Alamo Capital Investment Services Fri, 18 Jan 2019 19:12:37 +0000 en-US hourly 1 eNewsletter September 2018 Thu, 20 Sep 2018 17:50:25 +0000 ]]> 0 eNewsletter July/August 2018 Wed, 01 Aug 2018 16:05:18 +0000 ]]> 0 eNewsletter June 2018 Fri, 29 Jun 2018 19:13:27 +0000 ]]> 0 Investing Strategies for your 20’s to your 60’s: A Chess Game Thu, 07 Jun 2018 14:58:22 +0000

Much like a game of chess, strategy is the key to a winning financial plan.

Investing is something that takes a certain mind set depending on your age and current needs.  This is an evolving strategy and should be evaluated often throughout your life.  Your risk and goals will depend on the stage of life you are in.  A lot of the preventive planning is needed to assure that you are investing in appropriate investments based on your income, age, and needs.

This summary is a basic road map to help you guide your investment destination.  No one person has the exact same need, so it is important that you get advice from a person who has experience in these types of events.  That person should have experience in this field because the consequences of inaccurate decisions can be disastrous for you and your family.  Think of it like a chess game, each move has big impact, so you need to strategize and be ready for what is next.


The pawn is generally the weakest chess piece, but if played correctly early in the game, can cause big moves later in the game.  A person under the age of 15 can be involved with a strategy that will help fund a college education.

  • A 529 Plan can be established on the day the child gets a social security number. This is a plan where the parents, relatives and family friends can contribute immediately. This plan is free from federal income tax when used for qualified expenses.
  • Zero coupon bonds cost substantially less than a coupon bond with the idea of funding future liabilities like a college education.
  • A simple savings account is also a great start. Here the interest rates are probably minimal, but it is a start.


There are two Knights in the game of chess.  They are rarely played right in the beginning of the game because they can only move in the limited ”L” direction;  a well thought-out strategy is needed for these pieces.  However, Knights can be a great sidekick to other chess pieces that in-turn cause a big impact later in the game.  These pieces can complement your long-term strategy, much like investing in your 20’s can benefit you in the long run.

Starting in your early 20’s is the time to focus on a career and creating a foundation for your future.  Try to make smart decisions.  This is a critical time to start thinking about saving for retirement.  Since you are early in career-building, you will not have a great amount of large expenses like a mortgage.  If you do it right, your income should enable you to make some investments. By doing this, you are creating a discipline that should last for the rest of your earning years.  Purchase items you need, not want.  Creating a relationship with an investment advisor is a good idea.  Your investing cash could be small, but the promise of a bigger portfolio is promising.  Now is the time to take more risk with investments because you have less dependents and have a longer time to recoup mistakes.  The rewards could be substantial.

Stocks can be an ideal investment that does not require a lot of money.  Stocks do have more risk when compared to bonds but can be very rewarding with the right strategy and guidance.

  • Investment ration in this stage of life – 20% Conservative and 80% Aggressive.
  • Try to pay off any debt and manage what you charge on credit cards.
  • Start to realize that you are probably going to want to invest in your first real asset, a house, by the time you enter your 30’s, so you need to start building your credit.
  • Don’t buy a Ferrari, get a Honda! Not only will you save on gas and insurance, but the monthly payments will be less.
  • Get the job you love, you are not doing anyone a favor by taking the first offer you get. You will more than likely stay longer at a job you love and this can only help make more money, move up quicker and have stability.  People who change jobs frequently are considered “job-hoppers” by future employers.


There are two Bishops for each player on the chessboard, situated next to Queen and the King, respectively. These chess pieces move along the diagonals of the chessboard and are bound to the color they start on. Now you are in your 30’s and truly starting to mature, you should consider how your current actions will play into your long-term strategy.  It is likely you will have major assets that need to be protected and grown.   For example, you may already own or consider purchasing a home.  Possibly consider settling down and starting a family.  Also, by now you should have decided and committed to what you want to be when you “grow-up” …. because you are now grown-up.  Congratulations!

Insurance is a must.  Life insurance is protection for your family.  Medical is an absolute must, especially having the right amount of coverage which can have less of an impact on your wallet.  The last thing you want is to have a deductible that you cannot afford or coverage that is insufficient for you and your family needs.  Having children and keeping them healthy can be very costly without adequate medical coverage.

  • Investment Ratio should be 30% Conservative and 70% Aggressive.
  • Investments you started in your 20’s should be evaluated and adjusted.
  • This is the time to start considering transitioning into a slightly more conservative investment strategy. You are still young enough to take advantage of riskier investments because the more risk generally produces greater returns if you are right.
  • Start building and understanding your investment vocabulary. Learn about College 529 Plans if you have children.  Learn about the various options of retirement plans.  Learn and understand a solid financial plan.
  • If you fail to plan, you plan to fail.
  • Learn to love insurance. Risks can be reduced if you choose the right type and amount of insurance.


These rooks move up and down the rank and file of the chessboard, and can move any number of spaces as long as they are not obstructed by another chess piece. Now you are in your 40’s and the time to get serious about your retirement.

This is the heaviest spending decade.

