Submitted by The Investment Shadow
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Investors Review Their Favorite Investment Book
"My wife was trying to sleep and she's waking up and saying "What's wrong with you?" What could I tell her, that I was cracking up over a financial book---?"
"As I approach retirement in a few years, I'm very encouraged by the cash flow my portfolio can generate. If I can generate nearly 8% cash flow in the worst bear market in 70 years, and with minimal capital gains, I'm feeling pretty good about the future."
In the midst of financial crisis, market upheaval, and world-class uncertainty, at least one financial book provides an easily implemented strategy for safer investing. The Brainwashing of the American Investor is more than just "the book that Wall Street does not want you to read".
It's a book that might have helped you avoid many of the errors that have made this crisis so painful at a much too personal level. Certainly, it will provide you with the practical guidance needed to reconstruct your portfolio more defensively than you did after the dot-com fiasco.
Here are three typical reviews:
ONE: Thursday, January 15, 2009, from The Pigs of Wall Street Blogspot
The 5 Best Business Books of 2008
1. "The Brainwashing of the American Investor (The Book that Wall Street Does Not Want You To Read)" - Steve Selengut (revised version)
"A hard-nosed look at the various strategies employed by Wall Street sharks to snare, induce, and trick investors into a style of trading and investments that ultimately profit only those who pull in the commissions. Selengut compares the entire industry to a casino, where the odds are always with the house. Discusses the working capital model, variable annuities, fixed income strategies, and other topics in a thoroughly new light. More timely now than ever."
TWO: Thursday, January 8, 2009 joebirxxxx (at) gmail (dot) com writes:
"Ok, I'm just about through the first reading and I've got to tell you straight up you can really write, not to mention build a compelling argument--- you've got me, there's no doubt about it. I've got to play it cautious, and get a lot smarter, so I'll turn right around and go at it for Round 2--- The strange thing is that I really enjoy reading it--- the other day I was fortunate enough to discover your "custom" terminology appendix in the back.
I've got to tell you, there were times when I had some of the best laughs I can remember in recent memory, like when you're telling the accountant you can save him taxes by not paying his fees. My wife was trying to sleep and she's waking up and saying "What's wrong with you?" What could I tell her, that I was cracking up over a financial book---?"
THREE: Wednesday, January 28, 2009 xxllertx (at) comcast (dot) net writes:
"I have used your investment strategy since 2005. 2008 was a decline in market value; however, looking at the portfolio from a working capital perspective, the picture is quite different.
I had a 6.1% growth in working capital from dividends and capital gains. Another figure of merit you use is income as a % of beginning working capital. My income percent was 7.9% in 2008.
This is actual cash flow to my pocket (actually put back into the portfolio increasing working capital) from mostly the CEFs in the portfolio. Another number to use is income as a % of beginning market value. In 2008 this number was 11.6%. As I approach retirement in a few years, I'm very encouraged by the cash flow my portfolio can generate. If I can generate nearly 8% cash flow in the worst bear market in 70 years with minimal capital gains, I'm feeling pretty good about the future."
Many of you are less optimistic about the future (to say the least) than these reviewers, but the message is as clear as the book's focus on such things as realized earnings and growth in base income.
The Brainwashing of the American Investor is a back-to-basics training tool that has helped practitioners keep the realized income flowing and the productive working capital of investment portfolios growing during disastrous economic times.
For less than $15 (inscribed by the Author), or just $4.95 for the E-book... not a bad investment.
Investment Skills YOU will Learn & Concepts YOU will Embrace!
- How to determine the Asset Allocation plan that is right for you.
- Why Annuities, Zero Coupon anything, Commodities, Options, Index Funds, etc. should be religiously avoided.
- How to identify Quality Investments.
- Why income is the only real hedge against inflation.
- How to think outside the Mutual Fund box.
- Why corrections are every bit as lovable as rallies.
- How to diversify properly.
- That there are absolutely no "Freebies" on Wall Street.
- How to establish the all important profit taking "sell" target.
- That Commissions and Taxes are secondary investment considerations at best.
- How to sell out of "love".
- How to monitor investment performance without thinking about market numbers or anything else that is outside of your personal goals and objectives.
- And several dozen more.
Click for Details --> Buy Directly From Author
Risk Management: Income, 401k, and IRA Programs
Take a 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.