Just Plain Bad Advice - Nothing Always Works All of the Time

I was reading an investment periodical that I received at my office. It was from a real estate mutual fund company. The title of the article was "The Importance of Remaining Invested." They were talking about the importance of buying and holding investments for the long-term.

The article is talking about helping your clients feel comfortable with the risk in their portfolio. If your client doesn't feel comfortable with the traditional stock/bond/cash portfolio, consider adding real estate to make it more diversified. The article was making the point that by adding real estate to the mix "the correlation between real estate and stocks, bonds, and cash may help manage the volatility in a portfolio." In other words, reduce the risk.

That might have worked decades ago. Today, that is bad advice. The average year to date return of real estate funds is -7.25%. The fund that this article promotes is down over -9% year to date. (through 7/25/07)

The problem is that a stock is a stock whether it is international, domestic, or real estate. We are in an environment that traditional diversification might just not work. Stocks have all classifications are carrying the same type of risk today.

The flaw in this line of thinking is that traditional diversification and buy and hold ALWAYS work. Just remember that nothing always works. That is why you have to think differently when investing.

Reply to my Chase Post about On-Line Bill Paying

Paul from Chase Card Services/Communication & Public Affairs wrote me in response to my blog on the listener who had problems with the on-line bill paying. In all fairness, I wanted to post his response.


Just saw your blog posting about a problem a Chase customer had making a payment and wanted to follow up with you.

We recently rolled out an initiative we are calling "clear & simple" that is designed to provide customers with information and tools to manage their credit better, avoid fees and protect their best rate. You can learn more about this at http://www.chaseclearandsimple.com/.

On the topic of payments, I'd like to point out that Chase offers a number of tools to help customers always make on-time payments:

1. Setting up free phone/text/e-mail alerts that let them know when their payments are due and/or when a payment has been credited.
2. By setting up automatic payments, customers can choose to make payments in full or minimum payments on their due dates, ensuring that their payments are always made on time.
3. By using online payments, customers can schedule their payment in advance so that it is made on the due date, maximizing use of their funds and ensuring their payment is made on time.

I hope this is helpful. Thanks for your time, and please feel free to contact me if you have questions or would like additional information.

Bob - your information is always appreciated

Who Monitors the Politicians?

I always find Congressional testimony interesting. You have a panel of elected politicians grilling someone who has taken the stand on some issue. The politicians ask the tough questions and seek to lay blame.

As I write, Federal Reserve Chairman Ben Bernanke is on the stand. The Federal Reserve Chairman has the responsibility to report to Congress two times a year. The politicians are grilling the Fed Chairman on consumer debt and of course the crisis known as sub-prime loans.

One democratic politician just made the statement that the Federal Reserve was a sleep at the wheel. They allowed this to happen. There should have been safeguards built into the system to prevent predatory lending.

Our political system is a joke as are these hearings. The blame lies with our politicians. They conveniently ignore all of these lending practices and allow them to happen for two reasons. First, it gives the economy a short-term boost. It produces economic growth. Second, these banks pay their bills. I might add that MBNA is President Bush’s second largest campaign contributor. You certainly don’t want to bite the hand that feeds you.

Even more frightening is the lack of knowledge that these politicians have regarding these issues. Much of the questioning makes absolutely no sense.

When do we get to put the politicians on the stand and ask the tough questions? When do they take responsibility? They all look shocked that this sub-prime crisis is happening. You could see this train wreck coming a mile away.

Another Example of Being Careful Making a Credit Card Payment

Dear Bob,

- In August of '04, I was moving from California to Dallas, TX and I lost my checkbook in the meantime so I couldn't send my payment to Chase Credit Card. I called them to let them know the situation and they said I can make payment by phone but they'll charge $10 to do so. Well, I was a college student at the time so $10 goes a long way. I refused and told them that I'll make the payment on-line. They said okay. I made the payment on-line and it was a done deal. Well, the next months statement said that I didn't make a payment and they charged with a late fee and everything else they could think of. I called them immediately to find out what happened. Well, they had the wrong acct number that I had originally entered. I confirmed with them that if the internet system works and they said yes. So I tried again and it showed an accepted payment. Unfortunately, the situation occurred again and the payemnt quadrupled. Every assistant I talked to did not help me at all and gave no grace, but just demanded the payment. There was no solution. Eventually the payments were so high that I couldn't make it. I left it alone and they handed my acct to the collection agency. I talked to an agent and he himself was surprised because I've had perfect credit since '98 and all of a sudden there was a tragedy. I had to transfer all funds to one credit card and continue making high payments with that card. Is there anything that I could have done, or anything I could still do in that/this situation? Thanks.

