Forty Years of Investor Mistakes

Forty Years of Investor Mistakes

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Happy St. Patrick’s Day!

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Where are we now?

Before I expound on the market I want to give you and update on “40 Years of Investor Mistakes” my new book. We are planning for a late April release date. This has been a labor of love; emphasis on labor. I will provide updates and excerpts as we get closer. We will also have some book signings and lectures.

New satellite office is now open in Colleyville TX at:

Tivoli Court Law Office

1205 Hall Johnson Rd

Colleyville, TX 76034

I have wanted a more convenient meeting place for clients in the north east Tarrant county area and also provide me a quiet place to work after hours and weekends.

We are also revamping the website and client relationship system to provide a more streamlined client contact experience. I will announce the rollout when they are up and running.

Now let’s discuss the markets. This was an interesting weekend for the financial journalist. The consensus was that Monday was going to be a rough day for the averages and I will have to admit even I was expecting a pull back and looking for some buying opportunities. Well the market really faked us out since we are now up almost 200 points on the Dow and 20 points on the S&P.

What does that tell us? Well the first rule is market predictions are dangerous to your portfolio and your reputation. That is why you didn’t hear me expounding the fear that a majority of the prominent prognosticators were giving us this weekend. I still maintain a cautiously bullish approach and since this is the first triple witching of the year this Friday expect volatility to rule.

Now you know I don’t give much credence to the Dow, however it is lagging the other averages for the year with a 2% loss. From a physiological standpoint and since most of the retail investors make their investment decisions based on this index we need to go positive to bring animal sprites back to the market.



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Wise Decisions with Retirement in Mind

Certain financial & lifestyle choices may lead you toward a better future.


Some retirees succeed at realizing the life they want, others don’t. Fate aside, it isn’t merely a matter of stock market performance or investment selection that makes the difference. There are certain dos and don’ts – some less apparent than others – that tend to encourage retirement happiness and comfort.


Retire financially literate. Some retirees don’t know how much they don’t know. They end their careers with inadequate financial knowledge, and yet feel that they can plan retirement on their own. They mistake retirement income planning for the whole of retirement planning, and gloss over longevity risk, risks to their estate, and potential health care expenses. The more you know, the more your retirement readiness improves.


Retire knowing that you’ll have to assume some risk. Growth investing is increasingly seen as a necessity for retirees who want to keep ahead of inflation.


According to data and research compiled by the Social Security Administration, the average 65-year-old man will live to be 84 and the average 65-year-old woman will live to be 86. So that’s a 20-year retirement. The SSA also notes that roughly a quarter of today’s 65-year-olds will live past 90, and about 10% of them will live beyond age 95.1


If these seniors rely on fixed-income investments for the balance of their lives, they may end up with reduced retirement income potential, and in turn a reduced standard of living. Look at the Rule of 72: if an investment is yielding 2%, it will take about 36 years to double your money. Yes, interest rates are rising – but inflation should rise with them.2


A generation ago, mature Americans were urged to gradually shift their portfolio assets out of stocks and into fixed-income investments. One old rule of thumb was to subtract your age from 100, with the resulting number being the percentage of your portfolio you should assign to equities.3


Today, retirees and retirement planners are reconsidering this thinking. As the Wall Street Journal reported recently, one study of retirement money and longevity risk concluded that retirement funds may last longer if a retiree gradually increases the stock allocation within a portfolio about 1% per year from an initial range of between 20-50% to between 40-80%. The concept here is that a retiree’s stock allocation should be lowest when their retirement nest egg is largest.3


Retire debt-free, or close to debt-free.  Who wants to retire with 10 years of mortgage payments ahead or a couple of car loans to pay off? Even if your retirement savings are substantial, what will big debts do to your retirement morale and the possibilities on your retirement horizon? On that note, refrain from loaning money to family members and friends who seem quite capable of standing on their own two feet.


If the thought of using some of your retirement money to pay outstanding debts hits you, set that thought aside. You have dedicated that money to your future, not to bill paying. On second or third thought, other sources for the cash may be apparent.  


Retire with purpose. There’s a difference between retiring and quitting. Some people can’t wait to quit their job at 62 or 65 – their work is “killing” them, or boring them senseless.  If only they could escape and just relax and do nothing for a few years – wouldn’t that be a nice reward? Relaxation can lead to inertia, however – and inertia can lead to restlessness, even depression. You want to retire to a dream, not away from a problem.


A retirement dream can become even more captivating when it is shared. Spouses who retire with a shared dream or with utmost respect for each other’s dreams are in a good place.


The bottom line? Retirees who know what they want to do – and go out and do it – are contributing to their mental health and possibly their physical health. If they do something that is not only vital to them but important to others, their community can benefit as well.


Retire healthy. Smoking, drinking, overeating, a dearth of physical activity – all these can take a toll on your capacity to live fully and enjoy retirement. It is never “too late” to quit smoking, quit drinking or slim down.


Retire in a community where you feel at home. It could be where you live now; it could be a place hundreds or thousands of miles away where the scenery and people are uplifting. It could be the place where your children live. If you find yourself lonely in retirement, then “find your tribe” – look for ways to connect with people who share your experiences, interests and passions, and who encourage you and welcome you. This social interaction is one of the great intangible retirement benefits. 


