The Update 10/21/13 The quest for a fancy dress

My poor wife, Marea, works hard every single day of the week, and I am truly amazed at her unyielding dedication to saving our family money—both at the mall and online. This week, I got a chance to actually witness her in action, as she invited me to join her at the Burlington Mall to dress-shop for Gillian Bernard’s wedding. I hesitantly accepted, thinking why does she need a new dress?

 

Stupid question.

So there we were, one of about nine million cars at the mall on Saturday.

“Can you park in front Lord & Taylor? There is always a big selection of formal dresses, and they are having a ‘Friends and Family’ sale,” Marea said with a hint of excitement.

There she is, saving me money again.

“Do you think L&T is referring to your friends or mine?” I quipped.

No comment.

We enter the store in the purses and scarves’ section.  Marea and my daughter Taylor start perusing.

Twenty minutes later…

“I thought you were looking for party dresses,” I muttered.  This was going to be a longer afternoon than I expected.

Surprisingly she agreed, and we got as far as the perfume arena. “My goodness!  There’s a special on Flower Bomb!” The manufacturer bundled perfume, some kind of lotion and facial cream, and L&T offers the package at 10% off—the good ol’ “Friends and Family” price.

So we got Bombed.

And how’s this for strange: The “Friends and Family” sale doesn’t begin until Wednesday, so customers can purchase items on Saturday, but can’t pick them up until four days later! What a fantastic marketing strategy. The retailer provides the sale price days prior to the actual event, but the customer is required to return to the store to pick up the item, which, of course, may lead to the purchase of additional products.

The game is rigged, I tell ya.

After we paid for the Bomb, we finally got to the formal-dress area. I pointed out a few dresses being modeled by some lovely mannequins, but they were immediately rejected.

“Those are too short. Long dresses are more fun at weddings,” (In the past, I have written about articles of clothing being “fun,” To this day, I cannot understand the concept—but I digress.) Anyway, Marea and Taylor selected a bundle of long dresses and headed to the changing area. Luckily, directly adjacent to the dressing rooms were a couple of chairs and a couch. I happily selected the chair.

While waiting patiently, I noticed a young guy passively following his girlfriend in the hunt for “fun” formal wear. She headed into the private dressing area, and he sat on the couch next to my chair.

“Get comfortable. You’re going to have a long wait,” I say paternally. He simply nodded and looked away.

Marea finally reappeared in a full-length dress, followed by Taylor at her side.

“What do you think?” she twirled.

Does a more loaded question between husband and wife exist? I took my time checking out the dress she was wearing and exclaimed, “You look great!”

She glared at me. “You’re just saying that so you can get out of here.”

See what I mean?

“I can’t win,” I said defensively. She returned to the dressing room area, and I leaned over to my new friend on the couch, “Can you believe this?” I ask, hoping for any male response.  Once again, he just nodded and looked away. Apparently, he had no intention of bonding with me.

Marea reappeared and headed back to the unlimited racks of formal dresses. Knowing this would take a while, I decided to rest my eyes.

“BOO!” Taylor screamed wildly into my frightened face. “You were snoring,” she laughed. I stole a glance at my old friend on the couch, who at least smiled this time before gazing off into the distance again.

Marea headed back into the dressing room with another bundle. I began looking around and suddenly realized that women do not purchase formal dresses alone, and every buyer was accompanied by a gaggle of assistants—hence, the “Friends and Family” theme.

I guess that’s why I was invited.

My wife and kid reappeared again. “I’ve made a selection!” she proclaimed.

 

“Thank God,” I whispered under my breath.

Well, almost. There were two choices, and Marea needed the fashion prowess of a few nearby sales ladies to help her make the final decision. After a careful diagnostic analysis, they gave their final approval.

I was now awake and ready to leave.

“I need matching shoes,” she grabbed Taylor’s hand and began walking.

“You must have a hundred pairs of shoes,” I said, trying to catch up.

Ignored again. Do I even exist?

 

While in shoe heaven, I discovered that Marea needed champagne-colored, open-toe shoes with the right-sized heel to properly match the dress.  This could take a while.

 

Shockingly, we found some fairly quickly.  Success!  Time to go…

 

Not exactly.  Now we had to return to the dress department with the shoes so that the tailor could determine if any alterations were necessary.

 

Thirty minutes later, the tailor greeted Marea.  And wouldn’t you know? They were on a first name basis.

We finally finished, and as we walked out, Marea gave me some great news.  “Don’t worry.  I have the perfect jewelry for the outfit.”

That was certainly a relief.

By now, you may be thinking: What does any of this have to do with investments?

As we were walking to the shoe department, I told my wife that no one would be able to see her shoes while she was wearing a long dress. Regardless, she informed me that an outfit has to be properly coordinated. The lesson to be learned is that your portfolio needs to be coordinated in a similar fashion to Marea’s new formal dress ensemble.

You must have a personalized and coordinated bundle of stocks, bonds, and cash equivalents, referred to as asset allocation. Consider this: if I know your mix of stocks, bonds and cash, I can pretty much tell you what you generated in returns over a specified period of time. As I’ve mentioned in the past, long-term, stocks return 9-10%, bonds 3-5% and cash around 2-3%.

