Is Capitalism Evil?

Free markets are under attack. The media along with liberal politics have made capitalism the evil empire. They cast capitalist as greedy and unfeeling.

In fact everything that made America great is under attack. Our liberal leaders are trying to change everything that made us a great society. Many even say the facts prove that capitalism is wrong and socialism is the answer. I know as I am sure many of you are that ‘facts’ can be skewed to prove any viewpoint.

Taking the blubber off, Nantucket Harbor by Jo...
Taking the blubber off, Nantucket Harbor by Josiah Freeman, ?1867-?1890. (Photo credit: Wikipedia)

Capitalism and the free markets promote growth. Unfortunately the free markets do not ‘guarantee’ success. Some ideas flourish immediately, while some flounder. Some take time and require persistence.

There is a myth that pro capitalism is the same as pro business. This is a myth because capitalism promotes competition. While businesses want to limit competition. Businesses have to work harder to maintain their profits and grow.

Remember the more competitive the environment is the better and cheaper their products become.

The end beneficiary is the consumer with better products at a cheaper price. And of course added jobs.

Recently I watched the movie ‘In the Heart of the Sea. It is about the legend of Moby Dick the giant white whale. By the way I understand now why this movie was only in the theaters for a short time. Not very good.

Back then in order to power their lamps and stoves they needed oil. Well the oil then was derived from whale blubber. Can you imagine today if someone were killing whales or anything else for a profit? There would be protests everywhere.

But then it was there only source of power. So it was acceptable.

Because of capitalism another source of fuel was discovered and the business of killing whales stopped.

Capitalists are always looking for a better, more efficient way. The people working in the whaling industry were not happy. The business owners lost money and the employees lost their jobs.

As I have said some win some lose. But overall the consumer wins.

Today as it was in Moby Dick’s time no one could predict the future. If we invest our capital in a diversified manner we will succeed in the long term. However if you concentrate your assets in a single asset class, like whale blubber you will lose in the end.

The only thing that doesn’t change is that things change. However no one can tell you what will change and when.

There will be ups and downs. But patience and persistence will allow us to succeed.

Most if not all of us need the guidance of an investor coach/fiduciary adviser to find long term success.

Your coach will help you follow the three simple rules of investing..Own equities and high quality short duration fixed income…Globally diversify…Rebalance.

Memorial Day!!!

For regular readers of my messages you will recognize this message from last year. I am repeating it for two reason. One, it is a great message and two, I am a bit lazy this week. So, enjoy!

An American Dream (song)
An American Dream (song) (Photo credit: Wikipedia)

As we celebrate Memorial Day 2014 let us not forget those who fought and died for us and those who continue to fight for us. To protect our freedom.

You will never know how much it cost the present generation to preserve your freedom! I hope you will make good use of it!! – John Adams

This week will be a short message. Please remember and honor those who fought and continue the fight for our ability to seek the American dream. Every one of us has the ability to seek the American dream, however it involves sacrifice. There are no short cuts to prosperity.

The free markets are part of the reason our veterans fought. It does not involve speculation but rather prudent investing. The American dream is not a get rich scheme. It requires sacrifice, hard work and planning.

As John Adams said above “I hope you make good use of it!!”

Honor our veterans, past and present, by making good use of it.

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Success Requires Great Coaches!!

This last week I attended the Matson Money investor coaching conference in San Antonio. As usual it was a great conference. I was even able to fulfill an item on my ‘bucket list’ I visited the Alamo. A visit I recommend to anyone watched the old TV shows such as Davey Crockett. The RiverWalk area is fun as well.

Lou Holtz in July 2007. Cropped version of Ima...
Lou Holtz in July 2007. Cropped version of Image:Lou Holtz.jpg. (Photo credit: Wikipedia)

Each week I mention the Wall Street bullies and the need of an investor coach/fiduciary adviser for all investors. Well Mark Matson is my coach. I found Mark after an unfulfilling stint as a stock broker. His message is the same message I learned in financial classes in college and graduate school as well as my studies for the Certified Financial Planner® designation.

The message is:

  • The Free Markets work (Efficient Market Hypothesis)
  • Modern Portfolio Theory
  • Three Factor Model

work. I always found it curious that no one in the industry taught these academic concepts to new brokers. When I questioned this, the answer was those concepts only work in theory and do not work in the real world of investing. They were wrong…dead wrong.

The real reason the Wall Street bullies do not use these academic concepts is that it does not generate enough fees for the bullies. It doesn’t matter to the bullies if the investor is hurt and often severely hurt.

As I mentioned the conference was a great one. I also was able to hear the great Coach Lou Holtz speak, which I also highly recommend.

Essentially his message is the same as I have been writing about. To be a successful investor you need a prudent process and discipline. No one or no group can be successful without both process and discipline. This requires the guidance and vision of a good (great) coach.

I make an attempt to attend these conferences each year because I am reinforced that my beliefs are valid. Each event I attend Mark Matson’s message remains consistent. Follow the academic research provided us and remain disciplined.