Henry

You are not going to like this answer. The bottom line is that the payment (regardless of the issue) did not make it to the account. My assumption is that the payment was never drawn from your account. If it was drawn from your account and credited elsewhere, then that would be a different story.

They look at it from the standpoint that the payment never arrived. From their standpoint you could use any excuse as a reason for not making a payment. It is unfortunate. It is a sleazy system set out to damage credit for the smallest of mistakes.

Keep the Faith

Bob

True Credit Lock Very Different from LifeLock

I had a question come up regarding the new Truecredit (http://www.truecredit.com/) credit file lock. I have commented in the past on how Lifelock (http://www.lifelock.com/) works. Lifelock is simply putting fraud alerts on your credit reports every 90 days in order to help you fight identity theft.

As a review, the law states that you may only issue a fraud alert in the event that you are a victim of identity theft or you think that you might be a victim of identity theft. It doesn’t say that consumers should just apply a fraud alert because of general identity theft concern. So, this is a company taking advantage of a gray area in the law. If you don’t have an ethical issue with it ( I do by the way) then you can do it for free for yourself.

I have always stated that Truecredit is an outstanding company. So, I don’t want you to get these two programs mixed up. Truecredit are just stating that the company will put a lock on your TransUnion credit reporting agency credit report and not all three. They are not issuing fraud alerts.

TransUnion owns Truecredit. They can easily offer this program due to the ownership. Thus, TransUnion can elect to lock a consumer’s credit file outside of whatever the law says. Is it a benefit? Truecredit doesn’t charge for it. Locking up 1 of the 3 in a sense is a false sense of security. An identity thieve can still access the other two credit reporting files. In a business of aggressive marketing, it is probably Truecredit’s way to stay up with the competition without taking the low road like Lifelock.

The Gut Feel of a Terrorist Attack

This is not the typical Prudent Money post. However, I watching Fox News and the ridiculous commentary on Michael Chertoff. Homeland Security Chief Michael Chertoff made the statement on Wednesday that he had a "gut" feel that a terrorist attack was imminent. He has caught a great deal of criticism for making these statements. The argument is that someone in his position shouldn't make these types of "fear based" statements without any factual information. He should make statements that are credible based on fact. If there is specific information, give the American public the information.

First, the homeland security agency cannot give specific information. They have to stay very vague. Think about it for a second. Let's make public everything that they know so the terrorists can be a bit more informed. They cannot share everything that they know. Second, I think that you have a guy who is bombarded with all of the risks. At the least, he wants to send an indirect warning.

I would take his "gut" very serious. This guy sees what is happening. We don't need to know the details. We just need to know that the risk is higher today than usual.

Unfortunately, people in politics want to take this and use this to their own agenda. Terrorism is a very real thing. To just pretend it is not there is the risk.

I felt led to talk about financial crisis today on the radio show. I discussed point 1 of my 3 point plan that I feel is important to have as a foundation for the journey back to prudent stewardship. As a result of that topic, I heard some gut wrenching stories today. People are facing some tough situations. If you are one of them, follow along the next few days as I talk about this plan.

Some of this is going to sound obvious. However, it is the obvious that we many times miss.

Point 1 of 3 - The first and most important place to start is in prayer and a re-commitment to God's financial will for your life. This is the starting place. It is very important to get back into the middle of God's financial will for your life. The safest place for you to be is in God’s financial will.

Fortunately, it is a process that has simple beginning. James 4:8 perfectly illustrates the process.

"Come near to God and he will come near to you."

It is that simple. The hardest part is to commit. Keep one thing in mind. You can go through this crisis in or outside of His perfect will. The crisis began when we attempted to do things outside of God's financial will. At least I know that to be true for myself. I would suspect it is true for you as well. It is important to get back to that place of peace and relationship. From there, allow God to direct you through the journey.

That journey might have trails and challenges. Fortunately, that is not bad news. It is all workable because He is guiding you while you learn and grow and become closer to Him. As you stay obedient to Him and committed to his Will, there is nothing that you cannot get through.

It is the power of relationship, belief, and prayer that ultimately heals a financial crisis.

