Bear Market: It’s Flu Season Again
 The Dow and S&P are down more than 40 percent since October 2007. Retirement portfolios are bruised and battered. And investors have that sick feeling deep in their stomachs. It’s flu season again! That’s right – what is happening in the Markets is basically seasonal. History tells us that a Bear Market occurs approximately one year out of five, on average.
Now I know what many of you are thinking: almost everyone is saying that this Bear season is different. That’s probably because most of us don’t remember a time when we had such awful symptoms. Or when so many people were afflicted and felt so terribly ill. Fair enough. Every once in a great while, the flu gets so bad it becomes pandemic (like the 1918 flu). The vaccine just doesn’t work on this strain of flu this time. But keep perspective. Just because we’re all home with a really bad strain of flu, doesn’t mean we’re all going to die.
In fact, pandemic or not, most of us will recover quite nicely in due time – as long as we take care of ourselves. What do I mean? Get plenty of rest. Drink plenty of fluids. And for goodness sake, don’t reach for the antibiotics because it doesn’t cure the flu.
Sounds like good heath advice? Sounds prudent? Too bad not every investor heeds a similar prudent strategy when Markets cause them to feel sick. For many, instead of letting their quality investment portfolio rest, they want to exercise the heck out of it, trying desperately to doctor it up by changing the investments. Instead of continuing to water their portfolio with new investment contributions (basically buying more shares while they are on sale), they withhold vital fluids that make the portfolio grow larger, faster, over the long run. And worst of all, instead of diagnosing the portfolio illness correctly (maybe the portfolio is gravely ill or maybe it just caught a cold from all the sick people around it), the investor rushes to the emergency room in a life-or-death panic, screaming, “sell it all!” – which is almost always the wrong medicine.
To be sure, some investors should be in a panic. Holding just a few once-quality stocks that are now in need of CPR is cause for alarm. And even if the stocks are doing OK, the lack of diversification may kill them next flu season. What about those investors who now have all their money sitting in cash or gold? Chances are, they already suffered a near-fatal blow to their financial lives when they sold out at a Market low. True, if they never get back into an investment portfolio, they’ll never get the flu again; but they’ll be dying a slow death due to inflation. And they’ll never re-build the muscle and strength during the four-out-of-five Bull Market years, which not only would help protect their long-term health when the Bear comes again, but also would sustain them to a ripe old age.
But the unhealthy habits of these investors need not influence the rest of us. Those of us with a prudent investment strategy don’t need to call 911 (even if the world is in a pandemic situation). If you’re not feeling very well, by all means, get a check-up to make sure your health is solid. Then listen to your doctor: Get plenty of rest. Drink plenty of fluids. Don’t take the wrong medicine. In time you’ll be good as new.
And last but not least, if your doctor isn’t giving you this sage advice, it’s definitely time for a new doctor.
© 2009 Bull & Bear Capital Advisors. Article written by Bull & Bear Capital Advisor Patricia Ostholm.
Make Estate and Financial Planning a First Step
After Divorce Or Death Of A Spouse
 After a marriage breaks up, or a spouse passes away , about the last thing most people want to do is sit down with a financial planner or an attorney. But no matter how old you are or whether you have kids or not, it’s important to consult both financial and legal experts to make sure you have an updated estate and financial plan.
It’s also best to blend estate planning with financial planning after a divorce, but before an estate is settled. If you weren’t working with a financial or estate planner before, it’s time to do so now. The immediate months after a major life changing event can be disorienting – even if you don’t move, you are literally starting a new household that you will have to direct yourself, and that means new money issues to face.
This is why that the weeks immediately after such an event are a good time to revisit short- and long-term spending and planning goals. Here’s a general road map to that process:
Start with a financial planner: It’s a good idea to get a baseline look at your finances as early as possible. Expenses can pile up quickly and unexpectedly. A Bull & Bear Capital Advisors CFP® professional can help you review your new current spending and savings needs, compare strategies to achieve long-term goals like estate planning, and retirement and give you critical tools to protect your assets if you should die suddenly. Also, to make sure that your income lasts at least as long as your life. You need to revisit these areas of financial planning as a single individual before you move on to the next stage.
