www.youtube.com/watch?v=uu5PlI9CVZE

This is actually a fun question for me, because people ask me, what exactly does the NASDAQ stand for? Well, if we were back in 1971 when the NASDAQ was created, I would say it stood for the National Association of Securities Dealers Automated Quotations, the NASDAQ.

Back when it was first created, this is back when computers filled an entire room, if you even had a computer. Back then, they needed a more efficient way to be able to quote stock prices. Before that it was just, what was it on the floor of the New York Stock Exchange? So that’s what the NASDAQ was originally created for.

Today, the NASDAQ is seen as a leader in growth companies, it’s a stock market in and of itself here in the United States, and companies generally tend to go to the NASDAQ when they’re technology-based because that’s kind of what has been the mystique around the NASDAQ over all these years. And so where once it was just a quoting system, a way to get quotes really quickly, automated, now it has become a whole new thing, a whole new stock exchange, if you will, where companies come to be placed on the exchange.

That way other people can come to that stock exchange and be able to buy those stocks and so on and so forth. That’s why it’s known as one of the truly automated computer-based stock exchanges because that’s how it started, and that’s how it’s always been.

www.youtube.com/watch?v=egN2MblLIfE

I get this question a lot. What exactly is inflation? Inflation, to kind of make it really simple, is when the value of everything goes up except for the cash in your pocket, which stays the same.

So an easy way to understand this is let’s say a loaf of bread cost $1 this year. Now, I know a loaf of bread doesn’t cost a dollar, but we’re going to use that as the example. And next year, let’s say inflation over the course of the year is about 2%. Next year that means that loaf of bread is going to cost you $1.02. However, if you made $1 this year, next year you’ve got to make that extra 2¢ so another 2%, so you can still be at break-even.

Now how we gauge inflation in the United States is through something called the consumer price index, and there’s a lot of debates as to whether or not our consumer price index is actually a good model to be using because of some of the things that are in it. But the bottom line is, it is a good way for use to address this problem of inflation, because it is a problem.

As we look at it historically, and consumer price index, the rate of inflation has been traditionally between 2.5% and 4.5%. And of course there are years where it spikes, like with the Carter administration we saw inflation off of the charts. And there’s also years like in 2009 when inflation did 0%, and that was one of the things that really messed up a lot of seniors because they’re used to getting that cost of living increase in their Social Security checks and they didn’t get it for this last year. So what we use to gauge inflation is that consumer price index.

It is something good that you can use as kind of like a guide, but just bear in mind that you’re going to have to plan for inflation in all of your retirement planning. And inflation’s going to run between 2.5 and 4.5%, so a good, safe bet is to plan for about a 3.5% inflation. So I hope that helps.

Pete Mitchell here. I look forward to sharing more on the markets and investments with you tomorrow.

Buyers often equate the word “foreclosure” with below market value pricing.
But is that really the case? You may THINK you know, but do you really?

www.youtube.com/watch?v=No6g4awfy3w

What is a foreclosure? In the simplest terms, a foreclosure is a legal proceeding by which property is repossessed by a lender due to the borrower’s failure to fulfill the terms of a mortgage or deed of trust. In most cases, this means the borrower has either been unable or unwilling to make the agreed-upon payments.

All foreclosures are not created equal. There are several different types of foreclosures in the United States, and foreclosure laws can vary by state. The two most common types are foreclosure by power of sale (also known as non-judicial foreclosure or trustee’s sale), and foreclosure by judicial sale.

Non-judicial foreclosure, or “trustee’s sale”. This is a widely recognized and accepted foreclosure process and may be faster and less expensive than judicial foreclosure. In this arrangement, the mortgage holder sells the property without court supervision. This non-judicial foreclosure takes place when a power of sale clause exists, authorizing the lender, in the event of default, to sell the property as a means to satisfy the loan balance.

Foreclosure by judicial sale. This procedure is used when no power of sale is present in the mortgage or deed of trust. A lawsuit must be filed and a court order obtained before foreclosure can take place. Once a court declares a property foreclosed, generally it is then auctioned off to the highest bidder. However, as part of this process the lender could request a deficiency judgment. In this case, the borrower may be given up to one year to redeem the property.

Are foreclosures great deals for homebuyers? They certainly can be … but not always. Each foreclosure is different, and it depends on what you want and what you can afford. One thing to keep in mind is the time factor. Depending on the state and the type of foreclosure in place, the current resident could be allowed to stay in the property for anywhere from four months to almost a year. Also, there is the possibility that the current resident may regain control of the property, as almost every state offers a redemption period.

It’s also important to note that there are certain procedures that must be followed in order to properly purchase a foreclosed property. Many states will require a buyer to provide the seller with particular disclosures, and failure to provide these (and/or failure to use the correct paperwork to prepare offers) can result in the revocation of the sale, fines or even the possibility of a lawsuit.

So, what should you do if you want to buy a foreclosed property? You’ll want to determine what the facts of the foreclosure are – including what type of foreclosure is in place, how long it has been in place, etc. First things first, consult a real estate professional, preferably one with foreclosure experience, and consider speaking with a real estate lawyer as well.

What it is and how it guides your portfolio when the markets change.

www.youtube.com/watch?v=wx8xO_8m0vI

What’s an IPS? An investment policy statement, or IPS, is the foundation of a good investment strategy. It gives you an overview of the whole investment plan: the asset allocation, the objectives, the asset management approach and the ground rules for communication between you and your advisor.

A good IPS defines your time horizon, your risk tolerance, your liquidity requirements and income needs, your return requirements, and your tax concerns. It also notes any special needs and circumstances. But most of all …

Your IPS states the parameters by which you invest. You might consider yourself a value investor, a growth investor, or a conservative investor. With that preference established, your IPS defines a long-term asset allocation for you: a way to assign your invested assets to diverse asset classes in a way that suits your preferred investment style.

Think of your IPS as long-term GPS for your portfolio. The goal is to set the asset allocation in a way that can potentially give you the highest possible rate of return corresponding to an acceptable level of risk.

Your IPS keeps you from getting “off track” when it comes to investing. Over time, your financial advisor keeps an eye on your portfolio, to see that the assets inside it stay within the allocation boundaries set by your IPS. (This is why quarterly reviews are so essential.)

Periodically, your portfolio may need to be rebalanced. Here’s why. As months go by, the ups and downs of the investment markets will throw your asset allocation slightly or dramatically out of whack. As an extremely simple example, let’s say you start out with 25% of your assets in U.S. large caps, 15% in U.S. mid caps, 15% in U.S. small caps, 20% in foreign shares and 25% in bonds. Suddenly, small cap stocks have a great quarter, and thanks to the great returns, you wind up with 21% of your assets invested in small caps and only 19% in bonds. Great, right?

No. What’s actually happened is that your risk has increased along with your return. A greater percentage of your assets are now held in the comparatively risky stock market, removed from the bond market. So while the short-term gains have been great, it’s time to rebalance according to the parameters set by your IPS so that you can help reduce your risk exposure.

For tax-deferred investment accounts, this is easily done: you simply transfer assets among accounts to restore the target allocations. Future contributions occur according the IPS parameters. When it comes to taxable investment accounts, it is usually best to ramp up future contributions to the underweighted funds rather than sell portions of a fund and trigger taxes.

Remember that you are a balanced investor. Your IPS is designed to help you invest in a consistent, appropriate way, a way that matches your preferred investment style. Without an IPS, you invite impulse, emotion and a short-term focus into the picture. If you’d like to learn more about the long-term value of an IPS, talk to your personal financial advisor today.