Adam Bold - Back to Basics: Rebuilding Your Personal Wealth


Uploaded by JCCCvideo on 29.06.2009

Transcript:
GOOD EVENING LADIES AND
GENTLEMEN.
WELCOME TO THE POLSKY PERMANENT
ENRICHMENT SERIES.
I'M EMILY FOWLER.
WELCOME AND THANKS FOR BEING
HERE TONIGHT.
BEFORE WE GET STARTED I'D LIKE
TO REQUEST THAT YOU TURN OFF ALL
THE NOISE MAKERS, PHONES,
PAGERS, BLACKBERRY, BLUBBERIES,
CRAKEBERRIES, SO WE DON'T
DISTURB EVERYONE AROUND US.
THANK YOU.
THE POLSKY PRACTICAL ENRICHMENT
SERIES IS UNDER WRITTEN BY THE
NORMAN AND ELAINE POLSKY FAMILY
SUPPORTING FOUNDATION WITHIN THE
GREATER KANSAS CITY IN
PARTNERSHIP WITH JOHNSON COUNTY
COMMUNITY COLLEGE, INCLUDING
TOPICS NOT OFFERED ANYWHERE
ELSE.
WE HOPE YOU LEARN SOMETHING THAT
YOU DIDN'T KNOW WHEN YOU CAME
IN.
LOCAL PROFESSIONS ALSO JOIN US
TO BENEFIT YOU IN THE ANIMAL
THEY HAVE TO SHARE.
NORMAN AND ELAINE POLSKY'S
GRACES THE WONDERFUL THEATER
WHERE A VARIETY OF PROGRAMS
HAPPEN ALL YEAR LONG SO WE WANT
TO THANK THEM FOR THEIR
GENEROSITY WHICH ALSO BRINGS YOU
THE POLICY SERIES.
NORMAN AND ELAINE POLSKY SUPPORT
COMMUNITIES AROUND THE ROLLED,
AND NORMAN AND ELAINE, THANK YOU
SO MUCH.
[APPLAUSE] JUST A QUICK MOMENT
TO ACKNOWLEDGE OUR T.V. CREWS,
THANK YOU FOR YOUR HELP.
LET'S GET INTO THE PACKET THAT
YOU WERE HANDED.
WE'D LIKE YOU TO TAKE THIS HOME
AND SHARE WHAT YOU'VE LEARNED
WITH YOUR FAMILY.
LET ME TAKE YOU THROUGH THE
CONTENTS, AND I WANT TO SAY
THANKS TO NORM.
WE HAVE A SKINNY PACKET.
SO MY JOB IS REALLY EASY.
FIRST OF ALL, THE 2 CARDS, FIRST
WE HAVE THE BLUE QUESTION CARD,
SO IF YOU HAVE A QUESTION FOR
ADAM BOLD DURING THE PROGRAM
PLEASE WRITE IT ON THE CARD AND
ONE OF OUR USHERS OR I WILL COME
BY AND PICK THESE UP AS THE
PROGRAM PROGRESSES.
IF YOU THINK OF SOMETHING WRITE
IT DOWN.
YOU CAN HAND IT TO ONE OF US.
WE'LL START THE Q AND A ABOUT
8:30.
ALSO, THE GREEN SURVEY CARD
ALLOWS YOU TO GIVE US YOUR
FEEDBACK, ADD YOURSELF TO THE
MAILING LIST IF YOU'RE NOT ON
IT, GIVE US YOUR E-MAIL ADDRESS
SO WE CAN SEND YOU UPDATES.
WE'RE LOOKING FOR 100% RETURN ON
THESE.
BELIEVE ME, NORMAN ASKS ME HOW
MANY CARDS DID WE GET.
LET ME SAY 100% OF THEM CAME
BACK.
THANK YOU.
NOW, BEHIND THE CARDS ON PINK IS
NORM'S QUARTERLY ARTICLE SHOWING
HIS INVESTMENT RESULTS AND ON
THE BACK IT'S HIS INVESTMENT
HISTORY.
ENDED ME TO POINT OUT AT THE TOP
OF THAT PAGE, THE FRONT SIDE,
HIS 3 MONTH RETURN, S AND P FOR
THE LAST 3 MONTHS WAS 25.8%.
NORM'S RETURN ON HIS OWN MUTUAL
FUNDS WAS 39.9%.
IF YOU WOULD LIKE TO RECEIVE
THIS ON A MONTHLY OR QUARTERLY
BASIS, NORM'S ADDRESS IS THERE
NEAR THE BOTTOM OF THE FRONT
PAGE AND YOU'RE WELCOME TO SEND
HIM 4 SELF-ADDRESSED STAMPED
ENVELOPES.
HE WILL GET THE REPORT TO YOU
WHENEVER HE HAS IT COMING OUT.
ON YELLOW IS NORM'S MIGHT LEGACY
TO YOU ACHIEVE FINANCIAL
INDEPENDENCE.
FIRST STRATEGIES FROM JIM OF
AMERICAN CENTURY INVESTMENTS, 11
STRATEGIES FROM NORM POLSKY FOR
MUTUAL FUND INVESTING.
ON THE BACK OF THE YELLOW SHEET,
THE 10 COMMANDMENTS WHICH HE
SHARED WITH PURCHASE DUE
UNIVERSITY.
HE SHARED HIS 10 COMMANDMENTS
AND HE SAYS THEY NEVER ASKED HIM
BACK AGAIN.
[LAUGHTER]
ON THE BLUE SHEET IS AN OVERVIEW
OF THE STOCK MARKET'S
PERFORMANCE OVER THE PAST 50
YEARS, 1957 TO 2008.
NORM WANTS ME TO REMIND YOU THE
STOCK MARKET IS ALWAYS SEEKING
NEW HIGHS, SO DON'T LOSE HOPE,
IT WILL COME BACK, FOLKS.
WE JUST DON'T KNOW WHEN.
MAYBE OUR SPEAKER CAN CLUE US IN
ON THAT.
AND ON THE BACK OF THAT PAGE
NORM'S WEIGHTED SCORING SYSTEM
THAT HE USES TO DECIDE ON WHICH
MUTUAL FUNDS TO PURCHASE.
ON THE GREEN SHEET INFORMATION
ABOUT KINDNESS AND AN
ORGANIZATION CALLED REACHING OUT
FROM WITHIN STARTED BY ONE OF
OUR PAST POLSKY SERIES GUESTS,
SUE ELLEN, AND SUPPORTED BY THE
POLSKYS AS WELL.
ON PURPLE YOU'LL FIND BIOGRAPHY
INFORMATION ON NORMAN AND ELAINE
POLSKY AS WELL AS A LIST ON THE
BACK OF THEIR 49 ENDOWMENTS
WHICH SUPPORT ORGANIZATIONS ALL
OVER THE WORLD.
AND 2 THINGS I'D LIKE TO REMIND
YOU OF TONIGHT AND WE'RE DONE
WITH THE PACKET, SO YOU CAN PUT
EVERYTHING BACK IN ORDER FOR THE
PROGRAM.
FIRST OF ALL, WE HAVE A BOOK FOR
SALE IN THE LOBBY.
THIS IS ADAM BOLD BRAND NEW
EDITION OF THE BOLD TRUTH, ABOUT
INVESTING.
THERE ARE 100 BOOKS AVAILABLE
TONIGHT, A FEW HAVE ALREADY BEEN
PURCHASED.
OUR PRICE IS $10.
THIS BOOK IS NORMALLY 15.95 IN
THE BOOKSTORE.
AND A SPECIAL TREAT FOR YOU, ALL
OF THEM ARE AUTO GRAPHED
TONIGHT.
IF YOU'D LIKE TO BUY ONE AND GET
ONE FOR DAD, BECAUSE FATHER'S
DAY IS COMING UP ON SUNDAY.
TAKE ONE HOME BEFORE YOU GO HOME
TONIGHT.
AND SECONDLY, OUR NEXT PROGRAM
IS SEPTEMBER 2 WE'LL FEATURE
BARNETT WITH A PROGRAM ABOUT
ENTREPRENEURSHIP PRINCIPLES THAT
ARE HELPFUL FOR EVERYONE.
KEEP YOUR EYES OPEN FOR THE POST
CARD ON THOSE PROGRAMS COMING UP
SOON.
YOU'LL NOTICE THAT TONIGHT'S
PROGRAM IS ALL OF OUR PROGRAM
ARE BEING TAPED FOR BROADCAST ON
JCCC TELEVISION, THAT'S CHANNEL
17 ON TIME WARNER AND CHANNEL 22
ON COMCAST.
YOU CAN ALSO WATCH THE POLSKY
BROADCASTS ONLINE IN ITS
VIDEO.JCCCDO EDU AND WATCH 24/7,
GET UP AT 3:00 A.M., WHATEVER
YOU'D LIKE TO DO.
ON THE LEFT SIDE OF THE PROGRAM
THERE IS A POST CARD FOR
TONIGHT'S PROGRAM.
SO NOW IT'S MY PLEASURE TO
INTRODUCE NIGHT'S SPEAKER, THE
FOUNDER OF THE MUTUAL FUND STORE
WHICH HE STARRED IN 1996.
THE HOST OF THE MUTUAL FUND SHOW
HEARD LIVE IN RADIO MARKETS
ACROSS THE COUNTRY AND LOCALLY
HEAR IN KANSAS CITY ON KMBZ
980AM SATURDAY MORNING 10 K.
HE'S THE AUTHOR OF THE BOOK, THE
BOLD TRUTH ABOUT INVESTING.
THIS EDITION CAME OUT IN APRIL
OF THIS YEAR.
VERY UPDATE INFORMATION FOR YOU.
PLEASE WELCOME TO THE STAGE
MR. ADAM BOLD.
[APPLAUSE]
HI.
EMILY, HOW ARE YOU?
I'M VERY WELL.
FIRST OF ALL, THANK YOU ALL FOR
BEING HERE THIS EVENING AND
BEFORE I GET STARTED I DO WANT
TO THANK NORM AND ELAINE POLSKY.
YOU KNOW, I BELIEVE THAT WITH
PRIVILEGE COMES RESPONSIBILITY,
AND THERE ARE A FEW PEOPLE IN
THIS WORLD WHO HAVE SERVED AS
MENTORS AND ROLL MODELS FOR ME.
MR. K, FOR EXAMPLE, IS ONE OF
THOSE.
NORM AND ELINE POLSKY ARE THOSE
KIND OF PEOPLE, TOO.
AND THE TEAM THEY HAVE -- PEOPLE
THEY'VE HELPED, IT'S AMAZINGS
THEY'VE DONE A FANTASTIC JOB AND
IT'S REALLY MY PRIVILEGE NOT
ONLY TO BE HERE THISVENING BUT
TO -- EVENING BUT TO HAVE GOTTEN
TO KNOW THEM PERSONALLY.
BY THE WAY, I WILL SAY THIS.
FOR THOSE OF YOU WHO DON'T KNOW
NORM, NORM IS ONE OF A KIND.
WHEN NORM WAS BORN, GOD SAID I
AIN'T GOING TO DO THAT AGAIN.
[LAUGHTER]
IT WAS IN A GOOD WAY.
AND JUST TO GIVE YOU AN IDEA,
NORM PASSES OUT THESE FLASH
LIGHTS ALL THE TIME.
THIS ONE HAS BOTH NORM AND
ELAINE ON IT.
THE ONE I LIKE, AND I HAVE THE
WHOLE COLLECTION, BUT THE ONE I
LIKE HAS JUST NORM'S PICTURE ON
IT AND IT SAYS SQUEEZE ME.
[LAUGHTER]
WHICH I LIKE VERY MUCH.
SO ONCE AGAIN, THANK YOU, NORM
AND ELAINE FOR HAVING ME
TONIGHT.
SO HERE WE ARE.
EVERYBODY HAD A GOOD YEAR?
MAYBE NOT SO MUCH?
LET ME START WITH THIS STORY.
IT'S ABOUT THESE 2 WOMEN,
THEY'RE TAKING A LEISURELY WALK
NEAR THIS POND, AND THEY BECOME
UPON A FROG.
THE FROG SAYS HEY LADIES,
BECAUSE THAT'S WHAT FROGS SAY?
HEY LADIES, AND THEY LOOK DOWN.
IT'S A FROG.
COME HERE.
COME HEREMENT PICK ME UP.
SO THE LADIES REACH DOWN AND
PICK UP THE FROG.
THE FROG SAYS, HEY, I AM NOT
REALLY A FROG.
THIS WITCH PUT A SPELL ON ME.
IT TURNS OUT REALLY I AM A STOCK
BROKER.
IF YOU GIVE ME A KISS I WILL
TURN BACK INTO MY NORMAL SHAPE.
AND THE LADY THINKS ABOUT IT AND
SHE TAKES THE FROG AND STICKS IT
IN HER PURSE.
DIDN'T YOU HEAR THE FRIEND, HER
FRIEND SAYS?
AND THE OTHER ONE GOES, YEAH,
BUT THESE DAYS A TALKING FROG IS
WORTH A LOT MORE THAN A STOCK
BROKER.
[LAUGHTER]
ALL RIGHT.
HERE WE GO.
LET'S TALK, SHALL WE?
HERE IS MY AGENDA.
LITTLE THING ACALL REBUILDING --
REBUILDING YOUR PERSONAL -- WHEN
NORM ASKED ME TO SPEAK THIS
YEAR, HE WAS LIKE TAKE YOUR BOOK
AND TALK ABOUT YOUR 10
COMMANDEMMENTS, BUILDING WEALTH,
AND AS TIME PROGRESSED IT TURNS
OUT WE HAD TO REBUILDING YOUR
PERSONAL WEALTH.
5 TOPICS.
DON'T [INDISCERNIBLE] FUTURE
INVESTMENT PLANS ON 2008.
ASSET ALLOCATION IS ESSENTIAL.
MARKET TIMING IS IMPOSSIBLE.
ONLY INVEST IN WHAT YOU
UNDERSTAND.
AND HOW DO WE GO ABOUT PICKING
FUNDS NOW IN TODAY'S
ENVIRONMENT?
ALL RIGHT.
DON'T BASE YOUR INVESTMENT PLANS
ON 2008.
LET ME TALK ABOUT THIS JUST IN
CONCEPT FOR A MOMENT.
2008 WAS PERHAPS THE WORST YEAR
EVER IN TERMS OF INVESTMENT.
THE REASON I SAY THAT IS IT CAME
OUT -- WE HAD JUST REBUILT OUT
OF THE BEAR MARKET OF 2002.
WE GET EVEN AND BOOM, SURPRISE,
HERE COMES THIS TERRIBLE
DESTRUCTION OF WEALTH THAT
HAPPENED IN 2008.
AND KIND OF CAME OUT OF LEFT
FIELD.
IT HAPPENED REALLY, REALLY FAST.
MANY OF YOU WHO LISTEN TO THE
RADIO SHOW MAY HAVE HEARD ME USE
THIS ANALOGY BEFORE.
I'M GOING TO USE IT TONIGHT.
SORT OF LIKE -- AND -- IT'S SORT
OF LIKE WOMEN AND HAIR REMOVAL.
I KNOW THAT SOUNDS BIZARRE.
ALL RIGHT.
