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Do Stock Market Numbers Really Matter?




The last “all time high” in the S & P 500 (2,873) was struck just over six months ago, on January 26th. Since then, it has been down roughly 10% on three different occasions, with no shortage of “volatility”, and an abundance of expert explanations for this nagging weakness in the face of incredibly strong economic numbers.

  • GDP is up, unemployment down; income tax rates lower, unfilled job numbers rising… The economy is so strong that, since April, it has become stable to upward in the very face of higher interest rates and an imminent trade war. Go figure!

But what impact does this pattern have on you, particularly if you are a retiree or a “soon-to-be”? Does a flat or lower stock market mean that you will be able to grow your portfolio income or that you will have to sell assets to maintain your current draw from your investment accounts? For almost all of you, unfortunately, it’s the latter.

I’ve read that 4%, after inflation, is considered a “safe” portfolio withdrawal rate for most retirees. Most retirement portfolios produce less than 2% of actual spendable income, however, so at least some security liquidation is required every year to keep the power on…

But if the market goes up an average of 5% every year, as it has since 2000, everything is just fine, right? Sorry. The market just doesn’t work that way, and as a result, there is absolutely no doubt that most of you are not prepared for a scenario even half as bleak as several of the realities packed inside the past twenty years.

(Note that it took the NASDAQ composite index approximately sixteen years to rise above its 1999 highest level… even with the mighty “FANG”. All of its 60%+ gain has occurred in the past three years, much the same as in the 1998 to 2000 “no value” rally.)

  • The NASDAQ has risen just 3% annually over the past 20 years including the production of less than 1% in spending money.
  • In spite of the rally from 1997 through 1999, the S & P 500 lost 4% (including dividends) from year end 1997 to year end 2002. This translates into a nearly 5% per year asset drain or a total loss of capital around 28%. So your million dollar portfolio became $720k, and was still yielding less than 2% per year of actual spending money.
  • The ten year scenario (1997 through 2007) saw a modest 6% gain in the S & P, or growth of just.6% percent per year, including dividends. This scenario produces a 3.4% annual asset reduction, or a loss of 34%… your million was reduced to $660K, and we haven’t gotten to the great recession yet.
  • The 6 years from 2007 to 2013 (including the “great recession”) produced a net gain of roughly 1%, or a growth rate of about.17% per year. This 3.83% annual reduction brought the $660k down another 25% leaving a nest egg of just $495k.
  • The S & P 500, gained roughly 5% from the end of 2013 through the end of 2015, another 5% draw, bringing “the egg” down to roughly $470k.
  • So, even though the S & P has gained an average 8% per year since 1998, it has failed to cover a modest 4% withdrawal rate nearly all of the time… i.e., in almost all but the past 2.5 years.
  • Since January 2016, the S & P has gained roughly 48% bringing the ‘ole nest egg back up to about $695k… about 30% below where it was 20 years earlier… with a “safe”, 4% draw.

So what if the market performs as well (yes, sarcasm) over the next 20 years, and you choose to retire sometime during that period?

And what if the 4% per year withdrawal rate is a less than realistic barometer of what the average retiree wants to (or has to) spend per year? What if a new car is needed, or there are health problems/family emergencies… or you get the urge to see what the rest of the world is like?

These realities blow a major hole in the 4% per year strategy, particularly if any of them have the audacity to occur when the market is in a correction, as it has been nearly 30% of the time during this 20 year Bull Market. We won’t even go into the very real possibility of bad investment decisions, particularly in the end stages of rallies… and corrections.

  • The market value growth, total return focused (Modern Portfolio Theory) approach just doesn’t cut it for developing a retirement income ready investment portfolio… a portfolio that actually grows the income and the working investment capital regardless of the gyrations of the stock market.
  • In fact, the natural volatility of the stock market should actually help produce both income and capital growth.

So, in my opinion, and I’ve been implementing an alternative strategy both personally and professionally for nearly 50 years, the 4% drawdown strategy is pretty much a “crock”… of Wall Street misinformation. There is no direct relationship between the market value growth of your portfolio and your spending requirements in retirement, nadda.

Retirement planning must be income planning first and growth objective investing maybe. Growth purpose investing (the stock market, no matter how it is hidden from view by the packaging) is always more speculative and less income productive than income investing. This is precisely why Wall Street likes to use “total return” analysis instead of plain vanilla “yield on invested capital”.

Let’s say, for example, that you invested the 1998, retirement-in-sight, million dollar nest egg I was referring to above, in what I call a “Market Cycle Investment Management” (MCIM) portfolio. The equity portion of an MCIM portfolio includes:

  • Dividend paying individual equities rated B+ or better by S & P (so less speculative) and traded on the NYSE. These are called “investment grade value stocks”, and they are traded regularly for 10% or lower profits and reinvested in similar securities that are down at least 20% from one year highs.
  • Additionally, especially when equity prices are bubbly, equity Closed End Funds (CEFs) provide diverse equity exposure and spending money yield levels typically above 6%.
  • The equity portion of such a portfolio generally yields in excess of 4%.

