No SALT? That’s it! I’m moving to Florida!

Typically I don’t like to opine on things until they become facts.  However, it looks like the new tax code starting in 2018 will involve at least some limitation (if not total elimination) of the Federal exemption for State and Local Taxes (SALT).  If this comes to pass, I think it will accelerate the migration of wealth from high-tax states to low-tax states.  Furthermore, I think the hardest-hit states will be the Northeast and Illinois, and the greatest beneficiary will be Florida, which has no state income tax.  Texas will also benefit because it is a huge jobs engine, but the aging Northeast population will migrate to Florida.  California will also be hurt, but at least California has nice weather.  Someone living in the Northeast (New York, New Jersey, and Connecticut primarily) who has to live through the hot, humid Summers and the cold, snowy, slushy Winters, and now has to pay an extra 10%-15% to the government will be more motivated to pack up and move South, to warmer weather and lower taxes.

The Great Progressive Tax Escape

On November 13, 2017, the Wall Street Journal published an op-ed titled “The Great Progressive Tax Escape.”  Here is a link to it:

The article researched changes in Adjusted Gross Income (AGI) from tax returns filed in New Jersey, Connecticut, Illinois, and Florida from 2012 to 2015.  Analyzing changes in AGI is a good way to filter how wealthy people migrate.  As you may have surmised, the article showed that AGI is already declining in the high tax states (NJ, CT, and IL), and increasing in the zero tax state (FL).   To me, this proves that people, and wealthy people, in particular, do actually adjust their behavior and pick up and move because of already-high taxes.  Keep in mind the SALT deduction was still in effect for 2012 to 2015.  Just think what the Delta AGI will be like if the SALT deduction is taken away!  The Southbound lanes of I-95 could be very crowded.

That people are moving to Florida in droves is not exactly headline news – it has been happening for many years.  People like to live in a warmer place.  However, what is a new development is the increasing level of state and local taxes.  This includes property taxes, which typically fund schools and Medicare.  As the population has declined, especially in rural areas in high tax states, property taxes have ballooned.  More tax revenue is needed from the remaining population to pay for the increasing school and Medicare costs.  Some of the states with the highest income taxes also have among the highest property tax rates.

Update:  Check out this recent Bloomberg article that addresses certain hedge funds moving to Florida:

How Do I Profit?

The most direct way to profit from this upcoming trend (if you agree with me) is to move there yourself if you are now living in a high tax state.  Just by moving there, and assuming you keep a job that pays the same (I know, big If), you have given yourself a raise equivalent to the State taxes you used to pay.  Next, buy a home or condo in Florida; it is likely to appreciate, all things being equal.  Worried that Global Warming will flood the coasts?  Buy a home inland, in a place like Orlando.  Your kids and grandkids will love living near Disneyworld.  St. Joe (NYSE: JOE) is a publicly-traded landowner and homebuilder in Florida, but its stock has not done great over the past year, so I don’t believe it is your best Florida pure play.  Next Era Energy (NYSE: NEE) is a Florida utility that has a $73 Billion market cap and has done very well – up about 38% in the last 12 months and paying about a 2.5% dividend.


The prognosis is not good for high tax states.  I believe the exodus from high tax to low tax states will accelerate if the SALT deduction is limited or eliminated.  I am not necessarily advocating changing your investment portfolio as a result.  I am only pointing this out as a trend that I think will play out over the next several years.



My November 21 post titled “Open Enrollment” suggested that you Go for the Bronze, meaning that you should strongly consider a Bronze health care plan with an HSA over a Silver or Gold plan.  My main reason was the availability of the HSA.  I want to expand on the HSA and its benefits in today’s post.

Health Savings Accounts

HSA stands for Health Savings Accounts.  You must be enrolled in a Bronze plan that is HSA-eligible in order to contribute to an HSA.  (I like that it is “an” HSA but “a” Health Savings Account.  Same consonant – H – but a different article.  Makes learning English difficult.)  Your employer will tell you if your health insurance plan is HSA-eligible.  If you get your health plan from the Exchange website, the website will tell you if a plan is HSA-eligible.  If your employer or the Exchange don’t tell you that a health plan is HSA-eligible, it isn’t.