  • Investment Ratio should be 40% Conservative – 60% Aggressive.
  • Living expenses are high, raising a family is expensive but do not forget you still need to keep your retirement in mind.
  • Create a Will and a Trust.
  • Buy individual bonds.
  • Consider Tax-Free Income investments, which can be powerful. Tax efficiencies can make a substantial difference.
  • Do not forget the educational goals for the children.
  • Rebalancing to protect capital and maximize returns.

Delaying in hiring a professional for Financial Planning could be disastrous because things are much more complex, and the consequences are substantial.


The Queen is often considered the most powerful chess piece on the chessboard. She is placed next to the king, on her own color. The game is not over when she is lost, but if your opponent has a Queen and you do not, you may find yourself at a considerable disadvantage! Now in your 50’s, gradually change your mindset from growth to income.  Retirement is coming, you must be prepared not only financially but also mentally.

  • Investment Ratio should be 50% Conservative – 50% Aggressive.
  • Retirement catch-ups.
  • Buy Long Term Care insurance. Why in the 50’s – because it is cheaper!
  • Is your financial plan up to date?
  • Protect your assets.
  • Put off taking your IRA money. (at least 59 ½ years old)
  • Risk should be less.
  • Consider Municipal Bonds.
  • Cut down on your spending. Make your money last.
  • Review your insurance coverage. By now your assets value can replace the insurance needs.


The King is the most important chess piece on the chessboard. If he is checkmated the game is over! In your 60’s Medicare and Social Security could be in play.

Focusing on your retirement income is now mandatory.

  • Investment ration should be 60% Conservative – 40% Aggressive.
  • You need to review your Financial Plan constantly. Make sure you will have enough to live the way you want to.  Just a reminder as of 2018 life expectancy was (female) 81.6 years and (male) 76.8.  In 1990 the life expectancy for a female was 48.3 years and male 46.3 years.
  • Continue IRA/Roth contributions. Do not tap into this until you are 70.5 years.
  • Convert your IRA to a ROTH IRA.
  • Roth IRA should be focused in Total Return and Income investing.
  • Upgrade Municipal Bond holding to A Rated or better.

Remember, investing in life is like a chess game: if played with strategy, you can win. 

For more information please call us at (925) 472-5700 or email us at

Monisha Rajasekaran, Marketing Manager
Data provided by Bill Mullally, President




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eNewsletter May 2018 Fri, 18 May 2018 20:01:02 +0000 ]]> 0 Duration- An Easy Way to Measure Risk in your Bond Portfolio Fri, 18 May 2018 17:31:49 +0000

The concept of duration originated in 1938.The impact of interest rate risk can be lessened using the concept of duration. If you know the duration of a bond, you can anticipate how much interest rate risk you are assuming before purchasing. It is one of the ways you can quantify interest rate risk. Duration is particularly useful because it is a forward-looking number, as opposed to total return, which tells you what happened in the past.

Duration serves a dual purpose:

1. It provides an estimate of how a bond price will move based on a change in interest rates. It enables you to predict how exposed you are to interest rate moves.

2. It shows investors the average-weighted amount of time it takes to receive back the true cost of the bond.

The Formula

The formula is a complicated calculation involving present value, yield, coupon, final maturity, and call features and is expressed as a number of years.

1. For every 100 basis points (1%) that interest rates move up or down, the price of a bond will increase or decrease by the duration. For example, if interest rates move 100 basis points and the duration is 3, the price of the bond will move 3%. (the estimated price will go down 3% if interest rates rise, and the price will increase 3% if interest rates move lower). Remember there are other factors in additon to duration that affect price changes including credit rating changes and issuer disclosures during the life of the bonds.

2. Duration is also a measurement of how long it takes to receive the true cost of a bond. Duration changes as the coupons are paid to the bondholder. Duration also changes as time moves closer to maturity. It is the point in time in the life of a bond where the bond return remains the same or unchanged despite the movement of market interest rates.

Bonds with lower coupons have longer durations than bonds with larger coupons. This is one of the reasons that bond prices for lower coupons are more volatile than bonds with higher coupons. The calculation is taking into consideration the ‘interest cash flow’ as well as all other indicators in the formula. This explains the reason Institutional Investors and Bond Funds prefer 5.00% or higher coupons.

Premium and Discount Prices

Bonds with the same YTM (yield to maturity), but one a discount bond and the other a premium bond will have different durations. If you own a premium bond with high coupons, you receive larger sums earlier, which can be reinvested to earn interest-on-interest. If you own discount bonds, with low coupons, you have less money to reinvest to earn interest-on-interest. As a result bonds with lower coupons have longer durations than bonds with higher coupons.


Zero Coupons

If you have 3 bonds with same YTM, one a discount, one a premium and one a zero, the premium bond would be the least volatile, the discount would be more volatile, and the zero the most volatile (this is because zeros do not throw off any interest, so duration will match the maturity).



