BloggingStocks http://www.bloggingstocks.com BloggingStocks http://www.blogsmithmedia.com/www.bloggingstocks.com/media/feedlogo.gif BloggingStocks http://www.bloggingstocks.com en-us Copyright 2012 Weblogs, Inc. The contents of this feed are available for non-commercial use only. Blogsmith http://www.blogsmith.com/<![CDATA[Little-Known Victims of Nigerian Internet Scams]]>http://www.bloggingstocks.com/2010/02/21/little-known-victims-of-nigerian-internet-scams/http://www.bloggingstocks.com/2010/02/21/little-known-victims-of-nigerian-internet-scams/http://www.bloggingstocks.com/2010/02/21/little-known-victims-of-nigerian-internet-scams/#commentsFiled under:

This is a true story sent to me by a reader of my books. His family gave me permission to publish this sad tale, but requested I protect their anonymity.

Bill Hacknett (not his real name) had planned well for retirement. He was a senior executive with a major, publicly traded company. He had spent his entire working career in corporate America. When his company downsized, it was not a problem for him. Over his 30-year employment history, he had accumulated significant assets in his 401(k) plan and, in his late fifties, was ready for early retirement.

Then disaster struck.

Continue reading Little-Known Victims of Nigerian Internet Scams

Little-Known Victims of Nigerian Internet Scams originally appeared on BloggingStocks on Sun, 21 Feb 2010 14:10:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Dan Solinfrontotemporal dementiainternet scamsNigerian scamsretirementSun, 21 Feb 2010 14:10:00 EST<![CDATA[Check out your 401(k) in ten seconds]]>http://www.bloggingstocks.com/2009/02/01/check-out-your-401-k-in-ten-seconds/http://www.bloggingstocks.com/2009/02/01/check-out-your-401-k-in-ten-seconds/http://www.bloggingstocks.com/2009/02/01/check-out-your-401-k-in-ten-seconds/#commentsFiled under: , ,

I've got bad news for the 30,000 participants in Dell's (NASDAQ: DELL) $1.6 billion 401(k) plan. They're going to have to work another ten years to earn up to $202,000 in lost retirement savings, compared to the participants in the top-rated plan in its peer group.

Dell's plan isn't all that bad. It's about average.

It took me ten seconds to get this information. How did I do it?

Continue reading Check out your 401(k) in ten seconds

Check out your 401(k) in ten seconds originally appeared on BloggingStocks on Sun, 01 Feb 2009 10:40:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>401kbrightscopeDan SolinDellretirementSun, 01 Feb 2009 10:40:00 EST<![CDATA[These portfolios beat 99% of all portfolios for 2008]]>http://www.bloggingstocks.com/2009/01/02/these-portfolios-beat-99-of-all-portfolios-for-2008/http://www.bloggingstocks.com/2009/01/02/these-portfolios-beat-99-of-all-portfolios-for-2008/http://www.bloggingstocks.com/2009/01/02/these-portfolios-beat-99-of-all-portfolios-for-2008/#commentsThe portfolios that beat 99% of all portfolios for 2008 really are unique. Their proponent does not have clue about market timing, stock picking or manager picking. They are available without using any broker or advisor;

They involve the purchase of three low cost index funds.

A recent study found these simple portfolios beat the passive portfolios of Scott Burns, David Swenson, William Bernstein, Ben Stein and Andrew Tobias. I am quite confident that they beat 99% of actively managed portfolios of comparable risk as well.

Here are the 2008 returns and risk for these portfolios:

Continue reading These portfolios beat 99% of all portfolios for 2008

These portfolios beat 99% of all portfolios for 2008 originally appeared on BloggingStocks on Fri, 02 Jan 2009 17:40:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Fri, 02 Jan 2009 17:40:00 EST<![CDATA[Memo to Obama: Mary Schapiro is not 'change' at the SEC]]>http://www.bloggingstocks.com/2008/12/18/memo-to-obama-mary-schapiro-is-not-change-at-th/http://www.bloggingstocks.com/2008/12/18/memo-to-obama-mary-schapiro-is-not-change-at-th/http://www.bloggingstocks.com/2008/12/18/memo-to-obama-mary-schapiro-is-not-change-at-th/#commentsFiled under: ,

Isn't it finally time to put someone in charge of the SEC who really cares about investors?

