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Ruby Tuesday, Inc. Message Board

  • jamison59 jamison59 Oct 20, 2009 9:28 AM Flag

    Free Advice to All - Worth every penny

    It is rare indeed that a “stock pro” and world class real estate agent gives us the benefit of her many years of experience. “The Raven” has so generously bestowed the benefits of her superior intellect and scholarly erudition upon us. A word of caution for all of you who question this free advice, you constitute, in the words of “The Raven”, “the nits on this board” and “are a world class bunch of morons”.

    As an experienced advisor, “The Raven” is well aware of the first responsibility of any advisor, according to the National Association of Securities Dealers as well as the College for Financial Planning, to know one’s client. That includes a thorough knowledge of their investment experience, risk tolerance, current financial position and investment goals. Never doubt that with her inexhaustible resources, she has thoroughly researched each of you (probably with a mind scan) when she advises, “I would argue that you stop contributing to your 401K”. Most “nits” would think this unwise until the true genius of her advice is revealed, “use the proceeds to buy RT stock”. Forget tax deferral and employer matches, just do it! I know many nits think that with banks still in shaky financial condition and unemployment at levels not seen since the 1930’s, that there might be a tiny kernel of risk in following this advice. I implore the reader to consider the source of this advice and put your thinking cap away. You are in the presence of true enlightenment and your powers of reason are no match for her. Put aside all doubt; this advice is right for you.

    Raven, honey, I was asked a questions from someone that read your “pearls of wisdom”, but they were afraid to ask for fear of running afoul of your majesty. Raven sweetie, you already know all of this because of your mind scan capabilities. My friend is 57 years old and hoping to retire at age 65. He has assets in a qualified retirement plan (401k) of about $450,000, a separate rollover IRA of $125,000 and has a Roth IRA with about $12,000. His 55 year old wife has $90,000 in a 401k and plans to retire at age 63 with her husband. Their goals in retirement are to maintain the comfortable lifestyle they currently enjoy, travel 3 or 4 times a year to Europe and Florida and they want to be able to visit their 6 grandchildren who are spread across 3 states once in a while. They plan on staying in the house they currently live in as long as they can. They have several life insurance policies that have an aggregate cash value of $75,000. Both contacted their benefits coordinator yesterday upon reading your advice and stopped their 401k contributions effective as soon as their plans allow. Of course, these funds shall be used to purchase as many shares of RT as they can afford. They have a Long-Term-Care policy in the event that one or both of them become ill. The premium for that policy is $375 per month. They retained the services of a nitwit advisor that foolishly used an outmoded asset allocation strategy to formulate a diversified portfolio.

    Since they have already forgone their tax deferral and employer match, on your advice, should they cash in the life insurance and cancel the Long-Term-Care policy and invest these funds in RT? In addition, both of the 401k’s can be rolled into IRAs. Should they sell the diversified portfolio their nitwit advisor formulated (blathering something about conservative investment strategy in line with your age and risk tollerance) for cash, roll the funds over and buy RT.? I told them this was a slam dunk and you would answer in the affirmative. Everyone knows that your majesty, a “stock pro”, has done the analysis and this stock is a definite $25 per share value. I also told them of your forecast that if this stock remains around $9 per share, Red Robin will perform a hostile takeover and they will be able to buy both Europe and Florida with the proceeds. They want to hear it from you honey.

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    • Raven sweetie, my friends want to know at what age they can retire now that they have moved all assets int RT stock? They want to know if they will be able to buy Europe for the grandkids as well? I have talked my entire family into stopping 401k withholdings as you advised and have them investing it in RT. When can they retire and are they taking any risk with their retirement funds by investing it in RT only? I'm embarrased to say this, but one of my family members actually had the nerve to ask if you were a Certified Financial Planner. I told them you were a "stock pro" and the real estate queen of the world. They quickly invested everything in RT.

      • 1 Reply to jamison59
      • Because they are your friends, I do not recommend they move everything into RT. That's just easy money, and no one remotely connected with you should be able to enjoy easy money.

        Because they are your friends, I recommend a properly diversified portfolio, CERTAINLY including commodities, gold, and US treasuries. In fact, I recommend your douchebag friends put EVERYTHING into US Treasuries. They are safe, and risk free!!!

        I recommend they buy the funds in their 401Ks...you know the ones...the funds that own about 3,000 positions...that way, they'll safely NEVER outperform the market. My favorites are the Beacon Funds. I got a prospectus with them, and they owned basically the entire stock market and then some. They certainly are earning that 1.37% annual fee I pay them. I mean, it must take literally YEARS to buy as many stocks as they own, so they deserve EVERY penny of it.

        In particular, focus on the 401K funds that have far too much in AUM, so they will never beat the market. I like the ones that have at least $50 billion under management. A fund like that MUST be safe for capital preservation and enhancement.

        I also love those new "target life" funds. Ah...an annuity in another package. And I'm sure you love your annuities...it's like betting against your own longevity in this mortal coil! And RISK FREE.

        No, RT is far to risky for people their age. 5x cash flow, trough earnings, completely refreshed store base poised for better growth in the coming years. That's just too risky.

        As for 401Ks in general...I did stop paying into mine in the last year. And it was a great move. I still haven't gotten my assets back to where they were pre-2008. Yet, in the IRA and PA I actively manage, I've trounced the market since June 2007. Literally, since June 13th...I use the IRA to measure my performance, I've generated exactly 59% total return. Over that same stretch, the S&P is still down 23.8%...so I've generated 82.8 points of alpha. That's enough to beat my 401K handily, including my 20% employer match, and the present value of my deferred tax liability.

        No, I'll stick to my own methods. And I'll stick to my former statement, that, unless you are getting a 20-50% match on all funds directed to a 401K, you should stop investing there and buy index funds. 401Ks are a scam, unless you can do index funds there.

        Kind regards,

        Raven

 
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