Ulivi Wealth Management

It seems these days you can’t trust anyone anymore.  One of the foundations of finance is trust, so if we can’t trust our business associates and relationships, we are in deep trouble. Am I exaggerating?  Here are a few examples to illustrate why it has become so difficult, if not outright impossible, to trust anyone these days.

For months, the chairman of GE continued to insist the company was sound and would not cut its dividend.  Last week, they cut their dividend.  Is Mr. Immelt a liar or a con man? Read the rest of this entry »

If you are like the rest of us, you are probably very disappointed with the returns in your money market funds and/or CDs.  Because they are paying near zero interest, the temptation is to look elsewhere for better returns, and bonds are a natural place to look.  But, is buying bonds now a smart decision?
As an example of what’s available, the ten year US Treasury bond is paying about 3.2%.  Corporate, because they are riskier, are paying more, but for discussion purposes I will use the Treasuries to illustrate my points.  On a $100,000 investment, you would earn interest of $3,200 per year in Treasuries and near zero in a money market fund or CD.  Buy bonds, right?  The key to this question, however, is your forecast or bet on where interest rates will be in, say, 2 years from now.  Let’s review the alternatives: Read the rest of this entry »

Dear:
For over a year my advice to clients has been to keep lots of their funds in a money market fund.  There were two main reasons supporting my recommendation: the financial chaos we experienced last year and the fact that interest rates were so low that it did not make sense to buy most bonds.  All this is starting to change so I am getting close to issue a new recommendation on bonds.  I will keep you posted.
In the meantime, I want to give you a small recap on interest rates.  These have jumped in the last two weeks and I believe this trend will continue.  For example, CNNFN reported today that “Treasury yields soared – with the benchmark 10-year yield briefly touching 4% – after the government sold $19 billion of 10-year notes and Russia said it would reduce its share of U.S. debt.”  The rate on this bond was 3.2% only a few weeks ago. Mortgage rates have also jumped about 1% in the last week. Read the rest of this entry »

When you are evaluating an investment, which is more important, the yield or the safety?  In other words, should you focus on the expected rate of return or the risk?  The key is to take both into account while trying to gauge the tradeoff involved.  Yet too often investors tend to emphasize one or the other, forgetting that there is a fundamental relationship between risk and return.  Overlooking this can lead to costly mistakes.

To illustrate this point, I will share an experience I had some time ago.  My wife and I were attending a party and we were introduced to a beautiful woman.  After a brief chat, she parted.  As she left, I asked my wife, “Did you see her boobs?”  My wife replied very coolly and honestly with a firm “No.”  She then asked me, “Did you see her diamond ring?”  I never even noticed that the woman had hands. Read the rest of this entry »