Free Report Available – 2015 Market and Economy in Review

2015 yellow road sign2015 is in the books! Like many investment firms, we prepare a report to summarize what happened over the past year. In this report, we take a look around the globe at financial markets and world economies. This report is a simple, handy guide that gives you a summary of what has happened over the previous twelve months.

Also, you will find a short article about risk. The article will help you understand what risks are worth taking and how to get help if you need it. We hope you enjoy this year-end report.

To access the report, please click on the link below.

Prudent_2015 Year in Review

Good luck in 2016. We hope you have a healthy, prosperous and safe year.- Gary







Gary Allen on Business, Sunday, January 10, 2016 – Podcast Now Available

I wonder if this will effect our social security

Financial Planning is a Series of Trade offs

Financial planning is a complicated subject. There are so many trade offs and variables involved it can be overwhelming for many folks. Recently, long-time financial columnist Jonathan Clements penned an article covering 18 simple steps to creating your own financial plan.

Of course anything with 18 simple steps does not sound so simple, but it was a valiant attempt at back of the napkin financial planning. The reality is life and financial planning involve a series of interconnected trade offs without a concrete answer. My humble advice would be to gather relevant information on the subject and make the best informed decision you can. Life is not perfect and neither are many of the choices we all face.

On the program I follow along with Jonathan’s 18 steps and give my two cents along the way. Also in the program I mention two videos and articles about retirement planning that do an excellent job of providing clear and concise information on the subject. You can find the videos on two of my recent blog posts. You will find links to the short videos as well as links to a couple of robust papers on the subjects. Hopefully you will find them useful and informative.

I hope you enjoy the program this week. Hope you have a great week! – Gary

Here is this week’s podcast of my show that originally was broadcast on Sunday, January 10, 2016 on KNBR.


The information provided on this website is for information and educational purposes only. It is not intended to be investment, legal or tax advice of any kind. Please consult with your investment, legal or tax expert on all matters.



The Case Against Wall Street

bveresFinancial Columnist Bob Veres wrote a recent column that does an excellent job of outlining the major structural issues of Wall Street. Bob explains the three pillars of Wall Street’s business model and does a great job of highlighting how it impacts America and individuals in a bad way.

The article is an excellent read for anyone with even a passing interest in finance, investments or Wall Street. Two big thumbs up for an excellent article by Bob Veres.




The Difference Between a Fiduciary Adviser and a Broker/Agent/Salesperson

Shark SuitFrom experience, I know that most people do not understand the differences between a fiduciary adviser and a broker/insurance agent/salesperson.The average person would say they ALL sell financial products and charge commissions.The reality is actually far different. In my opinion, it is crucial for the general public to understand the differences and what it means to your financial future.

Fortunately, one of my business partners, Scott Simon has written a recent column on the subject where he nails it. Scott has been writing for Morningstar for more than ten years on fiduciary matters, but this column really hit home for me. He does a great job of dissecting the differences between the various adviser types and why it matters.

Scott’s column focuses on a retirement plan sponsor and her obvious confusion about the various types of advisers. Scott writes a sharp and brilliant letter to the plan sponsor in his column outlining in detail why it is important for everyone to know the difference and how it impacts their employees.

If I could, I would make this letter by Scott mandatory reading for every employer/plan sponsor in the United States. It provides a clear understanding of why they should care. Please feel free to share this post with anyone you know.

Here is a link to Scott’s most recent column for Morningstar.

Enjoy the week!




Gary Allen on Business – Sunday, November 29, 2015 – Podcast Now Available

Swami gazing into a crystal ball

Stock Market Predictions

On the program this week, I spend time discussing about the recent blockbuster “inversion” merger of Pfizer with Ireland based Allergan. The huge $160 billion merger is the latest example of the growing trend of US companies to change their corporate domicile for tax purposes.

Meanwhile it is that time of year when financial “experts” begin to offer their outlook for 2016. In the 2nd segment of the program, I spend time talking about the futility of predicting the future and basing your investment decisions on them.

Later in the program, I consider one of the most common concerns that investors have about the future. I call it the certainty principal, where investors are looking for things to sort themselves out and provide a clarity about the future. Of course, nothing exists like that. People have to come to grips with investing in an uncertain world.

Finally, I offer up a reminder for your viewing pleasure. My friends at Sensible Investing (Birmingham, England) produced an excellent eight-part series on Stock Market History. Look for a separate blog post for a link to the series.

