Kimmunications

Time to Tackle Some Widespread Myths

I was going through my magazines the other day, and one little graphic jumped out at me. It showed the results of a survey of working 56-65 year-olds who were asked about their retirement plans. What it told me was that there are still a lot of misconceptions out there on how to plan, save and invest for the future.

The mainstream press doesn't do much to shatter these myths. So I'm going to go point-by-point through the survey results, and I hope I'll be able to set many people straight.

Finding: 43% of those surveyed believe they'll be able to withdraw 10% or more of retirement savings each year without exhausting their capital.

Reality: The widely accepted "safe" withdrawal rate is more like 4%-5% per year from a well-diversified portfolio of stocks and bonds, according to several studies. As with most of investing, the term "safe withdrawal rate" comes with a disclaimer: 4%-5% is merely a figure based on historical data that provides a high probability you won't outlive your money.

How can that number be so low if the stock market, on average, returns 10.4% a year? It's because the 4%-5% figure takes into account the fluctuations of the stock market as well as inflation -- an often overlooked piece of the retirement income puzzle.  First, the "safe" withdrawal rate assumes you aren't 100% invested in stocks; you have at least some assets in bonds and cash, which carry lower returns. Second, the average market return is an oversimplification of how the market really works. If the S&P 500 is up 10% one year and down 10% the next, the "average" return is 0, but you would end up with less money. Third, you have to take into account inflation. If you assume that the historical rate of inflation is 3.5% per year, your portfolio's returns have to grow that much just to keep up, and your withdrawals have to increase at the same rate so you don't lose purchasing power.

This is why I say that you have to target double-digit returns with your investments.* To be able to withdraw 4% a year, keep up with inflation (3.5%) and pay your taxes (assuming a 25% bracket), you'll need to aim for at least 10% a year -- more if you want to withdraw more, if inflation is higher than 3.5%, or you're in a higher tax bracket. I wrote an article on bonds a while back that explained the math behind this statement.

Remember, this is a target of at least 10% so you can potentially withdraw 4% a year. Most retirement portfolios aren't set up to target double-digit returns, which means withdrawing 10% is well beyond a pipe dream for most people.

Finding: 49% of those surveyed believe their income needs will drop by half after they retire.

Reality: I meet with retired clients all the time to go over their financial situations. Rarely do I see cases where their spending has declined in retirement. In fact, the opposite is true more often than not -- they typically spend more!

That's just from personal experience, but academics are finding similar results. Researchers at the University of Michigan found that in the aggregate, pre-retirement spending and post-retirement spending are about the same. Other studies suggest that spending initially goes up in retirement and doesn't begin to decline below pre-retirement levels until the retiree gets much older.

Although your job-related expenses may decrease and you may have paid off your mortgage, you have to take into account other expenses such as travel and healthcare. The cost of healthcare, and the cost of healthcare insurance, is rising at twice the rate of inflation.

Finding: 38% of those surveyed believe that long-term care is covered either by health insurance, Medicare or disability insurance.

Reality: Medicare covers few long-term care services, and people must meet strict income and asset requirements to qualify for Medicaid. Health insurance and disability insurance generally doesn't cover the cost of long-term care. And those costs can be huge.

A private room in a nursing home today costs about $70,000 a year.  Since 1990, the price has been increasing at an average of 5.8% a year. If you have enough millions in the bank to cover these kinds of costs, you probably don't need long-term care insurance. For everyone else, it's a different story.

Finding: 60% of those surveyed believe that at age 65 they will have a 25% chance or less of living beyond age 85.

Reality: The odds are more like 50%, and the expected joint life expectancy of a healthy 65-year-old couple is 30 years. That means there's a good chance that one member of the couple will live to age 95. Which brings us to the next point…

Finding: 56% of those surveyed say the greatest financial risk for retirees is longevity risk.

Reality: I'm glad to see they got this one right. But it tells me that a large number of people aren't connecting the dots: They think they can withdraw 10% or more per year and have much lower expenses, but they're still worried about outliving their money. They don't seem to realize how one affects the other.

But you aren't like that now, are you? You now know that to successfully make it through your golden years, you need to save prodigiously and invest wisely. And you need to plan. If you feel you're already on the right path, then congratulations! If not, it may not be too late. Email me or give me a call at 214-245-5236, and perhaps we can work together to get you back on track.

SOURCES:
1. "Taking a pass on financial reality," Investment News, 30 June, 2008.
2. Bengen, William P. "Determining Withdrawal Rates Using Historical Data," FPA Journal, [accessed 21 July 2008].
3.  Cooley, Philip L., Carl M. Hubbard and Daniel T. Walz. "Retirement Savings: Choosing a Withdrawal Rate That is Sustainable," AAII Journal, February 1998, Volume XX, No. 2, [accessed 21 July 2008].
4. Easterling, Ed. "Waiting For Average," Crestmont Research, [accessed 21 July 2008]
5. Hurd, Michael D. and Susann Rohwedder. "Changes in Consumption and Activities at Retirement," Michigan Retirement Research Center Research Brief, July 2005, [accessed 22 July 2008].
6. "Facts on Health Care Costs" (National Coalition on Health Care, 2007) [accessed 22 July 2008]
7. "The Importance of Personal Financial Protection" (American Society of Pension Professionals & Actuaries, 2006),[accessed 22 July 2008]

*Double-digit returns is an objective, not a guarantee

---

Kim Snider is the President and Founder of Snider Advisors, an investment adviser registered with the SEC, focused on teaching individual investors a sensible, long-term investment approach focused on maximizing cash flow. For more information on Snider Advisors or the Snider Investment Method, please visit snideradvisors.com. Her book, How to Be the Family CFO: Four Simple Steps To Put Your Financial House in Order, will be in bookstores October 1, 2008.

