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How to Become “WEALTHIER”… Instantly

Monday, March 18th, 2024

How to Become “WEALTHIER”… Instantly

Would you like to become EXPONENTIALLY “WEALTHIER” in less than four (4) minutes???

That may sound improbable – even “LUDICROUS”... BUT, you can MAKE IT HAPPEN!!!

In the process, you will also sleep better, improve your health and increase your “HAPPINESS SET POINT” by up to 25% according to analyst(s).

Skeptical??? GOOD!!!

 

BECAUSE, I am about to reveal the “TRANSFORMATIVE”, “LIFE-CHANGING”, “SCIENTIFICALLY” PROVEN BENEFITS of feeling and expressing “GRATITUDE” on a DAILY BASIS.

Many people – perhaps most – wait for “SPECIAL OCCASIONS” to feel “GRATEFUL”.

Like when they graduate, or get that raise or promotion, or finally pay off the mortgage.

That’s a MISTAKE!!! You should let “EVERYDAY” things – “SMALL” things – spark a sense of “GRATITUDE”.

The weather is “FINE”. The meal is “DELICIOUS”. That rainbow is “GLORIOUS”. The grandkids are “PRECIOUS”. That stranger was so “KIND”.

You don’t have to WAIT for an opportunity to feel “GRATEFUL”. You have the POWER to “SAVOR” the feeling “EVERY DAY”. You only need to “WAKE UP” to it.

No doubt you have problems, perhaps serious ones. Health problems. Financial problems. Relationship problems.

Welcome to the real world…

Feeling “GRATEFUL” doesn’t mean everything in your life is SWELL. It doesn’t require you to be oblivious to what’s wrong with the nation or the world.

It simply means you take three (3) or four (4) minutes every day – not just a few seconds – to contemplate what’s right with your life.

 

Look for opportunities to make a “POSITIVE ASSESSMENT”, to recognize just how “GOOD” it is to be ALIVE…

AND, say it out LOUD. Then notice the people around you nodding their heads.

After all, we have much to be “GRATEFUL” for if we only “STOP” and RECOGNIZE IT!!!

Our “ANCESTORS”, PEACE and BLESSINGS BE UPON THEM, were born into a world where “SURVIVAL” itself was a “STRUGGLE”.

They LABORED hard to find FOOD, CLOTHING, SAFETY and SHELTER from the elements. Many DIED young, usually of unnatural causes.

There are plenty of people reading this “WIZ” DAILY JOURNAL now who GRANDPARENTS grew up without ELECTRICITY, RUNNING WATER or, VACCINATIONS against deadly diseases.

Never saw prosperity???

 

We live in the “WEALTHIEST” country at the most “PROSPEROUS” time in the HIStory of the world.

 

As I have noted before, a “MIDDLE-CLASS” citizen today is better off than the richest American ever: JOHN D. ROCKEFELLER.

 

Constantly comparing what you “HAVE” with what someone else “HAS” creates an “IMPOVERISHED” state of mind.

It makes you feel “POORER”, even when you are not.

How can you become “WEALTHIER” – instantly???

 

By adopting the “OPPOSITE” MINDSET!!!

 

Dwell on your ASSETS, because they will keep your “ASS SET”…

RATHER, than your LIABILITIES, because they will have you “LYING ABOUT YOUR ABILITIES”…

Dwell on your BLESSINGS, rather than your GRIEVANCES…

Dwell on your OPPORTUNITIES rather than your PROBLEMS…

Even SETBACKS can be viewed in a “POSITIVE LIGHT” if you see them through the lens of “GRATITUDE” – and ask yourself a few questions:

  • What can I be “THANKFUL” about in this situation???
  • Could it have been “WORSE”???
  • Is there an “IMPORTANT” lesson to be learned here???
  • How can I “GROW” from this???

Keep a “GRATITUDE” journal, one where you take a few minutes each night before retiring to write down the “GOOD” things – both LARGE and SMALL – that made you “THANKFUL” that day.

 

What are the “BENEFITS”???

Studies show that “GRATEFUL” people have an easier time falling asleep and snooze longer. They enjoy a host of health “BENEFITS”, including greater resilience and longevity. “GRATITUDE” has even been shown to boost your “HAPPINESS SET POINT” – your basic “GENETICALLY” determined level of “HAPPINESS” – by up to 25%.

In short, in order to “FEEL” – and be – “WEALTHIER”, you need only “RECOGNIZE” how “WEALTHY” your LIFE already is!!!

