Listening to Talk Radio. I've been on the highway a bunch during the past month. How does 4,000 miles sound? When I told a friend about this trip, he said he had driven about 4 miles in the same period. What can I say? I hate the hassle of airports and I like the freedom of being able to come and go as I please and not by the some airline schedule which is often wrong anyway. In this last leg of my trip from Denver to my lake house, I forced myself to listen to financial talk radio. What an experience that was. The underlying theme of most of these shows was an emphasis on what to do if you are losing money in the market. One commentator, Kathy DeWitt devoted two hours to extolling the virtues of their fixed income investment that guaranteed 18.74% return for the first year. "Yes folks, That's Eighteen point seventy four percent guaranteed by the second largest money manager in the world. You can get out of the risky stock market and get Eighteen point seventy four percent. If you'll just call for your appointment today we will stop your stock market losses and guarantee you Eighteen point seventy four percent. Our financial advisors are standing by for your call so you too can get Eighteen point seventy four percent". She said virtually nothing more than that for two hours. Can you believe I stayed with the program for that long. I wanted to find out what kind of investment she was talking about and who the money manager was but she never said. Would you make an appointment to drive to her office and hear the presentation? I can't believe anyone would but surely the company wouldn't be buying two hours of radio time if they didn't anticipate a lot of business from the program. Fear can drive you into some even more dangerous situations than the stock market.
Life Settlements Were Another Popular Pitch. Ever heard of these? My first experience with these came in the early 90's when the AIDS epidemic was nearing full swing. What they did was buy an insurance policy from a terminally ill AIDS patient for some discount below the face value. Then, when the patient dies, you get the face value of the policy. Everybody wins except the insurance company and the heirs. These investments, called viatical settlements, became less popular when the new drug regimen was discovered that prolonged the life of AIDs victims. Now AIDs patients are being replaced by "unhealthy senior citizens 78-80 years of age." Check it out folks. Call your elderly parents or grandparents and see if they have an old policy lying around that they would like to sell. If they don't just call Life Partners of Waco, Texas and we will get you one of these investments. You know what you will get the day you make the investment (the face value of the policy). The only problem is you don't know when. Just hope medical science does not discover a way to prolong the lives of "unhealthy senior citizens" like the way they did AIDs patients. On a more serious note, Life Partners is a company that has been around for a very long time and they perform a valuable service for many terminally ill patients who need money for their care. I have nothing against the company, only the unseemly way their product was marketed to investors who are anxious to stop the bleeding from their stock market and real estate investments.
How About a Variable Annuity? Some of these guarantee a return of your capital if you die. You are also guaranteed a minimal return if you hold it long enough. In addition, they promise some participation in the upside if the market does well during the holding period. These products are very complex and many of those who sell them don't really understand how they work. Just remember the "no free lunch" rule.
Everyone Has A Solution To The Current Market Volatility. Unfortunately, I don't believe any of them. I'll just stick to buying cash flow and believing that as long as I have income, the market will gradually return to historic levels.
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