Gary Allen on Business – Sunday, March 19, 2017 – Podcast Now Available

Planning For Retirement

Rollover Central (Big Business, Buyer Beware)

Retirement Party

One of the largest financial decisions a person will make during their lifetime is what to do with their retirement savings when they retire. I have heard many horror stories from folks over the years who have made wrong decisions. The stories often revolve around someone convincing them to buy a complicated and costly financial product. On the program this week, I spend time going through a framework to develop a good decision making process. 

Too often, people will immediately be talked into rolling or transferring their monies out of a retirement plan before comparing it to the proposed solution. In other cases, a lack of disclosure or too much faith in the salesperson dooms the transaction and/or the relationship. 

The concept of “money in motion” has been taught to financial salespeople for generations. That is, focus on people who are at or near a lifetime event to gather assets. They will be more vulnerable and responsive to sales pitches when they are facing a big decision. It all makes sense, but too often these trolling for dollars safaris end up hurting real people. I have seen many inexperienced or unscrupulous salespeople sell costly financial products that appear to benefit them more than their clients. 

On the program this week, I spend time walking through some of the issues that folks face as they get close to retirement and what they should do with their retirement savings. I hope you enjoy the program this week. – Gary

Contact Information

If you have a question or would like to contact Gary, the best way is through Gary’s Email at gallen@prudentllc.com. You can always try to call him as well 916.436.8331.

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Gary Allen on Business – Sunday, March 12, 2017 – Podcast Now Available

The Good Old Days

Good Old Days_ManI often hear about the good old days when everyone in the land had a pension that lasted a lifetime. These good old days come up when people complain about 401(k) plans and how they have failed America. However, were the good old days really that good? I don’t profess to have all the answers, but this memory of the good old days seems to be a bit hazy at best. 

First of all, only about half of American workers were covered by pensions. This is hardly comforting to the other half that did not have a pension. And on top of that, just how secure are those old pensions? The answer right now is a big shakier than many remember. Those old pensions are still the same pensions we are living with today. 

The reality is many of those pensions are significantly underfunded. The problem of under-funding is present in public and private pension systems. And the scary thing is the PBGC, which is the safety net behind pensions is also running out of money.

In the first segment of the program, I cover the current health of the pension system in the United States. Don’t worry, it can be fixed, but it is going to take a lot of effort and sacrifice.

KryptoniteIn segment two, I cover the exciting topic of the fine print. Investment disclosures are something that everyone struggles with. There have been many attempts at trying to develop more effective and simpler disclosures but it does not seem to matter. For whatever reason, disclosures appear to contain some kind of fatal dose of Kryptonite that renders investors oblivious to the risks involved. Unfortunately, I don’t have any simple answer to fix this problem. Caveat emptor still reigns supreme when it comes to purchasing investments.

In segment three, I respond to an excellent question from podcast listener Randy. He had a great question about when is it appropriate to invest in a stable value fund. Most listeners know, I am not a fan of stable value funds, but sometimes you don’t have much choice.

Finally, in segment four, in the remaining time I have, I cover some of the issues or problems that I see with stable value funds. The perceived safety and guarantee of stable value funds make them very attractive to retirement plan participants. It is my opinion that most people would do better if they did not commit their savings to these high cost, low return vehicles.   

It was the dreaded spring-forward Daylight Savings Time weekend… so I know many of you may have missed the broadcast. That’s why we have this podcast. I hope you enjoy the program – Gary 

CONTACT INFORMATION

If you have a question for Gary or would like to chat with him, the best way is to contact him through email. Gary’s Email  gallen@prudentllc.com.

If you are not the emailing type, you can always try to reach him via telephone at 916.436.8331.

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Gary Allen on Business – Sunday, March 5, 2017 – Podcast Now Available

The Health of the US Stock Market

Where Have All The Public Companies Gone?