The following are the limits of how much you can contribute in 2018:

  • Self only:  $3,450
  • Family Total:  $6,900
  • Catch-Up Per Person If Over Age 55:  $1,000

Tax Advantages

There are 3 ways that an HSA is tax-advantaged:

  1. You contribute to the HSA account with pre-tax money, so you don’t pay taxes on the money you contribute to the HSA.
  2. Any growth that the HSA account generates while the money sits in the HSA is tax-deferred.
  3. If you withdraw the money in the HSA account and use it to pay for qualified medical bills, you don’t pay ordinary income or other tax on the withdrawal.

Therefore, an HSA is even better than an IRA or 401K.  With a regular IRA or 401K (i.e., not a Roth), you pay ordinary income taxes on withdrawals from those accounts, no matter what you spend the withdrawals on.  With an HSA, if you use the money for medical expenses, the withdrawal is not considered ordinary income.  You have to keep track of what you spend the money on, but that is a worthwhile endeavor if you save money on taxes.

Save for Future Medical Bills

HSA’s are not “use it or lose it”.  Unused balances in HSA accounts can be rolled over to be used for future years’ medical expenses.  Think very far in the future.  Think of an HSA as a way to save tax-free and tax-deferred for your medical expenses that you probably will incur when you are older.  When you hit Age 65 and go on Medicare, you will probably want to purchase a Medicare Advantage plan.  Advantage plans effectively provide a cap on what your out of pocket medical expenses will be as an older person, but such plans can be expensive.  This is when you are probably retired and not making as much money.  So, it is highly advantageous to save when you are working to pay for your medical expenses when you are older.  Use your unused HSA account balances to pay for your Advantage plan premiums.

Tax Bracket Play

Depending on your current and projected future tax brackets, another play to consider is to forego using HSA balances to pay for current medical expenses in order to save the HSA balance to pay for future medical expenses.  This strategy works if you have enough money now to cover your current medical expenses, and/or if you don’t go to the doctor often now so you don’t incur a lot of current medical expenses.  Contributing to and holding the HSA now may not help you that much in your current tax bracket, but it may really help you in the future to have the tax-free income to pay for your medical expenses when you are older.  Also, if you have contributed money to a tax-advantaged account such as an HSA, you realize the benefit more if you leave the money in the tax-advantaged account.  The account can grow over time without paying taxes so that you will have all that much more available when you are older to pay your medical bills.  If money is currently tight for you and you need to use your current year HSA contributions to pay for your current year medical bills, then so be it.  But, you should consider covering your current medical bills with other funds, if you have them available to you, and let the HSA grow tax-deferred.


These are just ideas for you to consider as you enroll for 2018 Benefits.  I believe HSA’s have a lot of advantages and you should look at how to use them if your situation permits it.

Open Enrollment

November is typically Open Enrollment month for next year’s health insurance.  This is both through your employer or now through the Exchanges if you are not covered by an employer’s plan.


The types of plan options that you have are pretty standardized throughout the country.  You have HMOs and PPOs.  Most of you probably know the difference, but if you don’t, the difference is basically this:  An HMO is less expensive, but you need your primary care doctor’s referral to go to see a specialist, and a PPO is more expensive but you don’t need the referral to see a specialist.

The Olympic Medals

Within these plan options, there are further options that are named the same as the Olympic medals:  Gold, Silver, and Bronze.  There is also a Platinum option, which the Olympics don’t have, but which is a higher, more expensive level of coverage than the Gold.  The following is a link to the Health Benefits Table from Covered California, which is the California health care exchange website.  The table shows what is covered and what the costs are among the various Gold, Silver, and Bronze (and Platinum) plans:

Go For Bronze!

Unlike the Olympics goal (Go for Gold!), today I am encouraging you to Go For Bronze.  That is, I believe the Bronze plans may be the best option for a lot of people out there.  This is especially true if the following are true:

  • You are younger and/or you don’t go to the doctor very often and you aren’t on expensive medications.
  • You want a plan that will cover catastrophic issues (hospital stays and the like) but you aren’t as concerned about standard doctor visits.
  • You want to save money.
  • Your company actually offers a Bronze-level plan.  Some companies don’t.
  • The Bronze plan opportunity allows you also to invest in a Health Savings Account, or HSA.  You can only put money into an HSA if you have what the IRS considers to be a “high deductible” plan.  Your employer will know if a Bronze plan is HSA-eligible (some Bronze plans are not).  If you are on the Exchange (Covered California and the like), you can check a box to show only Bronze HSA-eligible plans.
  • Your company may even offer to fund or match-fund part of your HSA.  This would really make the Bronze plan appealing.


