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STOCKS SPLITTING: WHAT DOES IT MEAN? DLG Wealth Management Weighs In On When Stocks Split and What You Should Know

Friday, September 28, 2012
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You may have heard recently about Coca Cola’s stocks splitting. But what does that really mean? Is it a good or bad thing? Why do stocks split in the first place? Let’s dive in to the matter.

April 2012 – Coca Cola announced it was going to split its stock 2 for 1. This means if you own 100 shares, you are going to have 200 now. At the time they announced the split in April, the stock was trading at $78. Therefore if you owned 100 shares you were worth $7,800. In August 2012, the stock became $39 but if you previously owned 100 shares, you now own 200 shares. You’re still worth $7800. So why split a company’s stock? Most stock splits occur when companies feel positive about their future. Companies split their stock when they feel the price is too high and is keeping investors from buying their stock. In Coca Cola’s case the stock was $78/share at the announcement and will trade around $39 at the date of split. They also may have looked at stocks that are similar to them in the S&P 500. At the time of the split announcement the average price of a stock in the S&P was $56/shr. Coke was almost 40% higher than other stocks similar to them.

Some history: In 1919 - Cocoa Cola came out in its IPO at $40/share. This is the 10th split since 1919. If you have held the stock since then and reinvested all dividends and received all the stock splits your $40 stock would be worth $10,000,000.   Not a bad long term investment.

Be careful if you hear about a reverse stock split. Stock trading at $1/share and you own 100 shares. The company announces a 1:10 reverse split. You now own 10 shares at a price of $10/shr. As you can see in this example and most reverse splits they are done on low priced stocks. Investors look unfavorable on low priced stocks, sometimes called penny stocks, because of increased risk either real or perceived. Also many mutual funds and large pension funds can not invest in stocks priced less than $5/shr.

Stock splits usually are a positive but results still reflect a company’s earnings now and in the future. Stock splits should not be the only reason to invest in a particular company but it could be positive among other positives. Reverse stock splits are usually a sign of negatives, but again it should be part of your research.

 Give your advisor a call when you hear about a stock split to get details about the split and the possible   positives or negatives. For more on stock splits or any financial advice visit or call 518 348-0060.


Are You Nearing Retirement? Here Are A Few Tips To Keep In Mind

Tuesday, September 25, 2012
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Retirees and soon-to-be retirees should be made aware of the risks associated with investing in the stock market and the risks of not. The big question is; is it smart to keep your money in the stock market after you retire?

Traditional thinking is centered on the belief that as one gets older, equity allocation should decrease and bond allocation should increase. DLG Wealth Management manages volatility risk, but also manages “inflation,” risk.

Read these facts below to get a solid grasp on being in stocks or bonds as you get closer to retirement or are in retirement:
•    In stocks, the risk is volatility. But with retirees, inflation is a major, major risk. Inflation can be more risk than volatility because we’re living longer and we need to have a portfolio that keeps up with inflation - or else ten years from now, we can’t afford what we have to live on.
•    1/3 of the time, bonds have kept up with the rate of inflation, which means 2/3 of the time they have not. Bonds are not a great investment when you need to worry about inflation.
•    DLG’s advisors work with their clients to create a portfolio that meets their goals and financial objectives with consideration to risk tolerance. DLG advisors are not locked in to cookie cutter stock and bond allocations.
•    Lately, interest rates have been artificially put down creating a “bond bubble”. This means that there are three times as much money in bonds than there are in stocks when it comes to mutual funds. However, when interest rates go up, the value of bonds go down and the interest rates are going to go up soon, we just don’t know when. When this happens, it can create some big volatility risk in your portfolio.

 For all the retirees or soon-to-be retirees, take a look at your portfolio. Will you have enough to get you through retirement to live comfortable? Make sure you are well diversified. Bonds & stocks fluctuate in value. Which one will keep up with inflation?

Student Loans - Major Problems Students Have To Face

Thursday, August 16, 2012
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Federally backed student loans have been in the headlines for the past few months as Congress had to decide whether or not to keep interest rates from doubling this past July 1. Since then, the bill has passed, keeping interest rates of Stafford loans at 3.4 percent. But is there a bigger problem here? Managing Director of DLG Wealth Management, Andy Guzzetti, discusses the problem that the majority of students face by attending college.

