Financial Opinion and Insights

Financial and Other Odds & Ends


Jim Lorenzen, CFP®

Jim Lorenzen, CFP®



What did Bloomberg BusinessWeek’s 40-page `2010 Investment Outlook’ from January 4th, The Forbes `2010 Guide’ (12/14/2009), Fortune’s `Investor Guide 2010 (12/21/2010),  and Kiplinger’s `Where to Invest in 2010’ (1/2010), all have in common?   Not one of them even alluded to Greece or sovereign risk.   Hmmm. 


Usually Money magazine touts investment opportunities; but, sometimes the best advice they give is to be careful!  In it’s June issue, they had an article “Can Financial Stocks Keep Climbing?”  The first examples were Legg Mason’s Capital Management Opportunity managed by Bill Miller.  Money reported that it was up 123% over the prior 12 months and Fairholme was up 64%.  The article called those two picks `awfully tempting’, but also said, “Take a deep breath first.”   

It was good advice.   As often happens after the media touts something, investors who rushed in paid a price.  In the following 30 days, Management Opportunity was off almost 20% and Fairholme was down about 14%.  I’ll bet a lot of people bought high then sold low. 


Most people hate having to remember a long list of passwords for all the various sites they frequent; so many people simply default to only one that’s simple and easy to remember.  Not a good idea.  Trusteer, a security vendor, found that 73% of logins to bank accounts were also used for other sites.  Hmmm.  PCWorld reports that, at a minimum, Trusteer recommends using three separate log-ins:  One for financial sites (banks, brokerage, etc.), one for any other sites holding sensitive info, and a third for sites that are purely recreational.  Sounds good to me! 


I got this from Harold Evensky: 

Income                  % of Population        % of Taxes Paid 

<$30K                                 50%                              2.90% 

$30-$50K                           25%                              10.40% 

$200-$500K                       2%                                20.20% 

$500K+                                1%                               40.40% 


I’ve heard a lot of `talking heads’ on the tube decry asset allocation during the 2008-2009 economic crisis; but Professor Roger Ibbotson’s comment in Investment Advisor seems to take issue with the pundits.  He noted that in 2008, about 25% of U.S. listed stocks lost at least 75% of their value, only FOUR of the more than 6,600 unlevered open-end mutual funds available for sale lost more than 75% during the same period.   So, I guess diversification DOES work! 

Written by Jim Lorenzen, CFP®, AIF®

August 5, 2010 at 8:00 am