Asked & Answered: Target Date Funds

1/26/2012

Neil from Narberth, PA:

Should I just put my 401k in a Target Date Fund?

Friedenthal Financial:

Great question! The two primary factors to consider are risk level and cost. While the concept of a Target Date Fund (based on your anticipated retirement date) is appealing, it presumes that everyone retiring around the same time should have the same portfolio. There are many other factors that should be considered when estimating your ability and willingness to take investment risk. The Target Date Fund may (or may not) serve the average person retiring at your scheduled time. You may or may not be that average person.

Your ability to take investment risk is primarily based on the timing of your anticipated need for withdrawal. This could be due to a material capital expenditure or simply the need to draw income in retirement (net of other income such as social security, pension, etc.) relative to your expected assets. Obviously, if you never needed to withdraw funds, you would have an unlimited time horizon and would conceptually think of these funds as going to heirs or charity (and thus have their ability to take risk).

Separately from your ability is your willingness to take risk. If you would liquidate investments because you can no longer stomach the decline, you have a reduced willingness to take risk. If your ability is great, you may still be better served by a more conservative portfolio, due to a limited willingness to take risk. If you need assistance estimating your ability & willingness to take risk, we recommend contacting your investment advisor.

Even if the Target Date Fund happens to have an appropriate risk profile for you, there may be more cost effective ways to create such a portfolio given the menu of choices in your 401k plan. We always recommend balancing diversification and cost structure when targeting a risk level within a 401k plan.

We hope that helps and provides fodder for discussion.  Please let us know if we can be of further service!

The Friedenthal Financial Team

856-210-6494 (Office)

856-210-1565 (Facsimile)

info@friedenthalfinancial.com

www.friedenthalfinancial.com

Please send us your questions!!   If we don’t know the answers, we’ll find someone who does!

If you know someone who would like to discuss their investment needs with us, we certainly appreciate the introduction.

 

This blog is only intended to provide answers to questions of general interest we receive on the topics of investments, finance, capital markets, and economics and to serve as a historical repository for our e-mailed Asked & Answered column.  We are not rendering or offering to render personalized investment advice or financial planning advice through this blog or any of its attached links.  Friedenthal Financial will render investment advice to potential clients only after:  (i) we have delivered a disclosure statement to the potential client as required under applicable securities laws, and (ii) the potential client has executed and delivered Friedenthal Financial’s investment advisory contract to us.  We will provide investment advisory services to clients only in states in which Friedenthal Financial is registered as an investment adviser or is exempt from registration.

Asked & Answered: Multiple Advisors

December 6, 2011

Reid from Redmond, WA:

Should I engage several advisors to manage my investments or concentrate with one?

Friedenthal Financial:

This is a great question with no “right” answer.  There are benefits to both methods and ultimately you will need to evaluate your own needs to best choose.  Here are several of the typical benefits identified.

Multiple Managers/Advisors

The main benefit is simply the diversification of your risk in making the wrong choice in a single advisor.  Even with multiple advisors, it is important to evaluate their experience, methodologies, and procedural safeguards.  Selecting more than one advisor adds to your time spent performing due diligence, but reduces your risk in potentially making a single “bad choice”.

Another benefit is if one advisor is no longer meeting your needs, you already have another engagement in place. Some advisors have a waiting period to withdraw your funds (we recommend you always check BEFORE you enter into an advisory agreement), but having another relationship will generally reduce the time it takes to exit a relationship with an advisor.

One Manager/Advisor

The biggest benefit to having one advisor (or money manager) manage your investments is that your portfolio can be managed holistically.  This can lead to better total risk measurement, since all investments can be examined for correlation and combined risk profile.  If you decide to use several advisors, YOU will need to be the quarterback and coordinate risk profiles as they will not likely communicate with each other.  There may be times when one advisor negates positions in another advisor’s portfolio and other times when risks are “doubled-up”.

Concentrating your investments with one advisor is generally more cost effective, since many fee based advisors offer price breaks for larger accounts (which wouldn’t be realized if assets were spread around several advisors.)  Sometimes Mutual Funds are available in lower cost structures for larger investments.  This might not be optimized if assets are split.  In addition, splitting assets would result in a greater number of transactions, which could drive up costs.

Simpler tax planning and reporting – Having one advisor and fewer accounts may make tax planning easier for your accountant.  If multiple advisors are utilized, you may need to coordinate efforts related to your tax implications.

