“A Thumbs Up for The Big Short”

I just finished reading The Big Short: Inside the Doomsday Machine. You may recall that the author, Michael Short, also wrote The Blind Side, but his 1990 work Liar's Poker: Rising Through the Wreckage on Wall Street was his first glimpse at the corrupt world on Wall Street. Lewis, insightful as always, does an incredible job of factually depicting the recent mortgage meltdown in the United States. In both The Big Short and Liar’s Poker, Lewis exposes the ruthless greed and lack of morality that unfortunately have become the quintessential element on Wall Street. In The Big Short, Lewis skillfully weaves a story of the primary players who recognized the epidemic that manifested itself in the subprime mortgage meltdown and became very rich as a result.



Lewis explains in great detail what very few understood at the time and what most individuals still fail to understand about the crash of 2008. Essentially, banks allowed individuals to roll their large credit card debt into new interest only mortgages which began with low teaser rates that would balloon after two short years. The banks knew that these individuals would either default or be forced to refinance after two years. Not to be outdone, corrupt bond dealers wrapped these volatile loans into bonds and were able to get AAA ratings on many of these tranches. These garbage loans were then peddled throughout the world and eventually led to failure of some major banks in the U.S.


Unfortunately, the corrupt world described by Lewis in Liar’s Poker reared its ugly head again in the subprime mortgage meltdown. Not only did these fraudulent members on Wall Street evade prison, but they were bailed out by the same individuals who lost their homes as a result of these corrupt loans. Inexplicably, many of these exploited Americans, who will never financially recovery from losing their homes, want to extend the Bush tax cuts for this corrupt group of individuals on Wall Street. I highly recommend The Big Short and believe every American needs to become more educated with regard to what really occurred over the last five years and to reconsider some of their political views as well.

“How Much Does Tax Evasion Add to the Deficit?”

One of the primary arguments surrounding politics today is whether or not to extend the Bush tax cuts. Democrats certainly wasted some of the stimulus package dollars and even sent checks to people who are either dead or in prison. Republicans, however, have failed to give one single idea on how to cut the deficit after extending tax cuts and essentially looked the other way during the sub prime mortgage debacle. My question is “How Much Does Tax Evasion Add to the Deficit?” The American people could help reduce the deficit by paying what they legally owe. No one likes to be taxed, myself included, but everyone has a moral responsibility to pay for public education, for the body armor worn by those in the armed forces and for the roads which give us the freedom to travel.


Unfortunately, tax evasion is considered socially acceptable and beating the IRS is admired in certain circles. President Obama inexplicably appointed Timothy Geithner as the Treasury Secretary, and Geithner openly admits to his own tax evasion. Millions of dollars could go towards paying down the deficit if individuals reported money they earn under the table. Here is a novel idea: Quit stealing from America and live up to your legal and moral responsibility by paying your toll to live in the greatest country in the world.

Unemployment is Unfortunately Here to Stay

Unemployment is a terrible reality in the United States, and it is not going to improve in the near future.  My greatest criticism of President Obama is his resistance to telling the public that he cannot fix the unemployment problem.  American companies outsource work to make earnings.  In a capitalistic society, companies must get the best labor for the cheapest price.  Right now China and India have citizens that will work for $10 an hour without benefits.  They provide quality work around the clock.  In addition, technological advances have reduced the number of high paying blue collar jobs which cannot be outsourced.  My hope is that the President will honestly state the unpopular truth.  We must pursue education in technological fields and restore our position as the most productive country in the world.  America is without question the best place to live on earth, but we must stop blaming others, face reality and relentlessly pursue fields that will provide work for the next several decades.  Do you Agree?

“Do You Believe in the Efficient Market Theory? I Think It’s Nonsense”

If you own any mutual funds, you essentially believe in the Efficient Market Theory. The Efficient Market Theory was thoroughly explained in Burton Malkiel’s A Random Walk Down Wall Street. The following is a definition of the Theory from InvestWords.com:

"The (now largely discredited) theory that all market participants receive and act on all of the relevant information as soon as it becomes available. If this were strictly true, no investment strategy would be better than a coin toss. Proponents of the efficient market theory believe that there is perfect information in the stock market. This means that whatever information is available about a stock to one investor is available to all investors (except, of course, insider information, but insider trading is illegal). Since everyone has the same information about a stock, the price of a stock should reflect the knowledge and expectations of all investors. The bottom line is that an investor should not be able to beat the market since there is no way for him/her to know something about a stock that isn't already reflected in the stock's price. Proponents of this theory do not try to pick stocks that are going to be winners; instead, they simply try to match the market's performance. However, there is ample evidence to dispute the basic claims of this theory, and most investors don't believe it."

