Inevitable Wealth Coaching
3350 Township Line Rd.
Drexel Hill, Pa. 19026
Ph. 610-446-4322
Fx. 610-789-4927
e-mail address: brendan@coachgee.com

Monday, May 17, 2021

Robinhood's Big Lie!

 


Robinhood's Big Lie!

by: Brendan Magee

 Robinhood is getting a lot of publicity these days. Their trading application has gone viral. From January through April they added three million funded accounts, and their company has an estimated value of $11.2 billion. 

The company has also gained some negative attention. Robinhood has settled with the Securities and Exchange Commission for $65 million as a result of charges that it mislead investors about the costs of trading while using their application. 

That aside, the biggest danger posed by Robinhood comes from a claim they make in one of the advertisements. In the ad they claim to the public, "You were born an investor." Nothing could be further from the truth, but unfortunately many an unsuspecting investor will see the validity in that statement thinking,  "What could go wrong?" 

Massachusetts Securities regulators have found somethings wrong with how Robinhood is aggressively and misleadingly marketing themselves to inexperienced younger investors. Their charges contend that Robinhood is luring young investors into making risky and costly trades by making it seem more like a video game rather than alerting investors to the dangers, costs and risks of excessive trading. Unfortunately, one 20 year old never heeded any warnings and after believing he ran up debts of over $730,000 committed suicide. 

The plain truth is, people are not born investors any more than they are born surgeons or professional athletes. However, they are born human which makes them vulnerable. They are vulnerable to a good story. They are vulnerable to believing something about themselves that just isn't true.  They are vulnerable to wanting to belong to a crowd and will do anything to fit in. This is what Robinhood is cashing in on. They are turning the next generation of investors into gamblers without them ever suspecting it. All the while, Robinhood is cashing on on the destruction of their American Dreams.

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With comment or question send an e mail to brendan@coachgee.com. 



Friday, April 30, 2021

Phil Town Rule #1 Investing Destroying American Dreams

 

Phil Town & Rule#1 Investing:

Talking Investors Into Destroying Their 

Own American Dreams

by: Brendan Magee


 There is no shortage of con men, gurus, and prognosticators lining up to profit off the demise of hard working people's American Dreams and Phil Town, founder of Rule#1 Investing falls right into that group. 

Some how some way I have found myself on the receiving end of his Facebook posts and when I looked into what he was offering,  I couldn't believe it. I mean you really have to have a lot of nerve to legitimately offer to people such complete nonsense knowing full well there is no way in hell you can deliver on your claims.

His first claim is that investors "Can achieve average annual returns upwards of 15% buying wonderful companies on sale." Now when you go to his virtual seminar you will learn a system and a strategy for finding great companies which will only cost you $297. 

According to Town, a wonderful company is. "One that will continue to grow as the years go by, surviving whatever challenges the market may throw at them along the way." 

So right there is a bait and switch. People who follow his method of investing won't be investing, they'll actually be engaged in predicting the  future. No matter what the market throws at these "wonderful companies," they are going to grow, and if the past two years has taught us anything the future is relatively easy to know in advance. Really, at the end of 2019 who didn't know a global pandemic was coming and that the world's economy was going on lockdown?

Even more evidence that you won't need to protect yourself from the future is Rule#1 Investing's claim that, "You don't need to diversify, if you know how to invest."   The reality is you don't need to diversify if you can predict the future. If you know every year what the top performing companies are going to be, there is absolutely no need to diversify. Here again, Rule#1 Investing shows its flaws. If you can identify the top performing company, why would you need to buy more than one? Why wouldn't you simply buy the company that was going to perform the best? Why waste any money on the second best company?

The simple truth is no one can predict the future, no matter how much they would like to believe it. Rule #1 investing is putting people in the same position as people walking into a casino. They are gambling, only they may be doing it with money they will need to retire or put their kids through college. Gambling a few bucks on a football game or on a weekend in Vegas may be enjoyable and harmless, but talking people into doing that with the money they will need to fulfill on their American Dream is disgusting. Unfortunately, the only protection people have from these kinds of scams is to be aware of them and avoid them before they fall victim to their seductive pitches. 

If you have any comments or suggestions, call 610-299-3969 or send an email to brendan@coachgee.com.  



Friday, August 16, 2019

Investors Out 53% In Returns!!

Investors Receiving 53% Less In Available Returns!!
                                                                                           by: Brendan Magee


This week there was a lot for investors to worry about. The Dow dropped 800 points. There are indicators that a recession has started. There is always news of a trade war between the U.S. and China and the impact that is having on our economy.  However, all this pales in comparison to a problem that is causing more damage to investors and their families than anyone is taking the time to realize.




