Perception: For Politicians and Investors It Can Be Lethal

Perceptions: For Politicians And Investors, They Can Be Lethal!

by: Brendan Magee

Especially in America, we feel entitled to our opinions and interpretations.Once we have made up our minds about something that becomes the truth we go by. Unfortunately, before we base our decisions about how we will invest our money or who we will vote we never stop to see if  our brains have misinterpreted what our eyes, ears, sense of smell, and touch actually encountered. In the case of world events and investors account balances it would have been so much better if we could have gotten a perception double check.

"1924, The Year That Made Hitler" documents the trial for treason held when in November of 1923 Hitler and a group of National Socialists failed in an attempt to overthrow the government in Munich, Germany and use that action as a springboard to stage a march on Berlin and overthrow what they saw as the illegitimate government running all of Germany.

Hitler's trial was an international media event. As of 1920 through political rallies, he had become a fast rising political figure. Newspapers across Germany and the world added to the drama. Hitler was now going to   voice his political views and vent his frustrations about the problems facing Germany to the world.

In the German town of Rheydt some 400 miles from the court proceedings and having never met Hitler, a young university-educated  nationalist was eagerly reading the newspaper stories of the trial. In personal diary entries about the trial the young man wrote " "Communism, the Jewish question, Christianity, the Germany of the future. Hitler touches on many questions, but he makes the solution very simple.What is liberating about Hitler is the involvement of a really upright and truthful personality."This young man's name, Joseph Goebbels.

As I read this passage from the book, A. I am finding myself desperately wanting someone to shoot Hitler to stop the horrors he was to bring the world over the next 20 years, and B,  I was remembering a conversation that I had with a client almost eight years ago. Barack Obama was just about to become President of the United States.

I had a client call me up in a high state of upset. She wanted all her money out of the stock market. She said Obama was going to be a disaster for the the stock market and she wanted her money which is what we did, and in so doing terminated our professional relationship. Well,  we are coming to the end of Obama's term in office and here is what $100,000 invested in the various markets of stock grew to from Jan. 2009 through Dec. 2015:

U.S. Large Co. Stock $263,000

U.S. Small Co Stock $297,000

U.S. Large Value Stocks $222,000

As it did for the world with Hitler and my former client's perceptions, relying on them didn't prove to be beneficial for either.  This is why one of the biggest attributes an investor needs to be successful is humility which is defined as thinking less of yourself while at the same time not thinking less of yourself.

Our perceptions are prone to biases, misinterpretations, distractions, half truths, etc. Before coming to any conclusions about anyone or anything people might fare a whole lot better if they asked, "Am I seeing this right?' A five second double check could save a lot of uneccessary heart ache.

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

Sam Bradford & Investors, You Said, Yes!

Bradford and Investors,

Nothing Happens Until You Say, Yes!!

by: Brendan Magee

All in all, Sam Bradford was having a nice offseason. He had signed a new two year $36 million dollar contract to come back and play quarterback for the Eagles with $22 million guaranteed. Chip Kelly had been fired and the Eagles hired a new coach which would give Bradford a little more freedom to run the offense as he saw fit, plus the Eagles had signed a quite a few of their veteran players which should give the team even more of a chance to compete for a playoff spot in the upcoming season.

So all was looking good for Bradford until last week when the Eagles drafted what they hope to be their future franchise quarterback with the number two pick in the draft, Carson Wentz. From there Bradford went from the best available option to help the Eagles win to the guy the fans want out of town as quick as possible.

Bradford let it be known that he was angry the Eagles drafted another quarterback who was next in line to take his place. His agent, Tom Condon, told the press that Bradford wanted to be traded. Bradford would not return the phone calls of his new coach, Doug Pederson, and has been absent from the team's offseason workouts. Basically, every wrong message that could have been sent to the fans and the team, Bradford sent.

Some may blame the Eagles for creating an uncomfortable situation with their quarterbacks and that may be true, but the reaction to the draft, the demand to be traded, the not returning the coaches call, and not showing up for team workouts, that is all on Bradford. He said "Yes" to his comments and behavior and none of the fans ire would be directed at him at this point unless he said "Yes." He, and he alone, is responsible for the treatment he is getting at this point.

It reminds me of a meeting I had earlier this week with a couple. The wife, Jane, was considerably upset with the way their investments were being handled. Their adviser hadn't been in touch with them and she was worried that they were too far in the dark about where they stood with their investments. The husband, Tom,
when we sat down said he felt good about their investments. Even though the adviser hadn't been around too much, he was still fond of him. Even as he admitted that he was somewhat in the dark about their investments, he felt that they had made good decisions with their investments.

An analysis revealed their expenses were way higher than they realized. They were paying $3,500 above what they believed the were paying and that expense was going to go higher the longer they stayed with their investments. They were severely under diversified. 50% of all their investments were all in U.S. Large Company Stocks, the same asset class that went down almost 40% in 2008. They were taking more risk than they needed for the return they were getting.

Bottom line, there was no reason to have the confidence Tom had originally expressed. Jane at this point went from being upset to being frustrated, scared, and confused. She was sure that changes needed to be made.

Tom was little more analytical. He wanted to know why things had gotten to where they were. He wanted to go back and talk to their existing adviser. Even if the market crashed again, he felt he would not get hurt too bad. Whether it was protecting a bruised ego or something else, Tom was not of the mind to make any changes. He wanted to find out how things could have gotten as bad as they appeared.

Like Bradford, Tom is not going to find the answers that will make a dramatic difference by asking questions of his current adviser. He won't find them by researching his current portfolio. None of those will shine the light where it needs to be for him and every other investor out there. The light needs to be focused on who said "Yes" to how he is investing his and his wife's money.

When it comes to investing, an investor's success or failures comes form one source, themselves. Everything depends on what they do or don't do, what they allow or don't allow to happen to their money.

Tom couldn't be in a product that was under diversified, charged him thousands of dollars more, exposed him to more risk and less return until he said "yes" to the investment. Now why would he say "Yes" to an investment that put him at such a terrible disadvantage? It's because he couldn't see that that was what he was doing?

The changes Tom and Jane (or any other investor) want to see with their investments won't take place until they ask some hard questions of  themselves. Do they know exactly what they are doing when it comes to building their portfolio would be a good one to ask. Can they measure diversification? Can they account for all the expenses they are paying? These are amongst a few of the questions that need to be directed to the investor.

These questions will help place the responsibility where it belongs, in the lap of the investor. Once the responsibility is where it belongs,the power goes exactly where it needs to be, in the hands of the investor. Transformation, which is what most investors are looking for, but never get, is an inside out approach. It begins and ends with the investor.

Good luck Sam!

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.