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July 05, 2012


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The "No, that's a bad idea" is hard to overemphasize. I like that it came first in the list. It certainly reminds readers that they do well to consider financial advisers as assets.

Also for the investor trying to tackle his own investing, stopping to repeat this phrase to himself and consider may be extremely beneficial. There are many investors who read the ins and outs of rebalancing and managing their portfolio in hopes of returning a fraction of a percent of their investment but then cost themselves ten times that amount in a hasty emotional decision without pausing to counsel themselves.

I'm now seeing advisors charge a fee for a "plan" and then an annual renewal fee in addition, PLUS the funds often may have loads, 12-b1's etc., seems the middle class can't escape

I strongly believe that it's impossible for any 3rd. party to be able to manage my investments to my satisfaction so I have managed them myself since I retired. I spent my working life as an aerospace engineer, made my first computer run in November 1956 on an IBM 704 mainframe that used vacuum tubes and ended my career in September 1992 using what was then the fastest computer in the world, the Cray XMP4.

After retiring I subscribed to a comprehensive mutual fund and market index database that was updated every market day using a computer modem. The database also came with some very good charting and analysis software that ran under the MS-DOS operating system, it was later upgraded to Windows, and its capabilities were expanded greatly.

Using that database and software, and making my own investment decisions my annual rate of return from 12/28/1992 until 12/31/2007 was 21.29%. I used only no-load mutual funds and never used margin. At the end of 2007 4 market indicators that I was using each looked very indicative of bad times ahead. Also at that time my portfolio had grown by a factor of 18 and I decided it was a good time to move my investments entirely into the shelter of CDs, Corporate bonds, and Muni bonds which would be held to maturity, thereby reducing stress and worry and avoiding future losses. Since then my annual rate of return has been a steady 4.93% (tax free and tax deferred) regardless of stockmarket volatility. A few years ago Fidelity put my accounts under the management of a VP and branch manager and made me a member of one of their private client groups but I stll make all of my own decisions and seldom have a need to meet with him.

The other thing I like about bonds is that once you have converted your portfolio into fixed income bond investments, unlike mutual funds, there are no management fees whatsoever. Fidelity also provides a large inventory of fixed income investments that are both new issues as well as issues in the secondary market.

The 4 indicators I was watching back then were the (New Highs - New Lows), and (Up Volume - Down Volume) summation indexes for the NYSE and the NASDAQ. In particular the negative chart pattern consisted of a series of "Lower Lows" and "Lower Highs" for both indexes.

@Old Limey wrote:

>I strongly believe that it's impossible for any 3rd. party to be able to manage my investments to my satisfaction so I have managed them myself since I retired.
Yes, but I think you are very much the exception. If you were to pass away, could your wife manage the portfolio? Even now that it is much more conservative?

I am comfortable managing my portfolio, but I think my wife would be uncomfortable managing anything other than a CD ladder. An additional advantage for her is that with a financial advisor she may be able to have a non-zero stock and bond allocation to help keep pace with inflation.

-Rick Francis

Whenever I have met with the executive that manages the private client group I am in at Fidelity, my wife also comes along so she has got to know him. However to answer your question she is not computer literate, recently gave up driving, and knows nothing at all about investing. Our middle daughter, age 51, is well educated, computer literate and good at Math, as well as being our executor. She also has a muni bond portfolio 77% the size of ours. I plan to teach her how to manage all 14 of the family's Fidelity accounts but have been procrastinating about doing it. Since she will also be the beneficiary of our muni bond portfolio after we are gone I need to take care of things before it's too late. It doesn't take much work but every month, the interest that comes in has to be reinvested and occasionally a group of bonds mature or get redeemed which also have to be replaced. It's not a lot of work but it does require familiarity with Fidelity's website and their "Active Trader Pro" software which she doesn't currently have.

This just emphasizes the downside to doing things of this nature for family members, they never learn how to do it for themselves. I'm in the same predicament where cooking is concerned - I know nothing and have no interest in learning.

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