Everyone wants to beat the market. Very few investors do. Your friends at Black Swan Management, LLC are always on the lookout for information that will make the road to the riches a little bit smoother.
If the stock market doesn’t go up much, your index fund won’t bring big returns. Robert Hagstrom of investment firm Legg Mason says you should use actively managed funds.
Why do some people ‘’make it” and others can’t? What are the secrets to success? Why didn’t all of that schooling teach you anything about money? For the last 20 years, I have been observing and studying the lives of successful individuals and I have noticed some commonalities that may provide some insight for those of you looking to increase the odds of success in whatever endeavor you may be pursuing. I will be talking about these insights in this series, which we at Black Swan Management, LLC like to call The Keys to Success.
Anthony Sills, CEO Think about the last time you really accomplished something big . . . what was it? Why were you successful?Some people believe that success is really about being in the right place at the right time, and they’re (kind of) right. But that’s not really success; it’s more of a mirage. Successful people are in the right place at the right time…but not by accident.
Everyone wants success, but few find it.
Each year hundred books are published about your lack of success. And each year these books promise to get you on the right track for a life of achievement. Millions are spent on training materials, seminars, and courses. And while some are no doubt beneficial (I have read hundreds of these books and gone through dozens of these courses personally), much of the information is destined to collect dust on a shelf in the closet or to be sold as a used book at a garage sale for most people.
And the majority of the people who buy these programs and literature fail. Why?
They want to be successful….just not bad enough.
Think about it. If you ask 100 people if they would like to be a millionaire, or if they would like a new car, many of them will say ‘yes’ but if you ask the same 100 people if they would be willing to work an extra ten hours a week to get that $1M or that new car, how many would say ‘yes’?
There is no ‘silver bullet’ to achieving your goals. The real difference between those who ‘make it’ and those who don’t is HARD WORK. The love of what you do, combined with your belief in what you do, will not determine your success. It will determine how hard you will work and how dedicated you will be to achieve it. Success just shows up from there. Here are some suggestions from your friends here at Black Swan Management, LLC to get you started on your journey of personal development—and remember, the keys to success are hard work, belief in yourself and your abilities, persistence, and the determination to succeed!
We’ll be discussing more tips and techniques for personal development and being successful in Part Two of The Keys to Success but for now just remember that, as Jim Rohn says, “When you know what you want, and you want it badly enough, you’ll find a way to get it.”
About the Author
Anthony Sills, M.B.A. formerly traded FOREX from the Atlanta Financial Center and has worked for stock advisory services, brokerages, Fortune 100 companies, and national banks. Mr. Sills is currently a licensed loan officer and freelance writer. You can reach him at anthony@BlackSwanManagementLLC.com.
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*http://www.cms.hhs.gov/emtala/
**http://www.amjmed.com/article/S0002-9343(09)00404-5/fulltext
***Based on a survey of the most affordable health insurance options available as quoted on ehealthinsurance.com on 01/11/10 for non-smoking 25-year-old males and females in the following states: AZ, CA, FL, GA, IL, IN, MI, MO, NC, OH, PA, TX, VA, WA. Does not apply to residents of New York, NY and Trenton, NJ.
****Subject to the terms and conditions of the plan’s cancellation policy.
About the Author
Anthony Sills, M.B.A. formerly traded FOREX from the Atlanta Financial Center and has worked for stock advisory services, brokerages, Fortune 100 companies, and national banks. Mr. Sills is currently a licensed loan officer and freelance writer. You can reach him at anthony@professionalpenwriters.com. Mr. Sills has been published in various trade journals and newsletters, writes regularly for BestGolfWebsite.com and BetterCredit101.com, and is a ghostwriter for several small business owners and professionals. You can reach him at anthony@professionalpenwriters.com
Jan 29
Part One
“Rule No.1: Never lose money. Rule No.2: Never forget rule No.1”
–Warren Buffett
Follow these directions on your road to safety
Let’s take a moment and step away from technical analysis, stock tips, and high finance. Let’s talk about something that’s not quite as ‘sexy’ but is infinitely more important in your day-to-day dealings as an investor. Cash management and safety.
