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Best Of 2009

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July 25, 2009                  

“Stupid Investment” Of The Week…

Many Investors are still in their bomb shelters too shell-shocked to face the light of day and the risk of the Market.  Whether we are ready or not, the Market is returning to normal patterns with an upward Bullish trend.

Stupid Investment of the Week 

Time to cash out of low-yielding money-market funds

By Chuck Jaffe, MarketWatch.com* senior columnist  7-24-09

BOSTON (MarketWatch) -- All too often in investing, running with the herd will get you trampled.

But if you are an investor in money-market funds, heading for the exits with the masses is probably a smart idea right now, because investing in money funds is the Stupid Investment of the Week 

The list of funds currently earning zero percent is so long that fund tracker Lipper Inc. must list hundreds of funds as the laggard in their peer groups because they aren't making a cent.

Fund firms are waiving expenses to ensure that returns don't go negative, but the truth is that plenty of funds are keeping every ounce of positive return for themselves. The average fund, according to iMoneyNet, has an expense ratio of 0.32%; investors are lucky to get pennies.

No Sense

With interest rates at record lows and officials like Federal Reserve chairman Ben Bernanke saying that that rates are unlikely to move sharply for at least nine months, money funds are less an investment than a parking space.

Stupid Investment of the Week showcases the concerns and conditions that make an investment less than ideal for the average investor; while obviously not a buy signal, neither is this column intended as an automatic sell recommendation.

"People (Investors) in money-market funds are not a fast-moving crew, and some of them are probably asleep at the switch," said Connie Bugbee, managing editor of iMoneyNet's Money Fund Report. "It's not that the low returns are hidden, I think it's just that people don't pay attention, or they don't really think about it. They went into a money-market fund for safety, and expected a low return, so they just don't give much thought to how low that return has gotten.”

"I think month after month of earning nothing would convince you that it's time to change," said Bugbee, "Money funds will be a better investment than bank accounts at some point, but for now I can't deny that the average investor probably would be better off using something besides a money fund.”

Read It All: “Stupid Investment Of The Week”

 

Wishing You The Very Best Of Returns,

The Fed’s Funds Staff

 

Successful Investing For A

Successful Retirement!

FedsFunds.com

* Included source links and/or logos serve only to further viewer research and in no way indicates any endorsements, sponsorships or relationships. No accuracy guarantee of their content is implied.  This information is not presented as legal, tax or financial advice.

Reported performances of the past are not a prediction or guarantee of future returns.

July 11, 2009                  

Q. With So Many Financial Banks and Investment Banks Still Showing Signs Of Vulnerability How Safe Is Fidelity??

 

A. It’s hard to find information on Fidelity since they’re a privately owned company.  But here’s what we’ve found that may help answer your question:

Fidelity: The Family That Works Together...

By Don Dion* The Street.com* 07/10/09

In the land of mutual funds, Fidelity is king, with $1.2 trillion in mutual fund assets. While peers were crushed by the 2008 economic meltdown, Fidelity reeled in $2.36 billion in profits. In the first six months of 2009, Fidelity has already reported $44 billion in net inflows.

Fidelity Investments was founded in 1949 by Edward Johnson II and has always been controlled by the Johnson family. Under the family's oversight, Fidelity has grown to be the largest mutual fund company in the world.

Fidelity has always stayed true to its roots as an investment firm, even as it has grown other business interests. This focus has endured throughout various economic cycles, and Fidelity will not be quick to abandon its philosophy even during challenging times. "Diversification didn't fail in the recent market downturn. It worked -- just to a lesser degree," Fidelity noted in a recent report to clients.

I have been monitoring Fidelity closely for the last 13 years for my money management clients and Fidelity Independent Adviser subscribers. I recently selected Fidelity China Region Fund(FHKCX Quote)* as the Best Fund for Third Quarter 2009.

Read It All: Fidelity: The Family That Works Together*

Insight From Fidelity: Strong Signals for Foreign Stocks*

 

Wishing You The Very Best Of Returns,

The Fed’s Funds Staff

 

* Included source links and/or logos serve only to further viewer research and in no way indicates any endorsements, sponsorships or relationships. No accuracy guarantee of their content is implied.  This information is not presented as legal, tax or financial advice.

Reported performances of the past are not a prediction or guarantee of future returns.

June 27, 2009                  

Your 401k In Retirement…

Close to retirement or not, we all need an understanding how to invest our 401k money in our retirement years.

By the time we get to retirement we’ve been through a lot with our 401k!  Great Highs, Crushing Lows, Pension Freezes, Corporate Bankruptcy and on an on.

Now, when we walk out the corporate door we are trading our reliance on a Company Paycheck to a reliance on our Old Friend the 401k.  So we’ll need to think about how we’re going to make the best of what we’ll have on that day.

A Traditional Retirement Strategy

There’s something about traditions that help us feel secure.  Traditions have worked for generations past so perhaps they’ll come through for us too.

If you’re a Traditionalist then most likely you’ll feel your best putting all of your 401k money in “safe” places when you retire.

