10 Essential Questions Retirees MUST Address With Their Advisor...

1. What are you currently doing in preparation for your financial future?

2. What do you like most about your financial situation?

3. What don't you like about your current financial position?

4. As you reassess your planning process, what kinds of improvements are you looking to make?

5. Describe the ideal financial professional or financial strategy?

6. What has been your past experience with preparing for you financial future?

7. What, ideally, would you like to accomplish with your financial strategy?

8. What other family members need to be involved or consulted in the decision-making process?

9. Where does leaving a financial legacy for future generations rank in your list of priorities?

10. What, if anything, keeps you up at night?

Chart of The Day - Average Pre-Election Year - Is 2011 Keeping Historical Pace?

Today's chart illustrates how the stock market has performed during the average pre-election year.

Since 1900, the stock market has tended to perform well during the first seven to eight months of the average pre-election year. For the remainder of the year, pre-election performance has tended to be more flat/choppy. In the end, however, the stock market has tended to outperform during the entirety of the pre-election year.

This pre-election year has followed the path of the average pre-election year rather closely with a rally up until mid-February and a correction into mid-March with the aftermath of the devastating Japanese earthquake and tsunami weighing heavily on the market over the past few days.

Chart & Commentary Courtesy of Chart of the Day

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday, March 18, the S&P 500 closed @ 1279, and that was...
  
   +6.7% ABOVE its 12-Month moving average which stood @ 1199.
   +7.5% ABOVE its 40-Week moving average which stood @ 1190.
    -2.1% BELOW its 10-Week moving average which stood @ 1306.


Therefore, the INTERMEDIATE-Term trend IS NEUTRAL to Moderately Bearish and the LONG-Term trend is BULLISH.

How An Immediate Annuity Could Save Your Retirement Plan...

According to Financial Research Corp., a Boston research firm, a 65-year-old retiree who withdraws an inflation-adjusted $45,000 annually from a $1 million portfolio of stock and bond investments has a 25% chance of running out of money before age 92.

But if the retiree gets the same annual income by investing $400,000 in an immediate annuity and withdrawing the rest from $600,000 invested in stocks and bonds, the chance of running out of money drops to only 6%, the research firm says.

According to actuarial mortality tables, a healthy 65-year-old man has a 33% chance and a healthy woman a 44% chance of living beyond 90.

For a 65-year-old couple, there's more than a 50% chance that at least one of them will live beyond 90.

Corporate Cash At A 50-Year High...

The cash and other liquid assets held by nonfinancial U.S. corporations has hit its highest level since 1963, which is a good news / bad news situation.

Nonfinancial companies are holding $1.9 trillion in cash, or 7% of all their assets, which is the highest level since 1963, according to the Wall Street Journal.

On the one hand, that’s a very healthy development as it reflects a successful round of cost-cutting and higher profits in reaction to the economic crisis.

On the other hand, it implies a troubling lack of confidence in the recovery, since these assets are not being deployed for hiring and expansion purposes.

Housing Double Dip?

Home prices are at near their post-bust lows. January saw a double-digit dip in the number of new homes sold. Then Robert Shiller, Yale economist and co-founder of the S&P/Case-Shiller home price indexes, dropped this bomb: "There's a substantial risk of home prices falling another -15%, -20% or -25%," he said.

Besides, a home purchase is more than a potential investment, especially for families planning to stay put for a while. The big plus for them is the pleasure of living in their own homes. "People should base their decision on affordability, lifestyle choices and home preferences, not on investment," said Lawrence Yun, the National Association of Realtors' chief economist.

Buyers may take heart from some positive recent indicators, such as an up tick in the sales of existing homes in January; a drop in vacant rental homes; and more investors snapping up properties.

There's also been an upswing in the number of high-end homes -- those costing more than $750,000 -- being sold, according to Yun. The wealthy buyers of these properties have lots of choices of where to place their money and many are investing in real estate. "The smart money is making their move," said Yun.

The Inflation Rate Is Only 1.2%? Say What?

"The inflation rate right now is 1.2% for all goods and services."

-Federal Reserve Chairman, Ben Bernacke, in testimony before the U.S. House Financial Services Committee, March 2, 2011.

According to a recent article on CNNMoney.com, the Fed is currently projecting inflation of less than +2% for each of the next 3 years. Really?

The bar chart above shows the change in the price of several commodities from 2000 to 2010. The majority, if not all of which would be considered by many American's to be "staple" items.

For the group as a whole, the average price increase was more than +100% for the 10-year period, which was an annual increase of about +6.5% per year, more than twice the annual inflation increase the U.S. government has been reporting for the same period!