Snider Advisors makes 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 888-6SNIDER 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, including the Snider Investment Method™ are subject to risk, including possible loss of principal.

Cutting through the confusion

There are a lot of financial talk shows on the radio every weekend. My show is one of nine on KRLD each Saturday and Sunday, and if you consider all the other stations in the area, you can get an idea of the variety of voices and opinions that confront the average investor each week.

If I were someone who tuned in every week, intently listening to hopefully learn the best way to manage my finances, I think I would be incredibly frustrated. That's because there's so much conflicting advice out there. One host may tell you that variable annuities are the greatest thing that ever hit the market. I, of course, will tell you the opposite -- to stay away from them at all costs. One host might say that the stock market is too risky and that you should invest in real estate instead. Another will say that real estate is no good; life settlements are the way to go. (By the way, they're not!)

If you opened your brokerage statements over the last couple of weeks and said to yourself, "I've got to try something different," your head is probably spinning with all the choices out there. Who's saying the right thing? Who is trustworthy? You know that doing nothing isn't really an option, but you don't know where to turn.

I won't tell you that I'm the only trustworthy one out there and that you should just come to me. That would be too blatantly self-serving. Not everyone has the same investment objectives and temperament. Although I know I can help many, many people out there, I recognize that what we do isn't for everyone. And I would be dishonest to tell you otherwise.

I've noticed in my years helping people with their investments that there seems to be two kinds of financial advisors. The first kind is the one who will say or do anything to make a buck off of you. Sadly, that seems to be the majority of advisors out there. They're more interested in selling you whatever product will earn them the highest commission, regardless of whether it actually fits your needs.

The other kind of advisor is the one who really does care about your needs. But even those advisors can and will disagree on the best course of action for you. More on that in a second.

So how do you distinguish between the advisor who just wants to make a buck off of you and the one who really cares? My best advice is don't take anything at face value. Do your research. Meet with the potential advisor and go over your objectives. Treat this as a job interview, because your advisor is really an employee. Read my articles on financial advisor red flags (here and here) to help you weed out the bad ones. Screen out the ones who try to hide the facts from you or try to hype up any particular investment.

After you've narrowed down the list, it's time to pick the advisor who best matches your values and objectives. And this can be the most difficult -- and most important -- task.
Very smart, thoughtful and caring advisors can have very different opinions on what makes a good investment. Let's use the variable annuity as an example. I've written extensively on the problems I see with variable annuities. Every time I write one of those articles, I get several emails from financial advisors who I'm sure are very earnest and have a lot of integrity, but they disagree vehemently with my position. And they'll put forth a very well-thought-out argument stating their case.

I've often wondered, how can we both have our clients' interests at heart and yet come to opposite conclusions? After running into this situation time and time again, it occurs to me that it must come down to what you value and what you place a priority on.

Investing is really just the management of a series of trade-offs. All of investing is about balancing risk and reward, and risk and reward both come in many different forms. An advisor who puts safety and security first and focuses on trying never to lose a dime for his clients will probably recommend low-yielding but very safe investments like CDs and bonds. An advisor like me, on the other hand, who puts a priority on generating a maximum amount of income for you to live on will recommend something different. A CPA who is mostly concerned with minimizing this year's taxes may tell you that converting a traditional IRA to a Roth is a very bad idea, while I may think it's a very good idea. We're both sincere and attuned to your needs; we just happen to think that different things should take priority.

So what's an investor to do? Before you seek out an advisor, whether it's an educator or a money manager, think long and hard about your objectives and your values. Find out where your priorities lie. Then ask lots of questions as you interview to find the advisor who best matches up with your needs. When it's a good fit, chances are you'll know fairly quickly.

Any financial advisor worth his or her salt will welcome the chance to go over your needs and objectives, and they'll recognize when their philosophy isn't a match with yours. When I meet with clients, I can tell when someone is a good fit. If they're not a good fit, I'll politely tell them so and try to direct them to another advisor who may be a better match.

I guess finding the right financial advisor is a lot like dating. You'll meet several scumbags and genuinely nice people who don't quite fit along the way, but when you find the right match, you know. And the right match makes all the difference. 

Interested in learning whether our approach makes sense to you? Give me a call at 214-245-5236 or toll-free 1-888-6SNIDER. I'll be happy to talk things over with you and even schedule a one-on-one meeting.

---

Kim Snider is the President and Founder of Snider Advisors, an investment adviser registered with the SEC, focused on teaching individual investors a sensible, long-term investment approach focused on maximizing cash flow. For more information on Snider Advisors or the Snider Investment Method, please visit snideradvisors.com. Her book, How to Be the Family CFO: Four Simple Steps To Put Your Financial House in Order, will be in bookstores October 1, 2008.

Snider Advisors makes 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 888-6SNIDER 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, including the Snider Investment Method™ are subject to risk, including possible loss of principal.

We don't have enough time to buy and hold

Market commentator and analyst Barry Ritholtz has recently posted on his blog about the big divide between the pundits and the public over the state of our economy. Or, as he puts it, “the disconnect between reality and the Pervasive Pollyannas of Prosperity.” Most of the analysts you see on CNBC, he says, are touting the strength of the economy, or at least its potential to turn around soon. The public, he says, sees the situation very differently – they’re expecting more rough seas ahead.

Barry says the pundits have just gotten ridiculous:

How absurd has the Panglossian cheerleading become? On my pal Larry Kudlow's show last night, several of Candide's descendants talked about how great stocks are if you hold them for 30 years. That's right, the holding period for equities according to this crowd is three decades. Of course, this means every pullback is a buying opportunity. Words such as these can only be spoken by someone who has never worked on a trading desk or managed assets professionally -- or if they did, they lost most of their clients' money.

