Make sure to sign up below to stay updated for Part 2

Recently on a Saturday morning as I was getting ready to have breakfast I pulled a box of Wheaties out of the pantry and my 4 year old son asked, “What is that?”  I told him it is Wheaties: “The Breakfast of Champions.”  Then I went on a 2 minute lecture on how if you want to be a champion in sports and get stronger you have to eat a good breakfast like Wheaties.  I went on to explain to him how Wheaties are like the fuel for your body to help you perform when doing “BABOOM” (this is what my sons calls mixed martial arts ) and playing outside.  After listening to me rant, he asked for some in his cup and ran off to tell his 6 year old brother how he was going to be a champion because he is eating his Wheaties.  That is one powerful brand.

As I laughed to myself I began to think; “What is the breakfast of champions in terms of stocks?”  What is the fuel that drives high performance?  Innovation.  If you look at the history of some of the greatest performing growth stocks over the years the majority had innovating products and services that changed the way we live or do business.  We have been doing research on this for quite some time looking at various ways to try and track innovation both qualitatively and quantitatively.  We have found that companies sometimes have a problem looking into the future because they are hanging onto the past.  However, the companies that recognize that the ability to innovate is really truly the only competitive advantage are the ones who thrive.

It is the ruthless cannibalization of one’s own products, services, and processes that lead to some of the greatest innovations.  This is what many companies find hard to do. I remember I didn’t buy another ipod because I was waiting for the iphone?  I am sure Apple knew that the iphone could slow down the ipod’s growth yet when the sales and profits where bringing in a ton of cash they had the courage to charge forward and introduce a product that could potentially challenge one of their all time greatest innovations.  That is what high performing growth stocks do they continue to innovate.  It is the fuel for their sales, earnings, and cash flow growth.

Sometimes it is easy to spot an innovation; cell phones, pcs, internet, ipod, etc.  Other times it may not have been so easy.  What if it is something boring like tire cords.  Richard Foster in his book Innovation: the attackers advantage tells the story of how Dupont was the leader in nylon tire cords and was surpassed by Celanese who took 75% of the market in 5 years with their polyester tire cords.  Dupont chose to ignore the threat, didn’t innovate and lost.  This was the example of the large company who thought they could control the pace of innovation.  Then you had Michelin creep into the U.S. market with what most thought at the time was an inferior product “radials” and in the blink of an eye they were the leader.  Have you been studying the tire market lately to see if there are any innovations around the corner?  Probably not because it isn’t something most people think about or research too often.  This is something I think we fail to recognize: the amount of Innovation that is happening all around us.  When we hear about things like Peak Oil I have a hard time ignoring the history of the United States and it’s ability to innovate.  For example, if you go and read How I Trade and Invest in Stocks and Bonds by Richard D. Wyckoff a book first published in 1924, you will see he quotes the President of Standard Oil Company who estimates that by 1925 the U.S. will require 675,000.000 bbls. of crude oil against the 376,000,000 produced in 1920–an increase of 78%. The book states, “He asks where such an enormous quantity of oil is coming from.  If he cannot tell, you and I need not guess.”  Well when you look at how much oil we consume today I would have to say someone figured out how to harness the power of innovation.

How about Wheaties?  Even the folks at General Mills realize that in order to compete like a champion sometimes you have to create new products that may compete with your existing ones.

Watch out for our future post when we talk about the different types of innovations the incremental and the game changers, Sign Up Today for Our Free Updates so we can keep you Posted

Years ago CJ spent a weekend with one of Richard Dennis’s original turtles.  After he had spent years in research he began to realize that in order to capitalize on your ideas you needed to have a system/process to put your capital to work.  CJ began to look into trading systems, money management strategies, and quickly realized how this area was much more important to success in investing than the ideas themselves.