When someone purchases a mutual fund, he/she is essentially agreeing with EMT. The thought process is as follows: it is impossible to beat the Market so I will buy a basket of stocks to spread the risk and hopefully achieve a 7% return after fees. My question for those who purchase mutual funds is simply this: Why don’t you either take the time to beat The Market, (large numbers of people exceed index averages annually), or just invest in a broad based ETF and hope for the best? I am amazed that people continue to pay the fees for mutual funds after the meltdown of 2008.

If you want to learn more about investing, go to my website, www.TheDeGeorgeAgency.com, and let’s get a conversation started about how I can help you. You can also become a subscriber to my blog (http://www.degeorgeagency.blogspot.com/). The DeGeorge Agency is a “Family Helping Families.”

“Long-Term Care Insurance Can Offer Unique Tax Advantages”

Long-term care Insurance can offer unique tax advantages. Business owners and/or their employees, particularly members of C-Corporations, can receive significant tax advantages. What follows, however, are the tax benefits of Tax-Qualified Long-Term Care Policies for individuals. The Internal Revenue Code (IRC) extends:


 Premiums are deductible depending on the type of taxpayer Treasury Regulation 1.461-1(a)(1), (a)(2)
 Benefits paid are generally tax free IRC 7702(a)(2), 7702B(d), 105(b)
 Premiums are not deductible from a Flexible Spending Account; Employees who purchase LTCi must pay for their policies with after-tax dollars. IRC 125(f)

The deductible amount for these taxpayers is called the eligible long-term care premium and is included among eligible medical expenses. IRC 213(d) (10)

Here are the limits in 2010
Age Eligible LTC Premium
40 or less $330
40 to 49 $620
50 to 59 $1,230
60-69 $3,290
70-79 $4,110

Finally, it is always sound advice to work with those who have made a commitment to their profession. In the field of long-term care planning, those who have achieved the CLTC designation have the skills necessary to work with your CPA to make the best use of the tax code. If these few minutes have caused you to look at long-term care differently, then it is time to take the next step. As a CLTC professional, I have the experience and expertise to work with you and your other advisors to create a plan that protects the emotional, physical, and financial wellbeing of your family.

I would like to thank Harley Gordon and his staff at http://www.ltc-cltc.com/ for providing a great deal of the information for this essay. If you want to learn more about extended care planning, go to my website, www.TheDeGeorgeAgency.com, and let’s get a conversation started about how I can help you. You can also become a subscriber to my blog (http://www.degeorgeagency.blogspot.com/). The DeGeorge Agency is a “Family Helping Families.”

“Long-Term Care Insurance Provides the Income for Your Care”

While it’s possible you may not need extended care, you must plan for the possibility of needing care. Your plan should have two components. The first component is to preserve your family members’ emotional and physical wellbeing by allowing them to hire professionals to provide your care. The second component is to preserve your retirement portfolio.

Long-term care insurance can be an effective solution to funding a plan. Implemented correctly, the proper insurance provides a stream of income that pays for professionals to help keep you at home. The income provided by long-term care allows your family to supervise rather than provide care, therefore helping to protect their emotional and physical wellbeing. Since care is now paid for, there is no need to reallocate your income, which means it remains in place to pay for the financial commitments you have taken into retirement. Perhaps just as important, your investment portfolio remains intact, which (A) allows your tax plan to execute properly, and (B) preserves the estate for the surviving spouse and/or children. The value of long-term care insurance is it its ability to protect the emotional, physical, and financial wellbeing of your family should you ever become frail and need care over a period of years.

I would like to thank Harley Gordon and his staff at http://www.ltc-cltc.com/ for providing a great deal of the information for this essay. If you want to learn more about extended care planning, go to my website, www.TheDeGeorgeAgency.com, and let’s get a conversation started about how I can help you. You can also become a subscriber to my blog (http://www.degeorgeagency.blogspot.com/). The DeGeorge Agency is a “Family Helping Families.”

“Long-Term Care Can Dismantle Retirement”

Long-term care can dismantle a well planned retirement plan. Many people believe that a federal program such as Medicare or Medicaid will pay for their care, or veterans hope the VA will cover the cost of care. These programs, however, primarily cover medical procedures or rehabilitative care.


