The Power To Perform

What you need to think about, know, do, have, use, forget, and avoid to advise effectively and to invest wisely; nothing learned the hard way, do it right the first time investing.

Since 1989

mhj3.com Audio Introduction Excerpts


Investment Advising and Investing Performance Excellence

Investing Ethics

The health, the productivity, the success, and the duration of both business and personal relationships are determined by the quality, the integrity, and the consistency of knowledgeable and respectful discussions, equally beneficial conclusions, and honorable, skillful, and timely execution of mutual understandings and agreements.

Absent these vital considerations, the soul and the substance of both business and personal relationships are doomed; merely selfish, empty, wasteful, meaningless, and ultimately destructive trivialities.

Investmment Advisors

All investment advisors must first ask themselves:

  • 'Would I do business with me?'
  • 'Would I build a financial future with me?'
  • 'Would I entrust my life savings with me?'
  • 'Would an investor, Warren Buffett for that matter, agree that I know what I am doing if he were present while I went through the investment selection and investment portfolio creation and management processes in preparation for proposing his investing course of action?'
  • 'Would I invest my capital as proposed if I were to receive one of the investment plans I recommend to others?'

Investors

Investors may not be satisfied or successful while investing because they may not deserve to be satisfied or successful based on the way they manage (don't manage) the business, their business, of seeking investment advice from others or personally investing their capital in the financial markets; to build and to protect capital.

Investors' monthly statements and their investment portfolios most often look much like the 'Winchester Mystery House' without consistency, discipline, direction, continuity, control, or theme.

Investors are often exposed to 'hit and run' investment advice being sold random, isolated, sometimes frequent investment transactions with no clear investing goal in mind — adrift, results more by chance than by design.


Investing in 00:11:09;22

Modern Portfolio Theory

There is no theory — modern or otherwise — that can be ordained, no computer that can be programmed, no software that can be designed, no investing tool that can be 'imagineered,' no technical analysis voodoo methodology that can be contrived, and no equation that can be divined to quantify, evaluate, and predict the primary forces that drive the sublime chaos of the financial markets and investment prices; human consensus, mood, and behavior; intelligent and not, knowledgeable and not, reasoned and not, rational and not, and logical and not.

The premise of Modern Portfolio Theory depends heavily on one's blind, unconditional acceptance of a grossly invalid assumption; if it happened yesterday or if it happened sometime in the past, then it will — probably, more likely than not — happen today or it will — probably, more likely than not — happen sometime in the future much in the same way that it did in the past.

The error in the reasoning and the math of Modern Portfolio Theory is the failure to distinguish between 'connected and causal' variable relationships and 'contrived and coincidental' variable relationships; the 'connected and causal' variables, for example, that must be in place to cause rain or the 'connected and causal' variables that must be in place to cause investment prices to rise such as fundamentals and earnings growth verses 'contrived and coincidental' variable relationships, for example, between two investment variables such as the current or projected prices of an investment and a selected index to project the current or future value of one variable when given the current or future value of the other variable and the 'contrived and coincidental' historical relationship between the two variables; Beta; the current or projected value of an index is 'X;' therefore, because of the given historical relationship between variables 'X' and 'Y,' the current or projected price of 'Y' is/will be 'Z.' Absurd, as anyone who has spent more than a nanosecond in the financial markets would, should know.

Investments, Strategies, and Tools

There are many types of investments, investing strategies, and investing tools that are profoundly flawed, fictitious, treacherous, and often predatory. (Continue top next column)

If the techniques, tools, and theories surgeons trusted and used were of the same quality and integrity in their specific fields of medical expertise as those used by Wall Street, many investment firms, and most investment advisors — Investing Fools' Tools : Modern Portfolio Theory, Monte Carlo Analysis, Efficient Frontier Analysis, Beta, Brinson's Asset Allocation, Pie Charts, VaR, Sharpe Ratio, and a distant relative, Technical Analysisan Apple-A-Day would be a wonder drug, Ouija Boards and Crystal Balls would be considered advanced medical tools, and Voodoo, Séances, and Witchcraft would be Pulitzer Prize winning Modern Medical Theories.

