Get ready for a step back in stocks

Two steps forward, one step back, it’s the nature of things. Unfortunately, stock markets are susceptible to this pattern as well. As such, investors should be gearing up for a bit of downside in the near future.   That should come as no surprise. I like to remind readers that equity investors can expect at least one to three selloffs per year. Some of those declines can be quite scary and seemingly come out of nowhere. That’s the price of doing business in the stock market. Traders know this. They are paid to anticipate these moves. They make their money during times like that. They will buy stocks at giveaway prices from panicky investors like you and I, who typically sell at the lows and buy at the tops. My hope is that if I can prepare you to expect these minor blips in the market beforehand, you won’t become a victim of your own fear. Take the present level of the S&P 500 Index, which hit 3,000. That is something I predicted would happen a few weeks ago and right now, if you had stayed invested, you would be quite pleased with your performance. The 3,000 level on the S&P 500 is a nice round number and humans, for whatever the reason, are drawn to nice round numbers. That level also registered as a new historic high (actually, the index hit 3,018 for a moment, before backing off). But for some, if you put those two events together, some might assume that we may have hit an interim top in the markets. That’s way too easy. If I...

Paid family and medical leave are long-overdue in this country

What do the United States, Papua New Guinea and Oman have in common? Those are the only three countries in the world that do not legally obligate employers or taxpayers to pay for maternity leave. Many American businesspeople will hide behind a knee-jerk response to the above statement. “We are a free-market society,” they will argue, “and paid leave is paramount to just another form of socialism.” Good try, but that old argument is no longer based in facts. Free markets have given way to corporate socialism in this country, while corporations are now legally considered to have the same rights as individuals. As such, individuals have a moral responsibility to protect and care for future generations. They have an obligation to society. Giving paid leave to American workers, not only to deliver and care for their young, but also to provide income during serious medical conditions, cannot be left to the whims (and greed) of our corporate community. As it stands, after decades of waiting, a mere 15% of companies have voluntarily instituted paid leave to their workers, according to a 2017 Bureau of Labor Statistic report. The fact that for the last several years, corporations have banked stupendous profits and now carry more cash on the books than ever before just makes their failure all the more apparent, if not disgusting. To be fair, there are some companies such as Microsoft, IBM, Netflix, American Express, Citigroup and, of course, Berkshire Money Management that do pay for parental and medical leave. Take my own case as an example. As many readers are aware, I have had some serious...

Lower interest rates equal higher stock prices

The math is simple. As long as the Federal Reserve Bank is neutral to positive on lowering interest rates, investors who want any kind of return are forced into the stock market. Until that changes, equities are in the buy zone. “But, but, but,” moaned several readers, who called or emailed me from blue states, “What about Trump, and the Chinese and the Iranians and earnings season and everything else?” That doesn’t matter, in my opinion, over the next few months, or until stocks become so over-extended that the markets fall upon their own weight. Think of a tree that grows so tall and its limbs and leaves so full that its roots can’t support it. Until then, enjoy the ride. Unless you have been living under a rock (and some have), you should know by now that America’s outlook on things financial has become extremely polarized. Those in the Trump camp believe we are on the verge of the second coming of the Lord (if only we would all give the president a chance.) Those on the other side are convinced that Trump represents (as the Iranian leaders argue) the “Great Satan.” The Trump camp of investors needs little encouragement when I paint a positive picture of what’s to come in the stock market, so let’s focus on calming the fears of the remaining equity investors. My advice is not to be swayed by your wall of worry. I do not mean to discount or make light of all the negatives that we hear and encounter time and time again. They are definitely out there. But none of...

FHA approval is critical to elderly condo owners

Ever hear the expression “cutting off your nose to spite the face?” That’s exactly what the vast majority of condo owners are doing by not pursuing a Federal Housing Authority approval of their condos. Here’s why. Over the past few weeks, I have written several columns on the subject of reverse mortgages, Home Equity Conversion Mortgages (HECMs), the marketability of your existing home, etc. More and more Baby Boomers are opting to down-size (sell their empty nest and buy something smaller, like a condo) in order to reduce expenses, prepare for retirement, or simply take advantage of a rising housing market. While down-sizing makes economic sense, many elderly retirees have ignored a critical factor in the process–the ability to be able to tap into their new housing asset in a time of need. As readers now know, the potential market of buyers for your dwelling is considerably expanded if you have FHA approval. In addition, mortgage rates are lower, and banks are willing to lend more. Bottom line, it is easier to sell your home or condo with FHA insurance approval. However, only a handful of condo dwellings across the nation actually apply for FHA approval. For most potential buyers, approval doesn’t seem to be an issue at first. Builders and management companies often discourage it as well since the approval process requires time, effort, and some money. But as the owners age, some retirees encounter unexpected difficulties (health issues, sudden, but necessary, draw-down of retirement savings, etc.). Since many retirees are living on a fixed income, they don’t have the additional income they need to weather these emergencies....

How to tap your home equity to pay for long-term care in retirement

A home equity conversion mortgage (HECM) might simply be a fancy term for a reverse mortgage, but there are an increasing number of advisors and planners who are using them for an entirely different strategic planning purpose.   If you ask most couples in their sixties and beyond what is one of the greatest fears for their future, I’m betting that going bankrupt and/or losing their home and life savings as a result of nursing home bills would be right up there near the top. We all have horror stories to tell of how one or both spouses needed to go into a nursing home and the costs drained all their assets and then some. Before they could apply for Medicaid, they had to go through everything they own—their home, their retirement and savings accounts—all gone. Only then could they qualify for government assistance, which usually means and ending up on a Medicaid waiting list for a remote, tiny room in a facility for the remainder of their lives. That, my dear reader, is not the kind of “living the dream” Americans have in mind when they think of their future retirement years. Now, of course, the knee-jerk answer to this ever-present nightmare is long-term care insurance Any financial planner worth their salt will tell the average consumer to buy insurance, but there is lots of downside in following that avenue. Let’s take a sixty-five-year-old couple shopping around for this insurance. For the male, it will probably cost him double what it will cost his wife. A premium per month of $4,543.76, while the wife pays $2,825.97. That comes...