Barry illustrates very clearly here the problem with the strategy of buy-and-hold. It’s true that the U.S. stock market has returned on average 10-12% annually over long periods of time. To take advantage of the long-term growth, you’d need to buy when the market is down. To a buy-and-hold investor, the current market downturn is a perfect buying opportunity.

But investing isn't just about knowing when to buy. The problem with buy-and-hold isn’t the “buy” part. It’s the “hold.” To get the long-term 10-12% return, you potentially have to hold for a really, really long time.

The Wall Street Journal is calling this “The Lost Decade.” From Dec. 31, 1999 to December 31, 2007, the return of the U.S. stock market was practically zero (1469.25 in 1999; 1468.36 in 2007). Here we are in the middle of 2008, and the S&P is below 1300. For us to get back to the 10-12% average, we would have to experience a very long period of above-average returns. The question is, how long? Nobody knows. It could take 10, 20 years or longer. History tells us there have been 20-year periods in the past where the average return of the stock market was less than 2%.

If you’re in your 50s, your retirement time horizon may be 40 years (10 years pre-retirement; 30 years in retirement). 20 years is a long time to wait for the market to even itself out.

That’s why buy and hold doesn’t work for most of us. We don’t have time for it!

This is precisely why I am a cash-flow investor. My goal is to exchange the long-term 10-12% annual returns of the stock market for something more tangible in the short-term. If I focus on generating cash in the short run, the ups and downs of the market over time don't tend to bother me as much.

I admit, investing in the stock market this way is a bit of a paradigm shift. You have to think of your stocks not as an appreciating asset, but as a means to an end. Once you view your stocks this way, it’s a little easier to endure the market slowdowns. 

SOURCES:

1. Ritholtz, Barry. "Persuasive Pollyannas of Prosperity," The Big Picture, 02 July 2008. http://bigpicture.typepad.com/comments/2008/07/more-on-the-pub.html

2. Browning, E.S. "Stocks Tarnished By 'Lost Decade'," The Wall Street Journal. (accessed 02 July 2008)

---

Kim Snider is the President and Founder of Snider Advisors, an SEC Registered Investment Advisor, focused on teaching individual investors a sensible, long-term investment approach focused on maximizing cash flow. For more information on Snider Advisors or the Snider Investment Method and how to stop enriching your investment advisors at your expense, please visit snideradvisors.com. Her book, How to Be the Family CFO: Four Simple Steps To Put Your Financial House in Order, will be in bookstores October 1, 2008.

Snider Advisors makes 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 888-6SNIDER 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, including the Snider Investment Method™ are subject to risk, including possible loss of principal. Click here for performance statistics of the Snider Investment Method and a discussion of yield vs. total return.

Financial Advisor Double Whammy

Academics are slowly peeling back the curtains on the financial services industry to expose some serious shortcomings. One groundbreaking study, which I've referenced before, found that commissioned financial advisors don't bring any appreciable value to investors. It found that the mutual funds recommended by traditional advisors severely underperform the market as a whole.

No real surprise there, since the vast majority of the funds are expensive, actively-managed funds that typically pay the advisor fat commissions.

Now there's a study that shows that clients of commissioned financial advisors severely underperform within those same investments. In other words, not only does the mutual fund underperform the market, the investor underperforms the fund!

The reason, according to the authors, is that clients of traditional (commissioned) financial advisors are more likely than self-directed investors to try to time the market:

Our results sound a warning to fund investors who are considering whether to attempt market timing, either on their own initiative or through their broker's advice. On average, active investing leads to underperformance relative to a passive dollar invested in the fund. In addition, the use of an investment professional to trade shares is correlated with even worse investment timing performance.

The study, "Investor Timing and Fund Distribution Channels," is written by Mercer Bullard of the University of Mississippi, Geoff Friesen of the University of Nebraska-Lincoln, and Travis Sapp of Iowa State University. The authors studied 6,164 funds between 1991 and 2004.

Investors in load funds lagged the performance of the funds by 1.82% on average annually. Those invested in legal no-load funds (funds with no commission and a low 12b-1 fee) lagged their funds' performance by 1.91%. And those involved in Class B fund shares underperformed by 2.28%. The only investors who didn't underperform were those in pure no-load index funds.

This study shows that traditional financial advisors are no better than anybody else when it comes to timing the market. And they don't seem to do anything to curb the behavior of their clients who think market-timing is possible:

One potential explanation is that brokers seek to justify their compensation not only by helping their clients pick funds, but also by demonstrating their active monitoring through market timing advice. If this is the case, the evidence suggests that this advice, on average, is less than helpful. Another possible explanation is the well-documented psychological tendency of investors to overweight recent performance. Although investment professionals presumably are more aware of, and less, susceptible to, a short-term performance bias, their clients might be more susceptible to this bias than self-directed investors. … A third explanation is that some brokers may be able to appeal to their unsophisticated clients' short-term performance bias in order to increase sales compensation. Thus, brokered shares may show evidence of (bad) timing because of client pressure, the broker's financial incentives, or both. [emphasis added]

The authors were especially critical of advisors who put their clients in Class B shares.

Why do Class B shareholders fare so much worse? One reason might relate to questionable conduct by brokers. Class B shares often are an inferior choice for investors and have been the subject of a number of enforcement actions alleging misleading sales practices. Sales of Class B shares can provide higher compensation to a broker than other shares and therefore present an economic incentive to steer clients toward these shares.
…
It is possible that a broker who recommends Class B shares in order to maximize compensation may also tend to emphasize recent returns in order to allure investors. More prudent advice would instead tend to emphasize long-term performance, but on this count Class B shares fare poorly.

I think the biggest takeaway from this study is this: Ask yourself if your advisor is providing any value. Did you hire them because of their expertise? Their access to better investments? Their potential to keep you from making dumb mistakes? If they aren't providing any value, why are you still paying them?

