To Dream the Impossible Dream - Beating the Stock Market

A few years ago after reviewing some portfolios for clients that tried their hand in stock market trading it was obvious to me that they were gambling as if they were at the roulette table in Vegas. As someone who has worked for a billionaire and observed the asset class relative to stock, the investments were safe blue chip stocks, bonds, Treasuries and Index funds because it is next to impossible to beat the market.  I then wrote my first book The 3 Secret Pillars of Wealth that discusses the fundamentals of what is an investment and what to look for every-time you start to consider an investment.  Benjamin Graham who was the mentor of Warren Buffet stated an investment was something that preserved principal and provided and adequate return.

In the book we also discuss John Bogle, the founder of Vanguard Investments, views on investing and trying to beat the market. Mr. Bogle’s academic research proved that virtually no one could consistently beat the market over long stretches (like the 35 years we have to invest for retirement). The best you could hope for was to meet the market, which gave you returns that weren’t half bad. in my book we recount the research of looking at 355 mutual funds over the 35 years and that only 3 of them did anything compelling and that was in line with what the S&P 500 did. Hence, the idea is that going forward how would the average person who works uncover those 3 funds out of the masses; you can’t is the answer.

To this end, Mr. Bogle said we need to invest in a broad swath of stocks and bonds through low-cost index funds and forget about your portfolio. Spend your time living your life instead of researching stocks and bonds. That’s much more fun than sweating over investments anyway. If you’re going to research anything it would be real estate and starting your own business as other assets.

The other pundit of the idea that almost no one beats the market is Terrance Odean, a Berkeley professor who proved Bogle’s theory from another perspective. The more you trade, the more you lose, Odean discovered by examining the real-life portfolios and trading patterns of thousands of investors. His paper, Boys Will Be Boys, is a must-read for anyone who is trying to retire in comfort and not run out of money and for those who think they’re going to outsmart the stock market. You know the guys who have a super large screen in their office and they seem to be following the market and making trades. What they are really doing is creating taxes with capital gains and many of them short term which costs more, all for what?

Steady and consistent gets to the finish line if we remember what Aesop tried to teach us in the story of the Tortoise and the Hare. The best way to invest with success is to get base hits and not try to get a home run all the time. If we look at baseball, a home run is great but really you accomplish more if you get a base hit and move it one base at a time to home plate; this is better than striking out.

James Burns, Esq.

Survival of the Smartest in Retirement

An estimated 47 percent of Americans born between 1948 and 1954 may not be able to afford basic expenses and uninsured health-care costs through retirement, according to the Washington-based Employee Benefit Research Institute. EBRI has a database of 24 million 401(k) participants and 20 million Individual Retirement Accounts.

“The risk of outliving one’s assets in retirement, or longevity risk, has been placed squarely on the shoulders of workers,” said Assistant Secretary of Labor Phyllis Borzi said in testimony for the hearing. The life expectancy of a 65-year- old U.S. male is 82, and 85 for a 65-year-old female, according to the Social Security Administration.

There are solutions for guaranteed income contracts for life which makes sense to add to your planning. This provides predictability on outcome rather than riding the roller coaster of the market.

James Burns, Esq.

Health (scare) Care Reform and an Insidious Tax it Releases

The new Health care reform bill includes a 3.8 percent Medicare tax on unearned income including annuities, and possibly income recognized from the surrender or sale of life insurance.

Many clients have asked how to get out of annuities they don’t need to minimize a potential huge tax hit. This is only if you don’t think you’ll need this income as we can move it to an insurance policy that is free of the tax, leaves a legacy and still provide some income for you and your family.

This strategy spreads out potential tax payments over a 7-year period and moves funds from an existing annuity where funds are trapped and destined for taxes to efficiently transfer your wealth through life Insurance.

The benefit to you is that you keep more of what you earned and leave more to your family who should be the recipients of all your hard work.

Don’t fail to plan or get information on how this might affect you as the outcome could be disastrous.

James Burns

Medicare Scare

Sometimes seniors are denied claims and they think there is nothing they can do and they just accept it. However, a denied or partially paid claim can be appealed and nearly half of the appeals are successful and worth the effort…might as well give it a try.

When a Medicare claim is denied or approved for less that full amount, you have 120 days to request a “redetermination” of the decision. The proper form to request is called Medicare Redetermination Request Form (Form CMS-20027) which can be downloaded at (http://www.cms.hhs.gov/cmsforms/downloads/cms20027.pdf) or you can call (800) 633-4227.

The written claim denial that you receive includes instructions on where and how to submit the redetermination form. The claim denial should include an explanation why your claim was denied or only offered partial payment. You need to object the explanation in order to be successful with the appeal. You can ask your doctor to write a letter responding to the points raised in teh denial and explain why your health care is necessary. You include a copy of this letter along with the appeals form and as always, keep a copy for your files.

Common Reasons for Denial

The treatment or prescription is unlikely to cause your health condition to improve is the biggest denial circumstance and is a little vague. Medicare is required to look at your total condition, not just a specific diagnosis or your chance at a full recovery.

There was a citizen who was denied for Lou Gehrig’s disease which is incurable and degenerative. The patient successfully appealed, arguing that with the doctor’s help, that while having a nurse visit the home would not improve the condition, it could slow the progression of the disease and was need to care for various health issues.

Sometimes patients are denied because they may require long term care. You need to point out that Medicare is not limited to treatments that work quickly. As long as your doctor continues to order this treatment for you, Medicare should continue to cover it. Include a letter from your doctor if denied for this circumstance explaining that the treatment is having some positive effect or expressing an optimistic expectation that it will.

There are several other types of denial and you want to be specific to address the denial and use your primary care physician with a letter expressing an opinion that is different that Medicare’s conclusion.

Don’t give up

Sometimes you may have to go to Appeal #2 where you’ll have 180 days from the date your redetermination request is denied. You must completed Medicare Reconsideration Request Form (Form CMS-20033, at www.cms.hhs.gov/cmsforms/downloads/cms20033.pdf). You may have to ask your doctor to write a new letter or attach the old letter. Sometimes it is about hanging in there and being determined.

You may have to take it to Appeal #3 if your second appeal is denied and the amount in dispute is over $120. You have 60 days to file a third appeal, this time with an Administrative Law Judge (ALJ) of the US Dept of Health and Human Services. The filing instructions would be included with the denial letter.

Appeal #4  If the judge turns you down you have 60 days to request that Medicare Appeals Council (MAC) review the decision. The ALJ denial will include instructions on how to file.

Appeal #5 If the MAC turns you down you have 60 days to determine if you wish to hire an attorney and file a judicial review in federal district court. The amount in dispute must be greater than $1,180 to qualify.

I hope this helps a few Seniors and empowers them to fight their fight for benefits.

James Burns, Esq.

www.jamesgburns.com

(949) 440-3243