The income portion of the MCIM portfolio, will be the larger investment “bucket” and it will contain:

  • A diverse assortment of income purpose CEFs containing corporate and government bonds, notes, and loans; mortgage and other real estate based securities, preferred stocks, senior loans, floating rate securities, etc. The funds, on average, have income payment track records that span decades.
  • They are also traded regularly for reasonable profits, and never held beyond the point where a year’s interest in advance can be realized. When bank CD rates are less than 2% per year as they are now, a 4% short term gain (reinvested at between 7% and 9%) is not something to sneeze at.

The MCIM portfolio is asset allocated and managed so that the 4% drawdown (and a short term contingency reserve) consumes just 70% or so of the total income. That’s the “stuff” required to pay the bills, fund the vacations, celebrate life’s important milestones, and protect and care for the loved ones. You just don’t want to sell assets to take care of either essentials or emergencies, and here’s a fact of investment life that Wall Street does not want you to know about:

  • The gyrations of the stock market (and interest rate changes) generally have absolutely no impact on the income paid by securities you already own and, falling market values always provide the opportunity to add to positions…
  • Thus reducing their per share cost basis and increasing your yield on invested capital. Falling bond prices are an opportunity of far greater importance than similar corrections in stock prices.

A 40% equity, 60% income asset allocation (assuming 4% income from the equity side and 7.5% from the income side) would have produced no less than 6.1% in real spending money, in spite of two major market meltdowns that rocked the world during those twenty years. And that would have:

  • eliminated all annual draw downs, and
  • produced nearly $2,000 a month for reinvestment

After 20 years, that million dollar, 1998, nest egg would have become roughly $1.515 million and would be generating at least $92,000 in spending money per year… note that these figures include no net capital gains from trading and no reinvestment at rates better than 6.1%. So this is, perhaps, a worst case scenario.

So stop chasing that higher market value “Holy Grail” that your financial advisors want you to worship with every emotional and physical fiber of your financial consciousness. Break free from the restraints on your earning capabilities. When you leave you final employment, you should be making nearly as much in “base income” (interest and dividends) from your investment portfolios as you were in salary…

Somehow, income production is just not an issue in today’s retirement planning scenarios. 401k plans are not required to provide it; IRA accounts are generally invested in Wall Street products that are not structured for income production; financial advisors focus on total return and market value numbers. Just ask them to assess your current income generation and count the “ums”, “ahs”, and “buts”.

You don’t have to accept this, and you will not become retirement ready with either a market value or a total return focus. Higher market values fuel the ego; higher income levels fuel the yacht. What’s in your wallet?


Source by Steve Selengut


Where to Find Those Efficient and Hardworking Affiliates?




Everyone wants a hardworking affiliate, employee, associate, partner, or even spouse, and why not? It’s the next best thing to doing the work yourself. However with the massive outbreak of work and income opportunities available online, how can you beat everyone else and find that one (or more) ideal person who will make your online business explode with success? Here are some of the most ingenious and uncommon ways to snag the idea affiliates for your affiliate program

Direct Sales Agents

Direct sales people are really one of the most enterprising, hard-working individuals in business. They mostly work on commissions or rebates and are willing to literally go door-to-door offering their products to anyone and everyone they bump into. Imagine how much easier their job would be if they could be an affiliate and simply work via the Internet and a mobile device or desktop.

Also, most direct sales people tend to carry more than one brand in their product arsenal so signing up as an affiliate would be almost the same type of work but using a different approach.

Colleges and Universities

Many college kids would be interested in a part-time income opportunity if it would mean funds to help pay for their education, loan, or partying. All you have to do is make sure to offer them products they can endorse as a student.


Did you know that the U.S. Census Bureau’s latest annual report show that 75% of U.S. businesses used freelancers in 2011? Freelancers earned a whopping US$990 billion in 2011 which is a 4.1% increase from the previous year. The only industries where the number of freelancers decreased were in insurance, finance, and construction. Most probably your affiliate program isn’t a part of these 3 industries.

Furthermore, online business and finance experts are predicting the growth to increase incrementally every year even with an economy that is improving. People just want income security and more control over their earnings. With the spate of lay-offs, it’s understandable why many would prefer to work as an affiliate than as an employee.

Scout For Them At Affiliate Conventions

There are annual affiliate conventions held in different cities around the country. You should try to catch one when it is held somewhere near your location. The average turn-out for these types of conventions has increased regularly over the years. Last year, many of them were sold out weeks before the event.


