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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
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

Investment Firm, Investment Advisor, Stockbroker investment Advising and investment Selection 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.

Investment 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?

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; 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.

Investment Advisors' Past Performance

Investment advisors announce the required, responsible, and absolutely true investing footnote, "Past performance is not a guarantee of, …is not necessarily indicative of, …is not a true indicator of future investment results," and then proceed to use past performance as the primary basis for making investment recommendations and projecting future investment results.

Investment Advisors' Performance Oxymoron

Many investment advisors 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:

The conventional and (un)inspired investment advising and investing wisdom of the day is to have investment advisors and investors, in effect, 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.

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 Advisors vs. Wall Street

Core investments include bonds, equities, traditional mutual funds, commodities, coins, precious metals, real estate, and private businesses.

When these 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.

Better and safer investing will not be found in 'new and improved' investment products but in proven investment advising and investing skills, investing strategies, and investment capital management disciplines.

The notion that an investment is safer and that an investor is more secure by investing in index funds, for example, than in individual equities does not follow; both can go up and both can go down—a little or a lot, for a short time or for a long time.

Investment safety and investor security fall squarely and directly into the lap of the investing decision maker.

The degree of investment safety will be determined by the levels of investing investment selection and management skills of the investing decision maker and the quality and the integrity of a forward-looking investing plan and path.

  • The best of all investment advising products is the forgotten, and for many never acquired, art form of creating and overseeing unique investment portfolios for individual investors.
    • Now you truly have something of value to offer.

Investments, Strategies, and Tools

There are many types of investments, investing strategies, and investing tools that are profoundly flawed, fictitious, treacherous, and often predatory.

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.

Modern Portfolio Theory

Modern Portfolio Theory, the Olestra™ of advising and investing, and all of its illegitimate relatives — Monte Carlo Analysis, Efficient Frontier Analysis, Beta, Brinson's Asset Allocation, Pie Charts, VaR, Sharpe Ratio, and a distant relative, Technical Analysis — using yesterday's news as an investment crutch — are just other ways to record and to illustrate investment/investing history without valid analytical, interpretive, deductive, predictive, or directional investment value because they assume and suggest, incorrectly, that the financial markets' cycles of the past and the valuations of underlying investments in the past — because they are somehow mysteriously connected as part of an orderly, sequential financial system — will repeat themselves similarly or exactly in the future as they did in the past in much the same order and with the same frequencies, durations, levels, relative valuations, and volatilities; suggesting, contrary to fact and law, that investing hindsight is, indeed, investing insight and investing foresight — absurd, as anyone who has spent more than a nanosecond in the financial markets would, should know.

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.

Explained another way, a thermometer measures temperatures in degrees as the weather changes.

A thermometer is a recording device not a forecasting one; therefore, it cannot be used to predict future temperature levels:

  • If a thermometer happened to store prior temperature readings on a daily basis, you certainly would not retrieve that information and use it to predict tomorrow's or next week's temperature readings — 'It rained yesterday; therefore, it will rain today because it rained yesterday?'

Standard Deviation, Efficient Frontier, Beta, VaR, and Sharpe Ratio are much like a thermometer; merely means to measure past (contrived) relative investment performances between unconnected, coincidental, chance investment variables and neither the cause of nor the predictor of either.

As one would have to analyze the weather-changing causal variables that affect weather, such as clouds, winds, moisture, humidity, and barometric pressure, to predict future temperature levels, the same holds true for historical Standard Deviation, Efficient Frontier, Beta, VaR, and Sharpe Ratio readings as a basis for predicting the investing future.

Future investment values and associated investment/investing risks can only be meaningfully understood and predicted based on one’s correct understanding and interpretation of the fundamental performance changing causal investment performance variables that actually will affect an equity’s future behavior.

Underperform/Outperform

The investing performance facts are that most investment advisors, money managers, mutual funds, and hedge funds (with exponential increase in investment risk and, more often than not, no increase in investment performance), and almost all individual investors underperform most market indexes most of the time.

Knowing that past performance is not an indicator of future investment results, most advisors, managers, and investors:

  • Build their investment advising and investing performance cases by defiantly applying flawed investing concepts such as Modern Portfolio Theory, Monte Carlo Analysis, Efficient Frontier Analysis, Alpha, Beta, Standard Deviation, VaR, Sharpe Ratio, and Investing Technical Analysis; little or no investing judgment or skill is required — just scan, sort, pick, retrieve, view, print, present, and hope that the investing past will somehow become the investing future.
  • Stubbornly use investing software tools that base all calculations, conclusions, and projections on past investment performance data; performance more by chance than by design.
  • Exacerbate the investing underperformance problem by settling for investment advising and investing performance mediocrity; unmanaged investments, an investing outperformance oxymoron.

The opportunities for achieving investing performance excellence have never changed, will never change:

  • Traditional core investments, due diligence, attention to detail, suitability, patience, value, a 'sense' of the markets, and a forward-looking investing style.
  • Investment management; skilled, knowledgeable, active, disciplined investment management.
  • Investment planning software, portfolio design, management, and processing software, and performance measurement software tools to convert rhetoric into results — the investing performance edge.

Investment Advising Goal

Be better managers.

Build a personal, proprietary investment advising net worth; feel better, do better, and beat the competition:

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.

