Successful Investing – Helping Investors Avoid Common Investment Mistakes

The Top Mistakes made by Investors

In my dozen plus years of advising individuals and businesses I have found a number of common mistakes that have derailed even the best laid financial plans. I thought by sharing them I might be able to help others sidestep the pitfalls and the negative impact they can have on your portfolio and long-term financial plans.

1. Failing to establish a time horizon and investing accordingly -

If you have expenses that need to be funded in 3 years or less, you should not be investing the cash for them in the stock market or other risky investments. These monies should be carved out of your investment portfolio (the money earmarked for long-term investing) and invested appropriately in liquid assets such as money market funds or term-certain fixed income offerings. If the money is not going to be needed for 3 years or more, an investment plan should be established based upon specific a time horizon and risk tolerance for these funds.

2. Failing to thoroughly diversify your portfolio -

Many investors know about the concept of diversification and think that by owning different investments, they are diversified. Diversification of an investment portfolio makes good sense on an intuitive level. However, it wasn’t until Harry Markowitz published his model of portfolio selection that this concept became a formalized part of sound investment practice and formed the basis of today’s Modern Portfolio Theory. Beyond this basic concept of diversification, the key to Markowitz’s premise is the revelation that the risk of any investment can be reduced and/or performance increased by forming a portfolio of diverse and non-correlated assets. That is, it is important not just to seek a diversity of asset types, but also to seek assets that have low or near-zero correlations to one another. It’s not about owning different investments; it’s about owning different, non-correlated investments.

3. Letting potential tax implications rule your investment decisions –

Many investors delay selling an investment that has done well regardless of how good or bad the future looks for the holding. Their response is, “I will have to pay taxes if I sell.” By not selling, they set themselves up for not having to pay taxes at all – usually because the investment starts on a decline and their concern switches from “having to pay taxes” to one of “hoping for a turnaround.” Don’t be afraid to take some profits off the table. While taxes are an unpleasant result of investing, I prefer to look at them as a positive sign as it indicates you are making money and your investment plan is working.

4. Buying a stock based upon a “hot tip” -

Too many investors listen to a friend’s advice because he or she always seems to have the next “great” money making idea. They don’t take the time to assess the idea personally and jump in because it’s only a few thousand dollars they are investing. Unfortunately this is not investing – it’s gambling. If you want to gamble, go to Vegas and at least get free drinks, dinner, a show and a room for the risks you are taking. Any investment that is being considered for your portfolio should be thoroughly researched and have passed a comprehensive financial screening scrutiny.

5. Attempting to time the market -

Waiting an extra day, week, or month to try and buy in at the “right price” just doesn’t work. No one can predict the future. If they could they most likely wouldn’t be sharing this knowledge with you for free. Successful investors use time, patience and a disciplined approach to increase the likelihood of maximizing their investment returns – not trying to time the market. If you have done the research and the investment is sound and meets your criteria then buy it, regardless of timing.

6. Failing to regularly reevaluate your investments -

Over time all investment styles, strategies and types fall out of favor. So, like timing the market, it becomes virtually impossible to know what is going to be “hot” in the next bull market and what isn’t. For this reason it is always prudent to stay up-to-date on your investments to insure they are still the same investment that you originally purchased (segment drift and manager changes can be one reason they may have changed). If your investments consist solely of mutual funds then an annual review is a good place to start.

7. Basing investment decisions on emotion -

Maybe the stock market is going through a bad time because of a short-term geo-political or economic event. Stay calm and make an educated, well thought out decisions about what, if anything, to do. Assess whether the event will affect the economy long-term or if it’s just a short-term blip. The best move is often no move at all. If it is a short term incident, many times the smart, prudent investor will make additional investments because the current decline provides them with an excellent buying opportunity. The key to successful investing is to have a disciplined strategy and to stick with it.

8. Cashing out gains and dividends rather than reinvesting -

Once you’ve realized gains or had distributions and dividends paid out, insure they are reinvested back into your portfolio. If you pull out your capital gains, dividends and interest, your money won’t compound as quickly, thereby leaving you with a smaller chunk of change down the line. Letting your investments compound is one of the major tenets of successful investing.