AND I KNOW THE PEOPLE THAT WORK
WITH ME ARE LIKE, ALL RIGHT,
WHAT'S GOING TO COME OUT OF HIS
MOUTH RIGHT NOW.
HERE IS WHAT I'M TALKING ABOUT.
I KNOW THAT WOMEN SHAVE THEIR
LEGS ON A REGULAR BASIS.
I COMPLAIN ABOUT HAVING TO SHAVE
MY FACE, WHICH IS A PAIN IN
THE -- WHICH IS A PAIN.
BUT YOU CAN SHAVE YOUR --
ANOTHER THING YOU COULD DO IS
YOU COULD HAVE THEM WAXED,
RIGHT?
AND IT HURTS BUT BOOM IT'S OVER.
OR YOU COULD TAKE A PAIR OF
TWEEZERS AND PLUCK THEM OUT ONE
BY ONE.
WELL, THE BEAR MARKET THAT WE
HAD FROM 2000 TO 2002, THAT WAS
LIKE PLUCKING THEM OUT ONE BY
ONE.
THE THING LASTED FOR 3 YEARS.
THIS WAS BOOM.
LIKE EVERY DAY PEOPLE WOULD COME
UP TO ME AT A RESTAURANT OR AT
MY COUNTRY CLUB AND SAY HEY,
ADAM.
I BET YOU'RE NOT SLEEPING SO
WELL THESE DAYS.
AND I WOULD GO, NO, REALLY I'M
SLEEPING LIKE A BABY.
REALLY?
WITH THE MARKET, EVERY DAY YOU
WAKE UP, THE MARKET IS DOWN
MORE?
YEAH, I SLEEP FOR 2 HOURS, I
WAKE UP CRYING.
[LAUGHTER]
AND IT TAKES ME ANOTHER 2 HOURS
TO TRY TO GO TO SLEEP.
SO -- BUT HERE IS WHAT HAPPENED.
BECAUSE 2008 WAS SO TERRIBLE,
AND BECAUSE IT HAPPENED SO FAST,
AND BECAUSE IT HAPPENED CLOSE TO
THE BEAR MARKET OF 2000 THROUGH
2002, PEOPLE HAVE BEEN PSYCH
LOGICALLY AFFECTED BY 2008 IN A
WAY THAT THEY WEREN'T EFFECTED
BY THE -- IT'S LIKE, OH, NO.
I CAN'T DO THIS AGAIN.
AND THE BEST ANALOGY THAT I CAN
USE IS I COMPARE IT TO MY
GRANDMOTHER WHO ACTUALLY SHE
LIVES IN ROCHESTER NEW YORK, NOT
HERE.
ON THE RADIO I SOMETIMES TELL
THE STORY.
SHE SAYS DON'T TELL PEOPLE HOW
OLD I AM.
SHE'S 94 YEARS OLD.
SHE GREW UP IN THE DEPRESSION.
AND THEN SHE GOT MARRIED.
AND THEN MY GRANDFATHER WENT OFF
TO FIGHT IN WORLD WAR II.
SO SHE GREW UP IN THIS ERA WHERE
PEOPLE TALK ABOUT WE'RE
MILWAUKEEING ALL -- MAKING ALL
THESE SACRIFICES FOR THE WAR.
BOTH OF MY GRANDFATHERS, NORM,
PEOPLE WHO -- I MEAN THE
AMERICAN PUBLIC MADE SACRIFICES
DURING WORLD WAR II THAT WERE
UNLIKE ANYTHING THAT WE'VE SEEN.
YOU GET MEAT ONCE A WEEK.
YOU GET SUGAR ONCE A MONTH.
WHATEVER IT IS.
MY GRAND MA, 94 YEARS OLD, SHE'S
DOING JUST FINE FINANCIALLY.
SHE'S NOT RICH BUT SHE'S GOT
ENOUGH TO LIVE THE REST OF HER
LIFE.
WE GO OUT TO LUNCH AND SHE TAKES
SUGAR PACKETS AND STICKS THEM IN
HER PURSE.
NOW, MY GRANDMOTHER KNOWS THAT
SHE CAN GO TO THE STORE ANY TIME
SHE WANTS AND BUY SUGAR.
SHE KNOWS THAT THERE ARE LOTS OF
PLACES SHE CAN GO TO GET SUGAR.
BUT THERE IS SOMETHING
PSYCHOLOGICALLY IN HER BRAIN
FROM WHEN SHE WAS YOUNG, WHEN
SHE WENT THROUGH THE DEPRESSION
THAT WAS SO TRAUMATIC THAT IT
AFFECTED HER FOREVER.
IF YOU EVER HAVE A CHANCE TO GET
SUGAR, YOU SHOULD.
OKAY?
AND I DON'T KNOW WHAT SHE DOES
WITH ALL THESE SUGAR PACKETS.
BUT IT'S AN IRRATIONAL
PSYCHOLOGICAL REACTION.
AND THE SAME THING IS HAPPENING
TO PEOPLE RIGHT NOW.
BECAUSE OF WHAT HAPPENED IN
2008.
WHAT ARE THE RESULTS?
MANY INVESTORS ARE MAKING THEIR
INVESTMENT DECISIONS IN THE
REARVIEW MIRROR.
PEOPLE ARE GOING, I WANT
SOMETHING THAT IS GUARANTEED.
AND SO THE INSURANCE COMPANIES,
THE ANNUITY COMPANIES, THEY ARE
MAKING HAY RIGHT NOW AND WHAT
THEY DO IS THE WAY THEY PITCH
THESE PRODUCTS, THEY GO HERE'S
THE DEAL.
YOU BUY THIS.
IF THE MARKET GOES UP, YOU
BENEFIT.
IF IT GOES DOWN YOU'RE
GUARANTEED TO MAKE AT LEAST THIS
MUCH.
THAT'S THEIR PITCH.
OR THEY GO THIS GUARANTEES THAT
YOU'LL GET 10% FOREVER.
THAT'S THEIR PITCH.
WELL, THEN ALL THESE PRODUCTS
COME WITH A PROSPECTUS THAT'S
ABOUT 500 PAGES THICK.
I'M GROWING TO GUESS MAYBE THE
DEVIL IS IN THE DETAILS.
WE'LL TALK ABOUT THAT LONGER.
TREASURIES.
IF THERE IS A -- WHAT HAPPENED
LAST YEAR, CREDIT MARKETS FROZE
UP.
STOCKSTOCK MARKETS PLUNGING, REL
ESTATE IS PLEDGE, OIL IS
PLUNGING.
ALL THE PLACES PEOPLE LOOKED FOR
SAVING HAVOCKENS IN THE MARKET,
EVERYTHING WENT DOWN AT THE SAME
TIME.
I CALL 2008 A PERFECT STORM,
OTHER THAN TREASURIES.
WHAT HAPPENED WAS THE PRICE OF
US TREASURY BONDS GOT
ARTIFICIALLY HIGH.
THE REASON WAS THERE WAS A LOT
OF COMMAND AND THERE WAS A --
DEMAND, LIMITED SUPPLY, SO
PRICES WENT HIGHER.
NOW WHAT WE HAVE IS JUST THE
OPPOSITE.
AND THAT IS PEOPLE ARE STARTING
TO REALIZE, ALL RIGHT, THIS
STOCK MARKET WILL COME BACK
EVENTUALLY.
THE ECONOMY IN THIS COUNTRY WILL
COME BACK EVENTUALLY.
MAYBE I SHOULD START TAKING MORE
RISK.
I'M STARTING TO SEE SOME RETURNS
FROM STOCKS, BONDS, THAT ARE
NORMALIZED AND I WANT TO
PARTICIPATE IN THAT, AND AT THE
EXACT SAME MOMENT THAT'S GOING
ON, YOU HAVE GOT THE UNITED
STATES TREASURY BECAUSE OF THE
TARP -- YOU KNOW, THIS PLAN,
THIS PROGRAM, WHATEVER, THE U.S.
TREASURY IS BORROWING A TON OF
MONEY.
NOW ALL OF A SUDDEN YOU HAVE A
LOT OF SUPPLY AND LIMED DEMAND.
THAT'S GOING TO PUSH TREASURY
PRICES DOWN, AND THERE IS A LOT
OF PEOPLE WHO DON'T KNOW THAT
THEY CAN LOSE MONEY IN TREASURY
BONDS.
ULTIMATELY IF YOU HOLD THEM
UNTIL MATURITY, YOU WON'T LOOSE
MONEY.
I'LL TELL YOU RIGHT NOW.
I KNOW THERE ARE PEOPLE ON THE
RADIO, PEOPLE TALKING ABOUT HOW
THIS COUNTRY IS GOING BANKRUPT,
LOSE ITS TRIPLE A RATING ON ITS
BONDS.
THAT'S NOT GOING TO HAPPEN.
THE US TREASURY WILL BE THERE
AND WILL PAY OFF THEIR BONDS.
BUT THEY'RE BORROWING A HECK OF
A LOT OF MONEY, A LOT OF SUPPLY,
NOT THAT MUCH DEMAND.
WE'RE GOING TO SEE PRICES GO
DOWN.
MOVING TO CASH.
A LOT PEOPLE -- I GET CALLS FROM
THE RADIO SHOW, I TALK TO
PEOPLE.
THEY'RE LIKE WE GOT UNTIL
FEBRUARY, THE END OF FEBRUARY.
I CAN'T TAKE IT ANYMORE.
I GOT TO GET OUT.
I'M GOING TO PUT IT ALL IN CASH.
AND, OF COURSE, THAT IS EXACTLY
WHEN THE MARKET STARTED TURNING
BACK UP.
I'LL JUST REMIND YOU THAT WITH
YOUR INVESTMENTS, AND I'LL TALK
ABOUT THIS IN MORE DETAIL LATER.
IT DOESN'T HAVE TO BE ABALL OR
NOTHING PROPOSITION.
THERE ARE SOME MIDDLE GROUNDS
THAT YOU CAN TAKE.
GOLD.
HERE THESE GUYS ON THE RADIO.
BUY GOLD.
GOLD IS, YOU KNOW -- GOLD HAS
NEVER BEEN WORTH ZERO.
PEOPLE WILL BUY YOUR GOLD.
CASH FOR GOLD.COM.
YOU KNOW -- LET'S PUT IT THIS
WAY.
NOT A GOOD PLACE TO BE.
LAST YEAR WAS THE PERFECT STORM.
WE -- EVERYTHING WENT DOWN.
EVERYTHING WENT DOWN EXCEPT FOR
U.S. TREASURY BONDS.
AND WHAT'S -- WHAT YOU HAVE
TO -- WHAT I'M ASKING YOU -- YOU
DON'T HAVE TO.
I CAN'T MAKE YOU DO ANYTHING.
WHAT I'M ASKING YOU TO DO IS
CONSIDER THIS, AND THAT IS, THAT
RIGHT NOW FROM THIS DAY FORWARD,
FORGETTING WHAT'S HAPPENED IN
2008 AND THE FIRST COUPLE MONTHS
OF 2009, WE ARE MUCH MORE LIKELY
FOR THE NEXT DECADE TO HAVE A
MORE NORMALIZED MARKET
ENVIRONMENT.
HOW DO I KNOW THIS?
WHAT ARE THE SIGNS THAT I'M
SEEING?
I'M SEEING THINGS LIKE BONDS --
WHAT IS A BOND, BY THE WAY?
IT'S A LOAN YOU'RE GIVING A LOAN
TO THE FEDERAL GOVERNMENT, IF
IT'S A TREASURIRY, TO A
CORPORATION IF IT'S CORPORATE
BOND.
ET CETERA.
JUST A LOAN.
BONDS ARE NOW STARTING TO BE
VALUED ON WHETHER OR NOT THE
USHER OF THAT -- ISSUER OF THAT
BOND WILL BE ABLE TO PAY THE
INTEREST AND PAY BACK THE
PRINCIPLE.
THAT WASN'T THE CASE LAST YEAR.
LAST YEAR, BONDS WERE LIKE IF
IT'S NOT FROM THE TREASURY, I
DON'T WANT IT.
STOCKS, WE'RE STARTING TO HEAR
THINGS LIKE THE EARNINGS OF THIS
COMPANY ARE LIKELY TO BE THIS.
THEY'RE STARTING -- WE'RE
STARTING TO LISTEN TO THE
COMMENTARIES THAT THE EXECUTIVES
OF THESE COMPANIES ARE MAKING
ABOUT THE FUTURE, THE OUTLOOK
FOR THESE VARIOUS COMPANIES, AND
THAT'S THE WAY THE STOCK MARKET
IS SUPPOSED TO WORK.
THAT'S NOT WHAT HAPPENED LAST
YEAR.
I CONTEND THAT WE ARE BACK TO AN
ENVIRONMENT WHERE WE --
NORMALCY.
WE CAN EXPECT NORMAL STOCK
MARKET MOVEMENTS TO THE UPSIDE
TO, THE DOWNSIDE.
NOT THE KIND OF THANK WE SAW
LAST -- THING WE SAW LAST YEAR.
IF YOU MAKE YOUR FUTURE PLANS
BASED ON WHAT HAPPENED LAST
YEAR, I THINK YOU'RE SETTING
YOURSELF UP FOR SOME BAD
SITUATIONS.
ASSET ALLOCATION IS ESSENTIAL.
NOW, ASSET ALLOCATION, WE
INVESTMENT GUYS, WE THROW THAT
TERM OUT ALL THE TIME.
ALL IT MEANS IS HOW YOUR MONEY
IS SPLIT BETWEEN DIFFERENT TYPES
OF INVESTMENTS.
ONE OF THE THINGS WE'VE LEARNED
IS THAT THE MARKET GOES THREW
CYCLES.
SOMETIMES THEY LIKE STOCKS,
SOMETIMES BONDS, SOMETIMES
TREASURIES, SOMETIMES REAL
ESTATE.
SOMETIMES THEY LIKE BIG COMPANY
STOCKS, TECHNOLOGY STOCKS,
INTERNATIONAL STOCKS, ET CETERA.
HERE IS A CHART, A GRAPH --
CHART -- GRAPH.
I'LL GO WITH GRAPH.
CHART.
AND YOU GUYS BACK THERE, YOU
CAN'T READ ALL THESE -- THE
WRITING ON HERE, SO LET'S PAY
ATTENTIONS TO THE COLORS.
THIS SHOWS FROM 1999 THROUGH
2008, THE VARIOUS ASSET CLASSES
THAT WE TRACK RANK FROM BEST
PERFORMING AT THE TOP AND WORST
AT THE BOTTOM.
SO IF YOU NOTICE, WE GO FROM --
WE HAVE A YEAR LIKE 2000, 2001,
WHERE THE LIGHT BLUE -- WHAT'S
THE WORD -- THERE WAS A CRAYON
THAT COLOR.
I CAN'T REMEMBER WHAT IT WAS.
PARDON ME?
[INAUDIBLE]
ALL RIGHT.
THESE COLORS DOWN AT THE BOTTOM,
THE BLACK ONES AT THE TOP, AND
THEN ALL OF A SUDDEN THE MARKET
COMES BACK, 2003, 2004, THE
BLACK ONES MOVE DOWN HERE, THE
BLUE ONES MOVE UP THERE.
