Monthly Archives: August 2014

3 Books All Investors should Read

Whether you’re an investor, looking to brush up on some famous names, or looking for the best “get rich quick” scheme, reading a book on investing is always a good way to start informing yourself. However, there are so many books on investing that it can be hard to determine which are useful and which are shams. Luckily, there are a few “timeless” classics published by Benjamin Graham and Philip Fisher as well as a more recently published book by Mark Matson that are great sources of information on how to invest money wisely, how much skill is involved versus luck and other important facts. Here are our recommendations:

The Intelligent Investor by Benjamin Graham

Many regard Graham as the father of value investing, so it’s easy to see why The Intelligent Investor has withstood the test of time. Written more than 60 years ago, this piece outlines the importance of finding undervalued stocks and making big purchases. According to Graham, the market will eventually reflect the true value of these stocks and you’ll reap the benefits.

Common Stocks and Uncommon Profits by Philip Fisher

This book is a great resource for anyone who is just getting started on growth investing. Like The Intelligent Investor, this book greatly influenced Warren Buffett – in fact, he claims to be made of 85% Graham and 15% Fisher. The philosophies in this book are still studied and taught today, despite being nearly forty years old. According to Buffett, “A thorough understanding of the business, obtained by using Phil’s techniques…enables one to make intelligent investment commitments.”

Main Street Money: How to Outwit, Outsmart, and Out-invest Wall Street’s Biggest Bullies by Mark Matson

Many people put too much trust into stockbrokers, according to Matson. In this book, you’ll learn how to avoid being bullied by those on Wall Street who claim to have insider advice, but really just want to talk people into buying stocks when they’re not very well educated on their purchases. This guide is easy to understand, and the wisdom is valuable for anyone who wants to feel confident about investing their hard-earned money. A few peeks at the reviews for Mark Matson and his book on Amazon will allow you to understand why people feel so strongly about this book — after all, it’s saved them from wasting thousands, or even millions, of dollars.

These are just a few of the books that are useful to both investors and students of investing. Though the books may be small, they have great wisdom to offer and are recommended reading for anyone who is about to buy stocks.

Mark Matson Reviews Misconceptions

When you put yourself in front of a camera as part of your career, you’re going to inevitably wind up with more than a few people using some ink to tell others what they think about you. When Rick Starr decided to use KnoxNews.com to comment on Mark Matson, author of Main Street Money and a financial coach who makes frequent appearances on Fox Business News, the subject himself felt it necessary to set the record straight. In the video, Mark Matson reviews Rick Starr’s comments and takes the time to clear up any misconceptions that the public may have – for instance, Matson’s role as a “Christian” financial adviser and his comments on the job market.

A “Christian” Financial Adviser?

Main Street Money has had favorable reviews, both by critics and the public. With a nearly flawless 5 star rating on Amazon, it seems the unflattering review on KnoxNews.com could only stoop to grasp at straws. Rick Starr chose to call out Mark Matson for being a “Christian”; a fact that Mark Matson never chooses to harp on.

“I would not, in any way, shape, or form hold myself out as a ‘Christian’ financial adviser,” says Matson in the segment. He goes on to call the practice of using religion in order to make financial gains “deplorable.” While he does not try to deny the fact that he is, in fact, a Christian, nowhere on his website does he call himself a “Christian” financial adviser.

Getting Back to the Issues at Hand

With the whole religious affiliation issue put to bed, Mark Matson reviews the rest of Rick Starr’s comments on the Wall Street Journal piece that Matson was quoted in. He took specific objection to a particular quote that Starr seemed to present out of context. The quote in question deals with unemployment, stating that “no jobs, no retirement…these measures are like putting bandages on a patient dying of a heart attack.” Matson explains that the quote was an answer to the question “What do Americans need to get back on track?” Starr seemed more interested in taking Matson’s comments out of context than responding to Matson’s call to action. “We have 90 million people who can’t find jobs… we need more jobs, not more social security,” says Matson.

The Wall Street Journal Factor

Rick Starr also seemed to take issue with the fact that what Matson saw as a positive article came from The Wall Street Journal. “His political philosophy jibes nicely with the Wall Street Journal, of course,” Starr pointed out. Rather than take the opportunity to dispute this statement, Mark Matson focuses on the issues in the video. “People would be much better off taking 15% of their salaries all these years and invest it prudently,” says Matson, as an alternative to a proposed increase of social security.

The video shows that there are two sides to every story. While a guy like Rick Starr has his opinion, Mark Matson obviously has his own and can defend himself when the need arises.

Why Mark Matson Says Video Streaming Company’s Bull Stock Isn’t Really Good for Investors

To a lot of traders out there, the climb back to the top by the popular video streaming company (the one with the white letters and red background) seems too good to be true. But investor and advisor Mark Matson recently appeared on Fox News and said that it’s a bad bet—even as it reaches new highs every day.