There are many well qualified candidates. Here are a few suggestions:

William Galvin: The highly respected Secretary of the Commonwealth of Massachusetts. He has taken on the industry and recovered millions of dollars of damages for aggrieved investors.

Joe Borg: Executive Director of the Alabama Securities Commission. Mr. Borg has a stellar record of protecting the interests of investors in Alabama.

Andrew Cuomo: The Attorney General of New York. He knows the industry and has shown great tenacity in exposing the recent fraud involving Auction Rate Bonds and other misdeeds.

Mary Schapiro, who is President-elect Obama's choice, has spent her career protecting the securities industry from investors.

Continue reading Memo to Obama: Mary Schapiro is not 'change' at the SEC

Memo to Obama: Mary Schapiro is not 'change' at the SEC originally appeared on BloggingStocks on Thu, 18 Dec 2008 11:11:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Andrew CuomoAndrewCuomofeaturedfinraJoe BorgJoeBorgMary SchapiroMarySchapiroobamasecWilliam GalvinWilliamGalvinThu, 18 Dec 2008 11:11:00 EST<![CDATA[How about a bailout for Madoff's victims?]]>http://www.bloggingstocks.com/2008/12/17/how-about-a-bailout-for-madoffs-victims/http://www.bloggingstocks.com/2008/12/17/how-about-a-bailout-for-madoffs-victims/http://www.bloggingstocks.com/2008/12/17/how-about-a-bailout-for-madoffs-victims/#commentsFiled under: ,

Christopher Cox, the chairman of the Securities and Exchange Commission blames career administrators at the SEC for their failure to investigate Bernie Madoff.

We now know the SEC received "credible and specific allegations" of wrongdoing by Madoff over the past decade and ignored them. More troubling is the news that an SEC attorney who participated in investigations into Madoff's firm in 1999 and 2004 recently married Madoff's niece.

Industry insiders do not believe the SEC was really "asleep at the switch." The SEC is a toothless tiger that more often than not protects the interests of the industry it is supposed to regulate. Commissioner Cox has carried out that mandate more brazenly than any other Commissioner in recent memory.

Here's one of many examples:

In May, 2004, Senators Patrick Leahy (Chairman of the Senate Judiciary Committee) and Russell D. Feingold, a member of the Senate Judiciary Committee, wrote to Commissioner Cox. They asked him to give investors a choice between the mandatory arbitration system imposed on all investors who have disputes with their brokers and going to Court.

Continue reading How about a bailout for Madoff's victims?

How about a bailout for Madoff's victims? originally appeared on BloggingStocks on Wed, 17 Dec 2008 15:16:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Christopher CoxChristopherCoxMadoffSECWed, 17 Dec 2008 15:16:00 EST<![CDATA[Can Madoff's victims recover their losses?]]>http://www.bloggingstocks.com/2008/12/15/can-madoffs-victims-recover-their-losses/http://www.bloggingstocks.com/2008/12/15/can-madoffs-victims-recover-their-losses/http://www.bloggingstocks.com/2008/12/15/can-madoffs-victims-recover-their-losses/#commentsFiled under: ,

It won't take long for a flurry of lawsuits to be filed over the massive losses caused by the Madoff Ponzi scheme. Filing complaints is easy. Recovery is far more difficult.

There is no doubt that investors who entrusted Madoff with their life savings should be entitled to get them back. I only wish it were that open and shut.

There is a lot we don't yet know, but here's the way it looks to me at present.

Investors who relied on hedge funds ("funds of funds") may have a shot a recovery. These funds represented that they had the ability to select and monitor fund managers. Their recommendation of Madoff to their clients will be difficult to defend given the numerous red flags that have surfaced about his secretive and conflicted operation.

Investors who relied on other referral sources (brokerage firms, accountants, lawyers, advisors) stand on similar footing. These sources of referral may well have liability for not doing more due diligence before recommending Madoff's firm.

Continue reading Can Madoff's victims recover their losses?