High Grade Bond Funds, Insurance Contracts, Money Market Funds, CD’s or even the Credit Union Fund will fill the bill.

Your return will be very stable and easily predicted since these investments vary only a few percent from normal, even in extreme markets.

A Traditional PLUS Strategy

Unfortunately traditions like the “Buy and Hold, and Hold” Strategy are proving to be very vulnerable in this age of Unpredictable Market Swings.

At the same time many Employees of the “getting ready to retire” generation have suffered huge losses in their expected pension money.  This has forced older workers to take risks looking for stronger returns at a time when tradition says “look for safety”.

Many of these 401k Investors are looking for sensible alternatives to help resolve the problem.  One simple solution says, “lock-in your profits on the money you’ll need for the first part of your retirement, then carefully invest the rest where there is good potential for good returns.”

Very simply, Retirees would plan according to their expected lifespan.  For a simple 20 year expected retirement, the 401k could be divided into two halves.

The first 10 years worth would be invested in traditional “safe” places as noted above. The second 10 years worth would be invested in Proven Performing Funds that have a track record of doing well in “all types of weather.”

Each year as the part of the initial “locked-in” money is used the Retiree replaces it with money transferred from the higher risk portion. 

The potential here is to extend the 401k draw-down by several years, providing that the market is favorable and the investing is done wisely.

This year’s Auto-Pilot Rated Funds show some very good examples of “Proven Performers” since 2008 was such a tough and true test:  Fed’s Funds APR Funds.

The Top Funds Of Each Category Are Definitely Worth Considering.

 

Wishing You The Very Best Of Returns,

The Fed’s Funds Staff

 

June 20, 2009                  

Finding The Strong Trends…

Looking for strong trends to help you decide where to invest??

Funds with Strong Trends are now highlighted in Fed’s Funds High-5 Recent Trend Charts.  The trends for each individual category (Small, Mid, Large, Bal. and International) are shown with stronger trending funds receiving the bright green highlight.

The Market Favors Some Sectors

Unlike the broad-based market rallies of the past, in recent years markets have been playing favorites, advancing with strength in some sectors while virtually going nowhere in others.

So buying into the market’s preferred sectors has been more than rewarding for those willing to spend a few moments to find them.

Fund Map

It’s rewarding and exciting and the following SmartMoney.com Fund Map link shows it:  Fund Map*

A quick mouse-over shows that the broad-based S&P 500 Index funds have returned only about 3.5% YTD, Equity Income Funds are yielding 2 to 5% and Large Value Funds (Growth and Income Style) are coming up with and average of 2 to 4% YTD.

Meanwhile Growth Funds like Janus 20 and 40 are at 20%, Magellan is at 15%, OTC is 27%, Fidelity Small Cap Stock and Royce VP are over 15%.

We see the market favoritism Internationally as well.  Fidelity Emerging Markets shows up at 30% YTD, Janus Overseas at 40%, Fidelity Latin America is 38% and Fidelity Canada is 18% for the Year.

Are They Still Going Strong??

Fed’s Funds High-5 Recent Trend Charts are designed to keep you updated on which funds are trending well and which ones are falling behind the curve.  In today’s market it’s the difference between losing money and making double digit returns!

 

Wishing You The Very Best Of Returns,

The Fed’s Funds Staff

 

* Included source links and/or logos serve only to further viewer research and in no way indicates any endorsements, sponsorships or relationships. No accuracy guarantee of their content is implied.  This information is not presented as legal, tax or financial advice.

Reported performances of the past are not a prediction or guarantee of future returns.

May 30, 2009                  

Indications Good, Markets Responding

+ Reconsidering Portfolio Strategy…

The article directly below is from Fidelity’s Research and Analysis Division.  Written by analysts, it tends to be a bit technical.  For Clarity and Simplicity we have bolded some of the more important aspects.

Road to Recovery: Signals to Watch

Pleasant surprises from some key indicators

May 29, 2009 Fidelity.com Market Analysis, Research & Education

The most significant trend so far in the spring of 2009 is that the pace of decline has moderated for a handful of leading indicators that were severely negative in late 2008 and early 2009.

In some cases, these indicators point to stabilization, in other cases they simply show that the rapid deterioration in the economy has moderated. Taken together, however, they have provided hope that the worst part of the economic recession may be in the past, and that the economy may stabilize earlier than expected.

An example of a leading indicator that has improved is initial unemployment claims.  The number of people filing for initial unemployment insurance claims is a good proxy for layoffs, and new claims tend to be a leading economic indicator for the direction of the labor markets (as well as the unemployment rate itself, which is a lagging indicator).

Historically, a slowing pace of layoffs has generally preceded a bottoming in the overall economy. During the past month or so, while high unemployment claims demonstrated that workers continue to lose jobs, the number of initial jobless claims has trended down.

In March 2009 manufacturer’s new orders for non-defense capital goods—a proxy for overall business investment activity—nudged up for the second month in a row after hitting its lowest level since 1993 earlier in January.

Consumer expectations, a leading indicator of consumer activity, rebounded sharply in April compared to the past several months (though it remained at a low level on a historical basis).

