One Thing In Common!!

There is only one thing 300+ million Americans have in common. Do you know what that one thing is?

It is the fact that no one can consistently predict the future. Some may get lucky every once in a while. But no one can consistently predict what will happen next.

As people we all want to know what will happen in the future so we can prepare. The financial institutions rely on this and market it. I call them the Wall Street bullies.

When one of a banks or brokerage firm analysts’ ‘bullies’ recommend the right stocks or pick the top or bottom of the stock market. The financial institution will market that fact. This is why they have hundreds of analysts on staff. They know or hope one or two will get hot or lucky.

Unfortunately for investors there is no way to predict who will be the next ‘hot’ analyst or fund manager.

I know that free markets work and the stock market will recover…ok..ok it sounds like a prediction. However I do not know which sectors will do well or when there is a top or bottom.

To succeed in reaching your long term goals you must own equities….globally diversify….rebalance.

It also helps to have an investor coach/fiduciary adviser. Your coach will help you determine the right level of risk for you. Followed by learning how to deal with the inevitable ups and downs of the equity markets.

When Investing for Peace of Mind, Always Consider the Sum of All Outcomes.

During conversations with investors and financial professionals I hear of the hot advisor who beat the market. They made money throughout the ‘great recession’.

They are a Chartered Financial Analyst CFA or some other designation that ‘proves’ their ability to beat the market. They have the system to make money in futures, options, gold, real estate and/or other alternative investments.

During my studies of investing strategies over the last twenty years I have learned trading strategies work until they don’t. When they stop working it gets real ugly real fast.

Just because someone else got lucky doesn’t mean you will.  If we offered you a million dollars to play Russian roulette with a gun containing one bullet and five empty chambers, you would be a fool to ignore the chance of blowing your brains out.

Every day in the world of investing, someone takes a foolish gamble, gets lucky, and wins big.  When investing, you must always consider the sum of all probable outcomes, including the bullet in the chamber.

Unless of course, you are willing to gamble and speculate with your savings. Perhaps you wish to substitute a solid saving plan for a get rich quick scheme. Perhaps you do not wish to sacrifice todays sending for a successful retirement.

IF you are saving for a long term goal, like retirement or college for your kids or anything that is important to you, follow a formal strategy.

You should follow a strategy which is backed by academic research. This research should use at least 60 years or more of data to eliminate any chance of bias.

To succeed in reaching your long term financial goals you should, buy equities……globally diversify….rebalance.

In most cases, you require the aid of an investor coach/fiduciary adviser. Your coach will help you protect the future you from the current you.

Should Your Investment Research be Based on Academia or the Wall Street Bullies?

It seems every week I am saying the same thing, over and over again. I’m just saying it in a different way. Well here I go again.

That said, we must stop listening to the Wall Street bullies regarding what to do with our portfolio. Should we sell? Should we buy? What should we buy? What should we sell? The Wall Street bullies don’t really care. All they care about is that you trade. Most investors don’t know what to do.

All that you know is what the brokerage community or financial press wants you to know. They have trained you to accept their version of reality – over the span of your entire life.

There is a complete body of investing knowledge developed in the halls of academia.

Most people do not even know that it exists. This is the real wisdom you need to create wealth and abundance.

Rather than looking for the next great trade or asset class, invest in a portfolio based on Nobel Prize winning research. Instead of researching investments, your time will be much more efficiently spent on improving your job skills, or learn a new skill set leading to a new career, or even better, spending time with the important people in your life.

Perhaps you should look at your investments with a goal in mind rather than short term performance results.

Taking a long term view of your portfolio will reduce and perhaps even eliminate your anxiety.  Remember a disciplined saving strategy will outperform all trading strategies, long term.

Take control of your investments don’t empower the Wall Street bullies.

Successful investing requires discipline along with following three simple rules, own equities…..globally diversify…..rebalance.

Actively Trading To Nowhere!!

Through many discussions with investors I have learned that when things go against them they want to take control.

Stock pickers and day-traders who are actively trading their investments have perceived control over their portfolio. Similarly, people who jump in or out of the market during up or down swings also mistake their activity for control.

