Which Do You Rely On?….Process or Superstition?

This past week I attended an investment symposium in Cincinnati. Ironically, the symposium was in a large downtown casino. Every week I contrast true investing from gambling and speculating. And here I was walking through a large casino that seemed to be busy at all times of the day. As I walked through I noticed the faces of some of the gamblers and in all cases it had the look of desperation and false hope.

Casino Royale en Las Vegas
Casino Royale en Las Vegas (Photo credit: Wikipedia)

I’m sure many of these gamblers felt they had an edge because they were sophisticated and had a ‘system’. But if you looked closer it was not a ‘system’ but rather thinly veiled superstitions. They relied on luck and when the luck ran out the sophisticated gambler moved on to the next ‘system’.

A prudent investor will not switch from one hot ‘system’ to the next. With the help of an investor coach they will develop a prudent portfolio designed for them and then remain disciplined to that process. That process includes among other things the following three rules:

  • Own equities and high quality fixed income.
  • Globally diversify.
  • Rebalance.

The Wall Street bullies have extensive marketing campaigns, which begin as early as grade school, to keep the public gambling and speculating. You can tell you are gambling and speculating if you are doing any or all of the following:

  • Stock picking.
  • Market timing (Getting into and out of the markets at the ‘right’ times)
  • Track record investing (Investing in the hot managers or hot asset class)

These bullies forget to tell the public that these activities are in the best interest of the bullies and NOT you. These bullies use your emotions to keep your money on the move. Because their fees depend on you keeping your money moving from one strategy to the next.

Have you ever meet someone who won big at a casino? Did you find it curious why the casino would then give these ‘winners’ ‘free’ rooms and food. Perhaps even ‘free’ transportation back to the casino? Well these casinos do this because they know that if you continue gambling you will give all your winnings back.

Don’t get me wrong, gambling and speculating are not all bad. It’s ok as long as you gamble and speculate for entertainment purposes only. However it is not ok when this is your retirement plan strategy.

The Wall Street bullies believe the same thing if you continue trading their fees will continue and you will lose. These bullies will continue to use your emotions to entice you to gamble and speculate with your savings.

These gamblers and speculators will have continuous anxiety because they do not know what to do next. Their faces have the look of desperation and false hope.

Stop empowering the Wall Street bullies and take control of your own financial future. Fire your broker/agent and hire an investor coach/fiduciary adviser.

Want to Gamble With Your Investment Money…..Go to Vegas!!!

Recently I have heard someone say to me “I hope you are doing well in the market because I am’.  I did not respond to his proclamation nor will I in the future. This self-proclaimed trader obviously has made some good buys and sells.

Las Vegas
Las Vegas (Photo credits: www.roadtrafficsigns.com)

He does realize that he is gambling and speculating with his money. He can justify each trade with some signal or trend change or some other indicator.

Unfortunately for this trader his short term success will be met with long term failure. Successful investing is NOT gambling and speculating. Successful investing involves following a prudent process and remaining disciplined to that process.

OK I am going to say this with the risk of repeating myself. There are three simple rules to successful investing:

  • Own equities and fixed income.
  • Globally diversify.
  • Rebalance.

Each of these rules sound very simple and should be very easy to follow. Until one of your friends or someone you know tells you something that scares into panicking and selling. Or even convinces you that the next hot stock or asset class will make you rich.

Successful investing is just that investing which means long term. One of the reasons the equity markets provide an excellent return long term is the volatility both up and down. We need to live with the downturns in order to experience the upturns.

Stock picking and market timing may be more fun to talk about because it is exciting, especially when you win. But like a gambler market timers and stock pickers get a high off their trading.

It’s ok to gamble and speculate with fun money but not money designated for a long term goal, like retirement. If you really want to gamble and speculate go to Las Vegas, at least you will have more fun when you lose.

To successfully investor you need to fire your broker/agent and hire an investor coach/fiduciary adviser.

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Average Investor vs. Sophisticated Investor…Who Wins?

The Wall Street bullies are continuously in search of investors to feed their coffers. Financial advisers are continually searching for the high net worth or sophisticated investor. But what is a sophisticated investor? Is it someone with over $1 million? or 2 million? or more? The answer lies with the individual.

English: The corner of Wall Street and Broadwa...
English: The corner of Wall Street and Broadway, showing the limestone facade of One Wall Street in the background. (Photo credit: Wikipedia)


Regardless of what you consider a sophisticated investors, these investors believe that they can find superior fund managers and deserve ‘special’ investments not available to the general investing public. The Wall Street bullies play right into their hands. They make these investors believe that because if their ‘status’, (account size) they will realize superior returns. They are led to believe that the bullies can give them better information and predict what will happen next.


These are all false assumptions. The Wall Street bullies have no idea what the market will do next week or next month or next year. I believe the equity markets are far too efficient to consistently predict the future. By efficient I mean all the knowable information is already in the price the equities.


Going forward the equity markets are random and efficient.


Being a sophisticated investor does not give you any advantage over the ‘average’ investor. What it does do is allow you to speculate and gamble with your investment dollars. The Wall Street bullies can design very elaborate strategies to convince investors that they can ‘beat’ the market. In the short term some of these strategies make money and boost the return.


However, there is no strategy that can consistently ‘beat’ the market.


By the time you realize that this strategy will no longer beat the market you can lose substantial amounts of money. This is why many investors believe that investing with Wall Street is nothing more than gambling and speculating. In most cases this is true, because the Wall Street bullies spend massive amounts of money marketing their latest strategies.


These bullies know that they must continually come up with new ideas to keep investors trading.


Wall Street makes money when money moves. Whether you make money or not is secondary to them.


So what should sophisticated investors as well as average investors do? First of all we should really determine what a sophisticated investor is. When you can answers yes to the Twenty Must Answer Questions you will be a sophisticated investor. Not a gambler or speculator mind you but an investor.


In most if not all cases you will need the assistance and guidance of an investor coach. With the proper education and coaching to keep you disciplined you will become a sophisticated investor. This is not determined by account size but rather on changing how you view Wall Street.


Determine what is your investment philosophy.


Becoming a successful investor will reduce your anxiety and improve your long term returns. You can begin investing for the long term with confidence.


There are three simple rules of investing. These rules are however difficult to follow consistently…

  • Own equities
  • Globally diversify
  • Rebalance


Follow these three rules and focus on the long term and success will be yours no matter what your account size is.

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