Category Archives: Opinions

Capitalism 101

When you talk about educating investors, Matson Money believes that Wall Street does a terrible job of it. They teach people how to buy stocks, how to do this, do that, but nobody really talks about what’s underlying all this: Why would you even want to invest?

So I’ve created a little talk that I call Capitalism 101, which I could paraphrase by saying, “how is wealth created?” And I’m talking about true wealth, like the wealth, GNP of a country. Not “moving this guys’ money from his pocket to your pocket.” You might get rich but that didn’t create any wealth. So when you really stop and think about it, you ask, “Well, what is really needed in a country’s economy to make that economy grow and create this wealth?”

And the one that comes to mind first is skilled labor. We take countries like a lot of the Asian countries, but China is a great example over the last 20 years. A lot of skilled labor, allowing them to produce a lot of product quickly. Next, you’re going to need every economy needs, raw materials. That’s why China needs those raw materials from Australia and vice versa. Canada, Australia, Chile, Norway, these countries generate a lot of wealth just by having natural resources and selling those resources to the latter.

The third thing that’s needed is money, financial capital. And where and who is supplying financial capital to this whole system. It’s investors. So by supplying this capital to the whole system and the wealth being created, you as an investor, are entitled to your share of that increase in wealth. Now, unfortunately most investors don’t get what is truly their fair share. And that’s a big part of what my message has been over the years is, “how do you go about getting that?”

Advisers have a huge role to play because of their job. They’re not there to create wealth. And we know they’re not there to pick stocks, you know, or time markets or do those traditional things we call active management – none of that is creating wealth anyway. The adviser’s role is to make sure the investors, who are supplying the financial capital, are getting their fair share. So I call it a defensive strategy. The economy creates the wealth, the adviser structures the investment solution that enables the investor to get a fair share and then brings discipline to the whole process.

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.

Mark Matson: Why a Suit is Just a Suit

Mark Matson doesn’t always wear a suit.

Not because he doesn’t care, but because he does.

That is, he cares more about the content in his delivery of financial advice than about what he’s wearing.  He cares more about offering value for his clients than flaunting expensive silk ties and suits tailored in mahogany-walled rooms in the city.  He cares more about substance than he does about style.

And this isn’t just promotional, this is personal for Matson.  He does, in fact, care more about you than he does about … suits.

This much is obvious from the free financial advice and updates he delivers on MarkMatson.tv and the messaging of his company Matson Money, Inc.: “Save the Investor.  Save the World.”

In his video about suits not equaling substance, you’ll see why Matson is well-reviewed by investors.  You’ll also see why many “financial professionals” who placed more emphasis on style than substance are now shameful and sorry. Continue reading