I consider myself an above average stock picker. I try to do a lot of research and find strong companies. Something I struggle with is when to sell. Many sources, such as The Market Guys, advise adopting a hard and fast rule and stick with it. They advise selling a position when it will cause your overall portfolio value to fall by 10%. This seems sound, but I tend to think it takes decision making out of the equation. Other sources base sell decisions solely on the fundementals or technicals of that specific investment. Myself, I use the 200 moving average as a rough guideline. I absolutely will sell if the stock drops 15% below the 200 moving average. I will also sell if my follow up research highlights something very ugly. What does everyone else do to decide when to dump a stock?
Awhile back Kiplinger’s named Albuquerque the 3rd smartest place in the United States.
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Here is the latest carnival of personal finance:
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In March of this year, I heard about a website called Marketocracy.com operated by Ken Kam. On Marketocracy you start with $1,000,0000 and built a customized mutual fund for yourself. Ken used information from his top amateurs to perform very well in MSN’s Strategy Lab contests.
Because of moving, job searching, and getting settled, this became a study in the merits of a Buy and Hold strategy. No changes at all since I made the initial purchases on March 21, 2006. As the year comes to a close my Marketocracy account is up 43% YTD. Here is the graph showing my account in yellow and the SP500 in green.
I like the financials sector and have about 66% there. The beta on this account is 2.14. Here were my two best performers. GROW is U.S. Global Investors a mutual fund company with a strong background in commodities. As commodities becomes more attractive to retirement investors, U.S. Global Investors has reaped solid returns.
Sorry it has been so long since I posted. Here is an article I wrote awhile ago for Investorgeeks.com. Protection of assets should be concern of all investors.
Do I Need It?
Currently, about 1 and 5 Americans over age 65 are utilizing some form of nursing home care, assisted living, or in home assistance. The average cost of nursing home care is $150 dollars per day in the United States. Let’s assume that a husband and wife enter a nursing home at age 70. If they both live until age 75, they would have exhausted a non-inflation adjusted $547,500 of a retirement nest egg. If you have a nest egg over $2 million, you could be fairly comfortable self-insuring yourself and a long term care policy would not be as attractive.
What about Medicaid?
In most states, to be eligible for Medicaid assistance, you must have less than $2000 in assets. Your home, one car, and $30 in monthly income are excluded from this provision. Every other asset or income stream (including pensions and social security) goes to the state. Medicaid also is much more restrictive than long term care insurance. In many states, Medicaid will only pay for assistance in nursing homes that accept Medicaid patients. You would not have the comfort of receiving assistance in your own home like long term care insurance could offer you.
Going on Claim
To be able to start receiving your long term care benefits, most policies require you to have the inability to perform at least two activities of daily living (ADLs). These activities include being able to bathe yourself, use toilet facilities, eat unassisted, and get out of a bed or chair without help. I know, terrible things to think about, but realities for many of us as we age. Many policies also allow you to go on claim if you fail specific mental acuity exams.
Policy Options and Opinions
Policies can be structured for certain periods of coverage. If policy pricing is not an issue, opt for the lifetime coverage. People are living longer and longer even if their faculties continue to diminish. Elimination periods are another consideration. Usually, going for the 90 day elimination period (similar to a car insurance deductible) can substantially reduce policy rates. Choosing the 5% compounded inflation adjustment also provides excellent safety as health care costs continue to rise. The biggest piece of advice I can give is to shop around. Compare apples to apples with the big providers like John Hancock, Genworth, and Met Life.
When Should I Buy?
Based upon some non-scientific research I conducted by calling agents at John Hancock and Genworth, I discovered that the ideal age to purchase long term care insurance is your late thirties. The underwriters will see you as healthy, and settled down raising a family. You can take advantage of acting fast and buying a ten-pay lifetime benefit plan. You pay level premiums for ten years after which the policy is good for the rest of your life. In a few years, this will be what I purchase for my wife and I. Waiting until your early fifties, the policies would still be affordable for a healthy individual. Expect to pay about $2,000 per year for a lifetime coverage plan with $200 in daily benefit. If you wait until your early sixties, that same plan could cost you over $4,000 per year.
As a potential long term care insurance purchaser, you should be aware that long term care insurance is very lucrative business for broker-dealers. The broker-dealer you are working with will scoop up about 50-60% of your first year premium payments. In years 2-10, the broker-dealer will receive 10% of your ongoing premium payments. Just some information to be aware of. Analyze your own situation. Determine if your investment plan will allow you to self-insure or if you need the protection that long term care insurance could provide you.
Please check out the most recent carnival of investing hosted by Blueprint for Financial Prosperity. Flexo’s article on exchange traded funds was very well done.
I have had the website as a link on my blog since almost the beginning. About a month ago, I was selected to become a contributing writer. I think you will love what InvestorGeeks is and what it will become in the future. Check out the articles and participate in the discussion boards.
Check it out here: http://www.investorgeeks.com/
Also, check out my first article on InvestorGeeks: