Are Investors & Adviosrs Vicitims of Brainwashing?

Have We Been Brainwashed?

by: Brendan Magee

We have seen over time where people have been brainwashed into committing ungodly acts. The Nazis indoctrinated Germany into believing it was perfectly ok to kill Jews by the millions. ISIS has their soldiers at total peace in cutting off the heads of people who don't believe in their brand of Islam. People have been persuaded into drinking Koolade laced with poison that would kill them instantly. We look back at those acts and many more like them and have a hard time believing how people get talked into such behaviors. For the most part, I believe people take the position that, if under the same circumstances, they would not have caved in. They would have stuck to their principles and not succumbed to the peer pressure or brainwashing if you will.


It's our moments of pride and overconfidence that I believe we become the most susceptible to unhealthy forms of indoctrination/brainwashing. Unfortunately, investing is one of those areas where we would do well to take a step back and see, "Have I been brainwashed?" Have I been talked into behaviors and believes that on the surface seem ok, but in reality are doing harm to myself?


Brainwashing as a noun is defined as a method of systematically changing attitudes or altering beliefs. It is embodied by any method of controlled systematic indoctrination, especially based on repetition or confusion. Can you think of any industry that produces more information that absolutely no one can begin to comprehend then the investment industry? If I can control your beliefs haven't I gone a long way towards controlling your behaviors, what you will and won't do with your money?


If you do a word search on Google for the word money, 923,000,000 will come up for you to read. It would take about 5,268 years to read all those pages. Every one will have a suggestion as to what to do with your money and tons of statistics telling why their suggestion is the right one. My bet is that after 10 to 20 pages your head will start to spin. This doesn't say anything about the 28,000 mutual funds out there.


Now we come to the repetition. Every last bit of the information you read about what to do with your money promotes one of three strategies. Stock picking, market timing, and track records. Here are the stocks to own or get rid of. Now is the time to get in the market. Now is the time to get out of the market. Now is the time to buy these kinds of stocks or gold. Here is a fund with a brilliant track record over the past five, ten, 20 years and the person you should hire to manage your money. Are there any other kinds of messages that you see on TV, the inter net, the magazines, the cable shows, etc. It is a constant 24, 7, 365 stream of messages coming at investors. Does the word repetition seem appropriate?


Now long before the 1930's with the Nazis and long before the 2010 with ISIS, it was pretty much accepted that murdering innocent people was wrong. So how did so many people get talked into committing such atrocities? They couldn't tell the difference. Some were born into it. Some through coercion came to see their behavior as acceptable. They couldn't see the harm in it. They couldn't feel the harm they were inflicting on others or themselves. This wasn't the result of just one message. It was massive amounts of information going out to people and being manipulated to get people to believe and act as desired.


How does this apply to investing? Most people would never dream of taking their life savings and walking into a casino and start a daily habit of gambling and speculating with it. They know that would be downright foolish. They probably couldn't be convinced no matter how much information they were given to allow somebody else to start playing roulette, blackjack, or shoot craps with their retirement savings.


Back in 1990 the American Law Institute in writing the Prudent Investor Law came to the conclusion that "Bargain shopping in an attempt to separate the winners and losers through forecasting was deemed to be wasteful." By it's very nature stock picking, market timing, and track record investing are forecasting. It is an attempt to predict the future, no different from gambling. Yet in the fog of 28,000 mutual funds and 900,000,000 inter net pages that reality escapes the overwhelming majority of investors. They are led to behaviors that cripple their chances of ever experiencing true peace of mind with their investments.


The results don't lie. Most people, no matter what the casinos would like us to believe, do not walk into the casinos on a consistent basis and become affluent. The odds are not in their favor. In fact, there are mathematical formulas proving that the more you gamble, the more you will lose. That same mathematical evidence applies to stock picking, market timing, and track record, investing. Affluence does not result from those activities. More accurately, poverty results from those activities. From 1984 through 2013 U.S. Large Company Stocks annualized return was 11.10%. The average Stock mutual fund investor's annualized return in that time  was 3.69%.Inflation was up an annualized 2.80% over that same time. The tragedy is that investors are doing it to themselves.