Talk with a trained estate planning attorney about wills and other critical documents: True, there are software programs and other kit solutions available to write basic wills, powers of attorney and certain simple trust agreements. But it makes sense to coordinate the activities of a financial planner with an estate planning attorney who can tailor an overall estate plan specific to your needs no matter how basic they might be right now. Even if you are very young with few assets, it makes sense to get some solid advice in this area so you’ll be able to manage such planning as you age and your finances get more complex. Particularly if you have kids, such planning is important if you want to guarantee that specific assets are guaranteed for them when you die. One of the benefits of working with Bull & Bear Capital Advisors, LLC is that we are a multi-disciplinary firm with our own affiliated law office that specializes in integrated estate planning.
Make a guardianship game plan for your kids: It’s not enough to plan how money and assets will go to your children if you die suddenly or are incapacitated. If your children are minors, it’s particularly important to make sure you have a guardianship plan for their upbringing as well as any assets they may inherit. Also, if there are any trust or wealth issues that will become effective for your children once they reach adulthood, it’s also important to establish an efficient legal structure for distributing those assets as well as appointing a trustee in a will to train and guide your kids through that financial transition.
 Plan for special needs kids: If one of your children is disabled and is expected to need lifetime assistance of some type, then you should consult a qualified attorney to help you create a special needs trust. It will help protect your child from having to give up any public or social financial assistance as well as access to special doctors, medical help, special prescriptions or treatments that could be taken away if they were to personally inherit assets that would disqualify them for these programs. When such assets are held in trust, they are not counted as the child’s assets. The advantage is that those inherited assets may still be used to support their housing or other personal living needs.
Get solid protection in place: Most people focus on what may happen to their health insurance if they get divorced or lose a spouse, but insurance issues like life, property/casualty and disability insurance are sometimes put on the back burner. If you’re now on your own, you definitely need the best health coverage you can afford for yourself and your kids, but life, property, liability and disability insurance becomes doubly important.
Review all your investments for primary ownership and beneficiary information: Even if you were advised correctly to change the names on assets, it still makes sense to review that the names are indeed correct on those assets and most important, to make sure all beneficiary information is correct.
A Bull & Bear Capital advisor can help make stressful transitions like the death of a spouse or a divorce easier by making sure that you make intelligent and informed decisions about your financial life.
This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by Bull & Bear Capital Advisor Robert Liggero, MBA, CFP®, a local member of FPA.
It Is A Season Of Mounting Hysteria At Both Ends Of The Political Spectrum
 The new administration invoked the specter of an irreversible economic cataclysm if its stimulus bill were not passed, while the right predicted, with equal fervor, a cosmic economic disaster if the bill did pass. The Treasury Secretary made a delayed announcement of a plan to "save" the struggling banking system, and the equity market dropped five percent. Pundits of every persuasion ritually repeat that this is "the worst economic crisis since the Great Depression."
I beg to differ.
Nothing in this little essay should be taken as an attempt to minimize the gravity of the current economic downturn, which is by any measure steep and significant. But there is a very human tendency, when we are overtaken by shocking events like this, to see them as being terminally unique.
Try to recall the psychology which gripped our country after the terrorist atrocities of September 11, 2001. It was cited as this generation’s Pearl Harbor. We were certain that this was World War III, that the next attacks might come in any form and were surely imminent, that the economy had been gravely wounded, that everything in our lives had changed, and that we would never feel safe again. Almost everything of which we were universally afraid that autumn, insofar as the homeland is concerned, quickly faded away. (Some might say too quickly.)
Granted, an exogenous disaster like 9/11 isn’t directly comparable to a great cyclical economic event such as the one through which we are passing now, nor am I presenting it as such. I cite it not for its fact pattern but for the psychology that it induced: the illusion of terminal uniqueness. When that illusion overcomes us—as it surely has now—we not only lose the ability to put events into any kind of historical context. We lose all useful contact with history itself.
I suggest we go back and look at the period 1979–1982. These were the climactic years of a decade and a half of stagflation: the deadly combination of low economic growth and high inflation, a confluence which, until it happened, many economists would have said was impossible. The fact is that, between 1966 and 1982, the Consumer Price Index tripled—it’s our nation’s only sustained period of hyperinflation—while the Dow Jones Industrial Average went from 1000 to…1000.