Can Madoff's victims recover their losses? originally appeared on BloggingStocks on Mon, 15 Dec 2008 08:54:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bernard madoffBernardMadoffmadoffponzi schemePonziSchemeMon, 15 Dec 2008 08:54:00 EST<![CDATA[You can add 30% to the value of your 401(k) plan regardless of the market]]>http://www.bloggingstocks.com/2008/12/14/you-can-add-30-to-the-value-of-your-401-k-plan-regardless-of-t/http://www.bloggingstocks.com/2008/12/14/you-can-add-30-to-the-value-of-your-401-k-plan-regardless-of-t/http://www.bloggingstocks.com/2008/12/14/you-can-add-30-to-the-value-of-your-401-k-plan-regardless-of-t/#commentsFiled under: , ,

I don't mean to pile on. I know looking at your 401(k) statement is so painful these days many employees don't bother to open it.

History tells us that markets recover over time. Your 401(k) will increase in value, but it will still be far short of what you will need to retire. Why?

Because of hidden costs that enrich 401(k) providers. These costs are totally unnecessary and could be easily eliminated if only your employer cared enough to do the right thing. Most don't.

There is no end of research indicating that index funds outperform funds that try to "beat the markets." I call these funds "hyperactively managed funds." Index funds are also far less expensive.

While "less expensive" is good for employees, it is bad for brokers and advisors to these plans because it deprives them of excessive fees. The porky pig fees in most 401(k) plans include undisclosed trading costs, the payment of excessive brokerage commissions, the practice of subsidizing record-keeping services with high fund management fees and the payment of marketing fees for selling the high-cost funds in the plan, among many others.

Continue reading You can add 30% to the value of your 401(k) plan regardless of the market

You can add 30% to the value of your 401(k) plan regardless of the market originally appeared on BloggingStocks on Sun, 14 Dec 2008 12:10:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>401kbrokerage commissionsbrokerage feesDan Solinfeaturedindex fundsmanagement feesMatthew HutchesonSun, 14 Dec 2008 12:10:00 EST<![CDATA[An investment you can believe in]]>http://www.bloggingstocks.com/2008/12/07/an-investment-you-can-believe-in/http://www.bloggingstocks.com/2008/12/07/an-investment-you-can-believe-in/http://www.bloggingstocks.com/2008/12/07/an-investment-you-can-believe-in/#commentsFiled under: , ,



I advise people how to invest in the stock market. My books empower people to take charge of their investing: determine their asset allocation, buy a globally diversified portfolio of low cost index funds, and avoid brokers.

Frankly, it's a tough sell. Investors want the risk of risk-free investments, but the returns that come with taking significant risks. Most brokers and the financial media are more than eager to help them try to do so.

As Dr. Phil would say: How is this working for you?

It's not just about the current market meltdown. There is ample data indicating that, over the long term, the average equity investor makes a significantly lower return than he or she could obtain from FDIC insured Certificates of Deposit or Treasury Bills, with far less risk. This is a fairly predictable result, caused by stock picking, manager picking and market timing, all of which are peddled to gullible investors.

Historically, stock market investing has been the only way to keep pace with inflation and taxes. Nevertheless, it really is a lazy way to make money. You write a check, deposit it in an account and hope that it will grow into a bigger check so you can take it out some day and retire.

Continue reading An investment you can believe in

An investment you can believe in originally appeared on BloggingStocks on Sun, 07 Dec 2008 12:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>daniel solinDanielSolininvestingNASDAQNYSEstock marketStockMarketSun, 07 Dec 2008 12:30:00 EST<![CDATA[No. 12: Odds are rich people know the odds]]>http://www.bloggingstocks.com/2008/12/07/no-12-odds-are-rich-people-know-the-odds/http://www.bloggingstocks.com/2008/12/07/no-12-odds-are-rich-people-know-the-odds/http://www.bloggingstocks.com/2008/12/07/no-12-odds-are-rich-people-know-the-odds/#commentsFiled under: ,

This post is part of a series where personal finance expert Dan Solin looks at money secrets that help the rich stay rich. See them all.

To be a successful investor, you need to know the odds.

Investing is far more important than gambling. Yet most gamblers understand the odds before they place a bet. Few investors understand the odds of achieving a return on their investments.

The odds of shooting snake eyes at a craps table are one in thirty-six.

The odds of winning on one number at a roulette table are one in thirty-eight.

Most investors buy actively managed funds, where the fund manager attempts to beat a given benchmark. What are the odds she will be able to do so?

They are one in thirty-six. Sound familiar?

