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  • Second-Longest Bull Market Ever, Yet Investors Remain Skittish

    If the US stock markets don’t collapse between now and Friday, this will be the second-longest bull market on record. Really. The current bull market began in March 2009 and will have lasted for 2,608 days (7.2 years) on Friday. If so, it will top the former second-longest bull market which ran from 1949 to 1956 (2,607 days). That’s quite impressive.

    Yet despite the stock market’s very impressive returns since the end of the Great Recession, American investors have unloaded stocks at a near-record pace. According to a new Gallup poll, only just over half of American households say they currently have any money invested in the stock market, matching the lowest ownership rate in the poll’s 19-year history.

    The latest Gallup poll found that only 52% of American households have any money invested in stocks (individual stocks, equity mutual funds, ETFs, etc.), down from a high of 65% in late 2007. Unfortunately, young people are the ones with the lowest investment in stocks. There’s a lot to talk about on this subject.

    Yet before we get to that discussion, I want to bring to your attention a new report which found that almost half (45%) of Americans now pay zero in federal income taxes, according to the Tax Policy Center. The reasons may surprise you. Let’s get started.

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  • Why Most Investors Consistently Underperform The Market

    Long-time clients and readers will recall that for years I have been writing about the annual Dalbar Studies which compare the actual performance of mutual funds versus what the average mutual fund investor actually earns. You may also recall that the numbers are quite ugly – the average investor makes significantly less than mutual fund performance reports would suggest in both stock and bond funds.

    The problem is not that mutual funds overstate their performance. The problem is that too many investors decide to switch into and out of mutual funds too frequently, in the hopes of boosting their returns. All too often, investors decide to sell the fund(s) they currently own, often at a low point, and switch into the latest hot performers, just before they hit a losing period. This practice too often results in selling low and buying high. I call it the “Mutual Fund Merry Go-Round.”

    If you have not seen these Dalbar statistics before, you are probably shocked. So was I when I first saw them in 1994! What is most surprising is that there has been very little improvement in the numbers over the last 20 years.

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  • Buy Low, Sell High - Any Questions?

    There's no doubt about it, investors are scared. After soaring upward in the first quarter of 2012, the S&P 500 Index has now plunged based on worries about the US recovery as well as continued Eurozone woes. Many investors are paralyzed on the sidelines while others are seeing their buy-and-hold portfolios look more like a roller coaster than an investment portfolio.

    However, there is an investment strategy that has the potential to take the market's lemons and make lemonade. Renown investor, Warren Buffett, follows a value-style investment strategy and has done so successfully for many years. For such investors, market uncertainty can actually mean opportunity to scoop up the stocks of good companies at discounted prices.

    This week, I'm going to review value investing and how it can bring some stability and growth potential to a portfolio. After that, I'll introduce you to Yacktman Capital Group, a value-style money manager right in our backyard here in Austin. Yacktman has improved upon Buffett's approach to value investing and we are excited to offer this emerging manager to our clients. If you are out of the market or heavily invested in buy-and-hold strategies, you owe it to yourself to check out Yacktman's Concentrated Composite Strategy.

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  • You Can’t Go Home Again... Or Can You?

    Recent statistics from the US Census Bureau indicate that more adult children are either moving back with mom and dad, or never leaving in the first place. Studies show that this is not just a US phenomenon, but is also occurring across the globe. While it's easy to see that the economy is a major factor in this demographic shift, my focus this week will be on a possible silver lining.

    If adult children are moving back home due to lack of a job or not making enough money to make ends meet, this can be an excellent "teachable moment" for parents. The current economic environment is a way for parents to impart valuable wisdom about saving and investing to their adult children. While it's not always easy to get the attention of adult children, at least you won't have to convince them that rainy days happen since we're coming out of one of the worst economic storms we've ever seen.

    Obviously, it's better to start teaching children about saving when they are young. To help parents or grandparents of younger children, I have also included a discussion about the best ways to approach teaching kids about money, along with some valuable Internet resources to help you along.

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  • Teaching Your Kids to Save & Invest Wisely

    Italy was nice, but it's great to be back home. Because of my travel schedule, this week's E-Letter is a topic that we re-run periodically - how to teach your children to save and invest wisely.

    I consider it to be a duty and obligation of parents to teach their children about money, saving and investments. However, you'd be surprised to find that even many adult children of our clients have little or no financial knowledge. While it may be awkward to begin talking about saving and investing with your children when they are adults, it's not so bad if you begin sharing your knowledge with your children when they are young.

    This week's E-Letter will discuss ways to teach your children or grandchildren (or anyone) about saving and investing as well as ways to mentor your children financially even in their adult years. There's lots of good information in this issue, so I urge you to forward it to anyone you feel may benefit from it.

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  • Use of Professional Financial Advisors is Changing What You Can Learn from Wealthy Investors

    I think that all of us can agree that the wealthy, those with a net worth of $10 million or more, have a certain edge in their investments. After all, only the wealthy can play in the high-stakes game of hedge funds and other "private" offerings with minimum investments in the millions of dollars. However, there are times that all of us can learn valuable lessons on investing by paying attention to the habits of wealthy investors.

    A recent study by Cerulli Associates is a good example. It found that many wealthy investors are now seeking the advice of multiple financial advisors. This week, I'll highlight the reasons that wealthy investors are using multiple advisors as well as the advantages of doing so. More importantly, however, I'm going to show how you can get the same benefit of multiple advisors for your own portfolio, even if you aren't a multi-millionaire.

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  • Core Investments - What You Need to Know

    “Core" portfolio holdings are defined as being those steady performers that serve as the backbone of a diversified portfolio. However, they are among the most overlooked of all investments because they tend to be dull and boring. Unfortunately, this lack of attention has allowed mutual fund companies to define this category as predominantly large-cap blend and value funds. The problem is that these funds are far from steady performers since they are highly correlated to the ups and downs of unmanaged stock indexes.

    This week, I'm going to discuss the importance of core investment strategies and why they merit your close attention. I'll also point out the weaknesses of the mutual fund industry's conception of core investments, and then introduce you to an actively managed core investment alternative that may be a better option for you.

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  • Passive Vs. Active Investing, a New Perspective

    Since the bear market low in early March 2009, US stocks have come roaring back, the last few days not withstanding. In fact, the Dow Jones and the S&P 500 are within striking distance of their all-time highs. It is not surprising, then, that advocates for passive buy-and-hold strategies are once again singing their praises: See we told you, the market always comes back!

    What they fail to mention, however, is that hundreds of thousands (if not millions) of investors bailed out of the stock markets in late 2008 and early 2009 and never got back in. The S&P 500 Index plunged almost 51% from its October 2007 high to the low in early March 2009. Not many investors had the stomach for that kind of collapse. Yet the buy-and-hold crowd would now have you believe that everyone held onto their stocks and mutual funds during that period. Not so!

    Today, we will take a fresh, objective look at buy-and-hold versus the actively-managed programs we recommend at Halbert Wealth Management that aim to make at least market rates of return during up cycles, and hold downside losses to a minimum. I will give you the pros and cons of both strategies and show you how you can get these professionally-managed programs in your portfolio (if you don't have them already).

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