He still believes to this day in order of importance to be successful in investing or trading:

• Is your Mindset
• Is your Money Management Strategy
• Is your Markets/Stocks that you trade

Here is a quick story of the turtles from the tradingblox.com website (By the way tradingblox software is a backtesting software that was created by one of the original turtles which we use in house and would recommend)

In mid-1983 famous commodities trader Richard Dennis was having an ongoing dispute with his long-time friend Bill Eckhardt about whether great traders were born or made. Dennis believed that he could teach people to become great traders. Eckhardt thought genetics were the determining factor.

In order to settle the matter, Dennis suggested that they recruit and train some traders and give them actual accounts to trade to see which one of them was correct.

They took out a large ad advertising positions for trading apprentices in Barron’s, the Wall Street Journal and the New York Times. The ad stated that after a brief training session, the trainees would be supplied with an account to trade.

This group was invited to Chicago and trained for two weeks at the end of December, 1983. They began trading small accounts at the beginning of January. After they proved themselves, Dennis funded most of the trainees with $1 million in February.

“The students were called the ‘Turtles.’ (Mr. Dennis, who says he had just returned from Asia when he started the program, explains that he described it to someone by saying, ‘We are going to grow traders just like they grow turtles in Singapore.’)” – Stanley W. Angrist, Wall Street Journal 09/05/1989

The Turtles became the most famous experiment in trading history because over the next four years, they earned an aggregate sum of over $100 million dollars.

Richard Dennis proved that with a simple set of rules, he could take people with little or no trading experience and make them excellent traders.

One of the first lessons he taught CJ was the importance of psychology and also how they managed their money.  While most people seem to be focused on the turtle system in terms of the rules for entries and exits (Buying on a 20 or 55 day breakout/ selling on 10 or 20 day, etc) CJ saw much more value in the way they managed their capital.  How they sized their positions and how they would limit their risk through the use of stop losses based on the volatility of the instrument traded.  In addition, they managed their capital strategically to avoid the “risk of ruin.” They would reduce the amount of capital they traded as they began to lose money.  When you think about it this goes against conventional wisdom which tells you to buy more when you are down.

CJ believes too many investors get caught up in trying to be right on an investment idea instead of realizing the one single idea is just part of your system you are using to make money.  This need to be right leads to cognitive errors that are being studied in the field of behavioral finance.  For example, an investor who places more importance on stock selection versus money management may be more prone to confirmation bias in which we seek out information that confirms his decision and tend to avoid or ignore information that contradicts his decision.  So an investor who buys a stock only to see it fall very quickly may start to pay more attention to the guru on television telling him it’s a good buy and ignoring the fact that the company just warned and is forecasting a slowdown in its business.  He will listen to the guru’s careless conviction and tales of terrific times and his sound bites are music to his ears.  A glorious symphony which drowns out the facts that are trying to tell him his original thesis was wrong.  (Or if you are a technical trader a stock that just fell through support…A Quant would refuse to accept his model could be wrong and ignore the warnings from his risk manager as his equity began to evaporate like a snowman in the sun…How you view the world and what information you pay attention to is normally filtered through your primary discipline)

Here is a quick quiz…

You have a choice between two Investment Managers one who is “right” on his recommendations 30% of the time and is wrong 70% of the time in which his trade results in a loss.  The other Investment Manager is right 70% of the time and only takes a loss 30% of the time.  Which do you hire?

Stay tuned for Part 2 of Lessons from a Turtle for the answer.

Now that your done reading this send it to some friends and let’s see who finds the answer

If you don’t have an investment philosophy you will be more prone to be a follower.  So where do you begin?  I have included in this series a picture of the School of Athens by Raphael.  I actually have a huge painting in my conservatory at home to remind me the lesson I am about to teach you.

The painting is of some of the greatest philosophers in history.  In the middle you have Plato holding a copy of his dialogue The Timaeus and on the right you have Aristotle holding his Nicomachean Ethics.  Plato is pointing toward the sky, expressing his preference for the ideal.  Plato believed that the realm of forms is the only one that matters and everything on earth was an illusion.  Then you have Aristotle who is stretching his hand outward.  He preferred to deal with matters of reality.  You also have Socrates to Plato’s right lecturing the generals including Alexander the Great (Aristotle’s student).  On the left of Aristotle toward the bottom you have Euclid giving a math lecture.  The picture represents an incredible range of thought.  Who is right?

