Trump Tweets, Black Swan Events and Your Money

How much does your financial future depend on a 140-character Trump tweet, stroke of a pen on an Executive Order, or an off-hand comment to a reporter?

A lot, as these recent news headlines reveal:

  • “Trump Sinks Pharma Stocks on Medicare Price Negotiation”
  • “Dollar Dumps Most in 30 Years as Trump Raises Doubt Over Strong Dollar”
  • “When Trump Tweets, Wall Street Trades – Instantly”
  • “Trump, Not the Fed, Is What Moves Markets Now”
  • “Toyota Stock Drops Immediately After Trump Tweet”
  • “Trump’s Executive Orders Send S&P 500 to an All-Time High”
  • “Dow Jones Industrial Average Sells Off After Trump’s Executive Order on Immigration”

As you can see, when President Trump tweets or speaks, the markets react – in some cases violently.

Whatever your opinion of Trump is, there is one thing we can all agree on:

We are in uncharted waters. We have never had a president like Trump. We’ve never had an administration like Trump’s. There is no historical precedent for this.

What none of us knows is what to expect in terms of unintended consequences. What will be the potential impact on bond markets and interest rates? What is the risk of trade wars, currency wars, and U.S. relations with Russia, China, the Middle East, or North Korea?

Was Trump’s Election a “Black Swan Event”?

A “black swan event” is an event in human history that was unprecedented and unexpected when it occurred. By that definition, Trump’s election was a black swan event.

The idea of a black swan event was introduced by former Wall Street trader, Nassim Nicholas Taleb, as the 2008 financial crisis unfolded. The dot-com bubble of 2000 is another black swan event with similarities to the 2008 financial crisis.

So here’s a quick quiz for you: How much did the markets lose in the aftermath of those two crashes?

If you don’t remember, you’re not alone. As the behavioral finance experts have observed, we human investors typically forget about our losses and mentally exaggerate our successes.

Going back just 17 years, many people saw their investment accounts plunge by 50% or more when the dot-com bubble burst. And many investors had moved their money into NASDAQ technology stocks, which plunged 78% over 19 months.

In the most recent market crash, the S&P 500 lost 57% over an 18-month period.

There are many who would argue that the current bull market has outpaced the economic fundamentals. Today, stock market valuations are approaching levels last seen just before the last two market crashes. (They are now over 29 times the S&P 500, compared with an historical mean of 16.7 times, according to the Shiller cyclically adjusted price-to-earnings ratio.)

To add to the concern, in the last 100 years, there has never been a two-term presidency end that wasn’t followed by a recession within 12 months.

It pains me when I hear people say, “Oh, but my investments are up a lot since the last crash, and they’ve gone up even more in the last year.”

Those who forget history are condemned to repeat it.

Didn’t we all feel like we were sitting real pretty right before the crash of 2008 (and the crash of 2000)? Then we discovered – yet again – that what goes up fast usually comes down fast, too.

The stock and real estate markets did just that – with a resounding thud, and took the retirement security of millions of Americans with them.

The Critical Difference Between “Paper” Wealth and Real Wealth

If you think you can relax and coast until retirement because of the sky-high numbers on your retirement account statements, then you have forgotten the lessons of the last two crashes (and the crashes that came before them).

Your investment account statements, 401(k) and IRA statements, real estate appraisals and business valuations are nothing more than pretty numbers on paper. And those numbers repeatedly sucker many of us into believing we have real wealth and financial security when we do not.

Key Point: You don’t actually lock in any profit until you sell an investment and lock in (hopefully) any gains. Until then, you have only a paper profit, which can vanish in the next market crash.

Real wealth, on the other hand, doesn’t disappear when the markets crash. And, as we just discussed, your investment accounts, retirement plan balances, real estate appraisals and business valuations all represent paper wealth.

So, what asset represents REAL wealth, that doesn’t disappear when the markets crash?

A Bank On Yourself-Type Supercharged Dividend-Paying Whole Life Policy Is Real Wealth!

Your principal AND growth are locked in – even when the markets are tumbling. This is an off-Wall-Street strategy. Dividend-paying whole life has increased in value every single year for more than 160 years. Even during the Great Depression and Great Recession.

Your annual statements represent real wealth, which you can access how and when you want – without having to beg for it or ask permission to use it.

