I am always a bit curious when I read a cover story headline like the one on Kiplinger Magazine this month. It says 18 Ways To Earn 5% or More On Your Money.

A lot of readers will make an assumption that goes along with that headline that they are talking about low-risk investments or no-risk savings products. After all, it doesn’t take a degree in advanced personal finance to know that there are literally thousands of ways to earn 5% or more on your money. Of course, most of those also come with a way to lose 5% or more on your money too.

That is not what the article is about. Instead, this particular article, whose article title inside the magazine is, “Great Rates In A Low-Yield World” manages to give a better clue. The article is NOT about where to open a savings account to earn 5% or more. It is about how to get 5% YIELD on your investment. That is, 5+ percent as income, and not counting losses on invested capital.

Real Earnings Are About More Than Dividends and Interest

Unfortunately, while the article does indeed uncover available investments earning a 5% or higher yield, it ignores the potential change in value of those investments. If you are holding bonds to maturity, of course, this factor is moot, but if your personal finance needs change or you don’t plan on holding those munis for a couple of decades, then price volatility is a very real factor in whether or not you earn that five percent target interest rate.

The first way to earn more than 5% on your money on the list is taxable municipal bonds. Specifically, they talk about Build America Bonds (BAB) which in addition to having taxable interest, have a portion of their bond insurance paid for by the Federal Government. Long-term BAB are paying 6 percent or higher in many cases.

Of course, you better be planning to hold on to those long-term bonds for a long-term investment.

As any educated investor knows, bond prices fall when interest rates rise. This is true for Build America Bonds muni bonds too. So, the $1,000 you shell out to get the 6.6% 25-year Illinois bonds the article references will soon be worth much less.

While economists are predicting the Fed won’t raise interest rates until 2012, that still means that for the next 23 years, those bonds will be trading at a discount. That is not a pretty outlook for bonds.

If rates rise far enough and you end up selling those bonds for whatever reason, your capital losses will make your actual rate of return on the bonds far less than the 5% you were trying to earn more than in the first place.

Other money earning strategies on the list potentially have the same issue. The list includes some REITS, preferred stocks, and some exchange traded limited partnerships.

Nothing drives home this point more than the inclusion of British Petroleum on the list of ways to earn more than 5% on that money. Since magazines go to print months before they hit the newsstand, the article was written before the BP oil spill in the Gulf of Mexico occurred. So, on page 39, under “Juicy Dividend Payers” is British oil giant BP (with a listed stock price of $59) and its 5.7% dividend.

Unless you have been living under a rock, you know that this is one suggestion you do not want to take. Suggestions that BP eliminate or sharply reduce its dividend payment in order to retain enough cash to pay out mounting compensation and penalties are growing louder. Furthermore, the stock’s price has been crushed, closing under $34 per share on Friday. If you bought BP at $59 hoping for a nice juicy dividend, not only is that dividend likely to be much lower (if not zero), but you have also lost 40% of your original investment!

The point is not that this one suggestion turned out very bad, but rather that any one of the suggestions in that same article could have something happen to them as well. It wouldn’t take the world’s largest oil spill to turn a 6% dividend into a 3% yield, while at the same time wiping out 5% of your original investment.

Looking for ways to earn more interest on your savings is good. Knowing the distinction between savings and investments is even better. Don’t run down to your broker’s office with your savings account because a financial magazine or money management website touts higher returns. First investigate the risks and make sure you are putting the right dollars in the right financial asset strategy buckets.

Everyone is worried about if and when the Federal Reserve will raise interest rates, even though the Fed itself continues to say that it is not considering doing so. The personal finance strategy Catch-22 here is that as soon as the Fed drops the language in its statement saying that they plan to leave interest rates unchanged for the near future, markets will react as if the Fed actually raised rates. That is what happens when interest rates are so low (basically just above zero) that everyone knows the only way they can go is up.

Recent inflation data about the Consumer Price Index, or CPI was released suggesting that inflation remains calm if not non-existent.

Consumer prices in the U.S. fell 0.1% on a seasonally adjusted basis in April as energy, housing, auto and apparel prices declined. The core CPI — which excludes food and energy prices — was unchanged in April, lowering the year-over-year increase in core inflation to 0.9%, the lowest rate since January 1966. – MarketWatch

What is Core Inflation or Core CPI

I find it ironic that with every news story published about the CPI there comes an in text explanation of what the "Core CPI" is. The single liner typically says, as above, that the Core CPI excludes food and energy prices. The irony is that the same news story makes no effort to explain what the Consumer Price Index is in the first place, so how much sense does it make to explain what is excluded from it to derive the Core CPI?

