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Late Edition

After a Passive week in Lake Tahoe, replete with rain and snow- followed by an Active weekend in sunny Redding, CA, I am finally caught up enough to resume the column. The time in Redding, to celebrate my and another birthday, Mothers' Day, etc., was an excellent time to reconnect with 14 other family members, half of which are embarking on careers and seem to have a healthy interest in investing for the future, albeit passively.

In my 30 years (next year) of being a broker/money manager, I've always tried to beat/time the markets for a maximum retirement - usually a fool's errand. Lately, especially under current conditions, the ultimate investment (Risk vs. Reward) seems to be the Buy-and-Hold strategy via an Index mutual fund or Index ETF (Exchange Traded Fund, which can be sold intra-day); especially for those not actively interested in spending a lot of time and interest in financial securities.

For this I recommend the Vanguard S&P fund with very low expenses, to be bought with reinvested dividends and regular contributions (annually, etc), requiring very little monitoring for life. For variety, one can purchase the SDY (dividend-paying ETF), or an equal-weighted SPX (where APPLE and IBM do not dominate) - that symbol is RSP; this ETF has outperformed the overall market by about 2% a year over time..The numbers speak for themselves, as gleaned from the recent Barron's weekly magazines:

U.S. equities (stocks) since 1871 have averaged @ 9%, based on median returns over 5, 10, 20, and 30 year cycles. Even the decade to date has gained 8.36%, despite the 2007-8 crash, with the S&P 500 (SPX) tanking from 1600 to 600, and back again. Comparing this to 1% CDs (certificates of deposit), Treasury Bills and Bonds, real estate, which has seen both a Bull and Bear market recently - 9% is not a bad return when considering the 8th Wonder of the World - compound interest! The killer here is the fees that most mutual funds charge, or LOADS, for sales, management, commissions to brokers, etc. As a recent Frontline program showed, over a 50 year period, the fund can get up to 67% of your total savings, with you getting only 33%!.

A good place to analyze fund expenses is: run by FINRA, a regulatory agency; just enter symbols such as the Vanguard - VFINX or Schwab SNXFX and compare over different timeframes. Voila!


For those readers interested in timing the markets, a portion of this column is always dedicated to the Sentiment (Contrary Opinion) from Indicators listed in my Sentiment Blog at:

Most Indicators, although on the high, speculative side, seem to be unable to raise the stock market above Resistance areas, although temporarily hitting new highs. There seems to be a fight between investors afraid of rising interest rates creaming bonds (at all time lows after a 30-year Bull market), and stocks which hit a 30% gain last year. Even with the above recom about long term Index funds, it might be prudent to wait until some kind of correction (downturn) occurs to go All-In. The AAII (Individual Investors) Bulls and Bears are dead even. Insiders - CEOs, officers and board members, as well as 10% stock holders are still selling stock with both hands - especially Sheryl Sandberg and Jeff Bezos.


Each week this column serves to announce local Bay Area investment meetings, mostly Technical and Options-related for the weeks ahead.

This week's alert is for the San Francisco Bay Area Options Group, which meets once a month to support and educate traders in options, using member talks and expert presentations (sans sales pitches).

Saturday May 17, 2014, from 9:00 AM to Noon
Room C-235, Fort Mason Center, San Francisco


1. Recap Group Charter

2. Self Introduction - Members & Guests

3. 2014: Option Strategies that Worked and What Didn’t – George Chen

4. Break

5. Members & Guests Sharing What Worked and What didn’t

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