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.

“EXPERTS” Hate the Stock Market… Here’s Why

Friday, March 15th, 2024

“EXPERTS” Hate the Stock Market… Here’s Why

Rational, self-interested men and women consider the economy, interest rates, commodity prices, regulations, technological developments, pending legislation and the future prospects for various industries and incorporate all this information into share prices each day.

These investors are not just offering an “OPINION”...

They are taking “RISKS” that will result in “SIGNIFICANT” losses if they are wrong.

That is why markets are often described as “EFFICIENT”. Everything that can be known is IMMEDIATELY reflected in SHARE PRICES.

You are skeptical that “GREEDY” investors could possibly know better than highly trained scientists and policy makers???

Consider the space shuttle CHALLENGER…

At 11:38 a.m. on January 28, 1986, it lifted off its launch pad at Cape Canaveral. Seventy-four seconds later – and 10 miles higher – it BLEW UP!!!

The launch was televised “LIVE”, so the news spread QUICKLY.

Within minutes, investors began bailing out of the four major shuttle contractors: Rockwell International (ROK), which built the shuttle and its main engines; Lockheed Martin (LMT), which managed ground support; Martin Marietta (MLM), which manufactured the ship’s external fuel tank; and Morton Thiokol, which built the solid-fuel booster rockets.

All four (4) stocks were hit HARD initially.

BUT, by the end of the day, three of them were down just SLIGHTLY. Only Morton Thiokol closed SHARPLY lower…

There were no public comments that day singling out Morton Thiokol as the guilty party.

It would be six (6) more months before a Presidential commission concluded that the company’s O-ring seals were the culprit.

YET, the stock market IMMEDIATELY identified Morton Thiokol as the company responsible for the disaster.

How could investors know something that even NASA scientists did not???

Author JAMES SUROWIECKI calls it “THE WISDOM OF CROWDS”. What “ALL OF US” know is far “GREATER” than what any individual or elite group can know.

Evidence of this is all around us…

Remember the old TV show Who Wants to Be a Millionaire with Regis Philbin???

When a contestant was allowed to query an expert of his choosing, that expert gave the right answer 65% of the time.

BUT, when the contestant polled the audience – a “RANDOM” group of people with nothing better to do on a weekday afternoon than sit in a TV studio – they picked the right answer 91% of the time!!!

(This was before the advent of smartphones, of course.)

We “PRIZE” and “HONOR” the intelligence of “EXPERTS”. Yet, counterintuitive as it may seem, CROWDS ARE SMARTER!!!

“EXPERTS” don’t like that, of course.

(That’s why BILLIONAIRE money manager KEN FISHER refers to the stock market as “THE GREAT HUMILIATOR”.)

Following the GREAT RECESSION, I spent years on the lecture circuit trying – and often FAILING – to persuade investors that RISING stock prices were NOT a “DEAD CAT BOUNCE” or a “BEAR MARKET” rally but a powerful signal that the economy was on the MEND.

RISING share prices were a clear signal that the outlook was IMPROVING. BUT, people looked around or – worse – BACKWARD and concluded it was NOT.

Many of them missed the longest-running economic EXPANSION and “BULL” market of ALL TIME!!!

Don’t miss the next one…

After 27+ years as a PORTFOLIO MANAGER, RESEARCH ANALYST and, ECONOMIST, I do overstand/understand a few things about how to “READ” the stock market.

Lately it has said “LOUD and CLEAR” that the economy will “SNAP BACK” faster than most expect.

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.

The Demise of “HOMO ECONOMICUS”

Thursday, March 14th, 2024

The Demise of “HOMO ECONOMICUS”

I believe that the financial markets are one giant “RORSCHACH” test – you know, the test where a psychologist asks you to make sense of an oddly shaped inkblot.

Put another way… YOU SEE WHAT YOU WANT TO SEE!!!

My view flies in the face of “CONVENTIONAL” financial theory taught by professors in business schools (B-schools) around the globe.

Contrary to Nobel Prize-winning economic theories about “RATIONAL EXPECTATIONS”, an investor is anything but “HOMO ECONOMICUS”– the perfectly rational actor you will meet in every finance textbook.

Like BIGFOOT, an “ECONOMIC HUMAN” has never been seen in real life.

Unlike you and me, “HOMO ECONOMICUS”…

  • Has perfect information for investment decisions
  • Does not feel emotions like fear and greed
  • Believes that financial crashes like the one in 1987 happen only once every billion years.

