid cap value, etc.), and evaluates performance by calculating both Jensen’s alpha and a more comprehensive Fama/French alpha.

The report is similar to the SPIVA report (Standard & Poor’s Indices versus Active Funds Scorecard), which compares actively managed funds to various S&P and Barclays indices in US equity, international equity, and fixed income markets. S&P uses the CRSP Survivor-Bias-Free US Mutual Fund Database, and, like the Box Score report, is published semiannually.

Although we found the Morningstar report rather light on documentation, both reports are useful in providing a regularly updated analysis that quantifies the challenge facing investors seeking to identify winning money managers.

A few nuggets from recent reports:

  • Morningstar finds that 41% of actively managed funds outperformed their respective indexes for the three-year period ending June 30, 2009, using a measure of Jensen’s alpha. But Morningstar notes that “once the Fama/French factors are taken into account, active managers’ outperformance relative to the indexes falls materially.” By the latter measure, only 37% of managers outperformed, and average alpha was negative in all nine style categories.
  • S&P reports that only 31% of large cap core funds for the five-year period ending June 30, 2009 outperformed the S&P 500 Index. Results were even less favorable for non-US markets, where 13% of international funds and 10% of emerging markets funds outperformed their respective benchmarks. We often hear that non-US stock markets exhibit greater pricing errors than the US, supposedly offering a target-rich environment for clever stock pickers. The numbers suggest this is wishful thinking.
  • Fixed income markets were no less challenging: for the same five-year period, Standard & Poor’s found that 22% of intermediate government funds were outperformers, and the number dropped to 11% for high-yield bond funds and only 2% for mortgage-backed securities funds.
  • The fund attrition rate is significant: S&P reports that 27% of the 2,154 US equity funds in existence five years ago have merged or liquidated as of June 30, 2009. For reasons unclear to us, the number jumps to 39% for large cap blend funds, the worst among all style categories. Morningstar reports that 10% of small growth funds have disappeared in just the first six months of 2009.

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    Climbing a Wall of Worry

    August 4th, 2009

    Another excellent post from my favorite author Weston Wellington with Dimensional Fund Advisors:

    US stocks extended their winning streak as the S&P 500® Index jumped 7.41% in July; it was the first time since 2003 that the index rose by 1% or more for five consecutive months. Total return for the March 2009-July 2009 period was 35.7%, the strongest five-month period since 1938. The old Wall Street adage that “A bull market climbs a wall of worry” never seemed more appropriate as investors were confronted with a daunting list of worrisome news announcements:


    * March 5: Wells Fargo & Co. slashes the dividend 85%, following similar cuts by J.P. Morgan Chase and PNC Financial Services Group.
    * April 9: Berkshire Hathaway Inc. loses its longstanding AAA credit rating from Moody’s.
    * April 29: World Health Organization upgrades swine flu pandemic to a level-five alert.
    * April 30: Chrysler files for bankruptcy.
    * May 25: North Korea conducts nuclear missile tests in defiance of international condemnation.
    * June 1: General Motors files for bankruptcy.
    * June 29: Bernard Madoff is sentenced to 150 years in prison for defrauding thousands of investors.
    * July 1: Strapped for cash, California prepares to issue IOUs in lieu of tax refunds.

    Many observers dismissed the recent rise in stock prices as an aberration that would soon be rectified. It may be too soon for the bulls to declare victory, but the following sample of observations suggests that predicting the course of stock prices is often an invitation to embarrassment.

    “Dividend cuts have undermined the rationale that high dividend yields for global benchmarks are a buy signal for equities.”
    —Michael Mackenzie and David Oakley, “US Faces Worst Year for Cuts to Dividends since 1938,” Financial Times, March 3, 2009.

    “Commercial real estate loans are going sour at an accelerating pace, threatening to cause tens of billions in losses to banks already hurt by the housing downturn.”
    —Lingling, “Commercial Property Faces Crisis,” Wall Street Journal, March 26, 2009.

    “Without a sustained improvement in the credit market—the seat of the crisis—it seems irrational to expect a durable move higher in equities.”
    —Richard Barley, “Bond Markets Don’t Buy the Rally,” Wall Street Journal, March 26, 2009.

    “A record number of consumers are falling delinquent or into default on their loans, a problem that some economists say will only get worse this year.”
    —Kathy Chu, “Consumers Fall Behind on Loans at Record Rate,” USA Today, April 6, 2009.

    “New research shows corporate bonds have been far better at predicting where the economy is headed than anyone thought. Unfortunately, that suggests the economy is going to get much worse.”
    —Justin Lahart, “A Warning from the Bond Market,” Wall Street Journal, April 9, 2009.