Almost every broker and many advisors will tell you they can pick stocks that will be winners. What are the odds they can deliver?

Continue reading No. 12: Odds are rich people know the odds

No. 12: Odds are rich people know the odds originally appeared on BloggingStocks on Sun, 07 Dec 2008 10:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Secrets of the richSun, 07 Dec 2008 10:00:00 EST<![CDATA[ No. 11: Rich people know it's not what you make, it's what you keep that matters]]>http://www.bloggingstocks.com/2008/12/06/no-11-rich-people-know-its-not-what-you-make-its-what-you-keep/http://www.bloggingstocks.com/2008/12/06/no-11-rich-people-know-its-not-what-you-make-its-what-you-keep/http://www.bloggingstocks.com/2008/12/06/no-11-rich-people-know-its-not-what-you-make-its-what-you-keep/#commentsFiled under: , ,

This post is part of a series where personal finance expert Dan Solin looks at money secrets that help the rich stay rich. See more.

Most investors don't realize that the biggest factor in reducing their returns are the costs associated with their investments.

These costs include commissions, loads, taxes, advisory fees, market-makers, transfer agents and related costs. When you add them up, they can be very significant, reducing overall returns by as much as 40%!

Actively managed mutual funds (funds that try to outperform a given benchmark) have high turnovers of their portfolios. High turnover generates taxable transactions. The tax hit is carried by the investors in the fund, even when they don't sell their shares.

Here is one example:

The actively managed Fidelity Contrafund had a turnover of 60% in 2006. The passive Vanguard 500 Index Fund had a turnover of 7% during the same year.

Continue reading No. 11: Rich people know it's not what you make, it's what you keep that matters

No. 11: Rich people know it's not what you make, it's what you keep that matters originally appeared on BloggingStocks on Sat, 06 Dec 2008 18:15:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>Fidelityfund feesFundFeessecrets of the richtaxesSat, 06 Dec 2008 18:15:00 EST<![CDATA[No. 10: Rich people don't rely on false prophets]]>http://www.bloggingstocks.com/2008/12/06/no-10-rich-people-dont-rely-on-false-prophets/http://www.bloggingstocks.com/2008/12/06/no-10-rich-people-dont-rely-on-false-prophets/http://www.bloggingstocks.com/2008/12/06/no-10-rich-people-dont-rely-on-false-prophets/#commentsFiled under: , ,

This post is part of a series where personal finance expert Dan Solin looks at money secrets that help the rich stay rich. See more.

There seems to be no end of brokers, advisors, and talking heads on television who give advice to guileless investors. They discuss where the markets are headed, what stocks to buy "now," what stocks to sell, and which fund managers are "hot."

They endlessly analyze economic data and interpret it for those of us too unschooled to understand it. They tell us how it affects the markets, and what steps we can take to profit from this knowledge and from their insights.

Often they provide this information in breathless reports delivered from the floor of the New York Stock Exchange, which serves to heighten the urgency and importance of their message.

For the most part, they are false prophets. The information they impart is irrelevant to a sound investment strategy. In fact, listening to it and relying on it is harmful to your financial well-being.

Here are some examples:

Continue reading No. 10: Rich people don't rely on false prophets

No. 10: Rich people don't rely on false prophets originally appeared on BloggingStocks on Sat, 06 Dec 2008 10:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>brokersecrets of the richSat, 06 Dec 2008 10:00:00 EST<![CDATA[No. 9: Really rich people understand that net worth is not self-worth ]]>http://www.bloggingstocks.com/2008/12/05/no-9-really-rich-people-understand-that-net-worth-is-not-self/http://www.bloggingstocks.com/2008/12/05/no-9-really-rich-people-understand-that-net-worth-is-not-self/http://www.bloggingstocks.com/2008/12/05/no-9-really-rich-people-understand-that-net-worth-is-not-self/#commentsFiled under: , ,

This post is part of a series where personal finance expert Dan Solin looks at money secrets that help the rich stay rich. See more.

It always seemed to me that most people who said that money can't buy happiness didn't have much money.

It would be more accurate to say that if your unhappiness has nothing to do with money, wealth won't make you happy.

The harsh reality is that most of us need a certain amount of money to pay the bills and hopefully provide for retirement with dignity.