We/I can be swayed by the media or public opinion or everyday life. Without the reinforcement of great coaches like Mark Matson we can easily begin to:

  • Stock Pick
  • Market Time
  • Track Record Invest

This in turn is nothing more than gambling and speculating with our investment money. If you are interested in attaining or re-attaining the American Dream gambling and speculating are NOT the answer.

Getting rich overnight, although possible, is highly unlikely. Working hard, saving and prudently investing our savings will lead to your long term goals.  The American Dream is still possible however, there are no short cuts.

So, I will commit to attending the Matson Money conferences (at least) annually to maintain my strong beliefs in the free markets. It is up to you to find an investor coach to guide you to your American Dream.

Stop allowing the Wall Street bullies ruin your future NOW!!

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Do The Free Markets Work?

This is one question most investors never think about. Primarily because the Wall Street bullies want you to believe that free markets  DO NOT work. The bullies will continue to supply you with forecasts on what will happen to your finances.

English: 60 Wall Street
English: 60 Wall Street (Photo credit: Wikipedia)

First let’s look at  the assumptions if Free Markets Fail:

  • The market fails to price goods and services appropriately.
  • It is possible for some individuals to identify in advance which prices are inaccurate.
  • Underpriced or overvalued markets can be forecasted or predicted.
  • By taking advantage of these miss-pricings, either in stocks or market sectors, it is possible to both increase returns and avoid losses in investments.
  • People with this view would utilize traditional investment myths and speculate with their assets.

However if Free Markets Work.

  • Based on supply and demand the free market is the best determinant of market prices.
  • All available information is factored into the current price.
  • Only new and unknowable information and events change pricing.
  • The randomness of the market makes it impossible for any individual or entity to consistently predict market movements and capture additional returns unrelated to risk.
  • People with this view would utilize free market investment strategies.

It is vitally important that you decide whether free markets work or free markets fail. This will determine how you will invest for your future.

If you believe free markets fail you should continue to invest in the traditional investment strategies of stock picking, market timing and track record investing. This would require that you stay connected to ALL sources of financial information. By following this strategy you will, in my opinion, be gambling and speculating with you investment money.

Ask yourself one question, do you really want to constantly stay connected to the equity markets?

If on the other hand, you believe that free markets work. You would concentrate on capturing market returns. Build a globally diversified portfolio. Identify YOUR risk tolerance. Eliminate the traditional investment strategies.

And finally, work with an investor coach who shares this belief.

The Wall Street bullies want you to believe that there is someone on Wall Street that can predict the future. This message is constantly bombarding the investing public thru the media and marketing campaigns. They need you to believe that someone can earn you above market returns AND avoid all large losses.

After many years of watching Wall Street I can tell you no one can consistently ‘beat’ the market.

You will never have peace of mind with your investment dollars if you continue to seek the ‘hot fund manager’ or the next ‘hot stock’.

Any investment that requires an accurate forecast of the future is destined for failure because the equity markets are random and unpredictable.

To determine if your portfolio is built to take advantage of the free markets or built on the assumption that free markets fail view Portfolio MRI . You will learn what is required to take advantage of the free markets.

Keep in mind there will always be examples of those who beat the market however it is extremely unlikely that they can repeat.

To succeed in investing for a lifetime you need to follow three simple rules:

  • Own equities
  • Globally diversify
  • Rebalance

Your investor coach can help you stay disciplined throughout your life. As you age your coach will help you adjust your risk to assure you reach your financial goals.

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Broker-dealers up in arms 401(k) fee disclosure

Industry Skyline
Image by Rhys Asplundh via Flickr

This cash cow is about to end for many broker dealers. The writer of ERISA never intended for the 401(k) plan to be utilized as it is today. It is used more as a specualtion tool rather than a retirement savings vehicle.

Some industry observers say the brokerageindustry only has itself to blame for the fact that its compensation arrangements are so complicated.”This is a reflection of the broker-dealers choosing to operate in an environment where they charge everyone differently for identical services,” said Mercer Bullard, an associate professor of law at the University of Mississippi. “The industry… created the complexity and now they are complaining about having to disclose it.”

Revenue sharing agreements, by which mutual funds share revenue with broker-dealers, are just a part of doing business, said Brian Graff, CEO and executive director of ASPPA.

“If everyone paid the same amount of compensation for everything, it would be less complicated but… that’s now how the free market operates,” Graff said.

Brokers are also reluctant to disclose how much different fund families are paying them to be on their platforms. “No one wants to air their dirty laundry,” said one brokerage executive, who declined to be identified because the issue is sensitive for his firm. “There is a lot of vulnerability.”

Right now, each broker-dealer is taking a different approach in its efforts to comply, officials said.

Some firms are opting for a “phone book approach” to the disclosure, which means they are listing the fee they receive for any investment option available to investors with self-directed accounts.

Other firms are disclosing a possible range of compensation for each fund the firm offers.

Confusion is the brokerage industry’s most powerful weapon. They are able to generate huge amounts of cash flow at the investors expense. This must stop particularly in retirement accounts.

Please comment or call to discuss how this affects you and your investment accounts..

  • Brokerages may have to change business practices: DOL (
  • Spotlight on 401(k) fees may help many saving for retirement (
  • How Small Business Owners Can Fine Tune Their Company 401(k) Plans (
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