Dividend-paying whole life insurance is the best way to build a solid financial foundation that can help you weather whatever challenges life throws at you.

And the supercharged variation that’s used for the Bank On Yourself concept builds cash value significantly faster and lets you take an income stream in retirement with no taxes due on it, under current tax law.

Bank On Yourself Lets You Sleep at Night – Even When the Markets Are Crashing

It’s easy to find out how adding the Bank On Yourself method can help you reach your financial goals and dreams – without taking any unnecessary risks. Just request a FREE Analysis.

You’ll also get a referral to one of only 200 advisors in the U.S. and Canada who have met the rigorous training and requirements to be a Bank On Yourself Authorized Advisor.

So why not request your free, no-obligation Analysis NOW, while it’s fresh on your mind?

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Five Pieces of Free Financial Advice on Saving and Investing You Should Avoid

We all love free advice. Why pay for advice if someone is willing to give it to you for free?

Some advice will cost you little or nothing if it’s wrong. “You should wear these shoes with that suit.” “Try the catch-of-the-day. You’ll love it!” “I think you should turn left here.”

Other bad advice can be much more costly—both now and for the rest of your life.

This article focuses on free financial advice. We’ll tell you why five bits of so-called “wisdom” you’ve heard over and over again are wrong.

We’ll give you some tips on choosing sources of free financial advice you can trust, while avoiding all the dumb financial advice that’s out there.

Why Free Financial Advice Is Often Dumb Financial Advice

[Read more…]

SuperMoney Interviews Personal Finance Expert Pamela Yellen on Savings and Investing Strategies

Pamela Yellen, Founder of Bank On Yourself

Pamela Yellen, Founder of Bank On Yourself

I was recently interviewed by SuperMoney, a website that rates various financial products and the companies that provide them.

In this wide-ranging interview, I answered questions like these:

Why did you decide to start Bank On Yourself?

I reveal the frustrations my husband and I experienced following the conventional wisdom about investing and retirement planning. Maybe you can relate…

If someone were to say to you, “I don’t have the expertise to handle my finances. I’ll just hire some investment firm to deal with them,” how would you respond?

Here I discuss how and why 80% of all mutual funds, financial advisors and investment advisory services underperform the overall market. If the experts can’t even do it well, how can we regular folks be expected to? [Read more…]

Could the Government Seize Your 401(k) and IRA Money?

Is it far-fetched to wonder if the government could take control of your retirement savings in 401(k)s and IRAs?

Or is that just a paranoid conspiracy theory?

The fact of the matter is that it’s not far-fetched, or a conspiracy theory. The groundwork has already been laid.

And the government already gave banks the green light to seize your bank accounts.

Read on for the facts – and I urge you NOT to discount the importance and urgency of this issue affecting your hard-earned savings…

The Government Has BIG Plans for Your Retirement Savings

An article in American Thinker titled “The Feds Want Your Retirement Accounts” revealed that, “Quietly, behind the scenes, the groundwork is being laid for federal government confiscation of tax-deferred retirement accounts. Slowly the cat is being let out of the bag.”

And Bloomberg reported that,

The U.S. Consumer Financial Protection Bureau is weighing whether it should take a role in helping Americans manage the $19.4 trillion they’ve put into retirement savings.”

For the last 18 months, the Treasury Department has been testing the “myRA” program – which Obama created through executive order – no Congressional approval needed.

The myRA, which stands for “My Retirement Account” supposedly “guarantees a decent return with no risk of loss.”

And the only investment allowed in this account is a low-yielding Treasury security.

Of course, the Treasury wants to get more people signed up for this program, because it means more funds flowing right back into the U.S. Treasury to help the government meet its voracious borrowing needs. How convenient… [Read more…]

Dalbar 2016 Report: Many Investors Haven’t Even Kept Up With Inflation

The latest report from DALBAR reveals the harsh reality about the actual returns stock market investors have been getting for the last 30 years.

Would it surprise you to know that many investors haven’t even been able to keep up with inflation for the last three decades?

Many investors haven’t, according to the 2016 Quantitative Analysis of Investor Behavior.

Here are the facts about actual long-term investor returns

The average investor in asset allocation mutual funds (which spread your money among a variety of classes) earned only 1.65% per year over the last three decades!

These investors didn’t even come close to beating inflation, which averaged 2.6% per year.