There is no doubt that college is expensive and prices are on the rise. In February this country had $867 billion worth of student loans. Now, outstanding loans are around $1 trillion. In about 5 months, student loan debt in the US has increased 15 percent. As of July 1, Congress passed the bill stating that the Stafford Student Loans were not automatically going to increase to 6.8 percent and that they were going to stay at their current rate of 3.4 percent. Congress had to act quickly, making this one year bill a definite quick fix.

For those students and graduates with tremendous outstanding student loan debt, the bill passed is great for them. It lowers their monthly payments estimated over the life time of the loan and it will help them out. It boils down to this; there’s a mountain of debt in the student loan industry and something has to be done. This is debt and students and parents have to treat it like debt and look at whether it is worth it or not. Having Stafford Loans at 3.4 percent for people may have many overlook their debt because they see a low interest rate. If it were raised however, to the proposed 6.8 percent, then people would start taking a look at these loans. It would also show colleges that people are aware of these loans, the possible debt an education would incur on them and they may not be borrowing as much. This could prompt colleges to not raise their tuition costs as much as they’ve done in the like ten years.

It’s very important to be aware of all the costs of your higher education to make an informed decision. Money-saving ideas that will save you thousands for your future may be to go to a community college for a few years and maintain a part time job. Do your homework and analysis and you should be all set.

For more information on managing your finances or starting a college education savings program with an investment advisor near Albany, Utica or Saratoga NY, call (518) 348-0060 or contact us here. You can also see Andy Guzzetti every Monday morning on WXXA Fox – Albany.

There's No Secret Here. Department of Labor Makes Big Changes to 401K Plans

Tuesday, August 07, 2012
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As of July 1, 2012, big changes were made when it comes to 401(k) retirement savings plan. Administrators of these plans must now disclose all fees associated with participant’s 401(k) plans. Typically, the problem has been that the 401(k) fee disclosures were ignored or too complex to comprehend, therefore making it difficult for participants to grasp them and realize the total cost.

The new law passed by the Department of Labor is not all-new. Fees associated with 401(k) retirement savings plan were always disclosed to participants but not altogether. Some of the fees were in a prospectus and some were in a third party administrator’s contract. Moving forward, investment companies that administer 401(k)’s will be providing new disclosures to employers that sponsor the plans. These new fee disclosures will be passed on from employers to participants with information about how much they are paying to invest in their retirement plan.

This new law is intended to make it easy for companies to make a decision on what they want to do with their plans or decide which plan sponsor to use. The second important date is August 30th when companies will need to disclose information about these fees to their participants. This is a positive change, as people should know their plans. There is a catch to this change. There is no such thing as a free lunch. If we look at an example; let’s say we have a plan that charges a percentage of assets. One plan is charging you 1% and another is charging you .5%. If you fall into the trap and go with the low-cost retirement savings plan, then you’ll need to look at the returns. What if the plan charging 1% was getting you an 8% return versus the plan charging .5% only getting you a 7% return? The plan charging 1% is the better option.

Our advisors at DLG Wealth Management suggest that people don’t fall into the trap of investing in plans that administer low cost only fees to their retirement accounts. Take some time and some research. Ask the following questions when speaking with your advisor; what is my advisor doing? What is the Manager doing? What have the results been? Who is the third party administrator? These are some of the questions to think about. It’s great to have disclosure as it’s easier for people now to see how much it’s costing them and then they can make their decisions based on that.

Managing Director of DLG Wealth Management Weighs In On Capital Region Housing

Tuesday, July 31, 2012
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Recently, the Capital Region housing numbers for June were released, showing slow area growth. Closed sales were down 4 percent but pending sales were up 15 percent. The average sales price is up 3 percent and sellers are receiving 93.5 percent of the asking price.

What’s the reason for slow growth for the Capital Region? The Housing Market is putting a damper on recovery. Typically, the Housing market leads us out of recovery, especially with the record low interest rates. But the problem is that the banks aren’t lending. There is an overhang from all the potential litigation from investors who were sold securitized mortgage loans from banks such as CITI and Bank of America. These banks have had to take huge reserves for this possible litigation. These reserves use up much of the capital the banks could lend, thus money is tight in the Housing market.