To understand the company’s success, it’s important to understand its failures as well. The company has been playing the long game for a while, and after building a giant customer base in the late 2000’s it suddenly altered its prices and membership model in 2011. To many off its customers the change was sudden, unexpected, and worst of all seemed greedy—to many members it amounted to a 50% price hike. The company lost customers, was badmouthed across the internet, and, of course, suffered a blow to its stock.

But the company didn’t flinch. It was counting on the excellence of its product—the same excellence that had made it so popular in the first place—to help it weather the storm. And that’s exactly what happened. The company figured out the magic formula for watch-on-demand, seeing that viewers wanted unrestricted online access to lots of content and they wanted to be able to binge watch entire seasons of a favorite show in a single night. This is such an attractive proposition that the company knew it was undercharging and that ultimately it could get away with the price hike. And that’s exactly what happened.

Three years later, the company has surpassed all of its competitors and remains the number one service in its niche. It’s also had a steady climb in stock price, reaching 389—14% above its 300 peak before the price change.

That’s a great pick, right?

Mark Matson doesn’t think so.

He doesn’t deny that 14% is a nice return, and he doesn’t forecast any impending doom for the company. In fact, he expects it to keep rising. The reason he wouldn’t bet on the company is totally different: it’s that Mark Matson doesn’t bet.

Not on individual companies, at least.

Matson’s point on Fox news is that, over the same period since the company started its recovery, if an investor had invested widely across the S&P instead of “picking” the bullish company, they would have made a 60% return instead of just 14%.

To Mark Matson, long-term strategy is always the best strategy. The market overall is less volatile than an individual stock, it generally recovers from slumps, and often the returns are as good or better than picking a winning company.

In other words, Mark Matson has the same strategy as the company: play the long game.

3 Common Rookie Mistakes Investors Make

The investment game isn’t for casual players, but it’s something that countless people try to get into because they see the substantial financial potential some stocks can have. When you’re first starting out and begin to see a modest return on your investments, it can be easy to think that you know everything. You may assume you’re ready to start taking bigger risks and putting in a bit more money, but you shouldn’t let your modest success trick you into making bad decisions.

If there’s one thing Mark Matson hears a lot of, it is complaints from investors who started off well, but now find themselves in a world of financial trouble. It can be difficult and a little embarrassing to find out that something you thought was going to bring in a lot of money is actually messing up your portfolio. Don’t make the same mistakes that many new investors make and avoid these common pitfalls:

Going for what’s hot instead of proven good stocks

You just heard that a hot-shot billionaire swears that they have the next big thing in the market, and people everywhere can’t stop talking about it. You end up investing the majority of your assets into the hot new stock, and end up losing a lot of money in a few months when things cools off. Everybody dreams of “getting in on the ground floor” of a stock and making it big, but a lot of these new “innovations” and ideas people are trying to invest in may not have staying power. Stocks in resources and transportation have been known to do well long-term, but new fads and gimmicks generally don’t.

Going “all in” on one stock

Despite what you may have heard from some of your fellow hot-shot investors, there is no such thing as a “sure thing” in the stock market world. When people start seeing their stock of choice rise, they often put more money in and assume that it’ll keep going up. Others may have heard rumors that a certain company is about to release some sort of groundbreaking product, and end up shifting all of their money and focus into that stock. The secret to making good investments isn’t to dump everything into one place; it’s to have a diverse stock portfolio so that you can keep earning from a variety of investments.

Ignoring plans for “potential profit”

You’ve been telling yourself that you will sell your stock as soon as it hits $100 a share. The day finally comes but, since it hit $100, you’re thinking that it could go up a bit higher; instead of selling, you decide to wait and see how far it can go. That may sound like a bold strategy, but sometimes your old plans are much better than your new ones. Don’t wait for a potential rise in value that may never end up happening. If your plan is to sell your stocks when they hit $100 or to buy certain stocks when they get cheaper, stick to it.

Zack Shepard Keeps the Long-Term in Close Sight Despite an Unpromising First Quarter for Stocks

Zack Shepard, vice president of communications at Matson Money, Inc., spoke with Neil Cavuto on Fox Business News about the market’s unimpressive first quarter in April 2014.  Holding true to his beliefs and real world experience as a financial investor and coach, he told viewers that an unimpressive first quarter is not unprecedented.

It has happened before, it’s happening now, and it will happen in the future.  But despite this trend, the market, as history shows, tends to triumph in the long run.

At the beginning of the segment, Cavuto shows the year-to-date percentage losses/gains of major markets including Dow Jones, Standard & Poor’s, and Nasdaq. According to Fox Business News, the loss/gains were -1%, 1%, and 1%, respectively.

Categorical year-to-date gains and losses of the first quarter included:

  • Energy sector – 0.95%
  • Technology sector – 1.1%
  • Financial sector – 0.86%
  • Healthcare – 5.23%
  • Utilities sector – 2.94%

When Shepard was asked what he made of the market’s first quarter and the future, he said he looked at the matter historically.  In his research, he found no correlation between first quarter market activity and market activity in future quarters.

Yet Cavuto asked: “What does the rest of the year look like as a result of the opening quarter?”