According to full-time trader and author Karl Denninger, “Return of capital is more important than return on capital. Put another way, the first rule of investing is “don’t lose money!” Everyone wants to chase a winner; this, unfortunately, is why most investors lose compared to the markets over time.”
The first thing an investor must master is The Art of Not Losing Money.
Most investors only focus on the possible gains to be made. Learning not to lose money sounds boring and we all want to make the big bucks when investing, but the fundamental skill that you must have as an investor is the ability to protect your capital and the patience to wait for the right opportunity in which to invest that capital. Any full-time trader (or professional gambler for that matter) will tell you that it’s fine to have the know-how, but if you don’t have a bankroll—you’re out of the game!
Most investment books and magazines will have plenty of articles about investment strategies, investment gurus, and investment advice. Few will tell you the naked truth—without something to invest, you will never be able to take advantage of the opportunities that come your way.
Karl Denninger feels that it’s “… fine to speculate with money you can afford to lose, but your core capital should never be exposed to a market that is trading on bubble economics unless you’re close to the door and can leave fast – and for most investors that’s not possible with their “long-term” funds. The key to long-term outperformance (the real goal in any such portfolio) is to STAY OUT during times like this, and take advantage of long-term (and deferred) tax advantages during periods when the markets are trading on fundamental value.”
Think about this for a minute: If you lose 50% in the market, you need to get a gain of 100% just to get back to even. How often will the market go up 100%? It will likely take many years. But, if you lose 20% in the market, it only takes a 25% gain to get back to even. 20% is still a lot, but a 25% rebound in the market is certainly a reasonable expectation and can be achieved in one year’s time.
The Oracle of Omaha
Managing your cash really boils down to discipline.
Just remember that as an investor, your bankroll is your lifeblood. Without it you can’t invest – it doesn’t get any simpler than that. Despite this simple truth, many people don’t see mastering The Art of Not Losing Money as a skill of the same importance as being able to calculate ROI or analyze emerging markets. All the investment strategies and hot tips in the world don’t mean anything, though, if you don’t have money to invest.
About the Author
Anthony Sills, M.B.A. formerly traded FOREX from the Atlanta Financial Center and has worked for stock advisory services, brokerages, Fortune 100 companies, and national banks. Mr. Sills is currently a licensed loan officer and freelance writer. You can reach him at anthony@professionalpenwriters.com.
Do you have enough money to retire? Have you invested wisely? Do you need a better mortgage? Need somebody to hold your hand during these uncertain days in the stock market?
Well, our friends at Kiplingers Personal Finance Magazine are teaming up with fee-only financial advisors to provide two days of free help to anyone who calls in or visits their web site. This is the ninth year Kiplingers has offered this service, which usually attracts thousands of consumers with questions. Nothing is being sold. They’re simply providing for free what you’d normally have to pay up to $300 an hour to get–unbiased advice aimed at helping you negotiate some of life’s more complicated financial challenges.
“Month after month, we offer our readers solid advice on how to manage and invest their money,” said Kiplinger’s Personal Finance editor Janet Bodnar. “We are delighted to be able to go the extra mile by providing one-on-one financial advice through our partners at NAPFA.” (NAPFA stands for National Association of Personal Financial Advisors and it’s the top trade group for financial planners who earn their living based on charging fees, rather than selling you something that pays them a commission.)
The first free day is today–Jan. 22–starting at 9 a.m. Eastern Time (6 a.m. Pacific) and going until 6 p.m. Eastern. The second will be held next Tuesday, Jan. 26, during the same time slots.
To get access to the free advice by phone, call 888-919-2345.
If you would rather do a live chat on the web, the addresses are: www.kiplinger.com/links/jumpstart/ or http://www.napfa.org/
The following post is an excerpt from an article written by Anthony Sills entitled Everything You Need to Know About Investing You Learned Playing Monopoly
Rich Uncle Pennybags a.ka. Mr. Monopoly
Now that some of the euphoria surrounding graduation has worn off it may seem like ‘reality’ is starting to set in. And the reality is no one taught you what to do with all that money you’ll be making out in the ‘real world’. Well, fear not because everything you need to know to manage your money, and even become a successful investor, you learned a long time ago playing Monopoly!