Has the government been under reporting the inflation figures for the past 10 years? Do you believe that inflation is really running under +2%? The government couldn't be misleading us, could they?

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday, March 11, the S&P 500 closed @ 1304, and that was...
  
     +8.4% ABOVE its 12-Month moving average which stood @ 1203.
   +10.0% ABOVE its 40-Week moving average which stood @ 1186.
     -0.1% BELOW its 10-Week moving average which stood @ 1305.


Therefore, the INTERMEDIATE-Term trend IS NEUTRAL and the LONG-Term trend is BULLISH.

This Bull Market Is Lagging The Typical Bull Market By A Healthy Margin...

Even after almost doubling in 24 months, the S&P 500's two-year return is still -36% below the average bull-market gain of +131% since 1962, according to data compiled by Bloomberg and Birinyi Associates. 

The 730-day rally without a decline of -20% or more compares with an average duration of 1,407 days before a decline of -20%, the data show.

How U.S. Oil Consumption Compares to China's...

The U.S. consumes +21.7% of the world's daily oil production, more than double the +10.4% consumed by China. 

The USA's population is 311 million.  China's population is 1.319 billion or 1 billion greater than the USA.

Source: British Petroleum

 

The S&P 500: Bull Market Duration Perspectives...

7 of the last 10 bull markets for the S&P 500 stock index have reached at least 3-years in length and 5 of the 10 lasted at least 5 years.
 
The current bull market is the 11th bull for the S&P 500 since 1949 and it will mark 2-years in length on March 9, 2011.

Source: BTN Research

U.S Health Care vs. Socialized Medicine in Canada and England...

A recent "Investor's Business Daily" article provided very interesting statistics from a survey by the United Nations International Health Organization.

Percentage of men and women who survived a cancer five years after diagnosis:
 
     U.S. 65%
     England 46%
     Canada 42%

Percentage of patients diagnosed with diabetes who received treatment within six months:

     U.S. 93%
     England 15%
     Canada 43%

Percentage of seniors needing hip replacement who received it within six months:

     U.S. 90%
     England 15%
     Canada 43%

Percentage referred to a medical specialist who see one within one month:

     U.S. 77%
     England 40%
     Canada 43%

Number of MRI scanners (a prime diagnostic tool) per million people:

     U.S. 71%
     England 14%
     Canada 18%

Percentage of seniors (65+), with low income, who say they are in"excellent health":

     U.S. 12%
     England 2%
     Canada 6%

Hmm. No contest. The USA's private system wins hands down in every category. 

What's so great about socialized medicine?

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday, March 4, the S&P 500 closed @ 1321, and that was...
  
     +9.5% ABOVE its 12-Month moving average which stood @ 1206.
   +12.0% ABOVE its 40-Week moving average which stood @ 1180.
     +1.5% ABOVE its 10-Week moving average which stood @ 1301.


Therefore, the INTERMEDIATE-Term trend IS BULLISH and the LONG-Term trend is BULLISH.

The Economy: The Good, The Bad and The Ugly...

The Good: The manufacturing data in the U.S. continues to improve, at least within the confines of the major diffusion indices.

The Bad: The U.S. income and spending numbers were hardly stellar. It remains to be seen how much of the weakness was weather-related, but consumer spending dipped -0.1% in January - the first decline since April 2010. The fact is that consumers kept a lid on their spending even with the fiscal windfall in January, pushing the savings rate up to a four-month high of 5.8% from 5.4% in both November and December.

The Ugly: The housing sector remains in the dumpster.

Source: "The Good, The Bad and The Ugly" by David Rosenberg of Gluskin Sheff

Why The Washington D.C. Metro Area Has The Highest Per Capita Income In The Country...

Since the recession started private employment has declined by nearly -7% , a total of nearly -8 million jobs lost.

State and Local government employment, however, is essentially unchanged.

But Federal government employment has increased roughly +10%!

So that's where all that stimulus money went! To stimulate government, not the private sector?

Is that the reason why the Washington D.C. metro area (including suburban Maryland and Virginia) has the highest per capita income and lowest unemployment rate in the entire nation?

U.S Dollar - Safe Haven No More?

For years, whenever significant political or financial turmoil reared its head anywhere on the globe, investors would turn to the U.S. dollar as a safe haven.

Yet as the chaos in North Africa has grown over the past month, investors have largely shunned the dollar and sought shelter elsewhere. They have turned to other traditional islands of stability, buying Japanese yen and the Swiss franc.

What has especially raised eyebrows has been the move by investors to buy euros, a currency traditionally seen as a riskier prospect than the dollar, especially with the euro zone's debt problems still largely unresolved.

