Sunday, December 26, 2010

Eleven Resolutions for 2011

Are you fixin to quit smoking, drinking, eating come January 1? Will you be pulling the sheet off the elliptical in the garage (careful not to trip over the Ab Roller or the Thigh Master) and getting your butt back into losing your butt

Monday, December 20, 2010

The Crash

Red Bull, Monster, QE2, Rock Star, AMP, Five Hour Energy – just a few of today’s popular coffee substitutes. That’s right, coffee substitutes, not the nutritional supplements their labels portend. Sorry folks but the ginseng, b12, etc., is nothing more than camouflage for a mega-dose of caffeine… It’s the caffeine that heightens your senses, your focus, gives you that boost of energy.

The problem then, for the everyday user, is that these energy potions ultimately lose their oomph. His/her system, over time, builds a tolerance for the caffeine, thus requiring ever-heavier doses to achieve the desired effect… And, from what I gathered from an interrogation by a registered nurse during my recent physical (“do you smoke, use alcohol or caffeine?”), consistently high doses of caffeine just aren’t good for the body. I mean there has to be a reason caffeine and nicotine reside on the same line of a medical questionnaire, don’t you think?

You noticed I inserted “QE2”… That would be the concoction, developed in the labs of the Federal Open Market Committee (The Fed), designed to amp the U.S. economy by sustaining the market for treasury securities, thus keeping interest rates low… The funny thing is, from its very inception, rates have done nothing but gone up – signifying, perhaps, an increasing tolerance for this particular formula… And that my friends could be a very good thing!

(Presumably, according to oodles of “experts”, the Fed, under Alan Greenspan, over-stimulated the economy in the wake of the bursting of the ‘90s tech bubble, and thus created a whole new bubble in the real estate/mortgage-backed securities markets. The collapse of which lead to the Greatest Recession since the Great Depression, or, in terms an over-stimulated caffeine abuser would understand, The Crash…)

The bad news is that the recent rise in interest rates could prematurely slow the economy (not good for the employment picture). The good news is that the recent rise in interest rates just might be an indication that, this time around, the bond market is stronger than the (tinkering) Fed… And again, on balance, I’m thinking that’s a good thing…

 

 

Sunday, December 12, 2010

The Opportunity of Our Lifetimes

I must once again beg your pardon, for I can draw no correlation between part one of this commentary and your portfolio. Part one’s for those who’ve asked that I not refrain from sharing a personal essay when so moved. As for those whose visits here are strictly business, I can relate, so by all means skip to part two (The Market, 2011), then on to your to-do list.

For some reason, maybe it’s the season, I find myself in the mood to reflect. And as I look back upon 2010, I believe I’ve identified a distinct trend in my firm’s trade with our local florist-- it’s on the rise. And if I’m not mistaken, it’s been on the rise for the past several years. So now I’m wondering, are we becoming more sensitive, more sentimental perhaps, as we grow older? Or is it simply that we’re all growing older--and thus presented with more opportunities to extend our well-wishes and, alas, our condolences? I’m afraid it’s the latter. And the latter brings to bear the seemingly unsavory side of life; the medical emergencies, diagnoses of terminal illness, the death of loved ones--those constant reminders that we must never take life, nor our relationships, for granted.

So as we usher out 2010, and usher in this Holiday Season, rather than subject you to the obvious--a synopsis of the market/economic happenings of the year that was, or, worse yet, an utterly worthless prediction of what’s to come (although there is part two [which I encourage you to read]) – I’d like to share the following tribute to our elders, to those who have worked so hard, who have paved our ways, and whose bodies are now, as our monthly florist bill indicates, giving way to time…

The Opportunity of Our Lifetimes


The most influential people in our lives have surely been our seniors. As children we had no choice but to give our attention to our parents as they lovingly (or otherwise) imparted to us their life-lessons. As adults the choice is ours, we are free to listen, or not, without consequence--or so we assume. And that assumption, sadly, is a most erroneous one indeed. For when we choose, all too often I fear, to not give our attention to our elders, the consequence, while inarguably subtle, is unmistakably dire.

As we’ve come to learn, our way-pavers have logged into their memories experiences that you and I could not imagine were it not for their stories. As a child I would sit at the feet of my maternal Grandmother, the daughter of a New Mexico “lawman”, while she rocked her creaky old rocker and told of playing gin with the town drunk through the bars of a jail cell. I lived for the summers I would spend with my paternal grandparents at their cabin in the woods of Northern California. I listened tirelessly as my Grandfather, a Spanish immigrant, passionately lectured on how America was the greatest country in the world, while we fished pristine waters and walked beautiful mountain roads each morning. Then returning to the warm embrace of Grandma, who lived to please others in a way only grandmothers do. My father tells of being abandoned to the forest to cut a cord of wood, with an axe, in the summer of his twelfth year. Of, as a young man, pulling “green chain” at a saw mill. Of playing football without a face mask. He taught me how to work hard and how to “play with pain”. And my dear departed mother, a California farm girl, endlessly strove to teach her sons that true success is not to be measured by a number, and that it is by far the easiest of all endeavors. That to be successful means nothing more than to be honest, to live with integrity, and to be of service to others--and oh how she lead by example.

Of course my family stories are not at all unique, and yes there are those I might share that would not inspire nearly the sentiment you’re feeling at this moment. But honestly, such stories would in no way detract from the message herein.