In other words, do you what price categories are included in the CPI? How much help is it then to know that the Core CPI does not include two of the categories from the original list that you don’t have? I’m just saying.

The Bureau of Labor Statistics calculates and releases numerous price indexes. The one that the media constantly refer to as The consumer price index or CPI is actually the All Items Consumer Price Index for All Urban Consumers for the U.S. Cities Average, 1982-84=100. This is abbreviated CPI-U. As you can see, there is actually a lot that goes into the number reported as CPI.

Components of Consumer Price Index CPI

The basket of goods measured by the BLS to compute CPI is actually very large. The main categories, as reported by the BLS, are:

• FOOD AND BEVERAGES
• HOUSING
• APPAREL
• TRANSPORTATION
• MEDICAL CARE
• RECREATION
• EDUCATION AND COMMUNICATION
• OTHER GOODS AND SERVICES

As you can see, the CPI measures a lot more than just your average everyday expenses. Some categories, such as Medical Care and Education affect certain people a lot more than others.

Check out the latest on Thank You Network Citibank

The Core CPI that the media likes to report about is officially known as All items less food and energy. You can tell from its title what the BLS thinks about this particular statistic. Nonetheless, the idea is that Food and Energy prices are particularly volatile and by excluding them one gets a better idea of what the "real" inflation is. Whether that is true or not depends in large part to what extent the increase in food or energy prices are part of a long-term trend versus short-term adjustments, much like day-to-day stock market prices.

Raw CPI data is virtually worthless, which is why the Fed takes into account many more factors to put the CPI index into context when making its rate setting decisions. In other words, it is best not to get caught up in the hoopla surrounding individual CPI numbers. However, keeping an eye over time on the statistic provides a thumbnail sketch of whether prices are rising or falling.

For now, the concern is not the CPI and the CPI will not be an important factor in the Federal Reserve’s interest rate policy in the near future. Right now, the Fed’s only concern is how to withdraw the extra stimulus it has provided to the economy through its unprecedented steps in 2008 and 2009 without causing the fragile recovery to collapse. Everything else is just background noise.

In addition to writing this blog for fun and profit, I am also a professional financial freelance writer, as well as a freelance technology writer, among other things. So it is not without some professional writing background that I read with shock the financial news that Yahoo is acquiring Associated Content for “slightly more than $100 million.” Ostensibly, Yahoo buying Associated Content was done in order to boost Yahoo’s content offerings. If that is true, then it time to sell Yahoo! stock. Sell, baby, sell.

Before we go any further, let me just say that I think the publicly released one-liner about why Yahoo would buy Associated Content is either incomplete, or an outright bluff. There are plenty of other things Yahoo gets from buying Associated Content, not the least of which is a big fat swath of Internet real estate that ranks obscenely high in Google search results and Bing search results. A great deal of the traffic generated from these high ranking searches is monetized via, you guessed it, Google AdSense which pays content publishers based upon ads placed by Google on those websites. Yahoo, can now switch out those Google Ads and replace them with their own Yahoo Ads. Frankly, this strikes me as a pretty cynical move, and one made largely to dupe the investing public at large that is not savvy enough to sort out the results of Yahoo’s acquisition of Associated Content.

Value of Yahoo’s Associated Content Purchase

In my mind, here is how the buyout of Associated Content by Yahoo plays out. First, as always, there is the generous write down of “goodwill” and other acquisition related costs. All but the most unsavvy of investors are wise to the so-called value taken by acquiring companies when it comes to these intangible assets, but it still makes things look better for a while to those who can’t or won’t parse company stock filings and investor reports.

Secondly, once Yahoo has milked the costs of acquisition dry, it will move advertising on Associated Content to its own Yahoo advertising platform or to its partner ad platform with Microsoft’s Bing search engine. In the meantime, the company may be all too happy to simply collect revenue from online competitor Google based on existing AdSense advertising that already exists on the site. Of course, Yahoo management will not break out the “growth” in Yahoo advertising that is nothing more than swapping out Associated Content ads for its own from the true organic growth of its Yahoo Ad platform. (Management is under no obligation to do so, of course.) So, analysts will be left guessing how much real growth is occurring in Yahoo ad revenue and how much was simply bought via its Associated Content acquisition.