For the 30 year time period 1988 through 2018 investors received 53% less of the returns that were readily available to them. From 1988 through 2018, U.S. Large Company Stocks had an annualized rate of return of 9.97% while the average stock mutual fund investor did an annualized 4.09%. So investors on average only received 47% of the returns that were readily available to them. Bond investors did even worse. Their annualized return or this period of time was a measly 0.26%.


To put this in perspective, at 9.97% annualized return $100,000 invested in 1988 through 2018, an investor who invested in U.S. Large Company Stocks  would have seen their portfolio grow to $1,730,719. The average stock mutual investor in that same year would have seen their $100,000 doing an annualized 4.09%, would have seen their portfolio grow to $780,670. In other words, the average investor received $950,049 less in returns that were readily available to them.


Yes, there are investors who did better than the average, but even if they did twice the average they are still underperforming the benchmark. Now even more heartbreaking is the fact that there are also investors who did worse than the average. We have to consider there are investors who did twice below the benchmark which means they saw close to a zero percent annualized return over the past 30 years.


Now take a moment to think about the impact this disparity in returns is having on the lives of everyday people. Money, or lack of success with money, causes stress on people's lives. Stress leads to health problems. Money creates tension in the home. Relationships get strained, and we all know that frustration with money can lead to divorce. Vacations that were planned have to be put off or cancelled all together. Colleges that you planned on sending your kid to have to be taken off the list. Retirements have to be put off or never happen at all. Second jobs have to be taken up. Less time is spent with the family. Explanations that can't be given as to why the plans families made and aren't happening only add to the frustration husbands and wives start to experience with one another. Lives are being impacted by this epidemic.


So what's at the root of this problem? How do we start to right the ship? First and foremost, we have to start working on the right end of the problem. The same study that showed the disparity in investor returns point to another problem. Investors are making changes to their portfolios within a 3 to 4 year period of time. Now most people will readily agree that when they are opening up an I.R.A. or participating in a 401k plan that they are in engaged in a long-term process and that the money needs to be left alone to grow. Unfortunately, making changes to a portfolio every three to four years is not behavior that's consistent  with producing good long-term results, matter of fact it's in complete conflict with it.


So in other words, investors are not dealing with an investing problem, they are dealing with a behavior problem. Much like an obese person can't stay away from junk food or an alcoholic can't stay away from the booze, investors are engaged in behavior that is every bit as destructive to themselves and their families. Unfortunately, until we acknowledge the problem for what it is, a human problem, we are not going to change the results investors are achieving.


So ask yourself one simple question, Are you capable of managing your behavior over a 25 to 30 year period 100% in lock step with producing the results you want for yourself and your family? If the answer is no, like a lot of people have done with Weight Watchers or Alcoholics Anonymous get structures in your life that will help you stay on the right path. If the answer is yes you believe over 30 years you can be consistent with your behavior, get a second opinion from your spouse?


Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments send an e mail to Brendan@coachgee.com or call 610-446-4322



Tuesday, April 3, 2018

Investors-The Reality Of Coached vs Not Coached

How Investing Occurs For Coached vs A Not Coached Investors
                             by: Brendan Magee

How does the world of investing occur to you? When you think about investing what are the words you would use to describe how you feel or relate to investing? This was a question I posted on Facebook and got back a few responses that show there is a clear difference between how investing occurs for a coached vs  a not coached investor. 

One gentleman responded by saying investing occurs as  disciplined and a well defined philosophy. I think that this gentleman feels pretty confident and focused in regards to what is happening with his money. I would imagine he feels pretty secure about his and his family's financial future. 

Now the truth be told, I know this gentleman. I have been coaching him for the better part of seven years. He has put in the time and energy it takes to understand what prudent investing looks like. He has taken the time to understand what imprudent investing looks like and what it takes to avoid it.

Now another lady responded to the Facebook posting and honestly responded that investing occurs to her as risky. That it is for people who can risk to lose money and that it is scary. 

I have known this woman longer than I have known the previously mentioned gentleman.  She has not taken advantage of the coaching that has been offered to her and as a result the impression she has about investing hasn't transformed too much over the years. 

Now the importance of the contrast in how investing occurs between these two individuals is huge. Their perspectives will be the driving force behind the actions they take or don't take over their lives which will have a huge impact on how their lives turn out. 

