2010 april mike on markets by karen bosso

Spring Training pring is a time of renewal. The days are getting longer, baseball season is under way and the flowers are….. flowering. I have decided to follow suit with a little life advice in one article, some investment advice in another, and even a little challenge to my friends and clients. All interspersed with gems from one of baseball‟s great gurus.

Be Fearful When Others are Greedy and Be Greedy When Others are Fearful This is some classic advice from Warren Buffet which other investment gurus sometimes recommend too. In light of the market gains which followed the crash, I am invoking the Oracle of Omaha to advise strong caution right now.

It’s like déjà vu all over again.

Yogi Berra

I had to laugh the other night when a guest on CNBC‟s Fast Money said he wouldn‟t invest in a certain stock because he couldn‟t make at least 20%. It reminded me of what we were hearing about Real Estate not all that long ago, —or Tech stocks before that, —or Enron-era energy… I think I smell a little greed.

And while endless 20% hedge-fund-like returns are seductive, it also hasn‟t been all that long since we planned for happy, healthy, stable retirements based on 8% average returns. E-I-G-H-T. I‟m not a doomsayer, and I‟m not saying your mattress is a good investment

option. I am suggesting we all be wary of conditions which lead to bubbles. Which could mean learning to calm the fears which lead us to try fixing big, thorny problems overnight.

We need to keep in mind that we still have very high unemployment, a very weak and still weakening real estate market, and a severe National Debt problem.

Can all of these things be solved? Of course they can, but—- It. Is. Going. To. Take. Awhile. And it may take some political will on everyone‟s part, the likes of which we haven‟t seen in quite some time. So let‟s stay cautious, keep our expectations in check, and pay close attention to our national and world situation.

I can‟t be sure when that will happen or what exactly consumers will do, but I can be fairly sure it will involve spending money. Investment guru Peter Lynch used this type of intuitive logic to sustain one

FBR Wealth Management 8050 SW Pfaffle St., Ste. 100 Tigard, OR 97223

If anywhere within this newsletter you find yourself wondering if Mike has spring fever, or feel the need yourself to go outside and take a walk through a garden, I‟ve done my job. After all, not everything in life revolves around making money. (I can‟t believe I just said that….)

Office 503-620-5236 Toll Free 877-421-9991 Fax 503-620-5273 Cell 971-212-9464 mike@teamfbr.com

Finally, at this most important time of the year, be sure to get your peanuts, popcorn, hotdogs, and favorite beverage and treat yourself to watching the Boston Red Sox snag the American League title this year. The Yankees have unrealistic expectations of their own if they think they can have back-to-back World Championships…..

How Would You Treat Yourself? fter a good day I treat myself to something special by popping into the local coffee shop.

An especially good day will find me cruising Dick‟s for new baseball equipment. If you believe the economy is getting better, and people will be going back to work, then you could assume lots of people will be having “good days” in the future. How will they celebrate? Will they go out to dinner at a nice restaurant? Will they savor premium coffee again? Maybe they‟ll revamp their wardrobe or pick up a new pair of cleats.

Mike Bosso Financial Advisor

Mike

of the longest, most successful mutual fund manager careers in history. He, of course, dug much deeper before actually investing, but it‟s still a great beginning exercise in learning how to invest. What would you like to do if the economy became a happy place and you didn‟t mind spending $100.00 on something completely frivolous?

I‟ll give you a homework assignment: Put together a list of five things you would like to spend $100.00 dollars on and give me a call. We can figure out who the manufacturer or retailer might be, put together a watch list of those stocks, and see how they‟re doing. Maybe one will be worth owning as an investment, maybe not. But we can have some fun seeing how many people would indulge themselves in the same ways!

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Portfolio Rx: How I create Your Lineup

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Where do We Go From Here?

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2012!!!! Live Like You Were Dying

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Trading Card: Cramer

You can observe a lot by watching.