I don't believe someone, unless mentally disturbed, would intentionally do harm to themselves. Most people would prefer to grow, thrive, and be at peace. Yet we can't ignore that it is the decisions and behaviors of the investor that is at the root of their problems.


There is only one way to begin to start the healing process and end the cycle of destruction investors are inflicting upon themselves. That is for investors to consider and see for themselves,  that are the victim of a systematic effort to brainwash the investing public. The only way to do this is through being asked the right questions. 


 Do you know the three warning signs that you are engaged in or are allowing someone to gamble and speculate with your money as opposed to prudently investing it? If you can't, brainwashing has seeped into your beliefs, attitudes, decisions, and behaviors. Best not to resist or deny the condition. The damage will only continue unabated. The best course of action would be to accept it and accept that most likely on your own you will not overcome it. On your own, you will be taking on years and years of mental hard wiring. Allow someone qualified to lead you to the cure by helping you to ask the right questions and keep you there.


The great news in all of this is that if your are the source of the damage being done, you are also the source of the cure as well. You are more powerful then you may realize. Access to this power is accepting responsibility for what has been done. Be generous to yourself and don't condemn yourself for being human, and perhaps most importantly, realize where it is that you are powerless. You are up against your own hard wiring, the media, and the investment industry. Maybe you need to realize that to take on the evil empire you need help.




Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments go to www.coachgee.com or call 610-446-4322

Chattanooga, Guns, & Robo Advisors And Mayhem

Chattanooga, Guns And Robo-Advisors

by: Brendan Magee

Tragically, news of sudden bursts of gun fire and loss of life such as the one that played out in Chattanooga, Tennessee are becoming the norm. Does a day go by any more where this isn't in the headlines? They add fire to the national debate over gun control. Some argue that the government needs to be given more power to step in and take people's guns away from them. Others point to people like Mohammad Youseff Abdulazeez who rained a hail of bullets on two recruiting stations as the reason people need the right to arm and protect themselves. They point out that if U.S. Naval Officer Timothy White did not have his gun to fire at Abdulazeez the tragedy would have been even worse.

So who is right in this debate? The honest answer is that there is merit to what both sides have to say. Most people would agree that it is not in the public's best interests for the police to be outgunned by people who are out to harm citizens. Then again, with all the violence out there be it from would be terrorists, criminals, drugged crazed individuals, a person has the right to defend themselves. The police can't be everywhere.
With either side, there doesn't seem to be any debate about a shortage of guns. There's plenty to go around.

I don't know if it is the gun or the hand that is pulling the trigger that is the issue. A gun in the hands of the right individual can be beneficial. The continent of Europe will tell you guns came in pretty handy in defeating the Nazis. Conversely a gun in the hands of  someone like Abdulazeez hell bent on killing someone can prove lethal. I am wondering if more responsibility needs to be put in the hands of those who are distributing the guns. Are they putting society at greater risk by allowing individuals who do not have the skill or mental make up to safely use a gun? If the person becomes mentally unstable or careless maybe the government should be able to confiscate the gun.

Just as there is an ample supply of guns out there, there is also an ample supply of investment products out there for people to purchase. Just like a gun in the hands of the wrong person, an investment product in the hands of the wrong person can prove life changing. The latest fad of Robo-Financail Advisors is going to put more investment products in the hands of people who are not qualified to be using them.

Usually, when a person buys a gun there is a safety course on how to use the gun, how to store the gun, etc. So there is at least some attempt to prevent a tragedy form happening. With Robo-Advisors, there isn't any hands on supervision. From the comfort of your own computer, an investor answers a few questions and from there the investor is free to invest. Whether or not they understand what they are doing or not isn't much of a consideration. From the investment industry's perspective it enables them to get their products in the hands of the investor quicker and more efficiently. What could be better?

The problem is that just like firing a gun, investment decisions have life changing consequences. For some the idea of owning a gun is an emotional rush. It's empowering. Making investments is also just as emotionally charged. The idea of becoming financially independent or hitting it big can be just as seducing and lethal. Unfortunately, emotionally charged decisions without wisdom usually turn out bad. Just ask the Japanese about Pearl Harbor.