You see generations will pass, as will the tales--ultimately to die on the deaf ears of descendants yet to be. But this is the way of it, and this is fine. For the grand consequence of our choosing not to listen is not that we would miss some profound life-changing message or that we might forever lose our family history. What we would miss is a most subtle, yet most extraordinary opportunity.

While their intent is to teach us the art of living (and to be sure they do), these great purveyors of wisdom, without knowing, are teaching us something far greater, something not to be found in the content of their words--they are teaching us the art of giving. For when we truly listen, attentively, to the yarns of their past, we are doing more for our beautiful masters than their arthritis medications ever will. Indeed, in the mere act of extending our ears we extend our love (which becomes their sustenance as their bodies give way), and in an instant, we are givers, we are artists, we are better human beings. Clearly, in the end, we are tending to ourselves.

So when you say to your loved one, or that shriveled old woman in the street, “thank you for sharing”, you truly mean it, for she has blessed you with the opportunity of her lifetime.

Several years ago, during a deep life and death conversation with a friend, I issued the following proclamation: “When my body is spent, when old age renders me useless, I will find my way to the arctic, break off a chunk of ice, lie down on a blanket and drift off to sea, like the old Eskimo.” As my bravado dissipated my parents came to mind--wait a minute, I thought, what if that were their idea of how their lives should end? Then the selfish realization--as their son, under no circumstances could I accept such a notion. Not that it wouldn’t be a fitting way to leave this world mind you, but that they’d be robbing me of the joy of giving myself to them in their final days. The joy of listening to them, the joy of doing whatever it takes to bring them comfort while their lives change seasons, the joy of loving them, one last time. I’d truly be missing the opportunity of our lifetimes.

“Only a life lived for others is a life worthwhile.” Albert Einstein



The Market, 2011


As for what to expect in terms of the market in the coming year, I’ll start by pulling from N.N. Taleb’s bestseller The Black Swan (a must-read by the way). In Part 2 (titled We Just Can’t Predict) he lists “Experts who tend to be experts” as follows: Livestock judges, astronomers, test pilots, soil judges, chess masters, physicists, mathematicians (when they deal with mathematical problems, not empirical ones), accountants, grain inspectors, photo interpreters, insurance analysts (dealing with bell curve-style statistics). He then follows with “Experts who tend to be … not experts” (I shortened this list, as to not offend an individual or two who come to mind): Stock brokers, college admissions officers, court judges, personnel selectors, CIA agents, economists, financial forecasters, finance professors, political scientists, “risk experts”, august members of the International Association of Financial Engineers, and, alas, personal financial advisers.

“Not Experts” Abound


 Walking into the gym one morning last week--my iPod volume set too dang low--I hear “Hey Marty” coming from a familiar (glistening) face peering above the stationary bike panel to my immediate left. As I grasp his extended, rather wet, right hand with mine I say to my panting friend “Hey man, how are ya?” He says “good”, then gets right to business--“So how’s next year looking?” I’m thinking oh boy, here we go, now don’t answer Marty (not that I even had an answer), just see if you can get him to not give his prediction. So I shrug and say “you know what, the more I know, the more I know what I don’t know” (praying my humility will shame him into an accepting nod, another slippery handshake and a parting “Happy Holidays”). He grins confidently (my prayer rejected) then proceeds “Well, the market’ll be up next year, but not by much”. I immediately interject (as I catch him catching his breath) “hey, makes sense to me” thinking whew, that’s it… kept it short (also thinking how the hell does he know?), now to the hand-sanitizer. But no, we spent another fifteen minutes (I only allotted thirty for my workout) jawboning about taxes, deficits, unemployment, and party affiliations before bidding our farewells. As I retreated to the dumbbells (I’m talking the weights, not the dudes lifting them), after a stop at the rubbing alcohol dispenser, I’m thinking that was alright, I did good, the guy needed to talk and I listened, so what if my workout’s cut short. I then realized that I had missed a golden opportunity to give my standard smart-a** prediction (the one designed to discourage future inquiries of the sort)--that the market will end 2011 higher, lower or about where it is right now. Oh well, next time.


As you can tell, when it comes to predictions, Mr. Taleb and I are firmly on the same page. And if you happen to be a client, may my humility be your relief. Trust me; you do not want your advisor to suffer such delusion.

On the other hand, I can offer the following high-probability forecast: In the coming year, someone you care about will experience a life-altering event. And thus, if you’re expressly fortunate, that someone will bless you with an opportunity you’ll not want to miss--an opportunity to practice the self-expanding art of giving. The rewards from which, unlike a gain in your portfolio, you’ve no chance of outliving.

Wednesday, December 8, 2010

December 8, 2010 Market/Economic Report (video)

Wednesday, December 1, 2010

December 1, 2010 Market/Economic Report

Sunday, November 28, 2010

The Stranded

So let me get this straight; there’s this dying paranoid-lunatic dictator who’s passing the scepter to his twenty-seven year old son – and to show the outside world, as well as his subjects, that junior is every bit as screwed up as the old man, he drops a few dozen artillery shells onto his neighbor’s island…

“Outside world” is a term painfully literal to your average North Korean – and while I am anything but an authority on their conflict with the South, regardless, one has to know that a great deal of envy exists when worlds-apart realities separate folks on either side of a given set of tracks. In this case, a certifiably insane ruler peers over the fence and sees a people bustling in commerce, fattened, in his mind, by hotteok and whipped-creamed cappuccinos – while his people, growing evermore gaunt, feast on fear of a regime that’ll crush the infidel who shimmies a tree to take a peak next door.