--Yogi Berra

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Mike’s Plan for a Winning Lineup ince baseball season has officially arrived, I find myself comparing everything to my favorite sport. Making analogies helps me to think and understand and at the very least takes some of the tedium out of my day job! This article broadly covers my theory of portfolio management which I‟ll be comparing to building a team roster.

Just like every great team needs some core players, a great portfolio needs some core investments. These are players a team picks up well after they‟ve been drafted elsewhere and proven themselves for awhile on the field. Depending on where your portfolio/team is at (ie: age, risk tolerance, etc), I might recommend CD‟s, bonds, exchange traded funds (ETF‟s), or individual large cap stocks. There are no hard-and-fast rules on what these players should be, it‟s more the idea that we can have a reasonable amount of faith in their projected performance. These are the guys we can build the rest of your team around.

Next up, you need some quality role players. These are the guys you bring in to fill holes in your lineup. They can be heavy hitters or incredible defensive players—whatever the team needs that season. We don‟t have to love them, but we‟ll use and appreciate them for what they have to offer and trade them away when they‟re no longer needed or a better player comes along. In your portfolio, these might be short-term bonds, cyclical stocks, and commodity plays.

It ain’t the heat, It’s the humility.

Yogi Berra

Important, yet often misunderstood are the free agent showmen.

These are the guys some teams add purely to bring in the fans. They may or may not add value to the team‟s success, but of course you hope they do. When this type of investment works out, it can feel like a World Series ring, but when it doesn‟t, it just feels like losing money. Because that‟s what just happened.

In your portfolio the free agent showmen are hot stocks, the sexy ones people like to talk about at cocktail parties, the ones on Cramer last night (see p. 5). Companies with huge growth prospects that you hear about frequently----ones that seem to work out great…right up to the day they don‟t.

You are said to be “riding their momentum.” These are not long term investments. You might bring them into your account for as little as a week, or as long as several years, but typically these investments don‟t stand the test of time. Like the role-players, we trade them away as needed.

Finally, if you‟re going to run a successful ball club, you need some quality prospects. These are the guys that you sign out of high school or college, put some money into, and hope they mature into core players (or free agents you can trade to another team). When this strategy works out, these guys give you your greatest return on investment. Conversely, they can turn out to be a total loss. Within a portfolio, the prospect type of stock could look like start-up tech or biotech firms, or new pharmaceutical companies. These are called speculative stocks.

To carry the prospect analogy further: I‟ve noticed a belief in the baseball world that the (hated) Yankees are able to run out and buy the best players fully formed. Not so. I can name four possible future Hall-of-Famers— Jeter, Rivera, Posada, and Pettit—who all started out as Yankee Prospects.

The same holds true in the investment world. Love „em or hate „em, the best investors don‟t have a crystal ball—they‟ll typically buy hundreds of stocks over the years to end up with a few winners. Yes there‟s risk involved and yes it almost sounds crazy for the everyday investor. Yet thinking with a “prospecting mind”, is the price an investor pays to find the next Google, Microsoft, Pfizer, Starbucks… To be absolutely clear, you‟d never allocate a large portion of your portfolio to prospect stocks, but I don‟t believe in ignoring them either.

A well designed portfolio works together like a good ball team. My job is to help you, the owner, manage your team. I help set the lineup, recommend substitutions as needed, and advise overall strategy. I coach. I‟ve been known to cheerlead. While most of my clients prefer to sit in the stands and enjoy the game, so to speak, many of them did time with me in the dugout while we got to know and trust each other. I hope these examples help you better understand how and why I do the things I do. WELCOME TO THE SHOW!

Team Portfolio— A grouping of financial assets such as stocks, bonds and cash equivalents, as well as their mutual-, exchange-traded- and closed-end- fund counterparts. Portfolios are held directly by investors and/or managed by financial professionals.

Role Players Large Caps— A term used by the investment community to refer to companies with a market capitalization value of more than $10 billion. Large cap is an abbreviation of the term "large market capitalization". Market capitalization is calculated by multiplying the number of a company's shares outstanding by its stock price per share.