Another Bank of America Bait and Switch

I am trying to think of how many stories that I have written about Bank of America and their slight of hand marketing tricks. From their keep the change program that pays only .50% on their savings account to their "no fees" mortgage (but you pay higher interest rates), this is a Bank that should not be trusted.

What I am writing about today, is really not new news. However, I just stumbled upon it and wanted to warn my readers about yet another bad BOA deal. Last year, Bank of America was offering a free checking account. However, free ended up being for a limited time and not as advertized. Come to find out, they started charging $ 5.95 a month for the account in February of this year. The "good" news is that they would waive the fee if you would just transfer over
$ 25 to their savings account each month which only pays .50% while a good rate for a money market pays 5%.

It is unbelievable.

A Band Aid Approach to the Sub-Prime Mortgage Crisis

We need real leaders who are going to look out for the American consumer. The banking regulators just put together new "tough" regulations to help consumers who have fallen prey to the sub-prime predatory lending practices. This was a recent headline in a CNN money article:

Subprime loans get new standards

Principles issued by bank regulators include new consumer protections; lenders should only offer loans to those who have proof they can repay.

Now that is revolutionary..... How about lending money to people based on the ability to repay it.

These new regulations do nothing but allow predatory lending to continue. One of the main components of a sub-prime loan is the adjustable interest rate. After a period of time, the interest rate can be adjusted upwards. One of the reasons for the adjustable rate mortgage in the first place is to offer a strategy to the consumer to reduce the payment.

Adjustable rate mortgages in some circumstances make sense. However, it should be used only in certain circumstances. The average everyday homeowner has no business getting involved in a loan that one day they will not be able to afford. When that rate re-sets, the mortage payment increases. Most of the time it increases past the point that the consumer can pay it.

How about some real regulations for the mortgage industry?

1) Make it tougher to get an adjustable rate mortgage
2) Make the underwriting standards very black and white - don't give lenders the ability to make the determination whether someone is credit worthy or not.
3) Stop allowing banks to issue these exotic loans

Most importantly, figure out what is going to happen to the 1,000,000's of people who are about to face this nightmare. Studies show that we are in the early innings of these loans resetting. The high foreclosure rate in America is mainly a result of these sub-prime mortages.

With all due respect to the politicians in Washington, how about doing something that helps the people who vote you into the White House and not for the people who pay for it. The finance industry are HUGE contributors to political campaigns. It woul be a setback for the industry if politicians implemented REAL solutions to the sub-prime/foreclosure crisis. (which they allowed to happen on their watch)

"Junk Mail" and why Consumers are getting a Raw Deal with Auto Insurance Rates

Auto insurance companies can raise your rates on your auto loans without informing you ahead of time. This has been a practice that federal regulation has done nothing about. The Fair Credit Reporting Act requires most companies to send a letter called a notice of adverse action to the consumer if the consumer was penalized due to a low credit score.

A group of consumers sued insurance giants Safeco and Geico and won based on this unfair practice. The case appealed all of the way up to the Supreme Court was recently reversed.

Now the reasoning for reversal really leaves you scratching your head. Justice David Souters' reasoning was that it created too much “junk mail.” He did admint it was a loophole in the system. However, he stated that the cost of closing the loophole was way too high.

So, our Supreme Court is protecting us from junk mail and allowing auto insurance companies to get away with raising rates on insurance based on some obscure credit scoring system? The cost for making it a fair system is too high? Who is it to high for?

It is a good thing that the Supreme Court is there to protect the insurance industry. It would be a shame for the industry to be forced to make a little less money sending out those “junk mail” notices to make the system work better for the consumer.

They did allow for a system to where a certain group of people would be notified. However, the system is determined and controlled by the insurance industry. Thus this is more of a smoke and mirrors fix.

Why would it be beneficial for consumers to know about the credit scoring? First, consumers should know the benchmark. A consumer should know that insurance rates would come down if credit scores were below a certain level. Second, many credit scores are low simply due to error. Statistics would show that a high percentage of consumers have enough mistakes on their credit reports to adversely effect their credit scores.

Politics are a way of life. Blatant politics are another story. When the reasoning for reversing a case that would help consumers was based on a “junk mail” problem, something else is obviously going on.

Rent -a- Credit Score - Legal Yes Unethical Yes

There is a new scheme in the credit industry that is gaining a great deal of press as of late. There are companies that "loan" you the good credit of other people in order to increase your credit score. The company has the authorization from consumers with good credit history to make people with low credit scores authorized users on their accounts.

