The above chart indicates the amount of cash investors have held as a percentage of the Wilshire 5000 at any point dating back to 1974. First, this chart confirms the belief that people invest money when they feel good, and pull money out of the market when they are fearful. Look at the 1990s. The percentage of cash not invested in the market steadily decreased throughout a decade where returns were constantly high. Consequently, in percentage terms, more money was invested in the stock market right before the crash of 2000 than during any other period studied. Additionally, you can …Read More
Make sure you understand the fine print!
It’s a great time to buy or refinance a home. Interest rates are extremely low (As of Jan 2009 a no points, 30 year fixed, mortgage rate of 5% is very common). While this great interest rate opportunity creates a terrific chance to lower your monthly payment, it also can create confusion. The confusion lies in understanding the good faith estimate (GFE) and the HUD closing statement.
The GFE is the proposal the lender sends to you outlining your projected closing costs and the new mortgage payment amount. So often people will only …Read More
Treasury Secretary Timothy Geithner and Securities and Exchange Commission Chairman Mary Schapiro each testified before different congressional committees today to disclose their recommendations on regulatory reform of US financial markets.
Geithner, who spoke to the House Financial Services Committee, offered a six-point proposal to address oversight of major players in the finance markets and prevent many of the problems that led to panic in financial markets last year:
Identify a single regulator to supervise financial firms of all kinds and make sure that they do not take on excessive financial risks.
… Read More
Increase the capital reserves that large
Everyone has felt the sting of the faltering stock market. The decline in retirement account values causes people to react differently: some sell their stocks and move to cash, some hang on for dear life, and others haven’t had a good night’s rest for 17 months. The question I would briefly like to address is, “how concerned should I be about my nest egg?” Simply, the answer to this question depends on when you are going to need the money in your savings.
We all know the equities market has lost approximately 50 percent since its high in October of …Read More
Bernard Madoff ‘Made Off’ With Investor Money –
How Other Consumers Can Avoid a Similar Fate
Bernard Madoff’s alleged Ponzi Scheme stands as an example of how the financial services industry has failed to protect the best interests of consumers. It highlights the increased need for consumers to proceed cautiously when working with an advisor and the importance of asking pointed questions before hiring a professional.
As the post-Madoff era begins and the federal government and industry regulators decide the best course of action to protect consumers, people need to ask the right questions of an existing or potential advisor.…Read More