Interested in more? You can watch this full segment at or visit our News page for other financial tips and advice.

2012 Investment Camp Was A Great Success!

Tuesday, July 31, 2012
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DLG Wealth Management’s 2012 Summer Investment Camp was a great success! The camp began in early July and ran once a week for four weeks. This year sparked DLG’s third summer holding an Investment camp designed for High School Seniors and College Freshman.

As a wealth management firm in Saratoga County, the advisors at DLG Wealth Management understand the importance of educating students as they will soon be this country’s future. Last week, the camp wrapped up the 4-week session with discussions on Fundamental and Technical Equity Analysis, Financial Principals for Young Adults and Careers in the Financial Services Industry.

We would like to thank all of our participants from the camp this year and look forward to another camp in 2013!

The Importance of a Mid-Year Financial Checkup

Wednesday, July 18, 2012
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As we are halfway through 2012, the financial advisors at DLG Wealth Management firm in Saratoga, NY stress the importance of having a mid-year financial check-up. The video below explains the steps to take.

Make sure you are taking care of your retirement accounts, especially for those who are 40 years or younger. Retirement and Pension Plans as we now know are going to be a thing of the past. So it’s important to make sure you are paying close attention to your retirement accounts. Make sure to check-up on them and speak with your financial advisor regarding your accounts. Doing this will keep you educated and current on your retirement plan.

For more information on retirement planning, portfolio management or for other financial advice, speak with an investment advisor at DLG Wealth Management today, located in Albany, Saratoga or Utica NY.

The Perfect Storm

Tuesday, July 03, 2012
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Many investors are anxiously watching the development of a "perfect storm." Storm clouds are developing in Europe as Greece, Spain, & Italy are being attacked by the bond vigilantes. The last employment numbers out of the U.S. were terrible. At the end of the year, we have to make major decisions on what to do with the Bush tax cuts; should we increase the debt ceiling and do we go through with dramatic cuts to our defense department?

It’s nothing new, as we’ve seen this for the last couple of years. Recently, it seems to be evolving faster than ever before and it’s getting to a point where we have to be very careful. The EU banks have recently elected to help meet the pending bond defaults, but in reality they are “kicking the can down the road”.

During the Greece Elections, citizens went to the polls and voted for the New Democracy Party, which favors the country meeting their international debt obligations. They have formed a coalition that will address the debt crisis and meet qualifications for the EU bank bailout. How long before Greece will need another bailout if they do not tackle their debt problems?

In addition to Greece, Spain adds another warning contributing to the perfect storm. A $125 billion bailout was taken by Spain from the euro zone. This was not because they were in debt, but because their banks were in significant trouble. That is a major problem because we will have to see what those banks are going to do going forward and how they will be able to handle their issues. France, who also voted in favor of the Socialist party a few months ago, reduced the country’s retirement age from 62 to 60 for eligible workers. Reducing the retirement age could be problematic for France as it will cost them approximately $1 billion extra per year.

Furthermore, there are the issues we face here in the United States, including poor unemployment numbers in May, the economy not doing well, and recession looming. Our debt level is at $16 trillion. All of these things are coming to the surface, especially the issues about the bond vigilantes who look at the American debt and say you have to pay more for us to borrow. This could be a major problem for us. All in all, there are a lot of problems but our corporations are doing very well. Some last minute tips: don’t bail out of equities, be careful of bonds in your 401k, and stay asset allocated. If you follow these tips you’ll do OK through these tough times. As the news gets more troublesome make sure you keep to your investment plan. You will weather any storm inside or outside the United States.

For more information on investing or your portfolio, contact DLG Wealth Management near Saratoga Springs regarding your financial planning.

Third Annual Summer Investment Camp, July 2

Tuesday, June 26, 2012
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DLG Wealth Management will be holding the third annual Summer Investment Camp for local high school seniors and college students from 5:00pm - 8:00pm, July 2, 10, 17 and 24. This four-week camp will be held at DLG’s office located at 6 Executive Park Drive in Clifton Park. The camp is designed to introduce students to the world of finance and investments in a relaxed, informal and interactive environment.