9. Owning too much employer stock -

Many people get over-weighted in employer stock because of options and stock purchase plans made available in today’s competitive compensation packages. While these are great supplements to their annual salary they can put an employee in a position of having too much money invested in their employer’s stock. Additionally, it is quite common for people to invest in “what they know” and what do you know better than the company you work for? To compound the problem many people will add more employer stock to their 401k holdings and individual brokerage accounts. Not only does this create a diversification problem in their portfolio but it also subjects them to excessive single stock risk. A good rule of thumb to follow is to insure that no more than 5-10% of your entire investment portfolio is in any one single stock. If you find yourself in this situation the importance of creating a well thought out reduction strategy cannot be overstated.

10. Following the herd -

The most successful of all investors are moving in the opposite direction of what everyone else is doing. They buy when most are selling and sell when everyone else is buying. By following this simple plan you can preserve your capital and potentially sidestep the next bubble (can anyone remember real estate, internet stocks, and technology growth funds?).

11. Not investing at all –

Somehow in today’s society that Mocha Cappuccino Latte seems to take precedence over saving for the long-term. We are a society who wishes to satisfy the “here and now” rather than the securing our future. The important fact here is that those two are not mutually exclusive. In fact, BALANCE is the key in any long-term endeavor, but by always keeping an eye on the end goal you can make sure it is not out of mind while satiating the here and now.

12. Investing without a plan -

Investing without a plan and lacking the discipline to follow it is a sure way to lower your chances of success. The chances of obtaining any long term goal can be greatly enhanced by creating a strategy, following it and regularly reviewing it frequently enough so it reflects any changes that have taken place since implementation. Many investors start off with a small amount of money and start putting it to work without a plan. As time progresses they find they have a mish-mash of investments in their portfolio with no clear strategy or direction. It’s never too early to invest but it’s even better to invest early with a plan.

13. Taking too little risk -

Some people don’t want to take any risk and cannot stand the volatility involved with risky investments. While it may seem like you are keeping your money safe and secure by not taking risk, it is more than likely you are not because of inflation. If your time horizon is greater than 5 years it is recommended that you have no less than 25-30% in growth investments (i.e. stocks) in your portfolio to ward off the effects of inflation. The actual percentage to own is dependent upon many factors including but not limited to age, time horizon before money is needed, current financial situation, etc. A good general rule of thumb to use as a starting point for the percentage of equity you may include in your portfolio is “120 – your age.”

Family, Incest, and Law

Family Values ​​in Ancient Times:

Many people of the present make some very grave and disturbing assumptions about prior unethical behavior by humans. My theories may be biased and overly appreciative of a time before Empire and there is less data due to the destructive power of Empire and the hegemony to go on. However, that data is more pure and less likely to have been promoted or propagandized for the interests of power-mongers. Top scholars and those who are regarded as great academies still debate whenever women ever had equal rights and some state there were never matriarchal societies of great note. It would be a surprise for me if there were not many different approaches used in various cultures and millennia before the Ice Age we just experienced and thereafter, leading up to what we call history. Much of history today has all the marks of hegemony akin to the Middle Ages according to John Ralston Saul who says it "has come to resemble the obscure and controlling scholasticism of the Middle Ages." (1)

Could it be that ethics and moral behavior had higher importance in the communal homes of the Kelts and North American Indians, as well as other societies through this awesome world? We now know it has been traversed by ancient humans who loved and played all over the place for a far longer period than we have been lead to believe even though many may not be aware of these facts. Is it possible that basic principles were easily communicated and respect was the goal of people long ago? Why even debate the point about power and money – they had little need of it. Western society still has much of the ingrained misogyny of millennia of macho Mediterranean mores and the rest of the world is far worse. What greater issue is there than incest and family violence? It rots the fabric of families and society as a whole. This quote from respected anthropologist Carlton Coon about the 'hunting societies' of prehistory sets a stage we need to appreciate and evaluate.