Think about the American Dream as most people see it. It is embodied in family, and what we want to provide our families with, opportunity to attend good schools, live in a decent neighborhood, take nice vacations, build up financial security, have a say in the causes we value the most, and have a pleasant retirement. What fuels all that? Money, and unless you can play basketball, football, or can sing like Michael Jackson your paycheck won't cover all that. You will need to invest. 

Imagine how successful you would be as an investor if you saw investing as something painful and to be avoided? The most prudently engineered portfolio won't do you any good if you avoid it like the plague. You simply can't achieve your dreams on savings account interest rates. 

Now the coached investor's actions are consistent with achieving their American Dream. The "not coached" investor's actions are not consistent, in fact they are in direct conflict, with achieving their American Dream. They are at the mercy of a story about investing they believed to be true, but really isn't. 

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions and comments e mail brendan@coachgee.com or call 610-446-4322.

Monday, March 26, 2018

Listen To Ray Didinger When It Comes To Football, Not Investing

Listen To Ray Didinger When It Comes To Football, Not Investing
                                by: Brendan Magee


There isn't a more respected journalist in Philadelphia then Ray Didininger. Eagles fan want to listen him after every game. They don't just put anyone in The Pro Football Hall of Fame and he is in there because of the tremendous work he has done over the last 40 to 50 years. 

That is why I was so disappointed to hear him endorsing an investment program that has been academically proven to be wasteful. I am listening, as usual, to the local sports station and that's when I hear Ray sell out investors. He is endorsing a program that is going to teach people how to trade stocks like a Wall Street Pro. This program will teach you when to buy stocks, when to sell them, how to spot trends and know how to take advantage of them, basically no matter what is happening in the stock market you will learn how to profit from it. 

Now let's step back for a minute and imagine that Ray was endorsing a program that would "safely" teach aspiring athletes  how to use performance enhancing drugs/steroids. Not only that, let's say he was endorsing a program that would also teach aspiring athletes how to get past any drug tests they may be required to take in order to be eligible to participate in the upcoming season? Given all we know about the dangers of taking these kinds of drugs, how many of us would turn a blind eye to a man trying to get people or our children to engage in behavior that we know is destructive? 

That is exactly what he is doing by endorsing this on-line training academy's program. In 1990 The American Law Institute's Prudent Investor Law stated, "Forecasting in an attempt to separate the winners from the losers is deemed wasteful." Forecasting, speculation, and gambling are exactly the behaviors people are engaged in when they are stock picking. Not only do they take on the risk of gambling, they also engage in the added risk of owning individual stocks. Ever heard of Enron, Bear Stearns?

Now Ray is a very trusted individual. He has earned that trust over many years of integrity filled journalism. It would be very easy for any of the millions of people living in Philadelphia, based on his endorsement, enrolling in this trading program and start gambling and speculating with money they are going to need in retirement. 

The irony here is that more often than not if someone asks Ray on the radio who he likes in the upcoming Eagle's game or has a question about their fantasy league team, he immediately discourages the fan from using the information he is giving to go out and gamble on the Eagles or their fantasy team. He doesn't want to be responsible for them losing any money. I have no reason to doubt the man's sincerity over wagering on football games. It's just that when it comes to investing their life savings, he is encouraging investors to engage in the same kind of behavior. Why Ray?

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments e-mail brendan@coachgee.com or call 610-446-4322.










Monday, March 19, 2018

Gold Doesn't Fuel Your American Dream

Gold Doesn't Fuel Your American Dream, Cash Does!!
                 by: Brendan Magee


I got a couple of calls the other day. One client is getting ready to take a trip over seas. One client needs a couple of dollars to pay the taxes on her beach house. The trip and the beach house are significant parts of both these ladies' dreams. One is a devout woman of faith and she is taking a trip to the Holy Land. The other lady has had the beach house in her family for more then 50 years. Her children, her children's children, and her great grandchildren have spent a significant part of their lives at that house. The taxes and the air fare both need to be paid in cash, nothing else will be taken for payment.

This may seem like a bit of an oversimplification, but I recently received an e mail asking me if I would like to attend a seminar where I would learn about the benefits of investing gold. I would learn about how gold will perform when inflation, interest rates, and debt levels go up. Plus, I would learn how a trade war will affect the stock market. First and foremost, how do they stand their with a straight face and tell anyone they know how an investment will perform in the future? 



