Investing


Many of the things you think you know about investing are part of a mythology designed to make you bounce around between investment products. Modern day “conventional wisdom” just isn’t all that its cracked up to be. Concepts you worship are inaccurate; indices and averages you trust do not tell the complete story; the basic investment concepts still work — but Wall Street won’t tell you what they are.

It’s time to determine your investment IQ, here’s the deal:

Just take the True-False test below and send me an email list of the statements you feel are generally TRUE — please refrain from including any rationale or explanation. If you don’t get 80% or more correct — you need help.

Here we go: Generally speaking, are the following statements mostly True or mostly False? Note: you’ll do better if you research terms that you are unfamiliar with. Terms in “quotes” have very specific meanings in the Market Cycle Investment Management/Working Capital Model methodology.
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During the past sixty years, most economic, market, and interest rate cycles have lasted from two to five years, peak-to-peak. Rarely have any of the cycle-tracking market indices moved in tandem, and none of the cycles are considered to be particularly predictable.

Individual securities (the stuff that indices are made of) complicate things significantly by having even less predictable cycles of their own. This generally uncertain atmosphere is the very nature of the financial markets. If investors could come to grips with the non-calendar, cyclical, nature of markets, it is likely that they could improve their investment performance considerably.

In spite of decades of irrefutable evidence to the contrary, Wall Street has convinced most investors and far too many financial professionals that the calendar year is somehow investment relevant. Simple, yes; tax-code friendly, perhaps; but investment realistic— not.

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A participant in the morning Working Capital Model (WCM) investment workshop observed: I’ve noticed that my account balances are returning to their (June 2007) levels. People are talking down the economy and the dollar. Is there any preemptive action I need to take?

An afternoon workshop attendee spoke of a similar predicament, but cautioned that (with new high market value levels approaching) a repeat of the June 2007 through early March 2009 correction must be avoided— a portfolio protection plan is essential!

What are they missing?

These investors are taking pretty much for granted the fact that their investment portfolios had more than merely survived the most severe correction in financial market history. They had recouped all of their market value, and maintained their cash flow to boot. The market averages remain 40% below their 2007 highs.

Their preemptive portfolio protection plan was already in place — and it worked amazingly well, as it certainly should for anyone who follows the general principles and disciplined strategies of the WCM.

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Emphasize tradition and heritage in your advertising campaigns and don’t cut prices, said marketing guru, Martin Lindstrom, as he revealed his top 10 tips for the advertising during the economic downturn.

Brands that invest in marketing during a recession tend to gain market share as their competitors lose focus on their overall strategy, he said. Lindstrom was speaking in the run-up to his Buyology Symposium, held recently at Dubai. The symposium – the first time it was held in the Gulf – will cover the impact of subliminal advertising and the revolutionary influence of neuroscience in marketing.

The book, Buyology, which was released in October, is the result of a groundbreaking study on NeuroMarketing, which studied thousands of volunteers and was the largest of its kind ever taken.
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If you serach for online casinos at the moment there are thousands of casinos around at the moment, both online and land based.  But can it be done? If you search or visit the best online casino can you find a source of betting systems that don’t require you to pay $100’s up-front with no proof that they work? Can any betting system work at a casino? This site offers listings of top rated online casinos including those that accept US players and features a forum.

With the right system, and most importantly, the right discipline, it can be done. Casinos typically work to a ‘House Edge’ of 1 to 5%. For every $100 gambled, the player will lose $1 to $5. It doesn’t sound like much, but in a multi-billion dollar industry it’s enough to make online casinos some of the most profitable sites in the world, and to build Las Vegas up from nothing in just a few years.

A whole lot of people will tell you that it is impossible to overturn this edge, and from a purely mathematical point of view they are correct. The Laws of Probability mean that you cannot turn a negative into a positive. If you are playing Roulette, and Black has come up 10 times in a row, the odds of it coming up next time are still 50/50. (Ignoring the ‘0’ and ’00’) According to the Laws of Probability, there is no reason why Black cannot come up 100 times in a row. This argument, while scientifically sound, ignores the Law of Possibility, which means that in the real world, the chances of Black coming up 100 times in a row is so slight that it can be ignored.
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As impossible as it is to predict the future of the markets, it’s relatively easy to anticipate what you are going to experience when you view your next brokerage account statement.