To review, a Health Savings Account is different than a Flexible Spending Account (FSA).  An FSA is actually a salary reduction up to a maximum of $2,650 per family in 2018.  You then incur a qualified medical expense and you submit to your FSA for reimbursement.  Effectively you pay for the qualified medical expenses with pre-tax money.  An FSA is use-it-or-lose-it, meaning if you don’t incur and submit the amount you have withheld in your FSA, you lose it – you can’t carry it over to future years.

An HSA is different.  With an HSA, you earn the salary, but before you pay tax on it, you deposit it into a tax-deferred account.  Since you earn the money, it’s yours, and you can save it and carry it over to future years if you don’t use it during the current year.  There is no time limit – you can carry it over for as many years as you would like.  This is an excellent way to save for future Medicare Advantage premiums – save as much as you can in an HSA when you are making good money, but don’t spend all of your HSA every year.  Then you will have money saved to pay your Advantage premiums pre-tax.  Great deal!

HSAs also have higher limits than FSAs.  The maximum HSA contribution for a family in 2018 is $6,900, plus a “catch-up” contribution of $1,000 per person age 55 and over.


If you are currently healthy, don’t go to the doctor that much and/or aren’t on expensive medications (most generics aren’t expensive), and you have an opportunity to open an HSA, I strongly encourage you to look closely and consider the Bronze-level plan during Open Enrollment.  I understand everyone is different and their health situation is unique, but, in general, Bronze plans offer good coverage for less money, with the added kicker of a potential HSA account.



The Fed

President Trump on November 2, 2017, nominated Jerome Powell to succeed Janet Yellen as Chairman of the Federal Reserve Bank.  The consensus in the media and among economic pooh-bahs is that Mr. Powell will “stay the course” – keep going with the same programs and strategies the Fed has employed over the past several years.  Also, Mr. Powell is a consensus-builder, and as such will work within the Fed Board of Governors to make sure there is unity among the Governors as to what course to take.  Maybe we need some consensus-building in other areas of government!

Interest Rates

The media is focused on interest rates.  As most of you know, the Fed sets short-term interest rates including the discount rate.  If the Fed believes the economy is getting stronger, they will raise interest rates in an effort to keep the economy from getting overheated.  Conversely, the Fed will lower (short-term) interest rates to encourage economic growth if the economy stalls.  Lately, the Fed has raised interest rates incrementally – up about 1% total over the past 2 years or so.  It is likely the Fed will raise rates by another 0.25% when they next meet in December.  It is believed Mr. Powell will not change the Fed’s program of raising rates.

Fed’s Balance Sheet

Among other programs, the Fed combatted the 2008 Financial Crisis by going on a bond-buying binge.  When the Fed buys bonds in the open market, this puts money in the market for others to put to other uses, thereby (theoretically) juicing the economy.  Where did the Fed get the money to buy these bonds?  The short answer is:  The US Treasury printed it.  But, that’s not my point.  My point is that the Fed still owns most of the bonds that they bought as a result of the Financial Crisis.  Bonds that the Fed buy go on the Fed’s own Balance Sheet as Assets.

The following is a chart by the Heritage Foundation that shows how much the Fed’s Assets have increased over time.  The chart shows the period from 2008 to 2014; the Fed’s Assets have remained about the same since 2014:

The following is a link to the Fed’s website that shows the current Fed Balance Sheet.  The chart there is interactive so I couldn’t copy and paste it, but at least I can link to it and you can see it for yourself:  

$4.4 Trillion

You are reading that correctly:  The Fed owns about $4.4 Trillion of assets, maybe $4.5 Trillion now – mostly mortgage and other notes and bonds.  That’s with a Capital T.  That’s a ton of money, and it has remained that high for the past 3 years.  Prior to the Financial Crisis, The Fed’s assets were under $1 Trillion.  In October 2017, the Fed commenced an “unwinding” program whereby they will reduce their holdings by $10 Billion per month and increasing gradually over time.  So, the Fed is now reducing its balance sheet.


My questions:  Is $10 Billion per month enough?  Does the Fed really need to keep $4.4 Trillion of assets?  Shouldn’t the Fed “unwind” its Balance Sheet much quicker?  The Fed’s twin objectives (per Congress) are to minimize inflation and maximize employment.  Currently, inflation is low (under 2% annually) and unemployment is also low (well under 5%, at least how the Department of Labor measures it).  One could argue that the Fed’s past policies succeeded – that the reason we have low inflation, low unemployment, and a relatively healthy economy now is precisely because the Fed went bond-buying buying spree after 2008.