I ask that question because I want you to now change the characters.  What if Soros was Plato and Buffet was Aristotle? (This is just for illustrative purposes not to say either think like Plato or Aristotle) What if Euclid were replaced with Benoit Mandlebrot?  What if Socrates was Richard Dennis and the Generals Alexander the Great and Alcibiades were replace with Jerry Parker, another turtle.  Or what about Paul Tudor Jones and Steve Cohen.  You get my point.

Read George Soros’s Alchemy of Finance and compare that to Buffet’s investment philosophy that he learned from Ben Graham.  If I asked you well who is right?  The reality is that is the wrong question.  It is framed as an either or, as if there can be only one winner and one loser.  That is the problem I have seen in my career when people think about an investment philosophy.  It becomes part of their identity and they close their minds from any other possibilities. It must be their way or no other way.

The correct thing to do is study each philosophy and see if you can apply it in your investing strategy.  Is it congruent with what you believe and also do you have the foundation of knowledge to truly understand and apply it.  If you don’t it is better to have no opinion.

I was at the Market Technician Symposium recently and someone asked “Why do some Quants view what we do as voodoo?”  Yet, about an hour earlier a technician was giving a presentation and had a gorilla representing someone who used Fundamentals.  The problem I see is most people don’t look at the investment world in terms of philosophy and the philosopher kings of our time.  If they did they would not be so rigid in their thinking.  My personal journey has me exploring the various disciplines so I can appreciate not only what is done in each field but also how they think about what they do.

There is also conflicting investment philosophies within each discipline for example in the Fundamental world of investing there is Value versus Growth.  In the Technical world I have seen prominent technicians bash Elliot Wave Analysis, yet in his interview in Market Wizards when asked “…what market advisory services do you pay attention to?”  Paul Tudor Jones states …”Bob Prechter is the champion.  Prechter is the best because he is the ultimate market opportunist.  Robert Prechter is the leading authority in terms of Elliot Wave Theory.  Paul also mentioned Elliot wave Theory favorably in his forward for George Soros in the Alchemy of Finance.  I often wonder do people bash other philosophies/strategies because they have studied them in depth and have a rational explanation or is it because they can’t figure out how to use it or is it in-congruent with what they believe.  I believe behind every investment strategy you will find an investment philosophy that is important to the execution of that strategy.  It provides the foundation of thought necessary to follow the strategy.

The most important lesson I can teach you is to form your own investment philosophy because if you don’t someone else will do it for you.

Who is programming your subconscious?

Is it the media, schools, television, newspapers, some investment guru…Remember:

“The battle of philosophers is a battle for man’s mind. If you do not understand their theories, you are vulnerable to the worst among them.”

Are you acting like a detective?

“The criterion of detection is two questions: Why? and How? If a given tenet seems to be true–why? If another tenet seems to be false–why? and how is it being put over? You will not find all the answers immediately, but you will acquire an invaluable characteristic: the ability to think in terms of essentials.”

In your journey you may find investment philosophies that do not pass your litmus test.

Are you studying these just in case you run across them?

“Why should I study that stuff when I know it’s nonsense?”–you are mistaken. It is nonsense, but you don’t know it–not so long as you go on accepting all their conclusions, all the vicious catch phrases generated by those philosophers. And not so long as you are unable to refute them.

So as my Uncle Jesse told me years ago, study philosophy.  This may take a little time but it is well worth it.  Also, be sure to study philosophers with different opinions.  Understand the differences.  For example, if you study Popper make sure you read a little Feyerabend.  Have fun programming your own brain for a change.  By the way Uncle Jesse now has his P.H.D. and is living his dream as a college professor and he is truly making a difference in the world.  Now sometimes when he visits I often wonder does he regret leading me on this path because when it comes to politics and business matters, we sometimes have philosophical differences which lead to interesting intellectual debates.  My Aunt Caroline tells me she likes it when we talk because she gets to hear the other side.  However, just because we hold different philosophies I still respect his view and understand why and how he comes to his conclusions.  One of us is Plato and the other Aristotle.  Go and get started, develop your investment philosophy.