Sheltered as they may be, the North Korean people are all too aware of the prosperity residing to the south, but I’ll wager that they (some) are nonetheless proud, fear of their leadership notwithstanding, to be Northerners. In their view, sadly, the Southerners enjoy cushier lives by virtue of their sins – which somehow allows for the murders of two soldiers and as many civilians… They see their neighbors as insubordinate gluttons on a path to self-destruction – “they should not be allowed such freedoms, they need strong leadership, they must yield their personal ambitions in favor of the collective good”…

Again, a Korean conflict scholar I’m not, yet I can easily apply to said topic what would be my understanding of the collectivist mindset – a mindset that too many of us seem, albeit subtly (and unwittingly), predisposed to. The socialist-at-heart believes someone or entity other than himself is ultimately responsible for his lot in life. And when his neighbor steps beyond that paradigm and exhibits the tenacity that would suggest otherwise, i.e., becomes wealthy by way of hard work and ingenuity, he cries foul and demands that the government impose a limit to which any measure of his neighbor’s fortune in excess of be confiscated and distributed among those “less-fortunate” (i.e., those with a lesser worth-ethic).

While the Korean situation may not be the best segue to my message herein (in that we are not oppressed, nor are we communists), if class-envy is indeed at the crux of Pyongyang’s plague, my point would be that we, in that respect only, are not all that different than your everyday North Korean.

You see somewhere along that bumpy road to autonomy – the transition from juvenility to adulthood – folks (some) get stranded in a state of arrested development, where independence is merely a convenience to be abandoned at the slightest provocation. A state whose citizens demand the benefits of adulthood while living like children (I believe it’s called the “entitlement mentality”). A state a lot like California now that I think about it…

As it relates to society and economy, this underdeveloped state equates to terms like socialism, Keynesianism, ignorance and stupidism…

Examples:
The stranded politician would blame our recessions, asset bubbles and huge deficits on China. While the adult politician would blame such occurrences to some degree on cyclicality (recessions), but to a far greater degree on faulty policy – even when “faulty policy” comes from his own party…
I guess then, alas, the term adult-politician would be your classic oxymoron…

The stranded consumer facing home foreclosure would blame the bank for his woes – even though he signed the mortgage app stating he made $20k/month. While the adult consumer would accept responsibility, in that he willingly signed the bogus app (although the latter would require maturation to adulthood sometime between signing the app and missing his first payment).

Even the stranded consumer who had the stated income, yet facing foreclosure, would still blame the banks – for they caused the recession that cost him his job (or pay cut). While the adult with the income would accept responsibility, being that he put himself in a position that would not last a recession…

The stranded consumer on unemployment paid into it during those eleven weeks at Wal-Mart and therefore deserves the ninety-nine weeks of benefits – and has no interest whatsoever in going back to work until he gets every dime coming to him (I imagine the jobs numbers will improve when {if} Uncle Sam stops extending unemployment benefits). While the adult wants to get his ass back to work and off the government dole as soon as possible…

And lastly, to perhaps the very root of the problem, the stranded parent whose capable kid is flunking History blames the teacher, has his child switched to a new class and bribes a trip to Toys R Us when junior gets back to a C minus. While the adult parent whose capable kid is flunking History knows the little sucker’s screwing off and (lovingly) grounds his ass till he starts showing some real improvement – it’s called personal responsibility… Yeah, believe me, I know, there are a few bad-apple teachers out there – in which case we already know what the stranded parent will do. But the adult parent might very well say “welcome to the real world Johnny, let’s learn how to deal with a less-than-rosy situation (and of course if we determine your teacher is truly a nightmare I’ll see if I can’t perform a miracle and get the tenured Freddy-Krueger’s ass fired – and you’ll switch classes in the meantime {still doesn’t make you a victim}). Bottom line, I love you Johnny, and therefore I’m going to teach you self-reliance!”

Now you may believe, justifiably by the way, that the government is leveraging our children’s future – leaving them to contend with higher interest rates and inflation. But please don’t let your kids hear you say it – lest you strand them in a helpless victim mentality. If our youngsters grow to become self-reliant capitalist-minded adults, I assure you, they’ll do just fine…

Wednesday, November 24, 2010

November 24th Market/Economic Report (video)

Sunday, November 21, 2010

Wednesday, November 17, 2010

November 17, 2010 Market/Economic Report (video)

Sunday, November 14, 2010

Brains to Burn

In their book Freakonomics, the rather curious duo of Steven Levitt, an economist, and Stephen Dubner, a journalist, tell us

Wednesday, November 10, 2010

November 10, 2010 Market/Economic Report (video)

Sunday, November 7, 2010

What A Difference A Tuesday Makes

WHAT A DIFFERENCE A TUESDAY MAKES
I would have bet you a month ago, heck, a few days ago, that, come January 1, we

Wednesday, November 3, 2010

November 3rd Market/Economic Report (video)

Wednesday, October 20, 2010

October 20th Market/Economic Report (video)

Sunday, October 17, 2010

Keep The Botox Flowin Baby!

