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Investment Risk - How Much Should You Tolerate?

Posted by Larry Jones on Sep 28, 2021 9:30:00 AM

Are You a Risk-Taker?

Mr. Allen is the CEO of a large manufacturing firm, which has done very well over the last ten years. Lately, in considering expansion plans, it was brought to his attention that an attractive opportunity was available in another country for the location of the new plant. Labor costs would be much lower, and access to raw materials was also easier there, and he could count on a much higher return on investment.

On the other hand, this particular country has a history of political instability. In fact, powerful factions in this country were actively working toward political revolution and a commitment to nationalizing all industry inside it's borders, effectively taking over all foreign investments.

Should he locate the new plant in this country? How will Mr. Allen decide?

How about you? What would you do?

The answer you'd give reveals a lot about your personal attitudes toward taking risk.

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Topics: investment risk

Investment Risk-> (Part 2) Are You Prepared for a Correction?

Posted by Larry Jones on Sep 23, 2021 9:30:00 AM

Market Moods and Why They Swing

In the last post I discussed the fact that the stock market is a paranoid schizophrenic! Most of the time changes in the market have absolutely nothing to do with the underlying value of the firm represented by that stock. Just because the value of Microsoft is $100 a share on Monday and $80 a week later does not necessarily mean that the product that Microsoft puts out has just become junk. No, more likely it's because investor sentiment has changed due to some report, causing the stock price to fall. (Caveat: sometimes prices DO fall because the company is struggling...the saavy investor needs to do his research). The true value of Microsoft is probably about what it was a week ago.

There is however, a school of thought, known by the way as Modern Portfolio theory, that states that the listed price of a stock on any given day accurately reflects a true valuation of that firm. The reason for this is that, due to technology and full disclosure rules, there is nothing that is unknown to the investor, if he does his research. Therefore, Mr. Market has correctly evaluated the price of the stock for you. In other words, there's no use in trying to beat the market because you cannot do it. And in fact, the vast majority of professional money managers do not beat the market! Think about are quite likely paying your stockbroker 1-1.5% in fees to do something you could do yourself for next to nothing!

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Investment Risk-> Are You Prepared for a Market Correction?

Posted by Larry Jones on Sep 21, 2021 9:30:00 AM

Riding the Gravy Train

As last year came to a close it seemed that the message from the financial markets was that "happy days are here again." After one of the longest bull markets in the history of Wall Street, many were feeling that the sky is the limit when it comes to investing. 

I must admit that it's very hard to face the possibility of a downturn when portfolio statements are reflecting significant gains. I believe that most investors are, at heart, optimists, otherwise they wouldn't be investing, but sometimes our optimism may lead us astray. Ben Bernanke once famously commented that the market was showing an "irrational exuberance," a comment that I'm sure he soon regretted as the market reacted in a negative fashion to his remarks. 

Are we experiencing "irrational exuberance" once again?

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Debt is the Enemy of Freedom

Posted by Larry Jones on Sep 16, 2021 9:30:00 AM

I Owe, I Owe, It's Off to Work I Go

A number of years ago I met with a lady who was turning 65 years old, and going onto Medicare. She was all alone in the world, except for a couple of unemployed children who occasionally needed to borrow money from Mom. She shared with me that she collected $714 a month from social security, still had 25 years to go on paying off her mortgage, and was making two car payments, one for her and one for her son. Social security was her only income.

How does anyone survive on such an income?


If you have read my book, "Compounding Wisdom" you'll recall that one of the Biblical financial principles is to avoid debt as much as possible. Although a little debt can be used as a healthy leverage in some cases, too much of it will begin to suck the life out of your finances. How long do you think that you can get away with paying off your Visa card with American Express? Common sense will tell you that eventually that train must come into the station.

It's nonsense to believe that you, as an individual, can use credit to pay off more credit for the rest of your life. Interest will begin to compound against you until you reach the point where you just can't pay anymore. At that point your financial freedom is lost and you will be dancing to someone else's tune for awhile.

Yet we as a nation are being asked to believe that these same Biblical principles don't apply when it comes to Macroeconomics.

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College Planning: Do you know where the money is coming from?

Posted by Larry Jones on Sep 14, 2021 9:30:00 AM

You have just experienced a major paradigm shift:

As you stand in the maternity ward at 3:12 AM staring at little Bernie, you can't believe how your life has just changed. An hour ago life was all about you. Now, as Junior grasps your finger and holds on for dear life, you realize for the first time that your entire life from now on will revolve around this little fellow who's counting on you. You'd happily step in front of a bus for him if necessary.

The doctors come excitedly into the room to tell you that little Bernie holds the hospital record apgar score! He'll surely be a neurosurgeon or nuclear physicist.

But Harvard or Oxford won't be cheap....

How will you manage to pay for his education (even though you're sure the little genius will graduate in only 2 years)?

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Topics: College Planning

4 Good Reasons to Avoid NavStar Financial Services

Posted by Larry Jones on Sep 9, 2021 9:30:00 AM

My Bias is Showing

I'll have to begin this blog by pointing out that if you are looking for a completely unbiased opinion of NavStar, this ain't it. I realize that objectivity is everything these days, and we are constantly told that we should "keep an open mind." After the last election season, I've come to the conclusion (which blows that whole open-mind thing) that some of our minds are so open that the wind blows in one ear and out the other. 