Investors who follow the basic lessons that rich people know will be taking a positive step in the direction of responsible, intelligent investing that will help them maximize their returns.

Really rich people understand that money can't buy health. It also can't buy meaningful relationships with family or friends.

Continue reading No. 9: Really rich people understand that net worth is not self-worth

No. 9: Really rich people understand that net worth is not self-worth originally appeared on BloggingStocks on Fri, 05 Dec 2008 14:15:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>happinesshealthsecrets of the richFri, 05 Dec 2008 14:15:00 EST<![CDATA[No. 8: Rich people know the difference between an appreciating and a depreciating asset]]>http://www.bloggingstocks.com/2008/12/05/no-8-rich-people-know-the-difference-between-an-appreciating-a/http://www.bloggingstocks.com/2008/12/05/no-8-rich-people-know-the-difference-between-an-appreciating-a/http://www.bloggingstocks.com/2008/12/05/no-8-rich-people-know-the-difference-between-an-appreciating-a/#commentsFiled under: , ,

This post is part of a series where personal finance expert Dan Solin looks at money secrets that help the rich stay rich. See more.

Rich people own both appreciating and depreciating assets. They know the difference.

Depreciating assets decline in value.

Appreciating assets increase in value.

It is the appreciating assets that permit rich people to purchase the depreciating assets, and not the other way around.

Rich people get rich by buying assets that increase in value slowly over time. They build up businesses. The buy and hold real estate.

They invest in the stock market differently than most individual investors. They determine their asset allocation and buy and hold a globally diversified portfolio of low-cost stock and bond index funds.

Continue reading No. 8: Rich people know the difference between an appreciating and a depreciating asset

No. 8: Rich people know the difference between an appreciating and a depreciating asset originally appeared on BloggingStocks on Fri, 05 Dec 2008 06:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>assetselectronicsjewelryFri, 05 Dec 2008 06:30:00 EST<![CDATA[No. 7: Rich people don't bet the farm on one asset class or stock]]>http://www.bloggingstocks.com/2008/12/04/no-7-rich-people-dont-bet-the-farm-on-one-asset-class-or-sto/http://www.bloggingstocks.com/2008/12/04/no-7-rich-people-dont-bet-the-farm-on-one-asset-class-or-sto/http://www.bloggingstocks.com/2008/12/04/no-7-rich-people-dont-bet-the-farm-on-one-asset-class-or-sto/#commentsFiled under: , ,

This post is part of a series where personal finance expert Dan Solin looks at money secrets that help the rich stay rich. See more.

Is this a good time to buy commodities?

What about emerging markets?

Don't value stocks outperform the markets?

Six months ago, the investment du jour was oil. Clearly, it had no where to go but up. Right?

China and India were increasing consumption at a rapid rate and oil was in short supply. Many analysts were projecting the date when oil supplies would run out altogether.

Six months later, oil tanked.

Did you think that gold was a good hedge against a financial meltdown? If so, your views were shared by many "experts."

Gold reached a record high price of $850 in January 1980. Its current price is $747. What happened?

Continue reading No. 7: Rich people don't bet the farm on one asset class or stock

No. 7: Rich people don't bet the farm on one asset class or stock originally appeared on BloggingStocks on Thu, 04 Dec 2008 19:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>asset classAssetClassoilsecrets of the richThu, 04 Dec 2008 19:00:00 EST<![CDATA[No. 6: Rich people invest in themselves]]>http://www.bloggingstocks.com/2008/12/04/no-6-rich-people-invest-in-themselves/http://www.bloggingstocks.com/2008/12/04/no-6-rich-people-invest-in-themselves/http://www.bloggingstocks.com/2008/12/04/no-6-rich-people-invest-in-themselves/#commentsFiled under: , ,

This post is part of a series where personal finance expert Dan Solin looks at money secrets that help the rich stay rich. See the first five secrets.

I give a lot of talks to groups of investors. I like to ask this question:

How many of you made most of your money investing in the stock market?

Very few hands go up.

I get the same result when I ask: How many of you know someone who made most of his or her money investing in the stock market?

Let's drop to the bottom line:

Rich people invest in themselves.

Poor people invest in "things" that give them instant gratification, like plasma screen TVs and flashy cars.