Feel Free to Share with Anyone You Like…P.S. Sign up for our Free Updates adn Special Offers Today

This part of the speech you are about to read helped clarify my thinking and expanded my paradigms..

“You have no choice about the necessity to integrate your observations, your experiences, your knowledge into abstract ideas, i.e., into principles. Your only choice is whether these principles are true or false, whether they represent your conscious, rational conviction–or a grab-bag of notions snatched at random, whose sources, validity, context and consequences you do not know, notions which, more often than not, you would drop like a hot potato if you knew.

But the principles you accept (consciously or subconsciously) may clash with or contradict one another; they, too, have to be integrated. What integrates them? Philosophy. A philosophic system is an integrated view of existence. As a human being, you have no choice about the fact that you need a philosophy. Your only choice is whether you define your philosophy by a conscious, rational, disciplined process of thought and scrupulously logical deliberation–or let your subconscious accumulate a junk heap of unwarranted conclusions, false generalizations, undefined contradictions, undigested slogans, unidentified wishes, doubts and fears, thrown together by chance, but integrated by your subconscious into a kind of mongrel philosophy and fused into a single, solid weight: self-doubt, like a ball and chain in the place where your mind’s wings should have grown.

You might say, as many people do, that it is not easy always to act on abstract principles. No, it is not easy. But how much harder is it, to have to act on them without knowing what they are?

Your subconscious is like a computer–more complex a computer than men can build–and its main function is the integration of your ideas. Who programs it? Your conscious mind. If you default, if you don’t reach any firm convictions, your subconscious is programmed by chance–and you deliver yourself into the power of ideas you do not know you have accepted. But one way or the other, your computer gives you print-outs, daily and hourly, in the form of emotions–which are lightning-like estimates of the things around you, calculated according to your values. If you programmed your computer by conscious thinking, you know the nature of your values and emotions. If you didn’t, you don’t.

Many people, particularly today, claim that man cannot live by logic alone, that there’s the emotional element of his nature to consider, and that they rely on the guidance of their emotions. Well, so did the astronaut in my story. The joke is on him–and on them: man’s values and emotions are determined by his fundamental view of life. The ultimate programmer of his subconscious is philosophy–the science which, according to the emotionalists, is impotent to affect or penetrate the murky mysteries of their feelings.

The quality of a computer’s output is determined by the quality of its input. If your subconscious is programmed by chance, its output will have a corresponding character. You have probably heard the computer operators’ eloquent term “gigo”–which means: “Garbage in, garbage out.” The same formula applies to the relationship between a man’s thinking and his emotions.

A man who is run by emotions is like a man who is run by a computer whose print-outs he cannot read. He does not know whether its programming is true or false, right or wrong, whether it’s set to lead him to success or destruction, whether it serves his goals or those of some evil, unknowable power. He is blind on two fronts: blind to the world around him and to his own inner world, unable to grasp reality or his own motives, and he is in chronic terror of both. Emotions are not tools of cognition. The men who are not interested in philosophy need it most urgently: they are most helplessly in its power.

The men who are not interested in philosophy absorb its principles from the cultural atmosphere around them–from schools, colleges, books, magazines, newspapers, movies, television, etc. Who sets the tone of a culture? A small handful of men: the philosophers. Others follow their lead, either by conviction or by default. For some two hundred years, under the influence of Immanuel Kant, the dominant trend of philosophy has been directed to a single goal: the destruction of man’s mind, of his confidence in the power of reason. Today, we are seeing the climax of that trend.

