"We had a bad ten years, so now we're going to have another bad
ten years? I'm overwhelmed by the emptiness of that idea.
The history of the market is precisely the opposite. If you
have a bad ten years, you're likely to have a good ten years."
~Jeremy Siegel
Submit your question
here.
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How long does it take for my account to transfer to Schwab?
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Can I access my accounts on the Internet?
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I forgot my Schwab Alliance password. How do I reset
it?
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How does online access to my financial
plan work?
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What is the average return of the average Bowers Capital
asset management client?
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My bank said they would manage my
portfolio for less than what you charge. May I assume
that you will compete with their price?
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The last
twelve months
or so you haven't changed a thing in my portfolio. I
have a hard time seeing why I would pay anyone one percent if
my portfolio's composition didn't change at all. Why
didn't you 'do something' with my holdings?
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The market is down
20% over the last 12 months. Shouldn't I just get on the
sidelines for a while and wait 'to see what happens'?
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What is your
incentive for my portfolio to do well?
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Is it a good time to get into the
stock market, or should we wait until it goes lower?
-
I want you to pick for me the very
best of 5-star mutual funds. I want only the
top investment managers. You'll do this, correct?
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I don't need
a plan. I just want you to manage the assets. Will
you do that?
-
I'm thinking about
investing in solar and wind power. My neighbor's broker
says there's plenty of money to be made in alternative energy
sources. Since I don't retire for another 20 years, I
can afford to gamble with risky stocks with very high
potential growth potential, correct?
-
I don't want any
risk. I've had it with this stock market. I'm
thinking about moving all of my money into bonds and
guaranteed bank CDs. Doesn't that sound like a good idea
considering the recession and all that's going on with the
economy and the world?
-
So when you manage
my portfolio, you're going to just buy a lot of stocks and
bonds, and hope for the best, right?
-
What is the best family of
mutual funds on earth? I want to diversify my portfolio
within that family of funds.
-
Should I invest some money into an
'alternative investment' like a hedge fund? They seem
very popular and I've read numerous articles about how they
compliment a portfolio.
-
Why shouldn't I just put all of my money
into Warren Buffett's company?
1.
How long does it take for my account to transfer to Schwab?
From the day that Schwab receives your transfer form, it
usually takes about ten business days or less for your assets to
arrive in your Schwab account. We audit the account after
the transfer for completeness.
2.
Can I access my accounts on the Internet?
You will have your own personal Schwab Alliance website encrypted with a user I.D. and password. Your site offers,
among other features:
- Live updates of your accounts;
- balances
- positions
- market value
- gain/loss report
- transaction history, including transfers & payments
- eDocuments:
- monthly statements & trade confirmations are
archived for 10 years on your site, ready for viewing,
printing, and saving to your computer.
- quarterly portfolio profile allocation report
- Quotes & Research
- markets
- industries
- stocks
- mutual funds
- fixed income
- watch list
3.
I
forgot my Schwab Alliance password to
access my S.A. website. How do I reset the password?
A Schwab
representative will reset your password over the phone at (800)
515-2157.
4.
How does
online access to my financial plan work?
With your User I.D. and password you can access your plan 24/7.
You can run 'what if' scenarios, the Goal Wizard, and tweak your
plan with new assumptions and scenarios at your leisure.
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5.
What is the
average return of the average Bowers Capital client?
We do not publish or quote an average
return of our average client. Even if we did, it would tell
you nothing of value. Since the goals, investment objectives,
and risk profile of a 34-year old surgeon are quite different than
those of a retired couple in their early 60s, quoting even an
approximate average return would be meaningless and misleading.
The return we aim for is the one necessary to accomplish your
financial goals.
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6.
My bank said
they would manage my portfolio for less than what you charge.
May I assume that you will compete with their price?
If great advice were a commodity, that might be a
valid comparison. I'm confident that your bank doesn't offer
what I do. Advice varies wildly in quality, as do advisors.
You will be hard pressed to find another advisor who will care more
about you than I will.
In addition, most advisors render advice based
on market and economic predictions and try to guess which funds and
stocks
will outperform the other thousands of funds and stocks. Such an approach I
believe is thoroughly discredited. Your fee is the purchase price of a larger net benefit.
The extra few basis points I might cost when compared
with your bank must be returned many times over to you in better
long-term returns that progress from my behavioral advice at
dangerous moments. If you believe that great advice is a commodity,
you have no other choice but to go with your bank.
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7.