Commodities— Basic goods used in commerce that are interchangeable with other commodities of the same type. Commodities are most often used as inputs (raw materials) in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade.

Cyclical Stock— A stock that rises quickly when economic growth is strong and falls rapidly when growth is slowing down. Follows the business cycle.

Defensive Stock— One that investors tend to want to own during uncertain times, and one that they definitely want to own during hard times.

These are also deemed as non-cyclical stocks, so they are not as dependent on the overall economic cycle like certain tech stocks, and consumer discretionary or durable good makers.

Free Agents and Prospects Momentum investing— An investment strategy that aims to capitalize on the continuance of existing trends in the market. The momentum investor believes that large increases in the price of a security will be followed by additional gains and vice versa for declining values.

Speculative stock— A general term describing a stock with high risk relative to any potential positive returns. Speculative stocks are often purchased by those who believe the stock will appreciate in value without performing a detailed analysis.

Definitions courtesy of Investopedia http://www.investopedia.com/dictionary/default.asp

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Where do we go from here?

I admit it. I was watching Evita the other day and that song she sings when she finds out she‟s dying got stuck in my head. Oftentimes when that happens, it means the light bulb just turned on—the one that sheds light on that thing that‟s been bugging me that I couldn‟t quite put my finger on. And it seems an important question for today‟s markets and today‟s world.

ferent times, independent of the broader market.

I wish I had the 100% certain correct answer for you, but I‟m not positive there is one. Nor can I truly say that we won‟t be right back in the thick of a terrible market in the future (near or far).

There is, however, one investment I have few doubts recommending these days: Equity Linked CD‟s. Most of my clients are quite familiar with these, but for those of you who are not, here is a brief explanation.

Unfortunately, every so-called expert has a different answer and a different perspective.

These are FDIC insured (see below) Certificates of Some say just buy-andDeposit whose interest hold and everything payments are linked to One investment I have few will turn out fine— an underlying security which in my opinion doubts recommending these or type of asset. These hurt a lot of people may take the form of a days: Equity Linked CD’s over the last few years. basket of listed stocks, a Others are strongly in specific index, or an the camp of taking profits ASAP after they‟re asset category (currency, commodity, etc…). made—a practice that can leave a lot of money on the table.

Here is the advantage: These CD‟s are 100% principal protected and give you exposure to the If you believe the CNBC‟s and Bloomberg remarket. The risk: You may find yourself locked ports of the world, most investors missed out into the CD‟s term at a time when you could have on the majority of last year‟s gains because they gotten a better return elsewhere. Additionally, got out at the bottom of the market and were you may need the cash prior to maturity in which afraid to get back in when it started showing case you could end up taking a loss upon early improvement. Further muddying the waters, redemption. what we‟ve seen over the last year is what the industry calls a Trader‟s Market or a “Rolling I believe the upside potential and principle protecBull.” Meaning that individual stocks and section can be incredibly attractive for many investors went into their own „bull markets‟ at diftors during such an unpredictable time in the markets.

Here are some websites where you can find more information on equitylinked CD‟s. Please feel free to call me if you have any questions.

You've got to be very careful if you don't know where you are going, because you might not get there.

—Yogi Berra

One thing I know for sure!

www.sec.gov/answers/equitylinkedcds.htm www.investopedia.com/articles/bonds/08/index-cd.asp www.investopedia.com/terms/i/index-linked-certificate-of-deposit.asp seekingalpha.com/article/111056-index-linked-cds-worth-buying www.finra.org/Investors/SmartInvesting/ChoosingInvestments/BankProducts/ Printed on paper made from

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FDIC Extends Higher Insurance Levels to 2013

Deposits including CD’s are currently insured up to $250,000 per depositor, per insured bank, through December 31, 2013. On January 1, 2014, this is scheduled to return to $100,000 per depositor, per insured bank, for all account ownership categories except Certain Retirement Accounts, which will remain at $250,000 permanently per depositor, per insured bank.