Long-term care requires custodial care, which is defined as the assistance or supervision that a person who is physically or cognitively impaired needs in order to get through the day. With few exceptions, no federal or state program will pay for custodial assistance over an extended period of years. The family therefore is forced to pay out of pocket.


While you still may believe that you have enough assets to pay for care, relying on your retirement portfolio to pay for care is a problem. It is problematic because it has likely been committed to generating income to support your family’s lifestyle. If you have to reallocate your retirement assets to pay for care, you reduce the generation of monthly income. It can also cause other consequences such as:


Taxes: What would it cost to sell your qualified funds or taxable investments with a low cost basis?
Market Conditions: What if your investments need to sold in a down market?
Liquidity: Could you sell your assets, and if so, would you incur a loss?


If your illness or condition lasted long enough, it could threaten the financial viability of your surviving spouse and/or those who may depend on an inheritance.


I would like to thank Harley Gordon and his staff at http://www.ltc-cltc.com/ for providing a great deal of the information for this essay. If you want to learn more about extended care planning, go to my website, www.TheDeGeorgeAgency.com, and let’s get a conversation started about how I can help you. You can also become a subscriber to my blog (http://www.degeorgeagency.blogspot.com/). The DeGeorge Agency is a “Family Helping Families.”

“The Consequences of Needing Care”

You have likely seen the statistics that talk about the risk of needing long-term care as you age. And like most, you’ve told yourself “It will never happen to me.” You may very well be right. But what if you are not? Rather than focus on the risk of an event happening to you, take a moment to consider the consequences that providing care over an extended period of years would have on the emotional, physical and financial wellbeing of those you have promised to take care of.

When asked, many think long-term care is about nursing homes. The reality is that long-term care is not a place, but a full-scale response to an event or condition. It describes the care you need if you become incapacitated, either physically or cognitively, due to a degenerative disease like diabetes, Parkinson’s or Alzheimer’s or an incident such as a stroke. By definition these conditions severely compromise your ability to get through the most basic of daily routines. In reality, the need for long-term care is a safety issue that requires 24 hour a day attention.

 Since you are no longer safe, those you love are forced to restructure their lives to ensure your safety. The change in lifestyle and the stress of your slow degeneration can have a devastating impact on their emotional and physical wellbeing. You may not want your spouse or children to set aside their lives, but respectfully, what choice would they have? Long-term care doesn’t happen to you. It happens to people you love. Simply put, if you ever need long-term care your life is not going to end, someone else’s life is going to end.

I would like to thank Harley Gordon and his staff at http://www.ltc-cltc.com/ for providing a great deal of the information for this essay. If you want to learn more about extended care planning, go to my website, www.TheDeGeorgeAgency.com, and let’s get a conversation started about how I can help you. You can also become a subscriber to my blog (http://www.degeorgeagency.blogspot.com/). The DeGeorge Agency is a “Family Helping Families.”

Is your Broker Worth the Expense? Part 5: I Teach People How to Make Investment Choices and How to Trade!

In my last blog, I continued with “Is your Broker Worth the Expense? Part 4: Education is the Key to Independence and Success!” (http://www.degeorgeagency.blogspot.com/). Teaching people how to become financially independent was my topic. Today in part 5, I will finish the series by clearly defining the difference between my services and the services provided by a broker.

First and foremost, I want to clearly state that there are some excellent brokers and brokerage houses; I know some very good brokers, and I actually have my father working with one. Secondly, Merrill Lynch, who is considered to be in the top tier of full-service brokers, recently launched its Merrill Edge platform (http://www.thesunsfinancialdiary.com/investing/merrill-edge-latest-discount-broker-free-equity-etf-trades/). Merrill’s progressive move has propelled them into the online discount brokers’ space as well. To my knowledge, their recent launch makes them the first of the full-service brokerage houses to compete in the discount brokerage venue. Merrill is attempting to effectively dominant “new and old money” in the stock market. Their move provides an insight into the future of equity and debt trading. Trading will be cheaper, and Merrill will provide service to those who want a broker, or to those who want to do their own online trading.

My niche is to teach interested parties to determine a means for evaluating their investment choices, and for teaching them the logistics of online trading. I do not provide investment advice; I teach people how to choose investments which are appropriate for their unique situation. After five years of research, I have effectively married Warren Buffet’s undervalued investing strategy with Nassim Nicholas Taleb's out-of-the-money option trading (http://www.fooledbyrandomness.com/). For individuals, who have no interest in doing their own trading (i.e. my father), feel free to contact me for suggestions about choosing a broker. If, however, you want to learn a system which is the best I’ve ever seen or used, feel free to contact me regarding your investing education. I Teach People How to Make Investment Choices and how to trade!