So you’ve graduated and maybe you even have a job. What now? If you’re like most of us, you were always told to go to school, get a job, work hard, and save your money but no one ever told you what to do with the money. That’s okay. Everything you need to know about managing money you’ve know since you were a kid. Avoid being cash poor, invest your money wisely, and be prepared for the unexpected. It’s all about capitalism. Efficient use of one’s money makes for good capitalism and all that requires is some basic math.
Just like in Monopoly, you need to start the game focused and take control early. After all, you don’t want to just pass the time, you’re trying to win!
First thing you need to do is figure out your goals. What do you want out of life? Whether you’re absolutely certain, or don’t have a clue what you want, the important thing is to start thinking about it. That way you can develop a plan that will help you get there. There’s no time like your twenties to start putting your money to work for you so that you can achieve your financial goals throughout your life. Developing good spending and saving habits, and learning to budget and invest during your twenties, can help you prevent needless debt, and allow you to put away money for the things that are important to you. Not to mention you can take advantage of the power of compounding (beginning the game focused and taking control early) to start building a nice nest egg.
In fact, compounding of earnings is so powerful that those who start saving for retirement in their twenties can amass large nest eggs with relatively little effort, as long as they invest regularly.
For an example of the power of compounding, take a 25-year-old who invests $2,000 a year for eight years and never invests an additional dollar after the age of 33. He or she will earn more by the age of 65 than a 35-year-old who invests $2000 a year for 32 years, even though the 35-year-old invests four times as much.
Or consider this: Someone who puts $4,000 a year into retirement accounts starting at 22 can have $1 million by age 62, assuming 8% average annual returns. Wait 10 years to start contributing, and you’d have to put in more than twice as much — $8,800 a year — to reach the same goal.
Think about it.
Another benefit to starting early is that you want to invest as much as you can. Take advantage of employer contributions and matches to retirement accounts. Start to study investments and how money works. At least learn enough to know what’s going on with your money and the people that handle it (investment advisors, accountants, banks, mortgage companies, etc.). If your employer offers a 401k or other retirement plan, sign up for it and contribute as much as you can. If not, start contributing to a traditional or Roth individual retirement account. Aim to put aside 10% to 15% of your gross pay. Contributing every dime you can now will give you flexibility when you’re older, either to retire early or to cut back your contributions so you can cover other expenses (like future children’s college educations) without derailing your retirement plans.
Just like in Monopoly, even a well-planned strategy is still subject to Murphy’s Law. So be prepared. There’s no such thing as a good time for a bad thing to happen. That’s why it’s important to set aside funds for unexpected expenses that may result from an accident, temporary unemployment or major health related expenses.
You should be saving as much as you can, and optimally have three to six months living expenses (rent, transportation, bills, etc) earning interest somewhere relatively accessible in case of emergency. Start small. Add to your reserve when you get a raise—or when you receive a tax refund, a gift of cash or a rebate.
Get health insurance. You’re one accident or illness away from financial disaster if you don’t have coverage. If your employer doesn’t offer insurance, try to buy an individual policy. Opting for a high deductible can keep the monthly premium down but still offer you protection from catastrophic medical bills.
In future editions we will discuss Why No One Gets Rich Renting, Income Taxes, Investment Strategies, Real Estate Investing, Mortgages, Winning A Zero-Sum Game, and Bankruptcy.
Monopoly® and Rich Uncle Pennybags (a.ka. Mr. Monopoly and Milburn Pennybags) are registered trademarks of Hasbro, Inc. All rights reserved.
About the Author
Anthony Sills, M.B.A. is a veteran of the financial services industry having formerly traded FOREX from the Atlanta Financial Center and worked for stock advisory services, brokerages, Fortune 100 companies, and national banks including Bank of America and Washington Mutual. Mr. Sills is currently a licensed loan officer and freelance writer. He is considered a FHA and FTHB expert as well as an authority on real estate investing. You can reach him at anthony@bettercredit101.com.
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