Archives for February 2017

As much as we love to joke, “If you read it on the internet, it must be true!”, nearly everyone has fallen prey to some type of fake news headline. Even if you discover the information in an article is suspect after reading a couple paragraphs, your click alone may have been enough for the website to receive compensation.

Fake news has become big business and can be quite sophisticated, making it more difficult to discern false stories from legitimate news. Bear in mind that the website of a legitimate news organization will provide information about its mission, staff members, physical location and a means of contact. However, even fake websites may have names that appear legitimate, such as Associated Media Coverage, abcnews.com.co, WTOE 5 News or the Boston Tribune.

Even legitimate mainstream news coverage can be misleading at times. Some publications are prone to cover stories and/or angles geared to a particular audience, so even though the news may not be “fake,” it may present only part of the story. Be aware that the more times you click on questionable headlines you think could be real, the more fake news stories with similar content may be directed your way.

The following are tips to help stop today’s fake news epidemic:

• Read beyond the headline. Sometimes headlines stick in our heads and we repeat them or share them on social media. However, if you read the article before sharing, you may discover the information is iffy.
• Be aware that fake news articles tend to have no author or, worse yet, a fake author with bogus credentials.
• Check the date. Many stories get shared that seem timely but happened in the past.
• Stories that feature excessive exclamation points, capital letters and misspellings are not likely to be legitimate.
• Whenever you have doubts, Snopes.com and FactCheck.org are legitimate websites that expose fake news, so you can check out suspicious news sources.

When you hear something repeated enough times, doubts may start to slip away, and eventually it’s accepted as a fact. Believing the things that are imbedded in our psyche because we’ve heard them before is known as an “availability bias.”

This may partially explain why blue-chip stocks are popular, as more investors tend to be interested in known entities they have heard about hundreds of times before. Of course, it’s important to ensure you can trust the source from which you receive information, investment or otherwise.

Identifying a wide range of investor biases is part of the research emanating from the growing field of behavioral finance. These insights are designed to help each of us understand why we make the decisions we do, particularly when we behave irrationally despite having reliable information in hand to make a rational choice. Behavioral finance delves into how we process information using flawed filters of emotion, memory and even our personal disposition to bias our decisions.

Availability bias is just one of many factors that can impact investor decisions. Another is “recency bias,” an inclination to use our recent experience as a foundation for predicting what will happen. For example, even though we intellectually understand that securities prices rise and fall in market cycles, sometimes we get so caught up in the fact that a stock “always delivers” that we’re surprised when it takes a downturn.

“Familiarity bias” is when we stick with what we know and avoid what we don’t. In life, that may simply lead to boredom, but when investing, it may have more significant implications. It’s like saying we already possess all the knowledge we’ll ever need.

Bias can even pertain to when retirees decide to begin drawing Social Security benefits. The trend is to start before full retirement age. Some people may need to supplement their income at that time, but others instinctively believe that if they don’t start taking benefits early, they’re losing money (“loss-aversion bias”).

The truth is, once you begin taking benefits, you “lock in” to that level permanently. If you begin drawing benefits at age 62, you’ll receive 25 percent less each month than your full benefit at age 66.

As a financial advisor, we work to establish trust with our clients.  It’s important to consider any investment within the context of your own goals, risk tolerance, investment timeline and the composition of your overall portfolio. We will only provide investment advisory services after we have assessed your financial situation. If you’re interested in a comprehensive review of this nature, we’d be happy to schedule a time to meet with you.

Our firm is not affiliated with the Social Security Administration or any governmental agency. The content provided here is designed to provide general information on the subjects covered. It is not, however, intended to provide specific legal or tax advice. Contact us at info@securedretirements.com or call us at (952) 460­-3260 to schedule a time to discuss your financial situation and the potential role of investments in your financial strategy.

The United States’ recovery following the recession may feel slow, but it has outperformed other major markets worldwide.

Europe, home to many developed nations, has seen dismal growth that is not expected to improve anytime soon. The Conference Board, a global, independent business membership and research association, projects only 1.4 percent growth in 2017, down from its 1.7 percent rate in 2016.

Governments in developed countries are in a state of transformation and reform at the will of working-class voters. Dissatisfaction in Great Britain led to a vote to leave the European Union last summer, followed by a “drain-the-swamp” sentiment in the U.S. presidential election and finally, at the end of the year, Italy voted against a referendum for constitutional reforms that may have helped its failing banking system.

As a general rule in any country, a state of uncertainty and lack of confidence — whether caused by the economy, financial markets, civil unrest or political upheaval — tends to quash growth. Companies may put expansion and investment plans on hold, which further stunts job and wage growth. Unfortunately, the longer this state of uncertainty persists, the more profound impact it can have on an economy.

There are several key issues that will likely impact European countries this year. One is the voter movement against trade deals. Global free trade may offer lower-cost labor options and lower consumer prices, but at the price of job losses to workers in developed nations. The European zone in particular has enjoyed a prolonged period of open borders and a positive trade balance marked by more exports than imports. However, the challenge moving forward will be how to stimulate growth through globalization without further disenfranchising domestic populations.

The first big economic test for incoming politicians may come in March, when Britain begins its extrication from the EU. This will be accompanied by a series of political elections which could further serve to destabilize the region, including the Netherlands (March), France (May) and Germany (September).

The euro is losing value compared to the U.S. dollar, which one analyst believes could help Europe’s exports become more competitive and stimulate growth in the region. However, rising interest rates in the U.S. could lead to instability in emerging markets and a drop off in overall global demand.