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On the program this week, I talk about the concerns raised by a trio of professors regarding the health of capitalism in the United States. The professors are calling into question one of the basic tenets of capitalism, the idea of creative destruction. Their argument is America is headed towards a system of winner take all. This is where large companies continue to gain market share and dominate their industry. They argue the primary cause for this is a lack of anti-trust regulation and enforcement. In the first segment of the program, I give you my thoughts on why I think they are off base with this argument. HINT – I think it is a byproduct of the artificially low interest rates that we have experienced for a decade. 

Here is a link to the article by Jason Zweig that I mentioned at the beginning of the segment. Jason Zweig Article

In segment two, I spend time talking about one of the few initial public offerings in recent months. Snap Inc. of Snap Chat fame enjoyed a snap, crackle and pop opening (who could resist) on its public debut.

Segment three is another take on the “success” of the Snap IPO. Why does Wall Street continue to dominate the IPO process and the pricing structure? Snap, which burns money at an incredible rate, sure could have used an extra billion dollars that Wall Street passed on to its best clients by pricing the IPO below what the public market would pay just a few minutes later. 

Finally, in segment four, I cover, what in my opinion is one of the worst investments for most retirement plan savers. The funds are called many things, but they are commonly known as Stable Value Funds. I believe that most people would reject this investment if they truly understood how it worked. Let me put it to you another way. Would you be interested in an investment where you lock in a low rate of return and give up approximately 75% of the profit that your money generates? It is called spread income and it is not disclosed anywhere to retirement plan participants (Employees) or plan sponsors (Employer). Spread income makes Stable Value Funds the most profitable portion of a retirement plan vendor’s business. And that profit comes at your expense!

I hope you enjoy this week’s program! – Gary

Gary’s Contact Information

If you would like to contact Gary about your financial situation, the best way to reach him is via email at Gary’s Email gallen@prudentllc.com. You can try to reach him at his office, but he is often on the move! 916.436.8331.

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Gary Allen on Business – Sunday, February 26, 2017 – Podcast Now Available

“The Big Bet” With Warren Buffett

Each year, Warren Buffett provides a fabulous read when he releases his annual letter to shareholders. That annual letter is filled with information about Berkshire Hathaway, but the more interesting sections for many folks are the investment stories and anecdotes from the so-called sage of Omaha

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In the 2016 edition, one of the primary stories deals with Buffett’s challenge to active management. Nine years ago Buffett made a public bet of $500,000 stating that the S&P 500 would beat the cumulative or average returns of the hedge fund industry over a ten year period of time. Only one fund manager was willing to come forward and take the bet.

The bet is now heading into its final year with hedge funds trailing very badly. At this point, the S&P 500 and Buffett’s charity stand to win the big bet.

On the program this week, I spend time going through the story, the results and in Buffett’s own words the multiple problems of active management. It is a cautionary tale worth the time.

Here is a link for you if you would like to read the entire Berkshire Hathaway annual letter to shareholders.   Berkshire Hathaway Annual Shareholder Letter

The Problems With Hedge FundsCost increase concept.

Later in the program I speak about my own concerns with hedge funds. Ultimately, I don’t think hedge funds are a good investment or bet for most people. The cost structure, the lack of transparency and the lack of liquidity are major stumbling blocks in my opinion.

Based on what I have seen over the years, most people would be better off in much simpler, low cost, liquid and transparent investments. Less is often more in the investment world. That rings true to me with costs.

I hope you enjoy the podcast this week.

All the best – Gary

CONTACT INFORMATION

Do you have a question for Gary? Do you need help with your investments? The best way to reach Gary is by emailing him at gallen@prudentllc.com.

The Podcast

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Gary Allen on Business: New Podcast Available – Sunday, February 19, 2017

The Story of the Pencil and More

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Segment 1

How can the story of a simple pencil provide someone with an understanding of financial markets? Find out in the first segment of my program. It is an interesting story about knowledge, experience, pricing and human ingenuity.

You can read the short paper on the pencil by economist Leonard Read here:   The Pencil Essay

Segment 2

In this segment I cover some of the basics regarding the new 529 ABLE programs that are springing up around the country. 529 ABLE accounts represent a revolutionary way for disabled people to manage their finances. If you have not heard of 529 ABLE accounts you need to. Listen to this segment to get a quick overview of the new program and how it can fundamentally change the financial life of a disabled person. 

