Bring Me Back to October 2007!

This is a short coaching session on “Hindsight Bias”. This little parasite can rob many otherwise prudent investors of their peace of mind. We all do it ourselves and need to see it when it pops into our thoughts and conversations.

Here is how it enters our thinking. You tell yourself the following:

“When the market peaked in October of 2007, I thought we were due for a decline and I was right.”

“I knew the stimulus plan was not going to help and I was right.”

“If I had acted on what I knew I would have saved a lot of money.”

“Next time I am just going to pull out when I know what’s going to happen.”

This is the progression of thought we fall into. The problem: none of it is true!

First, we are never absolutely certain before something happens. We only become certain afterward.

Second, there are thousands of instances that we thought something that did not happen. We don’t remember all the times that we are wrong. We don’t include the wrong decisions in our total investment returns. It would be help our objectivity if we could balance when we are right with all the times we are wrong.

Finally, the progression of thoughts above is rooted in emotions, not in historical truth. The truth does not change. Hindsight is incomplete and often lies to us.

Review our list of important questions that can help you to build peace of mind relating to your invested savings.

Ponzi Schemes and Investment Scams

Are You Protected From Ponzi Schemes?

You don’t need to be a financial genius to avoid getting scammed by the next Ponzi scheme! In fact, looking at the latest scheme to hit the national scene, high net worth “professionals” are the most vulnerable. As wealthy friends and clients of Bernard Madoff are sorting out what went wrong, you and I would do well learn some lessons of our own.

Market Returns are perfectly acceptable for a highly successful investor! BEWARE, if your financial advisor tells you they can consistently beat the market. The overwhelming evidence shows that active managers cannot beat market benchmarks over time! Bernard Madoff told his client he could beat the market but he lied! If some one is lying to you, fire them fast! The market provides excellent returns over time. If any body tells you differently – don’t walk away… RUN!!

Common Sense still applies! BEWARE, if your active manager gives you a complicated strategy that you can not understand as the solution for your savings. The basic truths that govern our financial world have not changed. You do not need to be a financial genius to understand what makes your money grow. You simply need to know that your advisor believes the same things that you do. No one knew Bernard Madoff’s philosophy of investing but they gave him all their savings anyway! That makes no sense.

Separating Myth from Truth: The story of investing. Attend this seminar next month. This will give you some excellent information on what works and what doesn’t work with your invested dollars. Go to www.vanderwey.com and select the seminar tab at the bottom of the page for the seminar dates and on line registration.

YOU NEED TO KNOW THE TRUTH BEFORE YOU CAN KNOW WHO’S LYING!

Half of the Truth is Still a LIE!

The stock market will recover – TRUE!

Your actively traded mutual fund will recover too – NOT SO TRUE!

Every day we are reminded to “stay the course” because the market will come back. I agree with that and I am completely at peace with my investments because of that reality.

However, 85% of actively traded funds typically under perform the market and there are a variety of reasons why your active fund will not rebound when the market does! Stop believing the lie and learn how markets work!

MOST MUTUAL FUNDS ARE NOT GOING TO REBOUND WITH THE MARKETS!

Actively traded funds have some serious problems. First, many were weighted heavily in the financial sector stocks because of the long history of stability in that sector. From the billions of dollars coming out of the markets it seems that active money managers do not practice what they preach, they pull your money out of the market locking in losses while telling you not to pull it from them! Also, there is heavy redemption volume that forces active managers to sell their positions at the current lows and lock in their losses. If you are in an actively traded fund you have every reason to be concerned.

There is a better way! Market returns are very acceptable and achievable. There is peace of mind that begins when you accept a basic philosophy for investing that is grounded in the confidence that the Free Markets work!