SOURCES:
1. Bergstresser, Daniel, John Chalmers, and Peter Tufano, 2006, Assissing the costs and benefits of brokers in the mutual fund industry, Working paper.
2. Bullard, Mercer, Friesen, Geoffrey C. and Sapp, Travis, "Investor Timing and Fund Distribution Channels" (December 2007). Available at SSRN: http://ssrn.com/abstract=1070545

---

Kim Snider is the President and Founder of Snider Advisors, an SEC Registered Investment Advisor, focused on teaching individual investors a sensible, long-term investment approach focused on maximizing cash flow. For more information on Snider Advisors or the Snider Investment Method and how to stop enriching your investment advisors at your expense, please visit snideradvisors.com. Her book, How to Be the Family CFO: Four Simple Steps To Put Your Financial House in Order, will be in bookstores October 1, 2008.

Snider Advisors makes 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 888-6SNIDER 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, including the Snider Investment Method™ are subject to risk, including possible loss of principal.

Who's watching your pack?

Last week, I was in Alaska with the Bora Bora Society, a great group of Snider Method workshop alumni who travel together once a year.  While there, I met an Iditarod racer and his dogs. The racer, called a "musher," explained to us just how grueling the race can be -- more than 1,150 miles through mountains, across frozen rivers, and into dense forest and desolate tundra. All this at sub-zero temperatures, gale-force winds and blinding blizzards. The wind chill was once recorded at -100 degrees Fahrenheit! 

To see the work and training involved in such an endeavor is truly amazing, and I think I could have spent my entire trip just learning about the dogs and the care it takes to cross the finish line.

It takes a steely resolve and a little insanity to even want to compete in this race, and the mushers ought to be admired. But the real athletes, the real stars are the sled dogs themselves, which the mushers treat like their own children.

They were training one young dog -- maybe a little over a year old --  who was obviously new to the game. All the dogs were hooked together and running, but the young one kept turning his head, looking at the scenery around him.

I noticed one of the older dogs, perhaps the oldest in the pack, was right beside him. Every time the young dog broke his concentration, the older one nipped at him to keep him in line.

"We don't really do much training," the musher said. "The dogs really train each other."

That got me thinking about how families treat investing and personal finance. Your family is like a team of sled dogs; you all must work together to navigate the rocky terrain through all sorts of weather. The older, more experienced members of your family need to make sure the younger ones learn how to run the race the right way.

So who's watching out for the young pups in your family? Are you teaching your children and grandchildren good money habits? They won't pick it up in school -- most high school graduates don't even know how to balance a checkbook!

Sure, the younger pups may not appreciate your nipping at them whenever they wander astray. They'll yelp and bite back… but you must keep at it. Your involvement in your family's financial education will serve your pack well.

(By the way, there are more photos from the trip on our Bora Bora Society page on Flickr.)

---

Kim Snider is the President and Founder of Snider Advisors, an SEC Registered Investment Advisor, focused on teaching individual investors a sensible, long-term investment approach focused on maximizing cash flow. For more information on Snider Advisors or the Snider Investment Method and how to stop enriching your investment advisors at your expense, please visit snideradvisors.com. Her book, How to Be the Family CFO: Four Simple Steps To Put Your Financial House in Order, will be in bookstores October 1, 2008.

Snider Advisors makes 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 888-6SNIDER 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, including the Snider Investment Method™ are subject to risk, including possible loss of principal.

Guarantees and Generalizations

This week, I want to do things a little differently. Instead of writing my usual article, I sat down with newsletter editor (and radio show sidekick) James Pecht and discussed some feedback we received from our recent "Red Flag" articles. It's an audio file about 14 minutes long, and you can download it to listen from your computer or move it to your mp3 player.

Click here for the audio Kimmunique (Hi - 128k | Lo - 24k)

Notes:
0:00 Introduction
2:00 What we mean by the statement "If a financial advisor constructs a portfolio with an expected return of less than 10 percent, that's a red flag"
4:40 Why that statement did not reflect a guarantee but rather a goal
5:45 Generalizations in the articles -- why I use inflexible rules
8:25 About the information session scheduled for Saturday, May 31. (After my talk, we'll head over to Boston's the Gourmet Pizza on 635 and MacArthur in Irving to broadcast the weekly radio show live on location. Then we'll stick around to answer questions and talk to folks one-on-one.)
10:45 New virtual office hours -- a twice-weekly conference call.

Details on the office hours: 

• Wednesdays 5 p.m. - 6 p.m. Central Time
• Thursdays Noon-1 p.m. Central Time

Ask anything that's on your mind about the Snider Method, personal finance, the economy -- you name it! We have a special toll-free conference call line -- you can call in and ask your questions, or just listen in to what others are asking. The office hours have an online component, too -- the technology we're using allows me to show you calculations, visit websites, etc. It's like you're sitting right beside me, looking at my computer screen together.

To join me, here's what you do:

1. Call 1-888-617-3400 and enter the access code 791564.
2. (Optional) Go to https://www1.gotomeeting.com/join/597893666.Please note: Attendance is limited for the online component, and you may be prompted to download some software the first time you log on.

---

 

Kim Snider is the President and Founder of Snider Advisors, an SEC Registered Investment Advisor, focused on teaching individual investors a sensible, long-term investment approach focused on maximizing cash flow. For more information on Snider Advisors or the Snider Investment Method and how to stop enriching your investment advisors at your expense, please visit snideradvisors.com. Her book, How to Be the Family CFO: Four Simple Steps To Put Your Financial House in Order, will be in bookstores October 1, 2008.

Snider Advisors makes 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, including the Snider Investment Method™ are subject to risk, including possible loss of principal.

Investing Like Yale

In times when the market is going every which way, it can be comforting -- and rewarding -- to follow a rigid system. This video from Investment News shows how large university endowment funds follow a system to get better results. It also features an interview with a big-name fund manager who also follows a system.