Investment implications

The early stages of an economic recovery are usually marked by violent fits and starts. A close examination of leading economic indicators shows that while some remain negative, others have either improved or their rate of deterioration has slowed. While these incipient signs of stabilization helped fuel the recent stock market rally, investors will be looking for sustained improvement in these indicators to confirm a bottoming of the economy.

…historical analysis of leading indicators shows that owning stocks in the early stage of an economic upturn often has led to favorable results.

What’s more, investors should be wary of waiting for all indicators to turn positive because this “all systems go” signal has usually occurred at or beyond the end of recessions, and after a considerable percentage of a bull market’s gains have been recorded.

Read It All: Road to Recovery: Signals to Watch*

Also Read: Recovery hopes lift global stocks*

Reconsidering Your Portfolio Strategy?

The last Bear Market (Tech Bubble) exposed the vulnerability of the “Buy and Hold” Strategy.  This current Credit Crisis, Bear Market is showing the weakness of the “Diversification” Strategy.

Is Diversification A Strategy Of The Past?*

 

Wishing You The Very Best Of Returns,

The Fed’s Funds Staff 

* Included source links and/or logos serve only to further viewer research and in no way indicates any endorsements, sponsorships or relationships. No accuracy guarantee of their content is implied.  This information is not presented as legal, tax or financial advice.

Reported performances of the past are not a prediction or guarantee of future returns.

May 23, 2009                  

Don’t Worry??

Inflation, Recession, Weak Dollar, it seems like something is bound to torpedo our economic recovery and sink our stock markets again.

The “experts” are once again all over the map, this time the doom and gloom people have 2008 as their motivation to beat the drums even harder.  Who do we believe?

Looking back over 2008 we see that the S&P 500 experienced single-digit quarterly losses for the first three quarters.  But the fourth quarter saw a 22% drop that hit every invested 401k deep and hard.

But there was one “expert” at the beginning of the 4th Quarter who made a loud and clear call warning Investors to run for cover.

He was right, things were severely out of control.  After the 22% loss came another 11% loss in the 1st Quarter of 2009.

Those who heeded Jim Cramer’s October 8th call saved themselves from the two most severe Quarters of this recent Bear Market.

Today Show Interview October 8th 2008:*

"Whatever money you may need for the next five years, please take it out of the stock market right now, this week. I do not believe that you should risk those assets in the stock market right now."

- Jim Cramer

So What’s He Saying Now?

In the 2 minute video link below Cramer addresses Inflation fears, deflation, recession, gold, oil, copper and the weakening dollar. 

This quick video, made on Friday, tells us in layman’s terms that inflation is not going to be an overall problem in the near future.  Deflation in this recessionary environment is actually the larger concern.

As far as he’s concerned, Fed Chairman Bernanke is doing a brilliant job keeping the dollar weak to ignite American Manufacturing.

In closing Cramer advises not to spend time worrying about what may be on the back burner because those who focus on that often miss what’s most important, namely the 2000 point run up in the Dow in the last three months.

See The Video: Cramer - Forget Inflation*

 

Wishing You The Very Best Of Returns,

The Fed’s Funds Staff

* Included source links and/or logos serve only to further viewer research and in no way indicates any endorsements, sponsorships or relationships. No accuracy guarantee of their content is implied.  This information is not presented as legal, tax or financial advice.

May 16, 2009                  

Considering China…

Fidelity’s China fund is appropriately named The Fidelity China Region Fund.  It is actually made up of stocks from markets in Mainland China, Hong Kong and Taiwan.

Those who keep up with world history and current events know that for decades Mainland China and Taiwan have been at odds and not too long ago there was growing hostility between the two.

But recently improving relations have brought about a resurgence of market improving prospects as the following article points out:

Beijing-Taipei thaw creating investment opportunities

By Chris Oliver, MarketWatch.com* 05-15-2009

HONG KONG -- Rapidly improving ties between China and Taiwan bode well for Taipei-listed shares and other assets, analysts say.

Specifically, certain companies in the airline, technology, and banking sectors may be best positioned to benefit from the developing détente across the 110-mile Taiwan Strait.

Recently, bullish broker reports have highlighted cross-strait investment themes after what were heralded as "breakthrough" agreements between the two governments last month.

The latest agreements solidify what some are calling a new dawn after 60 years of bitter division between the Communist-ruled mainland and Taiwan.

Daniel Rosen, a principal with New York-based advisory Rhodium Group, said the normalization of relations means dissipating political risk and a lower chance of military conflict, which in turn is leading to the elimination of a discount investors have traditionally applied to Taiwan.

The benchmark Taiex was up 2% mid-way into Friday's session. The index has risen about 22% since April 1, and is up about 52% since February.

In an effort to encourage Taiwan's more open attitude to Chinese capital, analysts think Beijing will offer more carrots in the months ahead. These include greater access to China's vast markets, tariffs cuts that place Taiwan on par with the preferential rates extended to South East Asian nations, and better protection for Taiwanese intellectual assets.

Read More: Beijing-Taipei thaw creating opportunities*

It is interesting to note that two largest holdings of Fidelity’s China Region, Taiwan Semiconductor and China Mobile are mentioned in the full text of the above article.