The problem with guns and Robo-Advisors is that once in the hands of the consumer the safety net is gone, and the public needs all the safety nets it can get and so do investors.

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments go to www.coachgee.com or call 610-446-4322.

The Ocean & Investing Shows No Mercy

No Mercy Given By What You Can't See

by: Brendan Magee

I can't imagine the anguish that the parents of Austin Stephanos And Perry Cohen are going through right now. No doubt you have read or seen the news on the two boys who have been missing off the coast of Florida when they went out on a fishing trip about a week ago. To have your 14 year old sons lost at sea for days has to be about the worst nightmare come to life for any parent. My prayers go out to those boys, their families, and the men and women who are conducting the search. I hope everyone is home safe and sound real soon.

Looking back your vision is always 20/20. We look and see things that we should never have engaged in and clear alternatives to decisions that turned out badly. Perhaps, Austin and Perry's parents would have never let them take a boat out by themselves under any circumstances. Perhaps, the parents would have told the boys they couldn't go fishing until an adult who had years of experience and a license could accompany them. I have to imagine there is a lot of second guessing going on in their minds these days

With investing we can also see clearly looking back. If an investment went bad, no doubt there would be things that would have been done differently. For example, "My gut was telling me that investment adviser's recommendations  didn't feel right and if I had to do it over again, "I would have held off on investing that money in that fund!" In the moment prudent decisions can be hard to see. We get excited, scared, misread, misunderstand over estimate under estimate, etc.


None the less, we can't go back and change the things we've done or the impact they have had on our lives. The big problem is that we don't always have the opportunity or the wisdom to double check what we can't see in making our decisions.

I would imagine that neither Austin or Perry knew that a storm was brewing off the coast of Florida. Unfortunately that lack of knowledge or foresight could prove to be fatal and life altering for their families. I would imagine that in November of 2008 when investors took $58 billion out of the market they couldn't see the rebound that was coming in less than six months. I imagine the investors who absorbed huge losses when China's Stock Exchange plummeted earlier this month couldn't see that coming either. If they threw caution to the wind and loaded up on Chinese stocks they absorbed a loss whose impact is most likely permanent.

The point is it is easy to lose perspective. We get confident in abilities that we do not have. We convince ourselves that the bad things that happen to people when they break the rules of investing won't be too  bad or only happen to other people. That is when we pay a price we never bargained for and couldn't imagine how painful it could be.

The better part of valor is to swallow our pride  and enlist the help of someone else who will act as another set of eyes and ears to see and hear what we can't. We can't always tell we've had too much to drink, but our friends can. We can't always see when we are about to break the rules for investing, but a coach can. In either case the better outcome is to not drive and not make a decision that could cost you everything. You will live and one day you will look back and thank God somebody stepped in and cared enough to stop you.


Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments go to www.coachgee.com or call 610-446-4322.

Confront or Turn The Other Way?

Confront or Stay Silent?

by: Brendan Magee

Today, I am filling up my car with gas, thankful that I paid .30 cents less per gallon due to my super market's bonus points program. A young couple pulls up at the next pump to fill up their lawn mowers and pick up truck. The guy is pumping gas while his lady passenger sits in the front seat with the window down smoking her cigarette. I am having visions of the movie The Towering Inferno. What do you do? Let the couple know they are putting themselves and everyone else at the gas station in danger and risk getting punched in the nose? Honestly, I chose to pump my gas, stay silent, and get the hell out of there as soon as I could.

It doesn't get much more personal than telling someone that their behavior or choices are the source of their failures.This is the dragon that Investor Coach and investor have to slay before investors are going to start achieving the success.

I saw a post on Facebook and the woman was blaming Wall Street for the Crash of 2008. It's easy to blame someone or someone else for our shortcomings. The President, Congress, my ex-wife, my parents, Wall Street etc. are so much easier to blame. If it's their fault I don't have to feel the sting of responsibilities I have failed to live up to. I also stay stuck, but the reality is investors really don't have Wall Street or anyone else to blame for their investing problems.

