A: The debate over active versus passive investment management has been long waged.

Passive management typically refers to a strategy of with very little turnover of a portfolio and without the ongoing active stock-picking. Supporters often point to studies indicating that passive management has generated better returns after fees when compared with the broader universe of actively managed portfolios.

In general, active managers attempt to identify attractive risk/return opportunities based in part on comparative analyses of individual companies/securities looking at growth potential and current valuations. Supporting this view are studies indicating that managers that are truly active stock pickers have historically, over the long term, outperformed passively invested portfolios.

There have been numerous studies of active versus passive management with varied results, with most seeking to declare a winner based on a given set of data. Of potentially greater benefit to investors seeking to educate and improve their decision-making is to learn more about what distinguishes so-called passive investing from active management, and further, what distinguishes one form of active management from another. It can be helpful to look at the finer points of managers’ investing approaches such as market cap weighting, portfolio construction methodology and factors associated with buying and selling over a full market cycle.

The key to becoming an informed, disciplined investor is to understand the basic traits of a given investment approach and establish realistic market-based performance expectations. In doing so, investors can better understand their portfolio and be less prone to knee-jerk, emotional reactions or performance chasing.

As an investor, retired or not, the more important considerations for you should be, perhaps in this order: Personal Goals, Time Horizons, Risk Tolerance and then Fees.

A: The world of 3D printers is certainly an interesting and evolving area making three dimensional objects from digital files. Due to the regulatory nature of my business I cannot make specific stock recommendations in this forum. Specific recommendations can generally be made on an individual basis. There are many resources on the internet that could potentially assist you in your search, but be careful and do your due diligence on everything that you may read.

A: As a former syndicate manager, I can say that based on my experience generally it is difficult, though not impossible, for individual investors to get shares of an oversubscribed IPO. You can provide an ‘indication of interest’ to a firm that is participating in a deal and hope that you are allocated shares. I am not aware of any way that an investor can ‘join’ with an institutional investor to be allocated shares.

A: Please contact the insurance company direct to address this issue or question.

A: Please contact the insurance company direct to address this issue or question.

A: I recommend owning high-quality, dividend-paying stocks with revenue diversity, meaning stocks that earn income from different business lines. That's reflective of my expectation that the Fed will likely keep short-term interest rates at exceptionally low levels through at least late 2014. A prolonged period of low interest rates is a negative development for many of the financial stocks.

Many fundamental headwinds remain for the sector and the economy is giving mixed signals, evidenced by improving consumer credit card delinquency trends and tepid GDP growth. Those are offset by a continuation of consumers borrowing less and relatively high unemployment.

Although credit trends continue to improve, the market is focused on revenue growth, which has been a challenge given the lack of loan demand as consumers repair their balance sheets and reduce debt.

The financial sector has largely traded on sentiment and headlines, and I do not expect this trend to abate in the near term.

With the Dow breaking 13,000 for the first time in four years, financials have bounced back nicely the last two quarters, outperforming other sectors in the fourth quarter and year to date. At this point, I would keep your exposure to the financial sector relatively low.

A: After a company files for an IPO it will generally begin trading 3 – 4 months later. The shares of an IPO are usually sold through what is a called a Syndicate, a number of firms that join together to distribute the shares. I worked as the syndicate manager of a legacy firm to my current firm for a number of years in the late ‘90s. In my experience, there is often a very limited number of IPO shares available to individual retail investors of a ‘hot’ offering. Many of the IPO shares will typically go to institutional investors. Many investors that would like to purchase shares of an IPO will need to wait until the shares begin trading publicly on the secondary market at which point the stock will likely be higher or lower than the IPO price.

A: You may not put your LLC into your self directed IRA. This type of prohibited transaction would often be referred to as "self-dealing." Essentially, your IRA retirement can't conduct transactions which benefit you, your direct family, or your business. If you do, your IRA will lose its tax-deferred status and you'll be taxed and have to pay penalties.

Other prohibited transactions would include:
Real estate: Holding real estate you or other relatives live in, plan to live in, or use in any way while that property is held in your retirement account. The property must be for investment purposes only.
Private placements: You can't hold private equity shares of your own or a relative’s business.
Promissory notes / loans
You can't loan money to yourself or other relatives from your IRA.

You also cannot invest in:
• Collectibles, such as, art, antiques, stamps, gems, rugs, or anything the U.S. Treasury Department deems to be a collectible
• Life insurance
• The stock of a Sub-Chapter S Corporation
This isn't a complete list, so proceed with caution if you're interested in investing in something which might fall under one of those three asset categories.

In some cases you can invest in a LLC that you have no connection with.

Very important: Check with the IRS or consult with a qualified tax professional before investing. Wells Fargo Advisors, LLC Member SIPC in not a tax or legal advisor.

