The secret to Warren Buffett and Jim Rogers' success

Came across this post at the Daily Crux, and it's some of the best investing advice I've ever came across. Warren Buffett also did this, and it's a big reason for his investing success.

Charlie Munger - Buffett's long-time partner at Berkshire Hathaway - once told a crowd, "Warren was so successful because he sits on his ass and reads." Enough said. Good enough for them, so it's good enough for me.

The 401(k) Hoax, and How You Can Avoid It

Came across a good website and 11-minute video from Garrett Gunderson - author of the book, Killing Sacred Cows.

I recommend it because I'm not a fan of traditional financial planning, mutual funds and 401(k) plans. And I want more Americans to become financially literate, and not keep buying into financial myths that just aren't true.

The reasons why I don't like 401(k) plans are:

1) They offer limited choices for investors - usually several mutual funds, which only increase in value when the stocks these funds are invested in increase in value. If the market crashes (like it did last fall), your portfolio is in trouble. 401(k) and IRA plans came about in the early 1980s; and that's when the bull market in stocks started. These plans made it easy for workers to put money away, and they were sold to Americans as a supposedly safe way to invest in the stock market.

2) Even with employer matches to 401(k)contributions, and assuming employees consistently contribute to their accounts for 35-45 years, there's still a good chance that they'll outlive their money. If someone developed an asset or a business over several years, they could have a source of passive, residual income for retirement, and not have to worry about the stock market going up.

3) Baby Boomers are starting to retire, and pull money out of the stock market. Boomers' buying of stocks and funds were the primary reason for the stock bull market of 1982-2000. When tens of millions of Boomers start selling stocks and funds instead of buying them, the chances of the US stock market going up again are pretty slim.

But the biggest reason why I don't like 401(k) plans is this:

4) People aren't taught how to become skilled investors. I blame Wall Street and the government for this, because I believe they want ignorant, under-educated people blindly buying stock-based financial products.

How can people avoid the 401(k) trap? Get educated. You DO have choices when it comes to investing. You do NOT have to invest in stocks and mutual funds. Look at precious metals, tax lien certificates, or having a professional trade an account for you on a performance-only basis. In other words, he only makes a profit when he makes you money.

If you just have to invest in the stock market, for goodness sakes, get educated. Listen to Phil Grande at www.PhilsGang.com, or Tom O'Brien at www.TFNN.com. They have weekday live radio shows that are saved as podcasts, so you can listen to them at your convenience.

Listen to wise investing advice from Peter Schiff, Jim Rogers and Dr. Marc Faber; check out the weekly webcasts at www.financialsense.com, www.HoweStreet.com, www.GlobalEconomicAnalysis.Blogspot.com, and www.KEReport.com.

CNBC is a good Wall Street marketing show, disguised as investing advice. Don't depend on it for your only source of investing information. That's all for now, get started on your financial education TODAY.

Why Conventional Wisdom Is Hazardous To Your Wealth

I strongly urge you to read the chapters in Robert Kiyosaki's new book: Conspiracy of the Rich. It tells you why:

- Your house really isn't an asset
- Investing in a 401(k) could be the worst way to save for your retirement
- Why it's absolutely critical to invest at least part of your portfolio in gold and silver.

Go to: www.ConspiracyoftheRich.com. If you read it, fully understand it, and take the actions that Robert recommends... it's one of the best financial reads of 2009.

What you're being told in the mainstream and financial media is nothing more than Wall Street cheerleading. Yeah, the stock market has gone up about 2,000 points in the past few months. However, the Dow's still down at least 35% from it's peak of October 2007.

And it's still due for another downward correction. If you have any stocks or mutual funds that you hope will go up even further... don't keep "hoping and holding."

Get 'em sold - pronto. And put some of the proceeds into gold and silver.

Bush's - and now Obama's - insane federal spending has bankrupted our country, and a sharp decline (if not outright collapse) in the US Dollar is coming. And probably sooner than you think.

For you and your family's financial future, go to www.ConspiracyoftheRich.com.

Do it TODAY.

Why ETFs Beat Mutual Funds By A Mile

Larry Rowland of Money and Markets says it best, and I've always suspected this was the case. Mutual funds have plenty of fees, and they only work when the stocks they're invested in go up.

In my opinion, mutual funds aren't safe, and they're the investing version of the horse-and-buggy - soon to be extinct in the financial world.

Will Obama Bring Real Economic "Change?"

That's the question I hear being bantered about on talk radio and in everyday life. The answer is yes... no... and maybe. I'll explain my cryptic answer in the rest of this post.

Yes, you will see "change" because Team Obama has a somewhat different ideology than Team Bush. And the incoming President is a lot more articulate, and intellectually curious than the outgoing one (although I will give him credit for commuting the sentences of the two Border Patrol agents, Copean and Ramos). However, Team Obama seems to have more faith in the power of government, versus the power of free markets.

(Note: Our current economic and financial challenges are BECAUSE of government intervening in the mortgage, money and stock markets. I'll explain why in a few paragraphs).

The answer to this question is also NO, because the Bush Administration had its hand firmly in allowing financial and economic stupidity to occur. The Federal Reserve lowered interest rates to rock-bottom levels, causing the biggest misallocation of capital to occur in the history of the world.

