Retirement Accounts

For an serious read on objectivism, the philosophy of Ayn Rand, and how it has led our government for years: http://www.nytimes.com/2007/09/15/business/15atlas.html?pagewanted=1&_r=2&th&emc=th

And, as we watch performance in our retirement accounts, 70% of funds under-perform their benchmark every year. It's sad. On average, an actively managed fund returns 2% less (after fees) than the index it's measured against. A $100,000 portfolio that compounds 10% per year will grow to $1.7 million in 30 years. The fund with a 2% drag? Just $1 million. That's a $700,000 difference.

The gig is too obvious. The guys that manage the fund get 1 to 2% of your investment every year, no matter how they perform. More important, mutual fund regulations meant to protect investors actually make matters worse. For example, some rules mandate diversification. So instead of owning his 10 favorite stocks, a mutual fund manager may be forced to own more than 100 stocks... and dilute returns in the process.

Rules can also force managers to sell winning stocks prematurely, as their increased presence in the portfolio violates the diversification mandate. Also, size rules prohibit large-cap mutual funds from owning mid- or small-cap stocks, even if it's the best thing to do at the time.

For starters, the compensation structure is flawed. Mutual fund managers get a slice of your investment (typically 1%-2%) every year, no matter how they perform. Because they're paid based on total assets under management, not performance, managers shift focus from returns to fundraising.


Other rules prevent funds from buying companies in the midst of corporate restructuring or those temporarily losing money... or owning a stock that trades too few shares a day... or shorting stocks.

So, then we watch Wall Street, which devastated the world economy, and a few of the slime (like Goldman Sachs) are raking in 900k a year for each employee, and BlackRock has 42 million in billings already in being in charge of figuring out part of the derivative mess.

We're soon introducing another website, www.bluechipoptions.com that helps trade in more market volatility, as there is truly money to be made in the market today.

Just look at our call successes last week. We made serious money.

And, it's harder to understand the volatility. I consider VIX a statistical indicator now, and nothing more. Too many anomalies. While the DJIA,S&P, and NASDAQ each surged about 3% or more, triggered by euphoria, the ViX moved up from 25.02 to 25.89. This wasn't supposed to happen, it's the opposite, so it was a rarity in the fear gauge. Jason Goepert said that, "this was the only time in history that both the Vix and S&P500 rose more than 2.5% on the same."

In the other two instances, the markets declined soon thereafter.

What i see in this ViX anomaly is a unique combination of optimism (not greed) and fear, battling it out.

This shows Friday well. A market that hit highs of 8794 on the theoretical Dow twice, but hovered for the day in the 8600-8700 resistance area. Calls were available and tightly profitable. Puts were also available, and we now have open signals.

Study our Dow projections. We update through the week, and should be used in conjunction with the Dow or OEX projections you take throughout the day.

Last week we made crazy money. Let's start with prudent risk on our open trades.

Do NOT trust false facts, or be led by optimism or pessimism, but realism, with a sense of "what the ___?"