Individual bonds, equities, and traditional value mutual funds wrapped in a disciplined portfolio creation and management environment; the most efficient use of capital — direct and undiluted participation in investment opportunities, lower investment risk because free from flawed packaged investments and predatory investing strategies, and little or no fees and commissions constantly leaching from capital.

Rather than attempting to predict the short-term oscillations of the markets and investment prices — something no one can do on a consistent basis — control what can be controlled — judgment, skills, and strategies — to take control of and to take advantage of the uncontrollable and unpredictable; the markets and investment prices.

Build an investment advising and management model that does not depend (entirely) on the correct prediction of the direction of the markets and individual investments (both always help), but more on a business model that anticipates change and the certainty of the need to change.

'I think I know what is going to happen; however, regardless of what does actually happen, I am thinking and looking ahead and I am prepared to decide and to act.'

Create an almost perfect investment advising and investing environment.

Use the best of both worlds; a lot of the old school and a little of the new:

The old:

  • Investments; individual bonds and equities and the best names in value mutual funds.
  • Investment selection; fundamentals, earnings, growth, value.
  • Management and timing; what, when, why, how, how much, and what if. Investment portfolios; unique, structurally sound, competitive.
  • Advisor/Investor; knowledge, judgment, skill, discipline.

The new:

  • Investing software; to define, manage, control, and process the old.

Individual Investors

Individual 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 the business, their business, of seeking investment advice from others or personally investing their capital in the financial markets:

  • Investors are often exposed to hit and run investment advice being sold random, isolated, sometimes frequent investment transactions with no clear investment goal in mind — adrift, results more by chance than by design.
  • 'Buy, hold, and forget' is not an investment performance option.
  • Investors' failure to perform occurs because.
    • The conscientious often do not know the questions to ask to distinguish between good and bad investment advice.
      • They are more concerned about the 'nuts and bolts' of investments rather than the 'nuts and bolts' of their stockbroker or investment advisor.
    • The investing naïve and unsuspecting look for investment shortcuts and instant gratification investment solutions.
    • The reckless confuse knowing what an investment strategy is and how it can work with being able to make it work successfully; naked option strategies for example.
      • Investors usually fail to think or to ask that if what is being taught, presented, or recommended is so easy, certain, and extraordinary, why are these individuals even talking to me, why do they even need me?
  • Investors must do the planning and the work that is necessary to prosper in the financial markets and must be willing to learn or do what they need to learn and do in order to evaluate and select investments, investment advice, and investment portfolios; to either manage their own capital or to make informed decisions when they delegate investment planning and investing to an investment advisor.

Financial Markets and Investment Prices

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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.

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.

The appeal of these types of investment plans are 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.

Monthly Statements and Investment Portfolios

Monthly statements and investment portfolios most often look much like the 'Winchester Mystery House' without consistency, discipline, direction, continuity, control, or theme; neither structurally sound nor competitive.

Investments, Strategies, and Tools

There are many types of investments, investment strategies, and investment tools that are profoundly flawed, fictitious, treacherous, and often predatory.

Economic Opinion

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

The First Principle of Investing

The first principle of investing is do no harm; don't make major mistakes while in the pursuit of competitive investment returns.

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 and 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 just going to $43.00 in a year equals a 7.5% return on capital, a $30.00 equity just going to $33.00 in a year generates a 10% return on capital, or a $20.00 equity just going to $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 investment risk with occasional variances above and below these investment returns in extreme and unusual investment circumstances — best of all, as an investment advisor, you can deliver.

Modern Investing Math Mystique

There is an ever increasing and unexplainable modern investing math mystique investing equation phenomenon; if what seems to be or is defined to be a cause and effect occurrence expressed as a mathematical equation, the equation is assumed to be, must be valid, universally true, and has unique predictive powers.

'Einstein's theory of relativity seems to be valid:'

'Certainly If is valid and reflective of actual cause and effect variable relationships and is, therefore, predictive of behaviors in the universe, then surely the latest iteration of the Beta risk measurement equation below — much more complex, with many more variables than Einstein's equation — most certainly, must be, just has to be valid.'

From:

Beta = [Cov(r, Km)] / [StdDev(Km)]2

To:

'Wow, look at this one, honey.'

'Let's put all of our life savings into this equation!'

'It just has to work!'

Well, it doesn't.

'The Sharpe Ratio equation, which looks as simple as Einstein's math, most certainly must be valid.'

'I had no idea investing is this easy.'

Regrettably, mathematicians concluded that since Einstein's simple math works in the universe to explain current natural phenomena and to predict future relationships and events, it most certainly will work in the sublime chaos of the financial markets.

A few Albert Einstein mathematician wantabes, while ignoring the obvious structural and causality differences between the universe of nature and the universe of the financial markets, extracted the laws and concepts of Einstein's universe, so to speak, and attempted to superimpose them, in effect, onto the world of investing by confusing, comparing, and applying the concepts of immutable order, structure, relationships, causes, connections, effects, and rules (Newton's three Laws of Motion, for example) as found in the sciences and systems of the universe — and as explained with mathematics — with the chaos, incidences, coincidences, chances, correlations (none of which are causal; but, assumed in order to make Modern Portfolio Theory math work) and no rules as found in the artistry and complexity of investing and managing capital in the financial markets in an effort to predict investment outcomes; the ultimate 'non sequitur' of investing.

The popularity of modern investing math can be explained by the facts that no investment advising or investing skills, insight, or foresight are required — just define, retrieve, sort, select, present, buy, and hope that the investing past will somehow be the investing future — and the investing naive and unsuspecting are easily mesmerized by and respond to the apparent wizardry of the pie charts, graphs, and data dumps that modern investing math can generate.

