Personal Finance

Pam Martens, the Editor of Wall Street On Parade, managed the life savings of average Americans for 21 years on Wall Street.  Her personal finance columns seek to help the public better understand the jargon, complexities, and conflicts of Wall Street. The information that appears on this site cannot, and does not, take into account your particular investment goals, your unique financial situation or income needs and is not intended to be recommendations appropriate for you. When it comes to making your own investment decisions, you should always consult in advance with your financial advisor and accountant.

At times, Wall Street On Parade links to news or opinion on other sites which we believe to be in the public interest. These web sites may also contain investment advice or investment advertising. We receive no remuneration for these links, provide them purely in the public interest, and are not endorsing or recommending any investment information that may appear on the site.

Can You Trust Your Money Market Fund: November 9, 2012

Millions of Americans have no idea that there is a world of difference between money market accounts and money market funds. Two extremely critical words define the difference: FDIC insurance.

The New York Stock Exchange Wants to Teach You Investing Basics; Should You Listen: November 16, 2012

The New York Stock Exchange (NYSE) wants to teach the public financial literacy. It says “Our Financial Literacy Center serves as a credible resource for basic financial education to help people better understand and manage their personal finances.” Is the NYSE a credible source?

How Are We Going to Create Jobs In America With Stock Offerings Like These: November 26, 2012

America doesn’t have a jobs problem; it has an IPO problem. The lack of jobs can be directly correlated to the misallocation of capital by Wall Street to financial wagers instead of directing the flow of capital into job producing growth industries.

A review of the 201 initial public offerings (IPOs) at the New York Stock Exchange so far this year, shows that 99 were financial wagers on old debt and/or equity instead of new listings of real companies making real products to create real jobs. The 99 IPOs were closed end mutual funds or ETFs (Exchange Traded Funds). Another 11 listings were banks or financial firms.

Small Businesses Are Essential to the Economy, But How Do They Stack Up As Investments: November 30, 2012

Congress and the President should rightfully be concerned about the dramatic decline in young, small businesses coming to market as initial public offerings. These are, hopefully, the innovative small businesses that will fuel the jobs of tomorrow. But as investments to stockholders, they lack a key element.

Consumers Have Powerful Weapons Against Wall Street’s Bad Practices: December 6, 2012

I offer ten ideas to get started on the first course of taming the Wall Street beast. And, just to be clear to those perched on the edge of their seats preparing to scream “Socialist!,” I’m not suggesting “redistributing” wealth; I’m suggesting putting the wealth back into the hands from which it was taken in a rigged wealth transfer scheme.

Who Is Ken Fisher and How Can He Afford All Those Investment Advertisements: December 7, 2012

It seems like a day doesn’t go by that an advertisement from Ken Fisher doesn’t pop up on my laptop when I’m visiting a business news web site. It’s been going on for months. The ads suggest that I’ll be doomed if I don’t read the latest report from Ken Fisher; it’s a “must read” with research and analysis “you can’t find anyplace else.” And, by the way, if you don’t have $500,000 or more to invest, just fuhgeddaboutit. Yesterday, I decided to check out this fellow and find out how he can afford all these ads.

 Investing Angst: Sell Down to Your Sleep Level: December 14, 2012

Under law, investments are supposed to be “suitable” for the client. That implies things like: don’t buy a risky growth stock for a 90 year old; don’t invest in non-dividend paying stocks for a couple who have stated their major need is income; don’t buy start-up companies if the client tells you his most important objective is preservation of principal.

But all too often, financial advisors fail what I think should be a core mission of personal money management: build the client a prudent, effective financial portfolio that also allows the client to sleep at night. A portfolio that is creating stress, upset stomachs, and insomnia is a failure in my opinion, no matter what the rate of return. It may be legally “suitable,” but it fails on the basis of giving the client comfort and peace of mind. In other words, it is depriving the client of the very quality of life for which he saved that money his whole life.

How Much Money Do You Need For a Rainy Day Fund: December 21, 2012

A backup savings account that will last for three months is more like a brief shower fund than a rainy day fund. It’s certainly not adequate for the kind of Perfect Storm the economy is currently witnessing.

There’s a Retirement Planning Crisis in America: January 4, 2013

According to a Gallup poll conducted in April 2011, the number of Americans who say they will not have enough money to live comfortably in retirement reached a new high of 53 percent in 2011. And the angst is not limited to those nearing retirement. According to a Pew Research survey conducted in 2012, 53 percent of adults between the ages of 36 and 40 said they are either “not too” or “not at all” confident that their income and assets will last through retirement.

Downton Abbey’s Earl of Grantham Made Five Age-Old Investment Mistakes: January 11, 2013

The Earl made not one, but five critical investment mistakes which have been regularly repeated since time immemorial. The gravest mistake was to invest in a concentrated position – one company, one industry (and a cyclical one no less). Next, he was swayed by the preposterous assurances of acquaintances that he couldn’t lose. (If it is of this world, you can lose it.) Then, it appears, the Earl and his financial advisor failed to properly monitor the stock. Companies with visible hard assets like railroad lines (as opposed to companies like Madoff with imaginary paper assets) rarely go from thriving to bankruptcy overnight. There would typically have been warning signs and intermediate price declines when the position should have been scaled back.

