Our good friend Kevin Konar of RBC Dominion Securities is hosting a special seminar on Saturday, June 16th in West Vancouver entitled “Investing for Income  – What you need to know TODAY to Increase Income, Reduce Taxes and Minimize Risk.”

Kevin has been gracious enough to set aside some FREE seats exclusively for our MoneyTalks audience. If you live in the Lower Mainland we highly recommend that you take advantage of this opportunity. Michael Campbell asked Kevin to present on this topic last February at the 2012 World Outlook Financial Conference and this seminar is an expanded version of that presentation. Seating is limited.

Date: June 16th, 2012
Time: 10:30am
Location: Welsh Hall – West Vancouver Public Library – 1950 Marine Drive, West Vancouver (enter library via main entrance, Welsh Hall is downstairs on the bottom floor)

There is a parking lot beside the West Van Library that you can enter via Bellevue Street

To confirm your attendance please e-mail Brian Moore at brian.e.moore@rbc.com with your name and contact information. For more detailed information, please call 604-981-6645.

Topics to be discussed include:
– specific income alternatives to today’s low rates
– why dividend income is so crucial for anybody who pays taxes
– time tested investment strategies that minimize risk
– how to invest so that both your  income and your capital increases in value over time
– the current outlook for both interest rates and the equity markets

Back when my daughter was born in June of 2007, I used the occasion to talk about the simple investment strategy known as dollar-cost averaging.

And just about every year since then, I’ve used this column to update you on how a hypothetical investor would be faring by using the approach.

As hard as it is for me to believe, the time has already come around again!

Yes, five years have already passed … which really only proves one of the biggest points I continually make here — that because time goes by so quickly, it’s crucial that you plan for the long-term as early as possible.

So without any more sappy thoughts or clichés, let’s turn our attention to what another year of dollar-cost averaging would have done for us.

First, a Quick Recap of What
Dollar-Cost Averaging Is All About!

The idea with dollar-cost averaging is relatively simple: You buy equal dollar amounts of the same investment on a predetermined schedule.

Please note the italics in that last sentence. Dollar-cost averaging IS NOT buying a fixed number of shares on a regular basis. In fact, it is quite the opposite. Here’s why …

Let’s say you’ve decided to invest $10,000 in XYZ Corp. Rather than deploying the entire amount at one time, you might instead opt to purchase $1,000 of XYZ stock on the first day of each of the next 10 months.

What’s the logic behind this approach? Well, you can expect just about any stock’s price to vary substantially over a 10-month period. So, when the price is higher, your $1,000 will buy fewer shares; when the price dips, your $1,000 will buy more shares.

In other words, buying equal dollar amounts over time allows you to reduce your risk to a stock’s short-term price movements, automatically encouraging you to buy more when prices are lower and less when prices are higher.

It also removes much of the emotion from the investing process. You’ve already committed to buying the stock at regular intervals, regardless of market conditions.

And because you’re doing this automatically, it doesn’t require more than a few minutes of your time (if any at all!).

Okay, But How Does This Strategy
Fare When the Road Gets Bumpy?

Obviously, buying bits of stock as the market continually rises would work just fine … even if it meant you missed out on some additional upside by not putting as much in as quickly as possible.

But what about the other scenario — the one where the market really zigs and zags, moves sideways, or even goes lower over a long period of time?

Well, the last five years are a perfect illustration of just such a market!

Take a look at a chart of the S&P 500 since my daughter’s original birthday …

As you can see, despite the huge declines and rallies, the broad U.S. stock market index isSTILL lower than it was five years ago!

And yes, if you’d had very good timing, you could have clearly been making a fortune during every one of those major moves … but what if you didn’t have perfect timing?

Or worse yet, if you had BAD timing?

That’s where dollar-cost averaging comes in. Let’s look at what would have happened if you simply followed this approach over the last five years — investing an equal amount of money in the S&P 500 ETF (SPY) at the beginning of every single month.

It’s a long table, but I want to show you exactly how this works …

As you can see, by putting $1,000 into a broad-based ETF each and every month over the last four years, you would have spent $61,000 to buy a total of 546 shares.

