What Does Labor Day Mean To You?

Happy Labor Day!! I hope everyone enjoyed a safe and pleasant holiday. Sadly for many this is the last unofficial weekend of summer. The Labor Day holiday, which began in 1887, is to honor all the hard work of Americans.

English: Wall Street, Manhattan, New York, USA...
English: Wall Street, Manhattan, New York, USA Español: Wall Street, Manhattan, Nueva York, Estados Unidos (Photo credit: Wikipedia)

America has always been known as the land of opportunity. This opportunity will only result in success when combined with hard work and in  taking risks. There will always be risks, no matter what the path you take. Some of these risks will be apparent and some will be hidden. Even if you work for an employer you take the risk that the employer will no longer need you. Small business owners take on different and more apparent risks. But there will always be risks. Regardless of the type of risks you decide to take on the path to success, it will require hard work.

There is no short cut to success.

Keep in mind some will get ‘lucky’ and strike it rich quickly but the likelihood that these ‘lucky’ ones will hold on to these riches is slight. To appreciate your wealth it best to have earned it through hard work and taking the right kind of risks.

When we acquire our wealth through hard work and risk we should insist on having our money work hard with the right kind of risks.

The Wall Street bullies have convinced us that there is a short cut to investment success.  Why do we work hard and take risks to acquire our wealth and then think we can easily make a very high return? Why do we think that gambling and speculating with our money is the prudent thing to do?

Through research and proven concepts and theories we can make our money work hard for us with the right kind of risks. If you are working with a broker who is stock picking or market timing or using track records to invest you are gambling and speculating with your money not investing

Stop being a victim of the Wall Street bullies.

Free Markets Work…

It seems like every day an investor will ask me about my prediction for the stock market. Well anyone who works with me knows I do not believe anyone can predict the future movement of stocks with any consistency.

I believe no one can tell you whether the next 20% move will be up or down. But the next 100% will be up.

Each day the media focuses on a new prediction. Their audience is continually searching for new predictions. What will happen next? What is the new hot asset class? Where is the best place to put my money?

NASA Sunspot Number Predictions for Solar cycl...
NASA Sunspot Number Predictions for Solar cycle 23 and 24 (Photo credit: Wikipedia)

This is why people continue to watch the talking heads on the business channels. And why shows like Jim Cramer are so popular.

Everyone wants to have the best investments, only making money and avoiding all losses. This futile exercise will only add anxiety to your life.

To repeat…..No one can consistently predict the future.

When someone is right on a prediction it is a matter of luck and not skill or knowledge. Free markets are random and unpredictable.

Free markets left to their own devices set prices better than any individual or committee. They incorporate all of the knowable and predictable information in the present, as well as knowable information about the future.

Only unknowable future news and information can change prices going forward.

Rather than attempting to predict the future use your time and resources to improve your skills, either career or life.

Your investments are best allocated by owning equities, globally diversify and rebalance.

Follow these three simple rules and you will succeed in reaching your long term goals.

The problem really is when a stock picker or broker gets hot. People pour money into them to join the ‘party’. Problem really arises when the hot picker or broker cools off and lose money.

As an example Bill and Hillary Clinton’s son-in-law started a hedge fund less than 2 years ago and has since closed it. Why? Because the fund lost 90%. Hot then Not.

I call this musical brokers.

If you are serious about making your money last and grow with a certain degree of consistency. You need to fire your broker/agent and hire an investor coach/fiduciary advisor.

Your fiduciary advisor will help find the level of risk you are comfortable with and that helps reach your goals.

Your portfolio will be globally diversified. In my case the portfolios also have a small cap and value cap tilt. Regardless of this, a globally diversified portfolio will underperform at times.

This is where many investors stray off course. They then believe the globally diversified portfolio is no longer working. Or some broker shows them an outperforming strategy.

There is no strategy that will always outperform. But switching from one strategy to another will lead to poor results in the long term.

To remain disciplined during underperforming periods work with an investor coach/fiduciary advisor.

Process, consistency and discipline work. Free Markets Work.

Timing The Equity Markets Is Really Hard..