Yesterday I saw a statistic that was pretty amazing. U.S. Large Company Stocks since 1926 has had annualized returns of a little more than 10%. To put that in perspective, that means that roughly every seven years an investor would have doubled their money if they deposited the money in that asset class and just left it alone. Imagine, that in spite of Depressions, wars, oil embargoes, terrorist attacks, Presidential assasinations, etc. that you would have made out so well.

The key word in that last paragraph is left it alone. Investors behavior has not been consistent with leave it alone. In that same set of statistics investors have been shown to make changes to their portfolios roughly every three years. What they are doing is selling investments that are not performing or have lost money and buying investments that have done better or are expected to do better in the future. In actuality they are buying high selling low.

As opposed to the 10% return of U.S. Large Company Stocks, the average annualized stock mutual fund investors returns are hovering around 3.25%, barely enough to stay ahead of inflation.

So what are we supposed to do? Do we not have the uncomfortable conversations? Do we never give the investor an opportunity to see that they are the ones responsible for crippling their financial security? Do we never give the investor the opportunity to taste and feel the amazing sensation of transformation?Imagine how your life would change if all of a sudden you could stick to the behaviors that will get them to the point where they are doubling their money every seven to ten years? What does that make possible?

Now imagine on your deathbed you had the revelation that that conversation and all the possibilities it would have created for you and your family was withheld from you, simply because it was safer?


A very wise woman once told me that our power as human beings is in being responsible and being generous. I think this applies to coach and investor. We need to own up to where we are not being responsible. We might have to own up to the fact that we are avoiding difficult conversations because it's safer. We might also have to be generous to ourselves and not make ourselves out to be terrible human beings for making mistakes in the past, maybe knowingly and turning a blind eye to them. Perhaps in forgiving ourselves, it will make it easier to forgive others.

We can't do much worse then we've been doing.


Brendan Magee is the owner and founder of Inevitable Wealth Coaching. With question or comment go to www.coachgee.com or call 610-446-4322.
  

Investors, Are You Doing The Work?

Investors, Are You Doing The Work?

by: Brendan Magee

Over the last two years I have been engaged in a pretty intense workout regimen. If you are familiar with the CrossFit craze that has been sweeping across the country you might have an idea of what I am talking about. The intense hour long workout involves a lot of sit ups, push ups, burpees, mountain climbers, running in place, planks, hitting a heavy bag, etc. When finished, there is no doubt as to whether or not I have worked out. My weight has dropped by about 20 pounds in that time.

Prior to starting this workout regimen I went to the gym four to five days a week did a little treadmill work, stationary bike, some weights, etc and went home. I went to the gym but did I workout? The truth is, not really. Then in October of 2013 I had routine check up with my cardiologist. My weight was up to 214 lbs and cholesterol was higher than ever. 

When the doctor asked if I worked out I answered yes, but in the back of mind I knew I really wasn't. Nobody else but me really knew the truth. It also didn't help that with every lunch I ate,  I had a nice bag of potato chips and a couple of Cokes. As far as my health and vitality were concerned, I wasn't doing the work. The choices were pretty clear, stay on the same course and die or get to work and hopefully live to see my grandchildren. 

The same dilemma faces many investors. Rather than health and vitality (which can be affected by your finances), what is at stake is your peace of mind, quality of life, and freedom. How much or how little of these things you get to experience are tied to how much work you are putting into your money and investments. Merely, putting money into a 401k or an I.R.A. is not doing the work necessary to achieve peace of mind. Matter of fact if that is all that you do, there is a pretty good job your finances will suffer even more.

Putting in the work means determining your investment philosophy. How will your money should be managed is what is being answered by determining your investment philosophy. It means coming to an understanding of how markets and the world of investing actually work. Putting in the work means taking a look in the mirror and getting that some of your behavior and decisions could be  contributing to your lack of financial security. 

It might mean coming to the realization that on your own you will more than likely screw things up and accepting that you need a coach in your life.  