THE PINK ONES MOVE UP.
SO JUST AS SOON AS YOU THINK YOU
HAVE THE PATTERN FIGURED OUT,
THEN IT GOES THE OTHER WAY.
THEN WE HAVE 2005, 2006, 2007,
THAT BLUE BOX AT THE TOP IS
INTERNATIONAL -- THOSE BLUE
BOXES AT THE TOP ARE
INTERNATIONAL STOCKS.
BOOM.
BEST PERFORMING.
OKAY.
I GOT THIS FIGURED OUT.
ALL I GOT TO DO IS TAKE OWL MY
MONEY IS PUT IT IN THE BLUE
STUFF.
WHOOPS.
OKAY.
AND THE SAME THING IS HAPPENING
IN REVERSE WRITHE NOW.
THE MARKETS BEGIN TO COME BACK.
WHAT WE WANT TO DO IS WE WANT TO
SPREAD OUR MONEYS BETWEEN ALL
THE COLORS.
AND ONE OF THE THINGS WE HAVE
LEARNED THROUGHOUT THIS WHOLE
THING IS THAT PART OF ASSET
ALLOCATION INCLUDES MONEY
MARKET, HAVING CASH RESERVES IS
NOT A BAD THING.
AND THAT'S FINE.
BUT ONES AGAIN, IF YOU HAVE
CONFIDENCE, IF YOU HAVE TRUE
CONFIDENCE IN YOUR ASSET
ALLOCATION, IN HOW YOU HAVE
THINGS SPLIT, YOU CAN WEATHER
JUST ABOUT ANY KIND OF MARK THE
ENVIRONMENT.
NOW, LET ME ILLUSTRATE WHAT IT
IS THAT I'M TALKING ABOUT WITH
TRUE CONFIDENCE.
AND I'M GOING TO USE SPORTS
HERE.
MANY OF YOU MAY KNOW I'M A BIG
SPORTS FAN.
AND I PARTICULARLY LOVE THE GAME
OF BASEBALL.
AND I GO TO A LOT OF GAMES.
I LOVE BASEBALL.
IT'S A THINKING PERSON'S GAME, A
VERY ENTERTAINING GAME, BECAUSE
THERE IS A PITCH, THEN YOU TALK
ABOUT IT.
THEN THERE IS ANOTHER PITCH, AND
YOU TALK ABOUT IT.
AND FOOTBALL IS LIKE -- I LOVING
FOOTBALL, IT'S BOOM, BOOM, BOOM,
IN YOUR FACE.
BASEBALL IS PITCH, HEY, LET'S
TALK ABOUT IT.
I REMEMBER WHEN ONE OF MY
GIRLS -- I LIVE IN A HOUSE WITH
3 TEENAGE GIRLS, WHICH -- I WAS
AT A SWIM MEET LAST WEDNESDAY
AND THIS GUY CAME UP TO ME, HE'S
MY AGE AND HE GOES -- HE WAS AT
A SWIM MEET LIKE 10 YEARS
EARLIER, AND HE GOES HE MET THIS
GUY WHO HAD TEENAGE GIRLS.
AND THE GUY SAID TO HIM, GOD, HE
GOES I HATE MY DAUGHTERS.
[LAUGHTER]
AND HE GOES I REMEMBER THINKING
THAT GUY IS A JERK.
I CAN'T UNDERSTAND WHY ANYBODY
WOULD -- I LOVING MY DAUGHTERS.
THEY'RE SWEET.
WHY WOULD ANYBODY SAY THAT?
AND HE GOES, I HATE MY
DAUGHTERS.
[LAUGHTER]
SO IT'S FUNNY NOW IT COMES
AROUND.
I TOOK MY DAUGHTERS -- HERE'S
THE POINT.
WHICH I LOST FOR A MOMENT THERE.
BASEBALL, I REMEMBER SITTING
THERE TALKING TO MY GIRLS, THEY
WERE LITTLE, AND TRYING TO
EXPLAIN THE CONCEPT OF A
SACRIFICE FLY.
IN FOOTBALL YOU EITHER MAKE
POSITIVE YARDAGE OR YOU DON'T.
IN BASEBALL -- WAIT.
SO THE GUY WAS OUT BUT IT WAS
STILL GOOD?
YEAH.
HE ADVANCED THE RUNNER.
IT'S COMPLICATED.
IT'S A GREAT GAME.
ONE OF THE THINGS ABOUT BASEBALL
IS THE CURVE BALL.
A CURVE BALL IS AN AMAZING
THING.
LET'S SEE IF I CAN MAKE THIS
WORK.
LET'S WATCH A CURVE BALL HERE.
OKAY.
PITCHER.
CURVE.
NOW, HERE IS THE THING ABOUT A
CURVE BALL.
A CURVE BALL WHEN IT LEAVES THE
PITCHER'S HAND IS HEAD HIGH.
AND THEN BETWEEN THE PITCHER AND
THE -- HIS HOME PLATE, 60 FEET,
6 INCHES.
WHAT HAPPENED, FOR 57 FEET THE
BALL IS HEAD HIGH, THEN THE LAST
3 FEET IT DROPS DOWN IN THE
STRIKE ZONE.
JUST TO ILLUSTRATE THAT, LOOK AT
THIS.
THIS IS ABOUT 6 FEET OUT.
THAT'S -- THIS VIDEO THAT I
SHOWED YOU, 6 FEET OUT, THAT'S
WHERE IT IS, RIGHT OVER THE
PLATE, BOOM.
THAT'S WHERE IT IS.
NOW, HITTING A CURVE BALL,
THEREFORE, IS A VERY DIFFICULT
THING.
BECAUSE YOU HAVE -- THE BATTER
HAS TO MAKE A DECISION AS TO
WHETHER HE IS GOING TO SWING THE
BAT OR NOT WHILE THE BALL IS
NOWHERE NEAR WHERE HE CAN HIT
IT.
SO WHAT HAPPENS, THE WAY THIS
PERSON LEARNS TO HIT A CURVE
BALL IS THEY'LL WATCH THINGS
LIKE THE ROTATION OF THE BALL.
I'VE EVEN HAD HITTERS TELL ME
THEY CAN WATCH THE MOVEMENT OF
THE PITCHER'S FINGERS, AND AT
THE MOMENT THE PITCHER RELEASES
THAT BALL, THEY CAN TELL WHAT
THE PITCH IS GOING TO BE.
BUT THEY HAVE TO DECIDE WHETHER
THEY'RE GOING TO SWING OR NOT
WHEN THE BALL IS WAY OUT OF THE
STRIKE ZONE.
BUT A MAJOR LEAGUE HITTER, A GUY
WHO CAN HIT A CURVE BALL KNOWS
WITH HIS HEART AND WITH HIS
SOUL, IF IT'S A CURVE BALL, THAT
WHEN HE SWIPING, AND HE COMES
THROUGH BY HOME PLATE, THE BALL
WILL BE IN THE STRIKE ZONE.
SO IF THE PITCH LOOKS RIGHT, HE
IS OWE I GOING TO SWING, EVEN
THOUGH HIS EYES TELL HIM THE
BALL IS NOT IN THE STRIKE ZONE.
HE KNOWS THAT WHEN THE BAT GETS
THERE IT WILL BE IN THE STRIKE
ZONE.
HE ABSOLUTELY BELIEVES WITH ALL
HIS HEART AND SOUL THAT THE BALL
WILL BE THERE.
WELL, IF YOU'RE ASSET ALLOCATION
IS THE RIGHT WAY, IS SET RIGHT
FOR YOU, FOR WHERE YOU ARE IN
LIFE, FOR YOUR RISK TOLERANCE,
ET CETERA, THEN EVEN WHEN THE
MARKET THROWS A CURVE BALL, YOU
CAN WAIT IT OUT BECAUSE YOU KNOW
EVENTUALLY THE BALL WILL DROP
RIGHT INTO THE STRIKE ZONE.
SOMETIMES THAT REQUIRES
PATIENCE.
ONCE AGAIN, BEING FULLY INVESTED
DOES NOT MEAN YOU DON'T HAVE
MONEY MARKET.
ONE OF THE THINGS I'VE LEARNED,
ONE OF THE THINGS THAT WE'RE
DOING DIFFERENTLY IN TODAY'S
WORLD THAN WE WERE 5 YEARS AGO,
10 YEARS AGO, IS THAT OUR MORE
CONSERVATIVE ALLOCATIONS HAVE
MORE CASH BECAUSE WHAT WE DON'T
WANT TO HAVE TO SELL THINGS IN A
DOWNMARKET.
UPTOOK ABLE TO WAIT OUT -- WE
WANT TO BE ABLE TO WAIT OUT THE
BAD MARKET AND DON'T HAVE TO
HAVE TO DIG INTO PRINCIPLE
DURING THAT MARKET.
BY THE WAY, PEOPLE SAY ASSET
ALLOCATION DIDN'T WORK IN 2008.
BOND FUNDS LOST MONEY LAST YEAR,
TOO.
YEAH, THEY DID, BUT THEY LOST
SUBSTANTIALLY LESS THAN STOCK
FUNDSFUL IT DIDN'T SEEM THAT
COOL, BECAUSE THEY LOST -- BOND
FUNDS WENT DOWN MORE THAN PEOPLE
HAD EVER ANTICIPATED THAT A BOND
FUND COULD.
BUT STILL, IT DID WORK AND THE
PORTION THAT YOU HAD IN BONDS
LOST LESS THAN WHAT THE STOCK
FUNDS DID.
REGULAR REBALANCING.
ONE OF THE THINGS THAT WE DO FOR
ALL OF OUR CLIENTS IS REGULAR
REBALANCING, IF YOU'RE DOING IT
ON YOUR OWN, YOU NEED TO DO
REBALANCING TOO.
WHAT DOES THAT MEAN?
IF YOU START OUT FOR THE SAKE OF
DISCUSSION, AND YOU HAD HALF
YOUR MONEY IN THE STOCK FUND AND
HALF IN A BOND FUND, OVER TIME,
THOSE -- THOSE PERCENTAGES WILL
GET OUT OF KILTER.
AND WHAT WE NEED TO DO IS WE
NEED, FROM TIME TO TIME, TO PUT
THEM BACK TO OUR IDEAL
COMPOSITION.
BY DOING THAT, WHAT IT DOES IS
FORCES YOU TO TAKE MONEY OUT OF
THINGS THAT HAVE ALREADY RUN UP
WHICH IS HARD TO DO.
WHEN THINGS ARE GOING UP, YOU
WANT TO PUT ALL MY MONEY IN THIS
THAT'S GOING UP.
IT FORCES YOU TO TAKE PROFITS
THAT HAVE GONE UP ALREADY AND
PUT IT INTO THINGS THAT ARE
LOWER, AND VICE VERSA.
AND REBALANCING HELPS.
AND LASTLY I'LL JUST SAY IF THE
DECLINES IN YOUR ACCOUNT VALUES
IN 2008 AND INTO THE BEGINNING
OF THIS YEAR WERE MORE THAN YOU
CAN HANDLE -- NOW, I'M NOT
SAYING -- UPTOOK VERY CLEAR.
I'M NOT SAYING IF IT WAS AS MUCH
AS YOU CAN HANDLE OR NEARLY AS
MUCH AS YOU CAN -- LAST YEAR WAS
THE PERFECT STORMMENT IT WAS THE
MOST PAIN, THE MOST -- HOWEVER,
STRONG YOUR RISK TOLERANCE IS.
LAST YEAR PUSHED THE BOUNDS OF
ALL THAT.
IF IT WAS MORE THAN YOU CAN
HANDLE, THAT MEANT THAT THE
ALLOCATION WASN'T RIGHT GOING
IN, AND YOU NEED TO ADJUST IT
NOW.
MARKET TIMING IS IMPOSSIBLE.
WE'RE GOING TO PLAY A GAME
TONIGHT.
THIS IS CALLED THE WHAT WOULD
YOU DO GAME.
OKAY.
SO HERE IS A.
AND WHAT THIS IS, IT'S NOT
IMPORTANT WHAT THE SECURITY IS,
BUT THIS IS AN ACTUAL THING, AN
ACTUAL CHART OF AN ACTUAL MARKET
PERFORMANCES.
HERE IS MY QUESTION.
YOU'RE HERE.
YOU'RE GOING, ALL RIGHT, THIS IS
COOL.
EVERYTHING IS GOING UP.
WHEN YOU GET TO THE END OF THE
CHART, THE RIGHT SIDE OF THAT
CHART, WHAT DO YOU DO?
TIME THE MARKET HERE.
CLEARLY, DURING THIS PERIOD OF
TIME OTHER THAN A SLIGHT HICKUP
ABOUT TWO-THIRDS OF THE WAY
THROUGH, THIS THING JUST DOES
NOTHING BUT GO UP.
SO HERE IS WHAT I'D LIKE YOU TO
GO.
THIS IS CHART A.
MENTAL IT, MAKE A NOTE.
WHAT WOULD YOU DO?
IF YOU'RE GOING TO TRY TO TIME
THE MARKET, THIS SECURITY, WHAT
WOULD YOU DO AT THE RIGHT EDGE
OF A?
LET'S -- HERE IS B.
SAME QUESTION.
WHAT WOULD YOU DO.
CLEARLY, THIS STINKS, RIGHT?
NOTHING GOOD IS GOING ON HERE.
SO DURING THIS PERIOD OF TIME,
B, WHAT WOULD YOU -- NOW WE'RE
AT THE RIGHT EDGE.
WHAT WOULD YOU DO?
SO NOW YOU'VE GOT TO REMEMBER
WHAT, WOULD I DO AT A, WHAT
WOULD I DO AT B?
HERE IS D.
C JUST KIDDING.
C.
HERE IS C.
NOT BAD.
KIND OF NICE, STEADY GOING UP.
SO NOW WHAT DO YOU DO AT THE END
OF C?
HE HAVE BEEN GOT THEIR
DECISIONS -- EVERYBODY GOT THEIR
DECISIONS MADE?
LET'S LOOK AT IT.
AS IT TURNS OUT, A IS THE S AND
P500.
THOSE ARE THE OVERALL STOCK
MARKET BETWEEN JANUARY 1, 1995
AND AUGUST 31 OF 2000.
AND WHAT YOU SEE IS THAT THE S
AND P WENT FROM, I DON'T KNOW,
450 UP TO 1450 DURING THAT
PERIOD OF TIME.
I ASKED YOU ABOUT A?
WHAT WOULD YOU DO?
B, THIS IS THE S AND P FROM THE
NEXT DAY, OKAY?
THIS STARTS WITH THE END OF
CHART A, AND IS THE S AND P FROM
2000 THROUGH 2003.
C IS THE NEXT PIECE OF THE
PUZZLE AND WHEN YOU LOOK AT THEM
ALL TOGETHER THIS IS WHAT YOU
GET.
IT TURNS OUT A, B, C, IT'S THE
SAME SECURITY, SAME THING.
NOW, I CAN IMAGINE, YOU KNOW,
HUMAN NATURE BEING WHAT IT IS,
THAT WHEN YOU'RE AT THE END OF
A, YOU'RE GOING COOL.
THIS IS GREAT.
THE MARKET DOES NOTHING BUT GO
UP.