"While under certain circumstances, in some societies, a young man may marry a woman past menopause, he may manage to have sexual relations with other women, and may possibly get a nubile second wife." (2)

This seems a workable arrangement that includes education and the planning of families to avoid unnecessary abortion or mouths who are not really cared for, does not it? The older woman would probably be able to satisfy the early sexual energy of the young man, without leading their social or tribal culture into all the problems associated with children having children such as often happen today. The young man might even develop some sexual techniques and understand his urges better than pure lustful infatuation or the need to run off to fight in order to get rape and pillage payment for some Lord or Caesar. Then when financially and emotionally prepared for parenting he might actually do a decent job. Coon was able to observe this still exists in some Neolithic societies of the present day. When the second wife arrived it might present some problems but in most cases the first wife would probably enjoy helping the new wife to understand her opportunities better. Yes, I do overstate the case, I suppose, but in the Keltic clandoms it was even better than I am suggesting.

Kids were a source and source of pride for the whole clan. In the dynamic of raising a child this allowed for many things to occur in a more mature environment with less emotional blackmail. That does not lessen the aspirations parents have for their children but it makes for a lot less vicarious pressure, as parents have to spend all their waking hours attending to the needs of kids; Who see a way to get what they want by playing to the unrealistic parents who have yet to learn what they need to know. There are aspects of North American Indians tribes that show a similar approach to child-raising. The Stadacona Indians sent some of their children with Cartier, much as the Kelts shared educational opportunities with trading partners. Aunts and uncles do the disciplining of children among the Cree. The extended family and communal living is very clannish and even Gibbon noted there were heraladic Indian regalia that mirrored those of British heraldry.

The Hurons and Iroquois are most like the Irish or Norse Kelts in their social structure. Crimes committed by a member of a family or clan (tribe) are paid for by the whole family. With this kind of policing or morals bureaucracy would starve for want of something to do. The compassion and behavior modification of a family is better than that of the police or prisons, I think. The women of the Iroquois were the decision makers in most cases except the daily running of a war once it was approved. These women owned the assets or leaseholds. No one owned land just as was true in the land use laws of the Kelts which the English had to expunge along with all other just and fair culture when they finally forced Ireland under their rule. The Indians still practice Potlatch or the giving of respect and assets respectively the 1920s law against it in Canada. We can all imagine the Tax collectors do not like this kind of custom. It was much more than mere taxes the government bought and the Supreme Court had ruled the government and Catholic Church were intent on the total destruction of Indian beliefs, in recent rulings.

"In any event, the incest tabus recognized in any given hunting society bear some relationship to his choice (or to his and / or her parents' choice) of a marital partner." Of these prohibitions there are three basic and quite different incest tabus, Prohibiting intercourse between father and daughter, mother and son, and brother and sister. These prohibitions are not based on instinct or the inductive experience of the genetic consequences that sometimes result {Like the idiots and haemophiliacs or sexual deviates who lead us as a result of 'Noble' heritage – to war and other great heroic endeavors.} Some individuals violate them, but if so the violations do not result in marriage.

To a considerable extent these primary incest tabus are based on two kinds of antisocial results. Parent-child intervention would disrupt the lines of authority between generations, lines that hold the family together. Brother-sister intercourse during adolescence would inhibit intermarriage between families, reducing their interdependence. There was a married woman to have an intercourse with her brother, it would create a state of serious conflict between her husband and his brother-in-law, two kinsmen by marriage who, in certain cultures, might need each other's confidence and help. " 3)

The 'controlling scholasticism of the Middle Ages' referred to by Ralston Saul was part of the continuing effort to destroy these real family values. The marriage laws of the Kelts had to be eliminated because these laws were equitable and fair to women and children. Bastards were not ever possible in Keltic society and the idea of ​​a single mother was totally different than it is today. Of course, the payment of mercenaries including the rape and pill which enabled men to gradually lose all decent tabus or constructs based on the ancient means of care for each other that were part of all the systems Brotherhood developed, through common sense. The elevation of Gods from the state of hero (mere human) to Divine Rights and separate from Nature, is at the root of a lot of it. Heyerdahl thinks Odin was a Keltic king in southern Russia around the time of Christ and I find that quite possibly. When man began to say other men were unable to comprehend nature and needed an interpreter for the collective soul of humanity and all life, things began the downward drift to the hegemony that often even sins man has a soul.