We hope that helps and provides fodder for discussion.  Please let us know if we can be of further service!

The Friedenthal Financial Team

856-210-6494 (Office)

856-210-1565 (Facsimile)

info@friedenthalfinancial.com

www.friedenthalfinancial.com

Please send us your questions!!   If we don’t know the answers, we’ll find someone who does!

If you know someone who would like to discuss their investment needs with us, we certainly appreciate the introduction.

 

This blog is only intended to provide answers to questions of general interest we receive on the topics of investments, finance, capital markets, and economics and to serve as a historical repository for our e-mailed Asked & Answered column.  We are not rendering or offering to render personalized investment advice or financial planning advice through this blog or any of its attached links.  Friedenthal Financial will render investment advice to potential clients only after:  (i) we have delivered a disclosure statement to the potential client as required under applicable securities laws, and (ii) the potential client has executed and delivered Friedenthal Financial’s investment advisory contract to us.  We will provide investment advisory services to clients only in states in which Friedenthal Financial is registered as an investment adviser or is exempt from registration.

Asked & Answered: Fixed Income Risks

October 26th, 2011

Stanley from Sturgis, SD:

What are the risks in owning a fixed income portfolio?

Friedenthal Financial:

Great question! At a high level, there are 4 major categories of risks in fixed income. Many fixed income instruments (aka “bonds”) bear more than one of these risks, and of varying magnitude. It’s very important to understand any instrument you own, including how these risks interact with each other. Having said that, the 4 major risks are as follows.

Interest Rate Risk – This is the risk that the coupon/rate you are receiving becomes below market in the future. All else equal, a longer maturity bond (or fund) has more interest rate risk because you could be “stuck” with a below market rate for a longer period of time. The greater the interest rate sensitivity, the more the current value/price of the bond will decline for a given increase in market rates for like securities.

Credit Risk – The risk that an issuer of a bond will default, causing a
reduction in interest and principal received by the investor. This is germane in examining Corporate Bonds, Municipal Bonds, and many foreign Sovereign Bonds. We typically describe US Treasuries as “risk free”. Even with this year’s unprecedented rating downgrade by Standard & Poors to AA+, US bonds still behave like they are the global risk free instrument. Keep in mind that this ONLY refers to credit risk. Clearly US Treasuries have interest rate risk (see above).

Liquidity Risk – This is the cost differential between what you pay to buy a bond and what you receive when you sell it. Sometimes we think of this risk as probability you won’t receive what’s marked in your brokerage statement when you go to sell your bond. Individual corporate and municipal bonds can bear a great deal of liquidity risk. Mutual Funds and Exchange Traded Funds often provide much better liquidity than the bonds inside the funds.

Prepayment Risk – This is the risk of “timing” of cash-flows expected. It is specific to Mortgage Backed Securities and Callable Bonds. Since the investor doesn’t have control over when the borrower (mortgages) pays off the loan inside the bond, or when the issuer calls (forces redemption) their bond, cash-flow timing can be uncertain.

Keep in mind that all of the above risks are for individual securities. Diversification is very important in a fixed income portfolio, ESPECIALLY one with sensitivity to Credit Risk. For this reason, we generally recommend that investors use bond funds (mutual funds or ETFs) to own their fixed income exposure.

Please also note that bonds with material credit risk tend to be more highly correlated to stocks than to treasuries. As poor economic indicators frequently cause stocks to decline, they also suggest that corporations may have higher default rates, causing credit sensitive bonds to decline in value. These scenarios are often accompanied by increasing long term treasury prices (lower rates).

The charts below show scatter plots of the % changes in High Yield Bonds (JNK) vs Stocks(SPY) and the same chart against Long Term US Treasuries (TLT). If you look at the statistics on the right hand side, you will see that JNK has a 49% Correlation (R-Squared) to stocks compared to 6% to TLT.

JNK vs SPY

 Source: Bloomberg

JNK vs TLT

 

Source: Bloomberg

The last chart represents the price changes in three different treasury funds of varying maturies over the last 4 years. As discussed above, TLT(white line) has muct more volitility due to interest rate risk. IEI (Orange line) is a intermediate term treasury fund and exhibits less volitility than TLT, but more than SHV(Yellow Line) which is a short term treasury fund. To see this chart in more detail, click on the chart.