Americans Are Making a Grave Mistake With 401(k) Plans: January 18, 2013

A tax-deferred account such as the 401(k) allows interest and dividends to compound without a bite from taxes. Only when funds are withdrawn from the 401(k) is the money taxed. Since it is quite likely that a retiree’s tax bracket will be lower than that of his or her working years, focusing on the tax-deferred benefit of the 401(k) and maximizing that benefit is about the last hope for making this system work for retirees.

Do You Really Need Stocks In Your Portfolio: January 25, 2013

If you are an investor who is not emotionally prepared to lose 22 percent of your money in one day (October 19, 1987, Dow Jones Industrial Average loss) or 38.5 percent in one year (2008 S&P 500 loss), just stay completely away from stocks or invest only an amount you can afford to lose. Many people do just that and live happy ever after.

Retirement Becomes Distant Dream For Growing Number of Americans: February 1, 2013

The reality is that while the stock market indices like the Standard and Poor’s 500 and Dow Jones Industrial Average have made up lost ground in the past two years, many widely held stocks lost all or almost all of their shareholders’ equity when they filed bankruptcy, merged or were put into receivership. And, as is human nature, many pre-retirees could only take so much pain and angst and sold at close or near to the bottom of the market’s plunge, locking in their losses.

GAO Report: Cost of the Financial Crisis — Your Retirement: February 19, 2013

The General Accountability Office (GAO) has released a devastating appraisal of the financial toll the 2007 to 2009 Wall Street financial crisis has had on the U.S. economy and workers.

How to Hire a Financial Advisor: Do the Opposite of the U.S. Senate in Picking Jack Lew: March 1, 2013

If you are thinking of hiring a personal financial advisor for the first time or replacing the one you have, do the opposite of what transpired in the Senate.

Is the Stock Market Setting New Highs? Not Exactly: March 6, 2013

Were one to adjust the Dow for inflation, there has not only been a lost decade for investors, there’s been a lost 13 years. Adjusted for inflation, the Dow is not even back to its level set in the year 2000. Equally noteworthy, the general public would likely take pause to learn that stocks are nimbly plucked out of the Dow Jones Industrial Average when things go sour for the company. Who are the deciders making these closed door decisions? A big, independent accounting or consulting firm you might be thinking; like the folks who hand over the sealed envelope at the Oscars. No, the stocks are picked by editors at the Wall Street Journal, whose revenue stream comes significantly from corporate advertising.

Personal Investing Lessons From JPMorgan’s London Whale Debacle: March 22, 2013

Despite a multitude of formulas for measuring risk, multiple layers of oversight management, 28 members of a risk management team with titles like Managing Director, Executive Director, and Vice President, it somehow didn’t occur to any of these folks that the number one criteria for a trading investment is that you need to be able to get out of it.

PBS Drops Another Bombshell: Wall Street Is Gobbling Up Two-Thirds of Your 401(k): April 25, 2013

If you work for 50 years and receive the typical long-term return of 7 percent on your 401(k) plan and your fees are 2 percent, almost two-thirds of your account will go to Wall Street. This was the bombshell dropped by Frontline’s Martin Smith in this Tuesday evening’s  PBS program, The Retirement Gamble

The Gov’s Plan From Hell: Disgusted With Wall Street Fees Eating Into Your 401(k), You Can Move It To Even Higher Fees At an Insurance Company: May 13, 2013

Did you just find out your 401(k) is leaking 8 percent in a hodgepodge of Wall Street management fees, transactions costs, sales commissions, and marketing schemes. Maybe you did the math and realized your account value, without your new additions, is still where it was in 2007. Or did you just check BrightScope and find out that your 401(k) is so abysmal that you’ll need 18 additional years of work to make up for the $215,500 in lost retirement savings…

If so, there’s no reason to seethe in silence. The U.S. Department of Labor wants to hear from you about a potential plan to move you from the clutches of Wall Street to the warm embrace of the insurance industry where companies like AIG – that needed a $182 billion bailout from the U.S. taxpayer to avoid defaulting on its annuity payouts to widows and orphans around the world – would be able to take over the slimmed down assets in your 401(k) in exchange for the promise of a fixed income stream in retirement.

The Next Financial Crisis: Junk Bonds: May 31, 2013

Ignore this past week’s trading in the junk bond market at your own peril…In the last two weeks, junk bond prices have been selling off as everyone from small investors, pension funds, insurance companies and mutual fund portfolio managers reassess the amount of bond support that will be coming from the Federal Reserve in the future. While prices of Treasury bonds and investment grade corporate bonds have also sold off, there has been a notable deterioration in the junk bond area, with a particularly sharp sell off earlier this week.