This material was prepared by MarketingLibrary.Net Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.



1 – [2/6/14]

2 – [2/6/14]

3 – [2/3/14]

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Back At the Starting Gate

After a normal pull back in January we are almost back to where we started at the end of December. I’m always amazed when investors and clients experience a pull back from an outstanding year and their nerves get a little on edge and they worry about a big downturn. These are what I call the “Nervous Nellie Club” and when the phone calls start I know that the market is bottoming. This is exactly what happened last week. As I have stated before 5% corrections are a normal occurrence and happen with regularity since 1945.

This is an unusual time in the equity markets. One of my basic disciplines is the psychology position of the retail investor. As of now there is still a lot of positive climate in the markets going forward while valuations are very attractive for entry points and monetarily the Fed is very accommodating. The usual practice is that when everyone wants in I start taking profits and vice versa. However, the market continues its’ bullish run.

If we go back and look at 2004 the SPX ended the year at 1211.92 and the conditions were similar on the three disciplines mentioned above. As of this writing the S&P is at 1840 and in a bullish trend. There is an old saying the trend is your friend and since history has a way of repeating itself the bull is still on his feet.

Volatility will continue and it will test the nerve of some investors but it will probably settle down as we approach the middle of the year and moderate gains will be experienced. If you are properly diversified and rebalancing this volatility begets the trend is your friend theory.

As many of you know I have written a book which should come out in April. Check our web site for updates and excerpts to perk your interest.


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Stocks hesitate as expected after a strong rally

U.S. stocks had a great run in 2013 with major indices up 27% to 38%, but that momentum lost a bit of steam in January and the first hours of February trading. The pullback toward the end of January seems to reflect investor concern about turmoil in emerging markets in general, and specifically, about a drop in Argentina’s currency and a deceleration of Chinese manufacturing.

In other news, American manufacturing also retreated in January, expanding at a slower pace than in previous months, according to the Institute for Supply Management’s factory index. And the Federal Reserve announced that it would trim $10 billion from its bond-buying program. Janet Yellen, who was confirmed as Ben Bernanke’s successor, officially took the helm at the central bank and is expected to continue the gradual tapering, barring any major changes to the economic and jobs outlook. In addition, the government estimated that real gross domestic product grew at an annualized rate of 3.2% from the third to the fourth quarter of 2013, buoyed by a rise in consumer spending. Of course, that data is subject to revision, so we’ll continue to monitor this and any other economic data that could affect the markets.

Market watchers seem to agree that a softening was to be expected given the years-long rally among the stock markets, where we’ve seen the S&P 500 gain as much as 173% since its 2009 low. After last year’s great run, the S&P 500 declined 3.6%, the Dow fell 5.3%, and the Nasdaq slipped 1.7% in January.


12/31/13 Close

1/31/14 Close













S&P   500





Jeff Saut, Raymond James chief investment strategist, explained that the history of 40%+ rallies, like those seen since the June 2012 lows, is tactically followed by a pullback of between 5% and 7% over the next three months, and a 10% to 12% pullback sometime over the next 12 months. He cautions, though, that those numbers should be seen in context of the secular bull market that has brought gains in the double and triple digits over the past five years. Despite looking for a pullback to begin in late-January or early-February, his outlook for 2014 remains optimistic as he notes, “Things are getting better, just about on all fronts.”

Please feel free to reach out to us if you have any questions about the economy, the financial markets and how they may impact your long-term financial plan. We look forward to speaking with you.


Investing involves risk, and investors may incur a profit or a loss. Past performance is not an indication of future results. Investors cannot invest directly in an index. The Dow Jones Industrial Average is an unmanaged index of 30 widely held stocks. The NASDAQ Composite Index is an unmanaged index of all common stocks listed on the NASDAQ National Stock Market. The S&P 500 is an unmanaged index of 500 widely held stocks. The performance mentioned does not include fees which would reduce an investor’s performance.

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Surprise, Stocks Do Go Down!

It has been a few weeks since I put out some commentary on the market and 2014. The bulls to bears are just about even so we have a 50% chance of going up and a 50% chance of going down. Now that the great year of 2013 is slowly fading in our minds; I am starting to receive the “nervous Nellie calls” about what looks like to be a normal correction in a secular bull market. Remember my mantra: bull markets don’t end until money dries up-and that is far from tapering.

One of the indicators I use is the contrarian signal. It shows that the retail investor always has perfect timing of coming back in the market at the height of overbought conditions. This is exactly what happened in January with an increase of retail investor’s activity rising 30%. We have done very little buying in fact we have been “pruning” (taking profits) just like an arborist does to trees so that he will get better blooms in the spring.

There has been a 5% correction every quarter for the past few years but it has been somewhat masked by buyers stepping into the market. What is upsetting the investors today is volatility has not been a factor for the last two years and now we are seeing 300 point moves.

Taking a long term view what we are going through now is healthy for the long term and wealth creation. This repricing will end and the next leg up for the secular bull market will continue. The biggest mistake that investors make in markets like this one is being too bearish and selling. I have always erred on the side of being too bullish because I look at where my portfolio will be at the end of the year instead of the end of the week. I am looking for entry points not exit points. This is not 2008 and no one is talking about recession (in fact GDP going forward is showing improvement even better than most think).


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