DLG Wealth Management's Summer Investment Camp will be led by Managing Director, Andy Guzzetti and senior financial advisor Manuel Choy. Other company advisers will give instruction each week on their financial specialties along with Guzzetti and Choy’s discussions. The camp will lead through real-world examples and inform students of financial terminology to prepare them for college or a possible profession in finance, business or politics.

Guzzetti is a proud supporter of the camp and understands the importance of educating students, as his previous experience includes former high school educator, football coach, college instructor and financial speaker.

“Even if the participants don’t go into the financial services industry, they need to be prepared to handle the complex world of investing” spoke Guzzetti. “It’s more important than ever to be able to manage your retirement accounts since defined benefit pension plans and social security as we know it today will not be available to today’s camp participants. We think this camp will give them a jump start.”

Enrollment in the camp is limited. Deadline to apply is Friday, June 29. Interested students may contact Andy Guzzetti at or Manuel Choy at For more information, call 518-348-0060 or visit

The Truth Behind Facebook's IPO

Thursday, June 21, 2012
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After the dust has settled, the lawyers and lawmakers have pontificated and the regulators have weighed in Facebook is trading and has bounced off its lows. Some investors are still under water and crying about the entire Facebook IPO (Initial Public Offering) process. It's stock price has tumbled, people are upset and securities law suits may be made. So what does all of this mean to individual investors?

The main point is that $16 billion was raised and no taxpayer money was needed to start the company that will create thousands of jobs, construct new buildings, enabling employees who will then build new houses and spend. But nowhere does it state that all investors are guaranteed a profit. That is how capitalism works.


Mark Zuckerberg creates an idea while a student at Harvard in 1996. He tests the idea and it seems to work. In order to keep going Zuckerberg needs cash, so like most all early ventures Zuckerberg looks to “friends & family”. We know that a gentleman named Savorin put in money, because he sold his stake at the IPO and took his money to Singapore, some say to avoid taxes. Facebook used this “friends & family” money to build the user a base and to create a better product.
Facebook likes the progress it is making but must generate more capital in order to reach the next level. Although there is still plenty of risk in the company, they convince the “evil” private equity firms to invest. There is a list of highly respected firms, to include Goldman Sacks, who invest over a $100 million in this “startup” company. Facebook uses this money to improve the product and eventually ends up with close to 900 million users. In addition to putting money into Facebook, many of the private equity firms offered advice in a number of areas.

Facebook now is in the position of needing more money to expand its business organically and/or by acquisition. They are now ready for “prime time”. They interview investment banks to run the IPO. Facebook hires Morgan Stanley to be the lead manager. Because the deal is so large, Morgan Stanley is assisted by other banks. The investment banks do what is called “due diligence” on Facebook. They write a prospectus that discloses everything that is material to the offering. They set an offering price range that will allow the shares to be sold. When the date is set the investment bank sets up “roadshows” to let investors meet management and “kick the tires.” During this time the investment bank and Facebook make a decision on what exchange to be listed. In this offering there were old investors who had invested in the early stages who wanted to sell some of their shares. This was disclosed in the prospectus.

The offering was priced at $38, which many felt was too high, but remember all shares were sold so Morgan Stanley did its job. It is the investment bank’s job to raise capital. It is not their job to allow the folks who purchased the IPO shares to get a “pop”. One of the interesting things about IPO’s is that they are judged on how much they go up in the few days after the IPO. If a stock goes up 20% on the opening should the investment bank have priced the stock 20% higher if the demand is there? Remember the job of the investment bank is to raise capital for the firm that hires them.

There were some negative signs that were in this offering... high amount of insider selling, over hype, and questions about the management, but all of this was disclosed in the prospectus. As I stated in the beginning… $16 billion was raised and no taxpayer money was needed to create a company that will create thousands of jobs, construct new buildings, enabling employees to construct new houses and spend money. Nowhere does it state that all investors are guaranteed a profit. This is how capitalism works.

For more information on portfolio management or for any of your financial planning questions, feel free to email Andy at or Contact Us.