Of course, I’m hardly the only “HOMO ECONOMICUS” skeptic.

Psychologists have long confirmed that we humans suffer from “COGINITIVE BIASES” that make it difficult for us to get “P.A.I.D” from the markets.

Academics have labeled this new field “BEHAVIORAL FINANCE”.

Not surprisingly, it took psychologist DANIEL KAHNEMAN to convince economists that investors don’t act like hyper-rational automatons.

In a slap in the face to the entire economics profession, Kahneman WON the 2002 Nobel Prize in economics without ever having taken an economics course!!!

 

Putting Mr. Market on the Couch

Try telling a “STREET SMART” trader you have just learned that investors are NOT perfectly “RATIONAL”…

AND he will look at you with both “PITY” and “DISDAIN”.

After all, traders do little else than pay attention to the market’s “MOOD SWINGS”.

WARREN BUFFETT said that one of the most important lessons he learned from his mentor BENJAMIN GRAHAM was the parable of “MR. MARKET”.

Here’s how GRAHAM described “MR. MARKET” in Chapter 8 of The Intelligent Investor…

On some days, Mr. Market is euphoric. On other days, he’s very depressed. If you catch him on a good day, he wants a very high price for his shares. If he’s in a down mood, he’ll sell you his shares for a pittance.

 

“MR.MARKET” highlights the one thing you can predict with certainty about financial markets: Investors always “OVERREACT”…

OFTEN, “MR. MARKET” will shift his mood from go-go optimism to extreme pessimism for no real, discernable reason.

Now, I don’t know how WARREN BUFFETT has reacted to Mr. Market’s mood swings…

BUT, I do know how he has reacted in the past.

In August 2011, the U.S. stock market “SOLD” off sharply, much like it did recently. Investors panicked after the U.S. lost its AAA rating from Standard & Poor’s, the world’s foremost credit ratings firm.

On August 25, 2011 BUFFETT publicly announced that he was aggressively buying Bank of America (BAC) stock.

Fast-forward six (6) years to July 2017, and BUFFETTB had almost TRIPLED his money!!!

Once again, “MR. MARKET’s” mood swing proved temporary.

The lesson???

Be like BUFFETT– don’t get caught up in “MR. MARKET’s” latest “MOOD SWING”.

Instead, PAUSE, BE STILL and, REFLECT…

Take advantage of the opportunities the market pullback offers.

Here’s my prediction: The U.S. stock market will bounce back quickly from its current correction.

After that, it’ll be a stock picker’s market between now and September (2024).

In October, we’ll see the traditional fourth quarter rally in global stock markets.

By that time, “MR. MARKET’s” mood swing(s) will be a distant memory.

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.

The Stock Market Is Like a “CASINO”… AND, That’s a “GOOD”

Wednesday, March 13th, 2024

The Stock Market Is Like a “CASINO” and That’s a “GOOD”

 After a vigorous pick-up game of “HOOPS”, a playing partner proceeded to tell the group why he never invested in stocks…

“The stock market is nothing but a casino,” he explained. “Sometimes you win. Sometimes you lose. But everyone is just placing their bets and gambling.”

The other four players tried to explain to him why this explanation was “OFF THE MARK”. BUT,  as a dyed-in-the-wool real estate investor – he was having none of it.

The stock market “SCARED” him AND he was convinced that success or failure was just a matter of being “LUCKY” or “UNLUCKY”!!!

This opinion is fairly common among people with no stock market experience – or with one or two bad experiences. (Surely you have known individuals who voiced much the same view.)

I generally concede that, in some ways, the stock market is like a casino, especially in the very “SHORT TERM”.

Stock price movements from HOUR to HOUR – and even DAY to DAY – are largely “RANDOM”. It is only over LONGER PERIODS that an underlying “ORDER” and “LOGIC” take hold.

Companies’ shares move up only to the extent that their EARNINGS and their PROFITS move higher. The reverse, of course, is also true

Look back through HISory and you will not find a single example of a company that INCREASED its EARNINGS quarter after quarter and year after year without the stock tagging along, no matter whether we were in a “BULL”, “BEAR” or, something in between market.

That is why WARREN BUFFETT’s mentor BENJAMIN GRAHAM famously remarked that in the SHORT TERM, the market is a “VOTING” machine.

BUT in the LONG TERM, it is a “WEIGHING” machine.

AND, what it weighs is “CORPORATE PROFITS”.