If surgeons were as undisciplined in their professions as Wall Street, many investment firms, and most investment advisors are in their respective areas of advertised expertise as they advise individual investors, a few lucky patients would succeed, most patients would have surgical complications, and, many, regrettably, would not survive.

The appeal of Modern Portfolio Theory is that neither investing judgment nor investment selection and portfolio management skills are required; just search historical investment databases based on past investment performance, retrieve investments based on past investment performance, sort investments based on past investment performance, pick investments based on past investment performance and then view, print, and present and then hope that the investing past will somehow be the investing future.

Wall Street

When investments are 'packaged' into 'new and improved' investments or 'unpackaged' as derivatives by Wall Street's marketing 'imagineers' to contrive and fabricate entirely new classes of turbocharged toxic investments linked to high fee investing strategies, the value added most often accrues directly and immediately to investment firms and investment advisors in the form of increased revenues for the former and increased commissions for the later; but, without adding substantive investment value for investors at any time while, in most cases, masking added investment risk.

Investment Advisors

Investment Advisors have generally devolved from being fiercely independent, self reliant, skilled investment advising practitioners to being investment advising generalists who are merely superficially and conversationally competent in many wealth management related issues and masters of none; relying on profoundly flawed investing theories, strategies, and tools and trained to focus more on the marketing, gathering, and moving of capital than on the advising, building, and protecting of capital - products and transactions rather than portfolios and processes.

Extinction of the noble and important profession of investment advising, as we know it, is a distinct possibility because all markets eventually close, are closing the inefficiency gaps between value and price, competent and unqualified, skilled and unskilled, serving and self-serving, and, most of all, good investment advising judgment and management skills and bad investment advising judgment and management skills.

The leading indicator of this increasing and expanding trend towards extinction is the exodus of investors from traditional sources of investment advice to the ever expanding 'investment advising' Internet where, at worst, they will find for free what investment advisors offer for fees and commissions as they seek what is so rare, very hard to find, and priceless; mature investing judgment, sound investment advice, and disciplined investment management.
Leave out a step, proceed with greater, much greater investing and investment performance risks; adrift — results more by chance than by design.
Software
Where you are trying to go:
Budget, Cash Flow, Balance Sheet Analysis


Investor's CalcStation

Define the savings and investing tasks at hand; just a bump in the road, a walk in the park, or climb Mt. Everest.

How you are going to get there:
Portfolio Management


Investor's WorkStation

Create, manage, modify, monitor, measure, process, and maintain suitable, structurally sound, and competitive investment portfolios.

How well you have done:
Investment Portfolio Performance Calculator


PerfCalc

If it is measured, it will get done.

Economic Opinion

All economic opinion and market forecasting will range from terrible, to close, to a few lucky calls.

Performance

All investors are exposed to advertisements, articles, CDs, Websites, and seminars that use single investment incidences and exceptions to project incredible investment returns.

Keep in mind that those who even suggest or possibly promise annual investment returns of 100%, 50%, and 30% cannot deliver.

If the higher ranges of these investment rates of return were possible to achieve on a consistent basis, if an investor started with just $10,000.00, a quick compound capital growth calculation would show that it would not be too long before that investor would have just about all of the money in the world.

Since these returns are commonly suggested to be in the realm of possibility, the purveyors, or should I say predators, of these investment returns should not have to be promoting their investment scams, each should have about all of the money in the world by now, and there would not be any money left for either you or for me.

That said — back here on planet earth — a $40.00 equity going to just $43.00 in a year equals a 7.5% return on capital, a $30.00 equity going to just $33.00 in a year generates a 10% return on capital, or a $20.00 equity going to just $22.00 in a year and declaring a $1.00 dividend is a 15% return on capital; realistic investment return expectations for an investor seeking primarily capital growth and willing to assume moderate investing risks with occasional variances above and below these investment returns in extreme and unusual investing circumstances — best of all, as an investment advisor, you can deliver.

Investment Plans

Most standard investment plans — presented in the eye-catching wizardry of colorful pie chart, graph, and historical investment performance data-dump infested reports — offer considerable information about what investors already know about themselves and general theoretical information about the basis, the form, and the design of the investment plan; but, little about the details of the 'frame' and the 'structure' that will give an investor an investing direction and really nothing about the 'engine' that will actually drive the investor to his or her investing performance destination; the 'when, why, how, and what ifs' of investing over time.