    “The March stock market rally that fuelled hopes of a broader economic recovery was deceptive because ‘real money’ investors remained on the sidelines.”
    —Anuj Gangahr and Chrystia Freeland, “Head of NYSE Cautious over Rally in March,” Financial Times, April 16, 2009.

    “Lending at the biggest US banks has fallen more sharply than realized, despite government efforts to pump billions of dollars into the financial sector.”
    —David Enrich and Michael R. Crittenden, “Bank Lending Keeps Dropping,” Wall Street Journal, April 20, 2009.

    “The US economy appears doomed to enter an enduring episode of unimpressive growth.”
    —David J. Lynch, “US May Face Years of Sluggish Growth,” USA Today, May 8, 2009.

    “April saw the lowest level of insider buying ever recorded by research group TrimTabs, with insider selling fourteen times as high. Likewise, companies sold 64% more shares than they bought in April.”
    —Spencer Jakab, “Beware the Seductive Appeal of the Sucker’s Rally,” Financial Times, May 9, 2009.

    “Markets need volume to sustain bull runs, but unfortunately this run does not have it. In fact, trading volume on the New York Stock Exchange has been trending lower all month.”
    —Michael Kahn, “This Bear Should Stay Well Fed,” Barron’s, May 20, 2009.

    “We are still a long way from a viable, solvent banking system that intermediates credit independently.”
    —George Magnus, “Reasons Why Bear Market Rally Will Stall and Reverse,” Financial Times, May 21, 2009.

    “The bad news is that this recession fully matches the early part of the Great Depression . . . Global industrial output tracks the decline in industrial output during the Great Depression horrifyingly closely.”
    —Martin Wolf, “How Today’s Global Recession Tracks the Great Depression,” Financial Times, June 17, 2009.

    “The economy is still declining. Credit isn’t coming back. Unemployment is rising, and we are seeing a much less robust consumer. I think the market at some point is going to give back a large portion of these gains.”
    —E.S. Browning, “Is the Bull Run Pulling Up Lame?” Wall Street Journal, June 22, 2009. Quotation attributed to Michael Farr, president of Farr, Miller & Washington.

    “US stocks took a pounding yesterday, with the benchmark S&P 500 Index turning negative for the year as investors reacted to data showing many more people lost their jobs in June than expected.”
    —Kiran Stacey, “Stocks Pummelled as S&P 500 Turns Negative for Year,” Financial Times, July 3, 2009.

    “The average length of unemployment is higher than it’s been since government reports began tracking the data in 1948.”
    —Mortimer Zuckerman, “The Economy Is Even Worse Than You Think,” Wall Street Journal, July 14, 2009.

    Eckblad, Marshall, and Mike Barris. “Wells Fargo Cuts Quarterly Dividend.” Wall Street Journal, March 6, 2009.
    Economist. “Watching Nervously.” Global Health, May 2, 2009.
    Patterson, Scott. “Moody’s Strips Berkshire of Top Rating.” Wall Street Journal, April 9, 2009.
    S&P. The S&P data are provided by Standard and Poor’s Index Services Group.
    Yahoo! Inc. Yahoo! Finance. In www.yahoo.com, accessed August 3, 2009.

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    Investment Portfolio Risk - Systematic vs. Specific Risk

    June 17th, 2009

    Most individual investors (and unfortunately many financial advisors) haphazardly throw together bits and pieces of stocks, bonds, mutual funds and annuity products in an attempt to diversify their financial holdings and reduce investment risk. Incorrectly they assume that “more” holdings is automatically “better”, when in fact more may mean little more than a false sense of security.

    In the context of creating a truly diversified investment portfolio, there are two primary types of risk associated with individual investment securities - specific risk and systematic risk. The creation of an “efficient investment portfolio” is based on several factors, including eliminating all “specific risk” or “non-systematic risk” (also called diversifiable, unique, unsystematic or idiosyncratic risk).

    Specific risk is a completely unnecessary risk. Most investment portfolios are exposed specific risk, yet most investors aren’t compensated with corresponding investment return because of the nature of specific risk.

    Specific risk is the risk associated with individual investment securities. It’s unnecessary because it can be diversified away by adding more similar securities to the portfolio. The more securities added (similar in nature), the more the specific risk of an investment is reduced until you reach a point of diminishing returns (where added securities have no added risk reducing effect).

    If you own shares of IBM, there is specific risk associated with that security. It fluctuates in value based on its own set of business circumstances like profitability, financial strength, product innovations and future prospects. IBM also fluctuates in value based on how its market sector (a grouping of other large technology companies) is performing.