Based on the SPY’s recent price of $128.16, that total stake would currently be worth $70,017 — a total profit of $9,017!

That’s a 14.78 percent return over the five years … even though the market actuallyFELL 14.67 percent over the same time period!

The reason, as I mentioned earlier, is simple: While you would have bought some shares when the market was at its peak, you also would have forced yourself to buy a bunch of shares when the market was much lower than it is today.

Now, let me point out a few more things about these numbers:

FIRST, the overall performance number actually went down from last year’s review (+18.66 percent) and the total profit figure in dollars stayed the same.

In other words, our hypothetical investor didn’t make any additional money over the last year. But he did save another $12,000 and because this is a long-term strategy, I wouldn’t be particularly bothered by a year of flat performance.

SECOND, I’m sure you’ve already realized that on an annual basis, our investor has made a bit less than 3 percent a year. While that isn’t anything to write home about, it IS better than most other conservative investments have been paying … and is at least in line with inflation over the same five-year period.

THIRD, I am NOT holding dollar-cost averaging out to be the end-all-be-all solution.

In fact, I continue to believe that careful timing and superior stock selection will give you even BETTER returns!

[Editor’s note: You can get all of Nilus’ specific recommendations for just $39 a year by clicking here.]

But in the case of buying individual stocks, it’s worth noting that you can apply dollar-cost averaging there just as easily as you can with broad-based ETFs.

In addition, you are also using this same general concept whenever you reinvest your dividend payments or make regular contributions to the same funds in a retirement plan such as a 401(k).

Of course, whether or not you decide to put dollar-cost averaging to work in your portfolio, the important part is remembering that while time often passes more quickly than we might like, the key to success — in both investing and life — is finding a way to capture those key moments that happen along the way.

Best wishes,

Nilus

via The Big Picture

1. Societies, Economies and Markets Move in Long Cycles: Investors have to understand long cycles — and that half of them are not good:

Think about the post WW2 era — GI Bill sent millions of returning soldiers to school, the building out of suburbia, rise of the car culture, construction interstate highway system, civilian air service, broad electronics development — its no coincidence that 1946-66 was a long term secular bull market (good) for stocks. This investors paradise was followed by an ugly period: 1966-82 had VietNam, Watergate, Oil Embargo, Inflation, etc. In 1966 the Dow was 1000 and in 1982 it was still 1000 — 16 years, no gains (not good). The next good run was the 1982-2000 period that saw the rise of the PC, chips, software, internet, mobile, networks, storage etc. Another golden era for investing. (good). Do I need to explain 2000-2012 and counting? (not good).

If you don’t understand these cycles, you will not be a successful investor.

2. Long term doesn’t matter if you are in the middle of a bear market: Like we are today. I cannot tell you when it will end, but history suggests sometime before the next 5 years are over.

During these secular bear markets, your job is to reduce risk, carry more cash and bonds, and wait for better times. Tactical adjustments are what get you through these periods — not sitting fully invested in equities and getting shellacked. (See number 1 above)

3. Ignore pretty charts in Marketing Materials: Whatever you are shown in glossy brochures is nonsense sales bullshit. Never make any decision based on the old couple walking down the path, or a picture of boats. Its junk advertising — and amazingly, it is an effective way to capture the suckers.

Howard called it “bullshit” in the audio — and it still ensnared him. That’s how effective it is.

4. Your advisor should help you to Educate you.. More than just managing your money, your advisor should help you understand what is occurring financially in the world.

They should have a working knowledge about valuation, trends, economy, sentiment and market internals. They should be able to tell you what is working and what is not and why. A good advisor can contextualize the headlines, not merely read them to you. They should be able to answer all of your questions, and when they cannot, they should honestly tell you so — and then go find the answer for you.

5. Buy & Hold is for Secular Bull, Not Bear Markets. Buy & Hold is folly during secular bear markets like 1966-82 or 2000-to-today. Simply stated, it is against human nature and therefor will not work. People get tired, annoyed and angry. Human nature is such that no one wants to lose money for 15 years. This ultimately leads to frustration and bad decision making.

