retiree portfolio update

Today, Retiree and I finally wrangled his money from Brokerage2. Retiree seemed puzzled regarding why I stubbornly insisted to be on the conference call with him and Brokerage2. When I saw Retiree's equity positions with Brokerage2, each one had the word "Margin" next to it.

Retiree definitely is in no condition to be playing around with margins. Really.

Upon asking the Brokerage2 CSR who was helping us what the "margin" label now indicates, especially since Retiree insists every position was placed using his own cold cash, she replied that it was purchased via margin monies at some point in time. Therefore, the "margin" label stayed. Huh??

Plus, each transaction cost $15. Talk about a relic from the dotcom days. Talk about a crack outfit.

Anyhow, we're now expecting a check in the amount of nearly $6000 to arrive at Retiree's doorsteps within the next couple weeks.

The only significant capital left sits in a CD that will mature by the end of this month.

retiree portfolio update

I'm beginning to think Brokerage2 was established during the dot-com frenzy. Everyone has a heavy ethnic accent, trade commissions are similar to the ridiculously high rates of the dot-com days ($19.95 / trade), and their online trading system is rife with so many bugs and errors. It seems they catered to a niche ethnic market hoping to ride the bubble and cash in. It seems the only one cashing in was Brokerage2, despite the brokerage having gradually downsized over the years, according to the retiree.

It turns out they've listed every one of the retiree's stock equity position as a margin purchase! When confronting the retiree about this, all I received was silence over the phone. And more question marks. Since I was rather slammed at work, the retiree ended up calling Brokerage2, and did his own interrogation, but didn't prod as intensively as I would've liked.

What I hope to accomplish by tomorrow is the following, when teleconferencing with the retiree and a Brokerage2 CSR:

1) Ascertain why on their website, each equity position shows the word "margin" next to it, when Retiree is telling me they were purchased with his cash,
2) Realize the net cash-out amount of the Brokerage2, and request cost basis for each equity position, and
3) Cash out of there like no other.

Ultimately, regardless of that final cash-out amount, the balance has been bouncing around like a rollercoaster ride for years now. Retiree probably doesn't understand what's going on and how I'm trying to accomplish what I projected to accomplish-- almost as if I care for his money more than he does.

Furthermore, this issue is just a small wrinkle-- one of the last few wrinkles in a nearly year-long struggle to get a firm grasp on his holdings. The biggest, most urgent aspect of the Retiree's portfolio is determining a precise, methodical investment strategy that we'll fundamentally stick to for the rest of his lifetime. Although urgent, this needs to be planned with extreme caution. Any slight disruption might unsettle the complete grand plan.

introducing the 2007 retiree portfolio

I've been tasked to manage a retiree's portfolio on a trial basis. Note that this is with real money and, yes, for a retiree, frankly this isn't much cash at all. The following is a very rough framework for the portfolio.

The assets below were once spread between so many accounts and brokerages that, over the course of nearly one year, I was "discovering" a new account every month. I'll just say this: this person had at least 5 separate Roth IRA accounts. Sure, I can understand justifiable reasons for opening up 5 separate Roth IRA accounts, but not if the reason is so the account-openin' sales rep can pocket some commission or kick-back from the brokerage house.

All values are in thousands.



The goal is to grow the portfolio value by at least 10% CAGR (compound annual growth rate) to $138,600-- minus variances from actual, final principal values above, along with various fees and taxes, along with losing >23 days since the start of 2007. Unfortunately, until all assets and finally transferred the way we've planned it, I'm not exactly how many days since the start of 2007 is "lost" as potential opportunity cost until everything is finally settled. Another factor is that not all of the principal will be in equity and bond allocations-- there might be a small percentage stashed into a money-market fund.

Additionally, principal value will be used to purchase whatever funds I've allocated in a staggered schedule, so there might be some slight, hopelessly-complex calculations that would factor this staggering in-- it might be much ado about nothing, but I suppose one method of systematically doing so is by documenting purchase lots.

Finally, for future back-testing purposes, the projected 5-year asset value of this portfolio will be a hair > $200,000. The projected 10-year asset value of this portfolio will grow to nearly $330,000.

It appears starting principal will be lower than expected for now. Requesting a disbursement from Brokerage2 has stalled for now since they're not a big outfit. Transferring an IRA requires an in-person visit to a national brokerage house (otherwise a "medallion authorization" is required-- no notaries, only a certified bank certification of signature) which presents its set of logistical challenges. And finally, we're awaiting the CD maturation in late February '07.

Our starting basis as of the middle of January '07 is roughly $110K. Once allocations and locations are finalized, an update presenting the equity / fixed income breakdown will allow you to see where future return projections are headed.

Lastly, I'm still testing out various portfolio strategies. I'm hoping by the time the CD matures I'll have a strategy primed for execution. Stay tuned.