I don't mean to be glib. Rich people can afford education and great health care. Poor people often can't. A great education and good health positions rich people to get richer.

Continue reading No. 6: Rich people invest in themselves

No. 6: Rich people invest in themselves originally appeared on BloggingStocks on Thu, 04 Dec 2008 14:30:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>educationsecrets of the richThu, 04 Dec 2008 14:30:00 EST<![CDATA[No. 5: Rich people don't invest in complex instruments they don't understand]]>http://www.bloggingstocks.com/2008/12/04/no-5-rich-people-dont-invest-in-complex-instruments-they-don/http://www.bloggingstocks.com/2008/12/04/no-5-rich-people-dont-invest-in-complex-instruments-they-don/http://www.bloggingstocks.com/2008/12/04/no-5-rich-people-dont-invest-in-complex-instruments-they-don/#commentsFiled under: ,

This post is part of a series where personal finance expert Dan Solin looks at money secrets that help the rich stay rich. See them all.

The headline needs a caveat: some rich people did invest in complex instruments they didn't understand.

They are no longer rich.

Hedge funds are a perfect example.

Few people really understand them. They are not regulated. It is difficult to figure out what they are investing in. It is even more difficult to determine if they have deviated from their original investment strategy.

They promise big returns without additional risk.

Many investors and even pension funds fell for the pitch.

Few took the time to look at the data.

One study of 1,917 funds found that only 17.7% beat their benchmark.

Hedge funds are imploding at an alarming rate. One site that tracks hedge fund failures reports that, since mid-2007, 95 funds managed by 58 firms have blown up.

Continue reading No. 5: Rich people don't invest in complex instruments they don't understand

No. 5: Rich people don't invest in complex instruments they don't understand originally appeared on BloggingStocks on Thu, 04 Dec 2008 06:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>benchmarkhedge fundsHedgeFundssecrets of the richSecretsOfTheRichThu, 04 Dec 2008 06:00:00 EST<![CDATA[No. 4: Rich people don't try to outstmart millions of other people looking at the same data]]>http://www.bloggingstocks.com/2008/12/03/no-4-rich-people-dont-try-to-outstmart-millions-of-other-peop/http://www.bloggingstocks.com/2008/12/03/no-4-rich-people-dont-try-to-outstmart-millions-of-other-peop/http://www.bloggingstocks.com/2008/12/03/no-4-rich-people-dont-try-to-outstmart-millions-of-other-peop/#commentsFiled under: , ,

This post is part of a series where personal finance expert Dan Solin looks at money secrets that help the rich stay rich. See them all.

All information about listed companies is public. It is widely and instantly disseminated. This information is studied by millions of investors, who establish the price of a given stock based on this data.

Many of those looking at this data are professional analysts. They are well trained in finance and have access to powerful computer programs that assist them in crunching the numbers.

There is one piece of information they don't know: tomorrow's news.

Future events move stock prices. The market has already discounted for current news.

Because no one knows tomorrow's news, many "sure bets" turn out to be losers. Fannie Mae, Lehman, and Bear Stearns are recent examples. Past failures of top-rated stocks include Worldcom, Enron, Bethlehem Steel and Polaroid. In fact, of the 500 companies that made up the S&P 500 in 1957, only 74 of them were in the index in 1997.

Here is the real kicker: Only twelve of those companies outperformed the S&P 500 index in the period from 1957-1998.

Continue reading No. 4: Rich people don't try to outstmart millions of other people looking at the same data

No. 4: Rich people don't try to outstmart millions of other people looking at the same data originally appeared on BloggingStocks on Wed, 03 Dec 2008 19:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>secrets of the richSP 500Wed, 03 Dec 2008 19:00:00 EST<![CDATA[No. 3: Rich people know the foundation for all returns is risk]]>http://www.bloggingstocks.com/2008/12/03/no-3-rich-people-know-the-foundation-for-all-returns-is-risk/http://www.bloggingstocks.com/2008/12/03/no-3-rich-people-know-the-foundation-for-all-returns-is-risk/http://www.bloggingstocks.com/2008/12/03/no-3-rich-people-know-the-foundation-for-all-returns-is-risk/#commentsFiled under: , ,

This post is part of a series where personal finance expert Dan Solin looks at money secrets that help the rich stay rich. See them all.