By the late 1970s, inflation was actually accelerating, unemployment and interest rates were rising, incomes were declining and poverty was increasing. Then, in 1979, the wheels really started to come off. The Iranian revolution led to a tripling of oil prices, while government price controls produced interminable lines at the pump. Because oil was then a much greater factor in the economy than it is now, consumer prices shot up. Organized labor (then 20% of the American workforce) staged crippling strikes, trying to keep wages abreast of prices; there were 235 major work stoppages in 1979, involving over a million workers. In August, Business Week magazine ran its famous "The Death of Equities" cover story.
 By 1980, the "misery index"—the sum of the inflation and unemployment rates— was 22 percent. Gold in London hit $860 an ounce, a price it has never even remotely reached since, in real terms. (Today’s nominal price of around $1000 equates to perhaps 40% of what it was then, adjusting for inflation.). In September 1981, the yield on the benchmark 30-year Treasury bond exceeded 14.6%. Then, in 1982, unemployment peaked at 10.8%
I’ll leave the story of how this unprecedented, and therefore terminally unique, and therefore insoluble crisis was solved for another day. Suffice it to say that it was solved, as was every economic and financial crisis before it, and since.
Which brings us to the present day, about which one may, it seems to me, honorably hold one of two essential positions. The first is that this time is different: unprecedented, therefore terminally unique, therefore insoluble: the end of days. The other is that—fueled by massive monetary intervention, huge fiscal stimulus, and the natural order of the business cycle—we will muddle through, as we always have in the past.
In January of this year, new car sales were at such a low level that, were they to remain there, the average car would have to be on the road for 25 years before it’s replaced. In December, the rate of new single-family home construction was such that the average existing single-family home in America will have to wait 234 years to be replaced—as the economist Brian Wesbury pointed out, about the current age of Jefferson’s Monticello.
You may decide that it’s rather more likely that people are going to break down, at some point, and start buying new cars again, and that the automobile sales cycle will then turn up. By the same logic, you may deem it probable that people, taking advantage of today’s very low mortgage interest rates, will clear off the inventory of unsold homes, and that a new construction cycle will begin at some point. You may reluctantly conclude, in sum, that the business cycle has probably not been repealed.
In a similar vein, it may have escaped your notice that Intel recently announced plans to invest seven billion dollars over the next two years to build next-generation chip manufacturing plants right here in the USA, in order to produce faster, smaller chips that consume less energy. And how do they, in these credit-straitened times, propose to finance this massive outlay? Why, out of their own prodigious cash reserves, of course. (In January, Intel said it had more than $8.68 billion in cash, cash equivalents and short-term investments as of year-end.) The financial economy, dependent as it has become on the tender mercies of government, may be in a shambles. But out on the cutting edge of the technology economy, you’d think you were on a different planet.
(And don’t get me started on Moore’s Law, which says that the cost of a unit of computing power falls around 50% about every two years. If my math is holding up, that means that in ten years, computing power will cost a little more than three percent of what it does now. What astonishing new applications of information technology will such a decline in costs make manifest by 2019? )
But these musings are entirely beside the point. Which is simply a statement of one man’s opinion: that this isn’t quite the worst economic crisis since the Great Depression. It’s the worst economic crisis since 1980.
And that this crisis may one day be every bit as hard to remember as that crisis seems to be today.
© 2009 Nick Murray. All rights reserved. Used with permission.
Provided by Bull & Bear Capital Advisor Greg Pritchard, CFP®.
How To Prepare For Your First (Or New) Planner Visit
 If you’ve never met with a financial planner before, or it’s been years since you’ve visited one—or you want a second opinion because of today’s market environment—you need to find a planner, then prepare for your visit.
Generally, you should research individual financial advisers or firms, and you should look to trusted friends and family for advice. You should interview two or three advisers by phone before you sit down and understand their compensation structure.
It’s also important to discuss your overall goals with the planner you’re interviewing so you can gauge their ability to help you meet those targets.