The last twelve months or so you haven't changed a thing in my
portfolio. I have a hard time seeing why I would pay anyone if my portfolio's composition didn't change at all.
Why didn't you 'do something' with my holdings?
Over the last twelve months 'doing nothing' was precisely in
your best interests. At critical junctures in the market,
'nothing' is near impossible for most people to do. You need
an outstanding advisor to convince you to do nothing when it really
counts. Inside every tortoise there is a hare wanting to hop
out, and I try to prevent that from happening.
You have a magnificently diversified portfolio, well-suited for
your long-term goals. Sometimes 'doing nothing' is
doing something...the right something.
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8.
The market is down 20% over the last 12 months. Shouldn't I
just get on the sidelines for a while and wait 'to see what
happens'?
During the late stages of a
bear market many investors like yourself want to get completely out
of equities and into cash equivalents. It 'feels' safe.
Your feelings are normal but they usually result in a decisions that
destroy your long-term return.
- Your portfolio is magnificently allocated.
- The U.S. economy is not facing Armageddon.
- This time is never different.
- Do nothing.
It is important for you to know that this
is precisely what you are paying me to do for you.
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9.
What is your incentive for my portfolio to do
well?
The financial incentive is
that as the value of your account rises, so will the fee. When
the account value falls--as it certainly will sometimes--the fee will fall proportionately, which is my attempt at
walking the walk.
10.
Is it
a
good time
to get into the stock market, or
should be wait until it goes lower?
The premise of your
question is that it is possible to time the market. First, let me set the record straight: It
is not possible to time the market with any semblance of
consistency. With market timing just once, you have to guess right
TWICE--when to sell and then when to buy in again. Emotional
factors tell you to do precisely the wrong thing at precisely the
wrong time. If they do not, then you are not human.
For the long-term investor (is there really any
other kind?), the best time to invest in stocks is when you have
money available to invest.
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11.
I want you to
pick for me the very best of the 5-star mutual funds. I want only
the top investment managers. You'll do this, correct?
Usually that's impossible to do because many
mutual funds with the top managers are currently rated 1-stars,
2-stars, and 3-stars.
In fact, a 2007 study of the top quartile large
cap managers for the 10 years ending in 2006 revealed:
5-star funds do not necessarily have 5-star
managers, and funds with less than 5-star ratings often have top
notch managers. The stars rating system helps Morningstar more
than anyone else.
I have a group of what I view as 'top managers'
that I use upon occasions to complete a specific allocation
requirement.
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12. I don't need a
plan. I just want you to manage the assets. Will you do that?
I will manage your assets without a financial
plan as long as you understand, that doing so is synonymously tying
one hand behind my back to do that which requires two hands.
Before you decide that you don't need a plan, ask
yourself why you would want anyone to manage your assets without a
plan. One function of a plan is that it is the basis for the
creation and management of your portfolio. Since asset
allocation is the most important ingredient in portfolio management,
a plan based on your goals and tolerance for volatility serves your
best interests.
I've never met an investor who wouldn't benefit
from a plan because one financial goal common to all investors is to
carry your current standard of living into the future. Donald
Trump and Bill Gates need plans--and I suspect they have them--, and
the farther below Trump and Gates you are in net worth, the greater
the importance is to have a plan.
A financial plan helps you to outlive your money.
13. I'm thinking about
investing in solar and wind power. My neighbor's broker says there's
plenty of money to be made in alternative energy sources and cable
TV network CNBC had a guy on who said it's great place to invest. Since I
don't retire for another 20 years, I can afford to gamble with risky
stocks with very high potential growth potential, correct?
(Note: The answer applies to any hot, trendy investment idea.)
Well, you may have a point when you say you 'have
time to gamble' and I suspect there is a ton of money to be made by
somebody in alternative energy sources, although I haven't a clue
which companies will thrive and doubt that I ever will know how to
pick the very best of the industry.
But consider this: For every dollar you
lose today from high-return stocks with low success rates, you're
giving up $4.93 in 20 years; and that's when compounded at a rate of only 8%.
So a $20,000 investment--in what you hope is the next Microsoft or
Wal-Mart but almost always isn't--really costs you about $98,536 by
the time you retire in 20 years.
There is a hare that resides in us all wanting to
get out, but we already know who wins that race. For patient investors
it's not
just that they can't pick the next Microsoft, it's that they don't
have to.