    If you owned 10 large technology companies, you’d begin to diversify away the specific risk associated with IBM. If you diversified into enough positions (many experts say 15 to 20 at a minimum), you would have an “asset class”.

    An asset class is a group of similar securities - for example large companies, small companies or international companies. Asset classes do not have specific risk as it has been effectively eliminated through diversification. An asset class does however have “systematic risk”.

    Systematic risk is the risk associated with an entire asset class once all specific risk has been eliminated. It cannot be diversified away (with the exception of long/short strategies which is beyond the scope of this article). Each asset class has it’s own systematic risk that one must endure to achieve the expected long-term returns of the asset class.

    Each asset class has a historical “correlation” to another asset class, meaning some investment securities perform differently at different periods in our economic cycle. For example, in 2008 commodities like gold and oil fluctuated wildly both up and down in value. United States equity holdings floundered through the third quarter, then sank dramatically in the fourth quarter as commodities stabilized. Treasury bond prices tended to trend upward throughout the year as interest rates came down.

    These are excellent examples of “non-correlation”. Asset class investments performed good or bad relative to each other, and although most asset classes ended lower in value in 2008, there were varying degrees of investment loss for each asset class. Consequently a well diversified portfolio including multiple asset classes and bond holdings performed better on average than their 100% equity counterparts.

    To create a truly diversified investment portfolio, an investor must first remove all unnecessary (specific) risk associated with their investment holdings. This means ONLY accepting the systematic risk associated with an investment, and embracing it as a means to an end.

    To further reduce portfolio risk through diversification, an investor must combine several asset class investments with non-correlative qualities in a portfolio balanced to the investors desired risk tolerance. This concept is based on Modern Portfolio Theory - or an effectively proportioned mix of non-correlative asset class investments. Modern Portfolio Theory serves as an industry wide accepted model for rational investment portfolio decision making.

    Generally speaking, a minimum of 6 asset classes could be combined into a statistically significant diversified portfolio. 6 asset classes each holding 20 securities (minimum) makes for a LONG portfolio statement from your custodian! That’s 120 securities in your portfolio, and it’s quite unnecessary with the advent of no-load mutual funds and exchange traded funds. You could hold 120 positions and monitor them - fumbling around a re-balancing program, or hold 6 positions (8 to 12 is more preferable) making re-balancing your diversified portfolio allocation much simpler, and invariably more precise.

    Once the specific risk is removed and non-correlative asset classes are combined into a balanced portfolio, an investors desired long term return level should in theory be purely correlated with each unit of risk they’re willing to accept. When only systematic risk remains, and full diversification among several asset class investments has been accomplished - the saying “the greater the risk, the greater the reward!” should hypothetically hold true over long periods of time.

    So before beginning any investment program, consider carefully the types of risk you’re exposing your portfolio to. There’s no need to take unnecessary risks with your investments. It is your financial future after all!

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    Treasury Investment vs. Equity (Stock) Investment - Surprising Information You Must See!

    June 10th, 2009

    Here’s a quick 7 minute video produced by Dimensional Fund Advisors on the REAL risks of treasury bills vs. the risk for equity investment. It’s a piece every investor should see and understand, as the risks to purchasing power are increased dramatically with a heavy allocation to (what people mostly consider) “safe” investments like treasury bonds.

    Here’s the video:
    http://www.dfaus.com/library/videos/retireme/

    Surprisingly enough - the WORST 10 year period for stocks is NOT AS BAD as the WORST 10 year period for stocks and a balanced portfolio somewhere in the middle has the best risk/reward characteristics!

    OF COURSE, the main caveat is we’re assuming “equities” or “stocks” are a DIVERSIFIED BASKET of those securities - NOT individual stock positions, which brings in another realm of portfolio risk.

    Greg

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    Your Mutual Funds & Lending Securities

    June 1st, 2009

    It’s a little known fact that MANY mutual funds practice securities lending. Securities lending entails taking portfolio holdings, loaning them to another firm, and collecting interest on that loan.

    Why would anyone want to borrow securities? Simple - traders sometimes sell the market short - called “short selling”. Short selling is borrowing a stock or bond, selling it at current market prices, then buying it back at “hopefully” lower prices. Short selling is a trading strategy - NOT a long term investment strategy!

    What you probably also don’t know is that Dimensional Funds DOES in fact lend out securities and collects interest in order to benefit the portfolio performance by the amount of interest earned on the securities loan.