This has sparked a debate over whether the dollar has lost its safe-haven status.

"Over the last 20 years, people have always moved into the dollar on any sort of uncertainty in the global economic space, but what we've seen over the past two weeks is actually a terrific move out of the dollar," says Douglas Borthwick, a managing director at Faros Trading in Stamford, CT... 

So for now, the argument goes, there are better safe havens available to investors than the U.S. currency.

Even on individual days when events have sent a scare through the financial markets, the dollar hasn't benefited.

On January 25, when the protests in Egypt first flared up, the euro advanced more than two cents to almost $1.39.

This contrasts with other episodes of flight-to-safety currency buying in the past. During the 2008 global financial crisis, the dollar rose by roughly +24%.

Analysts at BCA Research also point out that some investors also are looking to gold as a more appealing safe-haven investment. "We would agree with this assessment," the analysts wrote.

Gold rose +5.7% in February, its biggest monthly gain since April 2010. With investors increasingly wary of the ability of the U.S. to solve its fiscal problems and the Fed perceived to be "printing dollars" as part of its quantitative-easing strategy to support the economy, there's less confidence that the U.S. dollar is "safe" in the sense, Mr. Borthwick says.

"It's the knee-jerk reaction that matters," he said. "Nowadays the knee-jerk reaction is buy euros and not to buy dollars. The mindset of buying euros is a complete switch."

Source: Wall Street Journal

Chart of The Day: Why The World Has No Choice But To Buy More And More Fertilizer

Why is everyone crazy about fertilizer and potash stocks?

One part of the equation is that demand for food is growing.

But there's another reason:

The clear trend in major regions is for less and less arable land per capita. Thus the only way to get more food is to get more yield from diminishing acres.

And that means: more fertilizer!

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday, February 25, the S&P 500 closed @ 1320, and that was...
  
   +11.6% ABOVE its 12-Month moving average which stood @ 1183.
   +12.5% ABOVE its 40-Week moving average which stood @ 1173.
     +2.0% ABOVE its 10-Week moving average which stood @ 1294.


Therefore, the INTERMEDIATE-Term trend IS BULLISH and the LONG-Term trend is BULLISH.

Chart of The Day: Oil Price Spikes and Sector Performance...

From Morgan Stanley's European analysts, a look at the relative performance of various sectors in the 6 months after (in dark blue) an oil price spike.

Fair warning for U.S.  investors: This report is based on European data, but I'm presuming the impact is similar for U.S. sectors.

Bottom Line:

Energy, health care and consumer staples perform best. Utilities, telecomms, industrials and financials are NOT negatively impacted after a sharp oil spike.

As one would expect, though, the consumer discretionary (cyclicals) sector suffers the most because consumer discretionary dollars are directed to the higher cost of energy-related goods in lieu of discretionary purchases.

And, on balance, European stocks suffered losses in the -10% to -15% range 6 months before and after oil price spikes, suggesting that stocks in general suffer when sharp oil price spikes blindside the markets.

Astronomical Surge in Price of Oil Possible...

Oil prices may surge to $220 a barrel if political unrest in North Africa halts exports from Libya and Algeria, Nomura Holdings Inc. said.

Crude futures rose to $97.97 in New York on Wednesday, February 23, the highest in more than 2 years, as the violence in Libya threatened to disrupt exports from Africa’s third-biggest supplier. Libyan leader Muammar Qaddafi vowed yesterday to fight a growing rebellion until his “last drop of blood.” Protests in Algeria led to the ending of a 19-year state of emergency.

“If Libya and Algeria were to halt oil production together, prices could peak above $220 a barrel and OPEC spare capacity will be reduced to 2.1 million barrels a day, similar to levels seen during the Gulf war and when prices hit $147 in 2008,” the Tokyo-based bank said in a report.

Annuities vs. Certificates of Deposit (CDs)

Annuities and CDs (bank certificates of deposit) are similar in that they are safe, secure investments with guaranteed rate of returns based on interest rates, both issued by large financial institutions, CDs issued by banks, Annuities offered by insurance companies, but they both possess inherent differences as well.

The big differences are that while Annuities offer everything CDs offer, they carry several advantages.

1. Generally Higher returns
2. Tax-Deferral
3. Liquidity

CDs do have FDIC protection to guard against bank or banking industry failure. Annuities also have safety measures put in place by the state to ensure Insurance companies have reserve pools in place.

Insurance companies may also be vetted for financial strength by obtaining their rating from objective rating firms -- Standard & Poor's, Moody's, A.M. Best or Duff & Phelps . The more solid the rating usually equates to a more solid financial backbone for the insurance company.

