Understanding Investment Fees: Do You Know What You Are Paying?

Understanding Investment Fees: Do You Know What You Are Paying?

As published in the Holiday 2015 Edition of NJ Lifestyle

More often than not, when we ask a potential client what they are currently paying in investment fees, we receive one of two answers:

  1. I don’t know.
  2. I don’t pay anything.

The first answer is understandable, as the transparency of investment fees leaves a lot to be desired, and the second answer is just wrong. Fees come in various forms; including commissions, portfolio management, operating expenses, and 12-b1 fees. Although you may not see the fee, it does not mean you are not paying it.

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Stock Market Volatility: An Unpleasant but Normal Part of Investing

Stock Market Volatility: An Unpleasant but Normal Part of Investing

As published in the Fall 2015 Edition of NJ Lifestyle

Arguably the most difficult aspect about investing in the stock market is the volatility that is the trade-off for higher long term returns. During the past 40 years, the S&P 500 (widely regarded as the standard index for measuring Large Cap U.S. stock market performance and includes the 500 largest U.S. Corporations by market capitalization) realized an average annual total return of 11.4%, according to S&P Dow Jones index data. However, to have benefited from such performance, an investor would have had to stay the course through periods of significant volatility. Market declines of 10% or greater (typically defined as Corrections) have happened more than 15 times over that forty year period, including four bear markets (defined as market declines of 20% or more). Corrections happen on average once out of every 18 months. Until the recent decline in August, the markets had been more than four years since our last 10% pullback. Corrections are normal and are to be expected when investing in equities. That doesn’t, however, mean they are not unpleasant and unnerving to most investors.

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The Behavioral Aspects of Investing

The Behavioral Aspects of Investing

The Behavioral Aspects of InvestingAs published in the Shore 2015 Edition of NJ Lifestyle

Traditional finance has long held to the notion that investors are rational, unbiased, and risk averse. It also professes that investors’ comfort level for risk is essentially stable and individuals will only accept higher levels of risk if offered adequate returns. Many of us have learned from real world experience that this is not always true. To explain the realities of investing a new field of study has emerged, behavioral finance. The new discipline portrays investors as being regularly overconfident, chronically emotional, and habitually biased.

There are many psychological propensities leading to investment missteps identified in the behavioral finance literature. This article discusses three axioms that can be used to illustrate how psychological factors can cause investors’ mistakes that lead to market inefficiencies. By under­standing the tendencies and biases of human nature, we will be better able to avoid them and generate better investment results.
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Active vs. Passive Investing: Does it Have to be a Case of One or the Other?

Active vs. Passive Investing: Does it Have to be a Case of One or the Other?

As published in the Holiday 2014 Edition of NJ Lifestyle

Much is written in the investment world about active vs. passive investing. It probably makes sense to define both before continuing to address the argument for one over the other.

Passive investing (also called passive management) is a financial strategy in which an investor (or a fund manager) invests in accordance with a pre-determined strategy that doesn’t entail any forecasting (either market timing or stock selection for example). The idea is to minimize investing fees and to avoid the adverse consequences of failing to correctly anticipate the future. The most popular method is to mimic the performance of an externally specified index. Active investing is just the opposite.
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Keeping Emotions out of Investing

Keeping Emotions out of Investing

Keeping-Emotions-Out-of-Investing---07-14pdfAs Published in the Summer 2014 Edition of NJ Lifestyle

WE HAVE ALL HEARD THE NUMBER ONE RULE OF INVESTING – BUY LOW, SELL HIGH. Simple in theory, yet counter intuitive to what our emotions dictate.   Many times as the markets are soaring to new highs, our emotions tell us to, as Jim Cramer would say, “buy – buy – buy.”  March 2009 proved to be one of the best investment opportunities with a nearly 200% gain since; however, our emotions at the market bottom begged us to sell.  Keeping our emotions in check, especially fear, greed, and regret, is vitally important for the long term success of any investment portfolio.
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Credentials Matter

Credentials Matter

As Published in the Fall 2014 Edition of NJ Lifestyle

Searching for a trusted advisor? Make your decision a well-informed one.

