91视频

Dear Mr. Berko: I鈥檓 a 67-years-young woman who recently retired from a good job in Miami. I rolled over my 401(k) into an independent retirement account with a Miami broker who solicited my business after we met at a seminar. I鈥檝e never really been in the stock market before, and I鈥檓 nervous because I don鈥檛 know if I鈥檓 doing the right thing. Since this broker began handling my portfolio in the middle of March, he made 192 trades in those three months. As you can see from my April, May and June statements, the value of my account has increased from $360,000 to $391,000. While that鈥檚 good, I鈥檝e been having trouble sleeping and have really tried counting sheep. I don鈥檛 want to bite the hand that feeds me because he鈥檚 doing well. Please give me some comforting advice.

C.N.
Boca Raton, Fla.

Dear C.N.: Keeping track of your portfolio is like playing Whac-A-Mole. There are so many trades in your account that it鈥檚 almost impossible to know what鈥檚 going to pop up next. During the second quarter of 2009, April through June, your broker made 192 trades 鈥� 86 buy trades and 86 sell trades 鈥� in the 63 days the market was open. Your account was plus 8.6 percent, 35 percent annualized, even after all those commission costs, which had to be in the neighborhood of $36,000.

Frankly, I doubt that the Vanguard funds or the Fidelity funds generate that many trades in 63 market days. When you have trouble sleeping at night, you don鈥檛 have to count sheep; you can count trades. Basically, during the months this guy has handled your portfolio, your gains have matched the movement of the Dow Jones industrials averages. Good grief! You could have done just as well and would have slept much better if you had owned the Dow Jones Industrial Average Exchange Traded Fund (DIA-$87.27). These shares are called 鈥渄iamonds,鈥� and that 鈥渂rokster鈥� could have bought them in April at $75 with just a onetime commission cost.

Now, I don鈥檛 know how they do things in a foreign country like Miami, but this trading is shamelessly excessive and darned dangerous to your sleep patterns and financial health. Unfortunately, neither the New York Stock Exchange nor the Securities and Exchange Commission nor the Financial Industry Regulatory Authority requires stockbrokers to have a fiduciary responsibility to clients. Close that account immediately and say a couple 鈥渢hank-you鈥� prayers that you haven鈥檛 lost any money. Then find a registered investment adviser. These professionals are required to act in a fiduciary manner.

Almost everybody did well in those three months, so your brokster鈥檚 record isn鈥檛 much to brag about. When you鈥檝e turned that account into cash, put the proceeds in a money market account for a while. Cash gives you time to think, and you need to do some hard thinking 鈥� including a visit to your CPA or accountant for some conclusive 鈥渢hinking advice.鈥�

The first question you must ask is: What are my objectives? I hope your answers are safety, income, income growth and principal growth, in that order!

Your next question should be: 鈥淗ow much safety (risk) can I handle?鈥� I hope your answer is that you want minimum risk.

Now, your next question will be: 鈥淗ow much income do I want my account to produce annually?鈥� Hopefully, your independent retirement account income can comfortably supplement your pension and Social Security.

Next, ask: 鈥淗ow much income growth do you need?鈥� You may not need any dividend growth or, perhaps, just minor income growth. Some folks may require a 鈥渓ittle more than the inflation rate.鈥� That may be difficult without sacrificing the safety you need. However, if you can generate principal growth of 3 percent to 4 percent annually, that should help you keep current.

These questions will help determine how your account should be managed and help you find a broker who will work to meet your goals 鈥� not his. These objectives will also give you a benchmark to measure your broker鈥檚 progress and guide him in making changes in your portfolio as circumstances suggest.

Address your financial questions to Malcolm Berko, c/o The Daily Journal of Commerce, P.O. Box 1416, Boca Raton, FL 33429, or e-mail him at [email protected].
漏 Creators Syndicate Inc.