I hope you enjoy the program and remember to subscribe or follow my podcast to always receive my show on a regular basis.




Gary Allen on Business, Sunday, November 8, 2015 – Now Available

Retirement Concept Social Security BenefitsCongress Kills Popular Social Security Claiming Strategies

This past week Congress compromised and settled on a budget deal that included some major changes to Social Security. Deep in the bill was the unwelcome news that Congress has closed some very popular Social Security claiming strategies. The so-called File & Suspend and the Restricted Application strategies will no longer be available as of April 30, 2016.

There is a six month window of opportunity right now for a certain group of people to take full advantage of the current claiming strategies. But the time to act is now before it is too late.

My program this week focuses on the changes and how they will impact people. This is a major change to claiming strategies that will significantly reduce the planning opportunities for most Americans. REMEMBER – these changes do not effect anyone who is already receiving Social Security benefits.

I have included a copy of a chart that outlines what the coming changes are:

Social Security Claiming Strategies

Below is a podcast of the program this week. I hope you enjoy it. – Gary

Gary Allen on Business, Sunday, September, 13, 2015 – Podcast Now Available

Can Experts Make Market Predictions? Does Market Timing Work?

"Why don't more of you appreciate my wry sense of humor?"

“Why don’t more of you appreciate my wry sense of humor?”

Timing financial markets is a very seductive thing. It seems like we should be able to do it. Of course, the reality is timing financial markets is a fool’s errand. We get lucky once in a while, but the cost of being wrong is often fatal.

What about the so-called financial experts? They have resources, credentials and experience far beyond those of the average person. Surely, their predictions must be useful and profitable. Alas, the evidence shows that financial experts are poor at making predictions.

And even if their prediction about world or corporate events is accurate, how useful is it when one tries to execute investment decisions. Once again, the value of long-term predictions is not very useful according to one recent study by Jim Davis.

Finally, at the end of the program, I spend some time discussing the Financial Security Index and what people are thinking about retirement. Unfortunately, it looks like we all have more work to do!

I hope you enjoy this week’s program.

Gary Allen on Business, Sunday, August 30, 2015 – Podcast Now Available

ETF Flash Crash

On the program this morning I discuss the details of a very interesting Monday morning, where the market dropped 1,000 points in a flash. But the real damage was done to people who owned various ETF securities.

In some cases, people lost more than 30% when market sell orders hit with a sudden fury as liquidity in the ETF market dried up. Later that day, these same ETFs were trading down around 5%, What happened and why?

More on this incredible action in the third segment of the show from Sunday, August 30, 2015. In segment one, I review a recent article by financial columnist Chuck Jaffee on the type of investor you might be and how to cope with bad financial markets.

Segment two of the show is the “Patience Principle” and how to survive bad financial markets. In the fourth segment, I briefly review the results of various alternative investments in recent years and their failure to deliver on their promise.

As always, thanks for listening to my program on KNBR. I hope you enjoy it.

The Patience Principle – Surviving Rough Financial Markets

Market TumbleChina Worries Rattle World Stock Markets
The Patience Principle

“Surviving Rough Financial Markets”

Global markets are providing investors a rough ride at the moment, as the focus turns to China’s economic outlook. But while falling markets can be worrisome, maintaining a longer term perspective makes the volatility easier to handle. A typical response to unsettling markets is an emotional one. We quit risky assets when prices are down and wait for more “certainty.”

These timing strategies can take a few forms. One is to use forecasting to get out when the market is judged as “overbought” and then to buy back in when the signals tell you it is “oversold.”

A second strategy might be to undertake a comprehensive macro-economic analysis of the Chinese economy, its monetary policy, global trade and investment linkages, and how the various scenarios around these issues might play out in global markets.

In the first instance, there is very little evidence that these forecast-based timing decisions work with any consistency. And even if people manage to luck their way out of the market at the right time, they still have to decide when to get back in.

In the second instance, you can be the world’s best economist and make an accurate assessment of the growth trajectory of China, together with the policy response. But that still doesn’t mean the markets will react as you assume.

A third way is to reflect on how markets price risk. Over the long term, we know there is a return on capital. But those returns are rarely delivered in an even pattern. There are periods when markets fall precipitously and others when they rise inexorably.