Aside from the inscrutability of stock movements in the very SHORT TERM, there is another way that “EQUITY INVESTING” resembles a CASINO.

And this analysis is based on my own experience.

I have never been much of a gambler.

I NEVER fell prey to the fatal conceit that if I gambled long enough or smartly enough – as if there were such a thing as “INTELLIGENT GAMBLING” – I would eventually win it all back… and then some.

I simply took a good look around the casino. While there were hundreds of people laughing and drinking and smiling (and frowning) at the tables… There was NO LINE whatsoever at the cashier’s window…

Clearly, I wasn’t the only one taking my lumps.

According to the American Gaming Association, gambling in the U.S. reached a record high last year (2022) as commercial casinos and online betting apps reaped more than $60 billion in gambling revenues. That broke the previous record of $53 billion set in 2021, increasing about 14% year over year.

These gamblers not only aren’t striking it “RICH”. They are paying for all those “GLITTERING” towers… AND, I don’t want to be one of them!!!

The “SMART” move is to be a casino “OWNER”… NOT A “CASINO GAMBLER”!!!

Few of us have the hundreds of millions or billions of dollars necessary to open and run a “FABULOUS” casino.

Yet that is no obstacle. You need only own a few shares of a leading “GAMING” company.

IN FACT, after that conversation with my “B-BALL” partners last week, I ran some numbers.

Here’s what I found…

Since the market bottom in March 2009, Century Casinos (CNTY) is “UP” 381%. Penn Entertainment (PENN) is up 487%. MGM Resorts (MGM) is up 1,334% and, Las Vegas Sands (LVS) is up 3,858%.

 

So yes, the stock market is like a “CASINO”...

Just be sure you are the “OWNER”… not the “GAMBLER”!!!

PEACE & BLESSINGS
Kenneth Reaves, Ph.D.

Become WEALTHY… By Monetizing The “NUIANCES” of Wall Street

Tuesday, March 12th, 2024

Become WEALTHY… By Monetizing The “NUIANCES” of Wall Street

I have never been an apologist for Wall Street…Quite the opposite, in fact.

Over the weekend, I bumped into two (2) associates with different but largely “MISTAKEN” views of the financial industry.

The first associate of mine, insisted that top Wall Street executives knowingly caused the financial “MELTDOWN” and “GREAT RECESSION” that followed – and should have gone to JAIL!!!

The other associate argued, that the deck is completely “STACKED” against ordinary investors – that HIGH INVESTMENT MINIMUMS, HIDDEN COSTS and, IMPERFECT KNOWLEDGE prevent the “AVERAGE” investor from getting ahead… or even getting a “FAIR” shake.

These views – while commonplace – aren’t just wrong. They could cost you serious money in the months and years ahead.

Let me begin with the first associate’s “BEEF”…

If you are still angry or unhappy about the Wall Street bailout, I share your frustration.

I oppose government “BAILOUTS” on principle. “CAPITALISM” is a PROFIT and LOSS system. It is wrong to “PRIVATIZE” profits but use taxpayer money to ”BAILOUT” failing businesses.

 

AND yet… there are times when standing on “PRINCIPLE” can get you steamrolled – and for no good reason. Ten (10) years ago was one of those times.

To this day, most Americans still don’t overstand/understand how close we were to the edge of the “ABYSS”.

The world economy runs on ready CREDIT. And when Morgan Stanley is afraid to lend Merrill Lynch money overnight – as was the case 10 years ago – we are in a “PERILOUS” place INDEED…

If the banking system were to collapse, consumers and investors would “PANIC”, the economy would go into a “TAILSPIN”, and SEVERE PAIN and POVERTY would result.

In his memoir, Stress Test: Reflections on Financial Crises, former Treasury Secretary Timothy Geithner reported that we were less than three (3) days from customers not being able to get their cash out of ATMs…

Talk about “PANDEMONIUM”!!!

NOTE: The world economy is built on “TRUST” in the financial system. Without that “TRUST”, there can be no “PROSPERITY”.

How did we wind up on the brink???

Wall Street “GREED” is the easy answer… BUT, not the best one.