When my youngest was a toddler he was prone to ear infections. They'd begin with a cough and a runny nose, his ear would start aching, his boogers would turn green and, without fail, we

Wednesday, October 13, 2010

October 13th Market/Economic Report (video)

Sunday, October 10, 2010

Can't Take It With You

A good friend recently sent me the following text:

"Marty, do you have any idea how stupid I'm gonna feel in the moment of death if I go before I retire?!? All those years of saving and for what?!? Just another perspective that I dare you to write about........ Could be a fun and humorous article."

Fun and humor aside, this is indeed a commentary-provoking topic. So here goes:

In all my years as an advisor (I

Can't Take It With You

A good friend recently sent me the following text:

"Marty, do you have any idea how stupid I'm gonna feel in the moment of death if I go before I retire?!? All those years of saving and for what?!? Just another perspective that I dare you to write about........ Could be a fun and humorous article."

Fun and humor aside, this is indeed a commentary-provoking topic. So here goes:

In all my years as an advisor (I

Wednesday, October 6, 2010

October 6th Market/Economic Report (video)

Monday, October 4, 2010

Myna Birds

Trade Advantages
The first paragraph from an AP article last week read:

Wednesday, September 29, 2010

September 29th Economic/Market Report (video)

Monday, September 27, 2010

Squint Just a Little

A good friend asked me the other day if I consider him to be a glass-half-empty or half-full sort of chap. I answered

Thursday, September 23, 2010

September 22nd Market/Economic Report (video)

Sunday, September 12, 2010

Expansion or Extinction?

A New York accented, Gracie Award-winning journalist begins her interview with a soft-spoken, chubby-cheeked analyst sporting a shiny scalp and an impressive list of formers. He was, according to the text on his left, former Chief Technical Analyst for Petroleum at Lehman Brothers, former VP at Amerex Petroleum and former VP at EF Hutton (let

Wednesday, September 8, 2010

September 8th Market/Economic Report (video)

Wednesday, September 1, 2010

Marty's September 1st Market Report (video)

Sunday, August 29, 2010

Beware the Supposers

Suppose I told you that the consensus among economists this time last year was that GDP would be clicking along at a 4% rate right about now, or that home sales would be on the rise, or that unemployment would be trending lower. If you

Wednesday, August 25, 2010

Marty's August 25th Market/Economic Report (Video)

Monday, August 23, 2010

Everyone Else Votes

Speeches have been made, books have been written, documentaries produced

Wednesday, August 18, 2010

Marty's August 18th Market/Economic Report (video)

Friday, August 6, 2010

God's Greatest Work

Forgive me, but for some reason (you’ll gather in the first line below) I was feeling unusually sentimental when I wrote the following. Therefore I must warn that this excerpt from my next, yet to completed (or edited) book, is not what you've come to expect from my commentaries. This is a personal story, one that many would find of very little, if any, relevance to their investments. Others perhaps may find it, in one way or another, metaphoric. So if you normally click the link hoping for something specific to current events, please don’t waste your time on this one. I mean really, please don’t! However if you’re a sentimentalist, a fisherman or a nature lover, then by all means be my guest.

I recently celebrated my 48th birthday and 26th anniversary in the investment business. So what is it with time? Why is life, as they say, so much like a roll of toilet paper (you know, the closer you get to the end the faster it goes)? When we were kids a day was an eternity. These days the sun rises then sets in the blink of an eye. My oldest just turned twenty-one, my youngest is heading for the eighth grade. Oh my God!

For virtually my entire adult life, I have had the pleasure of working with truly wonderful individuals and families. And while it’s my hope that our time together has been well-spent for my clients, I can say, without hesitation, that time-well-spent doesn’t even begin to describe the impact my clients have had on me.

Babies who, only yesterday it seems, crawled through my briefcase as their moms and dads shared their hopes and dreams with me across kitchen tables, are now graduating from college. Those once young parents are now well into their middle-ages and planning for retirement, the once middle-agers are now retired senior citizens, and, alas, I have had to bid final farewells to too many of my closest friends, those once senior citizens, now beyond this world, who entrusted me into their lives those many years ago. Yes, I have been truly blessed…

The client/financial advisor relationship is one of unavoidable intimacy. We’re dealing with the future, the educating of children, the planning of vacations, the purchasing of homes, the planning for retirement, and, ultimately, the preparing for death.

Of all the things I believe I know about the workings of the market, how to manage a portfolio and how to counsel a client, the one thing I’m certain of, beyond any doubt, is that investing success cannot be measured by a rate of return, or even (entirely) by the attaining of a goal. My humble knowing is that one succeeds as an investor only to the extent one achieves financial peace of mind. And that’s my hope for every individual reading this blog.

I have discovered that as the world revs up right before our eyes, as information now storms us from every angle, nothing the internet or cable television has to offer will ever bring us to that state of presence where we can walk through life with nary a financial worry. In fact, I’d argue that in today’s, click-of-a-mouse, harried world, financial peace of mind is as difficult to attain as it’s ever been. So then, my task is a most daunting one indeed, yet one I embrace passionately.

Think of the following essay as a brief respite from the market/economic/politically-centric theme of this book. It comes from another project of mine that has, on the surface, little to do with investing. But I’m going to share it here nonetheless. For I have found that the best metaphors for life (personal and business) are discovered within our own personal experiences. This is the story of my encounter (in the early fall of 2008) with a rare and inspiring individual. A man who possesses the peace of mind I believe each of us ultimately desires (admittedly or not).


God’s Greatest Work


Life can be a great adventure when we pay close attention to the moment by moment events and circumstances that mark our paths.