It seems the financial media is full of ‘professionals’ proclaiming their ability to time the market. That is, get out of the market when their ‘signal’ says to and get back in when their ‘signal’ says to. These ‘experts’ proclaim that because it happened in the past when this or this happened it will happen again and again.

During my years of watching the equity markets I have found that history does NOT repeat itself.

In order for history to repeat itself thousands of variables would need to perfectly align. While I cannot say this is impossible I will say it is extremely unlikely.

Below is an excerpt of an article on market timing. Weston Wellington is Vice President at Dimensional Fund Advisors. In it Mr. Wellington discusses the folly of investors and advisors and money managers trying to market time.

All timing strategies face a fundamental problem: Since markets have generally gone up more often than they have gone down in the last 90 years, avoiding losses in a down market runs the risk of avoiding even heftier gains associated with an up market. A successful timing strategy is the fountain of youth of the investment world. For decades, financial researchers have explored dozens of quantitative indicators as well as various measures of investor sentiment in an effort to discover the ones with predictive value. The performance record of professional money managers over the past 50 years offers compelling evidence that this effort has failed. Despite this evidence, the potential rewards of successful market timing are so great that each new generation sees a fresh group of market participants eager to try. Searching for the key to outwitting other investors may be fun for those with a sense of adventure and time on their hands. For those seeking the highest probability of a successful investment experience, maintaining a consistent allocation strategy is likely to be the sounder choice.

Weston Wellington September 2014

Remember short term success is no substitute for long term research.

While avoiding losses and participating in most of the gain sounds enticing. It will lead to poor results over the long term. Investors are looking for stock market returns with Treasury bill risk what they end up with is Treasury bill returns with stock market risk.

In my opinion investors would be better served by firing their broker/agent and hiring an investor coach/fiduciary adviser.

Your coach will help you remain disciplined during the inevitable equity market downturns.

While there are those that believe they can do it themselves. Most if not all find that they do not have the emotional strength to go it alone. If you think professional advice is expensive wait until you find out how much free advice will cost you.

Prudent process beats predictions over the long term.

Stop empowering Wall Street and take control of your financial future.

We Will Have A New President..Then What?

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.

speaking at CPAC in Washington D.C. on Februar...
speaking at CPAC in Washington D.C. on February 10, 2011. (Photo credit: Wikipedia)

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.

When Is The Best Time To Be Prudent?

When is the best time to be prudent? Most investors respond, “It is always the right time to be prudent.” And they’re exactly right.


If imprudent risk-taking and speculation has cost you money, the worst thing that you could do is participate in imprudent, speculative, and risk-taking activities going into the future.

An assortment of United States coins, includin...
An assortment of United States coins, including quarters, dimes, nickels and pennies. (Photo credit: Wikipedia)

If you are using an adviser or you do it yourself these three activities you are speculating and imprudent.


  • Stock picking
  • Market timing
  • Track record investing (picking fund managers based on past performance.)


We as investors have been taught these three activities are what investing is about. The financial media and the large brokerage firms and even insurance companies have convinced investors this is investing.


There are numerous studies proving that the above activities do not benefit the investor. But rather benefit the large brokerage firms, banks and insurance companies.



So why do people often insist on continuing with the imprudent behavior? Because to admit that there’s a better way, they, in effect, have to admit that they were originally wrong.


To admit that our own behavior or decisions were ill-founded in the past is threatening to the personal ego. This realization can be extremely painful to deal with.


For many people, it is easier to make a bad decision even worse by continuing the destructive process than to face it head on.


There is a better way. A prudent process that incorporates academic and scientific research. Some of which have won the Nobel Prize in economics.



The opportunity, here, is to realize that you are not your decisions, and just because you made an improper, or imprudent decision in the past, does not mean that you are less of a person, or less intelligent.


As a matter of fact, it’s a sign of intelligence and growth to solve and put an end to a destructive process when you become aware that it exists.


To succeed in investing you must own equities…..globally diversify……rebalance.

What? Another Crisis…

Numerous times over the Christmas holiday investors have asked me if they should sell their stocks because of a crisis around the world. As with all ‘crisis’ events I said no, you should remain disciplined to your investment policy statement and rebalance.

