My advisor has been losing my money for the lost decade.

Ten years ago on a sunny afternoon, I walked in into my advisors office. The rich, plush, leather chairs invited me to sit down. He greeted me with a warm smile and a firm handshake and asked how he could help me as he adjusted his $70 tie. I plopped my checkbook on the table and proceeded to tell him that I wanted my money to grow, that I wanted to “invest in the markets”. He gladly told me that he had some financial investment vehicles that he could show me to make that money grow. Since I was young he told me the best scenario was to go aggressive with my investments.

You have heard of this scenario a thousand times, and may have gone through the same process in your life with your advisor or broker. He started with a spreadsheet about how if I invested by the time I was 30 my account would grow by 50%-60% and that every year after that it would grow exponentially. Told me by the time I was 60 the account value would be in the millions! I am 26 and ten years later that money is now in the red. Let me break this down. If Joe Advisor had not collected an advisor fee every year my account would be positive by 9%. Since he collected his fee every year and paid himself off of my account and others, it chipped away at the performance of that account. My cash not only sat in those investments collecting dust, but also were not properly managed. If sold at the peaks and re-bought at the valleys, my account would be up 60%-150%. I could show you on a chart that as the bad news emerged into the market place that it was obvious the market top had been reached, therefore it was time to sell. With the market bleeding to new lows in March of 2009, and the world seemed to be ending, it was followed by a powerful rally after Bank of America and Citigroup posted profits, the bottom had essentially been reached… Time To Start Buying!

I am not saying that Joe Advisor needed to catch the very tops or bottoms, just close to it, you know like hand grenades, or horseshoes. With that being said I want to tell you how I went to interview to be an advisor with a huge advisory firm and what they told me. I sat in this meeting with a few other candidates and they gave me three criteria to pursue in order to become a “successful advisor”.

1. List as many people as you know that would have money to “invest” (AKA buy, pray, and hope). This included family members. Those poor poor people.
2. Ask these new prospects/clients what their “dream goals” were for their portfolio and their investments. (Sound familiar) In other words financial sales…
3. Create a plan for their portfolio and start investing their money in these financial instruments and start holding their hand as you build the relationship over the years to come. (This is ridiculous! If I want a friend I do not need to manage his money first.)

To carry on… I left that interview and this is the first thing that I thought about. How are my interests aligned with the investors interests. They are not aligned! No matter what happens in the market I still would collect my industry standard 1% management fee off of the assets under management. Let us assume that I had $4,000,000 under management, that would equate to $40,000/yr for my salary. That did not make any sense to me, as long as I was good at sales, then I would succeed! I could not continue thinking that I could pitch a lie and win in life. I needed truth, and a new business model to pitch with conviction.

Here was my newest investment pitch:

1. Account Owner shall immediately establish under his name one (1) Trading/Investment Accounts with TD Ameritrade, with Margin and all Options-Trading features activated, and shall fund the Trading Account with a sum of $1,000,000.00; and

2. Account Owner shall pay to Authorized Trader Or Account Manager weekly Commissions, based upon net profits generated each week within the Trading Account; and said Commissions shall be paid according to the following Commissions Schedule:
20% of the week’s net profits (realized gains only) generated within the Trading Account or Investment Account, if those net profits increase the value of the respective Trading Account(s) by less 1.5%; or
28% of the week’s net profits (realized gains only) generated within the Trading Account or Investment Account, if those net profits increase the value of the respective Trading Account(s) by 1.5% or greater,

3. In the event that the Account Value of the Trading Account or Investment Account shall fall to $950,000, (5% loss) Account Owner may opt to close that particular Trading Account or Investment account, and terminate this Agreement with the Authorized Trader or Manager, managing that particular Trading Account.

In other words if I didn’t make that account grow then I would not be paid!

As I started doing research over the years I started to assemble a strategy that would grow my account at an incredible rate. Yes at first I LOST, this is where I learned my most valuable lessons! My thesis concluded that 65-70 times out of 100 I would be correct in my intelligent speculations. There were two primary things that I learned. Most investors would buy the stock blindly (Ill explain)… because the company was fundamentally strong, a low P/E, no debt, great management, the strongest competitor, and a great stock price compared to tangible book value. I saw this flaw and started to analyze charts or also known as technical analysis. As I started to study charting, I realized a miracle! I could really identify the bottoms and tops of the move in the stock. As I mixed my new “market eyes” with fundamentals, my investments/trades started to take off! In three months I had my $800 baby/test/account which I was just playing with to see if I could grow it, go from $800 grow to $6800 in three months!

BAMM I fired my advisor!

Then I decided to take what I had learned and teach others and here I am today, doing just that. So as I invest then I will learn more and more about the markets. This year will be opening my own advisory and hedge-fund based off these underlying profitable principles. Many of my current subscribers are very happy as I show them my techniques and show them how to find the best stocks to put your money in. The thing is that I am just showing them what I am doing, and if they want to follow in, that is totally up to them. Many of them have anywhere from $1000-$600,000 accounts so these techniques are applicable across all account sizes.

Well anyways, I am off to downtown San Diego to swim with the dolphins at Sea World… Maybe. Have a great Martin Luther King Day!