When men abandon reason, they find not only that their emotions cannot guide them, but that they can experience no emotions save one: terror. The spread of drug addiction among young people brought up on today’s intellectual fashions, demonstrates the unbearable inner state of men who are deprived of their means of cognition and who seek escape from reality–from the terror of their impotence to deal with existence. Observe these young people’s dread of independence and their frantic desire to “belong,” to attach themselves to some group, clique or gang. Most of them have never heard of philosophy, but they sense that they need some fundamental answers to questions they dare not ask–and they hope that the tribe will tell them how to live. They are ready to be taken over by any witch doctor, guru, or dictator. One of the most dangerous things a man can do is to surrender his moral autonomy to others: like the astronaut in my story, he does not know whether they are human, even though they walk on two feet.

Now you may ask: If philosophy can be that evil, why should one study it? Particularly, why should one study the philosophical theories which are blatantly false, make no sense, and bear no relation to real life?

My answer is: In self-protection–and in defense of truth, justice, freedom, and any value you ever held or may ever hold.

Not all philosophies are evil, though too many of them are, particularly in modern history. On the other hand, at the root of every civilized achievement, such as science, technology, progress, freedom–at the root of every value we enjoy today, including the birth of this country–you will find the achievement of one man, who lived over two thousand years ago: Aristotle.

If you feel nothing but boredom when reading the virtually unintelligible theories of some philosophers, you have my deepest sympathy. But if you brush them aside, saying: “Why should I study that stuff when I know it’s nonsense?”–you are mistaken. It is nonsense, but you don’t know it–not so long as you go on accepting all their conclusions, all the vicious catch phrases generated by those philosophers. And not so long as you are unable to refute them.

That nonsense deals with the most crucial, the life-or-death issues of man’s existence. At the root of every significant philosophic theory, there is a legitimate issue–in the sense that there is an authentic need of man’s consciousness, which some theories struggle to clarify and others struggle to obfuscate, to corrupt, to prevent man from ever discovering. The battle of philosophers is a battle for man’s mind. If you do not understand their theories, you are vulnerable to the worst among them.

The best way to study philosophy is to approach it as one approaches a detective story: follow every trail, clue and implication, in order to discover who is a murderer and who is a hero. The criterion of detection is two questions: Why? and How? If a given tenet seems to be true–why? If another tenet seems to be false–why? and how is it being put over? You will not find all the answers immediately, but you will acquire an invaluable characteristic: the ability to think in terms of essentials.

Nothing is given to man automatically, neither knowledge, nor self-confidence, nor inner serenity, nor the right way to use his mind. Every value he needs or wants has to be discovered, learned and acquired–even the proper posture of his body. In this context, I want to say that I have always admired the posture of West Point graduates, a posture that projects man in proud, disciplined control of his body. Well, philosophical training gives man the proper intellectual posture–a proud, disciplined control of his mind.

In your own profession, in military science, you know the importance of keeping track of the enemy’s weapons, strategy and tactics–and of being prepared to counter them. The same is true in philosophy: you have to understand the enemy’s ideas and be prepared to refute them, you have to know his basic arguments and be able to blast them……

…..A battle of this kind requires special weapons. It has to be fought with a full understanding of your cause, a full confidence in yourself, and the fullest certainty of the moral rightness of both. Only philosophy can provide you with these weapons.

The assignment I gave myself for tonight is not to sell you on my philosophy, but on philosophy as such.”

Now in the context of your Investment Philosophy….Is it yours or just something someone put into your subconscious? Is your investment philosophy something that you thought about, researched, and created?  Or was it formed by the media, a school, or some guru? 