Fidelity China Region Fund

YTD Return = 24.1%

Best 1-Year Return = 84.9% (1999)

Worst 1-Year Return = -44.9% (2008)

See China Region’s Stats At Fidelity.com*

Check Out Its Funds Holdings At Morningstar.com*

 

Wishing You The Very Best Of Returns,

The Fed’s Funds Staff 

* Included source links and/or logos serve only to further viewer research and in no way indicates any endorsements, sponsorships or relationships. No accuracy guarantee of their content is implied.  This information is not presented as legal, tax or financial advice.

May 2, 2009                  

Getting Back To Breakeven…

Many Dire Predictions Have Been Made claiming that it will now take impossible amounts of time for American Worker Retirement Accounts to claw there way back to breakeven.

We’d like to take issue with these Bell Ringers of Doom, Gloom and Despair.

Just to keep things in a reasonable perspective, let’s look at the Tech Bubble burst of 2000 coupled with the 9/11/2001 Attack on The World Trade Center (Which was virtually an attack on Wall Street itself.)

This Bear Market lasted for about three years then it took the Large-Cap S&P 500 about four more years to recover to the breakeven point.  Three years down, followed by four back up for a total of seven years.*

Now let’s look at the positive factors that are working for us to shorten our recovery time:

  • Some market sectors explode back to life after a downturn so alert investors recover sooner.
  • Many stocks and bonds continue to pay dividends though both the ups and downs.  Since these are posted to you account much like a bonus.  
  • Inflation often cools rather than compounds during times of recession.

Those who are strongly invested in the healthiest sectors will likely have a much quicker bounce back time.

The graph link above will also show you that the Mid and Small Indexes recovered their losses in about a year.  If Large-Cap Investors had changed from Large to Mid at the low point they would’ve recovered their losses more than a year sooner than if they simply stayed in the slower sector.

Compare The Progress Of Your Funds

Using the following short-term graph you can actually see which sectors are recovering best from this recent downturn and also graph your own funds vs. each sector.

6-Month Index Graph*

To Compare Your Funds Using This Graph:  Click Compare, select the Enter Name box and enter the ticker of your fund then click the Draw Button at the bottom.

Read More in this article from Yahoo Finance*

 

Wishing You The Very Best Of Returns,

The Fed’s Funds Staff 

* Included source links and/or logos serve only to further viewer research and in no way indicates any endorsements, sponsorships or relationships. No accuracy guarantee of their content is implied.  This information is not presented as legal, tax or financial advice.

Reported performances of the past are not a prediction or guarantee of future returns.

April 25, 2009                  

The Minority Opinion…

Optimists are becoming a little easier to find these days but overall they’re still in the minority.

But what they have to say is refreshing to hear, tempting us to consider the possibilities of a more complete Market recovery.

The Downturn: Is the Worst Over?

It hasn't shown up in the government statistics yet, but we may be seeing the first signs of an economic rebound in the U.S.

By Harold L. Sirkin BusinessWeek.com* April 21, 2009

Over the past few weeks, I've met with more than a half-dozen U.S. CEOs whose companies represent a wide range of industries. They all told me that while their January and February performance was predictably horrible, they had significantly exceeded their internal forecasts in March. Their first-quarter 2009 revenue projections already had been adjusted downward from first-quarter 2008 numbers, so they were all surprised—and almost afraid to believe—that they were beating both their internal projections and their previous six months' performance.

One company that makes luxury products, which had experienced an extraordinary 98% decline (yes, almost total) in sales, has now seen a rebound to about 30% of its early 2008 peak. Others are seeing unexpected sales increases of 10% to 20%.

None of them are ready to celebrate, but they are seeing what may be the first signs of hope.

Economist Polina Vlasenko of the American Institute for Economic Research reported on Apr. 10 that during the current recession, companies have been cutting their inventories faster than in past recessions. "And they started doing so sooner after the peak of the business cycle," Vlasenko noted. Quite possibly, Vlasenko suggests, the rapid inventory reductions were made possible by "the just-in-time economy," with improved supply management enabling firms to carry lower inventories; when there are lower inventories during expansionary times, reducing inventories rapidly during slowdowns becomes easier.

What we now may be seeing is the reverse. When the same managers see demand increase by 10% while inventory levels are falling rapidly, they increase production by 20% to make up for the decline.

Confidence From The Stimulus

While some like to argue that the stimulus has made a difference, these funds are just now starting to filter into the economy, so the stimulus money couldn't be the answer. However, faith in the stimulus package's potential could be.

The Bottom Didn’t Drop Out

When consumers and business executives realized that we were not heading for the end of capitalism and not everyone would lose their job, they stopped hunkering down. Companies began spending again. Likewise, many consumers had deferred purchases for six to nine months. But everything can't be deferred forever.*

Banks Are Lending Again

It turns out that everyone is not a deadbeat. There are lots of viable businesses, especially after they cut 20% out of their cost structure. As bankers get used to this new environment, they may be more confident in their ability to separate good risks from bad. They also may be realizing that the spread between the rate they pay for funds (which is now very low) and the rate they charge borrowers is larger than it has been. There is a lot of money to be made on good risks.