• Bonds with higher durations carry more risk and price volatility.
• Duration indicates the years it takes to receive a bond’s true cost, weighing in the present value of all future coupon and principal payments.
• Duration is calculated to maturity (if non-callable) or to the shortest call (if callable). This is important to know when reviewing bond portfolios and mutual bond funds.
• By matching the duration to the time period when funds will be needed, interest rate risk is minimized.
• Even though duration is expressed in years, one should also consider the ‘average maturity’. You can have a short duration with a longer average maturity if the portfolio of bonds (or bond fund) has an abundance of short calls.
• Duration is better used when considering incremental interest rate swings as opposed to large-swings. It is more precise for short to mid- term maturities rather than longer 30 year maturities.

Duration, as a measure of bond’s sensitivity to interest rates, shows only part of the risk profile. Credit exposure and other risk factors are also important. No matter what kind of roller coaster ride interest rates take during the life of a bond, its value will always be par when the bond reaches its maturity. It is important to remember that if you own individual bonds, they all eventually mature. For more information, contact us at (925) 472-5700 or

Carolie Smith, Vice President

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eNewsletter April 2018 Tue, 24 Apr 2018 15:47:11 +0000 ]]> 0 What are “Bond Laddered” Investment Portfolios? Tue, 24 Apr 2018 06:38:03 +0000 The “Bond Ladder” is an investment strategy that attempts to minimize risk and optimize cash flow.  These portfolios do not offset the “Interest Rate Risk” because the value of the securities will decline when interest rates rise but the monthly income stays the same.  The portfolio does not offset “Credit Risk” because of diversification the whole portfolio will not be destroyed.

Every year there will be bonds maturing.  This creates the opportunity for reinvesting longer and always takes advantage of the best current rate. Bond Ladder Portfolios are not for every investor but because of the structure and concept it is one of the better philosophies of investing that has ever been imagined. Skilled investment advisors are familiar with this concept and can help with basic structure and reinvestments.

Here are some benefits:

  1. No management fees.
  2. Diversification of investments.
  3. Monthly income.
  4. Liquidity.
  5. Average maturity is normally at the optimum place in the yield curve.
  6. Can be tax free.
  7. A replacement for Mutual Funds that can be managed by you.

How it Works:

The investor takes an amount of cash and divides by 20 (amount of years the ladder runs) to compute the yearly amount of investments for 20 years.  This can also be longer if investor needs higher income.

For example, an investor has $200,000 to invest and buys $10,000 worth of bonds a year for 20 years starting with maturities of 1 to 20 years. Once the portfolio is in place, the investor takes the maturity bonds proceeds and purchases a 20-year investment no matter what interest rates are doing. It is a simple process that creates a diversified portfolio that lets the investor have an investment system that will handle a lifetime of income.

This portfolio now has 20 different investments.  If cash is needed, then the investor picks the shortest maturity for sale which means less risk. Higher income is generated with the longer maturities. Monthly income comes from all 20 different investments paying interest on different months. Bond laddered portfolios allows the investor to always buy new investments at the current interest rate levels. The portfolio will consist of many different ratings, names, maturities, and can be tax-free or taxable.

By Bill Mullally, President of Alamo Capital


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The Clouds are Clearing for Puerto Rico Debt Tue, 10 Apr 2018 19:51:24 +0000 Puerto Rico GO’s

Bond prices on the General Obligations have reversed much of the losses suffered after Hurricane Maria hit the Island. Much of this gain is due to the anticipation of better debt restructuring terms and the influx of federal funds and insurance money.
The Island has revised its fiscal plan projecting a $6 billion surplus (before debt) through 2023.

Puerto Rico GDB Bonds Update

The Fiscal Agency and Financial Advisory Authority (FAFAA), Government Development Bank (GDB) and the requisite bondholders have authorized the GDB Restructuring Support Agreement (RSA) amendment.

This amendment simplifies the structure whereas the creditors will exchange their claims for only one tranche of new bonds at an upfront exchange ratio of 55%. The proposed new terms would be a 7.5% annual coupon with an August 2040 maturity.   It will still need approval from the full creditor groups.  Previously the RSA had three proposed tranches between 55 and 75 cents on the dollar of the original bond values.  The original RSA agreement was never voted on by bondholders.

Puerto Rico Title III Claim Update

We continue to narrow down the outstanding bonds that have not yet sent written affirmation that a Master Proof of Claim will be filed on the bondholders behalf.  The General Obligations that Banco Popular is the Paying Agent and Registrar
for, have not yet sent bondholders notification that they will file the Master Claim and we are continuing
to determine their stance on this on a daily basis.

We have previously sent out notices to our bondholders who will have a Master Proof of Claim filed on their behalf.
Specifically these bonds are re Employee Retirement, Highway and Transportation, Sales Tax and Electric Power bonds,
and GO’s insured by Assured Guaranty.

If you would like to file your own Claim form, which you should have already received, then you may feel free to do so,
but be aware that the information you complete on the form could become public knowledge, unless you redact it.
However, the due date for filing claims isn’t until May 29, 2018, so we still have time to access if Master Claims
are being filed for you.

Please contact your Broker for more information or with any questions.


By Nancy Mullally, CEO/CFO

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eNewsletter March 2018 Tue, 27 Mar 2018 20:59:42 +0000 ]]> 0