Issue: #  10
OCTOBER 2009
Bautis Financial
Dear ,
 
Welcome to the tenth issue of The Wealth Chronicle, a free monthly newsletter written by Marc Bautis of Bautis Financial, LLC.  The objective of each newsletter is to present informative articles discussing the topics of wealth management, investment analysis, and personal finance.  This month's article has a Mutual Fund flavor to it, focusing on providing tips on how to make the best of your investing experience.  If you have any questions or comments about any of the articles, please send them to me.  I also maintain a blog containing more frequently updated information at
http://www.bautisfinancial.com/blog.
 
If you think the articles in this newsletter are informative and useful, please forward it to a friend or colleague.  If you no longer wish to receive the newsletter you can unsubscribe by clicking the unsubscribe link at the bottom of the page.  If you would like to discuss your personal financial situation, I would be happy to offer a free no-obligation consultation.
Follow the Insiders
Who knows better than the CEO

Follow the Leader

There are all kind of strategies you could employ in trying to beat the market.  Most do not work, but one you may want to look into is to buy shares of companies that insiders (CEO's, Board of Directors, ....) are buying.  The theory is that there are many reasons that insiders sell shares, but there is only one reason that they buy.   Better than just a CEO buying additional shares, look for clusters of insiders buying at once.  That is an extreme bullish sign.

 There are a couple of ways to invest in these types of companies:

 

  • The Insider ETF (Claymore/Sabrient Insider - Symbol: NFO) - this fund tracks an index of companies whose earnings have recently been increased and whose top executives and directors have been buying stock on the open market.  The fund is up 32% so far in 2009.
  •  

  • When an "Insider" buys stock it must reported.  You can research and dig up those companies on the SEC EDGAR website  http://www.sec.gov/edgar.shtml.   If you want to pay and have someone do the research for you there is a company (Form4Oracle) that offers this service. www.form4oracle.com.   

  • A Fixed Income Inflation Play?
    Foreign Bond Funds

    Foreign Countries

    When it comes to investing in things to combat the potential upcoming inflation most people think of asset classes such as Gold, TIPS, and Commodities.  The class that everyone tries to stay away from when inflation spikes is Fixed Income.  The reason to stay away from Fixed Income is simple.  Let's say you buy a bond that pays you $1000 per month.  With that $1000 interest you receive you may be able to buy all of your groceries for the month, however when inflation rises, most likely the prices of things like groceries will rise as well.  With that same $1000 that you may only be able to buy half of your groceries for the month.

     Not all fixed income investments may be bad if inflation spikes.  A couple of Foreign Bond funds are not only offering 10% yield, but also a protection against inflation.

  • Pimco offers two Foreign Bond Funds (PFOAX and PFUAX) invest in established overseas economies
  • Templeton Global Bond (TPINX) - The diverse fund's largest holding is in South Korean Treasury bonds.   
  •  The funds invest in stable places like South Korea and Australia, but also up and coming countries like Brazil who have more manageable debt than some of the states and companies in the US.  A lot of the international countries that these bonds have holdings in are commodity rich countries whose value will hold, or even increase if inflation picks up.

    Company Spotlight
    Baby Bambu

    With November approaching many of us are going to start preparing for the upcoming holiday shopping season.   If your list includes buying gifts for babies and infants you may want to check out Baby Bambu (www.babybambu.com).  Baby Bambu is an apparel company started a couple of years ago by Cort Bucher.  I have gotten a couple of gift sets from there and have been impressed with the quality of their clothing

    Baby Bambu
     
    Baby Bambu was born out of a desire to give parents a new, environmentally friendly choice in the clothing they dress their children in. Bamboo fibre is an exceptional fabric; silky and softer than pima cotton, naturally hypoallergenic, anti-bacterial, provides UV protection, etc. (perfect for infants and children)

    Cash for Clunkers
    Edmunds.com vs The White House

    529 plans

    The wildly popular Cash for Clunkers program gave car buyers rebates of up to $4,500 for trading in less fuel-efficient cars for ones that were more fuel efficient.  The administration set aside $3 billion to pay for the program.  690,000 vehicles were sold under the program.

    The White House Administration touts the success of the program stating that it gave the auto industry a much needed boost in the third quarter this year.  But was the program as beneficial as it seemed to be.  Automotive website Edmunds.com does not think so and released a report this month claiming making their claim
    http://www.edmunds.com/help/about/press/159446/article.html.

    Edmunds claim is that of the 690,000 vehicles sold under the program, all but 125,000 would have been bought anyways in 2009.   So far the 4th quarter auto sales numbers seem to back that claim as we are on track for the worst quarter ever in auto sales.  Edmunds also states that the government (or the taxpayers) spent $24,000 for each of those 125,000 cars. 

    This Administration fired back stating that the program provided a much needed boost to the auto industry which was on the brink of collapsing in the 3rd quarter.

    It is impossible to tell what would of happened to the auto industry or overall economy had the program not be instituted.  My main issues with the program were the government pushing what type of car one should buy as well as the fact that a majority of the money used for the program was taken out of a pool of money that was slated for clean energy initiatives such as Wind, Solar, and other alternative energies.

    Sincerely,
    Marc Bautis
    Wealth Manager
    tel: 201-221-6895
    fax: 201-754-9760
    Disclaimer:The information contained in this newsletter is for information purposes only and may not be suitable for your specific financial situation.  You should consult a financial advisor before making any investment decisions relating to the information contained in this newsletter

    Table of Contents
    Follow the Insiders
    Fixed Income Inflation
    Baby Bambu
    Cash for Clunkers
    BautisFinancial Logo
    About Marc

    Marc Bautis is an Independent Investment Adviser specializing in working with retirees and those nearing retirement who want to protect their principal and ensure their money lasts.  He is proud to deliver independent advice, always in his clients best interest.

    Marc is a Bergen County native. He is a graduate of Lyndhurst High School and Seton Hall University. He, his wife Katie, and puppy Winnie live in Hasbrouck Heights.
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