Here is a hing for savvy investors, however. The revenue Associated Content generates today has no reason to decline in the coming months. There is no radical shift in online advertising going on, nor is Google seriously updating its search ranking algorithm that provides fresh meat for the Associated Content content mill on a daily basis thanks to the large interlinking done by the site itself. Thus, once Yahoo advertisements start appearing in place of Google advertisements, investors should discount the current volume of revenue generated by Associated Content from the revenue numbers reported by Yahoo for its advertising platform as the purchased revenue. Any remaining growth can be considered real Yahoo earnings growth.

I do not own any Yahoo! stock as of this writing, but that may change at any time. This is neither a recommendation nor an offer to buy or sell securities.

I have written  for Associated Content in the past; some articles I have been paid for. However, no payment was made or offered for this article.

Dow Jones Indexes publishes lot of averages and indexes. They are best known for the Dow Jones Industrial Average and the Down Jones Transportation Average.

Personal financial planning on FinanceGourmet.com

The Dow Jones Industrial Average is featured on most stock market news reports and makes an appearance on the nightly news. It is often referred to as just The Dow, or Dow Jones. The Dow Jones Index is composed of the stocks of 30 big U.S. companies which are supposed to represent the majority of the US economy and industry, with the exception of the transportation industry; they have their own index.

Dow Jones Industrial Average Components

The Companies In the Dow Jones Industrial Average
3M Company (MMM)
Alcoa Inc (AA)
American Express (AXP)
AT&T (T)
Bank of America (BAC)
Boeing (BA)
Caterpillar (CAT)
Chevron (CVX)
Cisco (CSCO)
Coca-Cola (KO)
du Pont (DD)
Exxon Mobile (XOM)
General Electric (GE)
Hewlett-Packard (HPQ)
Home Depot (HD)
Intel (INTC)
IBM (IBM)
Johnson & Johnson (JNJ)
JPMorgan Chase (JPM)
Kraft Foods (KFT)
McDonald’s Corp (MCD)
Merck & Co (MRK)
Microsoft (MSFT)
Pfizer (PFE)
Procter & Gamble (PG)
Travelers Companies (TRV)
United Technologies Corporation (UTX)
Verizon Communications (VZ)
Wal-Mart Stores Inc. (WMT)
Walt Disney Company (DIS)

Dow Jones Transportation Average is composed of companies from the transportation industry. The idea is that if American business is making and selling goods, someone else is making money by getting them from Point A to Point B. Of course, with declining manufacturing influence and an increasingly prevalent service economy, that theory might hold less weight. However, some would point to increasing travel as representative of additional service, although this discounts the impact of technologies like conference calls, emails and social networking on providing quality service to customers and clients.

Personal finance tips from FinanceGourmet blog

Stocks In the Dow Jones Transportation Average
AMR Corp (AMR)
CH Robinson Worldwide (CHRW)
Con-Way Inc (CNW)
Continental Airlines (CAL)
CSX Corp (CSX)
Delta Airlines (DAL)
Expeditors International (EXPD)
Fedex Corp (FDX)
GATX Corp (GMT)
JB Hunt Transportation Services (JBHT)
JetBlue Airways (JBLU)
Kansas City Southern (KSU)
Landstar System (LSTR)
Norfolk Southern Corp (NSC)
Overseas Shipholding Group (OSG)
Ryder System Inc (R)
Southwest Airlines (LUV)
Union Pacific (UNP)
United Parcel Service (UPS)

Lesser Known Dow Jones Averages

There area handful of other Dow Jones Averages. Most of them are calculated by taking predefined subsets of either the Dow Jones Industrial index or the Dow Jones Transportation index.

Dow Jones Utility Average – Tracks the performance of utility stocks associated with the generation and delivery of energy.

The Global Dow – Tracks 150 worldwide stocks to track the global economy.

The Dow 10 – Made up of the 10 stocks from the Dow Jones Industrial with the highest dividend yield.

The Dow 5 – The 5 lowest priced stocks from The Dow 10 Average.

Dow Jones High Yield Select 10 Index – The 10 stocks of the Dow Jones Industrial average that have the biggest indicated dividend yield on an annual basis.

What other stock indexes or market averages do you follow?

You’ll forgive me if I don’t give a flying leap about whether or not Abby Joseph Cohen things the recession is over.  The Goldman Sachs perma-bull was famous for being “right” about the ever rising stock market of the 1990s.  Too bad she has never been right about a single declining stock market.

