How To Manage Sudden Wealth

How To Manage Sudden Wealth

At any given time in your life you may find yourself with a sudden windfall. Perhaps you've inherited money or a stock portfolio after a relative passed away. Or maybe you have built a successful business over the years that you were able to sell. So what to do with all that money? Read on to find out more.

Read More

If the US Economy Is Doing So Well, Why Is the Stock Market Doing So Badly?

If the US Economy Is Doing So Well, Why Is the Stock Market Doing So Badly?

A new client writes, “So . . . why should I not sell all the stocks I still have a profit in?”  

That is a reasonable question.  From the September 20th all-time high, the major averages have taken quite a pounding.  

The S&P 500 is down 10.5% from its record high, while the NASDAQ is down 14.7%.  The FAANG stocks are in bear market territory, down an average of 22.5%.

How can this be, when the US economy is doing so well?  For example, Consumer Confidence is at the highest level since right before the 9/11 terrorist attack, and at the second highest level since measurements began in 1967.

Business confidence is at the highest level since 1983.

The US Unemployment rate is at the lowest level since 1968, with a record 157 million Americans employed full-time.  The participation rate, at 62.9%, remains below the record level of 67.2%, which prevailed around 2000, which means that at least 10 million additional Americans could be working, but are not.  Despite relatively stagnant wage gains, US Real Median Household income is at a record $62K/year.

Company earnings for Q3 2018 were up 25.6% on an 8.4% increase of revenues (a record level.)  79% of companies beat estimates.  Thanks to the tax cut, US corporations are swamped with cash and have already used $1 trillion to buy back stock.

So nothing but good news, right?  Yet this is the second time this year we’ve seen a 10% or more sell off.  What do stock traders know that average Americans don’t know?

Read More

Is this a sound investment, or one that should be avoided?

Is this a sound investment, or one that should be avoided?

A friend approached me with an investment opportunity and I would like to know if it sounds legitimate.  It involves investing in a company that engages in proprietary trading of international currency, by being a lender to the company.  The company guarantees 12 percent or 25 percent of the spread, whichever is greater. As a lender, you are given a 90-day perpetual note that automatically renews.  If you choose, you can call in the note at any time, at which time it reverts to a 90-day note. At the end of 90 days you can get all of your money back.  If you want to, you can take out any interest you've earned each month. You can view how much interest has been deposited into your account on a daily and monthly basis.   You can also participate by rolling over existing IRA accounts to a self-directed IRA company. The trading company is regarded as an institutional account and is approved by the IRA company.  If you choose, you can have the monthly interest you earn sent back to your account at the IRA company to make other investments.  Does this sound like a legitimate investment opportunity?

Read More

Four Questions To Ask A Financial Adviser Before Hiring Them

Four Questions To Ask A Financial Adviser Before Hiring Them

You've made the decision to whip your financial life into shape and work with a wealth advisor to achieve your goals. Now all you need to do is find a trustworthy advisor who has your best interest at heart. Read on for the four questions to ask before hiring a financial advisor.

Read More

How To Deal With A Turbulent Stock Market

How To Deal With A Turbulent Stock Market

Timing the market is not a smart strategy for the average investor. Read on to find out why and also learn about three alternative approaches to investing which will hopefully prevent you from pulling your money out of the market in a panic - which is never a good idea.

Read More

Elf on the Engine Block – an Allegorical Explanation of Market Movements

Elf on the Engine Block – an Allegorical Explanation of Market Movements

We often use this analogy to explain market movements. The stock market is like a massive truck engine block suspended in the air by thousands of piano wires, swaying gently in the breeze.

There’s an elf standing on the block with cutters snipping wires, sometime on this side, sometimes on that side.

As the support shifts, the engine block may twist or swing. Imbalances may build up and reach a catastrophic tipping point. The block jerks suddenly, wires break en masse, the engine rolls violently, tossing the elf off on his ass.

Eventually the oscillations settle down, a new equilibrium is achieved, the elf climbs back on and starts snipping wires again.

An observer standing at the side knows that the longer the elf snips, the more likely a violent adjustment. But the observer never know exactly which severed wire will exceed the tipping point.

Read More

Stocks slip 6 percent in 6 days - should we sell?

Stocks slip 6 percent in 6 days - should we sell?

This year, we brought on board quite a number of new families, but we've only invested 1/3 to 1/2 of their cash.  Why?  Because this sharp sell-off, 6% in the major stock market averages over the past 6 days, is exactly what we anticipate when stocks have had a good, long run and valuations are stretched to the high side.

Read More

What You Need to Know About FAFSA (The Free Application for Federal Student Aid form)

What You Need to Know About FAFSA (The Free Application for Federal Student Aid form)

If you have a college bound high school senior in the house, here are some useful tips you should know about filling out the FAFSA form. The application for the 2019-2020 school year is now available as of October 1st. You can also use this estimating tool to get a sense of options without filling out the complete form.

Read More

Q&A With David Edwards: What are the best investment vehicles for a young, new investor looking for simple, long-term investments?

Q&A With David Edwards: What are the best investment vehicles for a young, new investor looking for simple, long-term investments?

I am 27 years old, single, have no kids, and my student loans are being repaid due to my military service. My only expenses are rent and a small number of bills. I have spent the last year saving and reading financial literature and I want to start investing now. What is the most simple and effective way to do so? Ideally I would like something I put a set amount into each month and it grows over time.

Read More

Q&A with David Edwards: I recently inherited a portfolio from my father, but I'm inclined to do nothing as dad would have wanted it that way

Q&A with David Edwards: I recently inherited a portfolio from my father, but I'm inclined to do nothing as dad would have wanted it that way

A common emotion among inheritors is reluctance to change the investment strategy of an inherited portfolio.  “If those stocks were good enough for Dad, they’re good enough for me!”  In fact, the moment of inheritance is a perfect moment to start over.

Read More

How did you come up with your business name?

How did you come up with your business name?

25 years ago I was in the process of forming a wealth advisory business.  The usual naming convention would dictate “David Edwards & Associates” – boring!  Then I considered “Quantitative Investment Strategies, Inc.” boring, and a little scary.  After that, I thought about “Bull & Bear,” “Tigers,” “Eagles” etc., but there were many other financial firms using those names already.

Read More

Q&A with David Edwards: Should I pay off my mortgage loan or invest with the money I am receiving from an inheritance?

Q&A with David Edwards: Should I pay off my mortgage loan or invest with the money I am receiving from an inheritance?

Question: My spouse and I will be inheriting about $750,000 to $800,000. The payoff balance of our mortgage is estimated at about $180,000 at 3.5 percent APR for 30 years. Would it be worthwhile to allocate some of the money we are inheriting to pay off the mortgage loan? We still have 27 years left to pay. Alternatively, should I invest the money and continue paying my mortgage?

Read More