AND IN B, WE WERE DOWN AT THE
RIGHT SIDE OF B.
GOING ALL RIGHT, I SHOULD GET
OUT, BECAUSE THE MARKET DOES
NOTHING BUT GO DOWN, C, WHAT WE
HAD THERE WAS A FULL RECOVERY
BETWEEN 2003 AND 2007 OF
EVERYTHING WE LOST DURING B.
ALL RIGHT.
WANT TO PLAY AGAIN?
I SAY YES.
OKAY.
HERE WE GO.
CHART, ACTUAL SECURITY.
CHART NUMBER 1.
WHAT WOULD YOU DO?
RIGHT THERE.
WHAT DO YOU DO?
YOU THINK YOU KNOW.
ADAM -- WELL, LET ME ASK YOU A
QUESTION.
THAT ACTUALLY ISN'T THE END OF
1.
THERE.
THAT'S THE END -- WHOOPS.
RIGHT HERE YOU MIGHT HAVE GONE
IT'S TRICKING ME AGAIN.
THIS WAS THE BOTTOM.
SO NOW HERE IS MY QUESTION FOR
YOU.
AT THE END OF 1, WHAT DO YOU DO?
GOING TO TRY AND TIME THE
MARKET.
CLEARLY, NOTHING GOOD IS GOING
ON HERE.
HOW ABOUT CHART 2?
PRETTY GOOD.
WHAT DO YOU DO NOW?
THE RIGHT EDGE OF CHART 2.
MADE YOUR DECISIONS?
THAT'S A GOOD QUESTION AND THE
REASON BEING IS THIS IS THE
MARKET THAT WE HAD FROM
JANUARY 1 OF 2008 THROUGH
MARCH 9 OF 2009.
THIS IS WHAT'S HAPPENED SINCE
MARCH 9 THROUGH JUNE 9.
AND THESE ARE THE TWO TOGETHER.
SO I WOULD -- IF YOU'RE TRYING
TO TIME THE MARKET MY QUESTION
IS, REALLY, THE REALLY IMPORTANT
QUESTION IS WHAT DO YOU DO AT
THE END OF 2?
THAT'S RIGHT NOW.
SEE, ONE OF THE THINGS THAT WE
HAVE TO KNOW ABOUT MARKET
TIMING, BELLE PEOPLE COME UP TO
ME RECOLLECT ADAM, WHY DIDN'T
YOU TAKE ALL OF YOUR CLIENTS TO
CASH BEFORE THE BEAR MARKET OF
2008 INTO 2009?
CLEARLY, WE WERE GOING INTO A
HORRIBLE MARKET.
YOU KNOW WHAT THE PROBLEM IS?
NOBODY KNOWS WHAT THE REST OF
THE CHART LOOKS LIKE UNTIL
LATER.
YOU DON'T KNOW.
I MEAN I CAN TELL YOU THAT ON
MARCH 9, 2009, THAT'S WHEN I WAS
SLEEPING LIKE A BABY.
YEAH.
IT WAS A TERRIBLE TIME.
AND A REALLY -- I MEAN GUT
WRENCHING.
LIKE I SAID, IT PUSHED THE
BOUNDS OF WHAT ANY OF US COULD
ACCEPT.
NORM GAVE YOU A CHART THAT SHOWS
THE PERFORMANCE OF THE U.S.
STOCK MARKET BETWEEN 1957 AND
NOW.
'57?
YES.
WE'RE GOING TO HAVE THESE
THINGS.
NOW, I KNOW THAT HAVING 2000
THROUGH 2002, BOOM, JUST WHEN WE
THOUGHT IT WAS SAFE, 2008 CAME
ALONG.
I WILL JUST TELL YOU YOU CAN'T
TIME THE MARKET.
FROM TIME TO TIME, WE'RE GOING
TO HAVE THESE THINGS.
UNFORTUNATELY, WE HAD 200 YEAR
FLOODS WITHIN A 5 YEAR PERIOD.
-- 2, 100 YEAR FLOODS WITHIN A 5
YEAR PERIOD.
CAN'T TIME THE MARKET.
GOT TO BE PATIENT.
STATISTICAL DATA.
RETURNS OF THE STOCKS COMPRISING
THE S AND B500 INDEXES, THEY
FOUND $1,000 INVESTED ON
JANUARY 1, 1988 WOULD HAVE GROWN
OVER 20 YEARS TO 8,860 DOLLARS
IF IT WAS INVESTED THE WHOLE
TIME.
PUT YOUR MONEY IN, FORGET ABOUT
IT FOR 20 YEARS.
IT GREW 8 FOLD.
IF YOU MISSED ONLY THE 5 BEST
DAYS OUT OF THAT -- 5 DAYS OUT
OF 20 BECAUSE YOU WERE TRYING TO
TIME THE MARKET, INSTEAD YOU END
UP WITH $6,800.
IF YOU MISSED THE TOP 15 DAYS,
THAT'S REALLY -- I MEAN 15 DAYS
OUT OF 20 YEARS YOU GET 4500.
AND IF YOU MISSED THE 25 DAYS
YOU'RE AT $3,300.
YOU'RE TALKING ABOUT 62% LESS
RETURN IF YOU MISSED 25 DAYS OUT
OF 20 YEARS.
NOW, I KNOW IT'S NO FUN IF WE'RE
TALKING ABOUT ENTERTAINMENT
VALUE, IF WE'RE TALKING ABOUT
PERSONAL SATISFACTION, IF WE'RE
TALKING ABOUT THE WEALTH EFFECT,
ABOUT HOW WE FEEL INTERNALLY,
IT'S NO FUN GOING THROUGH THESE
TIMES WHEN THE MARKET IS LIKE
2008.
BUT YOU HAVE TO BE PATIENT.
IT WILL WORK ITSELF OUT.
AND WE LIVE IN A WORLD NOW WHERE
NOBODY WANTS TO WAIT FOR
ANYTHING.
WE HAVE BECOME THE MOST
INPATIENT SOCIETY IN THE HISTORY
OF THE UNIVERSE.
WE WANT -- LET'S FACE IT.
OUR ANCESTORS HAD TO EITHER GROW
OR KILL THEIR FOOD.
WE DON'T WANT OUR FOOD UNLESS
THEY PUSH IT THROUGH A WINDOW SO
WE DON'T HAVE TO GET OUT OF THE
CAR.
WE WANT -- I REMEMBER IN THE OLD
DAYS, LIKE 5 YEARS AGO, I HAVE
TO GO HOME AND CHECK MY E-MAIL.
I HAVE TO GO TO THE OFFICE AND
CHECK MY E-MAIL.
NO.
IT'S RIGHT HERE.
NOT ONLY DOES THIS DEVICE HAVE
MY E-MAIL ON IT, AND CAN I MAKE
PHONE CALLS, BUT I GOT MY
FACEBOOK PAGE ON THERE, I GOT
TEXTING, I GOT BOOM, BOOM, BOOM,
BOOM.
I DON'T WANT TO WAIT FOR
ANYTHING.
I WANT IT RIGHT NOW.
THIS COUNTRY HAS BECOME
EXTREMELY INPATIENT.
AND I WISH THAT INVESTING WAS
LIKE THAT.
I WISH INVESTING WAS LIKE THE
KIND OF THING WHERE YOU HAVE
YOUR -- YOU PUT THIS OUT THERE
AND THEN LIKE THE NEXT DAY IT'S
GOOD.
THAT'S WHAT'S HAPPENING.
I PUT MONEY IN THIS MUTUAL FUND,
AND I'VE HAD IT THERE FOR A YEAR
AND IT HASN'T BEEN VERY GOOD.
WELL, YOU KNOW, A YEAR, IT TAKES
TIME.
BUT IT WILL WORK OUT IN THE END.
BY THE TIME YOU FIGURE OUT THE
PATTERN, OH, WAIT A MINUTE.
I JUST REALIZED THE MARKET IS
GOING DOWN.
IT'S JUST GOING TO KEEP GOING
DOWN. THERE IS NOTHING BUT BAD
NEWS.
BY THE TIME YOU FIGURE IT OUT,
IT'S PROBABLY TOO LATE.
BY THE TIME WE KNEW WE WERE IN A
HORRIBLE BEAR MARKET, THINGS
TURNED AROUND.
BY THE TIME THAT PEOPLE REALIZED
WE'RE BACK TO A NORMALIZED STOCK
MARKET, THEY'VE ALREADY MISSED
OUT 35% RECOVERY IN THE MARKET.
THINGS COME BACK.
ONLY INVEST IN WHAT YOU
UNDERSTAND.
HEARD OF CDOs, COLLATERALIZED
DEBT OBLIGATIONS, A PORTFOLIO OF
SUBPRIME MORTGAGES.
THE BEAUTIFUL PART ABOUT
SUBPRIME MORTGAGES IS LIKE A
REGULAR MORTGAGE, 5%, 5 1/2%,
6%, SUBPRIME MORTGAGE, 9%, SO IF
YOU OWN THAT MORTGAGE, THIS IS A
SWEET DEAL.
INSTEAD OF GETTING 5% RETURN ON
MY MONEY THAT I PUT OUT TO BE
INVESTED IN THE HOUSING MARKET
I'M GETTING 9%.
AND SO THESE GUYS AT BEAR
STEARNS, THEY WERE REALLY SMART.
150 YEAR OLD FIRM.
BEAUTIFUL.
THEY GO, OKAY.
INSTEAD OF BUYING NORMAL
MORTGAGES WHERE PEOPLE HAVE TO
DO CRAZY WHACKY THINGS LIKE MAKE
ENOUGH MONEY TO MAKE THE
PAYMENTS, HAVE SOME DOWNPAYMENT,
HAVE A JOB FOR A WHILE, AND OH,
LET'S VERIFY THEIR INCOME.
I MAKE $8 MILLION A YEAR.
YEAH.
PEOPLE CAN WRITE DOWN WHATEVER
THEY WANT.
INSTEAD OF DOING THAT, WE'LL
JUST -- WE WON'T DO THAT.
SO THEY DID THAT, AND IT WAS A
BEAUTIFUL THING.
THEY MADE THESE MORTGAGES,
PEOPLE MADE THEIR PAYMENTS, THE
HOUSES KEPT GOING UP IN VALUE,
PEOPLE SOLD THE HOUSES, THE
INVESTORS GOT THEIR MONEY BACK.
AND THEN SOME BRILLIANT GUY
SAID, YOU KNOW, INSTEAD OF JUST
GETTING 9% ON ON MONEY, WE COULD
BORROW MONEY AT 3% AND LEND IT
OUT AT 9% AND LEVERAGE OUR
RETURNS AND WE'D MAKE EVEN MORE.
IT WAS A BEAUTIFUL THING.
AND THEY MADE A LOT OF MONEY.
AND THEN, WELL, YOU KNOW,
INSTEAD OF LIKE 2 TIMES
BORROWING, IF WE DID 10 TIMES
WOROING, WE WOULD MAKE EVEN MORE
MONEY.
COOL.
THINGS WENT ALONG, THEY WERE
MAKING LOTS.
WHEN BEAR STEARNS WENT OUT OF
BUSINESS, THEIR PORTFOLIOS OF
CDOs WERE LEARNINGED 30-1. --
LEVERAGED 30-1.
YOU WONDER WHY THEY WENT OUT OF
BUSINESS SO FAST?
IT WAS BECAUSE THEY GOT A MARGIN
CALL.
WHEN YOU'RE LEVERAGED 30, YOU'RE
IN BIG TROUBLING. YOU GOT TO
SELL SOMETHING AND THEY DIDN'T
HAVE ANYTHING TO SELL.
THAT'S WHAT STARTED THE WHOLE
CASCADE.
NOW, HERE IS MY QUESTION.
WHO NEEDED TO OWN CDOs?
WHO NEEDED TO OWN A PORTFOLIO OF
SUBPRIME MORTGAGES?
NOBODY I CAN THINK OF.
AUCTION RATE PREFERRED
SECURITIES, ARPS, WERE THESE
THINGS THAT WERE SOLD BY THE
MAJOR BROKERAGE HOUSES AND THEY
WERE LEVERAGED PRODUCTS AND WHAT
HAPPENED WAS THEY SOLD THEM AS A
MONEY MARKET ALTERNATIVE.
THEY SAID YOU COULD PUT YOUR
MONEY INTO THIS DEAL AND YOU'RE
GOING TO GET A MUCH HIGHER RATE
HAN WHAT YOU GET IN A MONEY
MARKET ACCOUNT.
INSTEAD OF HAVING DAILY
LIQUIDITY THE WAY YOU DO WITH A
MONEY MARKET ACCOUNT, YOU HAVE
WEEKLY LIQUIDITY.
EVERY FRY THERE WILL BE AN
AUCTION.
WHENEVER YOU WANT TO SELL, YOU
CAN SELL.
WHEN WE HAD THE CREDIT MELT DOWN
LAST YEAR, THE AUCTIONS STARTED
TO FAIL.
AND THROUGHOUT MOST OF THE 4th
QUARTER OF 2008, THESE
AUTHENTICS FAILED AND PEOPLE --
AUTHENTICS FAILED AND PEOPLE HAD
THEIR MONEY STOPPED GETTING
INTEREST AND COULDN'T GET THEIR
MONEY OUT AT ANY PRICE.
I WOULD HEAR STORIES ABOUT
PEOPLE WHO BUILT A HOUSE, AND
THEY HAD THEIR FINAL PAYMENT
DUE, AND IT WAS TIED UP IN THESE
AUCTION RATE -- THEY COULDN'T
GET THEIR MONEY OUT AND THEY
WERE GOING TO LOSE THEIR HOUSE.
COMPANIES THAT WERE GOING TO
MAKE FRIDAY, NO AUCTION.
WHO NEEDED TO OWN THESE?
NOBODY.
THAT'S WHO.
CREDIT DEFAULT SWAPS.
ANYBODY KNOW WHAT A -- YEAH, YOU
GUYS KNOW.
LET ME TELL YOU, I AM SIMPLE
TERMS WHAT A CREDIT DEFAULT SWAB
IS.
THIS IS WHAT BROUGHT AIG.
THIS IS WHY THE GOVERNMENT OWNS
IT RIGHT NOW.
YOU GET THESE PEOPLE AND THEY
GOT, OKAY, GENERAL MOTORS WANTS
TO BUILD A NEW PLANT.
BUT GENERAL MOTORS IS KIND OF
DICEY.
I DON'T KNOW IF WE SHOULD LOAN
THEM THE MONEY.
AND AIG SAID HOW ABOUT THIS?
YOU GUYS LOAN GENERAL MOTORS THE
MONEY, AND YOU PAY US A PREMIUM,
AND IF GENERAL MOTORS GOES OUT
OF BUSINESS WE'LL MAKE GOOD ON
THE BONDS.
SO IT'S LIKE LIFE INSURANCE FOR
THE MONEY THAT YOU'RE LOANING TO
A COMPANY.
AND THAT WAS COOL.
BUT THEN SOME PEOPLE WENT, I
DON'T THINK GENERAL MOTORS IS A
VERY GOOD COMPANY.
WHAT I'M GOING TO DO, AND THIS
WAS BEAR STEARNS LEHMAN
BROTHERS, I'M GOING TO BUY THE
INSURANCE EVEN THOUGH I'M NOT
LENDING MONEY TO THESE PEOPLE.