The only way of getting that “average” return is to go with the flow. Think about it this way. A sign at the river’s edge reads: “Average depth: three feet.” Reading the sign, the hiker thinks: “OK, I can wade across.” But he soon discovers the “average” masks a range of everything from 6 inches to 15 feet.

Likewise, financial products are frequently advertised as offering “average” returns of, say, 8%, without the promoters acknowledging in a prominent way that individual year returns can be many multiples of that average in either direction.

Now, there may be nothing wrong with that sort of volatility if the individual can stomach it. But others can feel uncomfortable. And that’s OK too. The important point is being prepared about possible outcomes from your investment choices. Markets rarely move in one direction for long. If they did, there would be little risk in investing. And in the absence of risk, there would be no return. One element of risk, although not the whole story, is the volatility of an investment.

Look at a world stock market benchmark such as the MSCI World Index, in US dollars. In the 45 years from 1970 to 2014, the index has registered annual gains of as high as 41.9% (in 1986) and losses of as much as 40.7% (2008).
But over that full period, the index delivered an annualized rate of return of 8.9%. To earn that return, you had to remain fully invested, taking the unsettling down periods with the heartening up markets, but also rebalancing each year to return your desired asset allocation back to where you want it to be.

Timing your exit and entry successfully is a tough task. Look at 2008, the year of the global financial crisis and the worst single year in our sample. Yet, the MSCI World index in the following year registered one of its best ever gains.
Now, none of this is to imply that the market is due for a rebound anytime soon. It might. It might not. The fact is no one can be sure. But we do know that whenever there is a great deal of uncertainty, there will be a great deal of volatility.

Markets PictureSource: MSCI data © MSCI 2015, all rights reserved. Indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is not a guarantee of future results.

Second-guessing markets means second-guessing news. What has happened is already priced in. What happens next is what we don’t know, so we diversify and spread our risk to match our own appetite and expectations.

Spreading risk can mean diversifying within equities across different stocks, sectors, industries, and countries. It also means diversifying across asset classes. For instance, while stocks have been performing poorly, often bonds have been doing well.

Markets are constantly adjusting to news. A fall in prices means investors are collectively demanding an additional return for the risk of owning equities. But for individual investors, the price decline, if temporary, may only matter if they need the money today.

If your horizon is five, 10, 15, or 20 years, the uncertainty will soon fade and the markets will worry about something else. Ultimately, what drives your return is how you allocate your capital across different assets, how much you invest over time, and the power of compounding.

But in the short term, the greatest contribution you can make to your long-term wealth is exercising patience. And that’s where Prudent Investor Advisors and its investment professionals can help you.

Past performance is not a guarantee of future results. Diversification does not eliminate the risk of market loss. There is no guarantee investment strategies will be successful. International investing involves special risks such as currency fluctuation and political instability. Investing in emerging markets may accentuate these risks. Fixed income securities are subject to increased loss of principal during periods of rising interest rates. Fixed income investments are subject to various other risks, including changes in credit quality, liquidity, prepayments, and other factors. All expressions of opinion are subject to change. This article is distributed for informational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services.

Prudent Investor Advisors, LLC is an investment adviser registered with the Securities and Exchange Commission.

Gary Allen on Business, Sunday, August 23, 2015

HomeHomezada                                                                                                                                                                             Are you ever overwhelmed with home ownership? A home represents so many relationships with the outside world. People dream about going off the grid, but that is only one of many interactions a household has.

What if you could manage the life-cycle of home ownership and all it entails within a single portal or interface? Sounds like a dream… I know. Well that is the promise of Homezada and one of its co-founders, Mr. John Bodrozic.

As a financial guy, I was always surprised by the lack of technology tools to efficiently manage a home. Excel spreadsheets and a paper trail seems so quaint and antiquated at the same time.

On this program, I discuss the benefits of an electronic portal to manage all of the relationships and the obligations that homeowners face.

Later in the program, I discuss various applications with John for the real estate and insurance industry. It turns out that Homezada can be a very useful tool for real estate agents and brokers along with a host of other real estate related industries.


John Bodrozic co-founded Meridian Systems in 1994 and sold it to Trimble, a public company, for an all cash mid-eight figure deal. Under John’s leadership, Meridian outlasted the dotcom boom that spawned over 200 companies that were also focused on construction management. After leaving Meridian Systems, John co-founded his new startup, HomeZada. HomeZada provides smart applications and recommendations to manage data about your home for insurance, maintenance, remodeling, and financial purposes. Save money, improve value, and get organized.


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