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Nothing To Fear!

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When I tell people that I am an investor coach/fiduciary adviser. The typically response is to try and hide from me or simply walk away. These responses are the result of the stock market volatility during the last couple of years. The stock markets around the world have been extremely volatile.

Huge moves down followed by moves up followed by moves down again and then up again. This volatility has investors on edge and looking for safety. And who can blame them. In most cases we are talking about their life savings.

These ‘investors’ are focused on short term results without regard to the long term potential.  All investors need to keep in mind that they will hopefully be retired for a long time. Therefore the short term volatility is really meaningless to them. Or at least it should be.

This is where the guidance of an investor coach/fiduciary brings the most benefit to investors.

By coaching their clients about how the equity markets actually work. For example there is solid evidence that over the long term equity markets are one of the greatest wealth creation tools on the planet.

With this knowledge and the discipline to stay the course investors can realize these great returns.

You don’t have to know everything about the equity markets but you do need to know the right things.

Although I don’t agree with most of Warren Buffet’s methods. That is he believes in picking stocks.

What I do agree with is that he has a process and discipline.

Most if not all investors do not have the emotional strength to remain disciplined during equity market extremes. Both up and down.

There is also a quote by the same Warren Buffet that might help some here. When everyone is crying I’m buying and when everyone is yelling I’m selling. Apparently this only hold true for his buy side. Because he also says his holding period is ‘forever’.

This sounds like market timing, which I do not believe works. That is getting in and out of the market at the right time.

I believe Mr. Buffet’s real point is do not listen to short term volatility. Stay focused on the long term.

If you can find an investor coach/fiduciary adviser to help you. You can stop fearing the markets. You can realize the great long term results. The results that can lead to your successful retirement. Both up to and after your leaving the workforce.

Your coach will among other things teach you the three simple rules of successful investing.

  • Own equities and high quality short duration fixed income
  • Globally diversify
  • Rebalance

These three rules may seem simple but they are very difficult to follow without an investor coach/fiduciary adviser. Especially when the media is ‘scaring’ the hell out of you.

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What Will Happen Next??

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Our country, as well as the rest of the world is going through some very contentious times. I personally have never seen our country more divided than it is right now. There have been sadly, a large number of police killed by ‘protestors’.

Each time there has been a call for gun control. More regulations is not the answer. Perhaps we should just enforce the ones already in place.

It seems no one is accountable for their own actions. It is always the fault of someone else or something else.

There have been horrendous and cowardly terrorist attacks around the world. And there does not seem to be any effort to stop them.

Is this a lack of leadership? I believe it is. There has really been a lack of leadership in our country for quite some time. It seems everyone has their own agenda.

Many of the people I talk with remain pessimistic about the future. What if this happens or that happens? They ask. I’m not sure what will happen either short or long term. What I do know is that things will change. The only thing that doesn’t change is that things change.

Rather than trying to predict the future, which no one can consistently do, I follow my investment philosophy, which is that markets are efficient.  In that, all the knowable information is in the current price of securities. Any predictions made are a guess. The markets going forward are random.

I believe that free markets work. I believe that economies around the world will continue to grow. What I do not know is what sectors or industries or products will grow.

Therefore we must remain diversified and disciplined.

There will always be short term volatility. My role as an investor coach is to keep investors focused on the long term. Trying to time the markets or pick the right stocks will lead to poor results, long term.

Your goal as an investor is to reach your long term goal. This is not done by earning the highest return possible. Earning the highest possible return can be accomplished in the short term, however it cannot be accomplished long term.

UNLESS, you believe that earning the market rate of return is the highest possible return.

The markets may not be perfectly efficient at all times, however they are far too efficient to take advantage of and improve returns.

Let’s reduce your anxiety and improve returns, long term.

Let’s begin to become accountable for our own future.

The poor results of many investors is not the fault of someone on Wall Street. But rather our own lack of discipline and our fear of the future.

To succeed long term you must own equities…globally diversify..rebalance.

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The British Are Coming!!!

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This week we celebrate Independence Day, ‘the 4th of July”.

Many of us do not realize or forgot what this day represents. It is our Declaration of Independence from the oppression of the British government. Our day of independence from ‘taxation without representation’.