Preparing To Win

Many companies have been getting into fighting shape during the recession—cutting excess costs, restructuring manufacturing facilities, etc.—and are now starting to make their moves: buying "wounded" assets on the cheap, capturing customers from hurting or bankrupt competitors, and attracting world-class talent from those who can no longer afford to pay the market rate.

Unfortunately, the reports I hear from Europe are not the same. Just further declines, with no signs of an upswing. Europe, which entered the recession after the U.S., may still be working on the downside. Hopefully, this will change soon.

Many things can still go wrong. We are not out of the woods. But perhaps we have reached bottom and are heading up again. Perhaps the U.S., with our economy on the rebound, will lift the rest of the world from recession. And perhaps we will see confirmation of this before 2009 ends.

Read It All: The Downturn: Is the Worst Over?*

Harold L. Sirkin is a Chicago-based senior partner of The Boston Consulting Group and coauthor, of GLOBALITY: Competing with Everyone from Everywhere for Everything (Business Plus, June, 2008)

 

Wishing You The Best Of Returns,

The Fed’s Funds Staff

 

* Included source links and/or logos serve only to further viewer research and in no way indicates any endorsements, sponsorships or relationships. No accuracy guarantee of their content is implied.  This information is not presented as legal, tax or financial advice.

Reported performances of the past are not a prediction or guarantee of future returns.

April 4, 2009                  

Index Investing Gets Hammered…

2008 was generally better to Index Fund Investors than it was to those in managed mutual funds.  While in 2007 the Fund Managers beat their Indexes handily.

Here we are at the end of the First Quarter of 2009 and the Fund Managers are winning again, hands down.

It would be quite a job to name all the Domestic Delta 401k funds that beat their index so to save time and space we’ll name the few that didn’t make the grade.  Then we’ll point out the handful of funds that actually turned in positive results for the first quarter.

Lost To The Index

Small Caps: FMA Small Company

Mid-Caps: Alliance Bernstein Small/Mid Value, Fidelity Value, Lord Abbett Mid-Cap Value, Mutual Shares, Virtus Mid-Cap Value, Ariel Appreciation, Ariel Fund and Baron Asset Fund

Large-Caps: DWS Dreman High Return Equity, Fidelity Equity-Income, Fidelity Equity-Income II, Lord Abbett Affiliated, Morgan Stanley Large Relative Value, USAA Income Stock, Van Kampen Growth & Income, Fidelity Growth and Income and Fidelity Growth and Income II

Balanced Funds: Black Rock Balanced Capital, Fidelity Global Balanced and Van Kampen Equity and Income

The other 103 Domestic Funds all turned in Index Beating Performance!

A Positive Quarter!

We have now had six consecutive negative quarters so it’s very encouraging to see some of our funds moving back into the black!

Mid-Caps: Alger Mid-Cap Growth, Artisan Mid Cap

Large-Caps: Fidelity OTC, Janus Twenty, Legg Mason Partners Large Growth, Morgan Stanley Large Growth, TCW Galileo Select Equities and Touchstone Sands Capital Select

Members can view their fund’s Quarterly Performance: Quarterly

Compare your Fund’s Performance to its Index: Meeting & Exceeding

 

Wishing You The Best Of Returns,

The Fed’s Funds Staff

 

February 14, 2009                  

Start Your Engine!!

Delta and Fidelity are now offering us some much needed 401k support through a company called Financial Engines ®.

Financial Engines provides personalized, on-line 401k advice (for free) as well as portfolio management (for a fee); they’ve been doing this for about 10 years.

If you engage them to manage your portfolio, the fees will be deducted from your 401k account balance.  The fees are as follows:

0.45% per year for the first $100,000 in your account;

0.35% per year for the next $150,000 in your account;

0.20% per year for the amount above $250,000.

Doing the math, this is what would be deducted from your 401k annually:

                    $50,000 = $225    $100,000 = $450

                   $150,000 = $525   $200,000 = $700

                   $300,000 = $600   $400,000 = $800

The Best Part Is Free!

One of the most important parts of retirement planning is knowing whether or not you are financially on-track for a successful retirement. 

Delta last gave Employees a retirement readiness or “on-track” assessment back in 2000.  Since then we’ve seen several major changes to our retirement plan as well as our financial ability to retire.

Now with Financial Engines we all have free access to a readiness assessment that’s updated everyday.

Actually they call it a “forecast” and it not only tells you your chances of reaching your retirement income goals but if you need them, they’ll also give you suggestions on how to improve your chances of meeting those goals.

Once you’ve entered your initial sign-up info, each time you enter the Financial Engines web site (through your  NetBenefits link) you’ll see statements saying something like this:

“We estimate you will have $46,300 per year of income in retirement.

“You have a 46% chance of reaching your retirement goal of $55,000.  Consider reviewing your plan for retirement or we can provide professional help.”

The Fine Print…

Be aware that if you choose to have Financial Engines actually manage your portfolio there are some circumstances and conditions that you should know up front.

