Investment Discipline

When Secure Retirement was founded in 2002, our goal was to create an investment management company that would truly protect our retired clients no matter what problems struck the world economy and markets. So our first goal has always been to not lose our clients’ retirement money. Our second goal is to make as much as possible without ever losing the money. These goals sound fairly simple, but achieving them is far more difficult than one might think.

The key to our investment discipline can be summed up in one phrase: Buy Low/Sell High. Nearly every investor knows buying low and selling high is probably the single most important key to investment success. And if you asked 100 professional investment managers, every single one would say they believe you should follow this approach. Yet hardly any of these managers who have been trusted to oversee their clients’ retirement money even attempt to buy low or sell high.

This fact was illustrated quite clearly recently when a large mutual fund company surveyed over 1000 of the investment advisors who are purchasing mutual funds from this company. These advisors were first asked if they believe the stock market is presently over-priced. Over 800 of these professional advisors admitted they believe stocks are severely overpriced and are likely to suffer large losses in the relatively near future. In other words, over 80% of these advisors know they would indeed be “selling high” if they cut back on the stock funds they were purchasing for their clients. The advisors were then asked if they are in the process of reducing the amount of stock funds they own for their clients. Fewer than 10 out of 800 are doing so!

So the vast majority of professional investment advisors firmly believe stocks are over-priced, yet hardly any of them are considering selling high. How is this possible? There are two reasons for this huge disparity between their knowledge and their actions. The macroeconomic knowledge needed to tell an investor when prices are low or high is truly a vast field that changes continually. This is the real reason so many advisors who all say you should try to buy low and sell high don’t even attempt to do so – it takes a huge amount of objective research. The second reason advisors do not even attempt to sell high involves their own personal profits. It is so much easier to simply determine at the start how much of a client’s retirement money will be invested in stocks and how much in bonds and then leave it that way forever. When the stock portion goes up, the advisors can take credit for making their clients money. Then when stocks lose they basically say: “It wasn’t my fault – everybody lost money.” At Secure Retirement we would never accept losses simply because other investors also lost money. Perhaps some may feel comfort as they hurtle off a cliff with all the others, but at the bottom we doubt that all the company gives them much solace.

At Secure Retirement we do the research needed to determine if prices are too high and profits should be taken, and we also do the research to know when prices are low and stocks and other investments should be purchased. Then, unlike others, we act on this knowledge to protect our clients from the losses that always follow when prices are far too high. We then also act when prices are too low; purchasing those investments others are selling in fear when their low prices indicate they will lead to large profits going forward.

About Richard

Richard began his financial services career as an advisor in the Monterey Bay region of California, where he used Efficient Set Theory to create and manage institutional investment portfolios.

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About Jeff

Jeff is a specialist in the field of retirement security planning, with over 30 years of experience in the financial services industry. A cornerstone of his philosophy is an emphasis on safe investing strategies.

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Contact Us

18 Crow Canyon Court, Suite 325
San Ramon, CA 94583
P: 925-855-4300
F: 925-855-4630
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