Key quote: "We've found over the years that the numbers are more reliable than opinions, and that includes my own opinion." - Steve Leuthold, The Leuthold Group

Also, for those of you in the Snider Method® who are nervous about the international stocks Lattco® gives you, pay close attention to the discussion of overseas markets.

Go here to watch the video: http://link.brightcove.com/services/link/bcpid1125967528/bclid1125949998/bctid1498976295

Snider Advisors makes 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, including the Snider Investment Method™ are subject to risk, including possible loss of principal.

The Performance Paradox - Fear - (Part 1)

When the markets re-opened on September 17, 2001, the Dow was down, at one point, 850 points and the S&P lost 5% of its value. I remember remarking to my husband (boyfriend at the time) that I felt as if I was moving through Jell-O. Much of what we thought we knew about our world had just gone out the window. No one knew what was coming next. Would there be more attacks? Was this just the beginning? And even if there weren't, how would the economy withstand such an unprecedented disruption?

 

That week, a number of our clients called us. Some just wanted to talk. Others wanted to know what to do. Should they continue with the Snider Investment Method as if nothing has happened? Should they sell their Snider Method positions? Should they liquidate their other stock market holdings?

 

Our response, as it always is, was to stay the course. There was no reason to alter the strategy or do anything different. After all, our investment objectives, tolerance for risk or time horizon did not change when those airplanes slammed into the World Trade Center. I put together a 60 second radio spot that aired on local radio before the markets reopened which told people we would be buyers of stock when the markets reopened.

 

Many people, clients and otherwise, thought we were nuts. Some called to say they were dumping their portfolios. We advised strongly against it, but it was their money. They could do what they wanted.

 

Those who dumped their portfolios did so out of fear and are classic examples of one side of what I have come to call the Performance Paradox. The Performance Paradox is that the more we react to the short term performance of our portfolio, either out of fear or greed, the worse our long-term performance will be.

 

The person who invests from a base of fear, in other words is so afraid of market losses or is so obsessed with short term performance, that he sells every time an investment goes down creates a pattern of turning temporary losses in value into permanent losses of capital. Do this over and over again and you will continually turn winners into losers.

 

What is the answer?

 

To be a successful investor, you must be an optimist. You must recognize and internalize that we live in the greatest, most transparent economy in the world. There will be downturns and tough times - no question. All of us have a tendency, especially as we get older, to think the world is going to hell in a hand basket.

 

And yet, we also know that ten years after any economic disruption - whether it be the Great Depression, the 1987 crash, the currency crisis of the late 1990s, September 11th or whatever - we can look back and we will not wish we had sold. Instead we will wish we had invested everything we had at the time.

 

This is not to say that investing is risk-free and that even the most optimistic among us won't go through periods of doubt. By definition, we will experience severe declines periodically in the future. Investing in the stock market is a winning strategy, most of the time, but not all the time. And those down years can be hard to ignore.

 

If we could accurately predict when those down years would occur, this discussion would be moot. We would simply get in ahead of market upturns and get out ahead of the downturns. But of course, no one can accurately predict when the downturns will come or how long they will last. As Nobel Laureate Paul Samuelson said, "The stock market has forecast nine of the last five recessions."

 

What we can predict is, if you are an optimist who takes a long term view of the market, you will prosper over the years because you will have found a proven strategy for success. The investor who takes the opposite approach - who is bound up in fear and as a result monitors his portfolio constantly and reacts out of fear to short term declines in value, will not be successful over the long run.

 

This is the Performance Paradox. The more you want or need it, the more you try to get it, and the more you micromanage it, the worse it will be.

 

So which are you? Do you take an optimistic long-term view of the market? Or do you try to micromanage the short term performance of your portfolio?

 

Next week, I'll look at the flip side of the Performance Paradox - greed. Then we'll talk about the antidote. Stay tuned.

 

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.

Dow components compared to all-time high

I am on a plane, en route from Dallas to Atlanta. CNN was reporting the Dow was within just a few points and inching closer to its all-time high as I was getting on the plane. By now, it may even have reached or surpassed it.

 

We know stock prices rise over long periods of time. We also know, from studies like those done every year by Dalbar, that investor returns seriously lag investment returns. For example, in the 20 year period ending in 2003, the S&P was up almost 12% per year, on average. The average investor was only up 2.7%.

 

Using the Dow as an example, it is easy to see why investor performance is so bad. The Dow made its previous all-time high on January 14, 2000. Mike Panzner has gone to the trouble of calculating the change in the current stock price of each of the Dow 30 stocks from the January 14, 2000 high to now.

 

Dow Components

 

These numbers point out two places where our brains are likely to tell us the opposite of what we need to know or do to be successful investors. The first is the trickery of averages and the second is the trickery of indexes.

 

The financial services industry uses averages a lot! You almost can't help it. It is a convenient way to summarize information. The problem with averages is that people hear them and assume they will be at least average. Most people assume they will be above average. Some of them will be right. But some won't. Someone has to be below average.

 

Everyone wants to be in the top half. If you are part of the bottom dwelling contingent, you think the investment sucks - there is something wrong with the investment or you're somehow getting gypped. Of course, If you are part of the group who is doing better than average, you think it's the cat's pajamas.

 

The danger in averages, or at least in everyone's desire to be above average, is that when you are not, you head for the exits. You bail out of the investment you are in, hoping to replace it with something better. But again, someone has to be below average. Whether you end up in the top half or the bottom half of the next investment is just luck.

 

If you end up in the bottom half again, you sell and look for something else. You are creating a pattern of buying high and selling low. If you end up in the top, then someone else is now in the bottom and they will sell low so they can go buy something else high. Every time you move from one investment to another, rather than increasing your odds of success, you mathematically increase the odds that you will underperform.

 

Crazy, huh? But true.