In reality, the more activity and trading you generate in a portfolio, the more out of control the portfolio becomes. When an investor trades in their portfolio trying to time the market or find the “best” investment they are doing nothing but add costs and decrease return.

Actively trading your account by picking individual stocks or market timing or picking funds based on past performance is exactly what the Wall Street bullies want you to do.

Stop empowering Wall Street.

Remember, no one can predict the future, no matter how convincing someone is in the media they are only guessing.  In most cases the predictions are never broadcast by the same ‘experts’.

The “best” strategy is to have a prudent process and discipline in place   Stop trying to study the market to find bargains, statistics prove that it cannot be consistently done. You might get lucky in the short term but long term your results will suffer.

With the case of market timing, getting in and out of the market at the right time requires being right when you get out of the market AND be right when you re-enter the market. This again will result in lower returns.

To succeed long term and reach your financial goals you should
own equities…globally diversify …rebalance.

The problem investors have is that they do not know what long term really means.

Is it 1 year or 2 years or 5 years or ten years? I guess everyone has their own definition. What long term means to me is your entire life.  At some point, you will retire and stop accumulating funds. You will begin spending funds. Many believe that when you retire all your savings should be ‘safe’.

What these investors forget about is inflation. What seems like enough money today. May not be enough in 10 years or 20 years.

Let the free markets work for you. Remember since 1926 the S&P 500 has averaged 9.87% return.

Keep in mind this is not an arithmetic mean average but rather the compound average return. You can learn more by going to

During that time, there has been down turns of 10% or more 89 times. So, if you want to earn the great returns the equity markets have to offer. You need to be patient. It helps to have a coach to help you through the ‘bad’ times.

Sure Thing….NOT!!

After watching Super Bowl LI I felt shocked as the game progressed. The ending was unexpected given the events of the first three quarters. All I can say is WOW….

Altanta was ahead 28 to 3 and was dominating. Anyone watching would have said an Atlanta win was a sure thing. The owner of the Falcons Arthur Blank was down on the field with 10 minutes to play. A championship was assured. His Atlanta Falcons would win the Super Bowl and be awarded the Lombardi Trophy. Being a Packer fan I had to mention our old coach Vince Lombardi.

Then Tom Brady and the Patriot defense took the game over. With one minute to play the score was tied 28 all. Atlanta had one last chance to win in regulation. The Patriot defense held and there was overtime. In overtime New England won the toss marched down the field to score a touchdown and win the Super Bowl.

What was once a sure thing for the Falcons turned into a devastating loss.

What does this mean to investors?

Many times, investors watch the markets and see an asset class(es) or individual stock or investment product charging ahead or even dropping ‘like a rock’. And think I need to put all my money into that….or sell everything I own in that….

It is a ‘sure’ thing. Can’t lose. It’s the new paradigm. Traditional investments are dead this is the new thing.

There are thousands of examples of just this kind of thinking.

Then something happens. The fourth quarter begins and everything falls apart. What was once a sure thing, is now dead in the water. No one wants to touch it. Losses keep mounting and investors have all their money in one thing.

Devastation ensues. Investors panic and decide to never invest again.

The problem is they were never investing in the first place. They were gambling and speculating with their investment money.

Investors need to realize that there is no such thing as a sure thing. Anything can and will happen. Many times, unexpectedly.

To succeed investing long term you need to own equities and high quality short term fixed income…globally diversify…rebalance.

Follow these three rules with the help of an investor coach/fiduciary adviser and success will be yours.

The Equity Markets Are Unpredictable…Really!!

When investors are looking for the best place to invest their money, they attempt to avoid the pain, the pain of down markets. Given the high volatility of the stock market many investors are avoiding placing their money in equities. They are looking for guarantees, ie, annuities, cash, CDs, bonds, etc.

Many others are seeking ‘experts’ to tell them when to get in and out of the market, which is market timing. As an example, many investors missed the latest market advance because the ‘experts’ said the market would decline if Trump were elected. This of course did not happen.

The equity markets will have down periods and these ’experts’ will blame somebody or something.

Others investors are looking for the next hot stock or hot asset class. Still others are looking for the hottest fund manager or track record investing.

What all these people are looking for is someone to predict the future.

All this is the result of us looking to avoid risk or loss of principal. All these efforts are sadly wasted because all markets are random and unpredictable.

