"You Can Observe a lot Just By Watching"

Baseball legend Yogi Berra was as famous for the things he said as what he did on the field.  Many of his quotes don't make sense on one level, and yet they may on another.  For example:

"It ain't over till it's over."

"When you come to a fork in the road, take it."

"This is like deja vu all over again."

"You can observe a lot just by watching."

Berra came to mind recently as I thought of the many conversations over the years with people who think they don't pay any fees on their investments.  On one level, they don't see any cost on their statements, so it must not exist, right?  On another, one man's revenue is another's expense.  If you're not paying anything, then they're not making anything, and I highly doubt businesses function on goodwill alone.  Ignoring the possible types of relationships momentarily (see my previous post, Form Follows Function), it's clear that many people don't understand that they are paying fees one way or the other.

To simplify things, I like to break down costs into the following three areas when I'm comparing competing options.

Types of Costs

1. Compensation to the Representative = Millions of people in the US go to work for a company, and in exchange for their efforts, they receive compensation.  It is no different with your financial representative.  Whether he/she works for a Registered Investment Advisor or for a Broker-Dealer, your representative is in business to receive compensation.  How they go about seeking profits or providing services may be different, but the goal of every business is to generate profits.  
2. Costs of the investment product = These costs may go include several items, such as a markup/markdown, commission, expense ratio, mortality expense, trading costs, or fee.  These costs usually goes to the company for creating and/or distributing the investment product, and may help pay for items such as compensation of their employees, marketing, or overhead.
3. Recordkeeping or administrative costs = The firm you deal with tracks and communicates (physically or electronically) details of transactions and of your portfolio through  trade confirmations &/or statements.  Firms incur costs for tracking this information (for example, custodians, transfer agents, and broker-dealers), and often pass on these costs to clients.

I hope you find this post and others in this blog to be both educational and helpful.  Let me know what your thoughts are by posting on either the LinkedIn or Facebook pages for Locker Wealth Management, by emailing me directly at alex.locker@lockerwealth.com, or contacting us through our website.

Happy Investing!

The Agony of a Football Fan

Football has taken over this time of year for many sports fans (including me).  As I watched my team lose a game and listened to the post-game TV commentary, it made me think of how we often react to the stock markets.  Every game provides a roller-coaster of emotions.  Win a game & you're buying Super Bowl tickets.  Lose a game & you want everyone fired or traded. Your legacy is based on 4% of days during a 5 month period, and every week you get a 6-day performance review from self-proclaimed bosses despite the fact they are largely unqualified to do so.  It's even more noticeable because you only get 16 chances per season, as opposed to 82 in basketball or 162 in baseball.

Would you invest this way?  If so, STOP!  Focus on the "season", not the "session".  It's your life, not fantasy football!  Remember, your enemy is RISK, not another person, institution, or index. Try this instead as your new "roster".

• Owner = You (after all, it's your money);
• General Manager & Head Coach = Your financial advisor (Get the right people in the right positions with the right strategy);
• Assistant General Managers = Tax, legal, & other business advisors;
• Position Coaches = Money managers or mutual fund managers;
• Players = Individual securities;
• Offense = Stocks (Appreciation is how you move forwards)
• Defense = Bonds, Cash, & Insurance (Protect your position as much as possible)
• Special Teams = Alternative Investments, IPOs, & strategies with higher risk

The "plays" that are called will vary based on the condition of the markets, the economy, as well as your personal situation and preferences.  Most coaches have a sheet with plays for given situations that they've developed ahead of time.  In other words, they know what their choices are before the scenario arises.

Perhaps it's time for you to consider us as your new General Manger.  Visit "Our Website" above to learn more and schedule a phone consultation.