If you would like to learn more about my education process, go to my website, www.TheDeGeorgeAgency.com, and let’s get a conversation started about how I can help you. You can also become a subscriber to my blog (http://www.degeorgeagency.blogspot.com/). The DeGeorge Agency is a “Family Helping Families.”

Is your Broker Worth the Expense? Part 4: Education is the Key to Independence and Success!

(Please note that the blog that was submitted earlier today had a typo in it the first word that read 'I' instead of 'IN'.  This was an error by the admin person submitting the blog and not intended by the author of the blog.)

In my last blog I continued with Part 3 of “Is your Broker Worth the Expense? Planning Is Important”.  I wrote about my experience with so-called financial plans in the brokerage world.  Today in part 4, I will write about the importance of education.

My professional background revolves around teaching young adults how “to think” and play competitive games.  More specifically, I have taught 18-22 year olds how to develop their thinking skills by improving their reading and writing and have taught the males how to play football.  The DeGeorge agency specializes in teaching people how to “Build Personal Equity,” “Plan for Extended Care,” and “Buy Undervalued Stocks and Sell Puts in the Stock Market.”

My clients are interested in learning how to handle their own financial affairs and how to become responsible for their retirement and financial future.  I am a teacher and coach.  Metaphorically, I believe in teaching a person how to fish so he/she can  feed his/her family for a lifetime.  Educating you on how to become financially independent is what I do.  EDUCATION IS THE KEY TO INDEPENDENCE AND SUCCESS.

If you would like to learn more about my education process, go to my website, www.TheDeGeorgeAgency.com, and let’s get a conversation started about how I can help you.  You can also become a subscriber to my blog.  The DeGeorge Agency is a “Family Helping Families.”

Is your Broker Worth the Expense? Part 3: Planning is Important!

In my last blog, I continued with Part 2 of “Is your Broker Worth the Expense?” .  I took a quick look at three common ways that brokers charge clients.  


Today in part 3, I would like to write about the importance of planning.

Having a plan is extremely important, and those of you who have heard me speak before know that it is my contention that Americans have a plan for almost everything.  


I like to give the example that our family has a very specific plan when we go to Walmart.  I have compiled a list of items on the computer that we commonly purchase at Walmart, and while we drive to the store someone is reading the items off the list.  If we need an item, it is highlighted and when we arrive at the store highlighted items are divvied up as we enter the store.  Each member of the family then places the needed items in a cart, (we use several to save time), and we have effectively reduced our time in the store from 95 minutes to 28 minutes.  


Ironically, however, as detailed oriented as Americans seem to be, I have never met with a prospect who had a good financial plan.

Many brokers offer complimentary financial plans.  My experience, however, with brokerage house planning is that what the prospect/client generally receives is a compilation of assets with a nice binder around them and not a plan.  The compilation of assets serves as a means for the broker to offer investments in one of the aforementioned payment structures.  

 The process goes something like this:

1.      The prospect/client brings statements and/or paperwork which represents all of their investments and real estate holdings along with insurance and accumulated debt.

2.      At the bequest of the Branch Manager, the data is plugged into proprietary planning software, by an intern.  The intern’s keying the information into the computer allows the broker to go out and effectively work to gain more “assets under management” (AUM) http://www.investopedia.com/terms/a/aum.asp.

3.      The broker then meets with the prospect/client with very little command of the material.

4.      The so called “plan” is then presented in a very nicely bound format, or if the prospect/client has a good deal of money, it will be presented in an expensive leather binding.

5.      The prospect/client then is quite often impressed with the length of time this must have taken, and the aesthetically pleasing manner in which it is presented.

6.      As a result, the client/prospect feels gratitude and an obligation to purchase the recommended investments.

You may find many problems with the previous description of my experience with brokerage planning, but what I would like to concentrate on here is that the above scenario is a compilation of assets with investment offerings and not a plan.  

 PLANNING IS IMPORTANT.

If you would like a plan, go to my website, www.TheDeGeorgeAgency.com, and let’s get a conversation started and/or become a subscriber to my blog.  

The DeGeorge Agency is a “Family Helping Families.”