AIG WENT THAT'S COOL.
AS LONG AS YOU PAY THE PREMIUM.
GUESS WHAT.
THEY ALL GO OUT OF BUSINESS, AND
NOW AIG -- A I GIFT, THEIR
INSURANCE PART, THEY'RE DOING
FINE.
THE LIFE INSURANCE, CAR
INSURANCE, THAT'S GREAT.
IT'S THE YES DEFAULT SWABS THAT
BROUGHT THE COMPANY DOWN.
WHO NEEDED TO OWN CREDIT DEFAULT
SWABS?
NOBODY.
HEDGE FUNDS.
THAT WAS A BIG -- DURING THE
BEAR MARKET OF 20, 2002, HEDGE
FUNDS, SOME, MANY MADE MONEY
EVEN THOUGH THE STOCK MARKET WAS
GOING DOWN AND PEOPLE WENT, I
WANT THAT THING THAT GOES UP
WHEN THE MARKET GOES DOWN.
THAT WOULD BE COOL TO HAVE.
GUESS WHAT?
HEDGE FUNDS GOT THEIR CLOCKS
CLEANED.
THERE WAS ABOUT PROBABLY 30%
LESS HEDGE FUNDS THAN THERE WERE
A YEAR AGO TODAY.
WHO NEEDED TO OWN THOSE.
BERNIE MADOFF.
GOD LOVE THE GUY, NOT.
THIS GUY, OKAY, GOES AROUND,
TELLS PEOPLE, HERE IS THE DEAL.
GIVE ME YOUR MONEY.
WE'LL PAY YOU 2% EVERY MONTH, NO
MATTER WHAT THE MARKET IS DOING.
THE RETURN IS EXACTLY THE SAME
EVERY SINGLE TIME.
2% EVERY MONTH.
AND SOME PEOPLE WENT WELL, HOW
DO YOU DO THAT?
I GOT THIS THING, IT'S A COOL
THING, AND I COULD TELL YOU BUT
YOU REALLY WOULDN'T GET IT.
JUST TRUST ME.
TALK TO HIM, HE'LL TELL YOU,
IT'S COOL.
AND THAT'S WHAT -- YOU KNOW
WHAT?
IF YOU ASK ME ALL THESE
QUESTIONS I WON'T LET YOU
INVEST.
BERNIE, WHOA, WHOA, COME BACK.
I WANT TO DO THIS.
WHO NEEDED TO BE INVESTED WITH
BERNIE MADOFF?
NOBODY.
GUARANTEED ANNUITY PRODUCTS.
I TALKED ABOUT THESE ANNUITIES
EARLIER.
HOW THEY COME WITH A 500 PAGE
PROSPECTUS.
WE HAVE 3 MAJOR LIFE INSURANCE
COMPANIES IN THIS COUNTRY WHO
WOULD HAVE GONE BANKRUPT IF THE
U.S. GOVERNMENT HAD NOT BAILED
THEM OUT.
NOW, I WILL DRAW A STRONG -- THE
ORIGINAL TARP PLAN, I'M A BIG
FAN.
WE'RE GOING TO TAKE THESE BIG
INVESTMENT BANKS OWN SECURITIES
THAT HAD VALUE, BUT THEY
COULDN'T SELL THEM RIGHT THEN.
THEY WEREN'T LIQUID.
THE BEST EXAMPLE, YOU HAVE YOUR
HOUSE.
I SAY YOU NEED TO SELL YOUR
HOUSE, HOW MUCH DO YOU THINK
IT'S WORTH?
AND I'LL GIVE YOU 6 MONTHS TO A
YEAR TO SELL IT.
THAT'S ONE NUMBER.
NOW, HERE IS ANOTHER QUESTION.
YOU NEED TO SELL YOUR HOUSE AND
YOU HAVE TO SELL IT TONIGHT.
FOR CASH.
BANKS ARE CLOSED.
GOT TO BE SOMEBODY WHO HAS CASH
IN THEIR SAFE?
GOT TO BE -- YOU'RE GOING TO GET
A COMPLETELY DIFFERENT PRICE.
AND THE PRICE THAT YOU WOULD
GET, IF YOU HAD TO SELL YOUR
HOUSE TONIGHT, YOU GO, NO, I'M
NOT GOING TO TAKE THAT.
THAT'S WHAT HAPPENED.
THESE COMPANIES HAD SECURITIES
THAT HAD VALUE.
THE HOUSE HAS A VALUE.
IT COULDN'T SELL THEM RIGHT NOW.
THE GOVERNMENT SAYS WE'LL PUT UP
SOME MONEY AND THAT WILL GIVE US
TIME TO SELL THESE THINGS IN AN
ORDERLY FASHION OVER AN EXTENDED
PERIOD OF TIME.
I DON'T LIKE IT.
BUT THAT'S WHAT WE NEEDED AT THE
TIME.
WE HAVE 3 MAJOR LIFE INSURANCE
COMPANIES WHERE THE FEDERAL
GOVERNMENT HAS GIVEN THEM MONEY
SO THAT THEY DIDN'T GO BANKRUPT.
OKAY.
THIS IS THE LAND OF OPPORTUNITY.
I LOVE THIS COUNTRY.
WITH EVERYONE FIBER OF MY BEING.
I STARTED A COMPANY IN 1996, ME
AND MY ASSISTANT IN THE BASEMENT
OF AN OFFICE BUILDING ON COLLEGE
WELCOME.
WE GOT OFFICES IN 70 CITIES AND
I'VE GOT A NATIONALLY SYNDICATED
RADIO SHOW.
TELL ME WHAT OTHER COUNTRY THAT
CAN HAPPEN IN.
WE MANAGE MONEY FOR 28,000
PEOPLE FROM COAST TO COAST,
BORDER TO BORDER.
TELL ME WHAT OTHER COUNTRY THAT
COULD HAPPEN IN. NONE.
GUESS WHAT?
IF I HAD MADE MADE DECISIONS,
INSTEAD OF CHRIS, THE PRESIDENT
OF MY COMPANY, RAISE YOUR HAND.
IF I HAD HIRED A MORON, A BIGGER
MORON -- NO, JUST KIDDING.
[LAUGHTER]
WE HAD MADE BAD DECISIONS THE
COMPANY WOULD GO OUT -- THIS
COUNTRY DOES NOT GUARANTEE
SUCCESS.
THIS COUNTRY GUARANTY THE
OPPORTUNITY FOR SUCCESS.
NOW ALL OF A SUDDEN THE
GOVERNMENT IS GIVING MONEY TO
COMPANIES WHERE THEY HAVE A GOOD
BUSINESS PLAN, BAD BUSINESS
PLAN, DOESN'T MATTER.
THESE GUYS, THE REASON THESE
LIFE INSURANCE COMPANIES ARE ON
THE VERGE OF BANKRUPTCY IS
BECAUSE THEY SOLD THESE ANNUITY
PRODUCTS AND THEY SAID, HERE'S
THE DEAL.
YOU PUT THE MONEY IN.
IF THE MARKET GOES UP, YOU GET
THE BENEFIT.
IF IT GOES DOWN WE WILL GUARANTY
YOU CAN'T LOSE MONEY.
THAT WAS A SWEET DEAL UNTIL THE
MARKET WENT DOWN 50%.
THEY HAD TO MAKE GOOD ON THE
GUARANTEES AND THEY DON'T HAVE
ENOUGH MONEY TO DO IT.
THEY DIDN'T HAVE ENOUGH TIME.
INCOME EXPECTED THE PERFECT
STORM HIKE WE HAD LAST YEAR.
MY QUESTION IS THESE COMPANIES,
THEY'RE HOPING, THEY'RE PLANNING
ON EVERYTHING GOING GREAT FROM
THIS POINT FORWARD.
WHAT IF IT DOESN'T?
THE DEVIL IS IN THE DETAILS.
IF THOSE COMPANIES GO BANKRUPT,
THE GUARANTEES ARE NO GOOD.
THOUGH PRODUCTS ARE GUARANTEED
NOT BY THE UNITED STATES
GOVERNMENT, BY HARTFORD
FINANCIAL GROUP.
PEOPLE HEAR THE NAMES AND SAY
HARTFORD?
YEAH.
THAT'S 150 YEAR OLD COMPANY.
BEAR STEARNS WAS A 200 OLD
COMPANY.
LEHMAN BROTHERS, 150 YEARS OLD.
LET'S FACE IT.
I HATE TO DO THIS TO MYSELF,
BECAUSE THIS HAS BEEN A HEART
BREAKING YEAR FOR ME.
BUT GEORGE, DON'T PLAY FOR THE
ROYALS ANYMORE.
JUST BECAUSE THE TEAM IS CALLED
THE ROYALS DOESN'T MEAN IT'S THE
SAME AS IT WAS IN 1985.
THE SAME IS TRUE HERE.
BECAUSE THERE IS A COMPANY
YOU'VE HEARD THE NAME FOR YEARS,
IT DOESN'T MEAN IT'S THE SAME
COMPANY IT WAS BACK THEN.
PAST PERFORMANCES IS NO
GUARANTEED OF FUTURE
PERFORMANCE.
THE SEC MAKES ME WRITE THAT ON
EVERYTHING THAT WE PUT OUT.
IT IS NO GUARANTY.
BUT IT'S A DARN GOOD INDICATOR.
AND PEOPLE CHOICE PERFORMANCE.
ANYTHING THAT GOES UP 80 OR 100%
IN A YEAR, EMERGING MARKETS
FUND, A GOLD FUND, TECHNOLOGY
FUND, AN OIL FUND.
ANYTHING THAT CAN GO UP 80 OR 1
HUNG% IN A YEAR, CHINA FUND, CAN
GO DOWN JUST AS MUCH.
AND IF SOMEBODY PRESENT YOU WITH
AN IDEA THAT SOUNDS TOO GOOD TO
BE TRUE, 2% A MONTH, NO MATTER
WHAT, RUN AWAY.
IF IT'S TOO GOOD TO BE TRUE, IT
IS TOO GOOD TO BE TRUE.
FUNDS NOW.
LET ME GO THROUGH SOME VERY
SIMPLE THINGS.
WHAT WE CAN DOING AT THE MUTUAL
FUND STORE, WHAT I HAVE BEEN
DOING IS TRYING TO DETERMINE IF
THE -- BECAUSE REALLY GOOD FUNDS
DID POORLY LAST YEAR.
HERE'S THE QUESTION.
WAS THAT BECAUSE THE FUND
MANAGER HAS GONE BAD OR BECAUSE
A GOOD FUND MAJOR HAD A BAD
YEAR?
THAT'S QUESTION ONE YOU HAVE TO
ASK.
WERE MY RESULTS POOR BECAUSE I
HAD A POOR FUND MANAGER WHO IS
NOT GOOD, OR WAS IT JUST A GOOD
MANAGER WHO HAD A BAD YEAR?
STEP ONE.
STEP TWO.
HOW DO YOU KNOW IF THE MANAGER
IS NOW ON TRACK?
THE WAY YOU HAVE TO MEASURE THAT
IS YOU HAVE TO START LOOKING AT
THINGS, IF MORNINGSTAR AND YAHOO
FINANCE, WE'VE GOTTEN USED TO
COMPUTERS AND ALL THIS.
THEY TRACK LIKE 1 YEAR, 3 YEAR,
5 YEAR.
YOU GOT TO GO BACK TO MARCH 9.
HOW HAS THE MANAGER BEEN DOING
SINCE MARCH 9?
HOW HAS THE MANAGER RECOVERED
SINCE THE MARKET STARTED GOING
BACK UP?
ARE YOU GETTING ALL THE UPSIDE
AS THE MARKET RECOVERS.
THERE A LOT OF FUNDS OUT THERE
THAT HAD GOOD 2008s, BUT HAVE
HAD POOR THE 2009s -- A LOT OF
FUND MANAGERS OUT THERE WHO DO
WELL IN DOWN MARKETS BUT DON'T
DO WELL IN UP MARKETS.
THE IMPORTANT THING TO LOOK AT
IS IF YOU LOOK AT AVERAGE
RETURNS, WHAT A LOT OF PEOPLE
DO, THEY GO AND GET OUT
MORNINGSTAR OR LOOK ON THE
COMPUTER AND LOOK FOR THE FUND
THAT HAS THE PAST 5, 3 YEAR
RECORD.
LAST YEAR WAS SO BAD THAT IT
DISTORTED THE RETURNS, THE
AVERAGE RETURNS.
LET ME SHOW YOU WHAT I'M TALKING
ABOUT.
I WILL REALIZE YOU CAN'T ALL SEE
THE NUMBERS.
I'M NOT GOING -- THIS IS A REAL
MUTUAL FUND.
IT DOESN'T MATTER WHAT IT IS
BECAUSE I'M USINGS IT FOR ILLUST
EXTRAIVE PURPOSES.
IF YOU LOOK, THIS FUND OVER THE
LAST YEAR IS DOWN 36%.
YEAH.
I LOVE -- GIVE ME THE FUND THAT
LOSES 36 PERCENTS.
NO.
OKAY.
HOW HAS IT DONE 3 YEARS,
AVERAGED A LOSS OF 7.4%.
I DON'T WANT TO OWN THAT.
OVER THE LAST 5 YEARS, 3.6%.
I COULD GET IN THAT A MONEY
MARKET ACCOUNT.
WHAT HAPPENED IS LAST YEAR WAS
SO BAD THAT IT DISTORTED THE
AVERAGE RETURNS.
I CAN TELL YOU, YOU CAN'T LOOK
AT THE AVERAGE RETURNS ANYMORE
BECAUSE THAT -- YOU'RE GOING TO
BE -- IT WOULD BE LIKE A
BASEBALL HITTER, A GUY WHO
STRUCK OUT EVERY AT BAT FOR A
WHOLE SEASON.
AND THEN BECAUSE HE -- BECAUSE
HE HAD A BROKEN ARM.
THEY STILL LET HIM PLAY.
IT'S A RIDICULOUS ANALOGY, BUT
SAY THAT HAPPENED.
[LAUGHTER]
OKAY.
GREAT.
WELL, IT MAKES THE AVERAGES LOOK
TERRIBLE.
IF YOU LOOK AT THIS FUND, WHAT
WE HAVE TO DO IS LOOK AT THE
CALENDAR YEARS.
IN 2002, THIS FUND BEAT THE S
AND P500 BY 17 1/2%.
IN ONE YEAR.
IN 2003, HE BEAT THE MARKET BY
19%.
IN 2004, BY 10%, 5 BY # 1%,
2006, BY 12%.
15% IN '07, AND THEN DANG IT, HE
LOST 53% IN 2008.
TERRIBLE.
WORSE THAN THE MARKET.
HORRIBLE, SO FAR IN 2009, UP
18.3% YEAR TO DATE WHICH IS 16%
BETTER THAN THE MARKET.
THAT'S THROUGH YESTERDAY.
HE'S PICKED UP -- ALL RIGHT.
THIS IS A MANAGER WHO
CONSISTENTLY BEATS THE MARKET.
HE HAD A TERRIBLE YEAR LAST
YEAR, WORSE THAT A LOT OF OTHER
MANAGERS.