Personally, as I simply witness my life unfold and allow myself to flow with its rhythm, I marvel at all the magic I see and experience.

I recently spent three days fishing in and around beautiful Yellowstone National Park, Wyoming, accompanied by Matt, a professional fly fishing guide assigned to me by a local outfitter. I expected that this rare adventure would inspire me to write. And indeed it has, but surprisingly, my inspiration today comes not from the sheer majesty of Yellowstone, but rather it comes from my experience with my newest teacher, Matt the fishing guide.

While in the course of our three days together he delivered the obvious fly-casting tip now and again, what this unsuspecting sage ultimately had to offer had less to do with fishing and more to do with living.

It began the very first morning, when we greeted each other with the obligatory handshake and “nice to meet you.” By his warm smile and confident look, I sensed immediately that this sandy grey-bearded fishing guide was a man very comfortable in his own skin. He gained my attention and respect instantly.

To my pleasant surprise there was no, “Where you from, what do you do, have any kids,” etc. In fact there was no sizing me up whatsoever. It was obvious that Matt didn’t give a stone fly’s ass whether I was a fry cook, a financial advisor, or the President of The United States. He was simply there to spend the next three days showing a perfect stranger a good time in the most beautiful country in his world, and get paid to do it. Wow, what a life!

We went right to the business at hand, discussing the weather forecast and where and how we would coax a few Yellowstone cutthroat trout into mouthing a clump of bird feathers tied to a tiny steel hook.

As we climbed into his dusty red sports utility vehicle with two large cracks crisscrossing the windshield, I noticed on the console separating the driver and passenger seats what looked like a perfectly round, dark brown gourd, fashioned into an ornately decorated bowl. Protruding from the bowl was what I took for a thin metal pipe. I thought Oh boy, this guy’s a pot head. I hope he doesn't get stoned while I’m fishing.

Matt grinned sheepishly as he noticed me noticing his 1960-ish paraphernalia. He then reached behind my seat, grabbed a thermos and asked if I’d like some tea. He poured the thermos’s contents into what I was then relieved to discover was no bong after all.

He chuckled as he told me how most of his clients raise their brows when they notice his mate (mah-tey) with the metal straw called a bombilla (bawm-bee-yah) sticking out of it. He then proceeded to share everything I would ever need to know and then some, about this infusion, a South American tea made from the Yerba Mate plant he discovered on a fly fishing trip to Argentina.

As that first day progressed it became apparent to me that this fishing guide was a very unique gentleman and in fact a connoisseur. He was a connoisseur of South American tea, of fly fishing, of petrified wood, of all the wildlife one could find in Yellowstone, of how to leave nature unblemished, of Native American history, of being a husband, of being a father to two daughters he absolutely adored, and of how to help a perfect stranger feel at home in his world.

From the way Matt used his pliers to smash the barbs on the fly hooks to make sure there was no damage to the trout as we disgorged the cold steel from their tender jaws, to the way he showed me how to handle each fish with as little contact as possible as he took the pictures before we released them back into the river, to the way he carefully moved the branches of a bush to reveal an elk skull with antlers attached he had found and hidden several years earlier (which otherwise would have ended up on someone’s garage wall), to the way we stopped to admire every piece of petrified wood along our path (one of which was very large and impressive, requiring that it too be hidden underneath a bush so as not to end up on the porch of someone’s summer cabin) – it was obvious to me that he loved and appreciated his world precisely as it was. God had made him the caretaker of this little slice of our planet and he flawlessly carried out his duties.

I also noticed that while Matt went about his work he never once uttered a single word of discontent or criticism for those who would carelessly handle a trout, or remove a piece of nature from its surroundings. Not only was he careful to preserve the purity of his outer world, he took equal care not to pollute his inner world as well.

As impressed as I was with this man of the earth, something in me refused to believe that he could actually have it that much together. I knew there had to be a character flaw somewhere just waiting to be revealed. So I challenged myself to find it. I started with a question about the average skill level of his typical fly fishing client. He explained that he gets the experienced anglers (like yours truly, I’d like to think) as well as the ones who just wake up one morning and say “Hey I want to go fly fishing on the Madison,” usually between a day of horseback riding and a trip to the Tetons. I thought he’d surely express how utterly frustrating it is to do nothing but untangle lines and pull hooks out of trees— if not himself— all day long. But instead he shared how much he enjoys introducing someone new to the art of fly fishing, especially very young children (who I know are without question the most challenging). Wow, I thought, is this guy for real?

A little later I figured I would trip him up by bringing politics into the mix. So I mentioned how I expected the Denver Airport to be crazy as I made my connecting flight, due to the Democratic National Convention being held there at the same time. Then I followed with a comment on how interesting the upcoming election is shaping up to be (it’s been my experience that any mention of either of the two major parties is almost always enough to ferret out the political bias of anyone I may be talking to). To this he offered absolutely nothing. I know he heard me, but he didn’t utter a word. OK, I thought, this guy is smart. Never talk politics with your clients. At that point I gave up. I figured if Matt isn’t the enlightened being I’m beginning to think he is he’ll reveal his true colors before the end of our three days together.