Additionally, you need to be aware of the underlying components of each asset class. For example, on the equity side, what percent of your assets are in large companies, mid-size companies and small companies? What percentage of equity is invested internationally and are those investments hedged against the dollar? Also, do you own sector funds such as technology, gold, and real estate? Are you over weight in narrow sectors, such as staples or consumer cyclicals? (Staples are less risky long-term than cyclicals.)

Everyone should have a basic understanding of how their hard-earned savings are being invested and how much risk the portfolio is carrying. I personally measure the actual cost of portfolio management not in dollars, but in risk compared to a benchmark.

 

You can easily measure the risk of your portfolio to a benchmark such as the S&P. Are you carrying 75% of the volatility of the S&P, or is it around 50%? Can you stomach the potential downside based on historical data? I always look at the best and worst one, three, five and ten-year historical performance numbers. You need to understand the numbers just like my wife understands the impact of a three-inch heal versus a two-inch heal.

 

If you were given a test, you should be able to quickly and correctly answer questions related to your asset allocation and the risk you are taking in comparison to a general index, such as the Dow or S&P.

I can tell you this with the utmost certainty: just like the gals in the dress department at L&T, advisors are always willing to provide a diagnostic review and analysis of your holdings—and most are very good at it. (I recommend a diagnostic review at least annually.) However, only you can decide whether the strategy and plan makes sense.

Hey, I just thought of something: as far as Marea’s new dress is concerned, I would measure cost in terms of dollars instead of the risk of not receiving compliments. And let’s be specific, I am referring to the total cost of the dress which includes the dress, alterations, shoes, the Flower Bomb bundle and whatever else she purchases this coming Wednesday.

 

Have a productive week.

This update was written by Ron Mastrogiovanni and Chris Leone.

The next Update will be published on 11/18/13.

Please let me know if you would like to be taken off this distribution list.

Ron Mastrogiovanni

President

HealthView Services, Inc.

150A Andover Street

Danvers, MA 01923

mobile: 617-875-9313 fax: 978-561-1857

rm@hvsfinancial.com

http://www.hvsfinancial.com

 

MeOn Wednesday, October 23, 2013 1:50 PM, Beth Allan <ballan@hvsfinancial.com> wrote: Marian: here’s this week’s blog to post. Thanks, Beth From: Ron Mastrogiovanni Sent: Monday, October 21, 2013 9:

Oct 23 at 7:30 PM

MeOn Wednesday, October 23, 2013 1:50 PM, Beth Allan <ballan@hvsfinancial.com> wrote: Marian: here’s this week’s blog to post. Thanks, Beth From: Ron Mastrogiovanni Sent: Monday, October 21, 2013 9:

To Me
Oct 23 at 7:30 PM


Hide message history
On Wednesday, October 23, 2013 1:50 PM, Beth Allan <ballan@hvsfinancial.com> wrote:
Marian: here’s this week’s blog to post.  Thanks,
Beth
From: Ron Mastrogiovanni
Sent: Monday, October 21, 2013 9:10 AM
To: Ron Mastrogiovanni
Subject: The Update 10/21/13 The quest for a fancy dress
My poor wife, Marea, works hard every single day of the week, and I am truly amazed at her unyielding dedication to saving our family money—both at the mall and online. This week, I got a chance to actually witness her in action, as she invited me to join her at the Burlington Mall to dress-shop for Gillian Bernard’s wedding. I hesitantly accepted, thinking why does she need a new dress?
 
Stupid question.
So there we were, one of about nine million cars at the mall on Saturday.
“Can you park in front Lord & Taylor? There is always a big selection of formal dresses, and they are having a ‘Friends and Family’ sale,” Marea said with a hint of excitement.
There she is, saving me money again.
“Do you think L&T is referring to your friends or mine?” I quipped.
No comment.
We enter the store in the purses and scarves’ section.  Marea and my daughter Taylor start perusing.
Twenty minutes later…