The media and others have increased their focus on the Fed in recent years, especially since the 2008 Financial Crisis, because for many years Congress couldn’t get its act together and pass an actual budget.  Recall all of those times the US Government was funded based on “continuing resolutions”.  Fiscal Policy (i.e., congressional spending) was off the table due to congressional dysfunction, so Monetary Policy (promulgated by the Fed) took center stage.  It was never solely the Fed’s responsibility to “save” the economy during and after the Financial Crisis, yet the media portrayed it as such.  Currently, the economy is much stronger, yet the Fed’s Balance Sheet remains at crisis levels.  $10 Billion of “unwind” per month doesn’t make much of a dent in $4.4 Trillion.  At $10 Billion per month, that’s 10 months for $100 Billion of “unwind”, and 100 months (or 8.3 years) for $1 Trillion of “unwind”.  I think the pace of the unwinding should be much faster, and I think the focus should be on this instead of on the short-term interest rates.  The US Economy is currently strong enough to handle the Fed unwinding its balance sheet much faster.  The Fed should use this opportunity to “re-arm” in a sense, so as to put itself in a better position to deal with the next financial crisis, if and when it arises.  Perhaps the Fed is, in fact, planning to do so.  Perhaps Mr. Powell will use his consensus-building skills to point the Fed in the direction of more rapid unwinding.


The Wall Street Journal on October 26, 2017, published a front-page story about Morningstar, the mutual fund ratings firm.  Morningstar is famous for its star ratings.  Five star is the best, and one star is the lowest.  Morningstar also has a grid – for stock mutual funds, the grid axes are market cap and income or growth.  Here is an example of the grid for stock funds:

The Journal article was more concerned with the star ratings.  The Journal went back and looked at Morningstar’s star ratings and then researched the performance of the funds subsequent to their ratings.  The Journal found that fewer than 15% of funds that got the coveted 5-star rating was able to maintain that rating a couple of years later.  Smaller funds, in particular, were very volatile in their star-ratings.  Here is the scenario:

  • Small fund starts up and does well for the first few years, for whatever reason.
  • As a result, they receive a 5-star rating.  Money managers and investors pick up on this new hot fund and send money their way.
  • The fund’s AUM grows quickly.
  • However, due to the new money, or due to changing market conditions, the fund managers aren’t able to invest the new, larger fund the same way they had on the way up.
  • Performance suffers.
  • Morningstar downgrades the fund from 5 stars down to something lower.
  • Investors flee the fund.

It’s a sad story, but one that has played out many times before:  Investors chase returns, but the world changes and they lose money.  It happens in sports pretty often:  Manager or coach does well with a young team, the team overachieves and maybe does well in the playoffs or even wins a championship.  Coach is rewarded with a contract extension.  However, maybe due to injuries or better competition, the team underperforms the next couple of years.  All of a sudden, the coach is no good and he gets canned.


The problem here is not Morningstar.  They are just a rating agency.  The problem is that money managers and investors have over-relied on Morningstar and have not done their own due diligence on the fund and its managers.  Morningstar’s star system was meant to be one piece of the decision to invest in a certain fund – not the entire decision, as it has been too often.  The Journal article illustrated how some money managers point out with pride that they only put their clients into 5-star funds.


Why do some managers do this?  To provide cover for if and when they get sued.  If they put a client into a 5-star fund and it loses money, the manager can fall back on the Morningstar rating to say they weren’t negligent.  If instead, the manager puts the client into a 3-star fund and it loses money, the CYA argument is weaker.  Another example of the overly-litigious society we have, and the pressure that money managers are under when they stand to lose more than a client’s money if an investment under-performs.

Only Morningstar

The Journal article addresses the above issues (it was a lengthy article).  One issue that the article didn’t address is that Morningstar holds too dominant of a position in the mutual fund ratings business.   There are others out there, but no other firm’s ratings hold the sway that Morningstar’s do.  For other sectors wherein ratings are important – debt issuance and insurance companies, for example – there are Standard & Poor, Moody’s, Fitch, and AM Best.  An investor or manager can choose among these rating agencies and make up their own mind.  With mutual funds, it seems they look only to Morningstar.  This is not a criticism of Morningstar.  It is a criticism of those that have put all of their eggs in the Morningstar basket.