The extent of character assassination by academies that do not delve into the reasons for Caesar's publication or quote others who did not employ due diligence is as evident today as it ever was. The people who focus on Kelistic sacrifices and trophy head customs are telling a fact but not the whole truth. What is abortion and capital punishment if not sacrificing the life of people, perhaps for a common good? Victorian prudishness developed the 'sins and demons' fear-mongering of Jehovian greed even further. In fact the Western Tradition has succeeded in the destruction of all Ancient Knowledge if you were to believe what is allowed to be distributed through 'official' or educational channels. The Temples of Saphos and Mesopotamia joined all Mediterranean cultures in some form of forced prostitution for women, while the Biblical 'Devoted Ones' were sacrificed when the priest or his cronies were through with other obvious and disgusting uses of them. Often the orphans and waifs caused by the changing laws and racial unrest and prejudice made in these times, led souls to a place worse than the Hell ruled by the Catholic created Satan. The excellent book called The Golden Bough by Sir James Frazer gives ample evidence from reliable sources about burning Red Heads and women of all classes being forced to sell their bodies and give the money to the Temple. It may have started with Abraham (and other Ur-Story proponents with their harems) and his baby-factories but it was certainly not the way of ancient Kelts even after his time. The Indians of North America and the natives of Hawaii are ample testimony of the diversity of Keltic egalitarian approaches.

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Employment Law, Part I

Just how serious is employment law to the small businessperson? Very serious and let me tell you a true story; A horror story, which will make you think about just how serious these issues can be. In San Antonio TX one of our wash trucks was driving down the road and a border Patrol Officer passed them. We run a company which does onsite washing; Http://www.CarwashGuys.com . Down the road they dropped over two trucks and were handcuffing Mexican illegal aliens from those company's work trucks. Our crew drve by on their way to work. They had just left the shop and had on board two workers who worked for Labor Ready Co, for a year and a half previously and were still employed from them from time to time. We had gotten extra workers and filled our service truck with workers who were temporaries to work for us since they needed extra help with the full schedule that day.

The border patrol officer was then done with the other companies' trucks and saw we had Hispanic labor in the back and folded over our truck after chasing it down the highway. Turns out Labor Ready had hired the illegals because theyave fake identification to them; I question the Labor Ready procedures. Labor Ready charges us $ 11.95 per hour for workers they pay $ 5.40 per hour. That is fine with us on those super busy days. So it's a deal and saves us from background checks for jobs that are not too serious like rinsing car lots. Well we found out that 4 of the five workers we had gotten from Labor Ready did not have green cards or US Identification of any type, so they cuffed them right on the highway and took them in. Good, we do not hire illegals anyway. But think about it we hired labor from a reputable nationwide company, a franchise called Labor Ready. They take care of all this stuff and charge us up the gazooo for the workers.

We know they are overcharging but for temporary extra labor for one day it is worth it. They told us there are certain questions that can not ask them when hiring, such as are you a US Citizen or where were you born or things like that. I can not believe we have laws in the banking industry called "Know your customer laws" yet in employment we have no "Know your employee laws". We have an unspoken do not ask the employee anything except when you can start and explain the type of work. We have laws in banking so we catch money launderers and those who are working hard to not pay taxes they owe.

So it is okay for the government to enforce those laws through private enterprise, but it is not okay for employers to ask questions to protect homeland security and save themselves from embarrassment. Of course in this case it is not a crime to hire someone who has given you false information, and we can not collect damages from a company who followed the employment laws? So what the hell do we do here? We want to help enforce the law as well, so do all true Americans. But we have so many laws in place that keep us from helping the situation.

