Hosts Rick Fergerson of Fergerson Financial and Mark Bellows of Gallina discuss various financial topics….
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And, what are some other indexes an investor should follow? Let’s start with some history about the Dow. The Dow Jones Industrial Average, the Dow Jones, the Dow 30, or simply the Dow, is a stock market index created by Wall Street Journal editor and Dow Jones Company co-founded Charles Dow. It was founded on May 26, 1896. The index is named after Dow and one of his business associates, statistician Edward Jones. It is an index that shows how 30 large publicly owned companies “Blue Chips” have traded during a standard trading session. The Dow is not a weighted index (does not take market capitalization into account) but a price-weighted index, meaning that stocks with higher prices per share affect the average more. The 30 companies included in the Dow are 3M, Alcoa, American Express, AT&T, Bank of America, Boeing, Caterpillar, Chevron, Travelers, Coca-Cola, DuPont, Exxon Mobil, General Electric, Cisco, Hewlett Packard, Home Depot, Intel, IBM, Johnson & Johnson, JPMorgan Chase, Kraft Foods, McDonald’s, Merck, Microsoft, Pfizer, Procter & Gamble, United Technologies, Verizon Communication, Wal-Mart, and Walt Disney. Although the Dow shows how the stock market is trading for the day, there are other indexes an investor should follow that will give the investor a better feel for the different segments of a market. The S&P 500 is a capitalization-weighted index of 500 stocks intended to be a representative sample of leading companies in industries within the US. The S&P MidCap 400 provides investors with a benchmark for mid-sized companies. The index seeks to remain an accurate measure of mid-sized companies, reflecting the risk and return characteristics of the broader mid-cap universe on an on-going basis. The Wilshire 5000 Total Market Index is a capitalization- weighted index and intended to measure the performance of the entire U.S. stock market.  It contains all U.S.-headquartered equity securities with readily available price data. The Russell 2000 ® Index is a capitalization-weighted index designed to measure the performance of the 2,000 smallest publicly traded U.S. companies based on market capitalization. The Nasdaq-100 Index is a “modified capitalization-weighted” index designed to track the performance of the 100 largest and most actively traded non-financial domestic and international securities listed on The Nasdaq Stock Market. The bond market also has several indexes an investor should follow such as the Barclays Capital Aggregate Bond Index, J.P. Morgan Government Bond Index, J.P. Morgan Emerging Market Bond Index and Barclays Capital Treasury and Corporate Index. Not considered an index but the 10 year Treasury note rate provides an overall indication on changes in mortgage rates. When the rate on the 10 year Treasury note changes, mortgage lenders will react and change the current rate for 30 year fixed rate mortgages. Historically, the 30 year fixed rate mortgages have been about 1.7% to 2% higher than the 10 year Treasury. These are indexes that Fergerson Financial will follow to understand the market changes during the day and the trends over a period of time. You should continue to follow the Dow but keep in mind many others indexes are available to the investor that give the investor a better feel for the different segments of the market.   Fergerson Financial Experience/Trust/Results…it’s what you expect.
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Why should an investment strategy be important to you? Let me ask you a couple questions. Is it a long term strategy or a short term strategy based on your time horizon? Are you targeting a certain return on your investments? What is your level of tolerance? Are you monitoring your investments? If you are investing in real estate, common stock or equities, are you adequately diversifying your assets? Do you know the fee structure of your investments? If you currently utilize an advisor, are your fees transparent? These are just a few of the questions that you should be asking yourself. To help, let me provide a list of variables and hierarchy of decisions that should be important elements of an investment strategy. Asset Allocation Variables: Time Horizon Risk Tolerance Expected Return Asset Class Preference Tax Status Hierarchy of Investment Decisions: What is the time horizon of your investment strategy? What asset classes will be considered? What will be the mix among asset classes? What sub-asset classes will be considered? Which managers/funds will be considered? Remember it is your money and you want to make sure you have a defined investment process in place to determine your investment strategy. It is an important piece of your financial and retirement plan. The best way to describe Fergerson Financials investment approach is personalization. Each client is different and personal attention is needed for each investment portfolio. Fergerson Financial will provide you with Fiduciary standards of care which incorporates asset allocation variables, hierarchy of investment decisions and many other practices to ensure you have a sound investment strategy for your financial and retirement plan. Experience, Trust and Results…..it’s what you expect.
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All financial planners are not created equal. With the CPA as a foundation, a CPA/PFS is uniquely qualified to be your trusted financial advisor. A Personal Financial Specialist (PFS) is a Certified Public Accountant (CPA) who meets the financial planning requirements established by the American Institute of Certified Public Accountants (AICPA). The credential is awarded only to CPAs who demonstrate the requisite experience, education, examination, and ethical standards established by the American Institute of Certified Public Accountants. Why is a CPA/PFS beneficial to you?  Because not only are they qualified in accounting, they are also a financial advisor who follows fiduciary standards; has experience as an independent registered investment advisor; and has experience in the investment or mutual fund industry. The financial world has become a very complex place. Even if you’re used to handling your own financial affairs, the time may be right to consult a CPA/PFS who can review your financial situation and offer suggestions that may help you reach your financial goals. For example, if you have complex investment opportunities or unique financial requirements, you need someone who can help you navigate through those complex scenarios. A CPA/PFS can offer the analysis you need to answer these and other important financial questions. Experience, trust and results…it’s what you expect.  
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Here are my top 5 questions anyone should ask a Financial Advisor before they commit to the relationship. 1) Are you under a suitability standard or a fiduciary standard? A fiduciary relationship is viewed as the highest standard of customer care available. A fiduciary relationship is important as you want to make sure the advisor is looking after your best interests. 2) What are your credentials and do you have significant experience in the financial industry? Credentials such as CPA/PFS, CFP, and CFA are highly regarded. When the advisor holds one of these credentials, it demonstrates a level of education, experience and training. Credentials add relevance. Financial industry experience in the mutual fund, accounting, and retirement arena adds another level of experience. Combine credentials and financial industry experience, the advisor becomes a valuable resource to help make important decisions about your money. 3) Are your advisory fees transparent and how are you compensated? A quarterly statement disclosing fees paid to the advisor including the calculation of their advisory fee helps you understand the fee arrangement and provides transparency. Asset based fee or fixed fee or hourly fee is preferred. If the advisory fee is based on a commission, you should make sure you understand how the commission is calculated and how a commission’s structure is different in various investment products. If the advisor is upfront about their advisory fees, it will help create a positive experience in your relationship with the advisor. 4) Do you provide an investment management agreement or financial planning agreement outlining the services you provide? An agreement provides a level of understanding between both parties and should be an integral component of your relationship with the advisor. To provide investment management or financial planning services without an agreement is not right. It is your money so you should make sure an agreement is included, reviewed and signed. 5) Have you been disciplined by the SEC or State? You want an advisor that you can trust. As such, you should spend the time to research the advisor’s background by checking FINRA.org. FINRA Broker Check provides information about current and former FINRA-registered brokers and brokerage firms. It also provides information about investment adviser firms and representatives through the Investment Adviser Public Disclosure website. Trust should be important to you not only through a background check but also that the advisor adheres to a professional code of conduct and ethics.
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