What if you went to Las Vegas, sat down at your favorite slot machine, and very time you dropped in $1, you got back $2? I'll bet you would never leave!

This is the holy grail. Great returns without any risk.

It doesn't work that way in Las Vegas. Why do you think investing is any different?

The foundation of returns is risk. The higher the risk, the greater the potential for returns -- or for losses.

You can achieve returns without risk. However, to do so you need to invest in what are known as "risk-free" investments. These include FDIC-insured Certificates of Deposits and Treasury Bills.

The problem with "risk-free" investments is that they generate relatively low returns. The historical returns of Treasury Bills is 3.7%. After inflation and taxes, there is little profit remaining.

Most people want higher returns than they can get with "risk-free" investments. To do so, you need to invest in the domestic or foreign stock markets (preferably both) and in bonds, which can vary in terms of safety.

Continue reading No. 3: Rich people know the foundation for all returns is risk

No. 3: Rich people know the foundation for all returns is risk originally appeared on BloggingStocks on Wed, 03 Dec 2008 11:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>bondsrisksecrets of the richSecretsOfTheRichWed, 03 Dec 2008 11:00:00 EST<![CDATA[No. 2: Rich people know 'if it bleeds, it leads']]>http://www.bloggingstocks.com/2008/12/03/no-2-rich-people-know-if-it-bleeds-it-leads/http://www.bloggingstocks.com/2008/12/03/no-2-rich-people-know-if-it-bleeds-it-leads/http://www.bloggingstocks.com/2008/12/03/no-2-rich-people-know-if-it-bleeds-it-leads/#commentsFiled under: ,

This post is part of a series where personal finance expert Dan Solin looks at money secrets that help the rich stay rich. See them all.

Bad news sells. Good news is boring.

Inside media types will tell you that they are guided by this basic rule: If it bleeds, it leads.

The financial media is no exception.

There is a steady drumbeat of news about a "deep recession" or even another "great depression." How many times in recent months have you read about the "market crash" or the "financial meltdown," all meant to convince you that it really is different this time?

Is it really?

In September 1998, Newsweek carried a major story about an "unprecedented" worldwide "economic convulsion."

Fortune predicted "a fundamental change in the world's economic condition" in September 1998. Time Magazine, in June 1970, opined that we were in "the worst economic conditions since the Depression."

A "panic on Wall Street" was headlined by the Philadelphia Inquirer in October 1987.

The list is endless.

Continue reading No. 2: Rich people know 'if it bleeds, it leads'

No. 2: Rich people know 'if it bleeds, it leads' originally appeared on BloggingStocks on Wed, 03 Dec 2008 06:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>journalismnewssecrets of the richWed, 03 Dec 2008 06:00:00 EST<![CDATA[No. 1: Rich people know the difference between luck and skill]]>http://www.bloggingstocks.com/2008/12/02/no-1-rich-people-know-the-difference-between-luck-and-skill/http://www.bloggingstocks.com/2008/12/02/no-1-rich-people-know-the-difference-between-luck-and-skill/http://www.bloggingstocks.com/2008/12/02/no-1-rich-people-know-the-difference-between-luck-and-skill/#commentsFiled under: , ,

This post is part of a series where personal finance expert Dan Solin looks at money secrets that help the rich stay rich. See them all.

Everyone understands that coin flipping is random. You can flip five heads or tails in a row and no one would believe that you are an "expert" coin flipper.

What about fund managers who have five years of stellar performance? You see the ads every Sunday hyping their superior returns.

A closer look at the data indicates that these managers are no more skilled than the lucky coin flipper.

One study looked at the performance of the top 100 fund managers over an eleven year period. Only 14% of them were able to repeat their performance in the following year.

There are many studies demonstrating that there is no reliable way to predict the performance of fund managers. This is why you always see the disclaimer that "past performance is no guarantee of future results" in advertisements for mutual funds. It's put in small type so that you won't pay much attention to it.

Here are a couple of examples (there are hundreds more):

Continue reading No. 1: Rich people know the difference between luck and skill

No. 1: Rich people know the difference between luck and skill originally appeared on BloggingStocks on Tue, 02 Dec 2008 20:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments]]>fund managerfund managersFundManagerFundManagerssecrets of the richTue, 02 Dec 2008 20:00:00 EST