 

The other interesting point is made by the individual Dow components against their January 14, 2000 prices. More stocks in the Dow are lower today than are higher.

 

Contrary to the conventional wisdom, rising tides don't float all boats. The opposite is also true, falling markets don't sink all boats either. This is due to the random nature of price movements.

 

I think most people assume that if the market is going up, their stocks should go up too. I will concede that the bias is toward up in a rising market and down in a falling market. But that's about it. Stocks move in their own cycles within the movement of the index and often in the opposite direction.

 

This idea is critical to the way I invest. I believe stock prices are random. I know that even financially sound well run companies, including Intel, Microsoft, Coca-Cola and Wal-Mart, can experience five year periods of negative returns in a rising market.

 

So the Dow points out what I believe are two critical success factors for investors:

 

1. You have to resist the urge to jump ship every time an investment doesn't feel good. Chasing performance leads to worse performance. The patient investor always wins out over the impatient one.

 

2. When evaluating investment strategies, look for something that recognizes you will be impatient and makes staying in easier, even when the investment isn't up on a total return basis. For me, that means creating an income stream I can use to pay my bills and maintain a comfortable standard of living whether my stock prices are up or down. I am comfortable holding good companies for very long periods of time, so long as my standard of living is unaffected.

 

UPDATE: I wrote the majority of this post on Thursday. I didn't finish it until Sunday. So we know the Dow backed away from the all-time high. But the point remains.

 

SOURCE: Comparison of Dow components is from The Big Picture. Thanks Barry. I looked for the original source from Mike Panzner to give him a link. I couldn't find it.

 

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.

The Power of a Portfolio Paycheck

I write often about the power of a portfolio paycheck. In other words, creating a portfolio whose main objective is to generate cash flow rather than capital appreciation. This is a ten minute video I did for KRLD's Online Investor Workshop on the topic.

 

 

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.

Bora Bora, Colorado

Well, I am back from Bora Bora - no, not the island in Polynesia - the metaphorical Bora Bora. What is Bora Bora? It is the metaphor Snider Investment Method™ investors use to represent a peaceful, stress-free, life of financial security. It is the outcome we seek to achieve as a result of our saving, planning and investing.

 

My most recent Bora Bora was a trip with all my Durango Saddlebag buddies up into the mountains. It was fabulous - best one ever! I won't bore you with all the pictures here, but if you are interested, jump over to my Life In Bora Bora blog and check them out.

 

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.

The Perfect Portfolio

The perfect investment would be one with a huge return and no risk, right? But everyone knows that isn't possible. And there is much more to an investment than just its risk and return. There are factors like liquidity, fees, taxes, time required, and transparency. There are many different types of risk: credit risk, interest rate risk, market risk and conversion risk. There are income investments and capital appreciation investments. Some investments have an insurance component - others don't.

 

Given that there is no such thing as a risk free investment with huge returns, what is your idea of the perfect portfolio? Please leave your comment telling everyone the three most important characteristics of your ideal portfolio, in order of importance, and why they are important to you.

 

If you wouldn't mind, please also tell us how old you are, whether you are working or not, and if you are working, how long until you plan to stop working.

 

I look forward to seeing the results. I think this will be fun.

 

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.

What's Rational?

"We have a high moral responsibility to be rational."

-- Charles T. Munger, Vice- Chairman, Berkshire hathaway, at the 2006 Annual Meeting

Tip of the hat to Nick Murray Interactive for this quote. I, of course, like this quote because one of the six fundamental tenets of my investment philosophy is, "Investors are their own worst enemy."

I believe emotions cause us to do the opposite of what we should be doing and it is my job to try to keep my tribe acting in a rational manner rather than responding to fear and greed.

For more on this topic, see the posts in the Investors Are Not Rational category.

 

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.

You Can't Invest What You Don't Save

I often talk about the four legs of financial success and the six basic tenets, or principles of the Snider Investment Method™. Hopefully, people don't get them confused.

 

I define financial success as having sufficient financial resources that work becomes a personal choice instead of a financial necessity. I believe financial success is built on a foundation made up of:

 

1) a long-term, conservative approach to money

2) prodigious saving

3) prudent and purposeful investing

4) entrepreneurialism

 

The six principles of the Snider Method are:

 

1) you alone are accountable for whatever financial condition you find yourself in

2) emotions are an investor’s worst enemy - our herd instinct causes us to buy when we should be selling and selling when we should buying

3) most investments are designed to make Wall Street rich, not you, and the more people selling them the less likely they are to be a good investment

4) stock picking and market timing do not work -the empirical evidence is overwhelming that stock prices are random and cannot be predicted consistently over time

5) minimizing risk is as important as returns

6) the key to building wealth is making your money work consistently every single day, regardless of market conditions, economic conditions or geo-political events

 

Let's talk about saving - not an area I typically focus a lot of attention on. My primary focus is on #3 - prudent and purposeful investing. But I often get emails like this one:

 

I have very little money and I don't mean a couple of thousands either. I am lost in where to put it to make it grow and work for me. I tried to grow it but that doesn't seem to work, I don't have a greet thumb either. How much do I save to even begin making my money work for me? I know I'm probably helpless but I thought I would give it a shot. Thanks!

 

Most of us get the cart before the horse. The biggest mistakes I see people male are:

 

1) try to invest before they save

2) try to invest without really knowing what they are doing

3) try to turn almost nothing into a little something by taking too much risk, thereby almost guaranteeing their nothing will always be nothing

 

When you have no savings, your focus can't be on investing. The first thing you have to do is put at least six months of expenses in a money market fund. This is not negotiable. You should not be investing to try to create your emergency fund. You save that first!

 

Work on your financial education while you are saving so when you are ready to invest, you know what you are doing. I believe the most important job you will ever hold is that of Family CFO. Make sure you are qualified to do the job.