Imagine you had a warning light that would light up red whenever the market was going to decline.  Imagine that light was broken and could never light up.  That light would be exactly as accurate as Abby Joseph Cohen has been since the 1990s.

Compare the light to Cohen and you’ll find they have the exact same track record.

Cohen Always Predicts Bull Markets

The recession may actually be over.  In which case, her apologists will trot out this proclamation as another example of her being “right.”  Just keep in mind, the warning light is always making the same prediction.

Whether or not now is a good time to invest in banks that are repaying their US government bailout dollars to the Treasury is an easy analysis to make, but a tricky question to answer.  Which among banking stocks like JP Morgan ( JPM ), Goldman Sachs ( GS), Bank of New York / Mellon ( BK ), and Wells Fargo ( WFC ) are good stock market investments in this economic environment?

For those large US banks who never really wanted any government bailout money in the first place and that have stayed relatively stable and profitable since taking the TARP funds, now might be a good time to invest.  However, for those US banks trying a little bit too hard to look like the good banks that are repaying their government loans with ease, the answer is much different.  The tricky part is knowing the difference.

Recently released emails and documents from the US Federal Reserve suggest that certain big banks had to be brought in line for the good of the whole industry when it came to taking government aid.  Other banks, like Citigroup, were already teetering too much on the edge of bankruptcy to have any real shot and avoiding a bank collapse without government help.  In between were the other big banks which definitely benefited from the banking bailout.  Knowing whether they are stronger or weaker bank stocks now is difficult to tell.

Analyzing US Bank Stocks

Any bank that was on the verge of collapse without government help should be avoided as an investment.  The only difference between now and six or eight months ago is that the economy is a little bit better.  A lot of that economic improvement is because of the massive economic stimulus package passed by Congress and the Obama administration.  Stimulus like that doesn’t last forever and if it wears off at the wrong time, the economy could head straight back down taking those banks and their stocks back with it.

Banks that never really needed the TARP funds or the CAP program are better investment targets although they will continue to be tainted by the sector overall and may have trouble returning to full health.  However, considering the banking industry no longer has a giant housing boom to bail it out if things are a little off, and that consumers might not be quite as anxious to do the kinds of banking business they used to even if things get better, the banking industry may be in for many years of lean growth regardless of how strong any single company is.

Banks that over-reached to repay their TARP money are also in danger of getting back into trouble.  Some banking companies have undone YEARS of share buybacks by reissuing as much or more stock than they managed to buy back over those years.  That means that those bank stocks will have a big supply to continuously weigh down on share prices.  It also means that forgoing all of those dividend payments over the years were wasted since there is just as much stock now as their used to be.

Banking Sector Health

Lastly, never forget that usually the way a troubled sector is able to rebuild and move forward is that the weaker players and the poorly managed companies die off and are forced into bankruptcy or sold to stronger better managed competitors.  With the US Government and the US Treasury Department stepping in a saving many of those weaker and badly managed banks, the sector did not have the necessary purge.

That means that when things return to “normal” there will be just as many competitors trying for the same number (or less) customers which means smaller profit margins and little or no room for error.  Just because that bank didn’t go bankrupt this year doesn’t mean it won’t next year, or the year after.

For now, banks are an unusually risky stock investment with little or none of the traditional upside of risky investments.  If you want to take on more risk in anticipation of a stock market run or a steadily improving US economy, then by all means do so.  Just find your risk somewhere where there are better rewards to go along with that risk.

If you have money in a 529 plan to save for college, good for you.  529 plans represent one of the best vehicles for educational savings, and with the cost of tuition skyrocketing faster than anyone can keep up with, they also represent the middle class’ only hope of paying for even 1/2 of a college education in the future.

When 529 plans were created, lawmakers attempted to correct some of the perceived issues with 401(k) plans which are similar in nature, but with a different goal.  One of those issues was that the majority of 401(k) plan participants were doing it wrong, that is, investing incorrectly.  One such problem was changing their investments too often in response to news events or media hype.

The solution implemented in 529 plans was that they were restricted to just one reallocation per year.  In other words, if you started 2009 with half your money in the S&P 500 fund and half your money in the International fund, you could change that to something else, but only once for all of 2009.