Secular bear markets like the one we are in right now is not when you want to work with a buy & hold advisor (like Howard’s).

6. Caution When Too Much Wealth is Tied Up in One Stock: You would think that this lesson would have been learned after Worldcom, Enron, Lucent, Lehman Brothers and soon Facebook, but apparently not.

Anyone with a substantial amount of their personal net worth tied up in a single company needs to diversify that holding as soon as possible. We can argue if 40% or 75% is too much, but the short answer is if you are even debating it, you need to diversify your risk away from that one holding. PERIOD.

7. Build a Bond Ladder 7-15 Years Out: Ladders are bond portfolios of differing maturities (rungs) designed to capitalize on falling or rising yields. Higher yields means you build a longer ladder (15-20 years); low rates like today means you keep it shorter duration. HNW investors should have a substantial income stream from a diversified portfolio of Treasuries, A-rated Munis and investment-grade Corporates. With rates this low, the bond ladder should be no longer than 7 years.

8.  Rising Bond Prices = Lock in Yield: This has been a 30 year bull market for bonds. Anyone who is HNW should have been advised to ladder a portfolio decades ago, up to as recently as 2005-06.

You can still build  a bond ladder today — just don’t expect too much in way of returns. Expect higher or more normalized rates in the future.

9. Collars (XM Sirius):  There are occasions when great concentrations of stock wealth cannot be sold immediately. These are what the costless stock collar was invented for. It uses stock options to lock in a range of prices, and dramatically reduce the downside risk.

Let’s say hypothetically, if you owned 400 million worth of Apple, and were getting nervous. They could sell the January 2014 600 calls for $92, use the proceeds to buy January 2014 535 puts for $89. Upside is limited to $600, but the downside is capped at $535.

This is what should have been done for Howard back when SIRI stock had some value.

10. Covered Calls: Lacking a collar, the SIRI stock is now under $2. Depending on the stock holding, income can be generated writing covered calls — selling out of the money options to pick up revenue. This is only done if the writer is happy to sell and does not believe the stock has much upside.

via Barry Ritholtz excellent site:  The Big Picture

You’re seeing massive declines unfold in almost all markets. The reason for it is rather simple, and it’s something I’ve been warning you about.

Even in the midst of what should prove to be the biggest commodity bull market ever, you can get sharp dis-inflationary moves, especially when …

• Investors are frightened that governments may be going broke, like they are concerned now with Europe. When that happens, and they see no light on the horizon, they take their money and head for the hills — panicking and selling almost everything in sight.

• The world’s leaders are equally at a loss about what to do, investors again head for the hills, and choose to park their money largely in cash — another motive for selling almost all assets.

• They believe that it’s far-more-important to be concerned with the return of their money than the return on their money, they run for the hills even more — causing even more selling.

And yes, even that religiously passionate asset these days — GOLD — can get caught up in the selling.

I’ve been warning about all of this, and it’s here now. Investors, seeing Europe start to completely unravel, are dumping just about everything. Asset prices are plunging, from stocks to commodities, even to real estate (again).

And although this is a short-term move, and NOT the major trend (which remains up for commodities), it’s not about to stop anytime soon.

Fortunately, those following my Real Wealth Report were prepared for this. I had them hedge their core gold holdings a while ago. I had them effectively sell short silver with an inverse ETF. I had them sell short the euro with an inverse ETF on the currency. And more.

I’ve been telling them to hold those fruitful positions. While there may be some bounces in the markets ahead, it’s important that you know where I believe these markets are headed, and when I believe they will bottom.

So without further delay, here are the target support levels for each of the major markets I follow. They are support levels I expect to be tested before the rout is over …

Gold: Once gold closes below the $1,527 level, look for support at …

$1,446.80
$1,400.80
$1,373.10

I fully expect that by the end of July we will see gold test the $1,373.10 level.

Silver: Once silver closes below $26.07, look for support at …

$24.16
$20.22

I fully expect that by the end of July we will see silver test the $20.22 level.