Investment Advisors' Performance Oxymoron

Many investment advisors and investors have succumbed to the latest inane investment advising wisdom of the day; passive 'buy, hold, and forget,' untimed, unmanaged index funds, exchange traded funds investing — unknowledgeable, unskilled, undisciplined, unmanaged, untimed investing, an investing performance oxymoron:

  • Investment advisors and investors, in effect, should concede that neither one of them has the management skills nor the qualifications to manage investments and time investing and that, therefore, the best solution is that investors should buy unmanaged investments to eliminate investment management and timing; great concept, take all of your hard earned capital and invest it for the future without management or timing.

'Difficult to do does not mean; therefore, don't even try.'

  • Imagine going to Warren Buffett and suggesting to him that to improve investment performance he should no longer manage or time his investments, that, instead, he should invest in index funds in which the best he could do would be to be average — striking out, bunting, and hitting singles most of the time while never really having the opportunity to hit doubles, triples, and an occasional home run — and, worst of all, while actually assuming greater investing risks, not less, than most other investments because index funds are missing the two critical investment performance components that really matter, that actually determine investing outcomes; investment management and investment timing.

'Out of control investing,' what a great money management concept!

  • Adopting this investing strategy is tacit admission to clients that the investment advisor is unknowledgeable, unskilled, and undisciplined, that the investment advisor can't do what he/she was hired to do — bring value added to the investing performance equation — and that he/she will most likely underperform.

'True, but have you seen my pie charts?'

Investment Selection

Investment advisors, stockbrokers, and individual investors continuously seek the nonexistent wellhead of the 'fountain of perfect investment recommendations, investing strategies, and, investment timing sources' in the mistaken belief that 'best' investing performance can only come from better investment ideas while being unwilling to acknowledge the fact that they themselves are most often the weakest investing performance cog.

Investing Performance Obstacles

The five greatest obstacles to investing performance:

  • 'It'll come back.'
  • 'The analyst said.'
  • 'It's not a loss until it is sold.'
  • 'I rely on unmanaged index fund investments.'
  • 'I am a long-term investor.' — translated, I can make a reasoned decision to buy based on current and projected investment value and market conditions; but, I refuse to make a reasoned decision to sell based on current and projected investment value and market conditions.'

Price, Fundamentals, and Value

Though price, fundamentals, and value are seldom aligned — with one or two variables being ahead of or behind the other(s) most of the time — fundamentals and value will always ultimately be reflected in price at some point in time; however, the difficulty being that no one knows when, to what extent, or for how long.

Therefore, it is imperative that one have a dynamic, forward-looking investing style and proven investing strategies in place to help one evaluate the relative actual and projected alignments of price, fundamentals, and value in an effort to buy the best for the best price at the best time and to sell the best for the best price at the best time.

Wrong

All investment advisors and investors must accept, understand, and agree that, on occasion, they will be both right and wrong because investing has being both right and wrong built into it.

'Wrong' investment decisions are not the primary reasons for investing failure:
  • 'Wrong' is not having investment selection disciplines.
  • 'Wrong' is not having portfolio management disciplines.
  • 'Wrong' is not having portfolio design and construction disciplines that define right and wrong.
  • 'Wrong' is not having price management disciplines resulting in doing nothing when right or wrong.

Investing Performance Excellence

The investing and investment performance critical path conclusions are as clear and as inescapable as are any other investing and investment performance priorities indefensible.

The centerpiece of one's investment advising and investing performance skills must be to build and to protect investors' investment capital by first creating unique, structurally sound investment portfolios that match suitable, hopefully timely investment sectors, investment categories, and individual, underlying investments with different investor investment profiles — different investor investment risk tolerances, different income and capital growth objectives, and different time horizons — and then to keep investment portfolios competitive by managing, modifying, monitoring, and measuring investment portfolios — one at a time, a few at a time, or all portfolios all at once — as investors' investment profiles, the current market conditions, the market outlook, and relative investment values change as part of the ongoing decision making, action taking investment advising and investment management, and investing performance processes:

  • To convert rhetoric into results.
  • To thoughtfully define, relentlessly apply, and rigidly enforce investment selection and management disciplines, rules, and procedures and portfolio design, management, processing, and performance disciplines, rules, and procedures
  • To govern the dynamics of change.
  • To take advantage of change rather than to be the possible victim of change.
  • To amplify the impact of good/well timed investment decisions.
  • To mute the effects of bad/poorly timed investment decisions.
  • To outperform.
  • To excel.