 

Finally, once you have a little money to invest, don't go out and take a flyer on stocks. Build slowly and focus on managing risk. The biggest fallacy most people fall prey to is that taking a lot of risk guarantees a bigger return. It does not. It guarantees that, if you play long enough, the losses will be bigger and more frequent. Mathematically, a lot of risk guarantees a lower return, not a higher one.

 

Of course, the next thing out of most people's mouth will be, "I can't save. I am living paycheck to paycheck." I know it is hard but it can be done. I've been there and I've done it. So can you.

 

If you are in a position where you have not started socking away money, the best resource I can recommend is David Bach's books, "Automatic Millionaire" and "Start Late - Finish Rich."

 

Warning: I do not agree with David's approach to investing. That is probably no surprise given his former life as a senior vice-president of Morgan Stanley. I'd rather stick pins in my eyes than invest in a mutual fund. But … his advice for saving money, while it seems simplistic, is very doable. You can find the "Automatic Millionaire" on my reading list in Kim's Korner.

 

So I am curious. How many of you have six months of expenses in liquid assets like a savings account or money market? Take the poll below. Also, what constructive advice can you give the person who wrote the email above? 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.

 

Principle-Driven Portfolio Management

Nick Murray is one of my favorite financial writers. He is an author, speaker and advisor to investment advisors. While I disagree vehemently with the diversified portfolio approach he advocates, I cannot help but agree with most of his views on how to "think about" portfolio management.

 

He publishes a column each month in Financial Advisor magazine, which is unfortunately, not published on their web site. That also means, in order to share any of it with you, I must re-type it or scan it and run it through OCR. I thought the article, "Portfolio Management As Belief System" was so right on target, that I have done that.

 

The subtitle is "Principles, not prognostication, produce superior returns." I could not agree more. The Snider Investment method™ is, as it turns out, a principle-driven approach to portfolio management, not one based on prognostication. Here is an excerpt from the column:

 

Investors should not be seeking the maximum return possible anywhere in the universe, but rather the best return available with the least stress. In this construct, if Investor A gets a 9.5% lifetime return and thereby achieves his goals with the expenditure of little or no time and energy, while Investor B gets 10.7% working on his portfolio nearly every day, Investor A is held to have outperformed by a significant (if not precisely measurable) margin.

 

(This hypothetical comparison is made only to illustrate the idea of a quality-of-life component in real returns. You will not have failed to note that, in actual practice, the above juxtaposition of outcomes could probably not happen, everything else being equal, because the guy "managing" his portfolio every day would have made so many more market-driven portfolio switches that he'd have drilled his return into the ground.

 

The principle-driven portfolio management belief system thus begins with the dictum that "performance" is not a financial goal, and that the only rational basis for the construction and management of a long-term portfolio is the long-term financial goals of its owners. Thus questions like "When will the Fed stop raising rates?" and "What will the S&P 500 earn this year?" are subordinate, by several orders of magnitude, to the questions that really matter: (1)"Who is the money for?" (2)"What is the money for?", and (3)"When will this money be needed?" Or, if you prefer: the portfolio doesn't follow the market; it follows the human needs of the investor household/family.

 

My way of expressing this same belief is "Focus on outcomes rather than numbers." The idea is exactly the same. Obsession with performance is a disease inflicting most investors. A principled, rational approach makes more sense but the medicine is difficult to swallow for most. Here is another excerpt:

 

The third principle in this system states that the dominant determinant of real-life long-term return isn't what the portfolio does; it's what the investor does. That is, investor behavior dwarfs investment performance in determining the actual return that investors get.

 

[...]

 

Of necessity, since most financial input ordinary people receive is from journalism, they are constantly being brainwashed by a selection-and-timing culture. The primacy of asset allocation may be the immutable truth, but it isn't "news", and therefore journalism can't cover it. The truth is not merely different from the news, it is antithetical to it. The news is the disease; the truth-telling principled advisor is, for most investors, the cure ... assuming, of course, that they want to be cured.

 

Again, I have a different way of stating the same principle: "Investors are their own worst enemy." Investors are irrational. Investors emotions cause them to react irrationally - to do the opposite of what they should be doing - to view things as important that aren't and to view things very important as not.

 

Principle-driven portfolio management requires discipline. It also required, as Nick Murray states elsewhere in his article, for you to remain lashed to the mast of your principles in the face of storms of pounding fury. That is hard, for anyone. It is even harder to get others to stay lashed to the mast with you. And yet, we must.

 

So what do you think? Does this idea make sense to you or do you think it is all wet? Let us know. Leave your thoughts and comments below.

 

SOURCE:

 

Nick Murray. "Principle Driven Portfolio Management: Principles, Not Prognostication Produce Superior Returns," Financial Advisor, May 2006; p45, 46 <No on-line version available>

 

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.

Does the Snider Investment Method Buy and Hope?

I discussed what I call the Buy and Hope strategy in a post dated June 28, 2006. A number of people, including some practitioners of the Snider Investment Method™ left comments asking if the Snider Method didn't also rely on buy and hope. I started to post my reply as a comment but it got so long I decided I'd just put it up as its own post. So here goes …The Snider Method doesn't rely on hope - not in my mind - although some people may do it anyway.

 

I don't have to hope because I don't care what the stock price does. The reason I don't care what the stock price does is I am an income investor. I would be willing to hold any of my Snider Investment Method positions forever because I created them for the express purpose of generating a consistent income over very long periods of time regardless of what the stock price of the underlying asset does.

 

Many people can never let go of the concept of account value. That's fine. It's their money so they are entitled to think about it in any way they want.

 

For me, my account value is an irrelevant concept. I never look at it and I never worry about it. I only care about the standard of living my portfolio can sustain. You don't measure standard of living using account value - you measure it by income generated.