Consider the role of various federal agencies in creating the HOUSING “BOOM” and “BUST”:

  • The Federal Reserve (FED) kept interest rates too LOW for too LONG, making MORTGAGE LOANS dirt-cheap and priming the real estate “BUBBLE”. (The FED also approved and oversaw lending practices, including “NO MONEY DOWN” mortgages.)
  • In a “MISGUIDED” attempt to promote home ownership, Congress passed laws that effectively “CRIMINALIZED” (as “DISCRIMINATORY”) the failure to lend to “SUBPRIME” borrowers.
  • The federal government sponsored FANNIE MAE and FREDDIE MAC (or, as I prefer, PHONY MAE and FRAUDIE MAC) to warehouse these “FUGAZY” mortgages, leaving taxpayers on the hook to clean up the mess.
  • The $615 trillion market for REDIT DEFAULT SWAPS accelerated the financial collapse. These should have been traded through CENTRAL CLEARINGHOUSES, on EXCHANGES that provide “TRANSPARENCY”. Who decided against this??? The U.S. Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), two (2) federal agencies.
  • AND, who is responsible for the regulation of commercial and investment banks, savings and loans, mortgage companies, and rating agencies to make sure the mortgage market is fair and transparent??? Why, the federal government, of course…

In other words, it wasn’t corporate “GREED”. It was monumental GOVERNMENT INCOMPETENCE.

 

YES, Wall Street shares some of the blame.

Some banks sold customers loans they couldn’t afford and didn’t fully overstand/understand…

Others packaged the loans into dubious financial products for “MOM-and-“POP” customers. (“CAVEAT EMPTOR”, INDEED.)

AND, CEOs Jimmy Cayne of Bear Stearns, Dick Fuld of Lehman Brothers and Hank Greenberg of AIG all FAILED to comprehend the “HUGE” RISKS their firms were taking.

The “BIG” banks should not have been “BAILED OUT” for the sake of the bankers. (Those people deserved to lose EVERYTHING!!!)

BUT, they had to be “BAILED OUT” for the sake of everyone else.

REMEMBER, the officers, directors, managers, employees, creditors and shareholders of Bear Stearns and Lehman Brothers lost EVERYTHING. That is how it should be in a “FREE” market system.

BUT, if the “BIG” banks here and abroad had kept falling like dominos, we would have had a full-scale “PANIC”, a financial collapse and the “GREATER DEPRESSION”

 

Yes, government policy at the time was hurriedly improvised and highly imperfect (as it often is). But we dodged a cannonball to the face.

The U.S. economy is “HEALTHY” again – and the stock market has more than recovered.

Oh… and that TARP (Troubled Asset Relief Program) money used in the bailout??? It has been fully REPAID – with INTEREST...

Why aren’t any Wall Street CEOs behind bars???

BECAUSE, you go to jail for “CRIMINAL” behavior, not poor business decisions and regulatory negligence.

Politicians and bank regulators knew that financial institutions weren’t requiring down payments from borrowers..

They knew they weren’t verifying income or assets or borrowers’ ability to repay the loans.

Wall Street engaged in those practices because they were perfectly “LEGAL”.

As Berkshire Hathaway Vice Chairman CHARLIE MUNGER pointed out, “When a lion escapes from the zoo and injures someone, you don’t blame the lion. You blame the LION KEEPER”!!!

Federal regulators had all the tools they needed to protect us – but they .DID NOT.

Most Americans overstand/understand this…

The Cato Institute 2017 Financial Regulation Survey found that three-quarters of Americans believe regulations are politically “BIASED” and FAIL to have their intended effect.

MORE, regulations are NOT the answer. Abiding by a FEW sensible ones is.

Canada, for instance, avoided the housing bust altogether. How???

Homebuyers there are required to make 20% down payments. (Mortgagees don’t mail their keys back to the bank when they have skin in the game.)

Again… my interest is in the “FACTS”, not in defending Wall Street.


I regularly “WARN” retail trader/investors that if they swim with these sharks, they can expect to get eaten alive.

 

That doesn’t mean investment banks don’t play a “VITAL” role in our lives,
however.

 

They connect people with capital to entrepreneurs and businesses that need
capital. This fuels innovation. It creates jobs. And it allows companies to deliver safer cars, faster communications, and lifesaving drugs and medical devices.

All good things…

How about my other associates’ insistence that the average investor doesn’t
stand a chance competing against the “BIG” boys on Wall Street???

That, too, is the OPPOSITE of the “TRUTH”.

Investors today – even the smallest ones – have never had better opportunities to get “P.A.I.D.”!!!

 

PEACE & BLESSINGS

Kenneth Reaves, Ph.D.

The Ask The Wiz Wealth Institute is not an investment advisor. We strive to be educational and informative community servants.
 

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