The government turned a blind eye towards severely relaxed lending standards (and in fact encouraged sub-prime and other lending to folks who couldn't afford the homes they were buying), and the SEC allowed Wall Street investment banks to become overly leveraged to the tune of 40-to-1 (obligations to actual capital ratio). It wasn't a matter of IF this house of financial cards would come tumbling down, but WHEN.

Team Obama seems intent on expanding government even more than the Bush Administration did - and that's saying quite a bit, because the past 8 years have seen the biggest explosion of federal spending and debt in American history. The new Adminstration has a utopian, Keynsian economic view that government should determine where capital and spending should occur.

Bush was never a free-market capitalist of limited-government conservative, just another chip off the ol' Rockefeller Republican, country-club block - and not a very bright one at that. If anything, Obama seems intent on accelerating the intrusion of government into the average American's life (i.e., higher taxes, federal spending, and "voluntary service" in the private and military sectors) and taking us more towards being a socialist nation, instead of the one we've known that's grown and flourished based on free-market capitalism.

I'm not saying the US has been perfect throughout its history, not by a long-shot. But I'll gladly take my chances having more opportunities in a free-market system and nation, than under the false security of socialist rule where my options are limited.

And MAYBE we'll have change for the better in America, meaning a country where government spending and regulation are limited; and fewer bureaucracies are around to regulate what foods and drugs we take, how and where we educate our children, and how much of our paycheck we can take home.

Although it may take awhile, maybe several years and maybe in another presidential Administration... until enough people realize that government has been the cause of our economic and financial problems, and not the solution. That's my dream and hope for 2009 and beyond.

Mutual Fund Investors Need Another Investing Strategy

This Business Week article sums up why.

Of the 11,585 stock mutual funds that Morningstar tracked this year, all but one lost money - and the sole exception just broke even. I've listened to a great stock trader and radio host named Phil Grande the past couple of months, and he makes more sense than almost anything you hear from the mainstream financial media.

Phil says that almost all mutual funds are going nowhere for the next few years, because fund managers can only invest long in these funds. And the general stock market will struggle in the short-to-medium term future because the earnings aren't there to justify higher stock prices.

The current stock market is a trader's market - not a "buy and hold" market, like most stock brokers and financial planners advise you to invest. Most of the time, their compensation is based upon how much money you have invested in the stock market with a financial professional - NOT on how well your portfolio performs.

And a lot of folks in the industry are still looking for the "best-performing mutual fund" to recommend. That's like recommending the "fastest horse-and-buggy" in 2008. Employees with 401(k) and IRA accounts need to get educated on commodities and exchange-traded funds (ETFs) that will perform better in this current commodities bull market cycle.

Or - take the time to learn how to trade stocks wisely. And that's what Phil Grande shows you how to do. I know it's difficult to learn a new skill, with the time and effort you have to invest. However, if you learn to trade stocks and options profitably today, it'll more than pay off in the next few years - compared to other investors possibly losing their shirts because they didn't know the financial technicals and fundamentals.

I know this sounds like an advertisement for Phil, and maybe it is. However, his advice is some of the best out there. If you're looking for some "done for you" investment advice, check out what Bill McKinley and Doug Newberry have to offer at The Market Toolbox.

Doug also has a weekly webcast every Sunday evening, and their newest edition of the Research Lab can help you make more profitable stock picks in less time. That's something every investor can use.

Had a great time this past week, attending four Christmas parties. Today it was snowy and cold, and a good day to stay inside, relax and watch football.

Please check out Phil Grande and Doug Newberry's sites, they can definitely help you become a better (and more profitable) investor.

The Big Three Bailout Debacle

I'm no fan of General Motors, Ford or Chrysler, even though my uncle was a GM truck and Pontiac car dealer a few decades ago. I always thought that I'd never buy a foreign car or truck in my lifetime. That was until I realized Detroit wasn't serious about competing in the auto marketplace... at least until they realized they were almost bankrupt, and needed help from Washington to keep their companies going.

Management has had the vision of Stevie Wonder to keep up with foreign car companies, and rising gas prices. They remind me of someone you'd meet at a party who hears a joke, then laughs five minutes after the punch line. The UAW is equally as culpable - they've made unreasonable salary and benefit demands (which management usually capitulated to), and haven't been willing to budge on existing contracts - at least until the threat of bankruptcy and/or going out of business became a distinct possibility.

What's odd about this situation is the debates and delay from Congress, being concerned about $25-34 billion in loans or other assistance, which is a pittance compared to the $850 billion Wall Street bailout that sailed through Congress quickly back in September.

I'm glad to see Congressmen and Senators asking tough questions, and doing their due diligence. Democrats seem to be pushing hard for the bailout, Republicans appear to support the bankruptcy option. I agree with letting these firms fail, and going through bankruptcy proceedings.

If Chrysler had to go through bankruptcy back in Iacocca's day (and feel the consequences of their actions through the pain of restructuring), the Big Three might have paid more attention to their business, and not be in the shape they're in today.

Eventually, these big, dumb, slow companies will have to go out of business, be sold off in pieces, or restructured another way. Their current business model just isn't viable. These companies (or future spin-offs) will need to have non-union labor with reasonable salary and benefits packages, different and more forward-thinking management who can adjust and adapt to current and future trends in the auto business, and most of all: Building good-quality, reasonably-priced cars and trucks that Americans actually want to buy.

Out of our country's economic and financial problems, I hope this will be the catalyst of a new era of more competitive American business.