The work doesn't entail giving an investment adviser your money to invest and then walking away leaving your financial future solely in their hands. It entails participating in a system to verify that your advisers decisions are consistent with achieving your agenda. It entails attending investor briefings so that you can stay close to why what is being done with your is the best course of action. Money alone doesn't do the work. Your time, effort, energy, and passion are required. 

Sure there are pills that I could take to lose weight. These pills also promise that I could continue to eat potato chips and drink beer to my hearts content, but we have heard the horror stories that are associated with those wonder drugs. There are also those, via web sites, that tell you all you will have to do is fill out a few questions on an electronic form and from there all your investment worries will be a thing of the past. God help you with those side effects. 

The realization and we have probably all, painfully, come to this realization more than once is that there is no such thing as a free lunch. The cost usually involves money, but that is the easiest part of the solution. The real elixir is your time, effort, attention, and ego. Giving more of some of these and putting the other aside usually produces the results we are looking for. 

Brendan Magee is the founder and president of Inevitable Wealth Coaching. With questions or comments go to www.coachgee.com or call 610-446-4322.

401k & 403b Plans, Failing The Participant

401k Plans & 403b Plans, Failing The Participant

     by: Brendan Magee

Most people realize that as far as your retirement is concerned, you are on your own. Social Security currently covers maybe 40% of your working income if your lucky. You, and you alone, will be the  left to take care of the remaining 60%. Hence, the 401k plan or 403b plan grows in their importance to the American worker. 

In retirement, the American worker's financial security will depend on how well they have invested in their retirement plan. At the moment, the workers are losing that battle in a big way. Dalbar's Inc. runs an annual report on how well or poorly investors are doing. Over the last 20 years, the average stock mutual fund investor's annualized return was 5.02% vs U.S. Large Company Stocks which did 9.22%. Bond investors did even worse. The Barclay's Bond Index did an annualized 5.74% vs the average bond investor who did a measly 0.71%. 

The task gets even harder when the investments being provided to 401k and 403b plan participants are universally substandard. It also doesn't help when that lack of good investment choices are brought to the attention of the plan sponsors and it falls on  deaf ears. The sponsors in smaller companies could be the owner for the company and in bigger organizations they could have a separate department handling the running of the retirement plan.

I had two such frustrating experiences recently. The first, occurred when an employee at a school district came to me with concerns about the returns on her 403b account.  In 2014 on an account which had an $8,000 balance, her return was just $80 which is a return of just .000875%. By comparison, U.S. Large Company Stocks did an annualized 13.69%. This young lady was woefully falling behind the rising cost of living.  The worst part of it was that the other investment options in the plan hadn't performed all that much better than the investment she was in. 

When she found better investment options than her plan offered and asked her school district's business manager to add her preferred investments to the plan,  he told her to just use one of the other investment options already in the plan. In other words I have no clue about the school district's retirement plan and your concerns are of no importance to me. So frustrating!

The second situation occurred when a 401k plan participant came to me and wanted some help investing in her company's new 401k plan. The company was offering mainly target dated funds where the participant selects options that are designed around when you feel you will retire. There are various options where portfolios are specifically allocated for people retiring in 30 years, 20 years, 10, 5. etc.

When we looked at the various portfolios, the participants money would only be diversified amongst four different investments with any where from 40% to 60% going into U.S. Large Company Stocks. Still feeling the effects of 2008 where U.S. Large Company Stocks dropped by almost 40 percent, the participant wasn't feeling secure with her investment options. 

So here we were in a plan that was fundamentally flawed. With only four asset classes represented in the portfolio and being overly concentrated in U.S. Large Company Stocks there was a lot to be concerned about. We arranged a meeting with the person in charge of retirement plan benefits for the plan and showed him that as it was the plan would create a situation where the participants would be taking way more risk for the expected rate of return for each portfolio being offered. We also show that in some cases the participants would be out hundreds of thousands of dollars in expected rate of return as a result of the lack of diversification in the plan's portfolios.  It was a pretty much cut and dried analysis placed before the benefits manager. 

