Financial Advisor, Safe Investments, Christian, San Diego, Professional Athletes, Celebrities, Financial Planner

investment fraud

Far too often I see or hear about people, especially celebrities and athletes (as they get all the media attention) falling victim to investment fraud. Recently an article about a former San Diego Padres pitcher, Jake Peavy, discussed some challenges he’s faced which included a fraudulent investment from someone he trusted. This article inspired me to provide a few tips to help reduce the chances of this happening to you or someone you know. Do your research – When working with a financial professional do a quick online search. Websites such as Broker Check and Adviser Info are a good starting point. Personal references can be helpful, but I don’t suggest relying on them alone. Understand where your money is going – Many financial advisors use third-party custodians such as TD Ameritrade (my preference), Charles Schwab and others. By using a third party the money is held at that company and the advisor manages the account on your behalf. A good rule of thumb is to never write a check payable to an individual for money you wish to be invested. (By the way, Bernie Madoff’s company served as its own custodian rather than using a third party) Limit private investments – It seems that most cases of fraud that I see involve private investments. These are considered “non-registered” investments and therefore information is more limited. Examples often include start-up companies and real estate investments. I don’t mean to imply that private investments are bad, just know that they are generally less regulated and less transparent, therefore harder to research. They may tout high return potential but often involve substantial risk. I suggest limiting your exposure to these types of investments.  Diversify – The idea of not putting all your eggs in one basket doesn’t prevent you from investing in something that could be fraudulent, however, it does provide some protection to your overall finances.    Advisory services offered through Arbor Point Advisors. Securities offered through Securities America Inc., Member FINRA/SIPC. Arbor Point and Securities America are separate companies. CA Insurance #0E88557

Recent Volatility - measurement matters

It is common to measure things in dollars and cents, yet I would suggest that when it comes to finance there are more meaningful ways to measure. This week is a good example. On Monday volatility woke from its slumber and the Dow dropped 1,175 points. In my opinion some volatility is good and more typical of how markets work, however, if you caught the news, most reports made it sound pretty frightening. Here are a few headlines: “Dow Plunges 1,100 in Biggest One-Day Selloff Ever” – Fortune“Dow plunges 1,175 – worst point decline in history” – CNBC“Dow Drops More Than 1,100 Points in Stock-Market Rout” – Wall Street Journal If you measure in terms of percentages it was a 4.6% drop, which isn’t small but doesn’t register in the top 20 largest daily drops. Let’s compare Monday’s drop to the largest percentage daily drop which occurred in 1987. Date                Point Change  % Change        Closing Price02/5/2018       -1,175              -4.6%               24,345.7510/19/1987     -508                 -22.61%           1,738.74          Note, the comparison of the closing prices illustrates the benefit of investing in the stock market over the long run. If you had $10,000 invested in the Dow in October of 1987 and left it there while reinvesting dividends, it would be worth about $240,000 today. As you watch your portfolio, the dollar amount provides a quick measurement and is a way to set goals and meet milestones, however, it is limited in terms of the information it can provide. Ultimately, it’s more important to know if your investments are properly structured to meet your financial goals. Information alone often doesn’t tell the whole story but presented in the right way it can help you make meaningful and wise decisions. An investor cannot invest directly in an index. Past performance does not guarantee future results. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks.  Advisory services offered through Arbor Point Advisors. Securities offered through Securities America Inc., Member FINRA/SIPC. Arbor Point and Securities America are separate companies. CA Insurance #0E88557

Q4 and 2017 market Review

2017 was a momentous year for investors! Not only were returns positive across almost all asset classes, there was very little volatility as well. All investors love great returns with little risk (volatility), but usually you can’t have one without the other. However, 2017 presented this opportunity, but remember it was uncharacteristic. Here are some 2017 statistics:  The S&P 500 index was up every month, the last time that happened was 1959.Volatility of the S&P 500 was the lowest it has been since 1964 as measured by average daily price change.The DOW hit market highs 70 times.The S&P 500 gained 21.83% and the largest drawdown (peak to trough decline) was-2.6%, which is very low. Here are some additional years for comparison:Year                 Return             Maximum Drawdown2017                21.83%                        -2.6%2016                11.96%                        -10.3%2015                1.38%                          -12%2014                13.69%                        -7.3%2008                -37%                            -47.7% In Q4 2017 stocks in the US, international markets, emerging markets and real estate were all up. US and global bonds were also positive. The same is true for the entire year of 2017. It is worth noting that international and emerging stock markets both outperformed the US in 2017 for the first time in years. For a detailed market overview covering Q4 and all of 2017, click here. Planning note: You and I have no control of market returns, however, we do have control of how we choose to invest. First and foremost, assign a purpose to your assets. This will allow you to determine an appropriate investment strategy for your specific objectives.  Here are my principles for investing success: Maintain broad diversificationAlign your investments with your objectivesDon't let fear or greed drive your decisionsBe disciplined and consistentConsider taxes and fees   Advisory services offered through Arbor Point Advisors. Securities offered through Securities America Inc., Member FINRA/SIPC. Arbor Point and Securities America are separate companies. CA Insurance #0E88557

Rancho Bernardo Financial Planner