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Retirement Planning > Retirement Investing > Annuity Investing

Are we all a little crazy?

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Many invest based on the daily news, a nutty method that never works. TV news readers — readers because there do not seem to be many real journalists working these days — as in the genuine articles being the men and women who, like Dragnet’s Sergeant Joe Friday, gave us the facts, ma’am; just the facts. It wasn’t so many years ago that the Who, Why, What, Where and When of journalism were reported without much bias. But now we get handsome or beautiful TV news readers, people paid huge salaries (yes, the same folks who report on the exorbitant salaries in corporate America command huge agent-driven pay themselves) seem to tell us every minute of the day that the end of the financial world is right around the corner. Print journalists are no better than their television and radio counterparts, except they mostly can’t command the same high salaries. All of these men and women seem to, by expression and attitude, tell us how to think about finance and investing. We believe them and think the end of the world is coming, and we sell our stocks, buy bonds or something worse, and then sulk. Or we believe the talking heads when they say times are good, and invest for the wrong reasons.

Bias or not, The Daily Blather is not good for our investing health.

The business of media is based on eyeballs and ears. CBS, MSNBC, Fox Business make money based on how many eyeballs and ears are watching or listening. The readers don’t earn high salaries without coming up with new important information, so that millions of us are hooked on the news and pay attention each day.

Investing journalism

The real business of investing is covered well by a different type of media. Good investing information is invaluable — the currency of the occupation — and some publications (Barron’s comes to mind; also The Wall Street Journal, the business sections of many local and national papers, Kiplinger’s, and several trade publications) excel at providing good, sound information. Such publications are less prone to over-excitement about The Daily Blather. While these publications may note things of national import, their real focus is on investing. 

Investing is a reflective pursuit, one that requires time and study. Decisions can be fast, but prep time is slow. If you are in the business of advising or planning and you don’t want to put in the time to develop expertise in the investing craft, for Pete’s sake, get engaged with two or three good mutual fund wholesalers and a separately-managed account (SMA) manager or two. 

Another alternative: If you are great at attracting customers and building assets under management, hire or partner with someone that has a talent for portfolio work or for selecting and working with great SMA managers.

If you don’t like the idea of partnering, find two outstanding fund wholesalers from two of the best fund companies and work exclusively with them. Or work with SMA managers yourself. There are other alternatives as well. Many advisors work with The Sherman Sheet (phone Gordon Case at 888-957-3438), or Dynamic Portfolio Strategies (phone Charlie or Kate White at 877-377-7872). They provide trading signals and you do the gathering of assets while they do the investment strategies. 

When using such strategies, it may be better when signals are fairly frequent, to use relatively large brokerage or advisory accounts to minimize the effects of ticket charges and/or commissions. The signals work well, regardless of account size, in certain variable annuities designed with trading in mind.

Broker’s bookcase

To Sell is Human—The Surprising Truth about Moving Others by Daniel H. Pink (Riverside/Penguin, 2012). “But all of you are likely spending more time than you realize selling in a broader sense — pitching colleagues, pressuring funders, cajoling kids. Like it or not, we’re all in sales now.”

Readers know that I often discuss the fact that all of us sell, regardless of our job; whether we are financial planners, plumbers or surgeons. The author does a far better job of getting this message across

Before getting deeply in the weeds of technology and how modern sales is related to empathy and persuasion, Mr. Pink writes about Fuller Brush salesmen (all the ones I ever saw—and I’m old enough to have seen a few—were males), including maybe the last Fuller salesperson of all, a fellow named Norman Hall. “Without fully realizing it, each one of us is doing what Norman Hall has done for nearly half a century and what his Fuller predecessors did for more than a century before that. The salesperson isn’t dead. The salesperson is alive…the salesperson is us.”

The ABCs of today’s selling are: A is for Attunement; B is for Buoyancy; and C is for Clarity. Attunement relates to empathy and the author suggests an exercise to see whether or not one has it. The exercise involves an E and your forehead. When you have finished it, you should have a pretty good idea if you really can relate to others in an empathic way.  

To Sell is Human is filled with examples, thoughts and stories. When you’ve finished, you’ll see what Daniel Pink means. We are all salespeople.  

I particularly liked the story of Elisha Otis, who, in the spring of 1853, demonstrated the safety brake on his newly invented elevator at an exhibition. Elisha cut the rope holding his cage three stories high. He was in the cage at the time; had the brake not worked, there would be no Otis elevators in the world today.

For more from Richard Hoe, see:

This information is intended for financial professionals only, not the general public. This is not a solicitation to buy or sell any specific security. Mr. Hoe may have positions in the securities or other investments discussed. Principal, yield and/or share price will fluctuate with changes in market conditions, and when sold or redeemed, one may receive more or less than originally invested.


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