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Arthur Stein
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Arthur Stein, a Certified Financial Planner® with 22 years of experience, specializes in financial planning, investments and insurance. He published 22 articles and frequently speaks to professional and consumer groups. Arthur is an Adjunct Professor at Montgomery College, where he teaches... More
My company:
Arthur Stein Financial, LLC
My blog:
Art of Financial Security
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  • Are Houses A Good Investment?

    A recent article in the Washington Post discussed housing as an investment and whether to buy or rent. It was an excellent analysis of a complex situation.

    The basic answer is no, houses have not been a great investment. Over the last century, homes prices exceed inflation by an average of .3% per year while the S&P 500 Index exceeded inflation by 6.5% per year. Adding the costs of maintenance and upgrades might result in a negative rate of return after inflation.

    Of course, that ignores many factors, including tax breaks, rental costs if you don't own, the psychic satisfaction of owning, etc.

    It's easier to understand if we treat this as two issues:

    Should a family buy or rent the home they're going to live in?

    Is housing a good investment, for instance, for someone who wants either to buy a second home to rent or to buy and sell homes to make a profit?

    In terms of owning your own residence, it probably makes sense for many Americans when there's a positive rate of inflation, low mortgage interest rates, well built homes, current tax breaks, long-term ownership, etc.

    However, because homes have increased in value only slightly more than the rate of inflation, it's a tough way to invest. To profit from buying and then either renting or selling homes, investors have to be very good at strategy, tactics, and management. Investors need to buy and sell at the right time, upgrade in ways that maximize the attractiveness of the house at a reasonable price and find good tenants. Location makes a big difference: are you trying to do this in Washington, DC or Detroit?

    The article quotes economist Robert Shiller on other problems: "People forget that housing deteriorates over time. It goes out of style. There are new innovations that people want, different layouts of rooms,"... "And technological progress keeps bringing the cost of construction down."

    The stock market, historically, was an easier way to profit. Investors did not have to buy and sell at the right time. Long-term returns were so much greater than inflation that investors in a well-diversified, well-managed portfolio could buy and hold and still see their portfolios increase over long periods of time.

    Past performance is no guarantee of future performance but I prefer stocks.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    May 07 9:17 AM | Link | 3 Comments
  • Investing In Gold: Is The London Gold Fix Price Manipulated?

    I'm surprised that there are no Seeking Alpha articles about the March 15 report that the CFTC is investigating the London Gold Fix. According to the report, CFTC has evidence that banks colluded to "manipulate" the price of gold in a similar fashion to LIBOR.

    I have no idea if this is true and wonder what the Seeking Alpha community thinks. Some questions:

    • Is it possible? Wouldn't arbitragers force price to whatever the market price is in other countries?
    • Do you think it was fixed?
    • If fixed, was the price set artificially high or low?
    • How could major buyers not have known? Should GLD and IAU have known and said something?
    • How is New York price set?
    • If Fix is manipulated, should gold be sold before other investors sell in disgust?

    A Forbes contributor doesn't think it is important. Who does?

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Mar 28 2:19 PM | Link | Comment!
  • Your IRA Is Not An Investment!

    Your IRA is not an investment. Your mutual funds are not investments. Neither are your 401(k)s or ETFs.

    Now before you start feeling like I just pulled the rug from under you, let me explain. Rather than actual investments, they function as ways to own investments.

    For example, you own an IRA, the IRA is invested in a mutual fund, and that mutual fund purchases stocks. You are invested in stocks, even though you are several steps removed from those stocks.

    So what are investments?

    Investments fluctuate in value, generate income or both. Investments include:

    • Stocks
    • Bonds
    • Bank accounts
    • Money market funds
    • CDs
    • Real estate.

    It's important to know how much of your portfolio is in each type of investment (stocks, bonds, etc.), regardless of how the investments are owned (directly or through a retirement account, mutual fund, etc.). That's why portfolio reviews are important. A review helps determine whether the portfolio is appropriate for you:

    • Does it match your risk profile?
    • How likely is it to generate the growth needed to fund financial goals?
    • How volatile is it expected to be?
    • Is the liquidity sufficient for your needs?

    Portfolio reviews can also show:

    • The percentage of stocks by size (large, medium and small companies), value or growth and international stocks by region;
    • Bonds by type (US Treasury, municipal, corporate, foreign), default risk, maturity and interest rate risk;
    • Overlap among different accounts, mutual funds and ETFs;
    • Estimated historical performance;
    • Expected volatility.

    Since the review process can be difficult and time consuming, many individuals opt to hire a financial planner to do it. A financial planner can also recommend changes to the portfolio to better match your needs or current market conditions.

    For example, a portfolio that I recently reviewed did not take into account the client's tax situation and lacked diversification. All the bond investments were municipals, which offered my client little or no advantage because of his low tax rate. The stocks also lacked diversification, with low percentages in small, mid-cap and international stocks and no real estate or commodity mutual funds or ETFs.

    Arthur Stein is a certified financial advisor with over 20 years of experience in financial planning, investments and insurance. His firm offers a portfolio review service dedicated to helping consumers take a critical look at their existing investment portfolios.

    For more information about portfolio reviews, click here or contact us directly (301-377-9407 or


    The presentation is for educational purposes only. To learn more about the strategies mentioned and if they are suitable for you, consult the appropriate professional before implementing. Tax laws can change at any time.

    Any information provided in this presentation has been prepared from sources believed to be reliable, but is not guaranteed and is not a complete summary or statement of all available data necessary for making an investment decision. Any information provided is for information purposes only and does not constitute a recommendation.

    Keep in mind that:

    • Past performance is no guarantee of future performance;
    • Investments involve the risk of loss of principal and earnings;
    • Mutual funds, including money market funds, ETFs, etc. are not guaranteed in any way by the US Government, the FDIC, a bank or anyone else.
    • "Average annual return" evens out variations in the actual year-to-year returns.
    • Both stock and bond mutual funds and individual stocks and bonds fluctuate in value and there will always be times when they lose value.
    • None of the information provided by Arthur Stein is necessarily relevant to anyone's particular situation. Situations differ among individuals and you should not assume that these generalizations or information apply to you.
    • Investments mentioned may not be suitable for all investors.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Dec 31 4:16 PM | Link | Comment!
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