So Joe (who has bad credit) becomes an authorized user on Sally's (who has good credit -who he doesn't know) credit card (which has an excellent track record). Sally's excellent credit history now appears on Joe's credit file thus increasing Joe's score.

As you can imagine, this has lenders in an uproar and for good reason. One company's website, http://www.instantcreditbuilders.com/, states the following in their application:

This service is not sold to defraud or scam past, current, or future creditors.

Seasoned trade lines (credit history) are NOT sold as a quick fix for those who want to cheat the system.

...inherent in the service is the potential for abuse. We will not allow it! Credit Builders will report to the authorities ANY applicant attempting to defraud the credit bureaus or creditors in any way, shape, or form! At the end of the day, if we all play by the rules we all win.

ARE YOU KIDDING ME?

This system gives consumers the ability to lie to creditors. This system is a quick fix to bad credit problems. This is an attempt to defraud the credit bureas because a consumer who is using someone else's credit is misrepresenting themselves as a person with good credit. That my friends is fraud that is created bt this company.

Unbelieveable that there are companies that will go this far to take advantage of the system.

Fortunately, FICO, the company that developed the credit scoring formula, announced today that they are making changes to put a stop to this fraud.

Look Realistically at the Price of Gas

The national price for unleaded gasoline hit a record $ 3.22 a gallon last week. That is up $ 1.05 since February of this year.

There are numerous reasons for this rise in price. There is a large amount of oil refining capacity currently offline. There is strong gasoline demand. Finally, there are lower fuel inventories.

It is estimated that this rise in price is costing Americans an additional 20 billion dollars to drive.

What can you do about it?

There are the obvious solutions such as find ways to carpool, cut back on driving, make sure that you car is running effieciently etc. You don't need me telling you the obvious. However, there is something that is very obvious that people forget to do.

Look at this rise in prices realistically and plan for it!

This is the problem. People don't plan for this additional cost each month based on the notion that prices will go down soon and or it is just ignored until the bill comes. Look out over the next 3 to 4 months and accept it is going to cost you more to drive. Figure out how you are going to adjust. Remember when you don't adjust your spending, you will create debt. Debt is the replacement for the income that wasn't there to pay the bills.

The US Government reported that we are going to se up to 10 active hurricanes this season with 3 to 5 being major. We could just be in the early innings of these high gasoline prices.

Make sure that you aware of this and make sure that you plan for it

The Barefoot Boss Promises you Riches - Don't Fall for this scheme

This irresponsible marketing award goes to www.barefootboss.com. They advertise very aggressively on satellite radio. I have found that the majority of radio advertising on satellite radio falls into the irresponsible category. It seems that they are desperate to take on advertising and anything will do.

This one goes through the story of how they will make you millions. Of course, they claim making millions is very easy. Just take these steps (claims the commercial), and you can be working barefoot from home.

They appeal to your emotions by talking about how boring and uneventful your life is right now. They talk about how big business is just using you. "You can free yourself from this life," says the ad. The good news is that they have a "free" book and DVD set to help you. It is 100% absolutely free claims the ad. You can read about the program and see if it is a fit, then they charge you 39.95 so that you can access the rest of the program.

So, you are going to pay them 9.95 for this "free" book and DVD. They call it shipping and handling. If you don't cancel by 14 days, then you are charged the 39.95 for the rest of the program. However, you never get back the 9.95.

What a deal...... for them! They are probably making somewhere in the neighborhood of 3 to $ 4 an order from shipping and handling. That is not a bad spread.

The reality is that they are peddling a multi-level marketing program for Herbal Life. I am not saying anything negative about these programs. I am simply saying that this type of advertising is misleading and a huge rip-off. You can go to a herbal life meeting for free and get all of that information.

Always be leary of the "free" consumer offers. Most of the time, they are selling you something. The problem is that the consumer just thinks it is shipping and handling.

Banks Writing Mortgages for Illegal Immigrants??

I really wish that I could make this type of thing up. Let's see..... mortgage lending is getting tougher because of the real estate bust. Lending standards are getting tighter because of all of the irresponsible lending by the mortgage business over the years. So, business is not as good and standards for lending are going up. So, what is a bank to do to make money?

Well, they can go after the illegal immigrant market. Yes, they can lend money to illegal immigrants so that they can own a piece of the American Dream while illegally residing in this country. Now, let's look past the illegal immigrant debate and issue. I just want to focus on profit motivated banks and how even for them this makes no sense.