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14. I don't want any
risk. I've had it with this stock market. I'm thinking about
moving all of my money into bonds and 'guaranteed' bank CDs. Doesn't
that sound like a good idea considering the recession and all that's
going on with the economy and the world?
I would never recommend abandoning a beautifully
constructed financial plan, which includes an asset allocation plan. Your allocation plan is an
efficient mix of assets designed to give maximum risk-adjusted
returns. Changing an efficient plan usually results in an inefficient
plan.
I would no more recommend that you 'load the
boat' with bonds and bank products anymore than I would recommend
you 'load the boat' with oceanfront property in Arizona.
Moving your money into bank CDs is not escaping risk. It's
putting yourself in a situation that 'feels' warm and fuzzy but which
offers zero protection against loss of purchasing power. In
fact, reallocating a bank CD portfolio to a balanced
stock-and-bond portfolio actually lowers risk and increases
long-term growth potential. Building any portfolio around one
central idea--fixed rate bonds and CDs, in this case--is a
profoundly bad idea every time.
Being in the market during the next 25%
decline is not the risk; the risk is in being out of the market
during the next 100% move up.
Both will happen, this we
know; although I suspect the latter will occur before the former
since the market of 2008/2009 has presented us with prices many of
us may never see again.
Some great investment thinkers even see bonds as
the next bubble. As one of the great investors of all time, James
O'Shaughnessy, wrote in Yahoo Finance article dated March 17, 2009,
when talking about the 40-year real rates of returns for T-bills and
long-term government bonds:
"Note that, unlike stocks, both (T-Bills &
long-term government bonds) have had negative 40-year returns, and
long-term government bonds returned losses in 32 percent of the
40-year periods. Indeed, at current yields I believe that Treasuries
are the next bubble and that ten years from now, people will rue the
day they fled the volatility of the stock market for the "safety" of
government bills and bonds."
Bonds have their place in a balanced portfolio,
but loading the boat in anything only puts you more at risk.
Your are about to shoot yourself in the foot. Focus on goals, not
short-term market movements. Stick to your asset allocation
plan. Rebalance if your portfolio needs it, then 'let it
cook.'
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15. So when you manage
my portfolio, you're going to just buy a lot of stocks and bonds,
and hope for the best, right?
Not exactly. I'm going to build a portfolio
of some of the world's greatest companies; and allocate them
efficiently, based upon your individual risk profile, financial
goals and related time horizons.
The intended result is a tailored portfolio that
offers the maximum return for the least amount of acceptable risk;
but more importantly keeps you on track to fund your goals.
16.
What is the best family of mutual funds on earth? I want to
diversify my portfolio within that family of funds.
I'm not sure what you mean by 'best' but it
doesn't matter. The best is the family of funds in which you
feel so comfortable with that your investing behavior remains the
same through all market environments. Since your most
important job is to keep your emotions out of the process--meaning,
to avoid the common killer mistakes--, focusing on the 'best' family
of funds, whatever that means, is wasted energy. Just being
efficiently allocated is at least 90% of the battle; selection and
timing is the last 10%.
The only mutual funds I will own are formulated
funds with specific market cap designations. Specific fund
families do not matter over the long haul. Your performance
should be many percentage points higher per year than those around
you as long as you allocate, diversify, rebalance, and avoid
mistakes.
I put my faith in the fund's strategy formula
much more than a fund manager. With a formula, even a bad
manager cannot adversely effect the return. I can provide a
short list of formulated funds (as opposed to 'actively managed' funds).
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17. Should I invest some money into an
'alternative investment' like a hedge fund? They seem very popular
and I've read numerous articles about how they compliment a
portfolio.
Non-mainstream investments
like hedge funds, private-equity, managed commodities futures,
'might be' fine if they stand the test of two criteria:
(a) will such an investment
help the client's portfolio in the long run?, and (b)
does advisor and client alike understand the proposed 'alternative'
investment, which will or will not keep you from bolting when it
hits a performance 'speed bump.'
More times than not, both
of these criteria cannot be met. If both
criteria are met, then I'm all for allocating to such an investment,
with the intention of giving it 10 years or at least a full economic
cycle. You should stay married to those types of investments
a long time if you feel compelled to marry them in the first place. Past
performance absolutely does not even hint at future performance with
these type investments.
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18. Why shouldn't I
just put all of my money into Warren Buffett's company?
Because you wouldn't be even close to properly
diversified and your asset allocation would be way off.
Buffett will have his share of disappointing years. Also,
Buffett would never recommend that you put all of your assets in his
company.
Submit your question
here.
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