11-1-2006 - Items of Interest to Family CFOs
Saving and Budgeting
Money Magazine gives us 25 Rules To Grow Rich By. These cover the gamut -- from what remodeling will give you the biggest return when you sell your house, to how much company stock you should hold, to extended warranties. Each has its own calculator or resource box to go with it. While I don't agree with every one of them, they are good food for thought. (CNNMoney)
The Economy
The AP reports the median new home price fell 9.7 percent in September -- the largest amount in 35 years. That doesn't mean they fell everywhere, of course. The median is the midpoint. Half sell for more and half sell for less. Some areas, particularly those that have been hot in recent years, are harder hit than others. (Yahoo Finance)
Here is some more information, courtesy of Barry Barnitz, about falling home prices. "For two years running the S&P/Case-Shiller Home Price Composite Index has steadily shown tapering annual returns from its peak in July 2004. Not only do we continue to see shrinking gains but actual declines in most cities." (Financial Page)
The Wall Street Journal suggests the Goldilocks Economic scenario being suggested by many just got eaten. Eight days ago, the markets were pricing in a pretty rosy scenario. A slew of reports has (including the two above) changed all that. "It's prodded [the market] further into saying a slowdown of some magnitude is coming," says Mr. Ader. "People are thinking about a harder landing than they thought about two weeks ago." (The Big Picture)
Investing And Retirement
The vast majority of homeowners with adjustable-rate mortgages are worried their interest rates will rise, according to a Wells Fargo & Co. survey. But more than half think they'll be able to avoid a painful rise in their monthly payments by refinancing before things get too bad. 72 percent of homeowners said their home equity was their most important investment. That makes falling home prices and rising interest rates a bigger concern than ever before. (AP in Yahoo! Finance)
New numbers from S&P confirm what academics preach all the time: indexing continues to beat stock picking and market timing. Over the five years through the end of the third quarter only 29.1 percent of large-cap funds beat the S.& P. 500. 16.4 percent of mid-cap funds beat the S.& P. 400 index of mid-cap stocks, and 19.5 percent of small-cap funds beat their benchmark, the S.& P. 600 index of small-company shares. (New York Times, The Big Picture and Barry Barnitz)
John Markese, president of The American Association of Individual Investors, was interviewed by MarketWatch about creating portfolio income for retirement. He discusses maximum sustainable rates of withdrawal, a major shortcoming in my opinion, of the traditional asset allocation model. (MarketWatch)
Thoughts on any of these? Feel free to leave your comments below.
Kim Snider, Kim Snider Financial Communications, Chronim Investments and/or Snider Advisors make no representation that the information and opinions expressed are accurate, complete or current. The opinions expressed should not be construed as financial, legal, tax, or other advice and are provided for informational purposes only. Call 866-952-0100 to request the Snider Investment Method™ Owner's Manual, which includes a description of the Snider Investment Method, investment objectives, risks, suitability and other information. Please read and consider carefully before investing. All investments are subject to risk including possible loss of principal.
