We Will Have A New President..Then What?

Posted on April 4, 2016 by Tony — No Comments ↓

The presidential primaries are running at full steam. There appears more controversy during this election than any time I can remember.

The candidates are making more and more promises. ‘I will do this and it will make your life better.’ ‘I promise to change this to make your life better.’ And on and on.

Unfortunately the media covers all the smear campaigns as well. If a candidate made a mistake in the past watch out!!

Most of the information out there is very confusing to the voters. Is Donald Trump for real? Can he fulfill his promises?

I am not sure if he can. There is no way to predict. They all say they will change things. Sadly, they don’t say whether the change will be better or worse.

Regardless of the outcome the capital markets will go on. The free markets do work if we let them.

When dealing with investors I also have heard a number of questions. The most frequently asked is; what will the market do next? Every one of them believes someone knows what will happen next.

Investors are in constant search of the ‘expert’ that will give them the answers and ‘beat’ the market.

Unfortunately, there are no answers to the question; what will happen next? While investors are searching for the right answer they lose money unnecessarily.

This is evidenced by the Dalbar research study which looks at individual investor performance over a rolling 30 year period. The latest study revealed that the 30 years ending December 31, 2014 average annual performance of the S&P500 earned 11.16% while the individual investor earned an average of 3.79%.

Why the difference? It can partially be explained by the investors search for the ‘best’ manager. This is called track record investing and it doesn’t work.

The invisible hand of the market sets prices more efficiently than any other process known to man. Is it perfect? Indeed, No. There is no perfect price; only what a willing buyer and seller negotiate.

The market instantly incorporates the collective mind of every market participants. Markets work. Unfortunately, most investors never tap their real power.

Remember Wall Street, including insurance companies are good at selling fear. My question is if the equity markets went down and stayed down. Would insurance companies survive? Or would they go bankrupt?

If they did not survive it would mean investors took the risk and the insurance companies earned the reward.

Stop listening to the fear mongers. Stop trying to beat the market and let the market forces work for you.

This will be accomplished by owning equities….globally diversify….rebalance. These 3 simple rules will lead to a successful investing experience.

Is Silver The Answer?

Posted on August 10, 2015 by Tony — No Comments ↓

Over the weekend I had a discussion with a ‘doomsdayer’. The conversation did not last long because he had a vested interest in me buying silver. I believe the reason was the current administration has done too much damage for the economy to grow here as well as internationally.

There is no evidence or proof what would occur should ‘doomsday’ actually happen. What would you do with silver? Even if there was value, what would stop someone from taking all your silver? That’s if they wanted it. If doomsday actually occurred governments would cease to exist. If you owned real estate what or who would stop anyone from taking it from you?

If ‘doomsday actually occurs it seems the only thing you should own is weapons to protect yourself and your ‘property’. More importantly you could use the weapons to hunt for food.

OK, this all seems extreme. This all is extreme. I for one believe capitalism is the solution to all our problems here and abroad. We need equity to fuel capitalism. So owning equities is a great way to fight any perceived or otherwise ‘doomsday’.

We create economic growth through investment of capital not through government intervention.

We need to stop watching and listening to the financial pornography out there. There have been problem times in the past and there will be problems in the future. At any point in time there is and was problems somewhere in the world. There is no avoiding this.

What we need to do is focus on our goals and believe in our strategy. This is often a very difficult task. Many times our emotions get the best of us. We are swept up in the media blitz. Often we have friends/relatives/ acquaintances telling us that everything is falling apart. They tell us to seek the safety of gold, silver, CDs, annuities or some other can’t miss product.

This has been the pattern for many investors for decades. Exiting at the first sign of problems. Trying to avoid all losses. In most cases this ends up costing the investor a lot of money. It somehow feels better standing on the sidelines rather than being at risk.

Remember the markets reward us for taking risk. And risk involves downturns as well as upturns. There is no avoiding this. If you want the reward you need to takes the risk.

Over the long term stocks go up.

So stop empowering Wall Street by trading in and out of the stock market.

Find an investor coach/fiduciary adviser for the proper guidance. Learn to love the downturns, for the downturns are the reason the markets rewards you with great returns.

All this without market timing, stock picking and track record investing.

Can You ‘Trump’ The S&P 500??

Posted on July 27, 2015 by Tony — No Comments ↓

View image | gettyimages.com

As I write this the Dow Jones Industrial 30 has pulled back 4% off its all-time high. There are many pundits saying ‘I told you so’. Some even say this is only the beginning.

View image | gettyimages.com

This is where your investor coach earns their fees. This is where your coach keeps you disciplined to your strategy. This is where your coach prevents you from market timing. That is, getting out of the market now and buy back in when things ‘settle down’. Or when things look good.

Someone always has a strategy that just fits this particular situation. You should be doing this….or this….or this… These are all marketing gimmicks. Because these brokers give you the impression that they can predict market movements. Both up and down.

These are the Wall Street bullies I have been writing about for some time now. Your coach will keep you from falling victim to these bullies.

Keep in mind that these bullies cause what I call ‘musical brokers’. When their hot idea fizzles out the investor moves to the next broker with another hot idea.

When one of these bullies tells you they knew the market was going to go down. Ask them this question, Did you buy put options or sell the market short? In fact there are ETFs on the market called 3x bear. In other words if the market is down 4% these ETFs will increase 12%.

If these bullies knew the market was going to go down they would have mortgaged everything they owned and bought these ‘3x bear’ ETFs.

The truth is the markets are far too efficient to take advantage of over any extended period of time. Of course, there will be someone lucky enough to get it right. They will then market their ability to predict the market movements.

There is however no correlation between their current results and future results. This not a matter of skill but rather luck.

So resist the temptation to empower the Wall Street bullies.

As an example. Donald Trump has been receiving a lot of media attention because of his controversial opinions on all sorts of subjects. He is famous for his flamboyant style. He has amassed a fortune over his lifetime. Billions. However there was a study done on his transactions. If he had simply invested in the S&P 500 during this same time. He would have amassed $10 billion more.

Keep in mind during this time the S&P500 has had numerous pullbacks of 10% or more. Yet Mr. Trump would have earned billions more just by staying disciplined during all those down turns.

Of course his flamboyant style would have prevented him sitting and earning his fortune quietly.

Your investor coach/fiduciary adviser is there to help you through all downturns. Your coach/fiduciary adviser works for your best interest not the brokerage or insurance firms.

Let them earn their fees.