The Declaration of Independence of the United ...
The Declaration of Independence of the United States of America; July 4th 1776, by Asher Brown Durand (died 1886). See source website for additional information. This set of images was gathered by User:Dcoetzee from the National Portrait Gallery, London website using a special tool. All images in this batch have been confirmed as author died before 1939 according to the official death date listed by the NPG. (Photo credit: Wikipedia)

Those who signed this Declaration of Independence essentially signed their own ‘death’ warrant. Without these brave men America might not have become the great free nation that it is.

Freedom was the center post of this day.

We had been relying on the British to protect us and paid dearly for this protection. We realized that we could protect ourselves and realize our own dreams.

As an ironic twist. Last week the citizens of Great Britain voted to declare their independence from the European Union. This vote rattled the equity markets around the globe. As of today much of that decline has been recovered.

One has to wonder whether Great Britain will celebrate Independence Day on June 24, like we celebrate Independence Day on July 4th. Hopefully, the British can repeat our success over the last 240 years.

Currently, we as a nation are again relying on others to secure our future. We rely on the federal government to feed us, provide medical care and other essentials. We rely on the Wall Street bullies, including life insurance companies, to tell us what to do with our hard earned money.

Perhaps this week we should seek our own independence from these bullies. You do not have to risk your life like our fore fathers, but you can become more accountable for your own financial future.

You can protect the future you from the current you.

We continually rely on the federal government, our union leaders, the Wall Street bullies, life insurance companies, the media and on and on. Yes, you may have to experience some short term pain when equities decline. The long term benefits, however, far outweigh these painful times.

Stop being a victim and hire an investor coach to help you achieve your own independence.

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Maybe I Should Market Time..Because This Time Is Different!

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Last week there was a horrible attack in Orlando by a terrorist. Or should I say by a coward? There has been and will continue to be speculation that other attacks will occur here in the U.S.

More bad news, there will be a vote in England this week that will determine whether England will leave the European Union. It’s even been given its own name. ‘Brexit’.

English: Randall Building, 535-565 West Georgi...
English: Randall Building, 535-565 West Georgia Street, Vancouver, British Columbia, Canada. Built 1929. Named for the S. W. Randall Company, a brokerage firm. Architect: Richard T. Perry. The 1991 renovations were designed by Blewett Dodd Ching Lee, architects. (Photo credit: Wikipedia)

There are those that believe that the markets will go down as a result and we should exit the market. At least until things calm down.

Since there are over six billion people on this planet. There is always conflict and adversity somewhere. And there always will.

During these times of crisis we have a tendency to make emotional decisions. Decisions that are NOT in our own best interests.

Ideally, we should all just time the market cycles and only buy when the market is low and sell when the market is high. Unfortunately, few, if any investors are able to do this with any degree of consistency.

We tend to make our investment decisions based on recent past events and how we feel about those events.

If the market has done well lately, we wish, we are comfortable buying stocks. If the market has done poorly, however, we avoid them. Unfortunately, this is the exact opposite of what we should do if our goal is to maximize our long term return.

Once we feel “comfortable” with the market, we have usually already passed up large potential gains.

There is an unholy alliance between the media and the large financial institutions to convince the investing public to continue trading by spreading fear and panic.

Many investors mistakenly believe that the big brokerage firms make money by trading in and out of the ‘right’ investments

The large financial institutions actually make money when YOU trade in and out, making money on every trade.

I personally worked for a large brokerage firm that paid its advisors a greater fee for the equity portion of the portfolio than the bond portion.

Largely because the firm made more money on equity trading fees.

Since the advisors were paid more for the equity portion, there was a tendency to increase the equity portion of client portfolios. Thereby increasing risk.

This practice of paying more fees for equity positions will be changing with the new fiduciary rule taking effect in 2017. At least for retirement accounts that is.

Will these large brokerage firms find new ways to generate more fees?

You should own equities…globally diversify…rebalance and believe that America and the capital markets will prosper. We as a country have been thru much worse and we recovered and became stronger.

The problem is no one can consistently predict what will happen and when.

During times of crisis should we cut and run or should we stand and fight? Historically the fighters are the ones that profit and prosper. Those that cut and run grasp unto their ‘guarantees’ and wonder why they are always behind.

To best deal with the inevitable ‘bad’ times fire your broker/agent and hire an investor coach/fiduciary adviser. Keep in mind a fiduciary adviser did not need a new regulation to keep your best interests first and foremost.

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