Crude oil: To most analysts’ and investors’ surprise, oil is one of the weakest markets on the board right now, having given me no fewer than three sell signals. Look for support for oil’s upcoming bottom at either …

$77.10 or $67.05 (by the end of July)

Dow Industrials and S&P 500: A close below 12,200 in the Dow and 1,275.50 in the S&P 500 should lead to tests of the following support levels, with the extreme lower levels in the cards by the end of July …

Dow: 
11,800.00 
11,250.00 
10,567.36
10,386.63

S&P 500: 
1245.00 
1052.25*

*NOTE the large gap in support between 1,245 and 1,052. This is typically a telltale sign that if the S&P 500 cannot hold the 1,245 support level, a devastating mini-crash may be in the cards.

You should see lower prices ahead, over the next six to eight weeks, in virtually all markets but U.S. bond markets, which are temporarily benefitting from flight capital. The dollar should also continue to rise, on the back of flight capital.

When will it all stop? First, when the above support levels are tested. Second, and most importantly …

When the world’s leaders and central bankers get together and exercise coordinated money-printing.

That’s what they’re going to do. Come hell or high water. But it won’t happen until their backs are against a wall, and that’s going to be after further asset declines.

The next round of money printing, when it comes, will also be ferocious. The biggest yet. And with very few exceptions, like the Chinese yuan and other Asian currencies, it’s going to dilute the purchasing power of nearly all paper money.

Keep in mind that governments in the West are now fighting for their lives. They are drowning in debt. Unfortunately, the only thing they know how to do is issue more debt, and print money to pay old debts and support new borrowings.

It’s a very sad situation. But it has not come to a head yet. It will, when everyone realizes that Washington is not in any better shape than Europe.

That’s when the real %$#! will hit the fan. And out of it all will come a new monetary system, new government and even a new financial system.

There will be hell to pay, but a new day will dawn on the other side. But getting there will not be easy.

I’m doing everything in my power to protect and grow my wealth. Anyone who isn’t is asking for trouble. Big trouble.

Stay safe,

Larry

P.S. If not already a member, you may want to consider joining my Real Wealth Report. It’s the best way I know how to get my messages and investment recommendations into your hands, so you can make your own choices on how to protect and grow your money during these unprecedented times. //www.gliq.com/cgi-bin/click?weiss_uwd+0107201-2+UWD1072+vgbb@shaw.ca+%20%20%20%20%20%20%20%20++2+4422655++E-Acquisition%20Lead“>Click here to join now.

Perspectives –Conversation with LightSail Energy, The Climate Corporation, RoboteX, and SpaceX:

It is very hard hard for investors to invest in things that are unique. The psychological struggle is hard to overstate. People gravitate to the modern portfolio approach. The narrative that people tell is that their portfolio will be a portfolio of different things. But that seems odd.

Things that are truly different are hard to evaluate. Suppose someone wants to start a rocket company. You might ask, quite reasonably, “What experience do you have with rockets?” The answer might be “zero.” Elon didn’t have any experience in making rockets before he started SpaceX. Or suppose a VC wants to invest in a rocket company. The question becomes: “What on earth do you know about rockets?” Again, the answer is probably “nothing.” No one has invested in rockets in over 40 years.

iPhone games, by contrast, are entirely familiar. If you ask a gaming entrepreneur what experience he has with games, he’ll tell you about all the games he’s made before. Ask a VC what they know about games and they’ll go on and on about the many gaming companies in their portfolio.

The upside to doing something that you’re unfamiliar with, like rockets, is that it’s likely that no one else is familiar with it, either. The competitive bar is lowered. You can focus on learning and substantive things over process, which is perhaps better than competing against experts.

….read more HERE (Ed Note: It’s a long article, if rushed you might want to scan down to some of the different headlines including – The Future of The Past,  Energy Storage, Robotics, Space,  Perspectives –Conversation with LightSail Energy, The Climate Corporation, RoboteX, and SpaceX, simply a lot more fascinating topics to read about in this article.