Investing Technical Analysis

Investing Technical Analysis — worth a glance — is more a self-fulfilling trading style than a legitimate, independent means to predict future price behavior of an equity in that its own universal rules and its own phalanx of followers become the value by making the rules, following them, and, thus, occasionally, again because of the number of chartists checked in that day, possibly having a small contrived impact on creating the results in conjunction with the more substantive stock market price affecting variables; current market conditions, the market outlook, relative investment values, investors, fundamentals, etc.

It would seem technical followers, chartists, are participating in a game where the number of players following the rules and the amount of dollars they have will determine the outcome.

Every technical rule has an exception and every exception has a rule.

Nothing is tied to what the company is doing fundamentally other than being a possible reflection of it.

As a chartist you are simply hoping that enough members of the technical analysis club have paid their dues, are members in good standing, and that they will believe what they see, according to club rules, and that they will simply take the correct technical buying and selling action along with the rest of the herd.

Think about this:

A line is a line is a line. There are many bits of data that make up the dots on a line. You can do a lot with a line made up by data dots; square it, divide it, multiply it, average it, square root it, time or volume weight it, intercept or triangulate it with lines that are iterations of the primary line; but, you cannot determine or predict where the next data dot will be on the line because of the position or value of the prior data dots that make up the original line anymore than any data dots that came before the latest new data dot could have been predicted by the data dots that came before them; other than, as stated earlier, to the extent that others are looking at the same line as you are and are using the same artificial rules that you are to divine where the next dot will appear:

Step 1: Reflects the closing price of a stock on its first day of trading based on the net pluses and minuses of stock market price affecting variables.

Step 2: Illustrates two days' closing prices with day two's closing price being determined by stock market price affecting variables and not because of the position of the first day's price data dot.

Step 3: There is no basis whatsoever to suggest that the price of a stock will close @ A, B, or C on the third day based on the position of the prior two days' closing prices; the fatally flawed leap of faith assumption that technical analysis would have you accept.

Technical analysis also mistakenly makes much of the reflective not predicative relationship between a stock's daily price and any one of a number of moving averages, 20 Day Moving Average illustrated below, for example:

Daily Prices and a 20 Day Moving Average of those prices are nothing more than mathematically connected by the algorithm used to calculate a 20 Day Moving Average generated by, a function of Daily Prices

To suggest that a day's future stock price will behave in a particular way because of its relationship to its moving average — which is simply a different 'view' of itself — is absurd.

Stock prices and moving averages are simply ways to record trends; but, neither predicts trends.

Short-Term vs. Long-Term Investor

Historically, the terms Short-term, Long-term Investor have been used to differentiate investors' tendencies towards/preferences for the lengths of investment holding periods; the assumption being that short-term investing is more speculative and more for the gambler while long-term investing is more prudent and more for the conservative investor.

The implications and conclusions of these two investing strategies are that the holding period of an investment is a primary determinant of investment performance and, therefore, justifies ignoring both short and long-term investment outcome determinant considerations and variables.


'I am a long-term investor no matter what!'.... Are you sure you want no-matter-what?

Undisciplined and unskilled investment advisors and investor's, especially long-term investors, often use long-term as an excuse for ignoring current investment realities and for not making necessary short-term investment decisions — 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.'

Categorizing investors in this manner can only obstruct investment performance as the investment holding period is being determined, incorrectly, by the profile of the investor rather than being determined, correctly, by the short and long-term behaviors of the financial markets and underlying investments.

The results of using such an investment strategy are that it can box an investor into an inescapable corner which can only lead to absurd and, very often, very expensive investment conclusions; such as, the opportunity for a realized short-term gain of 25% is inconsistent with a long-term investor investment profile and, therefore, cannot be taken. Or, another example, the erosion of capital in the short-term can be ignored because it will somehow take care of itself in the long term.

The fundamentals and performance of an investment, moving from short term to long term, should determine investment holding periods rather than the investor's investment profile which has nothing to do with the investment value of and investment timing for an investment.

If the reasons, expectations, and apparent timing, present at the time of purchase, have diminished significantly or have disappeared altogether, the logic of selling is the same now as was the logic for buying in the past.

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 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 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.

  • Difficult to do does not mean therefore don't even try; i.e. index funds investing.

Investment Analysts

For every investment there is a respected analyst with a buy recommendation and an analyst with a sell recommendation.

The facts are that each will be, with rare exception, correct less than 50% of the time.

Investment analyst gain their 'expert' reputations through the 'argument by exception' which suggests that the exception is represented as the rule; make ten recommendations, one works out, tout investment selection skills based on the exception without mention of the 'actual' rule; one out of ten.

Investment Timing

Investing is more about timing — markets and individual investments — than any other investment selection consideration because it is the primary determinant of investing success.

Those who suggest that investment timing is not possible are the masses of undisciplined investment advising and investing weak who have given little substantive or procedural thought about when to buy or when to sell, who are unwilling to accept all of the responsibilities of advising and investing, who are willing to accept being average, and who are unwilling to accept that they can make an investment mistake—as they watch their investments plummet—while seeking solace by stating that statistics have determined that investment timing cannot be done in order to avoid having to make an investment timing decision as to when to buy or when to sell an investment.