The US Census Bureau has said that as of 2012, 15% of Americans are poor, 43% of young adults depend on their parents to some extent for money. Even more surprising is that the median income of young adults in 1982 was $31,583 and last year it was $30,604 for the same age group! Income is dropping and people are looking for ways to earn additional income outside of their 9 to 5 jobs. That’s where you can come in playing the hero and helping others realize their dream income.

Finally, go online and talk about your product. Make the affiliate marketers come to you and have the luxury of picking the best candidates. You will need some help in marketing your affiliate program so target a marketer who’s experienced in affiliate program and SEO.


Source by Lina Stakauskaite

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Recession Is Here… Six Costly Mistakes Home Sellers Make During Recessions And How To Avoid Them




The U.S. is officially in a recession. What is a recession? A recession is a business cycle contraction or general economic decline due to significant drop in spending and other commercial activities. Most pundits and politicians will blame Covid-19 crisis for the recession, but even pre-Covid-19 the proverbial writing was on the wall.

The U.S. had over 120 months of economic growth, which was the longest expansion in the modern history. Other indicators, such as negative yield spread on treasuries (long term bonds having lower interest rates than short term T-notes), were pointing to an imminent change of the economic cycle and an impending recession. The only real question was: when and how bad?

Then Covid-19 came… If the cycle was going to change anyway, Covid-19 acted as a huge and unexpected accelerant to make the recession much more immediate and severe.

Inevitably during recessions all classes of real estate, including residential homes and condominiums, will be negatively impacted as lower consumer spending and higher unemployment rates affect real estate prices and marketing times.

Here are the six costly mistakes home and other real property sellers make during recessions and how to avoid them:

Mistake #1: This will pass and real estate market will be hot again soon

First thing to remember is that real estate cycles are much longer than general economic cycles. Even if the general economy recovers, which eventually it always does, a typical real estate cycle takes as long as 10 to 15 years. The cycle has four key stages: Top, Decline, Bottom and Rise.

Let us consider the last real estate cycle, which lasted approximately 14 years:

  • 2006 – Prices hit the Top
  • 2006 to 2012 – Prices Decline
  • 2012 – Prices hit the Bottom (Trough)
  • 2012 to 2019 – Prices Rise*
  • 2020 – Prices hit the Top
  • 2020 to? – Prices Decline

*NOTE: In 2016 the national residential real estate price index reached its pre-recession 2006 peak levels. It took 10 years for the real estate market to recover.

The way to avoid this mistake is to recognize that real estate cycles take years to run and plan accordingly. Additionally, nobody knows for sure when the prices will hit the top or bottom until after the fact.

Mistake #2: Low interest rates will make the economy and real estate market rebound

Between 2006 and 2011 the interest rates (Fed Funds) were continuously cut by the Federal Reserve Board and went from low 5% to almost 0%. However, that did not stop the real estate recession and depreciation of property values.

Undoubtedly, low interest rates made the economic decline and real estate recession less severe and saved some properties from foreclosures, but it still took six painful years for the real estate market to hit the bottom and then four more years for the prices to go back to their pre-recession levels.

Some markets had never fully recovered. For example, residential home prices in some parts of California, Arizona and Nevada are still below their 2006 highs.

To avoid this mistake, one needs to realize that although low interest rates help stimulate the economy and the real estate market, they do not cure them.

Mistake #3: I don’t need to sell now, so I don’t care

If you do not need to sell until the cycle plays out, which typically is over ten years, then you will not be as affected, especially if you have a strong equity position, limited mortgage debt, and solid liquid assets.

However, it is good to keep in mind that “life happens” and either professional or personal circumstances can change and we may need to sell property before the downturn runs its course.

Furthermore, if a property has a mortgages and its value declines to the point being “upside down,” meaning the mortgage loan balance exceeds the value of the property, then the options of selling, refinancing or even obtaining an equity line of credit, will be significantly limited.

This does not mean that everybody should be rushing into selling their real estate if there is no need to do so, just keep in mind that circumstances may and often do change and property options will be affected, so plan in advance. As one wise proverb says: “Dig your well before your thirst.”

Mistake #4: I’m selling, but I won’t sell below my “bottom line” price

This is a common and potentially very costly mistake. Generally speaking, every seller wants to sell for the highest price and every buyer wants to pay the lowest price. That’s nothing new. When selling real estate, most sellers want to achieve a certain price point and/or have a “bottom line.”

However, it is important to understand that the market does not care what the Seller, or his/her Agent, think the property value should be at. The market value is a price a willing and able buyer will pay, when a property is offered on an open market for a reasonable amount of time.

Overpricing property based on Seller’s subjective value or what is sometimes called an “aspirational price,” especially in a declining market, is a sure first step to losing money. When a property lingers on the market for an extended period of time, carrying costs will continue to accumulate and property value will depreciate in line with the market conditions.

