Patrick Bourbon
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On December 16, 2010, Congress passed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. This legislation, negotiated by the White House and select members of the House and Senate, provides for a short-term extension of tax cuts made in 2001.  It also addresses the Alternative Minimum Tax (AMT) and Estate, Gift and Generation-skipping Transfer taxes.

In Summary:

-  Two-year extension of all current tax rates through 2012

- Temporary modification of Estate, Gift and Generation-Skipping Transfer Tax for 2010, 2011, 2012

- AMT Patch for 2010 and 2011

- Extension of “tax extenders” for 2010 and 2011

- Temporary Employee Payroll Tax Cut



You can also find a summary tax table on



Warren Buffett, the chairman and CEO of Berkshire Hathaway Inc. and one of the smartest investors in the world, knows all about broker conflicts. Buffett says he learned that "the broker is not your friend. He's more like a doctor who charges patients on how often they change medicines. And he gets paid far more for the stuff the house is promoting than the stuff that will make you better." I couldn't agree more. After 10 years close to Wall Street, I saw the pressures and the abuses.

You may wonder how good are Wall Street’s stocks recommendations. Please find attached an article that may answer your question. In summary:

How would you do longer term if you followed Wall Street's top recommendations each year? The future, of course, is unknowable. But I looked back over the past five years. I asked how you would have done if you bought the analysts' top 10 favorite stocks at the start of each year, held on for 12 months, and then sold and spent the money buying the new year's picks.

If you had started with $10,000 at the start of 2006, invested $1,000 in each stock and reinvested any dividends, today you'd have $10,950. That's before trading costs and taxes.

But if you had just ignored Wall Street analysts, put that money in the SPDR S&P 500 exchange-traded fund—which tracks the entire Standard & Poor's 500—and left it alone, you'd have $11,190: slightly more. And you'd have saved a lot on trading costs and capital-gains taxes as well. Overall, you'd have ended up considerably better off.

As for the unpopular stocks? Thanks to survivorship bias, we can't be completely certain. But if you'd just bought the most-hated 10 stocks (in today's S&P) each year you'd have an astonishing $16,430 today.

That's in just five years.


Lehman Brothers? At the start of 2008, 17 analysts covered the stock. Of them nine had it as a "hold," five as a "buy" and two—amazingly—had it as a "strong buy." Given that one of the smartest things anyone could have done with their money, ever, was to sell Lehman stock at the start of 2008, how many analysts actually issued that recommendation?

One. Out of 17. Source: just reported that companies in the Standard & Poor's 500 Index that analysts loved the most rose 73 percent on average since the benchmark for U.S. equity started to recover in March 2009, while those with the fewest “buy” recommendations gained 165 percent, according to data compiled by Bloomberg.

When your broker calls to offer you his analysts' "top picks" for 2011, maybe you'd be better off asking him which stocks his analyst hates. Or you could just let the phone ring. 


We would welcome the opportunity to know you better, introduce ourselves, share with you the work we do for our clients, and position ourselves as a useful resource for you. A consultation would be a wise first step toward achieving your vision.


Getting to know you, your needs and motivations, is as important as you evaluating our capabilities to help you meet your financial goals. We do not charge a fee for our initial consultation during which we review your portfolio, and discuss your goals and objectives.

“ Worldly wisdom teaches that it is better for reputation to fail conventionally than to succeed unconventionally.”
— John Maynard Keynes, The General Theory of Employment, Interest and Money, 1936
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Thanks to the 500+ of you who have read the Best of BFM Newsletter (click here), which summarizes the newsletters you enjoyed in 2010-2011. By now, you should have uncovered that financial decisions are not only driven by rationality but they are also influenced by emotions. You also found out that your vision can literally "trick" you whenever it can (click here)!

Has BFM Helped You Yet? Click Here for Your Personal Guide to Financial Peace of Mind

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This Newsletter is not advice.  Pursuant to the rules of professional conduct set forth in Circular 230, nothing contained in this communication was intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose. This newsletter may be an advertisement pursuant to federal law. 
Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, and fitness for a particular purpose.