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.

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.

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

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

One Reason Why The American Dreeam Is Diing

One Reason The American Dream Is Diing

A Conversation For Change or A Conversation For Healing, Which Would You Prefer?

A Conversation For Change vs. A Conversation For Healing,

Which Would You Prefer?

          by: Brendan Magee

I am in the doctors office with my dad. He has numerous medical conditions that require doctors to be on top of his situation. They need to see him weekly, check his weight, chemical balances, blood pressure, and to see if the medications he is taking are having the proper effect on his body. To make sure nothing gets lost in all the translations I attend all the appointments with my dad.

During the last discussion it dawns on me that we are not engaged in a process or conversation with the doctor for healing my dad's medical problems. We are in a process for maintaining his health at its present condition. His ailments are not going away and for my dad that is the most frustrating part of all the medications and doctor's appointments. Healing isn't taking place.

What we experience is a never ending process of changes. Weight, blood pressure, or fluid levels are up, the doctor makes a change to his medications. We are in a weekly process of tweaks to his medications. It's one of those things where the more things change the more they stay the same. 

I likened it to the process that a lot of investors go through. Not happy with your investment returns, suffered a big loss, losing out to the hot performing investment? The solution is to make a change. Change to a fund with a higher track record for the last five to ten years. If that doesn't do it load up on the commodities that are getting all the media's attention. If that doesn't do it, turn on the computer and open up an account with E*Trade or Fidelity and start buying companies that the analysts say can't miss.

The constant in the lives of investors as it is with my dad and his doctors is change. If not to their own funds, then the fund mangers in the investors portfolio are engaged in trading of the stocks in its portfolio. The other constant is that the relief from disappointing returns or confusing messages that are floating around out there is that eventually the investor starts to experience the same frustration, confusion, upset, and fear they were hoping to get rid of when they made the last set of changes to their portfolio.

Again, the more things change the more they stay the same.

I do not believe investors are so much looking for changes, rather I believe they would prefer healing. Rather than make the pain of arthritis manageable, wouldn't you prefer to get rid of it once and for all? Rather than soothe your anxieties, fears, and worries about investing, wouldn't you rather find a way to eliminate them?

When it comes to investing, that requires a different conversation. A conversation that is focused on you the investor rather than your portfolio. It requires a conversation that exposes breakdowns and blind spots. It requires an investor to look and see what are the impacts of those breakdowns and blind spots. In other words it takes getting up close and personal with your humanity and how vulnerable it makes us when it comes to investing. An investor needs to see, and take ownership of where their behavior has them taking actions and making decisions that are in conflict with themselves. Most of all, it is going to take acknowledging that when it comes to putting a stop to dysfunctional investor behavior, you alone cannot stop it.

The minute that happens, that's when the healing will begin.


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.

Are You A Predictably Irrational Investor?

Are You A Predictably Irrational Investor?

            by: Brendan Magee

I don't know too many people who would not object or defend themselves if when it came to handling their money, savings, and investments were defined as being "predictably irrational," but Richard H. Thaler, Professor of Economics from the University of Chicago was just awarded the Nobel Prize in Economics for his research in determining how peoples' behavior affects how successful or unsuccessful they are in saving money.

The Nobel Prize committe's position in awarding Thaler the Nobel Prize is detailed below:

The Nobel committee, announcing the award in Stockholm, said that it was honoring Professor Thaler for his pioneering work in establishing that people are predictably irrational — that they consistently behave in ways that defy economic theory. People will refuse to pay more for an umbrella during a rainstorm; they will use the savings from lower gas prices to buy premium gasoline; they will offer to buy a coffee mug for $3 and refuse to sell it for $6.

I think a good way to determine if you fall under Thaler's theory is to ask yourself two questions:

1. When it comes to saving and investing, have you ever done something you said you weren't going to do?

2. When it comes to saving and investing, have you not done something you said that you were going to do?

Take an honest look at your decisions. During the crash of 2008, did you take money out of the stock market? In the early 2000's did you pull the trigger on a tech stock after seeing how well that sector of the market was performing? Now most of us know and agree that you don't sell low nor buy high, but if you answered yes to any of these questions you were behaving in a destructive manner. It may bruise the ego a little in owning up to mistakes that you have made in the past, but the only way to take ownership of your American Dream is to take ownership of bad behavior that you are responsible for.

So if the answer is yes that your behavior has been in conflict with what you are ultimately trying to accomplish, why is that? You are a smart individual. You have achieved a high school diploma, a college degree, a masters, etc. You are raising children, own a home, and have been successful enough to start saving and investing money. You are intelligent.

The problem is and this is what Thaler bases his research on is that you are human, and there is no escaping that fact. As human beings we do not have one bit of control over the thoughts and impulses that come into our heads and that we act upon. Sure there are areas where we do a good job of self control. We usually don't say every little thought we have about our boss to his or her face, but what about the times when there is no one else involved but ourselves? The popcorn at the movie theater, the pepperoni pizza, the gym, etc. How successful are you in controlling what goes into your mouth and what your body is engaging in?

Perhaps the thing that we need to come grips with is that there are certain areas of life where we are way better off engaging in or avoiding, but  living up to those agreements we are incapable of doing them  to the level or as consistently as we need to in order to be successful. How many of us would be 25 pounds lighter if we joined Weight Watchers? How much more money would you have if in 2008 your coach talked you out of getting out of the market or stopped you from loading up on tech stocks? 

So you turn to a coach whose job isn't to sell you products, but rather make sure that you do not "ever" engage in behavior that sets you up for failure.

Eating less and moving more are easy concepts to understand in losing weight. Own equities/stocks, diversify, buy low/sell high are easy concepts to understand when it comes to building wealth. Both concepts are easy to understand but awfully difficult to stick to over long periods of time. If they were everyone you meet, including yourself, would have a size 32 waist with a million dollars in their retirement accounts. Unfortunately, those people are the exception. Why? It's because we are human.

Sorry to run but my fitness instructor is waiting on me.

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