They are going to give credit to someone without a credit score who could easily take out the note and go back to their country at a moment's notice. The bank gets stuck with the property in a real estate market that is in the beginning to middle stages of a bust. That makes no business sense at all. However, they do get to charge outrageous fees and very high interest rates to the ones who make the program work.

In Maricopa County the sheriff whose office has arrested hundreds of illegal immigrants, said banks providing these loans are taking on a risky proposition.

Well at least they are not writing sub-prime loans. After all the definition of a sub-prime loan is a loan that is given to someone who is a credit risk and has a very low credit score. Maybe in the interest of fees and high interest rates the rationalization is that the sub-prime issues don't apply here because after all the illegal immigrants don't even have a credit score.

The saddest part of the irresponsible lending practices of banks is that a legal residing resident with poor credit cannot even get a loan today.

Someone really needs to regulate these big banks.

Tricks of the Trade - Marketing Secrets of Financial Advisors

The ad reads:

Financial Playbook is a 68-page glossy magazine packed with entertaining and informative content. It is published semi-annually and is customized to feature individual agents/advisors on the cover and inside as Financial Playbook's featured financial professional.

• Your Photo Ithe advisor) is placed on the front cover
• Your article is published inside
• Generate Quality Leads
• Enhance Credibility
• Use the Power of Print

The best part is that Federal Reserve Board Chairman Ben Bernanke is on the front cover right by your (the advisor) picture.

All the advisor has to do is write a big check and they will put the advisor's picture on the front cover and publish their article inside the magazine. Incidentally, they will do this for anyone willing to pay for it.

A little misleading? It is just another example of irresponsible marketing by the financial services industry. What is irresponsible marketing? It is marketing that creates something that isn't true.

Financial Playbook is not a credible published magazine. It is not like a Wall Street Journal or Fortune Magazine. However, the public doesn't realize that to be true. The advisor is putting themselves out there as someone who is published by request of a major magazine because of their expertise.

So what would the advisor say when asked how this major magazine article came about?

Well the honest answer would be, "It is for marketing. I look credible being in a major magazine. It especially looks good with a picture of me next to Ben Bernanke. No, you can't find a copy of this magazine anywhere else. I just paid for this marketing stunt."

Do you really think that would be the answer? Be careful of the illusion.

The Reality of the Widget Salesman

Are you getting your opinions about the stock market from unbiased reousrces? Do the Wall Street cheerleaders really believe their opinions or are they just hoping eveyrthing works out?

As I sit here watching CNBC (financial television), I just stay amazed at the run away bullishness of this market. Should it be a real surprise? Just ask all of these money managers who talk about the markets on CNBC. They see nothing but clear sailing the rest of the year. Just keep in mind about the opinions of money managers.

The majority of these money managers can only purchase stocks. A bear market would be the worst case scenario. Thus, it will always be a bull market regardless of what the tape says. Besides, why would they shoot themselves in the foot and offer anything negative?

For example, let’s take the story of the widget salesman. The only thing that he can sell is widgets. Besides the money that he makes selling widgets, he also makes plenty of money as long as his clients hold onto those widgets. Well, let’s say that something happens to the widget market. Widgets lose some of their popularity. People don’t want them as much.

As a result, he will go announce that this weakness is temporary. After all, he doesn’t want to lose any current customers. Second, he will talk about what a bargain widgets are so that he can still sell them.

The take away from that story is that the salesperson can only sell stocks. The salesperson depends on widgets always being a good deal because that is his only income source.

The same applies to money managers or financial advisors who depend on stocks. Remember the opinion that you here in the media might just be desparate hope rather than a solid opinion.

Congress Proposing Legislation to Once Again Protect the Credit Industry

Let's take a look at this nonsense. First, the mortgage industry is allowed to make big bucks writing these sub-prime loans for the past 3 or 4 years. Anyone with common sense would recognize that a problem is going to be created by allowing a mortgage to be written for 100% of the home value, no money down, and no documentation nor income verification. It is a very risky loan that posses potential problems for the consumer.

Now we pay the price for the greed that has been displayed by the mortgage business. Of course, this type of borrowing has been great for the economy on the short-term. As a result, why would Congress ever step in and tighten the lending standards?

Now, Senator Schumer wants to bail out these sub-prime loan holders with hundreds of millions of dollars. So, what is he really doing? Is he proposing something to protect the American Dream or is he proposing something to protect the mortgage industry?

Think about it for a minute. This legislation will keep subprime lenders solvent by helping these mortgage holders pay their monthly mortgage payments.

