A Terrible Year… Except for Investors

Investors will be the victims of the Wall Street bullies if they let them. NO ONE can predict the future as these bullies want you to believe. The market rate of return is there for the taking. All you need to do it take advantage, build a prudent portfolio and remain disciplined. This will require the help of an investor coach. This coach will keep you focused on the long term and ignore short term volatility. You will also be coached to ignore the financial pornography that lures you into get rich schemes.

The Bombay Stock Exchange, in Mumbai, is Asia'...
The Bombay Stock Exchange, in Mumbai, is Asia’s oldest and India’s largest stock exchange (Photo credit: Wikipedia)

While index-based investors had a lot to smile about in 2012, investors relying on some stock market gurus were disappointed. John Paulson was hailed as the next “master of the universe” for his hugely profitable bet against mortgages in 2008. Investors flocked to his Paulson Advantage Plus Fund, hoping the magic would last. It didn’t. In 2011 the fund lost 52.5 percent of its value. The fund “recovered” somewhat in 2012, losing only a reported 19 percent!Paulson was not the only hedge fund manager who performed poorly in 2012. The HFRX Global Hedge Fund Index returned a measly 3.5 percent in 2012.

As you consider your investing strategy, you should reflect on this data. Remember that markets don’t always react to bad news the way you might think it will. The predictions of stock market pundits are wrong as often as they are right. Even if they are right, their insights might not help you predict the reaction of the market. Be wary of stock market gurus who claim to have the skill to “beat the market.” Their past success is more likely attributable to luck and is unlikely to persist.

You will find academically based information about investing in my books and those written by Bill Bernstein, John Bogle, Allan Roth, Burton Malkiel and my colleagues Larry Swedroe and Carl Richards. An investment of time and money educating yourself about responsible investing can make the difference between meeting your financial goals and running out of money when you are most vulnerable.

Market timers can lose even if they are right. Predicting the market direction is the action of fools or gamblers. Either way you are better off with a globally diversified portfolio and discipline.

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

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More Investing…..Less Gambling!

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)

The Wall Street bullies have a vested interest in keeping the investing public trading. They make money on every trade whether you make money or not. You cannot make up for a lack of saving by speculating. It is far too dangerous for you and your families’ financial future.

Needed: More Investing, Less Gambling

John Bogle said, “the wisdom of long-term investing has been crowded out by short-term speculation.” It’s more than just market timing and flash trading. Americans are speculating that Social Security will be fixed, and corporations are speculating that they will earn 8% on their pension funds.

Some additional risk may be necessary to help baby boomer clients generate the retirement income they need, but it’s important not to go to extremes. “The market doesn’t care whether [your client needs] extra income or not,” he noted. Taking excessive risk is “not a Bogle move. I’m a middle-of-the-road, boring–I’ll admit it, boring–kind of guy.”

Many investors are far too impatient to be successful investors. Remember to succeed in reaching your long term financial goals you need a disciplined savings strategy and a prudent investment strategy. Mr. Bogle’s advice brings something the Wall Street bullies lack and that is “Wisdom”.

Many of us are relying on Social Security as a safety cushion, a cushion which may or may not be there when we need it. Prepare for the worst.

Follow the three simple rules of investing:

Own Equities….Globally Diversify….Rebalance

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The Show Wall Street Doesn’t Want You to See

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)

The Wall Street bullies continue to fool the investing public. Many investors continue to believe that someone on Wall Street can predict the future. Unfortunately, there is no one who can consistently forecast the next great investments. Your best strategy is to find a prudent strategy and remain disciplined to that strategy.

The daily grist of these shows consists of commentary by smug, highly confident, financial journalists and their guests, who manage money. They regale us with their views, not just on what is happening in the market, but what is likely to happen. The stock picks of the fund managers have the same possibility of being correct as calling a coin flip. Their real agenda is to convince you to invest your money with them.If the premise of these shows is to get you to trade, by “fleeing to safety” in volatile markets,” and trying to figure out when to return to stocks to capture the next bull market, it is working well for them, but not for you. According to Forbes magazine, a majority of investors “consistently buy high and sell low” — the exact opposite of profitable investing. While you end up holding the bag, Wall Street continues to profit.

You can patiently search the networks and hundreds of cable channels in vain for a responsible financial talk show that is premised on solid, peer-reviewed, academically based, information, geared to assist you in reaping market returns that are yours for the asking.

The information withheld from you is vast. It is set forth in my books, and in books authored by Burton Malkiel, William Bernstein, John Bogle, David Swensen, Jason Zweig, Mark Hebner and many others. Trillions of dollars of really smart money is invested based on the research set forth in these books. If you are like the majority of individual investors, you are clueless. You continue to try to time the market, pick individual stocks or hot fund managers, or purchase variable annuities because you are told they are the “best of both worlds” (protection of capital and participation in upside market potential.).

The Wall Street bullies do not want you to know any of this. It is a prudent strategy backed by scientific, academic research. You can reduce the anxiety you feel investing the way Wall Street wants you to invest. Most investors do not even come close to matching the returns the market provides.

Please comment or call to discuss how this affects you and your financial goals.

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