“Certain Retirement Accounts” refers to IRA’s, self-directed 401k’s and others. For more information, please visit: http://www.fdic.gov/deposit/deposits/insured/ownership2.html 3

2012!!!!

Live Like You Were Dying don‟t know why I used all the exclamation points, but it seems that whenever those four numbers show up together, anxiety follows close behind. I‟m not what you‟d call one of those Armageddon types, but who knows what the concept “2012” really means. I personally don‟t believe it has to be negative, but few can deny that massive change is afoot. After pondering what “the end of the world” might mean (short of retirement planners having to recalculate those life expectancy tables), I came to a conclusion---one embraced by some of the greatest minds in history.

Jesus, Gandhi, Buddha, Mohammed all said it. Gurus* today: Eckhart Tolle, Deepak Chopra, and dare I say it….Tim McGraw all say it: Live in the Now and be happy with what you are doing today.

Does that mean you don‟t anticipate, plan, and prepare for a happy retirement? No, of course it doesn‟t. The idea is to not defer today‟s happiness in favor of a future that may never come.

Invest in your life.

My experiences shape the way I work with my clients and I like to share them occasionally so people understand why I say some of the things I say. One of the most poignant of these happened shortly after I became a Financial Advisor. A very nice couple in Springfield, Oregon had saved money their entire life. They had no children, had never taken a vacation, and put away every penny with one hope in mind: Early retirement.

I went Sky diving I went Rocky Mountain climbing I went 2.7 seconds on a bull named Fu Manchu. from Tim Mc Graw’s hit song “Live Like You Were Dying”.

Curb Records 2004

I happened to meet them within a few months of their planned retirement date. They had picked out property in Arizona to build a new house on and were incredibly excited. They wanted me to consolidate their various accounts and invest in bonds so they could live comfortably off the income for the rest of their lives. It was a textbook American success story. They‟d done everything “right.”

Thirty days later, one week after he retired, the husband was diagnosed with brain cancer and died within the month. Medical bills took a large portion of their savings and she never moved to Arizona. As amazing as this story seems, with minor variations on a theme, it happens all the time.

If I could impart one piece of advice based on my experience in this industry, it would be this: Invest in your life. Live like 2012 (or next month or tomorrow) is the end of the world, while preparing for the future. Even if that future is more modest than you‟d once thought you‟d needed. It‟s Life that‟s the contingency plan, the IF. Death is rather more of a “WHEN.” What would you do differently if you knew you were dying?

*Guru—a teacher; one who sheds light on Truth From Sanskrit: gu=darkness and ru=light

It ain’t over ’til it’s over.

—Yogi Berra 4

M adCramerMan

Jim has actually mellowed since the days from ‟88 to 2000 when he threw actual chairs at staffers of his highly successful hedge fund. These days his antics are mostly for entertainment on his popular CNBC show Mad Money (weekdays 3pm PT).

Author of five books including Confessions of a Street Addict (Simon & Schuster 2002), the 55year old Cramer has experienced a few setbacks and turnarounds in his life. While earning his B.A. in Government, he served as president of “The Harvard Crimson,” and worked his first years out of college as a general reporter. By virtue of living down the block, he was the first to arrive at a local installment of the Ted Bundy murders, thus launching his criminal reporting career. Not long after, an unknown stalker cleaned out his apartment and his checking account—the beginning a nine-month stint living out of his Ford Fairmont. When he became ill, he took a job and moved to New York to live with his sister. With his health back, he earned a law degree from Harvard and in 1988, became an appre nti c e at Goldman Sachs where he stayed four years before starting his hedge fund with wife Karen who he calls “The Trading Goddess.”

