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Sound Advice: February 28, 2024

Advisors are standing by . . . at 3 a.m.? One can only gag at the absurdity of the titles that are being used today to convince gullible people that those who are “ready” to serve them have notably superior qualifications for whatever they are supposed to be doing.  A few minutes listening to the radio (more likely in the car these days) will inevitably give you the opportunity to learn about offers to: 1. Take care of more than $10,000 in outstanding credit card debt; 2. Negotiate with the IRS to reduce unpaid taxes; 3. Sell your life insurance policy (because the premiums have gotten so high); and 4. Buy an extended auto warranty for a car that’s no longer covered by the factory warranty.  And so many others that make absolutely no sense. It is not unrealistic to believe that credit card companies will be willing to negotiate outstanding credit card balances.  For them, it would be better to take less than get nothing.  Although such payoffs can be arranged, they come along wit
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Sound Advice: February 21, 2024

800-000-0000 That’s 800-000-0000 Again, 800-000-0000 That’s the typical closing for the hard sell commercials that are increasingly polluting media airwaves.   These are the commercials for products or services you rarely need or most definitely should avoid. A substantial number are on behalf of groups of attorneys who would have you believe that you and many others may be entitled to cash compensation for having used or being exposed to some evil item or substance some time in the last few decades.   The pitch always includes a comment that there’s no cost to you unless there is a settlement in your favor. Much of this is rubbish, but when the appeal suggests that there’s nothing to lose, why not take a shot.   And, as you would expect, “advisors” are standing by 24/7 to take your call and help get the process in motion.   What kind of advisor would be available at 3 a.m.? One version of this approach pops up every year between October 15 th and December 7 th .   That’s

Sound Advice: February 14, 2024

Watch Out for Financial Scams Absolutely, it's crucial to be vigilant and cautious when it comes to financial matters to avoid falling victim to scams. Here are some tips to help you protect yourself: Be Skeptical: Always be cautious when dealing with unsolicited communications. Be it emails, phone calls or messages, don't trust them blindly, especially if they ask for your personal or financial information. Secure Personal Information: Don't share sensitive information such your Social Security number, bank details or credit card information with unknown individuals or websites. Legitimate organizations won't ask for this kind of information through email or social media. Use Strong Passwords: Create strong, unique passwords for your online accounts. Use a combination of letters, numbers, and special characters, and avoid using the same password across multiple platforms. Update Software: Keep your

Sound Advice: February 7, 2024

Be Careful When Buying Exchange-Traded Funds Caution is necessary when investing in exchange-traded funds (ETFs) just as with any other investment. Although ETFs offer several advantages, investors should be aware of the risks and consider the following points before buying ETFs: Understand the Strategy: Different ETFs follow different strategies. Some track broad market indices, while others focus on specific sectors, commodities or even complex derivatives. Understand the underlying index or asset the ETF is tracking, and make sure it aligns with your investment goals and risk tolerance. Liquidity Concerns: Although ETFs are generally liquid, some ETFs, especially those tracking niche markets or sectors, may have lower trading volumes. Low liquidity can lead to wider bid-ask spreads, making it more expensive to buy or sell shares. Investors should stick to ETFs with higher average trading volumes to ensure liquidity, which is essentia

Sound Advice: January 31, 2024

Why Exchange-Traded Funds are better choices than Mutual Funds Exchange-Traded Funds (ETFs) and mutual funds are both popular investment options, but ETFs offer several advantages that make them a better choice for many investors: 1.      Lower Expenses: ETFs generally have lower expense ratios compared to mutual funds. This means investors pay less in fees to invest in ETFs, allowing them to keep more of their returns. 2.      Tax Efficiency: ETFs are structured in a way that makes them tax-efficient. Mutual funds can generate capital gains when the fund manager buys or sells securities within the fund. These gains are typically passed on to investors, resulting in taxable events. ETFs, on the other hand, have a unique structure that allows investors to avoid capital gains taxes until they sell their shares. 3.      Intraday Trading: ETFs trade on an exchange like a stock, which means investors can buy and sell them throughout the trading day at market prices. Mutual funds,

Sound Advice: January 24, 2024

  Buy a Hedge Fund and Get Clipped Hedge funds are often considered risky and potentially poor investments for several reasons: 1.      High Fees: Hedge funds typically charge high fees, often referred to as "2 and 20" – a 2% annual fee on assets under management (AUM) and 20% of profits. These fees can significantly erode investors' returns, especially in years when the fund's performance is not stellar (usually the case). 2.      Complex Strategies: Hedge funds often employ complex investment strategies, such as leverage, short selling, and derivatives trading. These strategies can lead to substantial losses if not executed properly, and they require a high level of expertise to manage effectively. 3.      Lack of Transparency: Hedge funds are known for their lack of transparency. Unlike mutual funds or ETFs, hedge funds are not required to disclose their holdings publicly. This lack of transparency can make it difficult for investors to assess the fu

Sound Advice: January 17, 2024

The Market Indexes are Dominated by a Few Stocks Yes, it's true that in many stock markets, a small number of stocks can have a significant impact on the overall market averages. This phenomenon is often referred to as market concentration. Here are a number of factors to keep in mind when considering this aberration. 1.      Market Capitalization Weighting: Many stock market indices, like the S&P 500, are weighted by market capitalization. This means that companies with larger market capitalizations (total market value of outstanding shares) have a more substantial impact on the index's value. If a few large companies experience significant price movements, they can sway the entire index. 2.  Equal Weighting: When all the stocks are given equal weights, the results of the overall market index are quite different.  Over the latest five years, ending last November 1st, the cap-weighted S&P 500 Index rose 54.4%.  When results are viewed on an equal-weighted basis, t