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What Can You Learn From the Rearview Mirror of 2016?

We’re coming to the end of another wild year. In January, the markets recorded the worst start to any year in history . . . and now we’re floating towards DOW 20,000. Just a crazy roller coaster ride! Regardless of how the year goes, whether the markets are up substantially or down, an important exercise that every money manager should go through is a self-evaluation. This includes asking yourself the questions, what did I do well? What mistakes did I make? What would I do different? Were my mistakes emotional or something else? Jason Zweig of the Wall Street Journal said the following regarding self-evaluation. Evaluating yourself honestly is at least as important as evaluating your investments accurately. If you don’t force yourself to learn your limits as an investor, then it doesn’t matter how much you learn about the markets: Your emotions will be your undoing. This whole idea
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Categories: Personal Finance and Strategy.

Myth Busting: Stop Losses are a great tool for investors

One of the best phrases in the market today is a “stop loss.” Think about that . . . who wouldn’t want to stop losing? No one! However, I will tell you from experience, the only thing a stop loss does is stops you from making money! In fact, I’ve talked with several people in the last week that have experienced the very things I discuss in this email. It’s got me so fired up, it deserves to be this week’s content. Let’s start with the basics . . . For those unaware, a stop loss is an order that you can enter with a brokerage saying that you would like to sell a stock (or option) at a certain price. For example, let’s say that you just bought XYZ stock. You’re really excited about the investment BUT you definitely don’t want to lose money after you buy it (who
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Categories: Personal Finance and Strategy.

Presidential Election Results: A Quick Guide for Investors

This week has seen one of the most surprising US Presidential election results in history. What a ride it was! For me, this has meant mass texts, calls, emails and more from clients and associates wanting to grasp what it means for their portfolios and how to react. Today’s video is meant as a guide to how we believe the disciplined investor will act in light of a President-Elect Trump. Enjoy. What We’re Reading Jamie Dimon just sent this memo to his staff about Donald Trump’s victory: One of our favorite CEOs, Jamie Dimon of JP Morgan, sent out a letter to his employees after the election results. The whole idea of working hard, listening to our clients, and realizing the kind of country that we live in, that is stuff that we completely agree with. Good work Mr. Dimon! Master’s in Business Podcast interview with Bill Miller: This podcast
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Categories: Markets and Strategy.

Simplicty In Investing, The Foundation of the Iron Gate Philosophy

I am often asked how we have managed to have the performance in our All-Cap Value portfolio that we have had over the last 15 years. People want a “secret sauce” or a “hack” of some sort that gives us some kind of unseen power. Really, our process has been very transparent and easy to understand. I wanted to share with you a video from my partner Brian Hunsaker that walks you through exactly what we do. You’ll see that it’s not complicated or magical at all. Sticking to this process with discipline and not straying from it has been the key to our success. Enjoy the video. What We’re Reading Brett Pattison on CNBC – yes this is a bit of a fun one. Remember last week’s topic regarding advisor fees? Well an article I recently wrote was featured on CNBC just this week. It covers much of what
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Categories: Markets and Strategy.

What is the Value of a Dollar?

Those that don’t study history are doomed to repeat the same mistakes made in the past. How many times have you heard this phrase or something similar? This is why we study history at Iron Gate Global. If we look at the past it can give us an idea of what may happen in the future. Take income investing for example. Academia has this notion that the older you get the more income type investments you should own. For example, when you’re 60 years old you should have approximately 60% of your portfolio in bonds. We couldn’t disagree more with academia. The amount you should have in classic income type investments (bonds and dividend stocks) depends on your goals and the need to grow your money. Here’s what history has shown regarding the value of $1.00 over time using different asset allocations. As you review the returns, ask yourself the
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Categories: Income Genius and Strategy.

Income Genius July – Using Stocks You Love to Generate Income

In this month’s Income Genius we are looking at a specific method we utilize to generate income from stocks that you love. We walk you through the thinking behind this method and how it actually dovetails nicely with a long-term outlook for value investing because it is based on stocks that you would be happy to have in your portfolio. It is something that we believe brings unique value to your portfolio and can truly change how you approach income. We also discuss finding stocks at a reasonable value in an environment where many stocks that are income generators are at or potentially even above target value. And the kicker is almost no investors and 95% of financial advisors DO NOT use this strategy despite its benefits. Options are not suitable for everyone as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses.
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Categories: Contrarian View and Strategy.

Malcolm Gladwell, Popularity, and Investing

**The following is taken from our client quarterly newsletter. Certain sections have been removed that contain client only information.    One early morning while I was out running I was listening to an iTunes podcast by Malcolm Gladwell. It was published on June 29 and is called “The Big Man Can’t Shoot.”   Almost the entire time found myself saying, “Our clients need to hear this!” So with that in mind our quarterly commentary will have a Malcom Gladwell twist. In the podcast Mr. Gladwell details Wilt Chamberlain and his famous record setting 100 point game in 1962. In that game he shot 32 free throws sinking 28 of them (this is still a NBA record). What few people remember about those free throws was that fact that he shot them “granny style.” In other words, his arms would hang down by his knees and he would flick the ball
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Categories: Markets and Strategy.

With The Fed Rate So Low, Where Do You Go For Income?

The Fed (FOMC) just announced that they would NOT raise interest rates (the Fed Funds rate to be exact). This low interest rate policy continues to punish savers and investors. While I would love to give you my opinion of the Fed policy, I will spare you and keep my mouth shut. In fact, the question shouldn’t be “is the Fed doing the right thing?”, it should be, “that’s the situation we are dealt, what do we do about it?” In fact, we’re not alone in asking that question. Many people have bene inquiring with us about our firm’s ability to create retirement income. Our discussions over the past month coincide what we’re seeing with Google as well. Over the last week as we have seen global bond prices fall to historic lows, and negative in many countries, people are searching the terms “dividend income” and “interest rate income” more
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Categories: Strategy.

Income Investing: Don’t Get Burned!

After eight years the one constant in this market has been that interest rates are still sitting near zero and investors are still starving for income. For decades academic models for investing (which we despise) teach people that as you grow older you must shift more money into interest bearing investments like bonds (including bond funds) and dividend producing stocks (or stock funds). Most advisors that manage money subscribe to the same theories which only adds fuel to the fire. So what is the fire? The fire is the valuations that people are currently buying assets. By valuation we are referring to the price that something is actually worth versus the current market price. Something under-valued means that it is cheaper than the actual value that it’s trading for on the market. Something over-valued means that it is more expensive than what its actually worth. Howard Marks, one of our
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Categories: Strategy.

What we like our CEOs to say

We have read thousands of annual reports of the years. Some good, some bad, some terrific. One of the businesses that we own (which, for compliance reasons, will remain nameless) published an annual letter that contained a few phrases that we love to see. The phrases are below and are all tied around the importance taking care of the business owner (the shareholder). Financial Objective: To maximize intrinsic value per share, defined as (a) the unlevered free cash flow per share that, in our best judgment, will occur between now and the long-term future, appropriately discounted to reflect our cost of capital, minus (b) net debt per share. We manage our business for long-term results, and our quarterly financial results, especially our GAAP results, will often fluctuate, which may lead to volatility in our share price. (As a result) our revenues and operating results often vary significantly from quarter to quarter
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Categories: Strategy.
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