    Another article by Weston Wellington at DFA Funds details some recent commentary by Wall Street Journal author Jason Zweig:

    In a recent article, Wall Street Journal columnist Jason Zweig takes a look at securities lending practices among various mutual funds and finds, in some cases, cause for concern. “Securities lending is sensible and beneficial in the right hands,” he observes, “but can wreak havoc when it is done wrong.” Last year’s turbulent fixed income market led to problems in unexpected places such as money market funds or short-term “enhanced cash” strategies, and a number of lending programs experienced losses associated with reinvestment of collateral backing the securities on loan.

    Zweig’s principal gripe is that some fund sponsors keep a portion of the lending revenue even though loaned securities belong to fund shareholders and they bear the risk associated with such activities. He notes approvingly that T. Rowe Price Group and Vanguard Group “rebate all securities-lending income (net of expenses) back to the funds that generated it.” Although not mentioned in the article, Dimensional funds likewise receive 100% of any net lending revenue.

    Zweig’s article suggests that fund investors and their advisors should pay close attention to securities lending practices, the allocation of revenue, and the financial incentives for those providing lending services to the fund.

    A description of Dimensional securities lending practices appears on page 80 of the DFA IDG/DIG prospectus dated February 28, 2009, and a related risk discussion appears on page 16. A table on page 36 shows net lending revenue for the fiscal year ending October 31, 2008 for twenty-seven funds, with the funds earning a total of $182,252,000. The resulting performance enhancement among these twenty-seven funds for the fiscal year ranged from 0.04% for US Large Company Portfolio to 0.66% for Japanese Small Company Portfolio.

    Dimensional’s Research group is preparing a more detailed review of securities lending programs, including a discussion of recent problems. Look for it on our website in the near future.

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    The Single Most Important Thing Your Doctor & Lawyer Have That 99% of Financial Advisors Don’t - a Fiduciary Responsibility

    May 31st, 2009

    fi•du•ci•ar•y – A Financial Advisor held to a Fiduciary Standard occupies a position of special trust and confidence when working with a client. As a fiduciary, the Financial Advisor is required to act with undivided loyalty to the client. This includes disclosure of how the Financial Advisor is to be compensated and any corresponding conflicts of interest (source www.FocusOnFiduciary.com).

    If you haven’t heard of a Fiduciary Standard of Care, you haven’t done your homework on selecting your financial advisor. The single most important thing your doctor, your lawyer, and your accountant (your accountant has an implied Fiduciary Standard) have that 99% of all financial advisors DO NOT have is the Fiduciary responsibility to you, their client. Every financial advisor should be held to a Fiduciary Standard, but 99% of them will not put it in writing, legally binding them to that extra level of care and responsibility.

    So just what is a Fiduciary Standard? A Fiduciary Standard is the absolute and undeniable obligation to provide you (the client) the most appropriate financial advice and guidance REGARDLESS of personal gain (compensation/commission/fees/perks, etc.). A Fiduciary Standard entails acting with complete disregard as to how the recommendations and planning advice will affect the planner, but rather how those recommendations and the planning advice will benefit the client financially and accomplish the clients financial goals. A Fiduciary Standard requires a complete and consistent focus on the client from the beginning stages of the financial planning and investment process, through the execution, implementation, and monitoring of the clients financial plan.

    What would you think, how would you feel if you went to your doctor with a life threatening condition and they weren’t held to a Fiduciary Standard of Care? What if they received compensation or perks for recommending one drug over another? What if their income was dependent on which drugs or course of treatments they recommended? What if they needed to sell “X” amount of “ABC” drug and the generic counterpart never entered their mind?

    You’d feel betrayed, you’d feel distrust, you’d think your doctor didn’t have your best interests at heart, you’d be hesitant and concerned as to where to find real honest medical advice. You’d have every right to feel that way.

    Attorney’s have a similar Fiduciary responsibility to their clients. An attorney must act with good faith and in their clients best interests always. The client is trusting the attorney to represent them in the most prudent manner possible, and the attorney must not breach this confidence placed in them by their client.

    Yet everyday the average consumer with financial and investment needs signs over their financial security and future to an individual not held to a Fiduciary Standard of Care. Every day the average consumer continues to re-hire that same NON-Fiduciary financial advisor - because not firing a non-Fiduciary advisor is the exact same as re-hiring that person everyday that passes. Every day millions of investors naively but trustingly believe they’ve received the most prudent and unbiased advice possible, when this isn’t necessarily the case.

    Your doctor is held to a Fiduciary Standard of care, your attorney is held to a Fiduciary Standard of Care, and your accountant by implication is generally held to a Fiduciary Standard of Care.