“I thought you were looking for party dresses,” I muttered.  This was going to be a longer afternoon than I expected.
Surprisingly she agreed, and we got as far as the perfume arena. “My goodness!  There’s a special on Flower Bomb!” The manufacturer bundled perfume, some kind of lotion and facial cream, and L&T offers the package at 10% off—the good ol’ “Friends and Family” price.
So we got Bombed.
And how’s this for strange: The “Friends and Family” sale doesn’t begin until Wednesday, so customers can purchase items on Saturday, but can’t pick them up until four days later! What a fantastic marketing strategy. The retailer provides the sale price days prior to the actual event, but the customer is required to return to the store to pick up the item, which, of course, may lead to the purchase of additional products.
The game is rigged, I tell ya.
After we paid for the Bomb, we finally got to the formal-dress area. I pointed out a few dresses being modeled by some lovely mannequins, but they were immediately rejected.
“Those are too short. Long dresses are more fun at weddings,” (In the past, I have written about articles of clothing being “fun,” To this day, I cannot understand the concept—but I digress.) Anyway, Marea and Taylor selected a bundle of long dresses and headed to the changing area. Luckily, directly adjacent to the dressing rooms were a couple of chairs and a couch. I happily selected the chair.
While waiting patiently, I noticed a young guy passively following his girlfriend in the hunt for “fun” formal wear. She headed into the private dressing area, and he sat on the couch next to my chair.
“Get comfortable. You’re going to have a long wait,” I say paternally. He simply nodded and looked away.
Marea finally reappeared in a full-length dress, followed by Taylor at her side.
“What do you think?” she twirled.
Does a more loaded question between husband and wife exist? I took my time checking out the dress she was wearing and exclaimed, “You look great!”
She glared at me. “You’re just saying that so you can get out of here.”
See what I mean?
“I can’t win,” I said defensively. She returned to the dressing room area, and I leaned over to my new friend on the couch, “Can you believe this?” I ask, hoping for any male response.  Once again, he just nodded and looked away. Apparently, he had no intention of bonding with me.
Marea reappeared and headed back to the unlimited racks of formal dresses. Knowing this would take a while, I decided to rest my eyes.
“BOO!” Taylor screamed wildly into my frightened face. “You were snoring,” she laughed. I stole a glance at my old friend on the couch, who at least smiled this time before gazing off into the distance again.
Marea headed back into the dressing room with another bundle. I began looking around and suddenly realized that women do not purchase formal dresses alone, and every buyer was accompanied by a gaggle of assistants—hence, the “Friends and Family” theme.
I guess that’s why I was invited.
My wife and kid reappeared again. “I’ve made a selection!” she proclaimed.
“Thank God,” I whispered under my breath.
Well, almost. There were two choices, and Marea needed the fashion prowess of a few nearby sales ladies to help her make the final decision. After a careful diagnostic analysis, they gave their final approval.
I was now awake and ready to leave.
“I need matching shoes,” she grabbed Taylor’s hand and began walking.
“You must have a hundred pairs of shoes,” I said, trying to catch up.
Ignored again. Do I even exist?
While in shoe heaven, I discovered that Marea needed champagne-colored, open-toe shoes with the right-sized heel to properly match the dress.  This could take a while.
Shockingly, we found some fairly quickly.  Success!  Time to go…
Not exactly.  Now we had to return to the dress department with the shoes so that the tailor could determine if any alterations were necessary.
Thirty minutes later, the tailor greeted Marea.  And wouldn’t you know? They were on a first name basis.
We finally finished, and as we walked out, Marea gave me some great news.  “Don’t worry.  I have the perfect jewelry for the outfit.”
That was certainly a relief.
By now, you may be thinking: What does any of this have to do with investments?
As we were walking to the shoe department, I told my wife that no one would be able to see her shoes while she was wearing a long dress. Regardless, she informed me that an outfit has to be properly coordinated. The lesson to be learned is that your portfolio needs to be coordinated in a similar fashion to Marea’s new formal dress ensemble.
You must have a personalized and coordinated bundle of stocks, bonds, and cash equivalents, referred to as asset allocation. Consider this: if I know your mix of stocks, bonds and cash, I can pretty much tell you what you generated in returns over a specified period of time. As I’ve mentioned in the past, long-term, stocks return 9-10%, bonds 3-5% and cash around 2-3%.
Additionally, you need to be aware of the underlying components of each asset class. For example, on the equity side, what percent of your assets are in large companies, mid-size companies and small companies? What percentage of equity is invested internationally and are those investments hedged against the dollar? Also, do you own sector funds such as technology, gold, and real estate? Are you over weight in narrow sectors, such as staples or consumer cyclicals? (Staples are less risky long-term than cyclicals.)
Everyone should have a basic understanding of how their hard-earned savings are being invested and how much risk the portfolio is carrying. I personally measure the actual cost of portfolio management not in dollars, but in risk compared to a benchmark.
You can easily measure the risk of your portfolio to a benchmark such as the S&P. Are you carrying 75% of the volatility of the S&P, or is it around 50%? Can you stomach the potential downside based on historical data? I always look at the best and worst one, three, five and ten-year historical performance numbers. You need to understand the numbers just like my wife understands the impact of a three-inch heal versus a two-inch heal.
If you were given a test, you should be able to quickly and correctly answer questions related to your asset allocation and the risk you are taking in comparison to a general index, such as the Dow or S&P.
I can tell you this with the utmost certainty: just like the gals in the dress department at L&T, advisors are always willing to provide a diagnostic review and analysis of your holdings—and most are very good at it. (I recommend a diagnostic review at least annually.) However, only you can decide whether the strategy and plan makes sense.
Hey, I just thought of something: as far as Marea’s new dress is concerned, I would measure cost in terms of dollars instead of the risk of not receiving compliments. And let’s be specific, I am referring to the total cost of the dress which includes the dress, alterations, shoes, the Flower Bomb bundle and whatever else she purchases this coming Wednesday.
Have a productive week.
This update was written by Ron Mastrogiovanni and Chris Leone.
The next Update will be published on 11/18/13.
Please let me know if you would like to be taken off this distribution list.
Ron Mastrogiovanni
President
HealthView Services, Inc.
150A Andover Street
Danvers, MA 01923
mobile: 617-875-9313
fax: 978-561-1857



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