In the segmemiable-logont, I mention the State of Michigan’s new 529 ABLE program. My firm is the investment manager and investment advisor associated with that program. The program is a federal program, which means it is available to anyone that lives in the Unites States. You do not have to be a resident of Michigan to enjoy the benefits of the program.

If you would like more information on the Michigan 529 ABLE program you can visit there website at: Michigan 529 ABLE Savings Program

Segment 3

modern and historic architecture at college campusThe cost of higher learning (college) continues to skyrocket. In this segment, I spend a few minutes talking about the cost and how to plan for it. This is a high level look at the challenge parents face and how to approach this liability from a logical perspective. Ultimately, the answer is save as much as you can early, invest it aggressively, and then transition into lower risk (as measured by volatility) as college approaches. This is not personal advice, just a formula to consider for new parents. 

Segment 4

In the final segment, I spend time explaining the overarching formula of financial life. The trade-off between spending and saving… and the role of human capital and financial capital. Finally, near the end of the program, I provide an explanation of stocks and bonds. What they represent and what you should expect. 

I hope you enjoy the program!

Gary

CONTACT INFORMATION

If you would like to contact Gary, the best way is through this form.

You can also reach Gary via his work email at gallen@prudentllc.com.

 

PODCAST – Gary Allen on Business: Original air date – Sunday, February 19, 2017

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Gary Allen on Business – Sunday, March 6, 2016 – Podcast Now Available

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So many questions about investing and retirement…

Common Questions I Often Hear About Investing…

Is it a good time to be in the market? What about timing the market? When is a good time to get in or get out of the market?

All of these questions are somewhat similar because they are asking if I have some kind of ability to know in advance what it going to happen. Unfortunately, I don’t have that power and by the way nobody else does either. Although Andrew Bogut of the Warriors predicted a Curry 3-pointer before he dropped one in… but aside from that, no one has the ability to predict the future with any certainty.

Later in the program, I cover the total wealth equation, which is a combination of human capital and financial capital. If you can understand this basic concept, it provides you with a much clearer understanding of the trade offs in life between spending and saving.

Finally, I spend time discussing how Wall Street and most firms have been wrong about your number for so long. Most financial firms talk about building wealth and reaching for some big number. That number represents a nest egg of wealth. However, for retirement, the real number should be income. People need an income to survive. Wealth is not tied to inflation or retirement and is a difficult concept for people to understand. Next week on the program, I will dive deeper into this important concept.

I hope you enjoy the program this week. As always, thank you for listening to my program on KNBR.Thanks to my great product Justine for always doing a great job.

If you have any questions or would like to contact me, email is usually the best gallen@prudentllc.com or you can try to call, but I am often unavailable 916.436.8331.

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Gary Allen on Business, Sunday, Janaury 24, 2016: Podcast Now Available

Cartoon business people escape from stock market arrow

Stock Market Jitters, A Crude Awakening…

A large drop in oil prices has been fueling lower prices in the stock market recently. A strong US dollar has been one of the linchpins of this newfangled relationship. A stronger dollar is tough on US exporters and that strong dollar is a drag on oil prices as well. However, short-term market driven volatility is no reason to upset anyone’s well laid plans.

On the show this week, we spend time discussing two persistent myths about main street investors; the panic syndrome and market capitulation. It turns out that history shows that the average person does not panic and market bottoms usually happen with a whimper.

Later in the program, I go through eight points about managing money that our firm follows through good times and bad. It provides a road map for anyone to follow. And finally, I discuss the cost of bad investment advice.

There certainly are many things to be concerned about, but a disciplined investor understands they cannot control nor predict world events. These events make life interesting but are simply noise that can distract us from our purpose. Hopefully, you can ignore the bad advice that is driven by greed, fear and current events and develop a long-term plan that works for you in good times and bad.

I hope you enjoy the program this week. – Gary

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