A: Frogads (FROG) is a company that provides an internet platform for online buying, selling and advertising. The stock trades Over the Counter and is considered a ‘penny stock’. There is no research available on FROG through the sources available to me. I cannot comment on the relative merit of this stock.

A: This year is setting up to be another difficult year for investors seeking interest income. Short-term, high-quality, fixed-income securities can help preserve capital and liquidity, but these investments offer very little in the way of yield.
I see little reason to be optimistic that the challenging investment environment will change in 2012 given the Federal Reserve’s commitment to keep short-term rates unchanged at 0-to-0.25% through mid-2013.
Fixed income investors who are looking to achieve incremental yield or return will be forced to take on additional risks by extending their time horizon (buying longer maturities), lowering their quality parameters (purchasing lower quality bonds) or some combination of the two.

The Fed has exhausted its ability to lower short-term rates and has been relying on unconventional measures to further ease monetary policy. Over the past two years, the Fed has implemented two rounds of quantitative easing (bond purchase programs designed to boost liquidity in the economy) and is currently executing “operation twist,” which involves buying longer-term bonds and selling shorter-term securities. This is intended to lower long-term rates.
Investors looking to increase yield within their fixed income portfolios should consider adding allocations to credit-sensitive sectors, such as corporate bonds and preferred securities. Many corporations have improved their balance sheets in recent years, and these securities currently offer better value than Treasury securities.
I'd recommend that investors with short investment horizons use caution in adding to the more credit-sensitive sectors, given these sectors’ potentially volatile nature. Investors should refrain from “reaching for yield” by moving lower in credit quality than is appropriate for their risk tolerance.

Tax-exempt fixed income investors should take advantage of any weakness in the municipal bond market to accumulate high-quality positions. While municipal issuers will continue to face significant budgetary challenges in 2012, the primary risk will be rating downgrades rather than actual default risk. Investors should focus on accumulating positions of single “A” rated (rated by Standard and Poor’s) general-obligation and essential-service revenue bonds.

Please consult a financial advisor for details regarding risks associated with fixed income investing, as well as potential tax advantages/limitations of some fixed income investments. All fixed income investments may be worth less than original cost upon redemption or maturity.

A: The U.S. economy has been recovering from the 2008-2009 recession for 2-1/2 years. Normally, the economy rebounds rapidly after a steep contraction. This time is different. The current recovery has been relatively slow because of lingering problems from the recession.
Investors should keep their sector exposure relatively balanced. I currently recommend investors carry “overweight” positions in the utility and telecom services sectors. These sectors offer the potential for less volatile total returns, in addition to above-average dividend yields.
The industrial and materials sectors (companies engaged in mining, manufacturing and processing of raw materials) may also offer upside potential for 2012. While their market prices have picked up steam since early October, these two segments lost some ground compared with the market in the second half of 2011 as investors moved to a more cautious stance on the economy.
Dividends are not guaranteed and are subject to change or elimination.
Investments that are concentrated in a specific sector or industry may be subject to a higher degree of market risk than investments that are more diversified.

A: On the surface, agribusiness stocks may seem like a pretty safe bet in a volatile market. A global population that recently exceeded 7 billion people does need to eat.

And if Thomas Malthus is correct that "the power of population is indefinitely greater than the power in the earth to produce subsistence for man, " then the prices of agricultural commodities should continue rising on a longer-term basis.

Those who are bullish on ag stocks also point to the combination of 1) emerging-market middle classes migrating more toward protein-rich diets; and 2) money printing by central banks, which can spur commodity price inflation.

Upon closer inspection, however, investors need to realize that ag stocks are anything but a safe bet.

For example, the Market Vectors Agribusiness ETF (ticker MOO) lost roughly two-thirds of its value during the latter half of 2008, when global economic growth dropped precipitously. During 2011, MOO has underperformed the S&P 500 index by nearly 15 percent.

Investors must understand that most agribusinesses are capital intensive, so changes in global agricultural commodity prices can lead to significant fluctuations in profitability and cash flows. Monsanto's recent history is a case in point. The company's 2010 fiscal-year free cash flow declined by more than 60 percent (relative to 2009 levels) before rebounding by 226 percent in 2011.

Looking ahead to 2012, the decision to invest in ag-related stocks should be based largely upon one's outlook for the global economy. If the United States can generate reasonably solid economic growth, if Europe can stave off a serious recession and if China can avoid an economic hard landing, then perhaps demand for global agricultural commodities will outstrip increasing supplies. Such a scenario would almost certainly be bullish for agribusiness stocks.

On the other hand, if the global economy sputters next year, those putting money into agribusiness stocks may find themselves harvesting capital losses.