Remember, the greatest perk of the financial markets is liquidity — the best of the 'investment timing tools' of the financial markets; the ability to buy and to sell in moments; patience, price trends, market trends, company growth and profits, and economic cycles being the other investment timing tools.

Liquidity enables investors to 'time' the markets because they can buy and sell at any time as they try to take action at the best time to minimize the impact of timing mistakes and to try again when the time seems better.

The results, more often than not, will be doing better than the stubborn investor ('I've got to save that commission; so, I'll put 99% of my capital at extreme risk so as not to have any risk that I will have to pay a 1% commission.') who does not try to time the markets and who sticks with his/her initial investment decision—regardless of the fact that the reasons for making the investment in the first place have changed—with the long-term hope that time will somehow come to the rescue and bail him/her out; which may or may not ever happen.

Price Management

Almost all investment advisors, stockbrokers, and individual investors are completely out of control with regard to price management.

After carefully selecting investments and after executing the trades, almost all investment advisors, stockbrokers, and individual investors are generally very much adrift and very undisciplined.

The single most important decision that all investment advisors and all individual investors must make after a position(s) is established—buying, accumulating, dollar-cost-averaging—is the price at which an investment(s) will be sold should the price begin to decline; no exceptions:

  • The primary reasons for a stock's decline will only become apparent well after its decline.
  • Under no circumstances whatsoever should the investment advising or individual investor story be, no matter how great the story, bought at @ $50.00 or accumulated @ an average cost of $50.00 and still holding @ $25.00 while explaining, excusing, justifying, hoping, and regretting.
  • 50% down means 100% back up just to break even; a daunting task and an unnecessary, unpardonable, and undisciplined investing error.

Take advantage of the greatest perks of the financial markets, liquidity, price alerts, and stop orders.

When a price alert is hit (5%, 10%, 15%, all manageable), let the market decide for you what to do and do what the market is telling you to do:

  • Sell at the market!

To Rebalance Or Not To Rebalance Investment Portfolios Should Never Be In Question

There are many investment and portfolio management disciplines, rules, and procedures — allocate, rebalance, and reallocate investment portfolios to name three — that will always improve the 'odds' of meeting the primary objectives of investing; to build and to protect investment capital, to take advantage of changes rather than to be the possible victim of changes in the financial markets and in investment values.

Rebalancing investment portfolios is intended to maintain the initial structural integrity of an investment portfolio and to restore the initial allocation of investment capital consistent with an investor's investment profile; risk tolerances, income/capital growth objectives, and investing time horizon.

It must be presumed that initial/original allocation of capital to different investment sectors, investment categories, investment types, and specific underlying investments was based on an investor's investment profile at the time the investment portfolio was created — risk tolerances, income capital growth objectives, and investing time horizon — and the current market conditions, the market outlook, and relative investment values.

The broad question of whether to rebalance investment portfolios can first be answered by asking a general portfolio rebalancing question: 'If an investor had cash today, would the current now 'unbalanced' portfolio be the initial allocation of capital today that would match the investor's investment profile in the same way the initial allocation of capital was consistent with the investor's investing profile?"

To the extent and when an investment portfolio is not, the investment portfolio must be rebalanced:

  • Oversimplifying, if 50% A and 50% B (investment sectors, investment categories, investment types, and/or specific investments) was consistent with an investor's investment profile, the current market conditions, the market outlook, and relative investment values @ the time of the initial allocation of capital and the current portfolio is weighted 75% A and 25%, the portfolio must be rebalanced.
    • Other than the remote chance that 75% A/25% B is the new proper allocation of capital and investment weighting consistent with the investor's initial investment profile, current market conditions, the market outlook, and relative investment values or that the investor's initial investment profile has changed.
      • If 75% A/25% B is, in fact, the new proper allocation, rather than rebalance the investment portfolio, consideration should be given to using portfolio reallocation to set the investment portfolio to revised or new selections, combinations, and weightings of investment sectors, investment categories, investment types, and/or specific investments to fine-tune the investment portfolio; to be more consistent with the investor's investment profile, current market conditions, the market outlook, and relative investment values.
  • Failure to rebalance or reallocate investment portfolios based on the realities of these conditions compromises the importance of matching investments and maintaining proper exposure to investments consistent with the stated needs of the investor as reflected in the initial allocation of capital.

There is an additional reason for and advantage of rebalancing of an investment portfolio that falls under the mechanics of investing; rebalancing of a portfolio will lead to more efficient accumulation of investments.

Rebalancing investment portfolios forces, in effect, the process of continuously 'buying low and selling high' as investment sectors, investment categories, investment types, and specific investments within investment portfolios become relatively overvalued and undervalued as investment prices oscillate/crisscross over the short term, shorter term.

Oversimplifying, initial conservative investor weightings of 50% A and 50% B (investment sectors, investment categories, investment types, and/or specific investments) changes to 25% A/75% B weightings due to price/valuation changes and now match an aggressive investor's investment profile.

  • Not unlike a trader/investor who buys two stocks, one goes up and one goes down, takes the up profit and buys more of the down investment, then the down investment goes up and the up investment goes down, and the 'buying low and selling high' process continues.
  • The results will always be better than 'buy, hold, and forget.'
  • The assumptions are, of course, that the intention is to hold both investments and that there are always price disciplines and portfolio reallocation disciplines in effect to cut losses and to take profits should investment fundamentals, valuations, and outlook change.