Source: Bloomberg

We hope that helps and provides fodder for discussion.  Please let us know if we can be of further service!

The Friedenthal Financial Team

856-210-6494 (Office)

856-210-1565 (Facsimile)

info@friedenthalfinancial.com

www.friedenthalfinancial.com

Please send us your questions!!   If we don’t know the answers, we’ll find someone who does!

If you know someone who would like to discuss their investment needs with us, we certainly appreciate the introduction.

 

This blog is only intended to provide answers to questions of general interest we receive on the topics of investments, finance, capital markets, and economics and to serve as a historical repository for our e-mailed Asked & Answered column.  We are not rendering or offering to render personalized investment advice or financial planning advice through this blog or any of its attached links.  Friedenthal Financial will render investment advice to potential clients only after:  (i) we have delivered a disclosure statement to the potential client as required under applicable securities laws, and (ii) the potential client has executed and delivered Friedenthal Financial’s investment advisory contract to us.  We will provide investment advisory services to clients only in states in which Friedenthal Financial is registered as an investment adviser or is exempt from registration.

Asked & Answered: Economic Stimulus

August 24, 2011

Burt, from Boise, ID:

Does the government have any other economic stimulus tools besides a third round of Quantitative Easing (QE3)?

Friedenthal Financial:

It’s a great question, and certainly one with many subjective opinions floating around. Here’s a bit of background and several of the ideas circulating, including an outside the box notion.

The Federal Reserve’s first line of defense when it comes to stimulating the economy is of course lowering the Fed Funds Rate (short term interest rates). Since they have already lowered the Fed Funds Rate to zero (technically a range of 0-0.25%), they can’t really lower short term rates any more. They turned then to lowering longer term rates, treasuries as well as other bonds. This has been affectionately dubbed “Quantitative Easing” (rounds 1 and 2). Instead of QE3, at the last Fed meeting (8/9/2011) they announced that they would leave the Fed Funds target essentially at zero for another 2 years! This had a similar effect as quantitative easing, in that longer term rates declined. The benefit of this action over other stimulus tools is that there was no cash outlay by the government.

Even after all of this, there has still been banter about a potential 3rd round of QE, which we don’t think is out of the question. However, would it truly stimulate the economy? We tend to think not….or at least not materially enough. Lower rates stimulate the economy because they make borrowing money cheaper, which creates incentives to spend money. People and businesses aren’t avoiding borrowing money because it’s too expensive. The reason more borrowing (and lending) isn’t going on is because borrowers don’t have the income, credit, and/or collateral to get approved financing. So, lowering long term rates doesn’t really change the situation.

Your question….what “else” can be done?

Income Tax Holiday – While this is stimulative, since tax payers would have more money to spend, it would also increase the budget deficit (decreasing IRS revenue), which has been under significant scrutiny for its current growth rate trajectory.

Payroll Tax Holiday – Similar criticisms to reducing income tax, but targets businesses, hoping relief for businesses will tend to create jobs, thus the stimulus.

Corporate Tax Credit for job creation – A subsidy for businesses to create new jobs would stimulate job creation. Reducing unemployment would certainly be stimulative for the economy. The question is always if the cost of the stimulus would be regained by the government in subsequent revenue (taxes).

Infrastructure Funding – The nation’s bridges, tunnels, roads, railways, subways, etc. are aging. Investing in these infrastructure projects can be productive and certainly creates jobs.

Loosen Bank Capital Requirements – While this could stimulate lending, it reverses the recent course of more stringent capital requirements, which was designed to strengthen the banking system.

Buy Houses – This is the most “outside the box”, and would certainly be criticized for the same reasons as more Quantitative Easing…….it requires more government cash outlay. However, it could be much more effective than QE3, because it would address the two most constricting current economic factors; depressed housing and high unemployment. Buying houses would obviously support housing prices by removing supply. It would also create jobs to manage the properties (to rent), improve the properties where appropriate, and even potentially destroy certain properties, where better use can be ascertained. The government has the ability to hold houses (just like it holds securities in Quantitative Easing) until the market can bear selling them, generally at higher prices. The other stimulative benefit of rising housing prices is that it frees up collateral value to facilitate borrowing/lending. This supports spending as well as small business investment (since that’s where many small business owners get funding).

If you have other ideas, we would love to hear them! In these unique times, it may take some creative thinking to make the real difference.

We hope that helps and provides fodder for discussion.  Please let us know if we can be of further service!