There is constantly a crisis somewhere in the world. There will be other events both good and bad that will send shock waves, both up and down, into the stock markets.

This time, believe it or not, the markets are pulling back because the price of oil is dropping. It wasn’t long ago that the markets responded negatively to oil prices going up.

That is the point, there is no way to consistently predict market movements over the short term.

Keep in mind that in order to realize the superior long term returns of the equity markets we must control our emotions in both up and down markets. Warren Buffet has a saying I find helpful.

“Be greedy when others are fearful and fearful when others are greedy”.

In other words control your emotions there is no get quick rich scheme. If the ‘experts’ actually could predict the future why would they tell you? Fund managers, hedge funds managers, stock pickers, market timers all need investors to believe that someone can and does beat the stock market.

This is all part of their marketing strategy. When a manager actually does beat the market, (luck will allow some to win), the marketing department goes to work.

Unfortunately for investors there is no evidence that past performance correlates into future success or future losses.

Shows like Jim Cramer’s are based on their entertainment value and not on their value to investors. Investing is not a game as they make it appear. To succeed in investing for the long term you should own equities…..globally diversify….rebalance.

Any time or money you spend trying to beat the market is time wasted. Time which you could be spent improving your job skills or developing new job skills or spending time with family and friends.

So turn 2016 into the year you become an investor and not a speculator. Hire an investor coach and reduce your investing anxiety and improve your long term results.

Celebrate Bad Markets….What??

It seems the financial media publishes what I call financial pornography.

Every day we hear more bad news about our economy and more bad news from “Wall Street”.

No matter how much we believe that the free markets work and how much faith we have in the underlying system there will be stress in our lives about the future.

Currently, we are experiencing a substantial downturn not only here is the U.S. but around the world.  The financial media is making a huge display of how bad the market is. Their concerns for the current downturn and future performance are scaring many investors. These investors are selling in fear.

There are ‘experts’ extolling their prediction was correct. You will hear them say ‘see I told you so’. Keep in mind if a large number of ‘experts’ are making all sorts of predictions someone is going to be right.

It is not skill that they broadcasting but rather that they are the lucky ones. The equity markets here and around the world are random and unpredictable.

We must refuse to be a victim.

In his book former General Electric CEO, Jack Welch points out that feeling sorry for ourselves in one of the most destructive and energy sapping behaviors you can engage in. yes, it’s unfair that the markets are insane and some people are unreasonable.

We must accept this for the reality that it is and move on.

Every minute engaged in self-pity is one too many.  In the words of Jack Welch, “Refuse to be a victim”.

Develop a scientific, evidenced based strategy for investing and believe that the “bad times” will not last forever.  Believe it or not we must also remember that “good times” will not last forever.

If the markets never went down, investors would not be rewarded with good returns over the long term. The downturns should actually be celebrated because we can rebalance and buy stocks at a cheaper price.

Without risk there will be no or little return.

To succeed in investing for the long term we must own equities…..globally diversify …rebalance!

For all of us this will involve keeping our emotions in check. This proves impossible for most investors. The solution is to work with an investor coach/fiduciary adviser.

It is during down markets as well as extreme up markets that your coach will earn their fees. Allow them to earn these fees by being ‘coachable’.

Academia Or Wall Street…Who Has The Answer?

As we approach the 2016 presidential elections. There are predictions popping up as to who will win. And how will it affect the equity markets?

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

What will happen to stocks if Hillary Clinton wins? Or what will happen to stocks if Bernie Sanders wins? Or Donald Trump? Or Ben Carson? Or Scott Walker? Or Marco Rubio? And the list goes on and on.

No one really knows.  Let’s pray that the American public makes the right choice. And the right choice is available.

More than at any time in our history….we need strong leadership.

That said, we must stop listening to Wall Street regarding what to do with our portfolio. Should we sell? Should we buy? What should we buy? What should we sell? Wall Street doesn’t really care. All they care about is that you trade. Most investors don’t know what to do.

All that you know is what the brokerage community or financial press wants you to know. They have trained you to accept their version of reality – over the span of your entire life.