His response was there were administrative issues that required them to stay with their current plan and no changes would be made to the plan for the foreseeable future. In other words, I do not want to add to my work load no matter how much the participant's financial security is being compromised. 

The truly sad part is that these are just two people amongst millions who have had their eyes opened to how bad their company's 401k/403b plans are. There are millions who have no idea that they are pouring money into plans that will only make it harder and harder to afford retirement, and that the plan sponsors are not interested in solving their problems.

So what's a 401k or 403b plan participant to do? Not participate? Get further behind in the race to build up a sufficient nest egg? Neither of those options are optimal. Most likely, you continue to participate in a bad retirement plan. In most cases the participant is left completely in the dark as to how substandard their retirement plan truly is. The realization only comes when retirement approaches  and they realize they do not have nearly as much money as they needed.

 As in the words of one of the plan sponsors I met with "We are not eager for our employees to find out we have a bad plan." 

The only winner in this is the investment companies. They are brought in to invest people's money and are left unfettered to collect their fees and build huge profits from commissions. The participant doesn't win because it becomes more difficult to impossible to save enough money to retire. The company doesn't win because they are paying for the administration of a substandard plan that none of their employees can feel good about. The solution will only come when the sponsor is bothered enough by wasting money on bad plans. When that comes, your guess is as good as mine.

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.

The Questions Not Asked, The Decisions You Don't Get To Make & The Toll They Take On Investors

Questions Not Asked,  Decisions Not Made, 

& The Toll They Take On Investors

                              by: Brendan Magee

Last week, I was having a conversation with a very nice man during which I asked what he did for a living. He informed me he was on his second career. He retired a view years back after the company he worked for downsized the work force and he wound up as one of the casualties. Being close to retirement, he and his wife decided they had enough money to last the rest of their lives and it was time to start enjoying their lives.

Things started out o.k., but along with 2008 and the company's downsizing came the stock market crash. In a bit of a panic, Tom called his financial adviser and told him he wanted his money out of the market. Despite his adviser's advice to stay the course and the penalty that Tom would have to pay, he went with his gut and got his money out of the market and went on his merry way, which didn't prove to be as merry as he thought it was going to be. With the significant loss of his investments, his finances were not going to allow him to stay retired. He had to go back to work. 

My heart sank as he told me his story. Nobody likes to hear about someone struggling and realizing that their life's work won't be enough to fulfill on their hopes and dreams. 

Honestly,  I do not know the details of Tom's finances. I don't know how he had invested his money nor have I ever been privy to the meetings he had with his adviser when the money was first invested or withdrawn from his investment. The one thing I am taking notice of is that Tom's behavior isn't necessarily consistent with the rules for investing, buy low/sell high. So my mind and the questions I asked Tom went back to when he was first deciding how or where to invest his money. I was wondering if he was prepared to live with a downturn in the market or if he know how volatile his investments were. Were his expectations properly aligned with what he invested in?

So I asked him when he first started, did he get asked if he could come up with a mathematical measurement for how diversified his portfolio was? He said, "No, I was never asked questions like that." With that I surmised that Tom, like a lot of investors, made a decision without being able to fully answer and decide on one of the most fundamental questions anyone could be asked about investing and their financial security. Now he is paying the price and quite frankly is still in the dark as to why things have gone so wrong. 

Diversification is the cornerstone upon which all successful investing rests on and Tom was never given the opportunity answer this question. He was/is in the dark and not fully able to make the proper decision for him. I will lay odds he never got to fully answer questions about risk or cost either. 


To right this wrong and for investors not to find themselves in the same boat, more attention has to be given to the questions that need to be asked. The right questions are going to show investors what they aren't seeing and whether or not they are making decisions based on facts or dangerous assumptions.   

How does the stock market really work? Plus,Where do returns truly come from? These would be a just a couple additional questions that need to be answered as well.  The results Tom and his wife have to live with now most likely are not a coincidence. Nor would they be for any investor who wasn't given the opportunity to be asked the necessary questions and make the decisions that are most appropriate to their situation. 

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.