BUT HE'S MAKING IT UP A LOT
FASTER AND SOMEBODY WHO FOR THE
LAST 8 YEARS HAS BEAT THE MARKET
BY DOUBLE DIGITS EVERY YEAR
ACCEPT FOR LAST.
IF YOU LOOK AT THE AVERAGES, IT
DOESN'T LOOK THAT GOOD.
ONCE AGAIN, YOU CAN'T -- 2008 IS
GOING TO DISTORT THE RETURNS.
YOU CAN'T LOOK AT THOSE ANYMORE.
ALL RIGHT.
WITH THAT, I WOULD LIKE TO
INVITE EMILY -- DID I MENTION,
WHILE EMILY COMES UP HERE, MY
BOOK?
THE THING THAT IS GREAT ABOUT
THIS BOOK IS THE HANDSOME MAN ON
THE COVER.
[LAUGHTER]
I LIKE HIM.
COME ON.
SHALL WE?
YES.
[INAUDIBLE]
EXCELLENT.
WHAT WOULD YOU LIKE TO SAY --
LIKE TO SIT.
I'LL SIT HERE.
WE DIDN'T WORK THIS OUT
BEFOREHAND, IN CASE YOU'RE
WONDERING.
HOW ARE YOU.
I AM WELL.
IS THIS GOING TO BE LIKE THE
INSIDE THE ACTOR'S STUDIO.
WHAT WORD DO YOU REALLY HATE.
WHAT SOUND, WHAT WORD HAS A
SOUND THAT YOU LOVE.
IF YOU COULD BE A FLOWER --
JUST DON'T TELL US WHAT SWEAR
WORD YOU LIKE THE BEST.
THIS IS A FAMILY PROGRAM.
GOT IT.
WE'VE GOT SOME VERY GOOD
QUESTIONS TONIGHT, A COUPLE OF
THEMES EMERGED AS I LOOK THROUGH
THESE, THE FIRST IS ABOUT
INFLATION.
I'VE GOT AT LEAST 5 CARDS HEAR,
ONE FROM OUR WONDERFUL BENEFIT
FACTOR WHO ASKS ABOUT IS
INFLATION THE THING TO WORRY
ABOUT FROM HERE ON OUT.
ALL RIGHT.
I GET -- THIS IS PROBABLY THE
MOST FREQUENT QUESTION THAT I
GET NOW.
PEOPLE WORRY -- AND PART OF THIS
IS STIRRED UP BY THE TALK RADIO
PEOPLE.
NOW, I --
YOU?
OTHER TALK RADIO --
[LAUGHTER]
ALL JOKING ASIDE, A LOT OF
PEOPLE IN THIS ROOM CAME TO KNOW
ME FROM TALK RADIO.
AND THAT MEANS THAT BY
DEMOGRAPHIC, THERE ARE PEOPLE
WHO LISTEN TO TALK RADIO.
AND IF THEY LISTEN TO KMBZ, YOU
HAVE GLENN BECK AND YOU GOT RUSH
LIMBAUGH AND THESE PEOPLE WHO
ARE FANNING THE FLAMES.
AND I WILL TELL YOU THIS.
HERE IS WHAT I KNOW.
INFLATION IS A RISE IN THE PRICE
OF GOODS AND SERVICES.
WELL, FIRST OF ALL, RIGHT NOW
THEY RELEASED INFLATION NUMBERS
TODAY.
AND INFLATION IS AT 1.3%.
THAT'S NO BIG DEAL.
NOW, WHAT PEOPLE -- WHAT PEOPLE
ARE ASSUMING IS THAT BECAUSE THE
FEDERAL GOVERNMENT IS BORROWING
SO MUCH MONEY, BECAUSE THEY ARE
SPENDING SO MUCH MONEY, THAT
THERE IS A DIRECT CORRELATION
AND THAT ULTIMATELY, WE'RE GOING
TO HAVE OUT OF CONTROL
INFLATION.
THERE IS A COUPLE REASONS I
DON'T BELIEVE THAT TO BE THE
CASE, AND THEN I'LL TELL YOU
WHAT HAPPENS EVEN IF IT DOES.
NUMBER ONE, A LOT OF THIS MONEY
THAT HAS BEEN GIVEN -- THAT THE
GOVERNMENT HAS BEEN PASSING OUT
TO BANKS, THE MONEY HAS NOT GONE
INTO THE SYSTEM.
AND WHAT I MEAN BY THAT IS THEY
HAVE BEGIN MONEY TO BANKS TO
SHORE UP THEIR BALANCE SHEETS,
BUT THEY'RE NOT LOANING THE
MONEY OUT.
RIGHT NOW IT'S PRETTY TOUGH TO
GET -- YOU WANT TO BUY REAL
ESTATE, TOUGH TO GET A LOPE.
BUSINESS LOAN, TOUGH TO GET A
LOAN.
BANKS ARE HORDING THIS MONEY.
RIGHT NOW THAT MONEY IS SITTING
WITHIN THE BANKING SYSTEM AND
NOW WE'VE SEEP SOME OF THE BANKS
STARTING TO PAY THAT MONEY BACK.
THE SECOND THING IS THAT
INFLATION IS NOT A SNEAKY THING.
YOU CAN GO TO BED ONE NIGHT AND
WHEN YOU WAKE UP IN THE MORNING
YOU FLIP ON CNBC.
THE MARKET IS DOWN 300 POINTS.
OKAY.
INFLATION IS NOT THE KIND OF
THING WHERE YOU GET TO BED ONE
NIGHT AND IT'S AT 2%, AND THEN
YOU WAKE UP IN THE MORNING AND
IT'S SURPRISE, 10%.
IT DOESN'T HAPPEN THAT WAY.
2, 2 1/2, 3, 3 1/2.
WELL, WE MAY HAVE HIGHER
INFLATION DOWN THE ROAD.
THAT COULD HAPPEN.
IT IS A POSSIBLE OUTCOME.
MAKE EVEN A LIKELY OUTCOME.
BUT WHEN THAT HAPPENS WE'LL HAVE
A LOT OF TIME ALONG THE WAY TO
ADJUST TO IT.
AND I'LL POINT THIS OUT.
IS THERE ANYBODY IN THIS ROOM,
RHETORICAL QUESTION, THERE IS
NOBODY IN THIS ROOM WHO HAS NOT
HEARD THAT INFLATION MIGHT BE A
PROBLEM DOWN THE ROAD.
IS ANYBODY SHOCKED OR SURPRISED
BY THAT?
NO.
OKAY.
WELL, THE MANAGERS THAT RUN
THESE MUTUAL FUNDS THAT WE OWN
FOR OUR CLIENTS, THEY HEARD IT,
TOO.
THEY'RE THINKING ABOUT IT, TOO.
SO THEY ARE WATCHING INFLATION
AS CAREFULLY AS POSSIBLE.
I CAN TELL YOU THAT TRACY, THE
DIRECTOR OF INVESTMENT STRATEGY
AT THE MUTUAL FUND STORE AND
MYSELF ARE PAYING VERY CLOSE
ATTENTION AND WE WENTING THE
RATE OF INFLATION, FOR THE TIME
BEING IT'S NOT AN ISSUE.
WHAT WILL HAPPEN IS PEOPLE ARE
GOING TO BE SCARED INTO THINGS
THEY WOULDN'T ORDINARILY DO
BECAUSE INFLATION MIGHT COME
SOMETIME DOWN THE ROAD.
WHEN, IF, AND WHEN IT REARS ITS
UGLY HEAD WE'LL BE ABLE TO DEAL
WITH IT.
SO IT'S KIND OF LIKE YOU'RE
TIMING THE MARKET.
IF INFLATION DOES START
SHOWING ITSELF, THEN WE'RE GOING
TO MAKE CHANGES TO THE
PORTFOLIO.
THE FUND MANAGERS THAT WE -- YOU
CAN OWN ONE FUND AND TODAY THEIR
POSITIONED ONE WAY AND WE START
TO SEE INFLATION, THEY'LL SELL
ALL THE STOCKS THEY HAVE THAT
WOULD BE HURT BY INFLATION, AND
BUY STOCKS THAT WOULD BE HELPED
BY INFLATION.
IN THE SAME TIME.
YOU DON'T HAVE TO SELL THE FUND.
THE MANAGER IS DOING THAT WORK
FOR YOU.
THAT'S THE BUTTY OF ACTIVE
MANAGEMENT.
IT'S NOT -- RIGHT NOW IT'S
NOT -- UNTIL THIS ECONOMY STARTS
COMING BACK -- NOBODY HAS
PRICING POWER.
WE'VE SEEN OIL PRICES GO BACK
UP.
OTHER THAN THAT, I DON'T SEE --
YOU GO TO PARK MALL, THEY'RE
BUSY AGAIN.
PEOPLE ARE BUYING STUFF AGAIN.
THE PEOPLE AREN'T BUYING IT
UNLESS IT'S CHEAP, 25% OFF, 35%
OFF, 50% OFF.
ANYBODY GOING TO BUY A CAR --
ANYBODY IN THIS ROOM GOING TO GO
TO A CAR DEALER AND PAY LIST
PRICE FOR A CAR WITH NO REBATES
OR NO SPECIAL INCENTIVES RIGHT
NOW IN TODAY'S WORLD?
NO.
ANYBODY IN THIS ROOM GOING TO
BUY A HOUSE AT WHATEVER THE
HOUSE WAS WORTH IN 2007?
NO.
EVERYBODY EXPECT A DEAL ON
EVERYTHING.
I DON'T KNOW OF ANY COMPANY
RIGHT NOW THAT CAN ACTUALLY
RAISE, WHERE THEY CAN GO THERE
IS SO MUCH DEMAND THAT WE'RE
GOING TO RAISE PRICES.
WHEN THE ECONOMY STARTS COMING
BACK, WE'LL GET INTO THAT ROLE.
UNTIL THAT TIME, INFLATION IS
NOT GOING TO BE A PROBLEM.
OKAY.
WELL SPEAKING OF MUTUAL FUNDS,
WE HAVE A LOT OF QUESTIONS ABOUT
THE KIND OF MUTUAL FUNDS TO LOOK
FOR NOW AND IF YOU'RE NEW TO
THAT, SHOULD YOU WAIT UNTIL A
FUND HAS BEEN ESTABLISHED A
WHILE BEFORE YOU GET INTO IT?
WELL, I THINK THAT'S --
TWO SEPARATE QUESTIONS.
YEAH.
I DO BELIEVE THAT -- I KNOW, NOT
EVEN A BELIEF.
I KNOW THAT 20 YEARS FROM NOW,
THE MARKET IS GOING TO BE
SUBSTANTIALLY HIGHER THAN IT IS
RIGHT NOW.
A LOT OF PEOPLE IN THIS ROOM
AREN'T WORRIED ABOUT WHERE
THINGS ARE GOING TO BE 20 YEARS
FROM NOW.
[LAUGHTER]
I WANT TO KNOW WHERE IT'S GOING
TO BE A YEAR FROM NOW, 2 YEARS
FROM NOW.
I PERSONALLY BELIEVE THAT THIS
IS A GOOD TIME TO PUT NEW MONEY
INTO THE MARKET.
THERE IS A LOT OF PEOPLE WHO GOT
OUT OF THE MARKET AND NOW
THEY'RE LIKE, I DON'T KNOW WHAT
TO DO.
I GOT OUT, THINGS WERE LOW.
I HATE TO PUT MY MONEY IN, IT'S
HIGHER THAN WHEN I GOT OUT.
I'M GOING TO WAIT FOR THE RIGHT
TIME.
WELL, WHEN IS IT RIGHT TIME?
IF THINGS DO GO BACK DOWN YOU'RE
GOING TO GO, SEE?
IT'S GOING TO KEEP GOING DOWN.
YOU DON'T PUT YOUR MONEY IN.
IF THINGS GO HIGHER, WHAT THE
HECK, I SHOULD HAVE PUT MY MONEY
IN.
WE CALL IT THE MARKET REENTRY
PLAN.
IT'S A SYSTEMIC UNEMOTIONAL WAY
OF HELPING PEOPLE TO PUT THEIR
MONEY BACK INTO THE MARKET.
FOR PEOPLE WHO ARE LONGER TERM
ORIENTED, I'D SAY GORE IT.
BECAUSE RIGHT NOW YOU SAW THE
CHART.
YEAH, WE'VE HAD A PRETTY MARKET
RECOVERY FROM THE LOWS ON
MARCH 9.
BUT WE STILL HAVE ONLY RECOVERED
ABOUT 35% OF WHAT THE MARKET
LOST.
SO THERE IS -- JUST TO GET BACK
TO WHERE WE WERE, A LOT OF
UPSIDE POTENTIAL.
IF YOU'RE A LITTLE NERVOUS ABOUT
THAT, THERE ARE SYSTEMIC WAYS TO
DO THAT, TOO.
OKAY.
IS THERE A GOOD PLACE YOU'D
RECOMMEND FOR PEOPLE TO GO FOR
RESEARCH SO THAT THEY KNOW WHAT
FUND THEY'RE GETTING INTO, NOT
FULL OF FANNIE MAE, FREDDIE MAC,
JUNK BONDS.
I CAN THERE ARE 2 KINDS OF
PEOPLE IN THIS WORLD.
PEOPLE WHO HAVE EDUCATION, TIME,
AND MOST IMPORTANTLY, THE
EMOTIONAL FORTITUDE TO BE ABLE
TO MANAGE THEIR OWN MONEY.
AND THERE IS OTHER PEOPLE THAT
NEED HELP.
AND THERE ARE RESEARCH TOOLS OUT
THERE LIKE MORNINGSTAR.COM.
I THINK MORNINGSTAR -- I DON'T
LIKE THEIR SUBJECTIVE RESEARCH.
MORNINGSTAR STARS MEAN NOTHING
TO ME.
THERE ARE GREAT FUNDS THAT HAVE
VERY FEW STARS, TERRIBLE FUNDS
THAT HAVE A LOT OF STARS.
IF YOU'RE LOOKING AT THE
OBJECTIVE DATA, THEY DO A GOOD
JOB.
THERE IS FOREIGNS AND
DISCUSSIONS.
THAT'S GOOD.
IF YOU NEED HELP, YOU NEED HELP.
GOD HAS GIVE ME A LOT OF GIFTS.
PICKING MUTUAL FUNDS, I CAN DO
THAT.
I CAN'T -- MECHANICAL ABILITY,
NO SO MUCH. -- NOT SO MUCH.
I CAN CHANGE LIGHT BULBS, AND --
THE LIGHT BULB BREAKS, THE GLASS
IS IN YOUR HAND, THE METAL
PART -- THAT'S WHEN I CALL THE
ELECTRITION.
SENSE OF DIRECTION.
NOT MY THING.
I DO BELIEVE THAT THE LORD
INVENTED GPS JUST FOR ME.
[LAUGHTER]
BECAUSE I CALL HER MY
GIRLFRIEND, SHE'S TURN LEFT IN
200 YARDS.
YES, I WILL.
[LAUGHTER]
ANY HOW, I NEED HELP WITH THOSE
THINGS.
SOME PEOPLE NEED HELP WITH THEIR
INVESTMENTS.
IT'S HARDER THAN PEOPLE THINK.