The average investor in equity mutual funds averaged only 3.66% per yearbeating inflation by only 1% per year. (Was that worth the roller-coaster ride and sleepless nights?) [Read more…]

What’s In “The Big Black Book of Income Secrets”?

If you receive emails from investment advisory services, you may have gotten a sales pitch for The Big Black Book of Income Secrets from the Palm Beach Research Group.

The promo promises you’ll discover “30 unique income tools” in The Big Black Book of Income Secrets.

The offer entices you with a “risk-free 60-day trial subscription to the Palm Beach Letter.” If you’re not satisfied before the two-month trial is up, you’re told you can get a refund and keep the book and some “bonus” reports that are included in the offer.

To find out if The Big Black Book of Income Secrets lived up to its promises, we signed up for the “Platinum Subscription” for $99 for the first year, which comes with additional “bonus” reports.

Three weeks later, the book arrived, containing 22 (not 30 as promised) strategies, with a cover letter from the Publisher, Tom Dyson, explaining that we could log into their website to access the reports we signed on for and back issues of the Palm Beach Letter. (I guess for $99, they can’t afford to mail you hard copies of the reports.)

The First Red Flag in The Big Black Book of Income Secrets is “Income For Life”

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What Infinite Banking and Nelson Nash Missed

I am infinitely grateful to Nelson Nash for introducing me to the Infinite Banking Concept®. It’s a very powerful concept that brings to the table Nelson’s life-long study of the Austrian School of Economics.

In this article, I described what Nelson got right about this concept, and my own life-changing experience of how it lets you “Become Your Own Banker.”

However, here are several things in his ground-breaking book that I take issue with, and that have caused unnecessary confusion for readers…

1. His first book, Becoming Your Own Banker®, was copyrighted in 2000.

[Read more…]

Who’s the Bozo Administering Your Retirement Plan?

When you have a plumbing issue, you call in a qualified plumber, right? When you need a medical procedure, don’t you want a qualified doctor? When you go to get your car fixed, aren’t you going to hand it over to a qualified mechanic?

So why would you turn your retirement plan over to an unqualified administrator?

Wait! You didn’t know that you’ve placed your hard earned retirement money in the hands of someone who very likely doesn’t know what they’re doing? It’s one of the common retirement planning traps I’ve been covering in this blog.

According to SmartMoney magazine, 90% of the country’s 401(k) plans are watched over by people who “need no special qualifications and no investing expertise or experience.” [Read more…]

How Hidden Fees Are Sabotaging Your Retirement Plan

In my first blog about costly retirement planning traps, I explained how conventional retirement plans put you in jeopardy of losing money you absolutely cannot afford to lose. Just because all the other lemmings choose to dive over the cliff, doesn’t mean you have to!

Now let’s look at the gremlins of conventional retirement plans that are decimating the nest egg you’re trying to build: FEES.

Do you even know how much you’re paying in fees each year for your retirement account? If you’re like most Americans, you don’t have a clue. The Employee Benefit Research Institute found that only half of 401(k) plan participants even noticed the fee information stuffed in the 14-page disclosure (that requires a magnifying glass to read and 3 years of law school to understand).

And almost no one makes any changes to their plan if they do read the fee disclosures.

Most folks just don’t think fees are all that important. Or, they think they’re unavoidable – sort of like death and taxes.

Wrong on both counts!

[Read more…]

Wealth Beyond Wall Street: Retirement Planning Solution or Scam?

Have you been hearing radio ads for something called Wealth Beyond Wall Street offering a free book if you call a toll-free number?

The promise sounds enticing: Use an index strategy to share in the upside of the stock market with no downside risk. You may also hear that this is the same strategy used by Walt Disney and JC Penney.  If you’re wondering what it’s all about, I’m going to spill the beans in this review.

Wealth Beyond Wall Street is the brain child of marketer Brett Kitchen, and Ethan Kap, a financial advisor. They typically appear together in pictures dressed in black suits and black sunglasses, standing next to a classic Mustang. (Reminds me of the Blues Brothers every time I see it.)

Before Wealth Beyond Wall Street, they called it Safe Money Millionaire and the 101 Plan.

When you call their toll-free number to take advantage of their free book offer, you’ll also be offered a free consultation or “blueprint” from one of their advisors. [Read more…]