The Friedenthal Financial Team

856-210-6494 (Office)

856-210-1565 (Facsimile)

info@friedenthalfinancial.com

www.friedenthalfinancial.com

Please send us your questions!!   If we don’t know the answers, we’ll find someone who does!

If you know someone who would like to discuss their investment needs with us, we certainly appreciate the introduction.

 

This blog is only intended to provide answers to questions of general interest we receive on the topics of investments, finance, capital markets, and economics and to serve as a historical repository for our e-mailed Asked & Answered column.  We are not rendering or offering to render personalized investment advice or financial planning advice through this blog or any of its attached links.  Friedenthal Financial will render investment advice to potential clients only after:  (i) we have delivered a disclosure statement to the potential client as required under applicable securities laws, and (ii) the potential client has executed and delivered Friedenthal Financial’s investment advisory contract to us.  We will provide investment advisory services to clients only in states in which Friedenthal Financial is registered as an investment adviser or is exempt from registration.

Anked & Answered: Debt Ceiling Crisis

July 28th, 2011

Oscar from Olympia, WA:

What are the implications of the debt ceiling crisis?

Friedenthal Financial:

There are two main issues surrounding the debt ceiling crisis. First is the issue of potential default (or delayed payment) by the US government on its obligations. Obviously if the government doesn’t have the funds to make payments, it needs to borrow funds. If the debt ceiling is not increased, it has no ability to do so. The second issue is the possibility that S&P and/or Moody’s would downgrade US debt, which could have a ripple effect in our financial system.

At the root of the debt ceiling debate is the massive budget deficit (currently about $4T/yr). The pace at which we reduce the budget deficit will directly impact the pace of future debt ceiling increases. The rising Debt to GDP ratio is one of the primary causes of potential ratings downgrade.

Clearly the best case scenario is for Congress to quit this political game of chicken and come up with a plan to reduce budget deficit and increase the debt ceiling. If they do NOT do so by the August 2^nd deadline, does that mean there will be a default? Technically, the government could hold back (delay) payment of operating expenses, such as Social Security, Medicare, or government contracts. While this might not technically be considered a default, it is most certainly a very dire circumstance that could be met with a downgrade of debt ratings. There is significant speculation that even if a moderate budget deficit reduction is achieved, with a debt ceiling increase, there may still be a ratings downgrade, simply because any budget deficit still increases government debt and our total debt is high relative to the size of our economy (GDP).

If Congress doesn’t raise the debt ceiling in time, is there anything the President can do? Some experts say that Obama can unilaterally raise the debt ceiling under the 14^th Amendment of the Constitution, citing the validity of the nation’s public debt “shall not
be questioned.” Even if this is possible, it would clearly only be a short term fix and doesn’t address the underlying issue.

Could the US just print more money to pay its bills? They could….but it would just further devalue the currency and cause more domestic inflation. As such, this is not a long term solution, and doesn’t mitigate the risks of a ratings downgrade.

A true default seems very unlikely. A prolonged delay in payment of services also seems unlikely. However, the combination of events that could lead to a downgrade in US debt ratings, may not be so far-fetched. The consequences of a downgrade are not completely clear. If the US is perceived to still be the safe haven in a riskier world, the demand for US debt (treasuries) will still remain. If the spectacle caused by the political circus dealing with our debt ceiling leads investors to require higher yields for US debt, we could see more substantial market turmoil. Some institutional investors, domestic and foreign, may be forced to liquidate some or all of their US Treasury holdings to comply with internal policies regarding AAA bond ratings. Even if policies don’t dictate such, bank capital requirements may increase for lower rated bonds, causing a similar liquidation.

There are two commonly referenced Debt metrics.

Net Debt – This is the sum of all government obligations held by entities (Public and Private) outside the Government of issue.

Gross Debt – This is the total of Net Debt as well as debt and other obligations that the government owns itself.  Examples include US government bonds held by the US Treasury as well as the Social Security Fund.  The Debt Ceiling is based on Gross Debt.

The graph below illustrates the change in US Gross Debt as a percentage of GDP.

Source: Bloomberg

Most foreign countries report Net Debt as a percentage of GDP.  So, for purposes of comparison, the table below illustrates Net GDP as a percentage of GDP by country.

Source: Bloomberg

Note that the graph above is as of 12/31/2010. 2Q GDP figures will be released tomorrow (7/29/2011). Given the increase in debt, our ratios are expected to increase.