“I think investors should be looking out further than the rest of the year,” said Shepard.  “I think investors should be looking for a lifetime.  And for me, I think investors are looking at fear right now.

“My advice to them is to feel the fear and invest anyway.”

Invest long-term.  Invest in equities.  And invest in capitalism to seek your American dream.

Why Mark Matson Provides Investors with the Opportunity to Make More Money

Most of the time when people talk about stocks, they’re looking for “picks”—companies that are about to explode and see a sudden uptick in stock price, bringing an immediate windfall to investors.

Mark Matson and his team at Mark Matson Money do not play the picking game.

Recently invited to discuss the rising stock prices of three major pizza companies, Mark Matson’s Director of Marketing, Zack Shepard, refused to give in to the hype and excitement that other stock “gurus” feel about these companies. Pizza chains are making big money right now as they make it easier to order online. They’ve made an irresistible product and they’re riding the profits upward to higher and higher stock prices.

But Zack’s comment on this trend clove to standard Mark Matson philosophy: the only reason he likes these companies is because they’re part of a market that gains 3% a year.

In other words, it doesn’t matter to Zack—or Mark Matson—if these companies are seeing 10%, 20% or even 30% gains right now. Those short term gains are volatile and hard to predict. Even if you successfully predicted the upswing in the pizza chain niche before it happened, it could run out or reverse itself at any time for any number of reasons. Picking a winning stock is difficult, and staying with it is like trying to stay on a bull at a rodeo. You will eventually fall off.

But the market as a whole is less volatile and generally grows both more reliably and more smoothly. Instead of potentially getting a 10% return followed by an 8% loss, you have the potential to achieve 3% a year with relatively little variation by simply choosing small capital as a whole. A similar steady growth can be found with a diversified approach to almost any market.

To Mark Matson and his staff, equities are not only the most reliable and least risky approach to making money on the stock market, long term they have the potential to be the most profitable. If an investor really feels the itch to play a few promising picks, it should be with a tiny fraction of his overall investment, putting the majority into a diversified portfolio that provides the opportunity to make him money even when his favorite company blunders.

Is The American Dream Dead?

The problem with the American Dream is that people don’t believe in it anymore. There’s a recent poll by CNN and it showed that 6 out of 10 people no longer believe in the American dream. Now when I was little my dad taught me about the American dream and for me it means just two things. One is that if you work hard, you save and invest you can have a great lifestyle, and you can have a great family time together. And the other thing is that, America’s about progress so that the future generation actually has more opportunity and growth and prosperity than the generation before.

And I think two things, the crashes recently in the last 15 years and still the sluggish, if not anemic, or almost dead economy, you’re really destroying a lot of people’s hope in the American Dream.

One thing advisers can do to help investors reclaim the American dream is to stop speculating and gambling with their money. There’s reams of academic information that shows that stock picking, market timing and track record investing are nothing but rank speculation and that’s why so many investors have lost faith, yet they’ve either tried to pick stocks and be in the market at the right time and they’ve panicked when markets are down. Discipline and building broad, diversified portfolios so they can have the ability to create real wealth over time, that’s the first step to creating the American dream.

Over the last 10 years, I think most advisers are doing what they’ve always done over the last 30 years. One is to chase hot sectors. So a couple years ago everybody’s dumping money into tech stocks or dumping money into commodities. And the other thing is, panicking when markets crash. You know, everyone knows the simple rules of investing. Buy equities, hold them long term, diversify and then buy when it’s low and sell when it’s high by rebalancing your portfolio. But nobody wants to do it.

2008 and 9 is a perfect example. A lot of people panicked when the market was down 50%, they’re still on the sidelines setting and waiting, for clear signals of when to get in.

20 years ago we used to tell investors, just don’t watch the news, turn off the news, you know. All that noise and all that excess, that’s messing up your peace of mind and causing you to have dysfunctional behavior. The problem is you can’t turn it off today because you got the internet. Even if you go to take your kids to eat, or your family out to dinner you got the big flat screen TVs showing the market up or down and some talking heads scaring you. So, you can’t just turn it off.

One of the things we’ve been telling advisers and investors to do is to have regular coaching meetings at least once a month where advisers are educating their investors. Almost, think of it like a weight watchers meeting, if you’re not proactive in training and educating people, they’ll just slide back into dysfunctional behavior.

What’s really neat about the symposium is just really the culmination of a dream that started about 20 years ago, which was to build a community of advisers and investors together, in our field that’s really rare because usually the information is either just for advisers and sometimes, and these symposiums are big conferences, they don’t want the investors to hear this stuff. On the other hand sometimes it’s just focused on the investors. And so here what we’ve done is build a community to show, hey we can all talk about these concepts and issues and the challenges together, we don’t have to stay separated from each other.

So we’re really excited about that. We think it’s one of the first ground breaking things that this industry has ever seen together like that.

One of my general messages is, yes there’s challenges, yes we want to overcome those, but hey things are pretty doggone good, we should appreciate them and be grateful for what we have here.