There is a complete body of investing knowledge developed in the halls of academia.

Most people do not even know that it exists. This is the real wisdom you need to learn in order to create wealth and abundance.

Rather than looking for the next great trade or asset class, invest in a portfolio based on Nobel Prize winning research. Instead of researching investments, your time will be much more efficiently spent on improving your job skills, or learn a new skill set leading to a new career, or even better, spending time with the important people in your life.

Perhaps you should look at your investments with a goal in mind rather than short term performance results.

Taking a long term view of your portfolio will reduce and perhaps even eliminate your anxiety.  Remember a disciplined investing strategy will outperform all trading strategies, long term.  Stop looking at your investments through the short term eye of a gambler.

Take control of your investments…don’t empower Wall Street.

Successful investing requires discipline along with following three simple rules, own equities…..globally diversify…..rebalance.

Although simple these rules have proven very difficult for investors to follow. In most cases it requires the help of an investor coach/fiduciary adviser.

Is Silver The Answer?

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.

Map of Wall Street and the surrounding streets...
Map of Wall Street and the surrounding streets Trinity Church Bank of New York Building NY Stock Exchange Federal Hall Trump Building Cocoa Exchange (1 Wall Street Court) (Photo credit: Wikipedia)

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.

To Be or Not To Be A Fiduciary!!

The debate continues on setting the fiduciary standard for all advisers working with retirement plan participants.

Perhaps a little background on the fiduciary standard vs the suitability standard is in order.  The suitability standard which applies to all brokers of brokerage firms and insurance agents. This standard is one that allows the advisor to make recommendations to the client that may or may not be in the client’s best interest.

What this really means is the broker/agent only needs to determine if the product is suitable to the client. These broker/agents are not accountable for these recommendations.

As an example, the broker/agent is selling a U.S. Large Cap Growth Fund to the investor. That fund can be their firms’ proprietary fund which may have a higher cost and poor performance. There are better alternatives, but because the U.S. Large Cap Growth Fund is suitable for the client. The broker/agent can sell the higher priced, lower quality fund to the client. Thereby, providing more fees to the broker/agent and their brokerage/insurance company.

As you might guess the fiduciary standard requires the adviser to use the fund which is in the best interest of the client. This would include all solutions recommended by the fiduciary adviser.

Registered Investment Advisory firms follow the fiduciary standard.

All solutions must be in the best interests of the client. This however is not a guarantee of performance.

Another example, if someone age 55 to 59 is leaving their company. The adviser should not rollover the 401k to an IRA. Because when in a 401k and unemployed 55- 59 year old can take a withdrawal without the penalty for withdrawal before age 59 ½. If you rollover to an IRA you lose this privilege.

The broker/agent would gladly perform the rollover now, without regard to penalty.

The Department of Labor has recommended a fiduciary standard for everyone dealing with retirement plan assets. This has met with substantial opposition from Wall Street and insurance companies.

The question becomes, why is Wall Street and insurance companies dead set against being held to the fiduciary standard? Shouldn’t/isn’t all financial products recommended be in the best interest of the client? What are they hiding from the consumer?

There are a number of potential answers to this and many other questions. It would require extensive training of all representative. Along with a substantial increase in supervision by the firms. Some products generate substantial fees, though suitable, are not in the best interest of the client.

Many brokerage/insurance firms hire a large amount of people knowing that only a small percentage will succeed in reaching sales goals.

With the fiduciary standard this strategy would put the firms at a high level of liability. They would be required to train and screen much more carefully. This in turn would reduce sales.

Their argument is that with this screening there would be less brokers/agents and less people would be ‘helped’.

I believe that the fiduciary standard would result in the lower quality products being dropped. More attention would be paid to quality rather than quantity.

Unfortunately, our Congress has decided to defund the DOL with regard to establishing the fiduciary standard. Remember Wall Street and the insurance companies have a vested interest in avoiding the fiduciary standard. These groups will pay dearly to prevent a true fiduciary standard.

Regardless, of the outcome, I believe investors should seek out advisers willing to agree in writing, to serve the client based on the fiduciary standard. And not a watered down version.

Your financial future may depend on it.