As we moved down the river he would tell stories about certain stretches where perhaps a big fish was landed or had gotten away. As he shared these experiences he’d refer to the person he was with at the time as his friend. He’d say something like “My good friend Bob didn’t want to use a streamer at first,” or “My friend Jim just sat there frozen and didn’t set the hook while a huge one took his fly.” He never talked about experiences with his clients. At one point I wondered how he makes any money if he’s always taking his friends fishing. It occurred to me sometime later that these friends he was referring to were indeed his clients. In his mind, these people who pay him to take them fishing are much more than business to him, they were indeed people he endeared himself to — they were his friends.

My thoughts then turned to my relationships with the people I counsel. I too think of them as much more than business. Like Matt, I care deeply for my clients and I am committed to doing everything I can to make their experience with me as pleasurable and beneficial as possible. Yes, I thought, they are indeed my friends, and that’s how I will refer to them from this point forward.

As the days unfolded our conversations became more about philosophy and less about fly fishing. We talked about how for guys like us, it’s not just about catching fish. It’s the whole experience, taking in the full beauty of nature. In his opinion there is truly no such thing as a bad day fishing. That the days you have to work harder are the days you appreciate all the more what you catch. Or you appreciate what you learn about how an abrupt change in weather can make a finicky eater out of a rainbow trout. It’s about how with the right attitude, the tough times always make us better (in fishing and in life). We talked about our children and how amazing it is to watch them grow, and how we strive to be better people simply because they have us in their lives.

When it was all said and done I realized that I had met someone who truly embodies the message of this book. Matt the fishing guide, while being a connoisseur of many things, clearly accepts and surrenders to the reality of his world, and without question, appreciates the winters and springs of his life. He understands that everything is in divine order.

As I reached the end of what had become an introspective journey, I felt a profound sense of appreciation. My experience in Yellowstone confirmed everything I have come to know about living a peace-filled life. I thought about how I ended up there, seemingly by accident because of a canceled plane ticket that I had to use before it expired. I thought maybe Vegas for a weekend, but that didn’t grab me, or maybe Costa Rica. I could relax on the beach and perhaps do a little ocean fishing. But again, I didn’t feel it.

Then one morning during a meeting with a couple of well traveled “friends” I mentioned my dilemma. I have known these folks for years and they know I love to fly fish. The husband recommended I fly to Yellowstone and fish the Madison River. This was an option I hadn’t considered, but the moment he mentioned it, I somehow knew that’s precisely how I was meant to spend that ticket. The next day I Googled “Yellowstone Fly Fishing Guides” and found one that I thought stood out above the others. I called the number on the Web site and left a message with the dates I’d be there and that I’d like a private guide to show me around. A gentleman called back and informed me that they were all booked up for those dates, and referred me to another outfitter who ultimately landed me with Matt. Amazing how things always seem to come together.

Leading up to the trip, visions of Yellowstone filled my head. Visions of beautiful green meadows teaming with elk and bison, of fly fishing the world famous waters I dreamed of as a kid. And yes, it turned out to be everything I imagined it would. But while I was certain that I was headed to Yellowstone to experience God through nature’s beauty, I had no idea that He would also reveal himself through my experience with a true master, a sage, disguised as a humble fishing guide.

While we can easily appreciate the miracles of nature, in a crystal clear river, a snow capped mountain range, in a bald eagle hovering overhead, let’s not forget that perhaps God’s greatest work is done in the beautiful hearts and souls of the people who walk in and out of our lives every single day.

Wednesday, August 4, 2010

Marty's August 4th Market/Economic Report (video)

Sunday, August 1, 2010

Rocky Road

I have absolutely discovered the secret to successful parenting (i.e., getting my kid to do what I tell him without screaming). I have learned how to motivate my youngest to behave, to work hard in school, and even, without prodding, to do his household chores. And it has nothing to do with instilling values, setting limits, patience, or even inspiring self-confidence. You see my kid loves Rocky Road ice cream, and as long as he does as he

Wednesday, July 28, 2010

Marty's July 28th Market/Economic Report (video)

Wednesday, July 21, 2010

Marty's July 21st Market Report (video)

Monday, July 19, 2010

Bad News Sells

I was having lunch recently with my 13 year-old son Ryan when I felt compelled to lecture, as I do to both my boys at every opportunity, on the virtues of ethical behavior. I was motivated by a synopsis I had just read of a study of baseball card dealers that showed, while dealers and their customers knew they were being monitored, the business transacted was of a highly ethical nature.

In phase-one the customers were instructed to ask the dealers for the highest quality card, featuring a particular athlete, at a specified price they could afford. The results were inspiring, in that they showed that the customers made no attempt to low-ball the dealers and the dealers made no attempt to shortchange their customers.

The results of phase-two however offered no such inspiration. In the second phase the customers were aware they were being monitored, but the dealers were clueless. And unfortunately, when the dealers figured they could take advantage of an unsuspecting customer, undetected, the majority indeed chose to do so.

The study took place at a convention and, as it turned out, the out-of-town dealers were the worst of the culprits. They obviously figured they

Wednesday, July 14, 2010

Marty's July 14th Market Report (video)

Sunday, July 11, 2010

No Magic Pill

Ever notice how certain fundamental truths seem to transcend multiple industries? Chapter 4 of Super Freakonomics (Levitt and Dubner’s sequel to their best-seller, Freakonomics) cites (and I summarize) evidence from a series of widespread doctor strikes in Los Angeles, Israel, and Columbia, that shows the death rate dropping significantly, from 18% to 50%, in the areas where the doctors stopped working. Similar results, “an across-the-board drop in mortality”, according to the study, occur when large numbers of Washington’s doctors leave town for medical conventions. Their conclusion (well, that of their source):
when there are too many physician-patient interactions, the amplitude gets turned up on everything. More people with nonfatal problems are taking more medications and having more procedures, many of which are not really helpful and a few of which are harmful.