IF THERE IS ANYTHING WE'VE
LEARNED IT'S HARDER THAN WE ALL
THOUGHT.
THERE IS NO SHAME IN ADMITTING
THAT YOU NEED HELP.
JUST LIKE MY FRIENDS, MY
COWORKERS, THEY TEASE ME ABOUT
THE FACT THAT I CAN'T FIX
ANYTHING.
THEY CAN TEASE ME ABOUT THE FACT
THAT GIVEN AN OPPORTUNITY TO
TURN LEFT OR RIGHT, I ALWAYS
TURN THE WRONG WAY.
BUT I ADMIT, YOU KNOW, THERE ARE
CERTAINLY THINGS I'M GOOD AT,
CERTAIN THING -- I CAN'T HIT A
MAJOR LEAGUE CURVE BALL.
HERE IS A QUESTION.
WHAT DO YOU THINK ABOUT
INVESTING IN WINDMILL FARMS OR
OTHER SUSTAINABLE ENERGY?
YEAH.
[LAUGHTER]
HERE IS THE THING.
PEOPLE TEND -- PEOPLE, INCLUDING
OUR CONGRESS AND OUR PRESIDENT,
TEND TO BE VERY REACTIONARY.
FOR THOSE OF US WHO ARE OLD
ENOUGH, ANYBODY REMEMBER THE
PINTO?
FORD PINTO?
THE FORD PINTO WAS CREATED, A
GREMLIN, REMEMBER THAT?
COOL GLASS, ALL AROUND, LIKE
MELT YOU WHEN YOU SAT IN IT FROM
THE SUN.
THOSE CARS WERE CREATED BECAUSE
IN 1974 WE HAD THE ARAB OIL
EMBARGO.
THERE WERE LINES AT THE GASOLINE
STATION.
AND THE PRICE OF GASOLINE
WENT -- I MEAN COMPARATIVELY
SPEAKING IT WAS LIKE WENT FROM A
QUARTER TO 50 CENTS.
MY GOD.
BUT WE WANT SMALL CARS,
EVERYBODY SAID.
THEN THE ARAB OIL EMBARGO IS
LIFTED, PRICE OF OIL GOES BACK.
THE HECK WITH THAT, I WANT A
COOL POWERFUL COMFY CAR.
WELL, RIGHT NOW EVERYBODY --
THERE WAS AN ARTICLE IN THE
KANSAS STAR ABOUT SCOOTER SALES.
ALL THESE PEOPLE WENT AND BUILT
SCOOTER DEALERSHIPS AND NOW THEY
CAN'T SELL THEM BECAUSE GAS WENT
DUNGHEAP.
I BELIEVE, NUMBER ONE, I DO
LEAVE IN THE INGENUITY OF
SCIENCE.
I BELIEVE THAT WE DO NEED TO
MAKE CARS MORE EFFICIENT, THE
SCIENTISTS WILL FIGURE OUT WAYS
TO MAKE CARE CARS MORE
EFFICIENT.
IF WE CAN HAVE -- IF WE CAN HAVE
POWER THAT DOESN'T POLLUTE AS
MUCH, AND COSTS THE SAME OR
LESS, OKAY, I'M GOOD WITH THAT.
BUT I DON'T BELIEVE THAT HUMAN
BEINGS HAVE CAUSED ALL THE WOES
THAT A LOT OF PEOPLE DO, AND I
DO BELIEVE THEY'RE GOING TO
FIGURE IT OUT WITH SCIENCE.
THIS IS MY FAVORITE EXAMPLE.
WHEN I WAS A KID, WE HAD 4
CHANNELS ON THE TELEVISION.
OKAY?
AND ONE OF THEM YOU HAD THE SPIN
THE DIAL, UHF, CHANNEL 41.
40.
IT WAS A LONG WAY.
YOU HAD TO GET UP TO CHANGE THE
CHANNEL, OH, MY GOOD MULTISITE.
MY KIDS -- MY GOODNESS, MY
KIDS -- THE OTHER DAY, THEY WERE
WATCHING SOMETHING, IT WAS LIKE
SOME INFOMERCIAL.
WHY ARE YOU WATCHING THIS?
WELL, THE REMOTE FELL BEHIND THE
COUCH AND I DON'T WANT TO GET UP
AND CHANGE THE CHANNEL.
WOW.
THIS IS HOW OUR WORLD HAS
CHANGED.
SO THEN THEY CAME OUT WITH CABLE
TV AND IT WAS THE COOLLESS THING
EVER.
WE HAD 12 CHANNELS.
FIRST CABLE TV, TELACABLE.
OVERLAND PARK, 12 CAMS CHAPELS.
THEN ALL THESE STATIONS -- WE
WANT THIS PROGRAMMING.
AND THE CABLE COMPANIES, THEY
HAD ALREADY RUN THIS COPPER
CABLE TO YOUR HOUSE.
IT WAS REALLY EXPENSIVE TO RUN.
IF THEY WANT TO PUT IN SOME
OTHER CABLE SO YOU CAN GET MORE
CHANNELS, IT WOULD BE REALLY
EXPENSIVE SO THEY FIGURED HOW TO
GET MORE CAMS ON THE SAME --
CHANNELS ON THE SAME PIECE OF
WIRE.
NOW I HAVE A STILLION CHANNELS.
THERE IS NOTHING ON ANY OF THEM.
BUT -- [LAUGHTER]
CHANNEL 3,000, I HAVEN'T
FOUND ANYTHING I WANT.
BUT THE POINT IS, YOU KNOW,
THERE ARE WAYS TO GET MORE
POWER, TO HAVE THE KIND OF POWER
AND ACCELERATION IN AN
AUTOMOBILE THAT WE LIKE, AND
HAVE A CAR THE SIZE WE LIKE.
BUT FOR THOSE CARS TO BE MORE
FUEL EFFICIENTANT.
I THINK WE CAN TO THAT.
WINDMILLS, ALL THIS STUFF, I
JUST THINK THAT IT'S THE KIND OF
THING THAT PEOPLE IN A REAFTER
THE ACCIDENTARY WAY --
REACTIONARY WAY JUMP TO.
PEOPLE RESPOND TO THE MOST
RECENT STIMULI THEY'RE GIVEN.
YOU DON'T THINK THAT'S A
BOOMING INDUSTRY, THE BEST
INVESTMENT EVER.
NOT SO MUCH.
OKAY.
HERE IS SOMEBODY ASKING ABOUT
THE AMOUNT OF TIME THAT THEY
HAVE UNTIL RETIREMENT.
IF THEY'RE GOING TO REBUILD
THEIR PERSONAL WEALTH BUT HAVE
LESES THAN 10 YEARS TO DO THAT,
IS THIS A GOOD TIME TO GET BACK
INTO MUTUAL FUNDS?
WE HAD THIS BEAR MARKET IN
2000, THAT TOOK 3 YEARS, THE
MARKET WENT DOWN 50% DURING THAT
3 YEAR PERIOD.
IT TOOK FROM 2003 THROUGH THE
END OF 2007 TO GET BACK EVEN.
SO 3 YEARS TO GO DOWN, 5 YEARS
TO GET BACK TO EVEN.
IN THIS CASE, WE HAD THE MARKET
GO DOWN 50% IN 9 MONTHS.
SO I'M GUESSING THAT THE 9 MONTH
DOESN'T TAKE AS LOCK TO COME
BACK AS THE 3 YEAR KIND OF
THING.
SO I THINK THAT IT IS REASONABLE
TO EXPECT THAT THE STOCK
MARKET -- I MEAN IF YOU GET A
15% RETURN, LOW LEVELS.
IF YOU GOT 15% RETURN YOUR MONEY
WOULD DOUBLE EVERY FIVE YEARS,
SO 10 YEARS FROM YOU YOU COULD
BE TALKING ABOUT FOUR TIMES THE
AMOUNT OF MONEY THAT YOU HAVE
RIGHT NOW.
SO MAY BE FINE.
YES.
HERE IS A QUESTION ABOUT
IRAs.
IF YOU'VE GOT MONEY IN
TRADITIONAL IRAs, YOU WANT TO
CONVERT TO A ROTH.
IN 2010, SPECIFICALLY.
DO YOU HAVE ANY PROJECTS ON HOW
LONG IT WOULD TAKE TO ABSORB THE
TAX IMPLICATIONS?
2010 IS A VERY SPECIAL YEAR
IN TERMS OF ROTH CONVERSIONS.
RIGHT NOW IF YOU HAVE REGULAR
IRA MONEY AND YOU WANT TO
CONVERT TO A ROTH.
THERE ARE INCOME RESTRICTIONS.
HE HAVEEVEN IF YOU CAN, YOU HAVY
TAXES FOR MAKING THAT
CONVERSION.
IN 2010 THE INCOME RESTRICTIONS
GO AWAY FOR ONE YEAR AND THE
FEDERAL GOVERNMENT ALLOWS YOU TO
SPREAD YOUR TAXES FOR 2 YEARS ON
THOSE GAINS.
I WOULDN'T WAIT.
IF YOU'RE SQUALLIFYING TOO DO A
ROTH I'D DO IT'S NOW.
FOR YEARS I SAID DON'T DO ROTH
CONVERSIONS BECAUSE YOU'RE
LOSING OUT ON THE COMPOUNDING ON
THE MONEY YOU PAY IN TAXES, WITH
THE MARKET AS LOW AS IT IS AND
WITH PEOPLE'S VALUES DEPRESSED
IT SEEMS TO ME YOU DO THAT
CONVERSION NOW, THEN YOU'RE
GOING TO GET ALL THIS GROWTH AS
THE MARKET GOES BACK TO WHERE IT
WAS, AND THAT'S ALL GOING TO
BE -- THEN YOU NEVER HAVE TO PAY
TAXES ON THAT MONEY WHEN YOU
TAKE IT OUT.
I DO THINK THAT THE OLDER YOU
ARE, THE LESS -- THIS IS THE
KIND OF THING YOU NEED TO TALK
TO YOUR TAX PREPARER ABOUT.
YOU GOT TO LOOK AT YOUR
PARTICULAR SITUATION.
YOU DON'T WANT TO DO A ROTH
CONVERSION WHILE THINGS ARE
DOWN.
IT'S NOT AN ALL OR NOTHING.
YOU CAN CONVERT PART, BUT YOU
DON'T WANT TO CONVERT SO MUCH OF
YOUR REGULAR IRA TO ROTH THAT
YOU END UP PUTTING YOURSELF IN A
HIGHER TOX BRACKET OR MAKING
YOURSELF SUSCEPTIBLE TO THE
ALTERNATIVE MINIMUM TAX.
YOU HAVE TO BE CAREFUL.
I THINK THIS IS A GOOD TIME TO
DO IT NOW BECAUSE BY 2010 WHAT
IF THE MARKET IS 20% HIGHER, 30%
HIGHER?
YOU COULD MAKE UP FOR THE TAXES
IN YOUR ROTH IRA, AND NEVER PAY
TAXES ON THAT MONEY EVER.
GREAT.
SO SAY YOU'RE GOING TO GET A
PENSION PLAN, YOU'RE RETIRING.
WHAT'S THE ADVANTAGE OF DOING
LUMP SUM VERSUS MONTHLY PAYMENT?
IT'S A MATHEMATICAL THING.
CERTAINLY CALL, WE'LL BE HAPPY
TO HELP SOMEBODY GO THROUGH THE
MATH.
BUT ESSENTIALLY WHAT HAPPENS IS
IF YOU HAVE A PENSION, IF YOU'RE
LUCKY ENOUGH TO HAVE A EXCEPTION
BECAUSE SO FEW PEOPLE DO THESE
DAYS, YOU CAN HAVE THIS AMOUNT
OF MONEY ALL AT ONCE OR THIS
MUCH EVERY MONTH FOR THE REST OF
YOUR LIFE.
WHAT YOU HAVE TO FIGURE OUT IS
HOW MUCH RETURN WOULD I HAVE TO
EARN ON THAT LUMP SUM TO EQUAL
THE AMOUNT OF MONEY THAT I'M
GOING TO GET ON A MONTHLY BASES?
AND THEN IT GETS ONE STEP NOR
COMPLICATED.
WHAT HAPPENS IS THEY'RE PAYING
YOU EVER MONT.
THEY'RE HOPING YOU DIE TOMORROW.
THE SOONER YOU DIE, THE LESS
THEY PAY OUT AND THEY WIN.
SO IT MAY BE THAT YOU NEED TO DO
A -- TAKE SOME OF THE MONEY THAT
YOU'RE GETTING IN THAT MONTHLY
PAYOUT AND BUY A LIFE INSURANCE
POLICY SO IF YOU DO DIE, THEN
YOUR HEIRS, SPOUSE, WILL HAVE A
NEW POOL OF MONEY FROM WHICH TO
GET INCOME THAT THEY'RE LOSING
BECAUSE YOU'RE GONE, WHATEVER
THE CASE MAY BE.
THERE IS A LOT OF DIFFERENT
OPTIONS.
IT REALLY IS A MATHEMATICAL
CALCULATION.
OKAY.
THERE IS A COUPLE OF QUESTIONS
HERE THAT REALLY DEAL WITH
TRUST.
SO WHY DOES THE SEC EXIST IF BAD
THINGS ARE HAPPENING.
WHO CAN WE TRUST, OUR BANKS ARE
FAILING.
WHO CAN WE TRUST?
I THINK THERE HACK A HUGE
DESTRUCTION OF TRUST IN THE
FINANCIAL INSTITUTIONS IN THIS
COUNTRY.
OUR FINANCIAL SYSTEM IS BASED ON
A SYSTEM OF TRUST.
THAT'S WHAT MAKES THE WHOLE
THING WORK.
WHEN YOU BUY OR SELL A STOCK,
STOCKS HAVE 3 DAY STIMULUS SETT.
IF YOU BUY A STOCK, YOU HAVE 3
DAYS TO COME UP WITH THE MONEY
TO PAY FOR THE STOCKS.
IF YOU SELL A STOCK, YOU HAVE 3
DAYS TO DELIVER THE STOCK
WHETHER IT'S ELECTRONIC FORM OR
IN STOCK CERTIFICATE TO THE
PERSON THAT BOUGHT IT.
SO THERE IS AN ASSUMPTION THAT
GOES ON, PAY THE MONEY, I GET
THE STOCK.
WELL, PART OF WHAT HAPPENED, THE
REASON THAT BEAR STEARNS WENT
DOWN SO FAST, THEY WERE
HAVING -- THEIR MORTGAGE BACKED
SECURITY PORTFOLIOS FALLING
APART AND THEY WOULD SELL --
THEY WOULD BUY A STOCK FOR ONE
OF THEIR CLIENTS, AND THE OTHER
BROKERS THE CONTRABROKERS WERE
WORRIED THAT BEAR STEARNS WASN'T
GOING TO COME UP WITH THE MONEY
IN 3 DAYS.
THEY WENT WE'RE NOT DOING WITH
BEAR STEARNS.
ALL OF A SUDDEN BEAR STERNS IS
CUT OFF AND THEY CAN'T FUNCTION.
SAME THING KIND OF HAPPENED WITH
THE PUBLIC.
