Dow 14,000 in 2007?

Ulli Uncategorized Contact

You will never, ever hear any predictions from me. I am merely following trends not trying to get egg all over my face.

But the extremely bullish crow is at it again. With the Dow having set a new intra-day high yesterday of 12,838.46, the next milestone of 13,000 is just a slight push away and 14,000 is appearing on the horizon.

Sure, the domestic economy appears stable and global economic growth is strong. If that milestone is reached, great, but I won’t hold my breath. The markets have a way of punishing those who are most convinced of its future direction.

Don’t mortgage the house and hog the credit cards based on predictions and throw it at Wall Street. Stay prudent and track your sell stop points. Otherwise, you might resemble the guy who does sit ups under his car.

SubPrime Loan Solution: Let’s Bail ‘Em Out

Ulli Uncategorized 8 Comments

Last week’s article on the latest in the SubPrime loan arena really irked me. Turns out that consumer groups called on congress to revise the current bankruptcy law to save the homes of borrowers drowning in the rising tide of foreclosures.

I am certainly a sympathetic person, but that smells like another government bailout to me. Shouldn’t a potential homeowner applying for a loan have some responsibility as a fully functioning adult in the wealthiest country on earth to know what he is getting into when purchasing a piece of real estate?

It just rubs me the wrong way. If this bailout comes to pass, surely it could be expanded. Maybe if you as a mutual fund investor lost money during the last bear market, you should be able to apply for a refund?

Of course, I am being ridiculous, but what’s your view?

‘Lazy Portfolios:’ Beating The Same Old Drum

Ulli Uncategorized Contact

A few days ago, MarketWatch featured another update of their so called ‘Lazy Portfolios.’

If you missed my previous blog on it (, it’s a selection of various Vanguard low-cost, no load (good idea) index funds. In various configurations, it has outperformed the benchmark S&P; 500 index over 1, 3 and 5 years.

The repeated chest bumping every quarter is all about the fact that no timing and no trading is necessary. That’s good; I am all for limited trading and holding on to investments that are going up.

I am just wondering why a longer performance period was not included. For example, how about looking at a 7-year period, which would include the last bear market? Could it be that the downturn in the market from 2000 to 20003 took such a huge bite out of that portfolio that it’s better not to report?

That’s what the numbers say. As I reported before, the ‘Lazy Portfolio’ only lost 30% vs. the S&P;’s 33%. If I had owned the lazy portfolio, and not the S&P; 500, I would have felt so much better, how about you?

Investment Management: Brokers vs. Investment Advisors

Ulli Uncategorized Contact

If you are planning to employ the services of a professional to help you manage your portfolio, you need to know that not all financial advice is regulated in the same manner.

For example, commissioned brokers operate on a different standard than do Registered Investment Advisors. Since I am a fee-only investment advisor, I definitely have a bias as to what I believe is most appropriate for the investing public.

So what is the difference in terms of regulations and how might it affect you?

Just yesterday I came across an article called “How All Financial Advice is Not Regulated the Same.” It’s a well written piece that will thoroughly enhance your understanding about this important topic and will help you better decide which type of financial service professional is right for you.

You can read the full article at:

ETF Income Investing: Should You Take A Short-Term Gain?

Ulli Uncategorized Contact

Yesterday, one of my readers posed an interesting question:

“I own both IIC and EVM (Muni CEFs) in my taxable Scottade account. This week, I noticed a large price spike about mid week followed by a price drop today and yesterday. I believe it had to do with some news of dividend payout dates. Here is my question for you. Is it alright to sell these when a spike occurs and then buy them back in a day or two? I do want to continue to own these for the long haul but could have made a few bucks trading them this week!”

Turns out that the price spike happened because of market conditions and it raised the NAV by a little over 1%. If you could turn back the clock to that point in time, I still don’t think it’s a good idea to sell those positions for the following reasons:

1. The increase/spike is fairly small and considering the buy/sell spread and the trading fee, it’s simply not worth the effort.

2. Since this transaction would have happened in a taxable account, the capital gains would have caused a taxable event; not just for this small gain but all gains accumulated to this point.

Income investing requires a different mind set. If that’s your investment objective, you might want to read my article called “10 Rules For Successful Tax-Free Income Investing” at:

Mutual Fund Wisdom: Quit Hanging On To Losers

Ulli Uncategorized Contact

Yesterday’s piece in MarketWatch titled “Quit hanging on to milquetoast funds” contained a lot of truth.

In an interview, Steve Goldberg of Tweddell Goldberg Investment Management said that “investors should look at their mutual funds as if they are buyers or sellers, rather than holding on to lukewarm performers hoping for improvement.”

He added that “most people hang on to a fund too long, hoping for a return to a break-even point or to a place where they can make an exit and say that they doubled their money, without regard to the length of time such growth involved.”

I my advisor practice, I have found that to be true as well. I still get calls from readers who are proudly reporting that they have now finally reached a break even point after hanging on to the same funds through the entire bear market of 2000-2003—and beyond.

Maybe it’s a good idea to heed Goldberg’s advice, who finished by saying that “if a fund is good enough to own, it’s good enough to buy more; and if it’s not, then why are you hanging on?”

I can only add that the reason most people hang on is that they don’t have a clearly defined exit strategy. If they had one, they would automatically get out of funds as performance (due to market conditions) deteriorates and triggers their sell stop points.

Are you still hanging on to a fund you bought some 7 years ago?