I ask myself, "Even if I know how gold will perform in the future and how a trade war is going to affect the stock market, "So what!" Like my two clients, I have dreams and things I want to do in life, but they can only be paid for in dollars. I cannot take a gold bar to the college my boys choose to attend and pay the tuition with a gold bar or certificate. They will want cash. The trip my wife and I want to take to Hawaii will require cash as well, not gold.

As an exercise, for a few minutes, write down all the things in life that you want to do, see, experience, or have. How many of them do not require cash to pay for? So one problem is I need  cash to fulfill on my dreams. The other problem is that gold has been a terrible long-term investment.

Historically, the long-term rate of return of gold is about even with T-bills. The amount of volatility is about equal with stocks. In fact, according to Longtermtrends over the past 100 years the S&;P 500 is up over 36,000 %, the Dow Jones is up over 31,000 % while gold is up only 6,568%. So as an investment, gold has me taking stock market risk but only getting T-bill returns. Not a recipe for investment success.

So yes, buy your wife that gold necklace or watch. She deserves it and will look great in it, but as far as investing and coming up with enough cash to fuel your American Dream you would be wise to stay away from gold.

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments e mail brendan@coachgee.com or call 610-446-4322

Tuesday, March 13, 2018

One More Reason Why The American Is Dying

One More Reason The American Dream Is Dying
         by: Brendan Magee


As evidenced by a recent Fox News Poll, 88% of U.S. citizens believe that a secure retirement is a major part of the the American Dream. I think we would all like to believe that after a lifetime of hard work that we have the right to sit back and enjoy our golden years in relative comfort and security. 

The problem is that, routinely, investors are being talked into decisions and behaviors that are in complete conflict with financial security. I saw an article in Yahoo finance that does just that and thought I would point out the flaws, but at the same time show you how investors can easily get seduced into following this misguided advice. 

The article entitled "My 7 Must-Own Stocks to Build Up Your Retirement," does what a lot of investment articles and broadcasts do in that they give the illusion that the advice is prudent when in fact it turns an investor into an unsuspecting gambler and speculator. 

So let's start off with the "7 Must-Own Stocks." They are as follows U.P.S., Boeing,Visa, AbbVie, Jason Hall, Colgate Palmolive, and Westlake Chemicals. First and foremost, the article is posted on Yahoo Finance which tends to give the article a boost in credibility. Secondly, the article lists a few companies we are all familiar with. We see the U.P.S. trucks all the time as well as their commercials. We probably all brush our teeth with Colgate or use their mouth wash. With our level of trust going up, we tend to lower our guards and give the article more credit than it deserves. 

  The first question to be asked is, "How does the author, Lawrence Meyers, of Investor Place know what is going to happen in the future with any of these companies?" He goes into detail about why believes their stocks are good investments based on  information he has in hand, but what does any of that information have to do with what will happen in the future? The truth is  only unknowable and unpredictable information and how people around the world react to it is going to move the market. What do you think your odds are there?

What ever information he has will have nothing to do with what happens to these companies in the future, good or bad. So the investor who takes him up on his advice believes they are engaged in investing when in fact they are speculating and gambling with money intended for retirement, not the blackjack table. 

Secondly, one of the most critical components of successful long-term investing is diversification. It protects you from unforeseen future developments like 9/11, or a 2008 stock market crash. Ideally, by having your money spread out among multiple asset classes you are protected against the possibility of one asset class tanking. You also don't miss out on an asset class taking off and you missing the boom.

With this article's advice all the money invested in these companies is all in U.S. Stocks. Remember the 38 percent drop in U.S. Large Company Stocks in 2008? So not only would your money be invested in one country, it would be even less diversified by owning individual stocks. Unknowingly, the investor following this articles advice is taking way more risk than they are aware of without an increased expectation in returns. 

So the article seduces the investor into becoming a speculator and a gambler, and we all know the long-term expected profit of gambling and speculation. Then gets the investor to take on massive amounts of risk without any increase in the long-term expected rate of return. That is not a recipe for a secure retirement. It's recipe for working longer, retiring with far few resources to afford the kind of retirement you were hoping to live,  or not being able to retire at all. In either case, that is not what most people are looking forward to in retirement.

To protect themselves from this kind of advice, investors need to start asking themselves better questions. Questions like: How does the market really work? How does the market produce the returns it is generating? How do you spot the warning signs that someone is trying to talk you into gambling and speculating with your money rather than prudently investing it? Answering those two questions would put the investor in a far better position as far as knowing what should be done and not be done with their money? 

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments e-mail brendan@coachgee.com or call 610-446-4322