Higher Returns:
Annuities, like CDs, are hinged to interest rates. But when rates are low so are CD returns whereas annuities have a minimum guarantee in place, usually 3% or 4%. Your investment will never dip below the guaranteed minimum interest rate during times of falling or low interest rates. 

Again, low interest rates mean CD returns will be low as well. To offset the problem of low or falling interest rates, insurance companies equip annuities with guaranteed minimums. This is an agreed minimum rate of interest so that your investment is assured not to fall below the minimum performance even if CD rates do.

Tax-Deferral:
You pay annual taxes on CD interest earned without being able to withdraw funds until your investment term is over. With annuities, there is also a set term, but the earnings are tax-deferred. You only pay taxes on interest earned when money is withdrawn.

So with annuities the deferred tax on your interest remains in the investment earning you more and more money, instead of being paid out to state and federal tax agencies on a yearly basis. 

Liquidity:
CDs do not allow you to withdraw any monies during term. Period. Annuities have provisions that allow you to withdraw money, generally 10% of your account value annually plus many contracts allow you to remove the earned interest on a monthly basis.

Several other annuity contract provisions allow you access to all of your funds such as in the event you are hospitalized, undergoing a life-threatening illness, subjected to a permanent or extended stay in a nursing home, or other major calamities that affect you economically.

In addition, annuities can be structured to pay-out for the life of the owner over a fixed term such as 5 or 10 years, thereby spreading out your tax-burden and providing enhanced income security.

In short, Annuities offer enhanced flexibility... 

4th Quarter Corporate Earnings: Strong Results...

The health of corporate earnings has more to do with the movement of stock prices than any other measure.

And we just came through another strong earnings season for the S&P 500 as evidenced by the following...

3.42 stocks had a positive surprise for every 1 that was negative.  

1.88 positive estimate revisions ratio. Means that earnings estimates are moving up for the future.

Year over year growth of +43.7%.

Strong earnings that beat expectations and were revised upward are the major reasons why stock have performed so well in the past 3 months.

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday, February 18, the S&P 500 closed @ 1343, and that was...
  
   +13.1% ABOVE its 12-Month moving average which stood @ 1187.
   +15.0% ABOVE its 40-Week moving average which stood @ 1168.
     +4.4% ABOVE its 10-Week moving average which stood @ 1287.


Therefore, the INTERMEDIATE-Term trend IS BULLISH and the LONG-Term trend is BULLISH.

Women & Financial Advice: The Survey Says...

• 50% — Percentage of women who say they are open to and need help in some areas of managing their finances.
  
  
• 61% — Percentage of women who say trust and respect are their top criteria when selecting a financial advisor.
  
  
• 85% — Percentage of women who place a high value on income, principal or investment guarantees during retirement.

Long-Term Care Planning: Women Require More than Men...

Long-term care planning is essential for all workers, yet takes on a greater importance for women for several reasons.

First, according to the American Association for Long-Term Care Insurance (AALTCI), women are far more likely than men to require care.

Nearly 75% of nursing home residents are women, and women older than age 65 require care for an average of 3 years, roughly twice that of men. Therefore, it is not surprising that a significant number of long-term care recipients (66%) are women.

Single women represent the largest block of claimants (41%), while single men comprise the smallest (12%).

Finally, AALTCI estimates that women provide upwards of 60% of care needed for a spouse or family member, frequently while continuing to take care of their children and job obligations.

Widening T-Note Spreads: A Bullish Omen for The Economy

The difference between the yield on the 2-year Treasury note and the 10-year Treasury note was +2.91% on Friday o2/04/11, the largest spread ever recorded. 

Conventional economic theory argues that when the spread widens (i.e., the yield curve steepens), investors are optimistic about the strength of the U.S. economy and demand higher yields on longer notes to hedge their investments against inflation.

(Source: Treasury Department)

Chart of The Day: U.S. Exports to China Are Soaring

The conventional wisdom that China doesn't buy anything from America is a fairy tail!

Which begs the question:

"What kind of shape would the U.S. economy and U.S. employment be in if the emerging markets weren't buying our goods, services and technologies during the past 10 years?"

Vantage Point UPDATE: Intermediate-Term and Long-Term Trend Analysis

On Friday, February 11, the S&P 500 closed @ 1329, and that was...
  
   +12.2% ABOVE its 12-Month moving average which stood @ 1185.
   +14.3% ABOVE its 40-Week moving average which stood @ 1163.
     +4.2% ABOVE its 10-Week moving average which stood @ 1276.


Therefore, the INTERMEDIATE-Term trend IS BULLISH and the LONG-Term trend is BULLISH.