From the F.E. Delta Supplemental:*

Because the Program operates by providing FE full authority to give Provider investment directions on your behalf, once you are enrolled in the Program, you will not be able to make investment directions (changes) directly through Provider (Fidelity). If there are any exceptions to this provision, they are set forth here: None.

You can again exercise direct investment control of your Plan account after canceling your participation in the Program. You can cancel from the Program at any time, with no penalty, by calling FEA, as described in the Terms and Conditions. FE will typically process a request for cancellation within a few business days and forward the request to the Provider. Upon the Provider’s completion of the processing of the cancellation, you will again be able to direct investment of your Plan account.

Also notice below that your portfolio would be reviewed only on a quarterly basis, no one will be reviewing its needs on a daily or an “as the market dictates” basis.

From the F.E. Disclosure Brochure:*

Account reviews. For participants enrolled in the Program, FEA generally conducts account reviews quarterly. The account review process begins with an automated analysis of the account, which generates a progress report and proposed adjustments, if applicable, to the target allocation.

How Good Are They??

For those who are wondering about Financial Engine’s track record as far as managing money in 401k portfolios, nothing is mentioned on their website that discloses their past performance in this area.

Also, Delta Employee inquiries directed to their Advisory Department have generally been rebuffed with this type of response:

“Unfortunately, Financial Engines is not able to provide you with a comparative study of how your account would have done under our management during the past few years. All investors utilizing our program are in customized allocations given the length of time they have until retirement and the amount of risk they are looking to take in the marketplace. Because these investment strategies are customized and are based on investment selections which are different for each employer sponsored plan, Financial Engines is not able to provide annualized performance information. You are able to review the performance information for each of the funds available to you through your Delta 401(k) by contacting your 401(k) plan provider, Fidelity, at 1-800-554-0262.”

 

Wishing You The Best Of Returns,

The Fed’s Funds Staff

* Included source links and/or logos serve only to further viewer research and in no way indicates any endorsements, sponsorships or relationships. No accuracy guarantee of their content is implied.  This information is not presented as legal, tax or financial advice.

Reported performances of the past are not a prediction or guarantee of future returns

January 31, 2009                  

Will Economy Respond To Medicine???

With January’s S&P 500 loss of over 8% the Market has predicted its fate for 2009.  But the bigger question remains, Will the new Administration turn this economy around or just bury it deeper in recession this coming year? 

So far it seems that a lasting restoration of confidence is becoming more and more illusive for the present Administration much like it was for the last.

Will all the prescriptions from the various governmental agencies finally give us the much looked for turnaround? 

Or are we experiencing a “virus” that must run its course and all the meds can do is help to relieve some of the symptoms along the way?

February will probably see the Market predict whether or not the Administrations Big Shot of Medicine will be effective.  So a down-market for February would most likely amount to a pessimistic “I don’t believe it, show me” opinion.

US set for ‘big bang’ financial clean-up

By Krishna Guha Financial Times *

 Published: January 30 2009

The Obama administration is gearing up for a “big bang” announcement within the next two weeks that will combine a bank clean-up with measures to reduce home foreclosures and probably steps to kick-start credit markets.

The “big bang” approach reflects the belief of Tim Geithner, Treasury secretary, and Lawrence Summers, National Economic Council director, that the Bush administration was wrong to dribble out policy initiatives. Mr. Geithner intends to present a “comprehensive” plan that policymakers hope will command market confidence.

Read More: Big Bang Financial Clean-Up”*

Also Read: As goes January, so goes the year?*

S&P has worst January drop ever in month known to predict market direction   From MarketWatch.com*

 

Wishing You The Best Of Returns,

The Fed’s Funds Staff

* Included source links and/or logos serve only to further viewer research and in no way indicates any endorsements, sponsorships or relationships. No accuracy guarantee of their content is implied.  This information is not presented as legal, tax or financial advice.

Reported performances of the past are not a prediction or guarantee of future returns.

January 17, 2009                  

Where The Money Is Flowing…

Stocks Lost Big In 2008 and at the same time received 99% of all the financial press coverage.  Meanwhile the Market Sector that actually made money just smiled and kept quiet, all the way to the bank.

Who made money in 2008??  Those who kept an eye on the Top Performers in the left hand column know that it was the Government Bond Funds that turned in healthy 2008 profits.

BOND FUNDS

2008

Pimco Long-Term US Gov

13.6

Fidelity Ginnie Mae

6.6

Fidelity Govt. Income

10.6

USAA GNMA Trust

6.8

Wells Fargo Govt. Securities

7.9

Fid. Instl Short-Intermediate Gov

7.7

Basically, Depression reared its ugly head and many Investors fled to the Government for shelter.

As this recovery matures Investors will steadily come out from under the Government umbrella and look for returns in the normal marketplace.  But not necessarily the broad marketplace.

As we look at 2009 we’d like to know; Will the Obama “infrastructure stimulation” spending breathe new life to the rest of the Bond Market?  Will Corporate Bonds benefit from the many contracts that are sure to come out of this bailout package?