Credentials-MatterACCORDING TO THE BUREAU OF LABOR STATISTICS, THERE WERE 223,400 personal financial advisors in the Unites States at the end of 2012. Other analytical agencies such as Cerulli Associates, estimate that number to be north of 300,000. Furthermore, the Financial Industry Regulatory Authority (FINRA), which overseas how investments are marketed to the public, has identified at least 95 different professional designations for advisors. With hundreds of thousands of financial advisors across the country with an array of letters after their names, choosing one as your trusted advisor can be a daunting task. Understanding an advisor’s credentials is a must to ensure you choose the right one for you. Here we will cover three of the most respected designations in the financial planning and investment industry: CPA, CFA®, and CFP®.

Dissecting the Business Cycle

Dissecting the Business Cycle

As Published in the Shore 2014 Edition of NJ Lifestyle

UNDERSTANDING AND EVALUATING THE BUSINESS CYCLE CAN OFFER valuable information in formulating expectations for the economy and your optimal portfolio allocation. The business cycle is defined as fluctuations in GDP (Gross Domestic Product) in relation to long-term GDP trend growth. The typical cycle usually lasts 9-11 years and can be broken down into five phases, starting with an initial recovery and ending with a recession.

The initial recovery is the phase of the business cycle where the economy starts to pick up from its previous slowdown or recession. Often times this phase is accompanied by easy monetary policy in the form of low interest rates and/or a budget deficit. Business confidence starts to pick up as can be seen with higher inventory purchases, while consumer confidence may remain low as the unemployment rate is high. Inflation during the initial recovery continues to fall, putting downward pressure on government bond yields and the gap between long-term GDP trend growth and actual GDP remains large. As fears of a longer recession subside, the stock market may rise substantially with investors attracted to the riskier assets of small caps, emerging markets, and high yield bonds.

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The Power of Dividends

The Power of Dividends

As Published in the Spring 2014 Edition of NJ Lifestyle

Dividend paying stocks have received a lot of attention over the last few years as interest rates have fallen. With the yield on the 5-year Treasury note dropping below 1%, investors shifted their focus to stocks as prices were down and the yield on the S&P 500 surpassed 2.5%. As of July 2013, nearly 30% of the stocks that make up the S&P 500 Index had dividend yields that surpassed the yield on the 10-year U.S. Treasury. Low fixed income yields coupled with favorable tax treatment on dividend payments and the ability of dividends to help mitigate market volatility have made dividend paying stocks an important component of investor returns for decades, and can be a powerful tool for your portfolio.

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2013: The Year in Review

2013: The Year in Review

As published in the Winter 2014 Edition of NJ Lifestyle


  1. Top Business Story for 2013:
    Great Year in the Stock Market. All of the major U.S. Stock Indices finished with gains above 26%. The markets logged the best year since 1996 and volatility disappeared as the largest decline of the year was only 5% in the period May 21st to June 24th.
  2. Washington Gridlock: Congress did their best to derail the economy and the bull market. Lawmakers began the year by ending the social security tax holiday, which shrank all U.S. paychecks. Then, at the end of the first quarter, with Congress unable to reach an agreement on a budget, the across the board sequester cuts went into effect. In October, Congress was unable to pass a 2014 budget and the Federal Government was partially shut down for sixteen days. Congress finally got its act together and passed a two-year budget deal. Although this was not any grand bargain that so many were hoping for (as the two year budget does nothing in regards to entitlement or tax reform), it did give the markets and the economy some certainty from Washington.

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Rising Interest Rates and the Effect on Your Portfolio

Rising Interest Rates and the Effect on Your Portfolio

As Published in the Fall 2013 Edition of NJ Lifestyle

In 1981, the yield on a 10 year U.S. Treasury peaked at over 15%. Over the last 30 years, fixed income investors have largely experienced a “bull market” for bonds as yields have consistently fallen, bottoming out in July 2012 at 1.53%. With the Federal Reserve taking unprecedented monetary policy action through the setting of the federal funds target rate between 0% and 0.25%, coupled with their bond purchases of $85 billion monthly, rates don’t have much room to fall further. As the Fed “tapers” their bond buying, and eventually raises the fed funds rate, what effect will investors see on their portfolios? It is widely known that as bond yields rise, bond prices will fall. An investor who purchases a hypothetical bond today yielding 2% will earn $20 of interest annually per $1,000 par value bond. If yields were to rise to 3%, an investor can now earn $30 of interest per $1,000 par value, therefore making the 2% bond less valuable, resulting in a reduction in price. Investors today face heightened interest rate risk, the risk that rising yields will make their fixed interest rate bonds less valuable, as it is inevitable rates will rise in the future.

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