Is your Broker Worth the Expense? (Part 2)

In my last blog, I introduced Part 1 of “Is your Broker Worth the Expense?”. I encouraged you to take some time and determine what an acceptable rate of return is for you and your portfolio.

Today, I would like to take a quick look at some of the ways brokers charge you.

For higher net worth investors, those with a minimum of one million dollars, brokers quite often suggest a “Managed Account”( http://www.investopedia.com/terms/m/managedaccount.asp) In a managed account, your money is essentially given to an outside, professional money manager. My experience with these types of accounts is that you can be charged anywhere from 2% to 5% of your total sum invested. Your broker in the “Managed Account” scenario serves as a middle person, and gets a percentage of the fee. Hopefully, he/she at least understands the methodology behind the money manager’s investing process, and matches it with your goals because giving away your money takes no real expertise.

A wrap account, (http://www.investopedia.com/ask/answers/102.asp), is another popular way for a broker to charge. Quite often the broker chooses your investments in this account, and you pay 1-2.5% for unlimited transaction costs. In effect, the broker has effectively annuitized his/her business with the wrap account approach-that is they are paid quarterly regardless of performance and/or the number of performed trades. When an individual is paid by commissions and/or fees, a guaranteed income stream is good for them; my hope is that the wrap account is most importantly good for you!

Finally, a transactional fee (http://financialdictionary.thefreedictionary.com) Transaction+Fee is when your broker charges you a commission for each and every trade that is performed. Transactional fees were the most common payment for many years in the brokerage world. Quite often today transactional fees are still the most cost effective means of payment for individuals who need help investing.

If you are not sure which method is best for you, go to my website, www.TheDeGeorgeAgency.com, and let’s get a conversation started and/or become a follower of my blog. 

The DeGeorge Agency is a “Family Helping Families.”

Is Your Broker Worth The Expense?

In my last post, I examined the devastating impact mutual fund fees can have on your portfolio over a lifetime . This week I would like to introduce Part 1 of “Is your Broker Worth the Expense?” 

The answer to the question is actually not as complex as you might think. John F. Wasik, author of 13 books and a Morningstar columnist, recently wrote an insightful and related article entitled “Is it Time to Dump your Broker?”  Mr. Wasik suggests six guidelines to keep in mind, and his article makes some excellent points.

The fact of the matter is fees can significantly reduce your wealth over a lifetime, and therefore you must determine what you consider an acceptable rate of return.

 My first rule is “Don’t Lose Money,” and my acceptable rate of return is 15%. Quite often brokers try to determine the acceptable rate of return for you. Don’t allow him/her to tell you what an acceptable rate of return should be; he/she works for you.

Secondly, many brokers look to an index like the S&P, and believe their job is to beat the index. I don’t agree with that philosophy. If the S&P is down 40% and your portfolio is down 38%, 38% is not an acceptable rate of return. Finally, brokers get paid regardless of the outcome. 

I don’t believe anyone should be paid for losing your money. Do you?

Take some time and determine what an acceptable rate of return is for you. Then, let your broker know what you expect. Give them a chance to determine a plan and/or investment objective to reach that rate of return. If he/she comes back and says they cannot reach your rate of return, thank them for their honesty and either get a new broker or begin investing on your own.

If you are not sure how to determine your own acceptable rate of return, go to my website, www.TheDeGeorgeAgency.com, and let’s get a conversation started. 

The DeGeorge Agency is a “Family Helping Families.”

Want Some Clarity on Money?

My latest presentation was entitled:

"Want Some Clarity on Money? Recession, plus Market Volatility and a Credit Crunch=Uncertainty." 

One of my points about investing is how the fees involved with mutual funds can have a devastating effect on your portfolio over a lifetime.

Phil Town in his latest book 'Payback Time' writes:

"Fact: Mutual fund managers get rich at your expense-stealing as much as 60% or more of your returns over your lifetime through fees. Fact: The average individual will need more than $3 million to be financially independent in retirement in twenty years, and won’t get there with mutual funds. Not even close. Fact: 96% of fund managers can’t equal the historical market average return of 8% per annum. When the market goes down, they go down with it, no matter how “low-risk” their funds are supposed to be."(4)

I really try to read a book a week, and Mr. Town’s investment books are the best I have ever read.

Do yourself a favor, and get a copy of one of his books today.

Do you want some clarity on money? If mutual funds are not a good investment choice and a 12-month CD is currently paying 1.5%, what should you do with your money?

Go to my website, www.TheDegeorgeAgency.com, and let’s get a conversation started.