Whether you go the discount route through Schwab, Ameritrade, Fidelity, etc., or enjoy a higher level of service through an independent like LMK Wealth Management, you should never be surprised by the market values reflected on your monthly statement.

None of the firms make it easy for you to examine asset allocation, particularly on a working capital basis, and most refuse to even acknowledge that Municipal CEFs should not be lumped in with the equities. Additionally, no brokerage statement ever includes a warning label about the dangers of margin borrowing. Surprised? Not.

But, you can be sure that all statements will emphasize (in every conceivable way) the short-term change in your market value. Any long term or cyclical analysis (if any) is reserved for the “we understand your long term objectives” propaganda that fills their prospect-only glossies.
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www.fortunewatch.com

You knew it the moment it left the club, that spark at contact when you catch it just right. You look up. It’s just reaching the top of its climb— and heading down right at the pin, a pin positioned left of center on the elevated green, much too close to the water.

This could be the one! Four mouths hang open, not a sound. Then whack, the ball strikes low on the stick and disappears; the pin wobbles; the ball is nowhere to be seen—

Moe and Curley are certain it dropped into the hole as they hurry their tee shots and rush to their cart. “My buddy Stan holed out like that at Disney a few years ago”, you hear, as they search the cooler for four cold brewskis.

Larry isn’t ready to slap you on the back yet. “With my luck”, he says, “the ball would go dead left, down the hill and into the water”. He calmly puts his tee shot on the green, far to the right of the pin— about where you were really aiming. What are your expectations? What scenario fits your game today?
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The Investment Grade Value Stock Index is a barometer of a small but elite sector of the stock market. Some Investment Grade Value Stocks are included in all averages and indices, but even the Dow Jones Industrial Average includes several issues that are below Investment Grade and very few boast an A+ S & P rating.

The IGVSI tracks a portfolio of approximately 400 stocks— and less than half of them are likely to be found in the S & P 500 average. This new market index was developed in late 2007 to provide a benchmark for the equity portion of investment portfolios managed without open-end mutual funds, index funds, or any of the other popular speculations and hedges that are included in most professionally managed portfolios.

Two related indices (the WCMSI and WCMSM) track portfolios of closed-end income funds. Between the three, they serve as an excellent performance expectation development tool for investment portfolios managed according to the disciplines of the Working Capital Model (WCM). Through July 31 2009, these indices soared approximately 24%—- about five times the growth of the S & P 500 and twelve times that of the DJIA.

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wall-street-signBefore Wall Street and the media combined to make investors think of calendar quarters as “short-term” and single years as “long-term”, market cycles were used as true tests of investment strategies over the long haul. Bor-ing.

There were four types of standard analysis used by most financial institutions, Peak-to-Peak, and Peak-to-Trough being the most common found in annual reports. There were also basic differences in purpose and perspective in the old days, and a focus on results vs. reasonable expectations for actual portfolios.

Even more boring, and not nearly as profitable for “the wizards” as today’s super Trifecta, instant gratification, speculative, mentality.

Portfolio performance analysis was intended to be a test of management style and overall methodology, not a calendar year horse race with one of the popular averages. The DJIA was (I believe) originally conceived as an economic indicator, not as a market-performance measuring device.

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golfI think it was the immortal Ben Hogan who quipped: I can put “left” on the ball and I can put “right” on the ball— “straight” is essentially an accident. Most amateur golfers would make a slightly different observation. We can hit the ball left or right with no problem; we just have no idea when either will occur.

As to straight, most of us refer to that phenomenon as “the dreaded straight ball”— and it’s this lack of straight that makes it so critical for us to master the art of working the ball. We need to understand how to move the ball left or right, consistently, on the golf course, under pressure, but without ever aiming out-of-bounds or into a lateral.

Yeah, sure, just like that.

It is doable though, and Ehow.com is a great place to start. There, at “work-golf-ball” is a simple five-step tutorial that anyone should be able to master with countless hours of range work. Of course it’s more difficult on an actual golf course, with those red and white stakes, trees, bodies of water, marsh grasses, and back yard barbequers.

To become a lower handicapper, work the ball we must— unless your name is Moe Norman. Making the shot go higher or lower than normal is another of those ball working skills that you need to master to save strokes. Mother Nature really appreciates it when you maneuver the ball below Live Oak branches and over environmentally protected “no search” zones.

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