Hold A and B, like them both, and want to continue to hold them both:

Start:

  • 50%/50% initial capital allocation; $20,000.00 @ $10,000 each.
    • 916 A @ $10.00.
    • 500 B @ $20.00.

A goes to $15.00 and B falls to $18.00 a share as part of the day-to-day, normal, and typical independent fluctuations of both A and B as the financial markets change.

  • 62.5%/37.5% current capital allocation: $24,000.00.
    • 916 A @ $15.00; $15,000.00.
    • 500 B @ $18.00; $9,000.00.

Rebalance back to 50%/50%; $12,000.00 each; - $3,000.00, + $3,000.00.

  • Sell 200 shares of A @ $15.00; $3,000.00.
  • Buy 170 shares of B @ $18.00; $3,000.00.
    • 800 A @ $15.00; $12,000.00
    • 670 B @ 18.00; $12,000.00

A falls to $12.00 and B goes to $21.00 as part of the day to day, normal, and typical independent fluctuations of both A and B as the financial markets change.

  • 60%/40% current capital allocation: $23, 670.00 800
    • A @ $12.00; $9,600.00
    • 670 B @ $21.00; $14,070.00

Rebalance back to 50%/50%; $11,835.00 each; + $2,235.00, - $2,235.00.

  • Buy 186.25 A @ $12.00; $2,235.00.
  • Sell 106.43 B @ $21.00; $2,235.00.986
    • A @ $12.00; $11,835.00
    • 565 B @ $21.00; $11,835.00

Rebalance Market Value: $11,835.00 + $11,835.00 = $23,670.00.

Buy, Hold, and Forget Market Value: [1,000 A @ $12.00 = $12,000] + [500 B @ $21.00 = $10,500.00] = $22,500.00.

Rebalance Variance: + $1,170.00.

Perfect 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.

In reality, all investment advisors, stockbrokers, investment analysts, investment research firms, and individual investors who manage their own capital are always closer to random investment selection than they think they are, than they are willing to admit.

Whether doing one's investment selection due diligence or whether selecting investments at random, the results from both investment selection methodologies — careful investment selection and random investment selection — will be about the same most of the time; both generating good and bad investment selections and both yielding similar investment selection performance distributions; some up and some down; most a little, some quite a bit, and a few a lot; the problems, of course, being not knowing in advance what each investment will do; what direction, when, how far, and for how long.

  • The proof being:
    • The well known investing performance facts that most investment advisors underperformance most benchmark market indexes most of the time, that many slightly outperform some benchmark market indexes some of the time, that a very few tend to outperform selected benchmark market indexes more often than not, that none outperform chosen benchmark market indexes all of the time, and that many have no idea of how well they are performing other than referencing selected investment performance exceptions to build their investing performance cases.
    • Overall investing performance over extended periods of time is less than 10%; consistent with being closer to random investment selection.

The following investment portfolio (one of an infinite number of possible investment portfolio holding examples) was created by one of the best and brightest investing minds:

Without questioning what was selected and the due diligence applied in and the attention given to the investment selection process, it is clear that 'some up and some down; most a little, some quite a bit, and a few a lot is an investment selection and investing performance reality.

It is clear that investing performance excellence will be determined at least as much by what you do with investments, how you well you manage investments after you own them as by what investments you buy:

  • 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 suitable investments placed in suitable, 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 has a 'sense of the markets' and to the degree that investment timing can be improved, investing performance will improve exponentially.

Investing Vocabulary

If the following are any part of your investment advising or investing vocabulary the terms, though you are not looking for it, will probably lead you into investing trouble:

Option & Futures Funds
Non-Rated Derivatives
Naked Options
Margin/Short/Leverage
Covered-Call Writing
Straddles
25%, 50%, 100% annual gains
Bond Funds
Speculative
Modern Portfolio Theory
Beta/Alpha
Penny Stocks
Yesterday/In The Past
Ginnie Mae
The Moment
Performance Fees
Efficient Frontier
Leverage
Commodities (speculative)
Standard Deviation
Derivatives
Fannie Mae/Freddie Mac
Short-Term
Annuities
Transactions
Foreign
Tax-Efficient
Proprietary Products
Optimizers
Private Placement
Monte Carlo Analysis
Hedge Funds
Fund of Funds
Commissions
Past Performance
Illiquid
Open End Bond Funds
Junk Bonds
Preferred Stock
Unit Investment Trusts
Unsecured
Uninsured
Limited Partnerships
IPO
Secondary
Exchange-Traded Funds

Pie Chart/Graph

Currency Risk
Standard Deviation/Backtesting
Bear/Bull Spreads
Straddles
Index Funds
Butterfly
Non-Rated
I'm a long-term investor.
The analyst said.
I'll come back.
It's not a loss until it is sold.
Day Trader


Tempting, But Don't

  • CMOs, Fannie Maes, Freddie Macs, Ginnie Maes — 'A clear and present danger.'
  • Bond Mutual Funds — There never is an investing situation in which an investor will be better served by investing in a bond mutual fund as opposed to investing in individual bonds.
  • Margin — Never leverage capital to buy more investments unless borrowed capital will be used only as a short-term source for cash needs outside the investment portfolio and where there is a clear and specific source of funds to eliminate margin in the short term.
  • Sell Short — If Warren Buffett can survive without shorting stocks, so can I; odds are bad going against the upward bias of the market, loss potential infinite.
  • Options — Never buy, never write covered, and never, ever naked; well, OK, maybe "buy" every once-in-a-while! IPOs — In most cases, if you can get it, you do not want it.
  • Hedge Funds — Use other peoples hard earned money, take extraordinarily high investment risks with other peoples' money, pay yourself exorbitant base fees and performance fees for your so-called expertise from other peoples' money; the results of which are much more a function of taking a multitude of extreme investment risks with the hope that one will work out rather than the result of astute analysis and correctly predicting and managing the one 'best' investment risk.