Stay tuned for the final part of this series…

Feel Free to share with anyone you like…P.S. Sign up for our Free Updates and Special Offers Right Now

When I was 16 years old I was allowed to attend St. Peter’s College and take college courses for credit during the summer.  I was ranked number one in my high school and applied to a special program for high achievers and was accepted.  Now since I was a know it all I decided I would focus on accounting and math.  My Uncle Jesse, sat down with me and told me that I should study philosophy.  I thought he was crazy.  What in the world would someone do with a philosophy degree?  How do those guys make any money?  (I was concerned about making money since growing up we didn’t have any…)  Now my Uncle Jesse, back then had completed his Masters in teaching and was running his own maintenance company.  (He didn’t have any money either and so had to work to put himself through school)  Uncle Jess wasn’t motivated by money his passion was teaching and helping others.  He would sit there and tell me “Craig, you have to study Socrates, Plato, Hume, Descartes, they will teach you how to think!”  I thought he was crazy.  I would reply, “Look at my grades I know how to think (the arrogance of youth is very very dangerous).”  I wanted to learn how to read financial statements, I had heard Accounting was the language of business and I wanted to go into business.    Uncle Jesse would sit there and whisper in my ear, “But Craig It will be then and only then when kings are philosophers or philosophers kings.”  In the infinite wisdom of a 16 year old I was convinced that learning accounting would accelerate my  of dream of working in the stock market so I ignored Uncle Jesse.  However, when I went to work in the investment business I quickly realized how right he was….good ole Uncle Jess was onto something and it was big.

As I entered into the business cutting my teeth as I devoured financial statements researching stocks I picked up a book called Market Wizards by Jack Schwager.  I read about a gentleman by the name of Richard Dennis who seemed to be one of the greatest traders at the time and noticed he studied philosophy.  Then I learned about George Soros who had studied philosophy with Karl Popper.  I started to hear Uncle Jesse whispering  in my ear….As the years went on I realized the folly of my youth and started to make it a habit to study philosophy.  Then a little bit older, humbled, and dare I say wiser I began to study philosophy.

Like many people in the investment world I read the works of Ayn Rand who is well known for Atlas Shrugged, Fountainhead, and The Virtue of Selfishness.  Yes, I have read them and more, and they had an impact on me as many other philosophers have over the years; however, a defining moment in my life was when I read her address to the graduating class at West Point in 1974.  It was called Philosophy: Who needs it? In the investment world investors are often so caught up in learning a specific investment methodology, strategy, or tactic that never think about the philosophy behind what they are doing.   The reason why they follow that strategy is often something like…”Why are you a value investor?”  “Well, look at Buffet he’s a billionaire I heard on CNBC they said he is the greatest investor of all time so I am going to do what he does…”.  This is sad, but true.

Many people in the investment world like to act as if investing is just like science with the same rigorous “laws” like gravity.    They will even use analogy’s and metaphors to describe investing to make it sound like science.  Often when investing we are living in the abstract even though we don’t like to admit it.  This part of Ayn Rand’s speech really knocked me off my chair as I read it and started me on my journey of learning how to think:

“Now some of you might say, as many people do: “Aw, I never think in such abstract terms–I want to deal with concrete, particular, real-life problems–what do I need philosophy for?” My answer is: In order to be able to deal with concrete, particular, real-life problems–i.e., in order to be able to live on earth.

You might claim–as most people do–that you have never been influenced by philosophy. I will ask you to check that claim. Have you ever thought or said the following? “Don’t be so sure–nobody can be certain of anything.” You got that notion from David Hume (and many, many others), even though you might never have heard of him. Or: “This may be good in theory, but it doesn’t work in practice. You got that from Plato. Or: “That was a rotten thing to do, but it’s only human, nobody is perfect in this world.” You got that from Augustine. Or: “It may be true for you, but it’s not true for me.” You got it from William James. Or: “I couldn’t help it! Nobody can help anything he does.” You got it from Hegel. Or: “I can’t prove it, but I feel that it’s true.” You got it from Kant. Or: “It’s logical, but logic has nothing to do with reality.” You got it from Kant. Or: “It’s evil, because it’s selfish.” You got it from Kant. Have you heard the modern activists say: “Act first, think afterward”? They got it from John Dewey.

Some people might answer: “Sure, I’ve said those things at different times, but I don’t have to believe that stuff all of the time. It may have been true yesterday, but it’s not true today.” They got it from Hegel. They might say: “Consistency is the hobgoblin of little minds.” They got it from a very little mind, Emerson. They might say: “But can’t one compromise and borrow different ideas from different philosophies according to the expediency of the moment?” They got it from Richard Nixon–who got it from William James.”