Incidentally the workers who were handcuffed called us at 7 am morning two-days later and are ready to work and asked what time to meet. They were picked up at 9 am hand cuffed and stamped and exported that day. They were back in one day ready to work within 2 days. Some border patrol we have, what a complete joke; Protecting America, me ass? Why not implant a homing devise in these illegals and track them by satellite and find out the leaks in the system and plug them; Homeland Security or Homey Land of opportunity. You step up border patrol and catch these people and document on a board the number of deportees, yet they come the day back into the country. This is a true story you can call me for more information.

We have half a notice to go to the border patrol and give them free truck wash every morning and ask them to run the workers records and remove them from the crew. Sometimes the yellow truck will be known for not hiring illegals. A few weeks of that and every one who comes to work for us from Ready Labor will know it. Is this what we have to do to plug the system? Can not the border patrol guys figure it out; Then we will? If you can not enforce our borders then open them. But do not lie to the small businesses of America that somehow we are protected at our borders. We are not. This is a sham. Did not the Jordan Commission spend years putting together a plan only to have it never implemented? Why did we waste or breath? This is pure politics, not reality; Another of Smoot's points in his book "The Business Side of Government." One of the workers asked to work for us again and he wanted to borrow the twenty dollars he spent for the bus ride from Laredo to San Antonio. Even the illegals think this is a joke. We told him he could not work for us anymore. He did not understand why, because other businesses would have I guess that is why he was dumfounded when we told him to get lost. We called the border Patrol and they said they could not pick him up unless we knew for sure he was illegal. We said well you picked him up yesterday is he suddenly legal now? Can you prove it? No, all we can prove is your system does not work and that Labor Ready is doing an injustice to its customers, stocksholders and this country by not enforcing the laws of our land; The same laws, which have provided economic wealth to them over the years. Are they doing this all over the country? Yes.

The manager of Labor Ready said they did not like the laws either, but they needed to make a living and the companies need workers. So does this mean that Labor Ready who has offices all over Texas never disclosed this to their stockholders or customers? Yes it does, which is a gray area at least and a violation of disclosure law at best. The truth here is that no one cares. We make rules to appease the masses who vote for these things and tell the people we are saving them from terrorists. What about terrorists who are dark skinned and speak Spanish? What if a Middle Eastern spoke Spanish and was a terrorist and told the others he snuck over the border with he was from Argentina, they would not know either. And the business owner would hire them through a temp agency, who was making money off the business owner pointing to employment laws and said, well they had fake paperwork not my fault. Maybe it is not the border patrol's fault but shunning responsibility does not save us from the next attack.

Either we are worried about the next attack or we are not. I want someone to call me from the INS or Border Patrol to discuss this and I want a satisfactory answer or we will take this true story and document it and send it to the media one day before we send it to all the Congressmen and Senators. If we are not worried about terrorists then tell us. If we are, then fix the leaks. Why does it take 10 years to fix problems, when international terrorist groups only wait 3-5 years between acts? Good question worth answering and with all the BS and rhetoric we are seeing opposition from the Hispanic Chambers of Commerce and Hispanic Politicians. With 65% of the population of San Antonio Hispanic who do not want these laws at all, then extend the Mexican Border to include San Antonio TX as a free zone. Why not make it all of Texas and we can then defend the borders of Texas, which can be a free zone with Mexico.

If you are just going to give it lip service and not fix the leaks of illegals then open the borders and forget it. This is pathetic. We know how to enforce the barriers and we give out fines to businesses who do not complain, yet allow free entry by anyone who can walk. I am surprised we have not made ADA mandated border crossings for those in wheel chairs or are asthmatically challenged. Put in 1 foot per 1 inch inclines over the Rio Grande for those in wheel chairs and then nice sidewalks all the way to Washington DC so they can have a baby and run for Congress or become a radical speech writer and proponent of mass demonstrations and guns . You think I am kidding do not you. I am serious all this is so fake and such a ridiculous waste of breath and tax payers money.

End of Employment Law, Part I