Investing Performance Excellence

The investing and investment performance critical path conclusions are as clear and 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.

Portfolio Management Disciplines, Rules, and Procedures

The mechanical aspects of investing — thoughtfully defining, relentlessly applying, and rigidly enforcing investment selection disciplines, rules, and procedures and portfolio design, management, processing, and performance disciplines, rules, and procedures — are as important and as powerful in determining investing performance outcomes as are investment selection insight, inspiration, vision, and timing.

They are the 'fail-safe,' disciplined investment selection and portfolio management controls to maximize the effects of good, well timed investing insight, inspiration, and vision and to minimize the impact of failed or poorly timed investing insight, inspiration, and vision; to take advantage of changes in the financial markets rather than to be the possible victim of changes in the financial markets; can't get into investing trouble.

Regrettably, they are the critical but weakest or completely missing investing performance links for most investment advisors and almost all individual investors who invest for themselves; whim, mood, fancy, fear, and greed often seem to rule the day.

To prosper, investment advisors must piece the investment advising, investing, and investing performance puzzle together by first developing a unique proprietary investment advising value; your own prospectus; who you are, what you represent, what you will and will not do, and how you conduct your business; why, when, how, and what if — Investment Selection, Disciplines, Rules, and Procedures, Portfolio Management Disciplines, Rules, and Procedures:

  • A Few General Disciplines, Rules, and Procedures (all investors, all portfolios, all of the time).
    • Investment Sectors — User adds to fit investment philosophy and style; such as categorized by broad investment classes; such as bonds, equities, mutual funds, money managers, and user defined or by different economic or business investment sectors.
    • Investment Categories — As a subheading to Investment Sectors, user adds to fit investment philosophy and style; such as to categorize by different economic/business sectors or by specific types of bonds, mutual funds, money managers, and user defined investments.
    • Investment Quality — Match to investor's investment risk profile.
    • Investments — Core investments; individual bonds and equities, traditional mutual funds.
      • No index funds, no ETFs, no leverage, no 'new and improved' investments or 'unpackaged' as derivatives contrivances designed by Wall Street's marketing 'imagineers,' where the value added most often accrues directly and immediately to investment firms and 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 Selection Disciplines, Rules, and Procedures; for example, "A Simple Bond Plan".pdf
    • Investment Database — Potential and recommended suitable investments.
    • Asset Allocation Matrixes — A central investment theme and variations on that investment theme to generate different asset allocations for different types of investors.
    • Asset Allocation — Match investor investment objectives with the appropriate types and numbers of weighted investment sectors and weighted underlying investments.
    • Investment Diversification — Match investor investment comfort zones and time horizons with the appropriate types and numbers of investment sectors and underlying investments by investment categories.
    • Model Portfolios — Suitable, hopefully timely investment sectors and investments by investment categories for different investment strategies.
    • Cash Investment Portfolios — Create unique investment portfolios that match investors with the correct investments.
    • Blended Investment Portfolios — Blend an investor's existing investments with a model portfolio to the extent and when desired to bring new investors under one investment umbrella and to update existing client's portfolios with current investments as opposed to having too many different investment portfolios and to many different investments in different investment portfolios that were intended for the same or outdated objective.
    • Rebalance Portfolios — Reset investment portfolios to original investment sector and investment weightings to maintain the initial structural integrity of investment portfolios.
    • Reallocate Portfolios — Set investment portfolios to new selections, combinations, and weightings of investment sectors and investments to keep investment portfolios competitive as market conditions change.
    • Transaction Management — Accumulate/buy, distribute/sell, dollar cost average, scale.
    • Price Management — Set investment price alerts to build and to protect profit.
    • Investment Sector Alerts — In an effort to be in the right place at the right time.
    • Replace Investments — Take advantage of change rather than be the victim of change.

  • Specific (Personal)
    • The Investment Past — Other than in passing, other than a reference point is irrelevant.
    • Protect Capital — Regardless of the market conditions, always be in the investment present, on the investment defensive, and never excuse present portfolio cash value with future value hopes, explanations, and expectations.
    • Primary Investments — Cash, bonds, equities, and real estate — Packaged products are never better than the investment integrity of the underlying investments.
    • Interest Income & Dividends — All portfolios.
    • Trading — Never, unless the client knows at least as much as I do.
    • Alternative Asset Class Investments such as Hedge Funds, Private Equity, and Limited Partnerships — Often have lock-up provisions and other limitations on liquidity, difficult to value/price, no investment so good that it is worth losing liquidity.
    • Liquidity — Must be a daily market, never sacrifice for apparent investment opportunity.
    • Commodities — At no time to speculate, OK to hedge, and never unless the client knows more than I do.
    • Money Managers & Mutual Funds — Second choice. Why have them do what I am supposed to be able to do.
    • Bond Mutual Funds — Never. There is always a better, smarter way.
    • Investment Firms' IPOs — In most cases, if you can get it, you do not want it.
    • Modern Portfolio Theory — Investment diversion amusement.
    • Companies — Quality, products, management, competitive, balance sheet, accounting, earnings, growth, research and development, entry, and use of debt. 
    • Earnings — Realistic, maintainable, accurate, honest, and increasing.
    • Margin — Never leverage capital to buy more investments unless borrowed capital will be used only as a short-term source for cash needs outside the investment portfolio and where there is a clear and specific source of funds to eliminate margin in the short term.
    • Sell Short — If Warren Buffett can survive without shorting stocks, so can I; odds are bad going against the upward bias of the market, loss potential infinite.
    • Options — Never buy, never write covered, and never, ever naked. Well, OK, maybe "buy" every once-in-a-while!

