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June 5, 2012
No Shortage of Irrational Decisions

CHICAGO — Why supposedly rational humans make so many irrational decisions

CHICAGO — In all of the animal kingdom, only we humans have the ability to employ reasoning in a way that allows us to reach rational decisions. Why is it, then, that we seem to misuse that ability so often, especially in important areas such as money matters?

In coining the phrase “irrational exuberance” more than 15 years ago, former Federal Reserve Board Chairman Alan Greenspan was thought to be warning us that the stock market was irrationally overvalued. As it turns out, his comment may have presaged a new field of study called behavioral economics—a new science that makes an effort to determine why supposedly rational humans make so many irrational decisions.

When it comes to how we handle our money, there’s no shortage of irrational decisions. Consider the person who drives five miles to save three cents per gallon of gasoline, or the investor who consistently buys stocks at their highs and then panics when the market goes down and sells them at their lows.

April 3, 2012
Effective Diversification

CHICAGO — If there is one investment philosophy that approaches universal agreement among financial advisers, it’s the need for careful diversification in every portfolio in order to minimize risk

CHICAGO — If there is one investment philosophy that approaches universal agreement among financial advisers, it’s the need for careful diversification in every portfolio in order to minimize risk, but exactly what does diversification mean, and how can you tell if your investments are truly diversified?

One popular TV show on finances features a segment called “Am I Diversified?” in which viewers call in, give the host their top five holdings and the host lets them know if they are properly diversified. According to Jason Whitby, MBA, CFA®, CFP®, AIFA®, senior financial adviser with Miami-based Investor Solutions, it’s not that simple. “The idea of five-stock diversification is mostly refuted by the financial community,” he says, “which tends to agree that the number of individual stocks needed for diversification is actually closer to 30.”

March 6, 2012
Brokerage Services Brush-Up

CHICAGO — It’s important to know the difference between full-service and discount brokers

CHICAGO — If you’re one of the millions of Americans who own stocks and bonds, it’s a good bet that you maintain those investments in a brokerage account. Keeping physical possession of stock or bond certificates in this digital age makes about as much sense as stuffing cash under the mattress.

But opening a brokerage account was only your first decision. These days, you must also decide whether to go with a so-called full-service broker or a discount broker, and it’s important to understand the difference.

Discount brokers such as TD Ameritrade, E*TRADE, Charles Schwab and others typically charge between $2 and $20 for individual online trades; full-service brokers such as Merrill Lynch, Morgan Stanley and others charge as much as 10 to 15 times that much. While competition has caused many full-service brokers to reduce commissions lately, on average, you'll still pay $100-$150 for an average trade done through the typical full-service (translation: full-price) broker. And it doesn’t stop there.

August 16, 2011
Your Money: Leaning Toward Alternative Investments

CHICAGO — Judging from my e-mail, it’s not difficult to find savers and investors who are questioning the conventional wisdom when it comes to investing their money. With the stock market on an erratic, volatile course that seemingly leads nowhere, and yields on cash investments such as money markets and CDs almost nonexistent, more and more income-seeking investors are breaking the old rules by dipping a toe in waters they would have considered too risky a few years ago.

Instead of sticking to the philosophy that calls for portfolios laced solely with a careful mix of quality stocks, well-rated bonds and cash, these hardy souls are venturing into eyebrow-raising investments such as junk bonds, commercial real estate, options like puts and calls, and equities in emerging markets in an effort to improve the anemic and unpredictable returns they’ve been enduring of late. According to one adviser, taking on even a little more risk requires overcoming fear of foreign markets.

July 6, 2011
Market History Shows Profit Potential

CHICAGO — This is a difficult time for anyone trying to build a portfolio of savings and investments capable of providing a financially secure retirement. According to the Center for Retirement Research, more than half of the Baby Boomer generation will not be financially prepared for retirement even if they work until age 65.

With corporate pension plans now largely just a memory, it’s up to individuals to design their own financial plans for retirement, and that calls for making some tough decisions.

I can’t remember a time when the economy has seemed more uncertain and fluid. Are interest rates for savings set to rise after a long period of stagnation, or will they continue to remain mired abysmally low? Is it time to start investing in the stock market again, or is it better to wait? How about real estate? Is this a good time to buy or sell a house? These and other questions about our economic future are never easy to answer, but they seem especially problematic in mid-2011.

April 28, 2010
March Sales Show Signs of Turnaround

CHICAGO — March sales may finally be showing signs of a turnaround, according to this month's StatShot survey. Although unusually poor weather in February cut into quarterly gains, a majority of operators in three regions say that their March 2010 drycleaning sales improved from the same month of 2009.

December 17, 2008
Wise Investors Stray from the Herd

When it comes to investing money, human nature likes to play tricks on us. When the stock market is reaching new highs, we can’t wait to jump in. When it stumbles and falls, we stop investing — or worse, start selling.

As a result, the typical investor tends to buy “high” and sell “low” — the opposite of a profitable investment strategy. But in spite of the lessons of the past, that inner voice keeps urging us to follow the crowd.

March 31, 2008
SEC Files Suit Against Anscott Industries

TAMPA, Fla. — The Securities & Exchange Commission (SEC) has filed suit against chemical manufacturer Anscott Industries, charging a major shareholder and two others in connection with a fraudulent “pump-and-dump” scheme that artificially inflated the company’s stock prices.

December 17, 2007
CNBC Suggests 'Dry Cleaner Economic Index'

CNBC correspondent Jane Wells said that drycleaners could be the source of a new economic index in a blog post Friday — at least in Southern California, where the entertainment writers' strike and flagging real estate market are hurting demand for all kinds of services.