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During each correction, I give hope or courage to investors to refrain from the damaging inertia that results from attempting to determine: how low may we go; how long will this last? Investors who add to their portfolios for the duration of downturns without variation experience higher Market Values for the duration of the next advance. For just as surely as there is a Santa Claus for each five year old, there is another “value stock” rally for each fingernail biting fifty-five year old. Value Stocks have entered the sixth month of a wide downturn, and almost 50% of all Investment Grade companies are now down more than 15% from their highs. Seventy percent of those are down more than 20%. Working Capital Model users will have to be running out of cash in regards to now, while they add more issues to their portfolios, and more shares to existent holdings. Investors recognise that good companies seldom close their doors, or even cut their dividends.

Corrections are as much a portion of the normal Market Cycle as rallies, and they may be brought regarding by either bad news or good news. (Yes, that’s what I meant to say.) Investors always over-analyze when prices become weak and lose their mutual sense when prices are high, thence perpetuating the “buy high, trade low” Wall Street lunacy. Waiting for the perfective moment to jump into a falling market is as ludicrous a system as taking losses on investment grade companies and keeping cash. Corrections in both Equity and Income securities create the same kind of hysteria as a spring sale at Macy’s… but in reverse. The rudimentary quality of value securities does not change plainly because their prices fall in response to market conditions. When all value stocks are moving lower, it’s an opportunity, not a problem. When all [insert: bank, insurance, agriculture, oil, entertainment, travel, transportation, advertising] are lower, it’s an opportunity, not a problem.

During each correction, I’m astonished at the shocked reaction of the Media, the confused explanations emanating from the Market Gurus, and the fabulously poor counsel streaming forth from the Oracles of Wall Street… each last one of them. It’s no wonder that the intermediate capitalist is in a state of panic! If they could buy a new car, a new business suit, or a new house for half price, they would be ecstatic! Why does a lower price for a part of a high quality stock make them go bonkers? The Conventional Wisdom from Wall Street makes it so; the Conventional Wisdom from CPA land reinforces it; the Conventional Wisdom from financial advisors preys upon it. Experienced Investor Wisdom is boldly different. For example: (1) Corrections are always buying opportunities, the broader the correction, the better. Wall Street thrives on the fear and suffering. (2) Rallies are always selling opportunities. Wall Street would rather stroke your greed button with visions of upward only prices. Your accountant doesn’t want you to take profits, and has you convinced that losses are genuinely better than gains. (3) Higher Interest rates are good for investors… so are lower interest rates. Wall Street doesn’t actually care. They push short-term vehicles to address investors’ fear of price fluctuation, and shun simplex income devising schemes while they advertize complex derivatives that always unwind badly. (4) The calendar year is of no peculiar investment relevance. (5) Investment performance analysis must be an goal to be attained based program monitor rather of 365-day horse race with beside the point Market indicators. Wall Street used to agree with (4) and (5). Since then they have learned that they make more cash from unhappy investors.

Repetition is good for your CPU, so pardon me for reinforcing what I’ve said in the face of each correction since 1979… if you don’t love corrections, you genuinely don’t perceive the financial markets. Don’t be insulted, very few financial pros want you to see it this way and, in fact, Institutional Wall Street loves it when person investors panic in the face of uncertainty. But uncertainty is the regulation playing field for investors, and hindsight isn’t welcome in the stadium. Rarely do corrections kill good companies, no matter how bad the news, how huge the scandal, or how troubled the economic outlook. If you’ve been laying out capital in quality companies and have a secure cash flow within your portfolios, you will weather any storm. Loss taking is never smart, savvy, or necessary… even if it cuts the tax bill. Buy more of lower priced good companies while sustaining smart diversification according to the Working Capital Model. Add to lower priced income securities to reduce the cost per share. Make your retirement plan contributions yesterday!

There is an Investment Mindset Solution for the difficulties that most people have dealing with corrections, recessions, inflation and the Red Sox. Bad news brings about opportunities; so does good news. I’ve never understood why yard-sale prices in the stock market are so scary. And recession? Most people don’t realize that a recession is just two successive quarters of lower GDP. Not a big deal until it happens, and then, genuinely good things get done to fix it! In recent years, Wall Street and the media have turned the routine of laying out capital into a competitory event. What was once a long-term, goal-directed action has become a series of on a monthly basis and quarterly sprints. The direction of the market isn’t closely as primary as the activenesses we take in anticipation of the next alter in direction. Performance evaluation needs to be “rethunk” in terms of cycles!

The problems, and the solutions, boil down to focus, understanding, and retraining. You need to focus on the intents of the securities in the portfolio. You need to grasp and receive the normal conduct of your securities in the face of dissimilar environmental conditions. You need to get over your obsession with calendar amount of time Market Value analysis, and hug a more manageable asset percentage approach that centers on your portfolio’s Working Capital. You need to stop looking at your account on line so often and go to the movies. You need to elect new persons who know how to connect the economic dots and who will restructure the tax code to eliminate all taxation of investment earnings. Corrections fuel rallies, it’s just a matter of time. But for now, relax and take pleasure in this correction. It’s your invitation to the fun and games of the next rally, when you will see that correction is spelled o-p-p-o-r-t-u-n-i-t-y after all.

Note: The 2nd Edition of “Brainwashing” is here!