Margin Debt On Wall Street Hits All Time High: But Whose Debt Is It? June 3, 2013

Reports suggest that Wall Street brokers may be recommending highly inappropriate margin loans to their customers to be used for personal reasons. Publication 550 from the IRS explains that when it comes to taking margin loans against your investment securities, “You cannot deduct any interest on money borrowed for personal reasons.” In other words, you can’t deduct the interest if you use the loan to pay for a vacation, to buy a new car, to pay for a wedding, etc.

Stock Selection Is, Well, Everything: June 19, 2013

After 30 years, $1000 invested in Procter and Gamble grew by 2,168 percent to $22,684 – not including the cash it was paying you in dividends for 30 years. The same $1000 (actually $976) invested on the same date 30 years ago in IBM, grew to a measly $8,467 or 767 percent – and that’s with the dividend reinvested, giving you no cash flow for three decades. As always, be aware that past performance is no guarantee of future results. 

What Dodd-Frank Didn’t Fix: The Most Dangerous Aspects of Wall Street: December 13, 2013

For those being lulled into a sense of comfort or complacency by the announcement that the Volcker Rule was approved this week (it won’t take full effect until 2015 and maybe not even then), here’s a reminder of what the Dodd-Frank financial reform legislation and the Volcker Rule have not fixed. 

Why Didn’t the Stock Market Sell Off On the Fed’s Taper Announcement: December 19, 2013 

What actually happened in the stock market yesterday is the following:

The stock market did not initially rally at 2 p.m. on the Fed’s announcement – it did a bungee jump downward, as you can see on the daily chart here from That plunge is the patently normal reaction any sane market watcher would have expected after all previous hints from the Fed that it would begin tapering have sent the market into panic losses.

But by 2:03 p.m., a very strange thing was happening. The market reversed course on a dime and the Dow Jones Industrial Average was up 51 points. By 2:05 p.m., it was up 125 points. By 2:10, up 158 points. By the close of trading at 4:00 p.m., it was up 292.71 points.

The Devil Is In the Details of the President’s New Retirement Plan for Workers: January 29, 2014          

So exactly what does this new MyRA do for workers that they can’t get elsewhere? 

MyRA: Making President Obama’s New Retirement Account Work for You and Not Wall Street: January 30, 2014 

After speaking with the U.S. Treasury, and scouring fact sheets provided by the White House, this is the detailed outline of how the MyRA is currently envisioned.   

At What Age Should You Collect Social Security? Carefully Consider Your IRA: March 25, 2014

Many individuals are now retiring with large sums in their 401(k) plans. Those accounts can be rolled over to traditional IRA accounts without triggering a taxable event where the individual has more conservative choices like Treasury notes and FDIC insured Certificates of Deposits as well as mutual funds for the more aggressive.

Preserving the tax-deferred status of these traditional IRA accounts should be seen as a critical part of the deliberation of when to begin taking Social Security benefits. This article explains why.

New Report: Global Economies May Be on Path to Another Crash: September 30, 2014

Four noted economists have issued a report under the umbrellas of the International Center for Monetary and Banking Studies and the Centre for Economic Policy Research (CEPR) that is raising alarm bells at global central banks.

According to the report: “The world is still leveraging up; an overall, global deleveraging process to bring down the total debt-to-GDP ratio – or even to reduce its growth rate – has not yet started. On the contrary, the debt ratio is still rising to all-time highs.”

The Stock Market Has Lost Confidence in Central Banks as Gods: October 14, 2014

Yes, there is a wall of worry that the stock market is no longer climbing but is now descending. The greatest worry, that makes all others pale in comparison, is that the U.S. central bank, the Federal Reserve, has nothing left in its monetary arsenal but one bullet – Fed-Speak, otherwise known as spin.

Hedge Funds Get Pummeled: Shades of Long-Term Capital Management L.P.: October 16, 2014

If you happened to be sitting behind a trading screen on Wall Street in late August and September 1998, you’ve likely been having some déjà vu over the past seven trading sessions. Intraday rallies continue to fail; there is a thundering stampede into Treasuries; rumors are buzzing about hedge funds in trouble; waves of selling pressure suggest wholesale dumping to meet margin calls.

IBM Has to Pay a Foreign Government $1.5 Billion to Unload a Business? : October 21, 2014

In 30 years of observing Wall Street, we can’t remember a headline like the one that appeared yesterday at Reuters: “IBM to Pay GlobalFoundries $1.5 Billion to Take Chip Unit.” When one can’t even give a business away that includes thousands of patents, IBM engineers and two operating factories, times are tough. The market thought so also; by the closing bell yesterday, IBM’s stock was down $12.95, or 7 percent, to $169.10.

Wall Street’s Wealth Transfer System Is Imperiling the U.S. Economy: April 13, 2015

One facet that all of these wealth transfer systems have in common is that they all masquerade under a benign sounding name.

Here Is What Is Fraying Nerves Among the Financial Stability Folks at Treasury: June 10, 2015

On Monday, Richard Berner worried aloud at the Brookings Institution about what’s troubling the smartest guys in the room about today’s markets.

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