Investment Management

Create an organized, efficient, and disciplined investment advising and investing environment in which each investor, regardless of investment need, knowledge, experience, and the amount of investment capital, will be honorably, properly, intelligently, and efficiently served consistent with each investor's investment profile and investment goals, the current market conditions, and the market outlook; nothing learned the hard way, do it right the first time, suitable, hopefully timely investments, suitable, structurally sound, and competitive investment portfolios, full disclosure, and investor informed, economic best interests investing with specifics and in detail.

Investing Disciplines, Rules, and Procedures

Investing disciplines, rules, and procedures are the investment advising and investing performance excellence edge.

Investments selected at random and governed by the most basic user defined portfolio management disciplines, rules, and procedures — the weakest or completely missing investing performance links for most investment advisors and almost all individual investors — to create, manage, modify, monitor, measure, and maintain unique, structurally sound, and competitive investment portfolios and to process investment portfolios as investor investment profiles (risk, income/capital growth objectives, investing time horizon), the current market conditions, relative investment values, and the market out look change will outperform carefully selected investments generally ungoverned.

Carefully selected and weighted sound and suitable investments placed in unique, structurally sound, and competitive investment portfolios as determined by and governed by thoughtfully defined, relentlessly applied, and rigidly enforced portfolio design and management disciplines, rules, and procedures will outperform most market indexes almost all of the time.

To the extent that one's 'sense of the markets,' 'investment timing,' and a 'vision of the future' can be improved, investing performance will improve exponentially.

In My Opinion:
Investing.txt
Investment Timing
How to Create a Portfolio in a Flash
Risk Management
Hedge Funds
Performance Expectations
Bad News Bears
Individual Bonds and Equities

 

 

 



Bonds: Selection and Management
A Simple Bond Plan
The Dumbest Things
The Darndest Things
Wall Street Investment Firms
Interest Inc. Div./Cap. Gains
Market Forecasting Made Easy
Investing Vocabulary
Stock Market Indicators

Fools' Tools.txt
Investing Fools' Tools
Modern Portfolio Theory
Modern Portfolio Theory Disclaimer
Monte Carlo Analysis
Efficient Frontier Analysis
Technical Analysis
Beta
Dull Sharpe Ratio
Brinson's Asset Allocation
Pie Charts
Wrong

eBook
Bonds: Selection and Management

Investment Advisors.txt
#1 Investing Rule
Our Business
New Stockbroker
Past Performance
All of the Money in the World
Success Test
Performance Compensation
Your Investing Principles
Bond Selection and Management
Annuities
Your Commitment
Margin
Stockbroker Types
Advice 1000% Improved
mhj3.com Compatibility Test
Track To Run On
Underperformance
New Stockbroker.pdf

Individual Investors.txt
Individual Investors
Short-term, Long-term
Investment Slamming

Options
Beta not Banana
No Plan
Second Opinion
Investment Selection
Bond Mutual Funds
Never
Investors Behaving Badly
Performance Expectations

Audio Excerpts.mp3
mhj3.com Audio Introduction Excerpts
Investment Advisors
Questions Advisors Must Ask Themselves
Modern Investing Skills and Tools
Markets and Prices
Investing Oxymoron
Individual Investors
Wall Street
Long/Short-Term Investor
Modern Portfolio Theory
Beta
Efficient Frontier Analysis

Monte Carlo analysis
Technical Analysis
Brinson's Asset Allocation
Pie Charts
#1 Investing Rule
Investment Performance
Investment Timing
Wrong
Price Management
Budget, Cash Flow, Balance Sheet Analysis Software
Investment Portfolios
Investment Selection Disciplines
Portfolio Management Disciplines

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