As a result of the unprecedented economic and financial events of 2008, investors must deal with a whole new set of realities This new section of our website will be dedicated to helping investors understand the financial crisis and, most importantly, learn how to manage their portfolios going forward.   

We will add various papers dealing with market events and portfolio management as well as brief tips to help you deal with this crisis.

Brief Thoughts & Tips:

To ROTH or not to ROTH?  The media is full of articles about converting IRA accounts to ROTH IRA accounts. While it is a great concept, the big sticking point is that the amount converted is taxable at current tax rates. It only works for those who have the funds to pay the tax without drawing from the IRA and those retirees who want to pass the IRA onto heirs. If you are interested in analyzing a conversion, please contact your advisor.

Begin to Reassess: Markets have had an amazing rebound over the past two months and there have even been a few encouraging words on the economy. "Recovery" may be a premature notion but at least "stabilization" is a realistic possibility. Investors are beginning to feel like a long, torturous car wreck has finally come to a stop. Now is the time to begin assessing our injuries, the damage to the vehicle and other collateral damage. To help you in the first steps to rebuild your financial lives, please see our piece on Initial Steps to Reassess and Rebuild.

Gloomy but Thoughtful: Below is a link to an April 19 article about how investors may pull away from the markets for years to come. A few excerpts: "we stand a chance of losing a generation of investors..,...during the ten years ended March 31, the market fell 38%—the first decade of losses in more than 30 years ....., cataclysmic market events have left investors downright freaked out......the loss of faith is especially profound for those in or near retire-ment......the strongest kind of fear is fear of the unknown and that's been characteristic of this crisis......It is no wonder that money and the state of the economy were two top sources of stress for 80% of Americans." And my favorite: "Many advisers are just as dazed and confused as their clients." Read the article here.....

RMD Waived for 2009:  In another effort to illustrate their concern for the suffering masses, our Congress is waiving the requirement to take minimum distributions from IRA's in 2009. Sounds reasonable- no one wants to sell retirement assets when the prices are depressed - but it is another amazing example of the poor grasp  politicians have on reality. To understand why this is such a stupid mistake, read on. 

“Commodity investing is not dead." according to Jim Rogers (famous world- traveling motorcyclist – more famous commodity investor). He continues, “The fundamentals of commodities are unimpaired and prices will rebound when a lack of supply leads to shortages. Commodities will be the place to be when we come out of the downturn. Now, farmers can’t get loans for fertilizer. No one can get a loan to open a zinc mine. Supply restrictions will lead to some serious, serious supply problems.” We agree with this outlook. Commodity ETF's will again play an important role in portfolios. For all who are convinced there is a “conspiracy” controlling the price of oil, remember it is simply a commodity that responds to supply and demand.

2008 Taxes: Manageyour portfolio to pay NO taxes in 2008 Why sit on a loss when all stocks are down so drastically? Swap to a similar stock or mutual fund if you want to stay invested. Be cautious of mutual funds paying large capital gains distributions at year-end. It adds insult to injury if you pay taxes on a fund that lost a big portion of its value over the past year. Swallow your pride and take losses – they can be carried forward to use against gains in future years.

Municipal Bonds:  Perhaps the biggest “opportunity” in this crisis is tax-free bonds that are yielding as much as 1% to 2% more than comparable treasuries. Tax frees normally yield 80% to 90% of treasuries so this is an historic opportunity. Yields are high for various reasons and there are special risks and many caveats to consider. We recommend getting professional advice to avoid potential mistakes..