NavStar Financial Services is my baby. I have built it from scratch and not every day has been glorious and fulfilling. There has been a lot of blood, sweat, and tears along the way, and I'm grateful for every client that I have today. So don't expect me to be unbiased about it. And so, keeping that in goes.

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Topics: Financial Services

Tax Strategies: Are Municipal Bonds Really a Good Idea?

Posted by Larry Jones on Sep 7, 2021 9:30:00 AM

Everybody "knows" that folks in high tax brackets should hold municipal bonds in ther portfolio. Right?

I've seldom met a holder of municipal bonds who weren't extremely proud of their accomplishment. After all, they're getting growth at the expense of Uncle Sam. That just has to be good.

But the truth is that muni's may actually create more tax problems than they solve. Other tax strategies might work better.

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Topics: Tax Strategies

Asset Protection: Do You Have an Umbrella Plan

Posted by Larry Jones on Sep 2, 2021 9:30:00 AM

A Night to Remember

Ed and June Griswald are fairly affluent. They are conscientious parents of two teenage children, Bianca, age 17 and Carl, 18. One evening, Ed and June come into possession of two tickets to watch Duke and Carolina play a basketball game. The game is two hours from home. They decide to attend, and on a Friday evening, they travel to the stadium to watch the game. It promises to be a great game, and they intend to get a hotel room for the night after the game, and return home the next morning. They have no concerns about their two angelic children. They know that they'll probably watch a movie on TV and go to bed by 10.

Twenty minutes after they leave for the game, the friends of Carl and Bianca begin arriving. There is a well-stocked liquor cabinet at the Griswald home, which the angelic kids soon locate. The next few hours are spent in great fellowship and revelry, and a good time is had by all. 

After the game (where Carolina handily trounced Duke using only their third string players, 105 to 40), Ed decides to cancel the hotel and travel on home. About an hour away, June calls her two little angels just to make sure they aren't worried about them, and tells them they'll be there soon.

Panic ensues at the home of Griswald as the ne're-do-wells leave the scene. Unfortunately, one of the teenage drivers, having had way too much to drink, loses control of his car on the way home, and crashes into a telephone pole. He ends up with a broken spine, and is paralyzed from the neck down. Local attorneys go into a frenzy.

By the time they have finished with the Griswald family, and after their homeowners and car insurance policies have paid off, they are still on the hook for over $1.5 million dollars!

It was a night to remember.

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Topics: asset protection

In Defense of Used Car Salesmen

Posted by Larry Jones on Aug 31, 2021 9:30:00 AM

Did you see the 1980 film "Used Cars?"

The film starred Kurt Russell as a sleazy used-car salesman. The film drew laughs because it so fit the sterotype that American's have regarding the person who may have sold them their last car.

It just so happens that on the "trustability" scale, car salesman don't seem to rank very high. I'm beginning to wonder if we're not being too hard on them.

The recent TV series about Bernie Madoff detailed how one of the greatest financial criminals in U.S. history systematically stole somewhere between $20-50 BILLION from investors through an elaborate Ponzi scheme, which went undetected by the SEC for decades. Let's see the car salesman top that! ( I won't even go into how a politician can be nearly broke when they enter politics, and be worth hundreds of millions years later, while earning nothing more than a public servant's salary...)

Most people have a very happy relationship with their stockbroker. Many times I have asked folks, "how's your portfolio doing?" only to have them tell me something like, "it's been doing good lately." When I ask them for specifics, many times they can't tell me what "good" actually means. Often, when I analyze their holdings they have in fact been doing good, for the last year or two, but they are very surprised to discover that they are no better off than they were ten years ago! Why did they stay in the holdings they were in? They trusted their stockbroker.

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Tax Strategies: The Kiddie Tax?

Posted by Larry Jones on Aug 26, 2021 9:30:00 AM

A Tax on Kids?!

"Wait a minute, Larry. I just put one child in college, braces on another one, and these happy meals are killing me. Now you're telling me there's a tax on my children?"

Well, not directly, but Uncle Sam may have his eye on them. Why?

One of the more popular tax planning ideas is the shifting of income to a taxpayer who is in a lower tax bracket. Parents generally have a higher income than their kids, and so investment assets are often transferred to young children, through the use of trusts or custodial accounts, thus taking advantage of lower rates.

Is this a good idea? Does this lower the amount of taxes you'll have to pay?

Well..... no.

There's not much that the average taxpayer hasn't thought of that the IRS hasn't also considered. Families are today prevented from shifting large amounts of unearned income to children in order to shield the funds from taxation. The provision that limits this income shifting is known as the kiddie tax.

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What you don't know can hurt you!

As a fiduciary I am required to always act in your best interests, and as a professional planner, it's my job to be familiar with all types of possible solutions and financial vehicles. In short, I have no interest in selling any particular product or any affiliation with a particular company. I work for my clients.

Are you:

  • concerned that your tax bill is too high?
  • tired of watching your nest egg decline by significant amounts every 5-7 years?
  • wishing you could find more free time?
  • looking for ways to help protect yourself against litigation that could destroy all you have worked for?
  • worried that Uncle Sam is going to enjoy your retirement more than you are?

If any of the above describes you and you'd like to get a question answered then just click the button below and we'll be in touch.

Let's Meet!

p.s. we have the ability to meet virtually regardless of your location! Give us a shout!


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