Is this where the 2009 investment money will flow??  Where are the best opportunities for our investments to grow??

Munis look good as gov't spigot stays open

By Laura Mandaro, MarketWatch.com*  Jan. 8, 2008

SAN FRANCISCO (MarketWatch) -- Debt-ridden states and local governments are poised for a bailout under the incoming Obama administration, presenting a buying opportunity for downtrodden municipal bonds, Pimco founder Bill Gross said Thursday.

Gross, whose management of the world's largest bond fund has made his recommendations closely watched, said he anticipates that the White House under President-elect Barack Obama will "quickly be confronted by the need to provide those hundreds of billions of dollars to states and large municipalities.”

"Municipal bonds then, selling at historically high ratios relative to U.S. Treasurys, offer attractive price-appreciation potential," Gross wrote in monthly commentary posted to the Web site of the Pacific Investment Management Co., known as Pimco.

"Pimco's view is simple: shake hands with the government; make them your partner by acknowledging that their checkbook represents the largest and most potent source of buying power in 2009 and beyond," according to Gross.

The $129 billion Pimco Total Return bond fund PTTRX*, which he manages, returned 4.8% last year compared with a nearly flat performance in the comparable benchmark.

Read It All:  Buy Munis ahead of Obama bailout*

 

Opportunities Abound in the Bond Market

From Yahoofinance.com

By Christine Benz Morningstar.com* Jan.15, 2009

Christine Benz: I've been hearing that there are a lot of great opportunities in the corporate-bond market right now. Would you say that's the case?

Lawrence Jones: A lot of managers we respect, from Bill Gross at PIMCO Total Return to Dan Fuss at Loomis Sayles Bond and others, have been finding some great opportunities in high-quality investment-grade bonds, which have traded really to almost unprecedented levels.

There has been a dramatic dislocation in the corporate market. There has been a lot of illiquidity. And as we've seen bond prices decline, some high-quality corporations' senior debt now yields 7% or 8% for fairly minimal credit risk. When you see yield levels on bonds like that, it's not surprising that a lot of managers are finding opportunities there.

Read It All:  Opportunities Abound in the Bond Market*

 

Wishing You The Best Of Returns,

The Fed’s Funds Staff

* Included source links and/or logos serve only to further viewer research and in no way indicates any endorsements, sponsorships or relationships. No accuracy guarantee of their content is implied.  This information is not presented as legal, tax or financial advice.

Reported performances of the past are not a prediction or guarantee of future returns.

January 10, 2009                  

Balanced vs. Freedom Funds…

Whether we’re experiencing a bad market or just drawing near retirement, eventually we all look for a safer place to put our money.

We’re not just looking to protect our principal; we’d also like a fair and reasonable return on our investment so we often look to funds that hold a mixture of both stocks and bonds, Balanced and Freedom Funds.

2008 was the perfect year to tell where our money was best protected.  Then comparing 2008 with a 5-Year View will tell us which funds are giving us both the protection and the profit we are looking for.

Balanced vs. Freedom Funds

 

 

FREEDOM FUNDS

2008

5-Year

Fidelity Freedom Income

-0.1%

1.1%

Fidelity Freedom 2000

-13.9%

1.0%

Fidelity Freedom 2005

-24.4%

-0.2%

Fidelity Freedom 2010

-26.3%

-0.3%

Fidelity Freedom 2015

-27.1%

-0.1%

Fidelity Freedom 2020

-32.1%

-0.9%

Fidelity Freedom 2025

-33.6%

-1.1%

Fidelity Freedom 2030

-36.9%

-1.7%

Fidelity Freedom 2035

-37.7%

-1.9%

Fidelity Freedom 2040

-38.8%

-2.1%

Fidelity Freedom 2045

-39.1%

n/a**

Fidelity Freedom 2050

-40.6%

n/a**

 

 

 

BALANCED FUNDS

2008

5-Year

Black Rock Balanced Capital

-28.0%

-0.5%

Calvert Social Invest Balanced

-28.9%

-2.2%

Dreyfus Lifetime Growth & Income

-22.7%

-0.1%

Fidelity Asset Manager 50%

-27.8%

-1.7%

Fidelity Asset Manager 70%

-34.9%

-3.3%

Fidelity Asset Manager 20%

-14.2%

1.7%

Fidelity Balanced

-31.3%

0.2%

Fidelity Convertible Securities

-47.8%

-3.2%

Fidelity Global Balanced

-23.2%

3.4%

Fidelity Puritan

-29.1%

-0.4%

Janus Balanced

-15.8%

3.8%

Morgan Stanley Inst. Balanced

-28.4%

0.9%

Oakmark Equity and Income

-16.2%

4.4%

Van Kampen Equity and Income

-24.8%

0.7%

          ** Fund Inception Date: June 1, 2006

The chart above highlights the Best 5 and the Worst 3.  It’s important to note that the numbers given are “annualized.”  In other words the returns given are “per year.”