There is no substitute for doing your own research and making up your own mind about your own investments.  Morningstar is a great tool, and certainly factor the Morningstar star rating as part of your decision, but also look at the manager’s strategy and how that fits with your investment objectives.  Look at the fund’s top holdings and see what you think about them.  Determine if you are comfortable with a new fund with a high Morningstar rating even though the fund is new and hasn’t gone through multiple market conditions.  Maybe you are instead more comfortable with an older fund that might have a lower rating but that fits with your objectives and has been through the wars.  Use other ratings services – Value Line rates funds, and you can access it for free through your library’s website.  Understand what the Morningstar ratings mean and what they are supposed to be used for before making an important financial decision.


Voting With Your Feet

A new restaurant opens in your town and you decide to try it.  One of two things happens next:  1)  You like the restaurant and you decide you will try it again sometime, or 2) You don’t like the restaurant and you won’t go back again.

Voting With Your Feet

The second option – deciding not to go back there again – is a version of Voting with your Feet.  You register your displeasure with the restaurant by not going back there again.  If enough other people don’t go there, the restaurant will either improve to win people back or not improve and go out of business.  Then maybe someone else will buy the restaurant and it will be good again.


Stocks act in a similar way, even more efficiently.  You buy stock in a company.  If you like it, meaning presumably that the price goes up, then you hold onto it, or maybe buy some more.  If you don’t like it, you might sell it.  If enough people sell it, the price will trend down, and management will notice.  Maybe management will change something and the price will head back up.  In the stock market world, you vote with your feet by selling your stock or by not buying it in the first place.


Stocks have another way for owners to affect change that restaurant patrons don’t:  Stock owners vote every year on the composition of the Board of Directors.  This is because stock owners actually own the company, whereas restaurant patrons don’t.  (What if you could vote on how a restaurant was run or what was on the menu?  That might be fun!)

If you think management is doing a good job, then you probably will vote to keep the Board in place.  If you disagree with management but still own the stock, then you might reject the current Board.  The threat of shareholder revolt and the pressure to keep performing well helps to keep management focused and its collective eye headed in the right direction.


In October of this year, Procter & Gamble announced that it had beaten back a bid by maverick investor Nelson Peltz to win a board seat by a very slim margin.  Peltz wanted to affect change at P&G and sought a board seat in order to do so.  Peltz tried to convince enough other P&G owners to back his bid but he fell just short.  Time will tell if Peltz gets his desired changes at P&G despite his losing the board seat bid.

Index Funds

One thing that was interesting about the Peltz bid was that the various index funds that owned P&G were collectively divided over whether Peltz should win his bid.  Index funds were the three largest P&G shareholders.  State Street and BlackRock sided with Peltz but Vanguard voted against him. (Wall Street Journal, October 19, 2017).  I don’t know why each fund voted the way they did, but I think it was unusual that the top three shareholding funds were divided.  Most of the time fund owners will vote with current management.


The point I am making is that an index fund or ETF investor typically doesn’t have an opportunity to effect a direct change in management.  They have ownership in the ETF, not in the underlying company.  An owner of stock in a company, however, does have the direct opportunity to change the company, either by selling (voting with their feet) or by voting in a proxy.  This opportunity to vote is a major thing to lose by choosing to own funds rather than owning individual stocks.  If you own a fund, you indirectly own the underlying stocks and you can only hope that your fund manager feels the same way you do about a certain company within the fund if a proxy battle such as Peltz’ P&G battle occurs.  But, you gain the diversity of owning a basket of companies rather than just one individual company.  There are always trade-offs with anything you do.

Fun Money

Previously I wrote about House Money and taking chips off the table.  That is, selling some of your stock holdings that have increased in value over the past year or several years.

Today’s posting addresses what you should do with the chips that you cash in.  I offer a different take than many other financial planners.


First of all, if you have made money in the market lately, you should feel good about yourself.  But, a rising tide lifts all boats, right?  Even a fool can make money in this market, right?  Well, not all boats rise, and some really smart investors have still lost money.  Lee Ainslie, the renowned manager of the Maverick hedge fund, has lost money this year and is reducing his fees in order to stay alive (Wall Street Journal, October 19, 2017).  It is never easy to make money in the market, even in a bull market, because there are always arguments the other way.  Cognitive bias also plays a part – you don’t like the current President, so you are going short, or vice versa.  Biases usually lead you down the wrong path.  If you have made money investing in the market for the past year, you are due plaudits.

What Next?

If you have some House Money – profits that you want to sell – you next should ask yourself, What should I do with these profits?  Maybe you decide you will ask a financial planner what you should do.  I’m guessing that many financial planners would counsel you to be cautious and to reduce the risk in your portfolio.  Reduce your stock holdings and increase your bond holdings, for instance.  Maybe move from 70/30 stocks to 60/40 stocks.  After all, the reason you sold your profits is that you think the stock market is getting too risky, too overvalued, and you are concerned about a deep correction.  Better to protect yourself from the correction.