mhj3.com Money Management Plan

Organized: Money Management Plan Recap

A complete Money Management Plan is composed of a an Investment Planning Report, Investment Selection, Disciplines, Rules, and Procedures, Portfolio Management Disciplines, Rules, and Procedures, Portfolio Management Report, and a Performance Measurement Report.

Money Management Plan Reports

A money management plan must zoom in on investing performance bedrock and detail, not to zoom out using the modern investing language of pie chart, graph and data dump which often distort and always oversimplify rather than clarify:

  • These types of illustrations do little to enlighten.
  • In most cases, they are but distractions from the substantive issues of financial planning and investment planning.
  • In some cases, they are used because the one making investment recommendations does not know the details of the what, when, why, how, and what ifs of investing.
  • The one making investment recommendations has not thought about the future and the certain necessity for change as the markets change; preferring, after the initial trades have been executed, to just 'wing it.'

Neither Investor's CalcStation nor Investor's WorkStation reports have any pie charts, graphs, or data dumps because.

All Investor's CalcStation and Investor's WorkStation reports intentionally have an accounting look relying on numbers to detail issues, solutions, and processes.

You will notice that the Investor's CalcStation financial planning report is brief. This is by design:

  • There is no need to generate pages summarizing investor input that details what the investor already know about himself/herself as is done in most standard financial planning reports.
  • Investor's CalcStation financial planning reports detail the information required to determine an investing direction.
    • Money in, money out, actual and projected —how much, when, and at what capital growth rates, interest rates, and inflation rates.
    • Actual and projected balance sheets.
  • The emphasis, length, and detail of Investor's WorkStation's portfolio creation and modification reports are necessary to address the detail of investment selection and portfolio management.

Investment Advising Prospectus

As an investment advisor, I referred to the Money Management Plan as my investment advising prospectus because all of the reports actually define who I am, what I represent, how I conduct my business, and what I will and will not do; what, when, why, how, and what if.

The Money Management Plan is an actual working document rather than the usual generic (of value only at the drugstore) presentation; retrieved, viewed, printed, and presented by standard investment planning softwaresoon to be in the trash after initial trades are executed; often ending with the footnote, "Product recommendations are not specified," and/or "For specific investment advice please consult your financial advisor."

The complete Money Management Plan, as part of the continuous, forward-looking investment advising and investment management processes, is divided into three parts; detailing how rhetoric will be converted into results — budgeting, cash flow analysis, capital accumulation projections, investment selection and management and portfolio management, and performance:

Direction: Investment Planning — Where You Are Trying To Go

With regard to investment planning, the better the projection, the better the solution.

Start with Investor's CalcStationa simple, yet complete, budget (income - expenses), savings, assets, liabilities, cash flow, net worth, balance sheet, and investment goal analysis software program is designed to help the user approximate savings, asset building, and income generating projections and to define the investment task at hand to achieve a capital accumulation objective that will produce the desired income over a selected time period; just a bump in the road, a walk in the park, or climb Mt. Everest.

Rather than depend on default growth rates, inflation rates, and interest rates for broad classes of investments, Investor's CalcStation allows the user to track 'blocks' of capital as they actually change and as they are projected to change from one type of investment to another over a financial planning analysis period.

Furthermore, as capital growth is a function of both asset appreciation and linked income, Investor's CalcStation allows the user to break out both variables and to assign different and changing rates to each variable:

  • For example, savings earning 3% for two years is/will be converted to an investment portfolio composed of both bonds (income, possibly no growth) and equities (growth, probably dividends) with each type of investment assigned individual actual and/or projected growth rates, interest/yield/income rates, and inflation rates where and when appropriate and then the equity portion of the portfolio is/will be liquidated for an actual or a projected value in a selected time period and the proceeds are/will be used to invest in a summer cottage and more bonds; each again assigned individual rates and, each again, possibly changing based on actual and projected financial planning directions and goals.

Use Investor's CalcStation to evaluate projected verses actual performance to date.

Make appropriate adjustments; change investor contributions, investments, or the goal as required; always on track.

 

Opportunity: Investment Selection Disciplines, Rules, and Procedures

Bond investment selection and management disciplines, rules, and procedures, for example, govern the bond selection and management processes; the correct bond, the correct quality, the correct quantity, and the correct maturity at a competitive yield and reasonable cost.

 

Control: Portfolio Management Disciplines, Rules, and Procedures

Portfolio management disciplines, rules, and procedures govern the dynamics of change.

Efficiency: Investment Timing

Investment timing is everything; when you choose to walk across the street, what and when you buy at the store, the best time of year to buy a car, when to/not to stick your hand in the press, when to buy a house, the selection of a play in football when the outcome of the game is on the line, when a golf club releases when trying to hit a golf ball, and, most certainly and most importantly, what stock you buy and when you buy it and what stock you sell and when you sell it.