No Time To Lose

Golden years tarnished as bear market mauls target-date retirement funds

By Jonathan Burton, Assistant Personal Finance Editor MarketWatch.com*

SAN FRANCISCO (MarketWatch) -- If you were expecting your target-date retirement funds to keep your nest egg on track, you've been off target this year. Some of these investments have saddled shareholders with stiff losses, and probably no one feels more on edge than investors in their 60s who intend to stop working in a couple of years.

Better make that "intended." Target-date funds geared to a 2010 retirement had lost 27% on average for the year through Dec. 11, according to fund-tracker Lipper Inc. That's painful enough for someone nearing retirement, but investors in the most aggressive of these portfolios have seen one-third or more of their savings evaporate -- stripping the shine off their golden years and possibly forcing them to work longer.

Longevity risk

Target-date retirement funds have been billed as "set-it and forget-it" investments. These one-stop shops blend a fund company's stock and bond offerings into a single all-purpose portfolio. Allocation to stocks and bonds is automatically rebalanced over time, and the fund is supposed to ratchet down risk gradually as retirement nears.

Yet a crucial shift in the design of some of these funds has profoundly impacted investors' fortunes in the bear market.

A couple of years ago, leading providers boosted the equity portion of these portfolios and decided to hold this stock-heavy line well into people's retirement years.

The strategy is rooted in the belief that retirees should have substantial amounts of money in stocks to get through old age and not outlive their money. The average 2010 target-date fund had about 48% of assets in stocks at the end of September, according to consulting group Financial Research Corp.

But this answer to so-called longevity risk has been costly in the bear market. The alterations that were made during a more bullish time have added to target-date funds' troubles as the market melted down.

Fidelity Freedom 2010 Fund keeps 47% of its portfolio in stocks and has lost 28%, while Vanguard Target Retirement 2010 Fund with 54% in stocks, is off 23%.

The longevity argument also doesn't fully account for investors who can't handle gut-wrenching volatility, particularly with retirement in sight.

"There are funds on the edge in terms of their asset allocation that have lost a pretty large amount for someone close to retirement," said Greg Carlson, a fund analyst at investment researcher Morningstar Inc. "We've been wary of funds like that.”

Read The Entire Article:  No Time To Lose.*

 

Wishing You The Best Of Returns,

The Fed’s Funds Staff

* Included source links and/or logos serve only to further viewer research and in no way indicates any endorsements, sponsorships or relationships. No accuracy guarantee of their content is implied.  This information is not presented as legal, tax or financial advice.

Reported performances of the past are not a prediction or guarantee of future returns.

January 3, 2009                  

Cleaning Up & Organizing My 401k…

It’s Time, In Fact It’s Way Past Time To Clean Out My 401k Clutter!  All the bits and pieces and those perpetual losers that are doing me no good, have got to go!

This is my Goal: “Keep It Clean And Simple.”

Keeping it cleaned up and simple should give me better clarity, improving my ability to compare and judge which choices are moving me forward vs. those that are weighing me down.

Just like a tool bench or even kitchen drawers, sometimes we put too much stuff in there and it slows us down, eventually affecting our judgment as we try to get things accomplished.

Bite Size It

I can deal with almost anything if it’s sized right.  So I’m looking to section my 401k balance into 10% chunks.  This will give me 10 fund choices to deal with.  12.5% pieces would give me 8 choices to handle while 20% would give me 5.

This will eliminate all those little pieces of funds that I wanted to “just try” for a while.

Diversify It

Our 401k has Six Basic Investment Categories (Small, Mid & Large-Caps, Balanced, International and Bond Funds) plus the “Stable Value Option” (Money Market type funds). 

While I always encourage people to weight their holdings toward the categories that are healthy and less toward those that are out of favor, it is still very helpful to have an age-based Allocation Chart as an overall guide.

Here is a link to a simple and fun allocation pie chart that lets you select your age and adjusts itself to your selection:

Asset Allocation Charts From Bankrate.com *

Write It Down

Finally, writing it down on a real piece of paper is the best way to for me to remember my funds and my current diversity mix.  Here’s a copy of the chart I’m using :  2009 Organizer/Tracker

Note: Remember; when you change funds also review your Contribution Selections to ensure that you aren’t continuing to contribute to your previous funds!

Getting a Pay Raise??  Don’t Forget To Give Your Retirement A Raise As Well by increasing your Contributions a percent or two.  This calculator can show you the net affect on your take home pay:  PayCheckCity.com*

 

Wishing You The Very Best Of Returns,

The Fed’s Funds Staff

* Included source links and/or logos serve only to further viewer research and in no way indicates any endorsements, sponsorships or relationships. No accuracy guarantee of their content is implied.  This information is not presented as legal, tax or financial advice.

Reported performances of the past are not a prediction or guarantee of future returns.

Fed's Funds is an informational investing association and is in no way sponsored or endorsed by Delta Air Lines, or The Federal Reserve.  Fed's Funds products and services are provided on an "as is" basis without warranties of any kind, either express or implied.  Reported performances of the past are not a prediction or guarantee of future returns.  *Included source links and/or logos serve only to further viewer research and in no way indicates any endorsements, sponsorships or relationships.  No accuracy guarantee of their content is implied.

Question/Comments: Webmaster@FedsFunds.com


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