We hope that helps and provides fodder for discussion.  Please let us know if we can be of further service!

The Friedenthal Financial Team

856-210-6494 (Office)

856-210-1565 (Facsimile)

info@friedenthalfinancial.com

www.friedenthalfinancial.com

Please send us your questions!!   If we don’t know the answers, we’ll find someone who does!

If you know someone who would like to discuss their investment needs with us, we certainly appreciate the introduction.

 

This blog is only intended to provide answers to questions of general interest we receive on the topics of investments, finance, capital markets, and economics and to serve as a historical repository for our e-mailed Asked & Answered column.  We are not rendering or offering to render personalized investment advice or financial planning advice through this blog or any of its attached links.  Friedenthal Financial will render investment advice to potential clients only after:  (i) we have delivered a disclosure statement to the potential client as required under applicable securities laws, and (ii) the potential client has executed and delivered Friedenthal Financial’s investment advisory contract to us.  We will provide investment advisory services to clients only in states in which Friedenthal Financial is registered as an investment adviser or is exempt from registration.

Asked & Answered: Measuring Diversification

June 23, 2011

Laverne from Lafayette, PA:

Can I measure the level of diversification in my portfolio?

Friedenthal Financial:

That’s an excellent question!  While we are not aware of a universally accepted formula for diversification, we can share the methods that we use.

First let’s specifically define the task.  When we combine more than one asset, how does the expected volatility of the combined portfolio differ from the sum of the parts?  Diversification is a measure of risk reduction achieved by combining assets that are different from each other.  Let’s look at two stocks that have an expected return of 10% with a standard deviation of 20% (meaning about 68% of the time the returns will be +/- 20% from the expectation…..thus between -10% and +30%).  By combining them in a portfolio together, the expected return is still 10%, but the deviation will decline to something below 20%.  How much risk reduction is achieved will be determined by how different the two stocks are from each other.  The lower the correlation between the two stocks, the more diversification they achieve.  Thus the more diverse our portfolio components are, the greater the reduction in risk, for no reduction in expected return.  This is why diversification is considered the only free lunch (financially speaking).

Even though the S&P500 is considered well diversified already (since it is comprised of 500 stocks), you can still increase your diversification materially by combining other asset classes.  By adding a variety of equity, credit, and traditional fixed income, across multiple currencies, a portfolio can achieve maximum diversification.  We measure our diversification by comparing the combined portfolio deviation to the average deviation of the components.  Please keep in mind that if you are starting with components that are already diversified (such as an ETF or mutual fund that owns the S&P500) the incremental diversification associated with their combination will be lower than if you start with the individual stocks in each component.  So, learn to look at diversification as something of a relative statistic.

Please click here to download a spreadsheet with an example of portfolio diversification.

Spreadsheet Explanation:

When we look at the 30 stocks in the Dow Jones, we see that the average standard deviation is 22.7%. This is simply the average and not the combination. By combining those same 30 stocks into a portfolio (equally weighted for simplicity) we get a standard deviation of 15.7%. This illustrates that you get a 30.8% reduction (1-15.7%/22.7%) in standard deviation by combining these 30 stocks into one portfolio.

To take this one step further, we assembled a list of 8 asset classes with an average standard deviation equal to the standard deviation of the S&P 500 (16.3%). By combining these asset classes into a portfolio (again, equally weighted), we get a standard deviation of 14.3%. So we can say that by combining an index of large cap, US stocks with 7 other asset classes, we can remove unnecessary volatility of the portfolio by another 12.2% (1-14.3%/16.3%).

If you are looking closely, you might notice that the standard deviation of the S&P is higher than the combination of the Dow 30 stocks and wonder how this is possible given the number of stocks in the S&P 500. This is due to the 30 stocks in the Dow being large-cap blue chip stocks that tend to have lower volatility than many of the stocks the make up the S&P 500.

If you have any questions or would like to discuss this concept further, please feel free to give us a call. This topic can be challenging and we are happy to explain in more detail.

We hope that helps and provides fodder for discussion.  Please let us know if we can be of further service!

The Friedenthal Financial Team

856-210-6494 (Office)

856-210-1565 (Facsimile)

info@friedenthalfinancial.com

www.friedenthalfinancial.com

Please send us your questions!!   If we don’t know the answers, we’ll find someone who does!

