Mutual funds are one of the most common classes of investments owned today.  But what are you really getting into when you own them? Here are some things to consider:

You can't just "get out."

Many mutual funds have required ownership periods.

This means that you may have to pay a back-end load to get out of them.

Most mutual funds own too many investments.

Most funds own so many investments that they overlap. This means you're not as diversified as you may think!

They under-report fees.

Wall Street influence in our government means that the industry doesn't have to report all of the fees charged - particularly the trading fees.

We may be able to show you some alternatives to traditional funds.  The world has changed and there are now a multitude of options available.

Our contact information:
612-251-3405
mat@sovereignwealthsolutions.com

Sovereign Focus

December 2011

 Teach.  Wealth.  Innovation.

Why I'm Optimistic.

You wouldn't know it by watching the television or listening to the radio, but there are signs that the economy is (slowly) improving.  Don't believe me? Here are some points to consider...

The Economy is Adding Jobs Again.

Hiring is not robust, but we are now seeing employment start to turn upward again.  This includes an uptick in manufacturing data.  See the chart below courtesy of BusinessInsider.com.

Job Losses Chart 

The Unemployment Rate is Falling.

Our unemployment rate currently stands at 8.6%.  While this is not full employment, it is well below the peak of 10.1% experienced during 2009. As companies slowly return to hiring, this rate should fall over time.

Companies are Coming Back.

Since 2005, the Chinese Yuan has appreciated over 30% versus the US dollar.  This combined with other factors has made outsourcing less attractive.  Companies from Dell to Citigroup to Monster.com to Toyota have begun to bring manufacturing and services back to the USA.  This reflects an effort to improve service, a lack of projected savings from outsourced activities, and increased transport and fuel costs.

Railroad Car Traffic is Rising.

One of the best indicators of an economy on the mend is an increase in railroad car traffic volume.  This indicates an expectation of retailers and producers that the economy is improving.  November 2011 rail traffic was up 2.3% from Nov 2010 levels and a whopping 7.6% from Nov 2009.   

A Euro Collapse Looks Less Likely.

It appears less likely that both Germany and France will allow the European Union to fail.  While I acknowledge that political events are tough to predict, the majority of the bad news from Europe is most likely baked in at this point.

The Housing Market is Stabilizing.

Despite the pessimism, it was recently reported that in 12 major housing markets it is now cheaper to own a house than rent.  This indicates a return to historical norms and an indication that the worst may be past in the housing market.

Aggressive Debt Reduction.

The Federal Reserve November 2011 Household Debt & Credit Report showed reduction in consumer debt at virtually every level.  Mortgage balances, student loans, credit cards, and personal debts fell at all levels. More importantly, it reinforces the recent trend that consumers are taking their debt reduction seriously.