There are different risks in all assets classes whether it’s stocks or annuities or CDs or cash or bonds or even gold. No matter where you put your money there is risk involved.

If you invest in the stock market, no one can “save” you from the down periods—NO ONE. If markets were not random and unpredictable, they wouldn’t offer higher expected returns. Markets randomly and unpredictably go up and down.

If there were no down markets, equities would not produce good returns long term.

The cost of capital results in good returns, over time. The stock market is efficient enough that no one can predict the future. By efficient I mean all the knowable information is already in the price of the security. Only new and unknowable information change prices in the future.

Anyone who tells you what will happen in the future is trying to fool you and perhaps fool themselves. The media Is full of financial pornography trying to sell you their product(s). Each season there is a new prediction. As an investor you must avoid the temptation to believe these hawkers.

To succeed long term you must develop a prudent strategy with the appropriate risk level and remain disciplined.

You must own equities……globally diversify…..rebalance.

Hail No!!

As I write this it is Sunday noon. In two hours, the Green Bay Packers will play the Atlanta Falcons for the right to play in Super Bowl LI. As a fan, I believe the Packers will win. The end the result is unknown and unpredictable.

Forecasting the future is really, really, hard and a matter of luck and not skill. Some predictors will be right and some will be wrong. The problem no one can tell you with any degree of certainty who will be right. No one can tell you with any degree of certainty who will play in the Super Bowl.

The problem is the same for investors. Predicting the future is really, really, hard. Who will play? Who will be injured? Who will have a great game? Who will not play up to their potential? Who is ill? Who is not? And will it matter?

It is a waiting game now. Time will tell. Will I be happy with the result? In the end I will remain a Green Bay Packer fan regardless of the outcome.

For now, stay tuned……

Wow!! I was not expecting this performance from my Packers. Whatever could go wrong did. As I said earlier regardless of the outcome I will remain a diehard Packer fan.

What can investors learn from this? Well first and foremost past performance is no indication of future results. The Packers had been on an eight-game winning streak. Aaron Rodgers was one of the hottest quarterbacks over those eight games. The defense was a bend but don’t break.

Well, all those went out the window on Sunday afternoon.

Regardless of a fund managers past performance there is no assurance this performance will continue. The equity markets, like the NFL, are random and unpredictable.

With regard to the Packers we look forward to next year with optimism, as all fans do. As to investors, we need to own equities with the right amount of high quality short term fixed income, globally diversify and rebalance.

Attempting to prediction the future should be left to the speculators and gamblers.

Hail Rodgers!!

Just 15 months ago, I wrote the following:

As many of you may know I am a huge Green Bay Packer fan. Well Last night I watched my beloved Packers play their worst game under Aaron Rodgers. Nothing went right for the Pack. Let’s take nothing away from the Denver defense they played a great game. But the Packers had a very bad game.

After the game, Aaron Rodgers was quoted as saying ‘We didn’t execute the plan we had in place’. Another quote might fit in here. ‘Everybody has a plan until they get punched in the face’. Mike Tyson.

The Denver defense played a flawless game so that probably had something to do with it. But anyone who regularly watches the Pack knows this was a subpar game for them. On both sides of the ball.

Being a staunch Packer I believe they will be back. Stronger than ever.

They will regroup and Coach McCarthy will emphasize getting back to their plan. What makes them a great team needs to be reinforced to the players and staff. It requires discipline in both the good times as well as the bad times.

There is no need to panic and look for another solution. Coach McCarthy knows his system works and he will make sure the Packers organization to a man is committed to that system.

Well yesterday 1/15/2017 the Green Bay Packers under Aaron Rodgers did turn it around. Aaron was spectacular and the Packers are headed to the NFC championship game in Atlanta.

The results of that game are unknown of course. But I will be there cheering on the Pack regardless.

Investors need to follow this lead. They need a prudent portfolio one which they understand and believe in. Sometimes when times are bad they need a coach to keep them from panicking. It is a huge mistake to look for something else. Something that works better right now.

Like the Packers they need to ignore the media hype and focus on their long term goals.

Also like the Packers they need to understand what the process is and believe in it. Remember investors do not have to know everything about investing to succeed but they do need to know the right things.