You can order your very own TALKING Cramer bobble head for the low low price of $22.001 1

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If you haven‟t seen the show in its five-year run, Cramer uses his upbeat, fast-talking, hyperactive style along with sound effects and props to deliver his version of stock picking and analysis to an audience that seems eager to learn. Criticized on the one hand for what the industry calls “pump and dump” (rumor or report on a stock you own to drive up the price which you then sell at a profit), and on the other hand for not picking enough winners—-the Cramer effect can‟t be ignored. If a company is mentioned on his show—its price will generally move.

against each other, it‟s hard to fault any one person‟s opinion and as Cramer regularly repeats to his audience, “You‟ve GOT to do your homework.” He decries the wiggly language used by research analysts since Spitzer first cracked down on them— terms such as „In Line With Estimates.‟ Analysts, says Cramer, “are colorless and odorless and sanitized and fear Spitzer to the point of death." Even CNBC, he complains, is "terribly gun-shy about being anything but 'corporate crime watch' when people still need to make money."

MUST SEE CRAMER TV “They Know NOTH-ing !!!!”

Rant http://www.youtube.com/watch?v=rOVXh4xM-Ww

“It was fun...very satisfying.”

How hedge funds can manipulate markets. http://www.cnbc.com/id/15840232?video=808465173&play=1

A candid 2006 video interview which went viral on the internet shows Cramer dishing the dirt on technically legal but ethically questionable techniques hedge fund managers use to manipulate the market. Says Cramer, “The S.E.C. never understands this.” The absolute truth of that statement as well as how hard they try is a different story entirely.

With so many trading (NOT investing) techniques out there which work because they play

In baseball, you don’t know nothing.

“

James J. Cramer is a Markets Commentator —Yogi Berra for The Street.com, Inc., as well as Chairman of the Board and our co-founder. **TheStreet.com is a publisher.**.. [emphasis mine] To the extent any of the information contained in Action Alerts PLUS may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. 2

“

Jim Cramer

He and Spitzer were friends at Harvard Law and though there‟s little left to fear of Spitzer, for some reason, Cramer isn‟t afraid to advise, “Buy! Buy! Buy!” at the top of his lungs while stabbing a stuffed bear with a knife. You should see what he does to the bull...

The answer to why he‟s able to make recommendations without an analyst‟s or advisor‟s license like my own (I can find no evidence he has either), lies in the First Amendment. A publisher and its employees are not subject to the same investor protection rules as someone licensed to advise and sell investments. There are some days this irks me more than all the other days, when it merely makes me cranky.

Whether you‟re pro-Cramer or think he‟s a con, he is bold and he does admit his mistakes. Perhaps his biggest turnaround of all was making a dry, chewy, tasteless subject into something normal people can begin to stomach. If for no other reason than that, I have to send out a great, big Gresham Boo-Yah! To Jim.

How most people view financial markets…3

Securities offered through Pacific West Securities, Inc., Member FINRA/SIPC Advisory Services offered through Pacific West Financial Advisors, Inc., a Registered Investment Advisor Clearing services offered through Pershing, LLC, a subsidiary of the Bank of New York Mellon Please note that the mention of stocks in this publication is not a recommendation to buy or sell those stocks. Indexes are unmanaged groupings of stocks used to approximate general stock market performance. You cannot invest directly into any of these indexes.

Certificates of deposit offered subject to change and availability. FDIC insured up to $250,000 through Dec. 31, 2013 and $100,000 thereafter. Minimum deposit required. Periodic interest payments may not be reinvested in the certificate of deposit. Certificates of deposit sold prior to maturity may result in an uninsured capital loss.

The comments contained herein are for general educational purposes only, do not address the entire topic, and should not be considered investment advice, a solicitation, or a recommendation. All investments involve risk, including the possible loss of invested principal. Past performance is NOT a guarantee of future results. Security transactions involve trade costs. For more specific information on investment risks, you should consult the offering‟s prospectus. Prior to implementing any strategy, taxpayers are urged to seek the advice of their tax advisors.

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Mike Bosso 287 NE 3rd, Ste. 308 Gresham, OR 97030 Your Portfolio ER CO-MANAG

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It keeps the kids out of the house.

-Yogi Berra