    Why would anyone accept anything less than a complete acceptance of the Fiduciary Standard on the part of their financial advisor? Simple - 99% of financial advisor “professionals” choose not to (or cannot) adhere legally (or philosophically) to a true Fiduciary Standard. They’re enriched by large commissions, perks and other hidden fees to sell products rather than solve problems. Their incentive is lining their own pockets, not helping you achieve your financial and retirement goals. These financial advisors are paid from the Wall Street firms or insurance companies they work for, not their clients.

    Most consumers assume the Fiduciary level of responsibility and duty is already present in the financial services industry, and they’d be right to a limited extent. The Investment Advisors Act of 1940 mandates that to offer financial advice one must be a Fiduciary. To avoid this higher standard of care and responsibility the securities industry created what was coined the “Merrill Lynch Rule”, exempting certain types of fee-based accounts from coverage under the Investment Advisors Act of 1940 (labeling them brokerage accounts rather than advisory accounts).

    The Merrill Lynch Rule was overturned in May of 2007 thanks in part to the Financial Planning Association’s legal efforts. Wall Street does NOT want the imposition of a Fiduciary Standard because it clearly opens them up to more regulation and lawsuits from many standpoints, including a breach of fiduciary responsibility and suitability. But the simple fact remains that a Fiduciary Standard protects you, the consumer of financial and investment services.

    Although the Merrill Lynch rule was overturned, there still today does not exist any reasonable or consistent set of Fiduciary Standards in the financial planning and investment management industry. The primary reason this issue is so challenging for the industry to manage is compensation. If a financial advisor is paid directly from the client (or the financial advisor’s only source of income is through fees from the client in some form), they can in theory embrace a Fiduciary Standard. However, if a financial advisor is paid by some Wall Street investment banking firm or insurance company - their responsibility is to their employer who signs their paycheck first!

    If you believe that extra level of care and responsibility should be present in your financial advisor, demand clearly and in writing from them that they agree to be held to a Fiduciary Standard as described under the Investment Advisors Act of 1940. Demand they put your best interests first. Demand they provide you exceptional and unbiased financial and investment advice.

    A Fiduciary Standard is the highest standard of care, duty and responsibility in a relationship. Anything less than a Fiduciary Standard of care from your financial advisor is unacceptable. This is your financial future, your nest egg, your retirement, your family, and your security we’re talking about…right? Isn’t it time you expected more from your financial advisor?

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    Safety Checks Before a Flight to Quality

    March 24th, 2009

    These are challenging times. Challenging times call for prudent planning and a solid grasp on both long and short term financial needs. In designing an investment solution that is aligned with a client’s long-term plan, there is an ongoing, cooperative, and robust balance of:

    o Market risk – the risk that stock prices will decline
    o Inflation risk – the risk of losing long-term purchasing power
    o Longevity risk – the risk of outliving money

    Clients can be overwhelmed with the investment ‘advice’ being thrown at them from a variety of sources. While recent news certainly has not been good, many of these sources are focused on capturing viewers or readers and selling advertising (CNBC had record ratings in 2008). Unfortunately, the message is almost solely focused on market risk and doesn’t encourage a client to consider the bigger picture. As an advisor, I’m in the unique position to fully understand a client’s situation and help them understand that while they may wish to lower their exposure to market risk, doing so would increase inflation and longevity risks.

    This may feel better in the short term but the long term effects can be devastating. Red Rock is different than most other firms because we focus on providing an unbiased, comprehensive solution for each client’s personal situation. The question isn’t whether or not changes should be made in the portfolio given what’s happened; the question is whether or not the investment solution is aligned with the client’s personal, comprehensive plan.

    There is a bigger picture, and falling prey to the “talking heads” spewing financial “noise” can have substantial and negative impact on your long term planning.

    Greg

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    Ric Edelman Conf. Call - Pre & Post Retirement Planning in Today’s Volatile Markets

    March 9th, 2009

    Ric Edelman is an accomplished author, speaker, and syndicated radio host. His perspectives are insightful and down to earth.

    On Friday of last week, he had a client conference call for advisor clients (like my clients in the Edelman Managed Assets Program) and his personal clients. The call was eye opening to say the least, and in a horrific market I found it calming and realistic.

    The call is focused on those pre or post retirement and specifically covers cash flows, the markets, planning, what to do now, and how to handle the market recession.

    I personally consider this a “must listen” for anyone nearing or in retirement.

    This call was removed from the site. Please contact me a greg@redrockwealth.com if you’d like to learn more about the Edelman Managed Assets Program.

    Thanks in advance, and enjoy!

    Greg

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