Month: September 2015

In the past, we have occasionally sent information to our clients on ways to protect their finances from crooks and criminals. Many people have told us how much they appreciated it, so we thought it might be a good idea to delve even deeper into the topic of financial security. After all, protecting what you have is important no matter who you are.

Let’s start with the Big One: Identity theft.

Many things have changed over the last couple of decades; some things for the better, others for the worse. Credit and debit cards have made it easier to pay for your purchases, but they’ve also made it easier for hackers and con artists to get the information they need to steal your identity. This is especially true when paying for goods and services over the internet.

The scariest thing? Most people don’t know they’re a target until it’s too late.

Fortunately, there are steps you can take to protect your identity. The first step is to recognize the most important tools you have to combat identity theft.

Awareness and Knowledge

Identity thieves target many different types of people, but the older you get, and the closer you are to retirement, the higher up their list you go. Why? Because older adults frequently have access to cash they’ve been saving up for their entire lives. Many older adults also have great credit that they’ve been building up over a long period of time. Additionally, some people value their independence so much they are hesitant to report that their finances or identity have been compromised, fearing their relatives will think they can’t handle things on their own.

So how can you protect yourself and your loved ones? Here are some other steps you can take:

• ŸDo not publish the date of birth and death in obituaries. Dishonest people can use that information to obtain a death certificate, which usually includes the social security number for the deceased individual.
• Don’t make impulsive decisions based on fear. If you receive an email or phone call stating that it’s from your bank or the government, and that you’re in trouble, look into it before providing the sender with any personal information. Typically, the government will not contact you by email or phone. They will contact you by mail. Your bank will never ask you to provide information through email either. If you’re concerned about the credibility of a call or email from your bank, contact the nearest branch and ask them.
• If someone contacts you saying they’re a relative in trouble and need your help, ask them something that only your relative would know. Or ask a trick question that reveals they’re lying, such as “How’s your dog Scruffy? Did he get better?” when you know that relative doesn’t have a dog. If they say “Oh he’s doing much better,” then you know they’re a fraud and you should immediately hang up.
• Keep all personal documents in a safe place. Don’t carry them around with you, especially not your Social Security card.
• Don’t open emails from senders you don’t recognize. These can be disguised as special offers for things such as “weight loss,” miracle cures for different ailments, or products at unbelievably low prices. Scammers keep coming up with new subjects to hook you.

These are just a few things that can help you avoid becoming a victim of finance or identity fraud. Also, there are companies that can help you stay protected and informed. Here’s a link to a site that lists the top rated companies that can help to defend your identity: www.top10identitytheftprotection.com.

We hope you found this information valuable. Feel free to share it with your loved ones so they may stay informed as well.

Above all, don’t become a victim! Take a proactive approach to protect yourself, your family, and your retirement.

The Federal Reserve Meeting and Intermediate Indicators

Nothing is something.

Indeterminate Market

Indicator? What Indicator?

Last week, our Weekly Wire revealed that we were watching the US Stock Market closely to see if a bottom had indeed formed.  We mentioned that one of our less sensitive indicators had reversed up, however, we did not share the name of the indicator.  This prompted some great questions from our clients and blog readers.

 Alphabet Soup – BPNYSE

In the investing world we are often plagued by acronyms such as “NASDAQ”, National Association of Securities Dealers Automated Quotations, and initialisms like “NYSE”, New York Stock Exchange, and “S&P 500”, Standard and Poors 500 Index.  The list is seemingly endless.  We would like to add another one to your investing jargon repertoire: 

“BPNYSE” stands for the New York Stock Exchange Bullish Percent.  It is not a ticker symbol or index, rather it is an aggregate number illustrating the percentage of stocks on the NYSE that are on buy signals according to Point and Figure Charting – a system for measuring supply and demand of securities developed by Charles Dow in the early 1900s.

Despite the alphabet soup, the theory is actually rather simple.  A low percentage means fewer securities in the index are on buy signals and vice-versa.  When we say the indicator “reversed up” it means the percentage had been dropping or stagnate but it is now rising.  This gives a pretty good indicator of the overall health of the market.

Field Position

As football season is upon us, we’ll use a simple sports analogy here.  The plays called by a football coach will be determined by the team’s position on the field.  The plays used when the team is at the 10 yard line will be different from the plays used when they need to advance 80 yards to score.  Professional investment advisors will respond differently to a percentage reversal that occurs when the BPNYSE is at 30% verses when it is at 80%.

In fact, if you read up on the BPNYSE, the charts that indicate reversals and riskier points in the market look an awful lot like a gridiron chart that a football coach might use.

So what exactly happened last week?

Last week the BPNYSE was at around 24% and reversed up to a current point of about 30%. To put it in sports terms, if that trend sticks it would be like your team getting the ball well inside the 50-yard line (for non-football fans that means your team is doing pretty good.)

For more information on the BPNYSE click here for Investopedias™ explanation.

For some more background on Point and Figure Charting, this article is also helpful.

Has the bottom formed in the US Stock Market?

For Tactical Asset Allocation to work you need to know when you have passed a market top or a market bottom. The theory is simple enough: Sell after a top has formed so you don’t ride the market to the bottom, and buy after a bottom has formed so you can take advantage of the upside as much as is reasonably possible. Notice that we say after a top or bottom has formed, because selling at the exact peak of the market or buying at the absolute lowest point is impossible without relying on a lot of guesswork and luck.

Tactical Asset Allocation is a more reliable strategy because it employs both a sell discipline and a buy discipline. Currently, we are watching our indicators to see if a bottom has formed after the market volatility in August. We are looking for a market bottom to determine if the time is right to put a percentage of capital back into the market after we took a defensive position a few weeks back in a number of our portfolio models.

So the question is: How do you know a bottom has actually formed?

The answer is that you cannot know 100% for sure; however, you have the best likelihood of success by using unbiased data and multiple indicators that range in sensitivity. Point and figure charting and relative strength rankings are two of the resources we use to obtain unbiased data. They report what is not what might be.

Indicators are often patterns that form within that unbiased data. Some patterns indicate a positive or negative trend very early, however they also tend to reverse back and forth more often. Other indicators take a much longer time to change position. If you act on the very early indicators it is fairly likely that you will be consistently whipsawed, ending up zigging when you should be zagging. If you wait to act only on the long-term indicators, you may miss out on a significant portion of the upside, or ride the downside farther down than you would have liked too. So we use an array of indicators so that we can see the trend as it forms. This is why Tactical Asset Allocation is sometimes referred to as “trend investing.” The goal is to find a happy medium between reacting to soon and responding too late.

Our early indicators are showing that a bottom could be forming in the US Stock Market right now. We have even seen the first of our medium-term indicators reverse back up. Is it a trend? Maybe. It might be a bit too soon to tell, but we are watching closely. Either way we have a plan so we know what our response will be either way.