This restriction only applies to monies already in the account and exchanging that money between investments.  You can change where NEW money goes at any time.  Thus, in the example above, the account owner could switch to 25% S&P 500, 25% International, and 50% bonds on March 1st, but then they could not adjust that mix again until 2010.  However, the investor could elect to have all future contributions to go 100% to the Money Market fund on March 20th, and could change that again on April 19th, and so on, at any time.

2 Re-Allocations Investment Exchanges in 2009

Congress passed a law changing the rules for 2009 only.  In 2009, the account owner of a 529 plan may make TWO changes to the investment allocation of the existing funds.  One could therefore make a change now, and another change in September, for example.  The extra change cannot be rolled over and it does not apply to 2010, as of this writing.

Ironically, this action only proves the point.  Congress knows that people will be freaked out about their investments this year.  That means they will want to make the same kind of current events based investment decisions that were trying to be avoided by having the once a year rule in the first place.  Doubly ironic, is the fact that if one were going to “go safe” it probably should have been done in 2008.

With the new twice this year feature, Congress allows people to go safe now (too late) and then go back to “normal” later this year (probably too late as well). 

If you are sitting across the dinner table from a 15 year old, then you have a pretty tough call to make, especially if you have already rung up huge losses.  You are still probably better off sitting on the investment strategy you calmly and carefully analyzed when you were not scared, assuming that is how you picked your investments in the first place.  While there would only be 3 years until the account was started to be withdrawn, if you are looking to use the money over a full 4 or 5 years, then you are still looking at 7 or 8 years total.  There will most likely be some kind of recovery during that period.

Bond prices can only go down from here because higher interest rates cause lower bond prices and interest rates are already at zero…

If you are looking at someone under 10, do NOT panic.  Now is not the time to go 100% bonds, and it is most certainly NOT the time to go 100% money market.  The 20% recovery the market has already had from its lows earlier this year was the best way to get some of your money back.  You have 8+ years until the money is needed, let the markets do their work during that time.

You current contributions should be going into equities.  Pick a market index fund, or one of the “growth” allocations available in your plan.  Yes, there may be some more downside in this market, but you will be buying cheap if you are buying into stocks now. 

The opposite is true of bonds.  Never forget that bond prices go DOWN when interest rates go UP.  Interest rates are currently set at 0% basically.  That means it is GARAUNTEED that interest rates cannot go down, they can only go up.  Do the math and that means that for anything but the short-term bond prices can only go down.  Why would you buy an asset that is assured of losing value?

Once any sort of recovery begins, the Fed will have to start raising interest rates, and when they do, bond prices will fall.  The only way to avoid this is to own individual bonds and hold them until they mature.  For bond mutual funds, they can only lose money once the recovery begins.

A quick word about money market investment options: College costs are increasing at 7% per year on average.  If you are earning 3% in a money market (fat chance) you are losing 4% of buying power each year.  Yes, it is painful to watch the account value go down, but it will come back and over time, the market returns 9% to 11% depending on who you ask, and how you count.  In other words, your only hope to keep up with the 7% inflation of college tuition is to get that 9% in the stock market.  There is no other choice.

If you can’t or won’t listen, then that is too bad for your children, but AT LEAST make sure your current contributions are going into equities.  They won’t go down much more, but they could go up a lot.  Maybe that will be enough to make up for making the other decision.

Too harsh?  Leave a comment or shoot me an email.

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Ok, here it comes.

After the government released the results of its stress tests, banks are scrambling to come up with ways to raise huge amounts.  It seems that the government money that was a much vaunted and absolutely necessary lifeline to banks has become tainted now that it comes with, horror of horror, strings on how the money can be spent.  As if the banks ever handed out a huge loan to anyone without some sort of control on the collateral.

Be that as it may, banks want out of TARP and they want out now.  Even banks that would be much better off holding on to their TARP dollars are looking to buy back the government shares of preferred stock that they had to put up in order to their money.  Seems there is a feeling that the banks that do keep their TARP funds will be viewed as sickly or less stable than their counterparts who repay, regardless of the cost or wisdom of doing so.

The only way for these banks to raise the kinds of dollars being thrown around is by selling off assets, which is fine if they are not part of the core business (which begs the question why they were acquired in the first place), and by selling more stock to the public.  The latter means undoing decades of stock buybacks in some cases, and flat-out printing new shares in other cases.  Either way, that is a huge flood of bank stocks headed for the market. 

Buy, Sell, or Short Bank Stocks?

What’s an investor to do?

Get out of the way.