The very notion of 'timing' is an active instinct in all of us as we seek the best price and certainly is a more desirable thought process than simply passively deciding to succumb to notion that you will simply get what you get on the day you just happen to buy/sell and that there is little or nothing you can do about when, the time, you should try to do it.

Imagine going to Warren Buffett and suggesting to him that to improve investment performance he should no longer manage or attempt to time his investments and that he should simply invest in a Wall Street contrived, manufactured, self-serving ''baskets of investments' — felony stupid.

Management: Portfolio Management — How You Are Going To Get There

Most investment planning software programs generate boatloads of reports infested with carloads of pie charts, graphs, and schedules of historical investment data to detail what needs to be done; however, there is usually little about the detail of and the basis for the design, and structure of a proposed investment portfolio and the underlying portfolio investments that are intended to take the investor to his or her investing destination.

Use Investor's WorkStation to create a unique, suitable, structurally sound, and competitive investment portfolios consistent with the investor’s investment profile (risk tolerances, income/capital growth objectives, and investment time horizon) and manage, modify, monitor, and measure the investor's investment portfolio to keep the investment portfolio competitive as investor’s investment profiles, the current market conditions, the market outlook, and relative investment values change; the what, when, why, how, and what ifs of the investment management processes in detail.

Investor's WorkStation forces the user to take all of the portfolio design and creation steps into consideration and helps the user detail the investment selection and management and portfolio management processes.

Modify investment portfolios as investor investment profiles, investment goals, the current market conditions, relative investment values, and the market outlook change; always on track.

Profit: Performance Measurement

"If it is measured, it will get done."

Though past performance clearly is not an indicator of future investment results, it is the best measure of an individuals' investment advising, investment management, and investing performance skills; a measure of the ability to convert rhetoric into results. GIPS (AIMR - PPS™) 01/01/2010 compliant investment portfolio performance calculation; Modified Dietz and TWRR/Geometric Linking, and Daily Valuation Methodology Investment Return Calculation Options.

Leave out a step, proceed with greater than necessary budgeting, savings, and investing risks.


Investing Tools For All Seasons

Use investing performance software tools to help you drill down to investment selection and management, portfolio management, and investing performance bedrock:

Investor's CalcStation

Investor's CalcStation Personal Budget/Balance Sheet/ Investment Planning; define, modify, and manage the savings and investing tasks at hand; a walk in the park, just a bump in the road, or climb Mt. Everest — investor's current and projected Budgets (Income - Expenses), Assets, Liabilities, Personal Cash Flows, Balance Sheets, and Net Worth Investment Goal Analyses over user selected analysis ranges by:

  • Entering an investor's actual and projected sources and uses of funds and an advisor's/investor's actual and projected investments, capital growth rates, interest rates, inflation rates.
  • Tracking blocks of capital as they change composition over time; type, amount of capital, dividends, interest, income, growth rate, and holding period.
  • Generating only a few informative and substantive instant replay reports that define what must be done.
    • Rather than voluminous documents composed of historical and hypothetical assumptions; presented in the eye-catching wizardry of colorful pie chart, graph, and historical investment performance data dump infested reports resulting in a very visually pleasing, very generic, very over-assumed, and very under-planned investment plan.

Investor's WorkStation

Investor's WorkStation Portfolio Design, Management, Modification; create, manage, modify, monitor, maintain and measure unique, suitable, structurally sound, and competitive investment as investor investment profiles, current market conditions, the market outlook, and relative investment values change:

  • Create a modifiable allocation table matrix composed of different selections, combinations, and weightings of Investment Sectors and underlying investment categories at different matrix intercepts which are reflective of different investor investment profiles.
  • Create modifiable model portfolio templates composed of suitable, hopefully timely investments that when linked to an allocation table matrix will distribute capital to weighted investment sectors and then to underlying investment categories and weighted investments at each matrix intercept consistent with different investor investment risk tolerances, income capital growth objectives, and investment time horizons.
  • Allocate investment portfolio capital over three or six month intervals in an effort to accumulate investments at the best average cost over the short term.
  • Blend an investor's existing investments with an investment advisor's Allocation Table Matrix and linked Model Portfolio template to manage the timing and the degree of change as an investor transitions from what he/she currently owns to what the investment advisor feels is a more suitable investment portfolio based on the investor's investment profile.
  • Rebalance investment portfolios every six or twelve months to maintain the initial structural integrity of all portfolios by forcing the process of 'buying low and selling high' as investments within portfolios oscillate/crisscross in price over the short term.
  • Reallocate investment portfolios to new or modified selections, combinations, and weightings of investment sectors and underlying investments to keep all investment portfolios competitive as relative investment values and market conditions change.
  • Replace all or a portion of individual investments; deteriorating fundamentals with improving fundamentals, overvalued with undervalued, apparently poorly timed with seemingly better timed, underperforming with outperforming, weak with the strong.
  • Set Investment Sector and Investment Price Alerts; 50% down means 100% back up just to break even. A daunting task and an unnecessary, unpardonable, and undisciplined investment performance error.

PerfCalc

PerfCalc GIPS Compliant Portfolio Performance Calculator; Modified Dietz, Large Cash Flows Geometric Linking, and Daily Valuation investment portfolio performance calculation methodologies.

You will never look back.