Note: One could interpret the study’s findings as indicating that doctors have an over-treatment propensity. While I imagine this may at times be the case, you have to consider what a tough spot physicians find themselves in. I.e., patient comes in desperate for attention, so what do you do, tell him it’s all in his head and send him home untreated and litigiously upset, or treat the symptoms – hoping he’s telling the truth in terms of other meds, habits, etc.?

One parallel to this presumed over-doctoring phenomenon would be the apparent over-managing of investment portfolios. For example; studies of long-term mutual fund results suggest that the average fund manager, for all his/her education (Harvard MBA, Wharton PhD, etc. (no kidding)) and the analytical resources at his/her disposal, can’t seem to muster enough net return to beat the plain old S&P 500. A fact that, in recent years, Vanguard’s founder John Vogel has exploited to the tune of the $billions his firm has coaxed into its index funds.

While, as an advisor, I (on behalf of my clients) have had the good fortune of finding a few funds that have consistently outperformed their bogies, I can relate the mutual fund study to my basic (unoriginal) belief pertaining to the individual investor – that the long-term holding (as opposed to market timing) of a diversified group of securities is the most sensible approach to portfolio management. In other words; the failure rate (under-performance relative to an appropriate benchmark, or, more critically, failure to meet the investor’s objectives) of the everyday portfolio, beyond a point, increases in cadence with an increase in activity. When I say “beyond a point” I’m referring to a point beyond normal maintenance, or preventive medicine, if you will. Which would be the periodic rebalancing to a suitable target allocation (an act which forces buying low and selling high (relatively), which, in effect, stymies the buy-and-hold-is-dead argument), the gradual transition to a more conservative target as one grows older, the ongoing investment due diligence (and the consequent adding/removing positions as warranted), and the proper weighting to given sectors. Beyond that, we’re, in essence, “taking more medications and having more procedures, many of which are not really helpful and a few of which are harmful”.

The book states:
most people who are rushed to the ER and think they are going to die are in little danger of dying at all, at least not anytime soon. In fact, they might have been better off if they simply stayed at home.

So what’s my point? Well, if you happen to be our client, please don’t misunderstand my intent; I absolutely welcome your ‘911’ call anytime you’ve allowed the market to turn you a bit (emotionally) sideways – and I promise you’ll not be dismissed with a take-two-Prozac-and-call-me-in-the-morning. I will in fact be very attentive to your concerns and we will indeed re-explore whether your allocation, etc. is consistent with your world at large. Notice I said “your world at large”… For any adjustments I might recommend will have everything to do with your personal circumstances (time horizon, income distribution rate if you’re retired, etc.) and your comfort level – and virtually nothing to do with today’s headlines…

Lastly; it’s very important that, to maintain your financial health, you perform the necessary maintenance - just as you do with your personal health (right?). Like your annual physical---and the inconvenient tests that go with it---you succumb to a little inconvenience when it comes to your financial well-being. Which would be, if you happen to be our client, the semi-annual meeting where we review your situation and consider whether the current asset allocation remains consistent with your objectives, time horizon and temperament. And please understand, while one’s doctor may prescribe meds to sooth one’s nerves and even enhance other aspects of one’s personal life, when it comes to investing, stress reduction is only achievable through proper planning and the proper mindset (stuff (volatility) happens), and, alas, there’s just no little blue pill that’ll keep your stocks up when the market’s not cooperating…

Friday, July 2, 2010

Wednesday, June 30, 2010

Market Q and A

Yes I know this is my third commentary in three days. But that

Marty's June 30th Market Report (video)

Wednesday, June 23, 2010

Marty's June 23rd Market Report (video)

Wednesday, June 16, 2010

Marty's June 16th Market Report (video)

Wednesday, June 9, 2010

Marty's June 9th Market Report (video)

Monday, June 7, 2010

On the Other Hand (A Closer Look at the Jobs #)

Coming off the worst recession in 80 years, the U.S. economy managed a 41,000 private sector jobs increase for the month of May. If we stop there, one might have expected a nice rally when the number made the headlines last Friday. But alas, no such reward; in fact the market tanked as reality didn

Friday, June 4, 2010

Dow Down 200 - PERFECT!

Stock index futures are falling off a cliff as this morning's reading on jobs noticeably missed consensus estimates.

Now what have I been pounding the table about ever since "they" started talking healthcare reform, financial industry reform, penalty fees levied on banks, higher taxes on business owners, etc.? The real world fact that when you hit businesses, you hit the consumer

Wednesday, June 2, 2010

Marty's June 2nd Market Report (video)

Tuesday, June 1, 2010

The Most Dangerous Deficit & A Peek at Today

Heading into the last recession, far too many CEOs were blindly wallowing in the spoils of a long-in-the-tooth expansion and the it

Wednesday, May 26, 2010

Marty's May 26th Market Report (video)

Thursday, May 20, 2010

What Now?