Frankly, there are too many variables here for any bank stock investment to be anything other than an educated guess at this point.  Trading on banking stocks based on whatever methodology or information you have analyzed can be nothing more than the equivalent of counting cards in blackjack and may be nothing better than picking red or black on a roulette wheel.

When you start using gambling analogies to discuss trading options, its time to step back.

At issue, is what will happen as the various banks strive to implement their business plans to both get out from under the government thumb and pay back their TARP money.  What is about to occur is unprecedented.

Typically, large corporations carefully time any additional stock sales or new issues into markets viewed as particularly favorable to their goals.  Nobody is saying that is the market we are looking at today, and yet, oodles of banks are looking to unleash the single largest infusion of bank stocks into the market in…well, forever.

Secondly, as banks focus on implementing their TARP pay backs and mending their image, they are more likely than ever to take their eye off the ball when it comes to actually running their businesses.  Already, companies have made consumer relations missteps that have become front page news, and Congress is talking about making credit card issuers make money fairly, instead of with fine print and contract double-talk, something most of them haven’t done in years, and may not be able to do anymore at all.

In other words, it is completely possible that thanks to a recovering economy, the largest government intervention in recent history will be a huge success and the Feds will get back all of their investment dollars and get to claim credit for saving the economy.  Along the way, bank stocks may absorb the huge infusion of supply and continue upward.

It is also completely possible that more than one bank will bungle throwing off the government shackles, or in doing so weaken itself too much to stay competitive, resulting in the credit crunch failing to unwind, a short-lived dead cat bounce in the economy and the onset of a second recession or banking crisis, this time that may cause the banks to stay in government hands for good, or that will leave investors holding the bag…and their shiny brand-new shares of common stock that are now worthless.

Go buy Wal-mart or GE, or company that’s upside during a recovery is not tied solely to how it plays the game during the next 10 months.

People are always asking me how safe municipal bonds are.  The answer is: They’re Safe.

Note that we are talking about BONDS here, NOT Notes, which are a whole different deal.  Unless you are an expert or near-expert bond trader, you should stay away from any and all notes of any kind except those from the US Treasury.

But, that can’t be the end of it.  After all, there are some examples of muni bonds going sour, most notably Orange County’s default on some of its muni bond debt. 

And, of course, various municipal bonds which were pegged to specific projects or revenue streams have gone belly up.  Of course, it is pretty easy to spot which ones have that kind of risk.  Bonds fully backed by the state, county, or city are generally as safe as you can get without investing in a US Treasury.  Also pretty safe are bonds back by utilities (water and sewer especially) since people have to pay for those one way or another. 

The ones you have to watch out for are the ones that are for building a specific project and then funded with the revenues from that project.  Common examples are things like an aquarium, stadium, road, business park, mall, and so on. Those can and do default pretty regularly, so you’ll really want to make sure you know all about the project and all about municipal bonds before you dip a toe in there.

When it comes to regular municipal bonds though, they tend to be as safe as anything can be without being backed by a federal agency like the FDIC or NCUA.

Here is an example.  Today’s CNNMoney site (among others) reports that California is delaying $3.5 billion in payments.  The list includes taxpayer refunds, contractors, counties that get money from the state, and even social service agencies.  Do you notice what is missing from that list? 

Nowhere in any news story in any paper or on any website do you see even a hint that California is considering for one second not making timely interest payments on California Muni Bonds.  In fact, while Fitch was downgrading California Revenue Anticipation Notes, or RANs, (what did I tell you in the second sentence?) it made no moves to lower its A+ rating (with negative watch, from before this news) for California municipal bonds.  That is a pretty good example of how safe most municipal bonds are.

To no one’s surprise, all of the major stock market averages ended January down for the month.  This has drawn out the media to file their annual (when the market is down in January) stories about how sometimes January being up or down can predict how the year goes as well.

This is about as accurate as which conference wins the Superbowl, the AFC or NFC, predicting how the stock market will perform for the year.  That is, not accurate at all.

The flaw in both is a fundamental misunderstanding of the nature of mathematics and statistics.  Just because something is true 75% of the time in no way makes it a reliable predictor of anything, and yet, here we are.

I’ll write up an article on this later, but for now just keep in mind that smart investing is about facts, not old wives tales, and arthritic knees predicting the weather.  Watch the numbers, not the headlines.

By the way, don’t expect February to be any better, but after that…well, we’ll just have to watch the numbers.