If you know someone who would like to discuss their investment needs with us, we certainly appreciate the introduction.

 

This blog is only intended to provide answers to questions of general interest we receive on the topics of investments, finance, capital markets, and economics and to serve as a historical repository for our e-mailed Asked & Answered column.  We are not rendering or offering to render personalized investment advice or financial planning advice through this blog or any of its attached links.  Friedenthal Financial will render investment advice to potential clients only after:  (i) we have delivered a disclosure statement to the potential client as required under applicable securities laws, and (ii) the potential client has executed and delivered Friedenthal Financial’s investment advisory contract to us.  We will provide investment advisory services to clients only in states in which Friedenthal Financial is registered as an investment adviser or is exempt from registration.

Asked & Answered: Corporate Bond Liquidity

April 28, 2011

Chuck from Charleston, SC:

I went to sell a corporate bond from my portfolio and discovered I couldn’t get anything close to what was marked in my account.  Why is this?

Friedenthal Financial:

There are a few reasons.  First, be sure that you are looking at a current price for your bond.  Your most recent account statement may still be outdated.  If you are looking at an online snapshot of your portfolio, chances are that your corporate bond may only reflect the previous day’s close (if it’s during market hours), unlike stocks or ETFs, which your broker/custodian will generally have fairly up to date prices displayed (maybe real-time).

However, the most likely cause of your frustration is simply the lack of liquidity of your security.  One symptom of a less liquid security is a large spread between the prices that you would be able to purchase the security (offer price) and the price at which you could sell the security (bid price) in the open market.  We are often used to the highly liquid markets of equity securities, which frequently trade with a 1 cent spread between bid and offer.  Corporate bonds can trade as wide as several dollars (points) between bid and offer.  We have even seen specific bonds trade more than 10 points between bid and offer!

The price reflected by your broker/custodian is most likely coming from an independent pricing source.  They do not necessarily account for a specific side of the market (buyer or seller).  They also do not account for the size of your specific position, which can contribute to the disparity in your observation.

While some corporate bonds trade every day, some don’t trade very frequently.  We have seen bonds that literally haven’t traded in several months!  So, the pricing sources are making an educated guess on their value based on other bonds that have traded more recently.  It may be that the pricing source used by your broker/custodian doesn’t accurately reflect current market buyers and sellers for your specific bond.

Generally, less frequently traded bonds are less liquid, and carry larger spreads between buyers and sellers since less information is available about trading history.  Smaller size bonds may also be more difficult to sell and thus receive lower prices (bids).  Really large positions might also have problems, but this is not common in a retail setting.

A good example of a corporate bond that has a large spread between bid and offer is a bond issued by Anheuser Busch that matures in 2031 and pays a coupon of 6.8%. Looking at the table below, you will see that this bond traded 9 times on February 18^th, though the price varied materially. This is an example of a bond with a wide bid/ask. If you wished to buy this bond on 2/18, you would have paid a much higher price than what you could sell where you could sell it at the same point in time.  Even if your broker valued your security in the middle of this range, it would create quite a surprise when you went to sell it!

Source: Bloomberg

Another example is a municipal bond issued by a Township Board of Education in Verona, NJ. You can see in the table below that this bond only traded 2 times in the last 6 months. It would be difficult to even know a realistic price for this bond considering how long ago it traded.

Source: Bloomberg

We hope that helps and provides fodder for discussion.  Please let us know if we can be of further service!

The Friedenthal Financial Team

 856-210-6494 (Office)

 856-210-1565 (Facsimile)

info@friedenthalfinancial.com

www.friedenthalfinancial.com

Please send us your questions!!   If we don’t know the answers, we’ll find someone who does!

If you know someone who would like to discuss their investment needs with us, we certainly appreciate the introduction.

 

This blog is only intended to provide answers to questions of general interest we receive on the topics of investments, finance, capital markets, and economics and to serve as a historical repository for our e-mailed Asked & Answered column.  We are not rendering or offering to render personalized investment advice or financial planning advice through this blog or any of its attached links.  Friedenthal Financial will render investment advice to potential clients only after:  (i) we have delivered a disclosure statement to the potential client as required under applicable securities laws, and (ii) the potential client has executed and delivered Friedenthal Financial’s investment advisory contract to us.  We will provide investment advisory services to clients only in states in which Friedenthal Financial is registered as an investment adviser or is exempt from registration.