Free Professional Advice and Research (My Little Blackbook)

March 23, 2007

The financial markets have been very choppy this quarter. We started off 2007 with day after day of the stock markets hitting new highs. Then one crazy Tuesday in February (27th to be exact) the bottom fell out of the market (I blame it on my producer Heidi; she was off that day spending time with her dentist and a root canal). Ever since it has been up and down to the point that many of you are wondering what in the world is going on.

On today’s show I am going to share with you the resources that help me determine what is going on in the financial world.

Before I let you into my Blackbook of economic research I feel that I need to offer some common sense to this discussion and the mind set you need to have to be a successful investor.

Understand the weakness of your of gut. The short-term financial markets are driven by the fear and greed of investors. Most investors are their own worse enemies and because of it do everything backwards. According to the 2003 Dalbar Study “Market Chasing Mutual Fund Investors Earn Less than Inflation:”
* The average equity investor earned a paltry 2.57% annually; compared to inflation of 3.14% and the 12.22% the S&P 500 index earned annually for the last 19 years.
* The average fixed income investor earned 4.24% annually; compared to the long-term government bond index of 11.7%
This shows me that most investors are “Buying High and Selling Low”. There is also this mentality that you should buy the best performing fund or sector from the previous year. This is demonstrated by the fact that the average investor held equity funds a little over 2 years. 2 years is not a realistic holding period.

The secret to investing is to be focused on the long-term. Most of your investment assets are probably in retirement accounts that you will not have access to until your are 59.5 years old. With that being the case do not worry about what happens in the day to day market. You need to focus on your long-term plan with your ultimate planning goal, your risk profile, and coordinating these items into an effective asset allocation (check out my previous show on asset allocation if you need help).

Ok now that I have climbed down from my soap box I will share with you where I go to research the health and future of the financial markets.

General Financial Analysis and Entertainment:
The Top Dog on what is going on with the finacial world is of course the Oracle from Omaha, Warren Buffett. On March 1st the Oracle released his review of 2006 through “Warren Buffett’s Letter to Bershire Shareholders”. Warren’s insight is very interesting and outright entertaining including his realization that Berkshire paid enough taxes in 2006 to run the government for more than half of one day.

The Fixed Income Market Place (Bonds):
The Warren Buffett of the Fixed Income marketplace is Bill Gross. Bill is the founder of Pimco and also runs the Pimco Total Return bond fund. Bill provides market commentary on his website and also has a Podcast that you can find on iTunes. I will warn you that Bill is not scared to express his politics in his podcast show, but with a record like his he can say whatever he cares to.

Contrarian View Points (Alternative Investments):
Dr. John P. Hussman is the founder of Hussman Funds and manager of the Hussman Strategic Growth fund which is classified by Morningstar as a Long-Short Fund. This category of investments seek to make money whether the equity markets are up or down and you can see that this holds true for Dr. Hussman if you review his fund’s historical returns.

Caldwell & Orkin has been beat up pretty good because of their lack luster performance 2003-2006, but these guys know what to do when things get ugly in the equity marketplace. I was fortunate enough to own this fund in 2000 when the market started its fall, so I have a soft place in my heart for this investment. If you click on the “Document Library” link you can download their Update Newsletters.

These are just a few of my research tools. I am also fortunate enough to get several premium services (aka they cost money) that keep me up to date on economic releases and commentary, but this list is not too shabby since everything is free.

Good luck and remember to think LONG-TERM!


Most Recent Episodes

Dave Ramsey vs. The Money Guy: Which Strategy is The Best?

Dave Ramsey has an incredible legacy of helping folks get out of debt and take control of their financial lives. We agree on a lot of things, but there are a few points of contrast. In this episode, we’ll discuss differences between The Money Guy Show and Dave Ramsey...

Top 4 Financial Mistakes We Saw This Year! (2022)

We saw some wild financial mistakes this year during the bear market. From making extreme changes to portfolio allocation, chasing the hot dot, and using too much leverage, we’ll talk about some of the biggest financial mistakes we saw in 2022 in this episode.   In...

How Millionaires Build Wealth! (With Dave Ramsey)

Join us for a very special episode as we welcome personal finance radio host and influencer Dave Ramsey to The Money Guy Show! There’s so much misinformation out there about building wealth. We had the pleasure of having a great conversation about how millionaires...

Do These 4 Things with Your Finances BEFORE 2023!

There are unique financial opportunities available at the end of the year - especially this year with the market down. In this episode, we’ll talk about what you need to do with your money BEFORE 2023! In this episode, you'll learn: What you need to do with your money...

How to Win When the Financial World is Burning!

Lately it’s felt like the financial world is in chaos, with rising interest rates, a falling stock market, and high inflation. Let’s talk about how to focus on what you can control and how to minimize the time spent worrying about what you can’t control. In this...

Financial Advisors React to RIDICULOUS Money Advice on TikTok!

The most powerful time to get serious about building wealth is when you’re young. So, what is the younger generation learning? Financial Advice (good and bad) is being produced in massive rates across online platforms and TikTok is the new frontier. Is there good...

Loss Harvesting: Why Wealthy People Love It (And You Should Too!)

Tax-loss harvesting: what is it and should you be doing it? In this episode, we’ll cover everything you need to know about tax-loss harvesting, including whether it makes sense for you, how much it could save you in taxes, and how to eliminate the downside of loss...

The Market is Crashing! (Where Should You Put Your Money?)

The stock market has not had a great year so far. You might be asking yourself, “Since the market is crashing, where should I put my money now?” In this episode, we’ll discuss how to invest when the market is dropping and how to make the most of your money. In this...

Will Rising Interest Rates Tank the Economy?!

The Federal Reserve is raising interest rates to combat inflation, and many are concerned about how it will affect the economy. In this episode, we’ll discuss what rising interest rates means for your wallet and how to make the best of it. In this episode, you'll...

How to Be Wealthy By Age! (Can You Catch Up?)

How much does it take for you to meet your retirement goals by age, and what are some common traps your peers fall into? Learn more about how to be wealthy, mistakes to avoid, and exactly what a little extra saving can do for your retirement income. In this episode,...