AFTER BERNIE MA.GOV, AND THESE
THINGS THAT HAVE COME TO LIFE.
BERNIE MADOFF.
THE SEC REGULATES MY BUSINESS.
THEY ARE IN CHARMING OF
REGULATION -- CHARGE OF
REGULATION.
SO LET ME JUST BEGIN ANSWERING
THIS QUESTION BY SAYING I LOVE
THE SEC.
THEY MADE ME THE MOST FANTASTIC
COOLEST PEOPLE EVER.
I DON'T THINK ANY OF THEM ARE
HERE.
YEAH, BUT PLAY IT ON TV.
BY THE WAY, SOMEBODY CALLED ME
UP AND THEY GO, FLIP ON CHANNEL
17.
I FLIPPED IT ON.
THERE I AM, AND IT WAS FROM
APRIL OF LAST YEAR AND I WAS
LIKE I LOST SO MUCH HAIR LAST
YEAR, AND IT'S GRAY.
[LAUGHTER]
SO ANY HOW, BUT YOU DO SHOW IT,
JUST IN CASE SOMEBODY FROM THE
SEC, I LOVE YOU GUYS.
[LAUGHTER]
THAT BEING SAID, I DON'T -- I
HAVE PROBLEMS WITH WHAT'S
HAPPENED WITH THE SEC, BUT I
KNOW THAT AT THE MUTUAL FUND
STORE, MY COMPANY, WE HAVE HAD 3
ROUTINE AUDITS.
WE'VE HAD 3 IN THE LAST 6 YEARS.
WE'VE COME THROUGH WITH FLYING
COLORS.
THEY FIND LITTLE -- BUT IT'S ALL
BEEN, YOU KNOW, IMMATERIAL
THINGS.
OKAY.
GREAT.
SO THEY HAVE BEEN THERE, AND
IT'S A BIG HASSLE BECAUSE IT
DISRUPTS OUR BUSINESS.
WHAT THEY DO, THE WAY IT WORKS
IS LIKE ON A FRIDAY AFTERNOON,
THEY SEND OVER A 35 PAGE FAX ON
WHAT THEY WENT WHEN THEY SHOW UP
ON MONDAY.
NOW, HOW DOES THAT HAPPEN?
THEY COME 3 TIMES IN 6 YEARS TO
US.
WE'RE DOING MUTUAL FUNDS.
WE CAN'T DO FRONT RUNNING, OUR
CLIENT ASSETS ARE CUSTOMERTYING
ADD SCHWAB INSTITUTIONAL.
THE STATEMENT COMES FROM A BONA
FIDE PLACE.
WE HAVE EARNEST AND YOUNG DO OUR
AUDITINGS, THE SECOND BIGGEST
ACCOUNTING FIRM IN THE WORLD.
3 TIMES -- HOW DOES MADOFF GET
BY?
I DON'T KNOW.
NOW THINGS ARE SWINGING THE
OTHER WAY.
SO THE GOVERNMENT TODAY,
PRESIDENT OBAMA ANNOUNCED
THIS -- THESE SWEEPING REFORMS
OF THE REGULATORY OVERSIGHT FOR
THE FINANCIAL SERVICES INDUSTRY.
AND I WILL TELL YOU, THEY'RE
BEING REACTIONARY RATHER THAN
PROACTIVE.
MADOFF, ALL THESE THINGS
HAPPENED, THE BANKS HAD THESE
PROBLEMS.
THAT'S PROBABLY NOT GOING TO
HAPPEN AGAIN ANY WAY.
THE BANKS IN BUSINESS DON'T WANT
THAT TO HAPPEN AGAIN.
AND THE ONES THAT ARE OUT OF
BUSINESS ARE OUT OF BUSINESS.
AND IF YOU WERE GOING TO HAVE A
BIG SCHEME FRAUD, IT PROBABLY
WOULD HAVE COME TO LIGHT BY NOW
WITH THE MARKETS THAT WE'VE HAD.
SO NOW WHAT THEY'RE TRYING TO DO
IS PREVENT THE THINGS THAT HAVE
ALREADY HAPPENED INSTEAD OF
THINKING AHEAD, WHAT COULD
HAPPEN IN THE FUTURE.
IT'S KIND OF LIKE AFTER THE
HURRICANE KATRINA IN NEW ORLEANS
E THEY'RE GOING MAYBE WE SHOULD
BUILD STRONGER THINGS THAT KEEP
THE WATER OUT OF THE CITY.
OKAY.
WELL, YOU KNOW, THEY WENT 200
YEARS -- NEW ORLEANS IS ONE OF
THE OLDEST COUNTRIES IN THE
CITY.
200 YEARS.
NOW WE'RE GOING TO BUILD IT
BETTER, BIGGER, STRONGER.
MAKE WE SHOULD THINK ABOUT WHAT
OTHER CITIES COULD THAT HAPPEN
TO.
AND THAT'S WHAT'S HAPPENING.
THEY'RE THINKING BACK YARDS
INSTEAD OF FORWARDS.
I LOVE THEM.
THEY'RE GREAT.
THEY'RE FUN TO HANG AROUND,
REALLY COOL.
NOTHING I'D RATHER TO DO, GO TO
A GAME WITH THE GUYS FROM SEC.
AFTER ALL IS SAID AND DOWN,
THEY'RE BEING REACTIONARY RATHER
THAN PROACTIVE.
HERE IS SOMEBODY THAT ASKED
ABOUT SOME POLICIES THAT ARE
COMING UP.
SO IF PRESIDENT OBAMA DECIDED
THAT YOU AS A CEO MAKE TOO MUCH
MONEY, AND HE DECIDES TO REPLACE
YOU WITH ONE OF HIS CZARS, WHAT
WOULD YOU DO AND HOW WOULD YOU
REACT?
WELL --
HI PRESIDENT OBAMA, WE LOVE
YOU.
IN CASE YOU'RE WATCHING.
WE DO?
OKAY.
[LAUGHTER]
FIRST OF ALL, SWITZERLAND
SEEMS COOL.
[LAUGHTER]
I DON'T WANT TO GET -- I
DON'T WANT TO GO TO SOUTH
AMERICA, BUT SWITZERLAND IS
SCHOOL.
THEY HAVE MOUNTAINS, GOOD FOOD.
CHOCOLATE.
NOT MY THING, BUT PRETTY
ROADS.
NICE PLACE.
I REALLY -- I DO -- OKAY.
I'M I GOING TO GIVE PRESIDENT
OBAMA THE BENEFIT OF THE DOUBT.
I -- THIS COUNTRY IS NOT GOING
TO BE A SOCIALIST COUNTRY.
YOU KNOW WHAT'S GOING TO HAPPEN?
IF WE CONTINUE -- FIRST OF ALL,
GENERAL MOTORS -- THIS IS THE
THING THAT PUSHED EVERYBODY OVER
THE EDGE.
WE BAIL OUT -- PEOPLE THOUGHT
THAT THE MORTGAGE ALTARP PROGRAM
WAS A BAILOUT.
IT WASN'T.
IT WAS A LIQUIDITY ISSUE.
I REMEMBER WHEN I TALKED ABOUT
THIS, I GOT MORE HATE MAIL,
E-MAIL, AGGRAVATED PEOPLE
CALLING GOING THE GOVERNMENT IS
BAILING OUT THESE WALL STREET
FAT CATS, AND I SAID, NO, THE --
THESE GUYS ARE GOING TO PAY THE
GOVERNMENT BACK.
THEY NEED LIQUIDITY RIGHT NOW.
GUESS WHAT?
THEY'RE STARTING TO PAY BACK.
THAT PART IS SCHOOL, ALL --
COOL, ALL GOOD.
THIS WHOLE NEW THING, GENERAL
MOTORS, CAN'T HAVE THAT MANY
UNEMPLOYED AT ONE TIME.
DOESN'T MATTER, YOU CAN AGREE
WITH THAT OR DISAGREE WITH IT.
YOU CAN SAY IS THAT THAT WAS THE
RIGHT THING FOR THE GOVERNMENT
TO DO OR THE WRONG THING.
BUT THERE IS NOT VERY MANY
COMPANIES IN THIS COUNTRY THAT
HAVE THE EFFECT ON MILLIONS OF
WORKERS LIKE GENERAL MOTORS DID,
BECAUSE WITH THEM, IT WAS THE
MYERS, DEALERS, SO EVEN JUST FOR
THE SAKE OF DISCUSSION, LET'S
SAY YOU AGREE, IT'S NOT LIKE IF
BLOCKBUSTER VIDEO GOES OUT OF
BUSINESS, THAT IT'S TOO BIG TO
FAIL.
THERE IS TOO MANY PEOPLE.
SO -- AND WHAT I WILL SAY IS
THAT IF WE WERE TO CONTINUE TO
SEE A SOCIALIST TYPE AGENDA, GOT
TO REMEMBER, THERE IS
CONGRESSIONAL ELECTIONS COMING
UP IN 2010.
THERE IS A PRESIDENTIAL ELECTION
COMING UP IN 2012.
THERE ARE LIMITS TO THE POWER OF
THE PRESIDENT.
THERE ARE LIMES TO THE POWER OF
CONGRESS.
AND YOU AND I, IF WE DON'T LIKE
IT, WE CAN VOTE FOR SOMEBODY
ELSE.
THANKS.
OKAY.
I THINK THIS IS GOING TO BE OUR
LAST ONE, UNLESS THERE ARE MORE
OUT THERE.
ARE THERE PARTS OF THE ECONOMY
THAT YOU THINK WILL NEVER COME
BACK, FORGET IT, IT'S GONE?
AND THEN WHAT DO YOU THINK IS
KIND OF THE BRIGHTEST SUPPORT
COMING UP IN THE FUTURE?
WELL, FIRST OF ALL, BEST AND
BRIGHTEST, I BELIEVE IS
TECHNOLOGY.
AND WE LIVE -- WE'RE LIVING IN
THE MIDDLE OF A SECOND
INDUSTRIAL REVOLUTION.
AND THIS COUNTRY, IT'S A
TELACOME, A COMMUNICATIONS --
IT'S NOT JUST -- WE USED TO
THINK OF TECHNOLOGY AS
COMPUTERS.
IT'S A DEL, CISCO SYSTEMS.
IT'S NOT.
TECHNOLOGY IS AFFECTING US IN
MANY DIFFERENT WAYS.
WE'VE -- AS I SAID, WE HAVE
28,000 CLIANCES.
WE'RE GROWING.
ACCORDING TO WEALTH MANAGER
MAGAZINE, WE HAVE NOR CLIENTS
THAN ANY -- MORE CLIENTS THAN
ANY OTHER NON BANK INVESTMENT
ADVISOR IN THE COUNTRY.
THAT'S COOL.
WE HAVE A SYSTEM THAT WE'VE
INVESTED HEAVILY IN THAT ALLOWS
US TO DESIGN A CLIENT'S
PORTFOLIO, AND THEN INSTEAD OF
MY ADVISORS HAVING TO MANUALLY
ENTER ALL THE TRADES THE WAY WE
USED TO, THEY HAVE TO GET A
CALCULATOR.
I WANT 20% IN THIS.
REBALANCE MANUALLY.
SOLD THIS, BUY THAT.
NOW WE HAVE THIS TECHNOLOGY THAT
WE'VE INVESTED IN.
WE JUST REBALANCE MR. JONES
ACCOUNT, MAKE THESE TRADES.
THAT HAS -- WE'RE DOING A BETTER
JOB BECAUSE WE CAN REBALANCE
MORE OFTEN, MORE FREQUENTLY, AND
CAN MAKE CHANGES THAT WE NEED --
AND LESS PEOPLE THAN WE USED TO
DO IT WITH.
THE SAME THING IS HAPPENING, I
HAVE A CLIENT WHO IS A HOME
BUILDER.
AND HE HAS SEVERAL DIFFERENT
HOMES HE'S BUILDING ALL AT THE
SAME TIME.
THE WAY IT USED TO WORK IS THEY
WOULD DELIVER 2 BY 4s OUT TO A
JOB SITE.
AND THEN THEY WOULD, WHEN THE --
THE FRAMERS WOULD RUN OUT OF
WOOD, THEY WOULD CALL THEIR
BOSS, GUESS WHAT?
WE'RE OUT.
AND THEY WOULD STAND AROUND AND
SMOKE CIGARETTES UNTIL THE TRUCK
BROUGHT THEM MORE.
WELL, NOW EVERY MORNING THE
FOREMAN GOES BY AND THEY SCAN IN
HOW MANY 2 BY 4S THEY GOT.
IT ANTICIPATES HOW MANY THEY
NEED, THEY GET DELIVERS AND
NEVER RUN OUT.
THESE EFFICIENCIES WILL CONTINUE
FOR THE FORESEEABLE FUTURE.
I LIKE TECHNOLOGY A LOT.
WHAT'S NOT GOING TO COME BACK?
ONTHAT THERE IS NOTHING THAT'S
COMPLETELY RUINED.
REAL ESTATE IS TOUGH RIGHT NOW
BUT I THINK -- I RECENTLY BOUGHT
MORE.
I THINK THAT IT WILL COME BACK.
THAT WILL BE THE TOUGHEST THING
AND THE BIGGEST PROBLEM WITH
WALL
REAL ESTATE, THE BANKS DON'T
WANT TO LOAN MONEY.
UNTIL THAT LENDING PRACTICES
START OPENING UP AGAIN, THAT'S
GOING TO BE TOUGH FOR REAL
ESTATE TO BOUNCE BACK VERY MUCH
AT ALL.
OKAY.
TELL US ONE MORE TIME WHEN YOUR
RADIO SHOW PLAYS AND HOW CAN
PEOPLE GET IN TOUCH WITH THE
MUTUAL FUND STORE?
I'M ON NEWS RADIO 980 KMBZ 10
SATURDAY MORTGAGES.
IF YOU CAME HERE TONIGHT AND YOU
WANT TO HEAR MORE, AND YOU'RE
NOT A CLIENT, WE HAVE AN
ELECTRONIC NEWS LETTER THAT WE
SEND OUT TO PEOPLE.
CLIENTS GET THIS STUFF ANYWAY.
PEOPLE ARE ARE NOT, GO TO MUTUAL
FUND STORE.COM.
IT SAYS SIGN UP FOR OUR E-MAIL
NEWS LETTER.
YOU CLICK ON THAT.
AND THEN YOU'LL GET THE E-MAIL.
THAT'S PRETTY BASIC.
IT'S TRICKY.
TECHNOLOGY.
WHAT ELSE?
WAS THAT THE LAST THING.
I THINK IT WAS.
YOUR BOOK IS AVAILABLE IN THE
LOBBY, AND THEY ARE AUTO
GRAPHED, $10.
THEMED ME SIGN A -- THEY MADE
ME SIGN A LOT OF BOOKS.
THANK YOU FOR HAVING ME.
IC I SAY THANKS TO NORMAN ANDY
AND ELINE ONE MORE TIME?
ABSOLUTELY.
[APPLAUSE] GREEN CARDS CAN BE
HANDED TO YOUR USHER ON THE WAY
OUT.
DON'T FORGET TO LEAVE THOSE WITH
US.
THANK YOU FOR COMING.
THANK YOU FOR COMING. SEE YOU ON SEPTEMBER THE 2nd