The Revenue Rises
Trending Now
Stock Market News UK Update: FTSE 100 &...
Stock Market News UK Update: FTSE 100 &...
DP Trading Room: Key Support Levels for the...
Stock Market News UK Update: FTSE 100 &...
Stock Market News UK Update: FTSE 100 &...
Stock Market News UK Update: FTSE 100 &...
Stock Market News UK Update: FTSE 100 &...
Retirees ‘stunned’ as market turmoil over tariffs shrinks...
Week Ahead: NIFTY Set To Open Lower; Relative...
Market Drop Compared to 2020: What You Need...

The Revenue Rises

Stocks

Step 1: Asset Creation, Step 2: —————?, Step 3: Asset Growth

by admin December 7, 2024
December 7, 2024
Step 1: Asset Creation, Step 2: —————?,  Step 3: Asset Growth

The secret sauce of 1-2-3 investing is quite simple: don’t skip Step 2. Far too many investors who’ve succeeded in creating wealth are anxious to rush forward with “all gas, no brakes” to embrace the excitement of Step 3 – Asset Growth. Only in retrospect do they so often discover the hard way that the essential connective tissue between asset creation and asset growth is the imperative prerequisite of asset protection (see our book Tensile Trading, Chapter 1, page 2).

Now more than ever in my five decades of managing my assets do I implore you to build your personal investment citadel based on a protection mantra. You absolutely must curtail your impulses to speed forward without building a solid asset protection foundation first. Your future financial prosperity depends on it.

This blog is not intended to focus on all those asset protection specifics. We’ve offered all that in much detail in our book (Tensile Trading). This blog is meant to raise the alarm as to the recent seismic increase of risks I see these days associated with investing our portfolios. I’m certain we can all recount numerous examples of Ponzi schemes, shady derivatives, and an infinite variety of “alternative investments” that have fleeced individual investors and even sophisticated money management firms. Those risks not only continue to exist, but are ever more clever and seductive. And it’s the risks in the “trendy” asset category of “private equity” that has me particularly worried.

The tsunami of money flooding into the private equity space now deems it ripe for operators on the Dark Side to take up residence there, even more than they have in the past. There are many reasons for all this new money chasing a finite universe of private equity deals. One of the most significant catalysts is that large Mutual Fund companies are desperate to stem the flow of assets out of their respective fund complexes and believe that presenting investors the opportunities to invest in private equity will help stem that negative flow. Oh yes, perhaps the higher fees might also have something to do with it!

Recently, I experienced this phenomenon firsthand. In thirty years as a Vanguard client, I’d never had a phone call pitching me financial products. They recently called to suggest I put assets into private equity.

This is not a sermon about whether private equity investing is right for you or not, but I do beseech you to understand all aspects of liquidity — in other words, how long are you required to hold it. This is a financial sermon about my perception that risks are everywhere and risks are escalating. Let me share four personal data points to support this.

I recently attended an anniversary dinner for a large money management firm whose success in private equity investing is undisputed. As the various speakers revisited their historical successes, I was struck by their strategy for the future. They have deemed it necessary to hire a highly respected forensic scientist to head a sizable due diligence department within the firm. In today’s financial arena, digging deep into the backgrounds of every potential deal is imperative and non-negotiable. They claimed that an extensive percentage of potential deals where the numbers alone would have Warren Buffett salivating were in fact abandoned due to “dark side discoveries during due diligence.” My point is that with too much money chasing fewer private equity deals, not all the money managers will be inclined to execute such deep and meticulous due diligence. It’s the investors who will inevitably pay the price.

My second data point is the number of financial advisors I see who are outright misleading. It’s common for me to pickup on their gaslighting techniques where they attempt to manipulate investors and their perceptions of reality. In The Wall Street Journal, Jason Zweig amplified on this by labeling it as “trust washing.” Rather than earning your trust the hard way, these shady manipulators attempt to buy trust by claiming they were seen on TV, quoted in respected periodicals or written popular investment books — thereby crowning themselves as trustworthy financial gurus. To convince yourself, just google how many financial advisors have been convicted and are serving jail terms. I was stunned.

