Ron & Rand still at it: FREE-MARKET GEMS

He told us so . . . Ron Paul wrote this article in 2001. He was spot-on right back then. He seems downright prophetic today.

Out of the way, NASA (2:40) . . .  Your visionary days ended the moment Neil Armstrong took that famous step. It’s the entrepreneurs’ turn now.

A true bi-partisan . . . Rand Paul is at it again, joining forces with Democrat Ron Wyden to stop yet another expansion of Federal power into our privacy. Computer privacy this time.

California dreamin’ (6:00) . . . The golden state’s water solution is obvious, says policy expert Reed Watson: let the free-market determine prices and then compete for it. The odds of them actually doing it? In your dreams.

Give us a break! . . . This letter from an entrepreneur to the heads of the Senate Committee on Small Business and Entrepreneurship paints a dire picture of one start-up business strangled by red tape. Obama’s overtime rules just pulled the knot tighter.





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One for the Little Guy, and other FREE-MARKET GEMS

Trump – No one saw it coming (8:00) . . . Actually, this guy did: Dilbert creator Scott Adams. We ran this piece last fall, when Donald was still a long shot. It speaks even louder now.

One for the Little Guy (6:00) . . . A courtroom victory against the FDA makes life a little easier for medical device start-ups.

Service with a Smirk . . . TSA wait-times continue to climb, but don’t look for anything like a fix. You can’t put a price on safety, after all.

Yes, Sweatshops are Evil (2:30) . . . But for the children who work in them, the alternatives are usually worse. Boycotting products made from child labor is not the solution to ending the problem. Economic development is.

Changing the Program . . . FEE contributors Isaac Morehouse and Dan Sanchez propose 7 ways that school has warped our minds, and some hope on how we can straighten them out.

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What Percentage of Active Mutual Funds Beat the Market Index?

Do me a quick favor and paste this search into your web browser.

What Percentage of Active Mutual Funds Beat the Market Index?

You should find some or most of the following titles:

Index funds trounce actively managed funds: Study
90% of fund managers beat the market — but their shareholders don’t
86% active managers failed to beat market in 2014

Wading through the first page of results will be disheartening if your portfolio is mixed with active funds.

I like the last article on the first page the best:

10 Reasons Why Brokers Don’t Like Index (not active) Funds” I’ll save you some time and skip to the end of the list…

No. 10: If you invest in index funds, there’s nothing in it for me.
This argument puts the naked truth on the table: The broker is not really working for you. A broker may say something like: “If you want professional guidance you have to buy a fund that compensates me with a commission or other fees.”

I think that’s backwards. If you want objective guidance that isn’t swayed by sales commissions, you should pay an advisor separately for advice on choosing the lowest-cost funds that will be best for you. Depending on your needs, you may pay a one-time fee for one-time recommendations or an ongoing fee for continuing advisory help.

Regardless of whether or not you pay a sales commission, when you buy an actively managed fund instead of an index fund, you will pay higher expenses as long as you own the fund. This is not a good way to pay a broker for investment advice — and most of the higher expenses you pay will not go to the broker anyway.
~ Paul Merriman

In other words, with actively managed funds, you pay a mutual fund manager to make trades that are supposed to beat the market. With every trade there is a fee for the investor. That fee gets paid to the mutual fund manager. In contrast, the index fund does not get traded at the whim of a manager; rather it simply tracks the index. With far fewer trades, there are far fewer fees, which of course means your investment grows quicker.

While this is just a quick Google search and not empirical evidence, the articles do comport with decades of research that seems to confirm the general tone of these answers. And having an answer to the question of what type of fund is better, index or actively managed, is key to creating a plan for your future that will give you peace of mind today.

So whether you are retired now or have 30+ years to go, here are the key questions that you should consider:

1. How do I know if I own active mutual funds?
2. If I do, how do I fix it?
3. My 401k only offers active funds, what are my best options?
4. Are index funds the answer or is there something better?

We’ll be answering these questions at our upcoming investor event on May 17th. We’d love for you to join us.

For more information about upcoming Investor Education Seminars, contact <a href=”” target=”_top”>Kristin Faasse</a>  or Liz Trawczynski at (517) 853-5473.

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Darth Trump, Pot Law, and the Risk Fable: FREE-MARKET GEMS

The Risk Fable . . . Entrepreneurs are not gamblers choosing lower risk over more; rather, they are needs providers, putting their resources where the greatest consumer need lies. Only a right understanding here can explain the effects of taxation on entrepreneurship. Ludwig von Mises himself is the guest blogger today (ok, he’s dead; it’s a book excerpt).

Pot Law – A Game of Inches (2:30) . . . Possession of an ounce can get you 10 years of jail time in Virginia, and not even a warning next door in D.C. But when we don’t like the laws, we can still (for now at least) vote with our feet.

12 Reasons to Oppose the Welfare State . . . Professor Bryan Caplan of FEE breaks them down according to soft, medium, and hard-core libertarian sensibilities. So there’s something here for everyone (who thinks rationally).

Conscription as Payback? . . . Nonsense, says Ron Paul. We already pay for our freedom to the tune of $700 billion in tax revenues every year. Furthermore, government does not grant to us our rights. It secures rights already granted to us by God.

Darth Trump . . . Yes, another Star Wars / Presidential Race analogy. From one Sith presidency to another, Trevor Burrus highlights America’s most recent slide toward the dark side.

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Event: Time Horizons


“I don’t mind if my investments run out during retirement” – said no investor ever.

Maybe you’ve heard people say that when they’re ready to retire they’ll get out of the market. They say prudent investors use stocks only during their working years, but when it’s time to retire, they trade in for something more reliable – an annuity, more bonds, even all cash!

It sounds logical, until you consider the major flaw in this thought process: the key to successful investing up to and into retirement is maintaining the right level of equity exposure within your investment portfolio.

And this level may be higher than you expect.

Think of your investments during retirement like you would an endowment for a scholarship fund. The endowment holds its principle in perpetuity and only allows for a certain amount of money to be taken from the fund each year. By never taking more than the allotted amount, the fund ensures that there will be money for years to come to maintain the scholarship.

In contrast, having all of your money in bonds during retirement doesn’t allow the money to grow fast enough to keep you from cutting into the principle, which puts you in danger of using up your retirement savings early.

In a very real sense, the date of retirement is actually the beginning of the investor’s most important investing phase. The purpose and handling of the portfolio in this phase can have as much to do with retirement income as the investor’s entire lifetime of investing decisions.

This time period – the time you plan to keep your money invested – is what people in financial professions call your Time Horizon. Investopedia defines it as the total length of time that an investor expects to hold a security or portfolio.

So, now it’s time for you to answer some questions about your portfolio while you plan for your retirement:
• What is your time horizon? (How long do you expect to hold your portfolio?)
• What are your expected income needs in retirement?
• What part will your portfolio play in meeting these needs over the time required?
These are complex questions that may be hard to answer without some help.

On May 17, Evan Vanderwey will be hosting an Investor Coaching Seminar in East Lansing that will dive into this concept, and you’re welcome to join us. Afterward you are invited to schedule time to meet with us to talk about your retirement income needs and investing time horizon so that you can achieve peace of mind.

For more information about Evan’s upcoming Investor Education Seminars, contact Kristin Faasse ( or Liz Trawczynski at (517) 853-5473.


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