Additionally, properties with prolonged marketing times tend to get “stale” and attract fewer buyers. The solution is to honestly assess your selling objectives, including the desired time-frame, evaluate your property’s attributes and physical condition, analyze comparable sales and market conditions, and then decide on market-based pricing and marketing strategies.

Mistake #5: I will list my property for sale only with Agent who promises the highest price

Real estate is a competitive business and real estate agents compete to list properties for sale which generate their sales commission incomes. It is not unusual that Seller will interview several agents before signing an exclusive listing agreement and go with the agent who agrees to list the property at the highest price, often regardless if such price is market-based.

Similarly to Mistake #4, this mistake can be very damaging to Sellers, as overpriced properties stay on the market for extended periods of time costing Sellers carrying expenses such as mortgage payments, property taxes, insurance, utilities and maintenance.

Furthermore, there is the “opportunity cost” since the equity is “frozen,” and it cannot be deployed elsewhere till the property is sold. However, the most expensive cost is the loss of property value while the real estate market deteriorates.

During the last recession, we have seen multiple cases where overpriced properties stayed on the market for years and ended up selling for 25% to 40% below their initial fair market values.

The solution is to make sure that your pricing strategy is based on the market, not empty promises or wishful thinking.

Mistake #6: I will list my property only with Agent who charges the lowest commission

Real estate commission rates are negotiable and not set by law. A commission usually represents the highest transactional expense in selling real properties and is typically split between Brokers and Agents who work on the transaction

Some real estate agents offer discounted commissions, in order to induce Sellers to list their properties with them. But does paying a discounted commission ensure savings for the Seller? Not necessarily.

For example, if the final sales price is 5% to 10% below property’s highest market value, which is not that unusual, due to inadequate marketing, bad pricing strategy, and/or poor negotiation skills, it will easily wipe out any commission savings and actually cost the Seller tens of thousands of dollars in lost revenues.

The solution is to engage an agent who is a “Trusted Advisor,” not just a “Salesperson.” A Trusted Advisor will take his/her time and effort to do the following: 1) Perform Needs Analysis: listen and understand your property needs and concerns; 2) Prepare Property Analysis: thoroughly evaluate your property and market conditions; 3) Execute Sales and Marketing Plan: prepare and implement custom sales and marketing plan for your property; and 4) Obtain Optimal Results: be your trusted advocate throughout the process and achieve the best possible outcome.

Finding such a real estate professional may not be always easy, but it certainly is worth the effort and will pay off at the end.

In conclusion, this article has outlined six costly mistakes real estate Sellers make during recessions and how to avoid them. The first mistake is not understanding that real estate cycles are long and take years. The second mistake is a misconception that low interest rates alone will create a recovery. Another mistake is not realizing that circumstances may change and not planning in advance. Mistakes number four, five and six pertain to understanding the market value, proper pricing and selecting the right real estate professional.

By understanding and avoiding these mistakes, real estate Sellers have significantly better chances of minimizing the negative impact of a recession while selling their properties.


Source by Robert W. Dudek

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Useful Tips To Build The Best Gaming Computer




Every gamer will want their computer to be the best gaming computer among their peers. Sometimes, with a little knowledge and tips and tricks, it is possible to build the best gaming computer and show it off to your peers. This article will show you how:

1) You can’t get the best gaming computer from computer retailers

If you want to get the best gaming computer, you have to build your own. Different gamers have different requirement for their gaming machine. Unless you are willing to pay a high price, you will not be able to buy a commercial computer that fulfills all your gaming needs. The only option you have is to build your own gaming computer.

2) You don’t have to be rich to build the best gaming computer

It is not necessary to burn a hole in your pocket to build the best gaming computer. With some due diligence, do some market research and compare prices around the marketplace. Merchant such as TigerDirect and NewEgg give regular discount to their products and you could save a lot of money if you catch them during their promotional period.

3) Most expensive parts do not have to be the best part

Sometime, the latest model or the most expensive model does not have to be the best part for your computer. It requires various components to work together to form the best computer system. When choosing a computer part, what matters is how well it can integrate with the rest of the components. Compatibility is more important than individual performance. What use is there if you spend lot of money on the latest quad-core processor and find that your motherboard doesn’t support it?

4) You don’t need to change the whole PC to own the best gaming computer

It is a misconception that you have to change the whole gaming machine to build the best gaming computer. If you already have a good barebone system, what you need to do is to upgrade the necessary parts and your gaming computer can roar back to life instantly.

5) Brand is important

Unless you want to see your computer system malfunction every few days, it is important that you purchase the parts from branded manufacturers with strict quality control. Motherboard brand such as Gigabyte, ABIT, ASUS are some quality brands that you can consider

If you follow diligently to the tips stated above. You will be on your way to build the best gaming computer. While price can be an issue, it is better not to scrimp on important computer parts such as motherboard, CPU, RAM and graphics card as it will cost you more to upgrade in the future.


Source by Damien Oh

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