I spoke to a good friend recently who is a tech executive. I didn’t want to push him for specifics, but he told me that based on their experiences in the past, Google now has a corporate policy of “Zero Trust.” Sounds bloody ominous to me. As individual investors, perhaps our mantra needs to be the same.

Finally, the recent front page article in The Wall Street Journal about Morgan Stanley (MS) and their collection of corrupt and nefarious clients was daunting and disturbing. Yes, MS is motivated by profits to collect assets — hence weak controls and poor due diligence should not be surprising. What was shocking to me was that an audit revealed the large percentage of their clients who were deemed to be extremely high-risk. In other words, clients leaning towards the dark side.

In summary, today’s financial reality is such that we individual investors don’t have the tools necessary to vet sophisticated complex investments sufficiently. In my opinion, we should not venture down that road with anything but a small percentage of our assets. Call it your “high risk” allocation or perhaps your “funny money fund.” The S&P 500 (SPY) basket of stocks is a far more dependable asset growth vehicle which is diversified, pays dividends, offers growth and lovely liquidity. These are benefits that should should not be underestimated by you.

I plead with you to steer clear of the “all gas, no brakes” investment tendencies. Embrace the mantra of asset protection before asset growth. Your future self will thank you!

Trade well; trade with discipline!

Gatis Roze, MBA, CMT

StockMarketMastery.com

  • Author, “Tensile Trading: The 10 Essential Stages of Stock Market Mastery” (Wiley, 2016)
  • Developer of the “Stock Market Mastery” ChartPack for StockCharts members
  • Presenter of the best-selling “Tensile Trading” DVD seminar
  • Presenter of the “How to Master Your Asset Allocation Profile DVD” seminar

previous post
What Fed chief Powell said about crypto that may have aided bitcoin’s rally to $100,000
next post
Two ETFs That Could Thrive Based on a Normal Yield Curve

Related Posts

Stock Market Sell Off: Is the Bull Market...

December 20, 2024

How to Spot a Golden Mining Opportunity Using...

September 7, 2024

Stocks in Focus: 3 Stocks to Watch

March 22, 2025

S&P 500 Earnings 2024 Q3: Still Overvalued

January 13, 2025

Mag7 ETF Leads as Bullish Pattern Forms –...

January 25, 2025

Bullish AND Bearish Options Trade Ideas

January 14, 2025

Bearish Signals & Risk Management: Protect Your Portfolio!

February 28, 2025

Top 5 Breadth Indicators You Can’t Afford to...

October 29, 2024

5 Strong Stocks Defying the Bearish Market!

March 12, 2025

Week Ahead: NIFTY May See Mild Rebounds; Painful...

November 16, 2024

    Become a VIP member by signing up for our newsletter. Enjoy exclusive content, early access to sales, and special offers just for you! As a VIP, you'll receive personalized updates, loyalty rewards, and invitations to private events. Elevate your experience and join our exclusive community today!


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Stock Market News UK Update: FTSE 100 & 250 Rise
    • Stock Market News UK Update: FTSE 100 & 250 Rise
    • DP Trading Room: Key Support Levels for the SPY
    • Stock Market News UK Update: FTSE 100 & 250 Rise
    • Stock Market News UK Update: FTSE 100 & 250 Rise

    Popular Posts

    • 1

      Polls show some good early signs for Kamala Harris

      July 26, 2024
    • 2

      Solana and Cardano: Solana is waiting for a new impulse

      July 18, 2024
    • 3

      The presidential race shifts — modestly, so far — toward Harris

      August 6, 2024
    • 4

      Donald Trump’s imaginary and frightening world

      September 23, 2024
    • 5

      DP Trading Room: PMO Sort on Earnings Darlings

      July 18, 2024

    Categories

    • Business (663)
    • Economy (965)
    • Politics (873)
    • Stocks (749)

    Disclaimer: therevenuerises.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 The Revenue Rises. All Rights Reserved.