Submitted by Steve Selengut
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Golf and Investing: Working The Ball
I think it was the immortal Ben Hogan who quipped: I can put "left" on the ball and I can put "right" on the ball--- "straight" is essentially an accident. Most amateur golfers would make a slightly different observation. We can hit the ball left or right with no problem; we just have no idea when either will occur.
As to straight, most of us refer to that phenomenon as "the dreaded straight ball"--- and it's this lack of straight that makes it so critical for us to master the art of working the ball. We need to understand how to move the ball left or right, consistently, on the golf course, under pressure, but without ever aiming out-of-bounds or into a lateral.
Yeah, sure, just like that.
It is doable though, and Ehow.com is a great place to start. There, at "work-golf-ball" is a simple five-step tutorial that anyone should be able to master with countless hours of range work. Of course it's more difficult on an actual golf course, with those red and white stakes, trees, bodies of water, marsh grasses, and back yard barbequers.
To become a lower handicapper, work the ball we must--- unless your name is Moe Norman. Making the shot go higher or lower than normal is another of those ball working skills that you need to master to save strokes. Mother Nature really appreciates it when you maneuver the ball below Live Oak branches and over environmentally protected "no search" zones.
Really, it just takes some practice, keeping the club on the target line, a consistent tempo, head down, either an open or closed stance, relaxed hands, etc. OK?
Mother Nature's investment twin sister is not nearly as difficult to deal with, but is often treated by the media with a level of disrespect normally reserved for ladies whose profession involves a whole "nuther" sort of market making. Perhaps deservedly so, but the media is an instant gratification or blame environment little suited to either golf or investing.
Today's product sideshow and short-term roulette-like atmosphere is just not what the investment gods had in mind when they developed trade, created world business, and gave birth to the building blocks of the financial markets.
Even Pete Dye would be shocked at the way Wall Street's financial course architects have turned the most rudimentary of tracks into a moguled, windswept, bunker field, fraught with hazards unimaginable even by their creators. Whatever happened to stocks and bonds?
One financial triple-bogey at a time, the world's amateur investors are learning that they either have to "Work the Investment Ball" or drop out of the tournament. In this case however, a lifetime of short straight strokes down the middle of the fairway will achieve par most of the time. The sooner investors apply the K.I.S.S. principle to their investment program, the easier the process becomes.
The Working Capital Model is a boring, conservative methodology for lowering the slope rating of the most diabolical wealth accumulation courses. Market hazards are avoided with reasonable expectations, and retirement approach shots that grow the annual income chip by chip, throughout the wealth accumulation period.
In 2008, this approach maintained income levels with market values falling at a relatively lower rate. In 2009, market values have grown acceptably (relatively speaking) while income levels have been bolstered by robust profit taking.
Thinking about the next hole or two, too soon, spoils many a round of golf. Not thinking about the next turn of the market, interest rates, or the economy soon enough will sabotage most normal investment portfolios.
Most of us recognize that, without full time instruction and practice, golf is just not easy to master. Less than 10% of amateurs break 100 regularly (unadjusted), but most of us could do better if we had the time and money to play more frequently.
Similarly, most amateur investors are unable to practice frequently enough to learn how to "work the ball" away from the hazards that always become headlines much too late to be useful.
Practice with market simulators of any kind, by the way, is as useless as pounding balls at a video screen image of The Ocean Course. When it's your own money, there's a whole new set of emotions to be dealt with. How often have you brought that "poifect" drive from the range to the first tee box?
Really, above par investing just takes practice, keeping the targets reasonable, consistent selection rules, patience, media noise muted, proper asset stance, relaxed emotions, etc. OK?
Here's to the search for the holy repeatable swing.
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|Please read this disclaimer:|
Steve Selengut is registered as an investment adviser representative. His assessments and opinions are purely his own. None of the information presented here should be construed as an endorsement of any business entity; the information is only intended to be educational and thought provoking.
Risk Management: Income, 401k, and IRA Programs
Take a free tour of a professional investment managers' private SEP IRA program during ten years surrounding the financial crisis:
In developing the investment plan, personal financial goals, objectives, time frames, and future income requirements should all be considered. A first step would be to assure that small portfolios (under $50,000) are at least 50% income focused.
At the $100,000 level, between 30% and 40% income focused is fine, but above age 50, the income focus allocation needs to be no less than 40%... and it could increase in 10% increments every five years.
The "Income Bucket" of the Asset Allocation is itself a portfolio risk minimization tool, and when combined with an "Equity Bucket" that includes only Investment Grade Value Stocks, it becomes a very powerful risk regulator over the life of the portfolio.
Other Risk Minimizers include: "Working Capital Model" based Asset Allocation, fundamental quality based selection criteria, diversification and income production rules, and profit taking guidelines for all securities,
Dealing with changes in the Investment Environment productively involves a market/interest rate/economic cycle appreciation, as has evolved in the Market Cycle Investment Management (MCIM) methodology. Investors must formulate realistic expectations about investment securities--- by class and by type. This will help them deal more effectively with short term events, disruptions and dislocations.
Over the past twenty years, the market has transitioned into a "passive", more products than ever before, environment on the equity side... while income purpose investing has actually become much easier in the right vehicles. MCIM relies on income closed end funds to power our programs.
To illustrate just how powerful the combination of highest quality equities plus long term closed end funds has been during this time... we have provided an audio PowerPoint that illustrates the development of a Self Directed IRA portfolio from 2004 through 2014.
Throughout the years surrounding the "Financial Crisis", Annual income nearly tripled from $8,400 to $23,400 and Working Capital grew 80% $198,000 to $356,000.
Total income is 6.5% of capital and more than covers the RMD.
Managing income purpose securities requires price volatility understanding and disciplined income reinvestment protocals. "Total realized return" (emphasis on the realized) and compound earnings growth are the key elements. All forms of income secuities are liquid when dealt with in Closed End Funds.
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|Please read this disclaimer:|
Steve Selengut is registered as an investment advisor representative. His assessments and opinions are purely his own and do not represent the views of any other entity. None of his commentary is or should be considered either investment advice or a solicitation of business. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be or should be construed as an endorsement of any entity or organization. The reader should not assume that any strategies, or investments mentioned are any more than illustrations --- they are never recommendations, and others will most certainly disagree with the thoughts presented in the article.