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 are not endorsing or recommending any investment information that may appear on the site.

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.

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. 

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.

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.

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.

SEC and Stock Frauds: Can This Dog Hunt? August 16, 2016

A dubious search engine company trading over-the-counter on Wall Street, with a felon as a “General Design and Marketing Strategist” who was banned from the industry for previous stock frauds, and with the craziest SEC filings and disclosure documents you’ll ever read in your lifetime, was finally halted from trading yesterday by the SEC – but only after reaching a market value of $35 billion.

What JPMorgan and Citigroup Have in Common When It Comes to Crime: February 23, 2017

On September 8, 2016, the Consumer Financial Protection Bureau (CFPB) fined Wells Fargo $185 million following an investigation that found that its employees had engaged in a widespread practice of “secretly opening unauthorized deposit and credit card accounts” in order to meet sales quotas or qualify for bonuses. An estimated 2 million accounts were involved. One month later, the Chairman and CEO of Wells Fargo, John Stumpf, was gone.

Consider that swift action to acknowledge and punish egregious abuse of clients with how the Boards of Directors of JPMorgan Chase and Citigroup have responded to criminal felony charges and seemingly endless regulatory fines for abusing clients’ trust. The Boards have kept their CEOs in place, paid the monster fines and moved on to the next settlement.

Warren Buffett Pens a Dangerously Misleading Letter to Americans: February 27, 2017

Warren Buffett, the CEO of Berkshire Hathaway, authors an annual letter to shareholders that receives wide media coverage for the nuggets of wisdom dispersed to the masses. His latest letter, released on Saturday, trumpets American exceptionalism, the miraculous market system Americans have created, while it blithely dismisses the greatest wealth and income inequality in America since the 1920s. Buffett preposterously observes that “Babies born in America today are the luckiest crop in history.”

Federal Agency Issues Warning on Reverse Mortgages: August 30, 2017

The Consumer Financial Protection Bureau (CFPB), the Federal agency created after the 2008 financial crash to protect consumers from predator banks, has issued a warning on what smells like the latest financial blood sport: bank employees selling reverse mortgages to seniors under the guise that it will allow them to reap a larger Social Security benefit down the road by delaying Social Security payments to a later age.

If Vanguard Is Right, You’ll Need to Save More For Retirement:  November 28, 2017

If your retirement savings strategy has factored in an annualized stock market return of 7 percent or higher and Vanguard is right about the potential for a return of 4 to 6 percent, those planning to retire in less than 10 years will need to either save more for retirement or extend out the date of retirement.

Wall Street’s Misallocation of Capital Is Worse Today than the Era: June 7, 2018

Short memories are going to once again doom millions of stock market investors who are getting their advice from Wall Street’s minions of deeply conflicted analysts and brokers. This is a good time to reflect on the fact that when the bubble went bust from 2000 to 2002 it wiped 78 percent of the value off the Nasdaq stock index.

Even after Madoff, Ponzi Schemes Touting Promissory Notes Proliferate: June 11, 2018

The promissory note/Ponzi scheme has become such a problem that in April of this year the SEC issued an “Investor Alert” detailing the following “classic warning signs”:

“Promises of High Returns with Little or No Risk. Guaranteed high investment returns are the hallmark of a Ponzi scheme. Every investment has risk, and the potential for high returns usually comes with high risk. If it sounds too good to be true, it probably is.

“Unlicensed and Unregistered Sellers. Most Ponzi schemes involve individuals or firms that are not licensed or registered. Even if an investment professional comes across as likeable or trustworthy, use the free search tool on to check whether the person is licensed and registered.

“Overly Consistent Returns. Investment values tend to fluctuate over time. Be skeptical of an investment that generates steady positive returns regardless of market conditions.

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