Here are some questions you should ask a prospective financial planner:
What training do you have? Find out how long the planner has been in practice and what kind of certifications they hold. A CERTIFIED FINANCIAL PLANNER™ professional is someone with a minimum experience of three years who has completed a comprehensive course of study through a degree or certificate program offering a financial planning curriculum approved by The CFP Board of Standards, Inc. CFP® practitioners must pass a comprehensive two-day, 10-hour Certification Examination that tests their ability to apply financial planning knowledge in an integrated format. Based on regular research of what planners do, the exam covers the financial planning process, tax planning, employee benefits, retirement planning, estate planning, investment management and insurance.
What services do you offer? What a financial planner offers is based on credentials, licenses and areas of expertise. Generally, financial planners cannot sell insurance or securities products such as mutual funds or stocks without the proper licenses, or give investment advice unless they are registered with state or Federal authorities. Some planners offer financial planning advice on a range of topics but do not sell financial products. Others may provide advice only in specific areas such as estate planning or taxes. A few elite financial firms offer comprehensive financial planning. All of the advisors at Bull & Bear Capital Advisors, LLC are licensed CFP® professionals. Additionally, our team also includes several attorneys and CPAs who are able to provide a uniquely integrated multi-disciplinary approach to client service.
How do you charge for your services? Professional planners will provide you with a financial planning agreement that spells out the services they provide and how they’ll be compensated. Payment can happen in one of several ways:
• Salaried planners are actually employees of a firm, and you help pay their salaries through fees or commissions you agree to pay.
• Direct fees to the planner through an hourly rate, a flat rate, or on a percentage of your assets and/or income.
• Commissions paid by a third party from the products sold to you based on the planner’s recommendations. Commissions are typically a percentage of the amount you invest based on those recommendations.
• A hybrid of fees and commissions based on services. A planner may charge a fee for designing a comprehensive financial plan and occasional visits and calls to review it, while commissions might come from products they sell that you invest in. (Planners may offset some fees in exchange for commissions.)
Do you have any potential conflicts of interest? It may seem like a rude question, but the best planners expect this one and are prepared to make disclosure. Obviously, if a planner profits from the sale of investment products to you, she must spell that out.
 How do you feel about teaching and training? One of the primary benefits of having a financial planner is education about the moves you are making or may potentially make. Don’t view a planning relationship as tossing someone your finances so you won’t have to deal with them anymore. As long as you’re paying for their services, make sure you get a long-term education out of it.
When you select a planner, they’ll give you a list of documents and information to bring in for your first meeting, and generally, it will be detailed on a checklist that may include:
An income and expenditure checklist: This is a summary of current and projected income. You’ll need to bring or detail:
Income
• A current pay slip
• Profit and loss statements for business income
• Pension income statements
• Statements of non-investment income
• Family trust distribution documents
• Tax returns
• Annuity, maintenance agreement statements
Expenses
• Home: Mortgage, rent statements, utilities, household repairs, insurance, appliance purchases, landscaping or house cleaning
• Transportation
• Food: Grocery and restaurants
• Medical: Doctor, dentist and prescription bills
• Education: Tuition, school fees
• Child care: In-home our outside-the-home care
• Personal grooming: Clothing, shoes and accessories, hair, makeup
• Pet care: veterinarian, food and grooming bills
• Insurance: Health, life, auto, disability
An asset and liability checklist: This is a summary of what you own and what you currently owe. You’ll need to bring or detail:
Assets:
• Principal residence
• Vacation home
• Investment property
• Bank accounts
• Investments
• Collectibles and personal property
• Automobiles, other vehicles
Liabilities:
• Mortgages
• Credit card debt
• Auto loans
• College loans
• Business loans
Lastly, you will want to understand the process that is used to develop your financial plan.
This column is produced by the Financial Planning Association, the membership organization for the financial planning community, and is provided by Bull & Bear Capital Advisor Robert Liggero, MBA, CFP®, a local member of FPA.
Bull & Bear Capital Advisors is a comprehensive financial planning firm with its own affiliated law firm to help you create a well thought out estate plan that can protect your interests if you become incapacitated.
BULL & BEAR CAPITAL ADVISORS
6817 Southpoint Parkway, Suite 1003 · Jacksonville,
Florida 32216
phone: 904.363.3600
Securities offered through Bull & Bear Brokerage Services, Inc., Member MSRB, NASD, SIPC.
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