How about another idea to consider. Force the sub-prime lenders to go in and reconstruct these loans for the borrower at reasonable fixed interest rates. In addition, force them to do it for free. If needed, Congress could subsize the costs of this process. How about the sub-prime lenders coming in and paying the price for their greed? As taxpayers we should not take on the burden of bailing out these home buyers. Thes subprime lenders should pay the price.

Another example of Congress watching out for big business when they should have been regulating big business a long time ago.

RENT-A-CREDIT SCORE

So, you need a higher credit score to qualify for a mortgage loan?

An internet company will increase your credit score by making you an authorized user on another person’s credit card. By being an authorized user on a person’s card with excellent credit, all of the good credit information will be transferred to your credit file.

As a result, your poor credit score will get an increase due to borrowing the credit history of someone with good credit.

There is also big dollars in it for the people who are willing to allow this company to use their credit cards by adding add authorized users. They get a hefty fee for each added authorized user.

Although the Federal Trade Commission is looking into, they have not filed any legal claims against the company. However, the Nevada Mortgage Lending Division states that anyone associated with this scheme “will be subject to administrative action and potential criminal penalties.”

Adam Wheeler who runs this unethical scheme states his business is “legal” but he conceded that “some people might say it’s unethical.” He also said he does not “condone fraud against mortgage institutions.” If clients are going to lie to lenders, he says, “that is not good.”

Well, Mr. Wheeler it is probably not good if you help those people lie to those lenders either. That is a story from the “I just can’t make this stuff up department.”

Let's Just Give Them Some More Money.....Again

Senator Dodd said this week that Congress needs to provide aid for about 2.2 million sub-prime borrowers. So, let me get this straight. Senator Dodd wants to use our tax money to bail out someone who took out a mortgage that they couldn't afford, enable them to live in a house that they shouldn't be in, to help those who were casulties of a horrible mortgage system that Congress has enabled, and to help those who don't read the fine print.You know let's not give them aid.

Let's just pay off their mortgage. In fact, let's help out those poor sub-prime lenders because they might be in jeopardy of loosing the billions of dollars that they made while practicing predatory lending.

The problem starts at the top. We don't have leaders in Congress that work to protect the people of this country. We have politicians who close their eyes when it is convenient and point fingers when situations come unglued. It was convenient for politicians to close their eyes to a mortgage industry that through predatory lending was helping to pump a great deal of money into the economy and increase economic growth.

When did it make sense to throw credit underwriting standards out the window and issue mortgages without even verifying income or looking at tax returns. Senator Dodd, where were you 3 years ago. Could you not see this coming?

I really do regret that millions of sub-prime borrowers are going to be hurt in this mess. My heart goes out to anyone in this situation. At the same time, Congress is suppose to enable laws that protect consumers from their greatest enemy....themselves.

This is why gambling is not legal in every state. This is why pot is not legal. This is why there are speed limits.What we need is reform on all levels. The debt industry is out of control. Until we get politicians that think like leaders and not like politicians, these problems will continue to surface. Maybe I am being a little ldealistic. It just seems that most of these problems are real easy to fix.

Jim Cramer Doesn't Have a Bearish Bone in his Body

Dear Bob:

Just wanted to say thank you for your sanity. I was listening to Cramer on MSNBC (not sure why)and he is calling everyone suckers who are bailing or getting out of stock and of course his advice is to buy now. Might be good advice for some or really bad for others depending on where you are. Just made me want to look to see what you had to say and sure enough, you had a response. Always the voice of reason.

I always appreciate the kind words. Sanity is a strong word. My wife might disagree with the sanity remark.

The only thing that I am doing is looking at market risk. You can have high levels of risk in the stock market for a long time and nothing bad happens. However, high levels of risk always have a reckoning day. Until then, it only matters when it matters.

Are we starting to see risk matter? It is a little to early to say. As I have said many times, one week of stock market declines does not make for a bear market. On the other hand, it is prudent to know your risk level and be realistic about what stock market investors will face at some point.

When listening to people like Jim Cramer, always remember one thing. It is all about the ratings and being bearish is a ratings killer! Plus Cramer works for a company that is owned by GE (a publically traded company)

Although Cramer with all of his screaming and drama can be bearish on a particular stock, I guarantee you that you will never hear him be negative about the stock market in general or the stock of General Electric. At the end of the day, he has to be a yes man and do everything that supports the parent company that hosts his show!