 

Every dollar of income that can be generated indefinitely out into the future is the equivalent of a dollar of income I would otherwise have to make by working. My goal is to make sure I always have enough passive income that I never have to work. So long as I am meeting that goal, the only person who cares about my account value is my heirs and I am thinking my heirs care a lot more about my dignity when I am living (and not having to take care of me) than they do about the amount I leave them when I die.

 

Steve mentioned winters in his post. Winter, in the Snider Method, is a month in which a Snider Method position does not generate any income. I know most people view winters as bad. I don't. Winters were designed into the system and are included in our historical return numbers.

 

The problem with winters, of course, is as soon as you enter one you are convinced that spring will never come. That feeling is compounded if you get multiple positions in winter at the same time - which happens. My grandmother used to say, "Nothing is impossible, just highly improbable." Our experience over the years is no matter how bad they feel, positions generally come out of winter within a few months - though not always.

 

Sure, we could have designed the Snider Method so we didn't have winters. That would mean there would be no risk. No risk means low return. There are already no-risk investments - CD's and Treasuries, for example. That wasn't our objective. We are willing to take an acceptable amount of risk for an acceptable amount of return. That is, for us, a standard deviation of 6% for a yield of 13% annually. Others may or may not find this risk reward trade off appealing.

 

You have to remember the Snider Investment Method is not a short term trading strategy. It is a long term investment strategy. It is absolutely self-destructive to look at the returns of any investment from month to month. The question you must ask is, "Is this investment meeting my needs and objectives over my given time horizon?" If your time horizon is a month, six months, or even a year - you are in the wrong vehicle.

 

The Snider Method is nothing more than a substitute for bonds in your portfolio. The Snider Method creates a portfolio of synthetic bonds, which in the aggregate, have about the same level of risk as investment grade corporates and act similarly.

 

My own personal philosophy, as I have stated many times, is that I will not put my own money at risk in stocks. I think they are too risky given that each of us must now create a portfolio capable of sustaining an acceptable standard of living for 30+ years. I have also said, as a result of that philosophy, that my own money is only invested in CD's, money markets, and bonds. I, of course, include the Snider Method in the bond category as it is a terrific alternative to traditional bonds because the yield is so much higher for the same level of risk and shorter duration.

 

Accordingly, my family and I have the vast majority of our investable assets in the Snider Investment Method. Where else would we put it given that approach to investing? That doesn't mean you will, or even should. That is a decision you have to make given your tolerance for risk versus return and your temperament.

 

The best way to understand the liquidity issue, I think, is to think of a Snider Method portfolio as what it is - a portfolio of laddered, synthetic, investment grade corporate bonds. By laddered, I mean the bonds in your portfolio are of varying durations. Some of them "mature" after only a month. Many will go as long as two years. The infamous Checkfree position we dissect in the workshop took four years and one month to close. The average duration of a Snider Method position over time has been about six months - but that is just an average.

 

The Snider method is definitely not highly liquid - any more or less than a traditional bond portfolio is. We tell everyone not to put any money in the Snider Method that you aren't willing to leave the principal invested for at least two years. The income you can scrape off monthly but there is a liquidity risk, which we discuss in great detail in both the workshop and our free information sessions.

 

So to Steve's second post: We agree totally. You should always have an emergency fund of cash set aside for emergencies. Everyone should have six months' to a year's worth of bills set aside in liquid cash equivalents before you invest in anything - your 401(k), stocks, bonds or the Snider Method. Otherwise, you are robbing Peter to pay Paul. To invest before you have your basic needs covered is crazy.

 

So we assume you do have cash reserves. Given that, my personal philosophy is that your nest egg is sacrosanct - no matter what happens, you never, ever, rob your retirement funds to cover short term cash flow problems.

 

If circumstances are such that you have run through your emergency funds then it is my belief you have to do whatever you would do if you had saved nothing for your retirement. In my mind, it is as if the principal in your retirement doesn't exist.

 

I do have one caveat: If your retirement funds are producing income, like the Snider Method does, I think it is not only OK to use the income if you have to, but it is in fact one of the reasons I advocate becoming an income investor early in life. But robbing principal? Never.

 

That is the easy way out and years from now you will wish you hadn't. You can never recover the gift of time in the market. No matter how you rationalize it, you'll never catch back up. You are robbing money from a period in your life when you will have no earning power during a period in which you do - even if that means flipping hamburgers at McDonalds or picking up cans by the side of the road.

 

So, as far as I am concerned it is as if that money doesn't exist. From that mindset, which is the way I look at it, the liquidity issue becomes a non-issue because no matter what, I am never going to cash out a Snider Method position for any reason. Any money Jim and I know we will need later, we plan for and systematically remove from our Snider Method portfolio well in advance of needing it.

 

I think the main point is this - no investment is perfect. All have pros and cons, including the Snider Method. Every investor, and every investor's situation is different. It is up to you to develop a coherent philosophy that makes sense to you. Mine may or may not work for you - it does work well for me but that's because I am me. Your job is to be as rational and realistic about the future as possible, plan accordingly and then employ the tools that make the most sense to you in order to actualize your plan.

 

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.

The Dog Whisperer

I have written many times in this blog about the similarities between dieting and investing. Now I have another one for you. Investing is like dog training - yes, dog training!

 

Some of you may recall, back in September, my husband and I rescued a wonderful German Shepherd we named Drittё. Turns out, Dritte and our other German Shepherd, Lexi, have a problem with one another. They both want to be the alpha dog.

 

That rivalry came to a head at Christmas when they almost killed one another. Many hours at the vet and many stitches later, we got them put back together but they obviously had to be separated. We have been living that way ever since. Our house is like War of the Roses. Each dog has their part of the house and yard and never the two shall meet!

 

I have hired dog trainers. I have read books. Nothing seemed to offer the solution. Then I heard about Cesar Millan,