Brainwashing American Investor Book Street

The Brainwashing of the American Investor is a hands-on, practical investing manual that challenges the prevailing wisdom to put your trust blindly in Wall Street. Author Steven Selegut explains how The Street s investment trend of-the-moment may in truth be more for the investment house s gain than your own. There is no one-size-fits-all winning formula to make cash on Wall Street. Selengut has expended more than thirty years in the investment world constructing his tried-and-true working capital model that you may alter for your own financial circumstances. Selengut tells you why you need to think outside the Wall Street box to give rise to your personal asset portion plan. Contrary to ordinary belief, laying out capital is not a competitory event; it is an person and goal-directed activity. Mutual funds the most mutual investment vehicle for most Americans are not the best way to grow your nest egg over the long term. Selengut s unconventional but common-sense schemes will aid you make the most of your investment dollar. The working capital model outlines a sensible, realistic, and safe scheme for long-term, profitable investing. Master conceptions such as: How to create the asset part plan that is right for you. How to distinguish quality investments. Why income is the only real hedge versus inflation. Why mutual funds are not the best way to diversify your investments. Why corrections are each bit as lovable as rallies. How to diversify properly. How to establish the all-important profit-taking trade target and when to take profits. Why commissions and taxes are secondary investment considerations at best. How to monitor investment performance without thinking when it comes to market numbers or anything else that is outside of your personal goals and objectives. Why the market value of your equity holdings and that of your income investments are wholly unrelated. Why the income generated by your summations is more important than their current market value.

ReviewHe sees Wall Street as the investment minefield and his book is to aid you keep away from being a victim. — New Life Magazine, C. A. Jung (Sept-Oct 2002)

His energetic pieces on Wall Street, trading, “the Market”, engaged my interest and intellect — Magical Blend Magazine, Jenn House (Nov 2002 Issue)

Selengut is a seasoned cash manager with over twenty-five years of experience and a shrewd understanding of investment realities — Norm Goldman,

a work that deserves a wide audience. It challenges much of the established “wisdom” on investing. — Allen I. Kraut, Ph.D., Professor of Management, Zicklin School of Business

one of the best this reader has attempted…a pleasant learning experience…both informative and understandable — Author/Writer, Denise M. Clark

About the AuthorSteven R. Selengut, MBA, RIA, has been in the financial services industry for more than forty years. He started laying out capital while applied in a life insurer’s pension investment department. At age 25, he gained obligation for a modest trust portfolio and begun his retail career using the working capital model outlined in this book. Selengut’s twelve-year adventure in financial services developed an appreciation for the Wall Street environs that helped him fine tune his distinctive investment strategy. The program’s success propelled him into early retirement at age 33 and a new career as a private investment portfolio manager. He devised a distinctive cost-based approach, with on an individual basis managed investment portfolios, low annual fees, and commissions to an uninterested third party. He has built a loyal following of devoted clients, some of whom have been with him since the beginning. More data when it comes to his investment management business may be found by calling (800) 245-0494. Selengut, a native New Jerseyan, lives near Charleston, South Carolina, with his wife and best friend of fifty years, Sandra. They have two grown children and two growing grandchildren.

Brainwashing American Investor Book Street Image

Brainwashing American Investor Book Street Picture

Brainwashing American Investor Book Street Picture

Brainwashing American Investor Book Street Picture

Most helpful client reviews

21 of 24 humans found the following review helpful.
Unique Advice That Stands Out From The Crowd
By Carl M. Rakes
I’ve expended well over $… on my investment library. So galore of the books blend together with little worth remembering let alone implementing, but this is one of two that stands out. Besides being written in an agreeably diverting and irreverant style (if you’re an accountant, attorney, or Wall Streeter, look out!), it has immensely practical advice.

Steve is one of 2 writers I’ve read that focuses on making cash on the market’s inherent volatility vs. attempting to guess what’s next. Unlike Technicians who play volatility AND undertake to guess what’s next, Steve just assumes that it (volatility) will be there, like the waves on the ocean (interesting that he has a beach house!). Using safe stocks, he buys lower and sells higher, no greed, just take what the market is going to give you. Saves a lot of time and appears to work.

It would be nice to see galore historical results documented in the book, but his internetsite does provide a good deal of numbers to evaluate.

The other author… Robert Lichello, lately deceased. Zany book, but accurate. Steve adds the missing ingredient – safety.

10 of 11 humans found the following review helpful.
Right on the Money!
By D.M.
I heard a short segment on Stu Epperson’s radio show as he discussed investments with Steven Selengut. I heard sufficient to prompt me to search for his book on the internet. As a securities rep. myself, Steve appears to be “right on the money”. I didn’t want to put the book down until I was through. Steve’s merchandising scheme is freshening info that will have to make a lot of people a lot of cash with less risk. I have even contacted him with a couple of questions and was pleased with his prompt and courteous response. Thank you Steve for sharing your success with everyone. In your next book, please do not forget that all “advisors” are not “sharks”, a great deal of of us do put our clients first.

11 of 13 persons found the following review helpful.
The Best Investment Book I Have Ever Read
By David J. Fleming
As I write this (11-27-2007), the markets are getting ready to open after closing down the former day. The Dow Jones industrial intermediate has fallen closely 240 points and the headline in the local paper is screaming “Wall Street suffers another huge hit.” Serious-faced announcers on cable-TV are saying the Dow is down 10.03 percent from it is mid-October closing high, officially putting the blue chip index past the 10 percent threshold that signifies a correction.

For Steven R. Selengut, author of The Brainwashing of the American Investor, corrections such as this are as welcome as rallies. The market, he points out, is just doing what the market has always done.

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