As most of you know, I custody asset with Fidelity's Institutional Wealth Services.  Unless you have been asleep for the last month, you are fully aware that many of the major institutions have filed bankrupty or been bought out by other companies for far less than book value.  I would like to take this opportuity to discuss Fidleity's stability.

 

Fidelity is privately held and a subsidiery of FMR, LLC.  Their revenues for 2007 were $14.9 billion, 16% over the previous year.  Regarding trading in the mortgage market, Fidelity does not speculate/trade in this area.  Fidelity  excutes trades at the direction of institutional and retail accounts, and at the request of Fidelity Funds.

In terms of customer asset protection, Fidelity is a member of Securtities Investor Protection Corporation (SIPC).  SIPC accounts are protected up to $500,000.  This does not cover the decrease in a security's value.

Money markets held in brokerage accounts are considered securities for SIPIC purposes.
Fidelity is one of the largest asset management companies in the industry and a company thate investors can feel confident doing business with, regardless of market conditions. 

As of this writing Congress has not yet put together a relief package, and it is reflected in the numbers below.  To summarize the plan for you, the government would take the illiquid assets off the balance sheets of the financial companies, which is the root of the financial system's problems.  These assets are primarily housing and mortgage related assets.  The lack of uncertainty in an immediate relief package weighted heavily on the markets and resulted in significant losses across all the major indices.

As for the third quarter ending September 26, here is where the indexes stand:

 

Coastal Financial Planning's managed portfolios were down across the board, but not at the same level. To my surprise the conservative portfolios were off -7.7% and moderately aggressive were down -3.1% after fees.  I believe the only reason the moderate portfolio fared better was due to the high concentration of dividend paying stocks. Also, I held higher positions in cash reserves earlier this year, which may have impacted the productivity of the conservative positions.
Please remember that no two portfolios are identical.  Everyone comes into the market at different times with different holdings and risk tolerances.  This information is for your benchmarking purposes only.
 
I want to reinforce now is not the time to sell. If this is a bottom, it may prove an excellent time to add value stocks into portfolios.  You can consider yourself powerless against the market downtrend or be determined and take action.

 

 

As many of you know, over the years I have cautioned you against annuities.  With the recent bankruptcies and takeovers of major financial institutions, many of you have called and asked if the annuities you have are still safe.  The answer is yes, for the most part. 

 

My first recommendation is to call the person who sold you the annuity and ask them for the details surrounding the annuity. Find out if your annuity is a fixed or variable.  If it is a variable, are the underlying investments with a company that recently filed bankruptcy?  If so, those investments should be moved to other mutual fund families.  Also, please remember you can take 10% out every year from your annuity, penalty free.   This may be the time to start making those distributions.

 

As for safety, each state runs an insurance guaranty association to protect policyholders.  Insurers contribute fees to ensure customers of failed firms are protected.  State guarantees are limited, which is a problem for policyholders.  To find out how much your state insurance department contributes to these benefits programs go to www.nolhga.com. 

All these firms survived the depression, the dot com disaster, but could not overcome the mortgage mess that they created internally.  Although this is not the only thing that contributed to their collapse, it does tell the story of how "too big" does eventually lead to an organization that can no longer control itself.
 
I am happy to say that Coastal Financial Planning, Inc. will not be part of anyone's bailout package.   This small firm has grown at a manageable rate, with a focus on ethics, solid investment decisions, and listening to our clients' needs.  We welcome new clients from other firms that meet our investment minimums.  Please call me to discuss your particular needs. 

I will be out of my office from Tuesday, January 20 - Friday, January 23, 2009 at an Asset Management Conference. I will be returning on Monday, January 26. I am giving you advance notice as I am rarely out of the office for an extended period of time.

 
I also start annual reviews around this time of the year. As I will be away in January, we will begin our annual reviews the first week of February 2009. I will send out another reminder with the year-end newsletter. 
 

This month I had the opportunity to join my fellow CFP ® Bob Veasey on his new radio talk show, Smart Money.

His program airs every Saturday morning at 9:00 a.m. on 790-am radio. Bob has been in the business for a number of years and has been someone I have always looked up to and respected. I hopefully will be joining him once a month or as appropriate topics arise on personal finance. If your schedule allows, please tune in and listen to his program. He has a broad knowledge base, and I have always found him an informative financial speaker.  

 

 

Many of you have already called and we have discussed the future direction of your portfolios. As always, if you have any concerns, please feel free to call. Verbalizing your thoughts helps me understand your risk tolerance during this volatile market period. Even though many of you have long time horizons, you still may want to share your perspectives. 

Visit Our Website

Newsletter Archive

Our Privacy Policy

Meet Angela