To succeed long term in investing find an investor coach/fiduciary adviser that you believe in and learn whatever you can.

Then you must own equities…globally diversify…rebalance. And repeat until you die.

And of course…..GO PACK GO!!!!!

Emotions Override Statistics…

When you read a daily financial publication like the Wall Street Journal you find an enormous amount of facts. These facts can lead to vastly different conclusions. I wager that each day, with the exception of 2008-9, I can find 5 reasons the market will go up and 5 reasons it will go down. All of these ‘facts’ occur in the same day.

You can justify almost any imprudent investment decision with “facts.”  Information is filtered by our emotions to create “fact” that support our decisions or beliefs. Without outside guidance, it is impossible to tell when and how this happens. Truth is the field of investing is elusive.

Remember the Wall Street bullies make money when we, the public, move money from one investment to another. Your broker has a vested interest in moving your money. They make more commission each time you move. The banking system loves to feed the fear.

If you are really interested in earning a good return on your investment dollars stop empowering the Wall Street bullies. Develop a sound, prudent portfolio, based on YOUR risk tolerance level and remain disciplined to that strategy. Jumping from one investment to another will cost you money and make tons of money for Wall Street.

As I have mentioned a number of times, NO ONE can predict the future. When you ask your broker what is the best stock for now? Or, when should I get in and out of the market? Or, who is the best fund manager(s)?  You are essentially asking them to predict the future.

A globally diversified portfolio eliminates the need to predict and allows you to relax and be assured you are properly invested to reach your long term goals. One of the main attributes investors need as well as advisers is discipline.

Many investors make the mistake of being in stocks or out of stocks. There is no in between for these ‘investors’. The truth is the answer is somewhere in between.

When a new investor in their 20s begins, their portfolio is 95% equities and 5% fixed income. As we age our portfolio needs to take on less risk. For example, for someone in their 50s and 60s a portfolio of 60% equities and 40% fixed income might be appropriate. For someone in their 70s 50% equities and 50% fixed income or even 40% equities and 60% fixed income might work.

To be specific your fixed income allocation should be high quality short duration. This adds stability to your portfolio.

The real answer is to maintain your purchasing power and provide reasonable growth you need equities in your portfolio. The level of risk you maintain is up to you and your spending habits.

Equities are one of the greatest wealth creation tools available, if properly used. To reach you long term financial goals own equities…..globally diversify….rebalance.

Nobody Knows Anything….in Advance!

As we begin 2017 there are many questions about the future. The future of the equity markets, the future of the political arena and many other questions. Questions that cannot be answered with any degree of certainty.

You will hear many ‘guesses’ and they are guesses. No matter what their credentials are or what their track record. Any predictions are simple guesses.

As to investors predictions are abundant but accountability is rare.

John Bogle, inventor of the index fund and past chairman of Vanguard Investments was speaking at an advisor conference. Now 80 years young, Mr. Bogle, shared the best investing advice he ever got while a young man working as a runner for a brokerage firm, a fellow runner, about the same age as Bogle is now told him the secret ‘Nobody knows anything’.

During his interview Mr. Bogle warned attendees that “we give too much credence to past returns; past is not prologue,” saying instead “it’s the source of the returns” that is more important. He then quoted Samuel Taylor Coleridge that history is like “a lantern on the stern, which shines only on the waves behind us.”

Discussing investing opportunities, Bogle pooh-poohed private equity, saying that there are “a lot of sellers, but not many buyers.” He still believes that “performance chasing” is one of the most deadly of investing sins, that “I grow more concerned about target-date funds every day,” is skeptical about 130/30 funds–“it’s not that easy”–and on exchange traded funds, “my skepticism is increasing,” saying that his reading of the data shows that “ETF investors do badly relative to mutual fund investors.” The problem is not the product but the investor. They need a coach to guide them through the maze of financial media and hype.

Basically what Mr. Bogle is saying is that stock picking, market timing and performance chasing do not work.

Developing a customized portfolio, with regard to your comfortable risk level. Using a scientific approach and remaining disciplined will maximize your opportunity for a successful outcome. My clients understand this and will succeed in the long run.

We must remain diligent and stay focused. Own equities…… diversify…..rebalance.