Not a Tough Decision

Very recently, I sat in my library listening to a Senior Account Accumulator for a well known advisory firm pitch me on the idea of his firm managing my investment portfolio for a flat annual fee of 1% (based on an account minimum of one million US dollars )

I had warned his appointments secretary that this would be an exceedingly tough sell.

He was interested to learn how, as a retiree, I managed my money. I handed him a 2011 projection of my monthly expenses versus projected income and the net outgo gap I needed to plug.

And I handed him a copy of my blog # 1 ( see archives Aug 26, 2010 ) setting out my plan to ” play ” the market to compensate for the very low rate of return being offered on fixed income investments.

He noted from my print out of 49 week market results that I am generating far more new market value than I will require to cover my
originally projected deficit. He offered his congratulations but wanted to know why I had totally missed the market’s move from July 13, 2010 until my market entry just after the elections. He characterized the move I missed as ” big time “.

I was quick to assure him that had I known the market would start it’s 19% move on July 13, 2010 I’d certainly have been “all in “. But what I saw on July 13 th, according to my diary, were signs the recovery was faltering and that Congress was uncertain about what measures to take. To me, these indications were nothing less than storm flags flying stiff in the wind with October not far over the horizon. I offered that I believed I had done a better than good job by prudently earning almost 5% on my capital by investing in fixed income ETFs during those 3 plus months.

But then it was my turn. I explained I was curious to know why his firm’s equity portfolio was down 42% for 2008. I commented I could never have sat still while that kind of loss was accumulating. His reply was that everything happened so fast it was difficult to react, especially with his firm taking a long term outlook which counted on the markets rebounding as they have. I agreed the market has come back, but not to a new, higher value plateau that would have justified me sitting with losses for 3 years.

And there it was….market timer ( me ) versus buy and hold ( his firm ).

I explained that as a retiree, for me, long term is next month. I readily acknowledged that his firm was following traditional asset allocation guidelines which for a guy my age is probably 70 / 30 fixed income versus market exposure.

But, this is the “new normal” and based on my confidence in my ETF selection and timing capabilities I planned to continue to operate in a manner diametrically the opposite of tradition.

How many millions did one need to invest to receive an acceptable monthly income from fixed income investments ?

Forget it ! In this environment I believe an individual investor needs to be proactive and agressive and have his money hunting with those of a like mind.

So, here I am, a heretic , on new ground, trying to prove that in today’s market 70 is the new 40. !

How am I doing ?

I’m delivering, at least for this year, more than Bernie promised. For the last 49 weeks my ” Go to Cash ” portfolio followed by my ” Go to Market ” portfolio has grown approximately 14%. And, while I don’t expect anyone to pursue me with a fistful of investible dollars, at least and at last, I overcame the skepticism of the ultimate ” show me the money ” skeptic….my wife. She has authorized her broker to allow me to trade in her account (which will be the mirror image of mine )

On top of everything else, I am happy to conclude this report by stating there is no way to describe how much I enjoy my daily 5:30 am commute to work, (down the hall from my bedroom ) and having the satisfaction that finally, after all these decades, I definitely know what I want to do when I grow up !

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