Different Idea

While it is sound advice, it is also boring.  My advice is:  You have just created some Fun Money for yourself, so go have fun with it!  Buy yourself a new car, whether a luxury car or just a plain one you need.  Luxury car sales are up due to the “wealth effect” of people feeling more wealthy due to their stock market gains, per this article in

Other ideas for your fun money:

  • Improve your house!
  • Vacation!
  • New clothes or other shopping!

I am not suggesting spending all your profits.  Just enough to make yourself happy and to give yourself a pat on the back.


One last idea for your profits, your Fun Money, that I will put out there:  Speculate.  Instead of spending all of your fun money, you should think about creating more fun money.  Great speculation opportunities can often be found in the latter innings of a bull market.  For instance, new tech companies that have been able to grow because of economic growth may now be looking to go public.  Maybe you should invest in a new IBO.  Not a lot; just a little.  Watch it like a hawk.  Stay up to date on the company’s situation.  Read their press releases and SEC filings.  Then maybe invest in a second new company.  Soon you will have a decent portfolio that will keep you interested.  Make Investing a hobby.  It is good to have hobbies such as investing that could make you money, rather than traditional hobbies such as golf that likely won’t make you money and could cost you a lot of money.


One word of warning prior to starting your speculation hobby:  Make sure your house is in order before you do so.  Pay off all expensive debts such as credit card debt.  Make sure your remaining investment portfolio is consistent with your desires and in line with your goals.  You may want to consult with your Financial Planner as part of this process.

House Money

People ask me quite often if the bull market we have had this year will continue or if we will soon have a correction.  I tell them I Don’t Know, but I don’t see a catalyst that would cause a correction.  Especially a correction that happened 30 years ago, in October 1987, or the dot-com bubble burst in the early 2000’s, or the Financial Crisis crash of 2008. Then again, who foresees a correction coming until it actually happens?

House Money

Many investors who have had money invested in the stock market have seen their account values rise for the past year, and for the past several years.  This gives rise to the concept of “House Money”.  Even if you haven’t heard that concept expressed as such before, most people know exactly what it means:  Profits.  Picture yourself sitting at a Blackjack table in Las Vegas, and you have had a good run.  You are looking at a pile of chips larger than the pile with which you started.  The difference between your current, larger pile of chips and your starting pile is House Money.

Take Chips Off the Table

What should you do with your winnings?  You know your run of good cards has probably been lucky or at least unlikely to continue (otherwise, casinos wouldn’t exist!).  Should you “let it ride” and continue to play with your now-larger pile of chips?  Or should you “take chips off the table”, meaning go and cash in some of your chips at the window?  It’s Vegas, after all, and you have probably also had a couple of cocktails, so perhaps your judgment is impaired.  In this situation, most card players will let it ride.  It takes a lot of discipline to take chips off the table.

What Should I Do Now?

Vegas is one thing – the objective is to have fun and to experiment with the effect of cocktails on decision-making.  After all, you are in Vegas with money you can afford to lose, right?  Investing is a different animal.  Sober decision-making is needed.  This is your nest egg, your retirement money, that you can’t afford to lose (although you should think about how much you can afford to absorb during an ordinary downturn).  If you are In The Black now, should you take some chips off the table?  My advice to you is that you should if it helps you sleep better at night.  However, the trick is to balance your ability to sleep at night with the regret you might have if the market continues to go up after you take those chips off the table.  It also depends on where you are in your lifecycle.  If you are closer to retirement, it makes more sense to take chips off the table.  If you are younger and have many more years to work, then Let It Ride (as Bachman-Turner Overdrive said).  Watch it here:


A lot of us who were in the market in 1987, 2001, and 2008 remain scarred by those experiences.  We are convinced that because it happened back then, it will happen again.  A major correction probably will happen again, but we have pulled out of every past correction and gone on to make new record highs.   We are near a record high in the major indexes as I write this.  Gloom-and-doomers in the media are always out there.  Have confidence in your own ideas and research, and make sure you have a good financial advisor to help you.  I know how to contact one.

In a future blog, I will discuss what to do with any money that you do in fact take off the table.  I offer some advice that may be counterintuitive and may be different than advice offered by my financial planning brethren.  Please stay tuned!