I started to think of all the things I thought I knew about investing, how many were abstractions mixed in with some anecdotes.  I started thinking about value and growth, buy and hold, and other catchy phrases about investing.  How much of what we have been taught about investing has been passed down through stories like the ancient tribes did for generations?

I realized in that moment I needed as Uncle Jesse told me years before to learn how to think in order to find the answers…

Then I read another part of the speech and it all came together….Stay Tuned for Part 2

Have you signed up for our free updates and special offers?  P.S. Feel free to share this with anyone you like…

One popular investment strategy is the passive buy-and-hold system. Even during bear markets, proponents of buy-and-hold say: “Stay the course! Unless you are in the market all the time, you’re in danger of missing the very best days, and those relatively few days account for a huge portion of the stock market’s gains.”

Proponents have justified the assertion based on a 1994 Ibbotson study of the stock market: If you invested $100 in the stock market in 1926 and simply kept your money there through 1993, your investment would be worth $80,000. But if you used an active money management strategy and “missed” the 30 best months, your $100 would have grown to only about $1,200, the same return you would have received investing in U.S. government T-bills.¹

At first this sounds compelling: Why would anyone want to take the chance of missing out on $78,800 or 98% of the gain? However, proponents have not told the whole story: What if you employed an active management system and could avoid the 30 worst months from 1926 through 1993? Your $100 initial investment would have grown to around $8.6 million.²

Now, what if you made a $100 investment during these 67 years and employed a less-than-perfect active management system that caused you to miss the 30 best months while helping you miss the 30 worst months? Your $100 investment would have grown to $120,000 vs. $80,000 for buy-and-hold, 50% more net dollars than the buy-and-hold investment with less volatility.² Thus, it appears the risk of missing the good days is less than the risk of being exposed to the bad days.

Many investors simply don’t want to “stay the course” and watch their portfolios drop as the stock market and the economy turn from bad to worse – as it did from January 1999 through January 2009. During that time, the worst 10-year stretch in the history of the S&P 500, an investor holding the stocks in the S&P’s 500-stock index, and reinvesting the dividends, would have lost about 5.1 percent a year after adjusting for inflation.³

Many investors, especially retirees and those nearing retirement, can’t afford to wait out or try to rebound from stretches like that. They want an active investment system that can help them grow their assets during up-trends and preserve the value of their portfolios during market downturns.

¹Ibbotson, Roger G., and Rex A. Sinquefield. Stocks, Bonds, Bills and Inflation: Historical Return (1926–1993). Chicago: Dow Jones–Irwin, 1994.

²“The Myths and Realities of Market Timing,” by Paul Merriman, Merriman Fund Advice, June 29, 2005. www.fundadvice.com/fehtml/mtstrategies/9410.html

³“A 10-Year Stretch That’s Worse Than It Looks,” by Floyd Norris, Feb. 7, 2009, New York Times (p. B3, New York edition).

Who do you think you should send this to right now?

Through his rigorous on-going education, CJ has earned the industry designations of Chartered Financial Analyst^® (CFA^®) and Chartered Market Technician (CMT), and Certified Hedge Fund Professional (CHP) which required advanced coursework in technical analysis, hedge funds, securities management, and the investment decision-making process. He is one of only a handful of investment advisors in the country who has also earned the designation CAN SLIM^® Certified Expert, which required an intensive study of the time-tested CAN SLIM^® Investment System. Evidence of the system’s success is shown through its impressive rankings with the American Association of Individual Investors independent study of investment systems over the years.

Mr. Coletta is a member of the AICPA, CFA Institute, Market Technicians Association, New York Society of Security Analysts, Professional Risk Managers Institute, and the Society of Quantitative Analysts.

Companies & Professional Titles
President of Coletta Investment Research, Inc.
Chairman and CEO of C.J. Coletta & Company, Inc.
President of Coletta Publishing, LLC.