Well folks, it happened, as of this moment the major indices have accomplished what

Wednesday, May 19, 2010

Marty's May 19th Market Report (video)

Thursday, May 13, 2010

Marty's May 12th Market Report and Tip (video)

Friday, May 7, 2010

Don't Be Average

I once read somewhere that B and C high school students tend to enjoy more "successful" lives than the straight A-ers. And while I can't confirm or deny that statistic, although I'd sure love to believe it (which gives you a clue as to my GPA), I can say that being average when it comes to investing has clearly not been the secret to long-term success...

In April the U.S. economy created 290,000 jobs (230k coming from the private sector) - should be a game changer. But alas, given the problems in Europe, the news has fallen on deaf-eared traders...

I could here list a plethora of positive economic stats along with earnings results and estimates that would encourage the staid-hearted investor to pony up whatever cash he/she can and buy stocks like there's no tomorrow...

I could also list here a near-plethora of concerns around pending legislation, higher taxes, social programs, etc., that would encourage the faint-hearted investor to sell his/her stocks like it's the end of the world...

And no doubt, I'll give you all you can stomach on both sides of that fence in the weeks to come. But it's during times like these that I feel it's my responsibility to discourage emotionally-driven investment decisions. Or in other words, help you keep from making the classic investment mistakes...

So with that in mind, I pulled the following from my book Making Lemonade. Please take just a minute and give it a read, then forget about the market for now, and enjoy your weekend...

Forward

Over the past two decades, I have had the pleasure of helping literally hundreds of investors design and maintain their investment portfolios. In the process, I have discovered what I truly believe to be the secret to long-term investment success. Unfortunately, my discovery won

Don't Be Average

I once read somewhere that B and C high school students tend to enjoy more "successful" lives than the straight A-ers. And while I can't confirm or deny that statistic, although I'd sure love to believe it (which gives you a clue as to my GPA), I can say that being average when it comes to investing has clearly not been the secret to long-term success...

In April the U.S. economy created 290,000 jobs (230k coming from the private sector) - should be a game changer. But alas, given the problems in Europe, the news has fallen on deaf-eared traders...

I could here list a plethora of positive economic stats along with earnings results and estimates that would encourage the staid-hearted investor to pony up whatever cash he/she can and buy stocks like there's no tomorrow...

I could also list here a near-plethora of concerns around pending legislation, higher taxes, social programs, etc., that would encourage the faint-hearted investor to sell his/her stocks like it's the end of the world...

And no doubt, I'll give you all you can stomach on both sides of that fence in the weeks to come. But it's during times like these that I feel it's my responsibility to discourage emotionally-driven investment decisions. Or in other words, help you keep from making the classic investment mistakes...

So with that in mind, I pulled the following from my book Making Lemonade. Please take just a minute and give it a read, then forget about the market for now, and enjoy your weekend...

Forward

Over the past two decades, I have had the pleasure of helping literally hundreds of investors design and maintain their investment portfolios. In the process, I have discovered what I truly believe to be the secret to long-term investment success. Unfortunately, my discovery won

Thursday, May 6, 2010

Marty's May 6th Market Report and Tip (video)

WOW!!

WOW!! What just happened? The market's been slowly grinding itself higher for months, we're thinking this is great, valuations based on earnings look very reasonable, companies are forecasting good to great results going forward, interest rates are low, there

Tuesday, May 4, 2010

Today's Volatility (quick note)

They say the market experiences a 10% correction (on average) once per year. And while I haven't officially tracked that stat myself, I would say, from personal experience, that the past 12+ months have been somewhat unusual - in that the market has had an amazing run without a double-digit (%) pullback along the way.

As you might imagine, after 26 years of investment counseling, I have witnessed my share of corrections. And my message, given today's 200+ point Dow drop, is that not once did a correction ever come (on the surface) for the sake of itself.

Never have I seen a headline stating "The Dow's off 200 Today on Great News from Greece". Or, "The Dow's off 2.5% Today on Great Corporate Earnings". Nope, the headlines always read of the crisis du jour, the fear spawned by X...

We

Today's Volatility (quick note)

They say the market experiences a 10% correction (on average) once per year. And while I haven't officially tracked that stat myself, I would say, from personal experience, that the past 12+ months have been somewhat unusual - in that the market has had an amazing run without a double-digit (%) pullback along the way.

As you might imagine, after 26 years of investment counseling, I have witnessed my share of corrections. And my message, given today's 200+ point Dow drop, is that not once did a correction ever come (on the surface) for the sake of itself.

Never have I seen a headline stating "The Dow's off 200 Today on Great News from Greece". Or, "The Dow's off 2.5% Today on Great Corporate Earnings". Nope, the headlines always read of the crisis du jour, the fear spawned by X...

We

Monday, May 3, 2010

Words Speak Louder Than Actions

Had a conversation the other day with a bright, young, passionate Central Valley California conservative. A person who would all-day-long profess himself a capitalist, who, with table-pounding zeal argues for smaller government and lower taxes, who tea-partys like it

Wednesday, April 28, 2010

Marty's April 28th Market Report and Tip (video)

Monday, April 26, 2010

Click the X

Last week I received an email invitation to an on-line conference where, among other things, the presenter will divulge

Thursday, April 22, 2010

Marty's April 22nd Market Report (video)

Wednesday, April 7, 2010

Marty's April 7th Market Report and Tip (video)

Monday, April 5, 2010

Doing Unto Others

So your seventh-grader comes home from school today and tells you how much she loved playing cross-fire (dodgeball to you/me) in P.E. because she hit Tyler smack in the face. Shocked at the sadistic nature of your little angel