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    The Effective Investor: 20 Secrets for Ordinary People to Build Extraordinary Wealth
    The Effective Investor: 20 Secrets for Ordinary People to Build Extraordinary Wealth
    The Effective Investor: 20 Secrets for Ordinary People to Build Extraordinary Wealth
    Ebook219 pages2 hours

    The Effective Investor: 20 Secrets for Ordinary People to Build Extraordinary Wealth

    By Mark K. Lund

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    About this ebook

    For most people, investing can seem complicated and overwhelming when trying to uncover facts. For example, do you ever worry about…
    Having enough money when you retire?
    Picking the right stocks?
    Whether you should be in or out of the stock market?
    The performance of your portfolio?
    Not having the right fund manager?
    Choosing the right advisor to work with?
    Paying too much for your investments?
    Hidden fees in your investments?
    The next market crash?
    It’s easy to get opinions on questions of this type. It’s hard to get facts. In The Effective Investor, Mark Lund answers questions of this kind. The answers are based on results that can be measured.
    LanguageEnglish
    PublisherBookBaby
    Release dateNov 15, 2014
    ISBN9780983111016
    The Effective Investor: 20 Secrets for Ordinary People to Build Extraordinary Wealth
    Author

    Mark K. Lund

    Mark K. Lund founded Stonecreek Wealth Advisors, a fiduciary, fee-only, Registered Investment Advisory firm. Mark started in this business back in 1999 and published his first book in 2010 called, The Effective Investor. He has written articles for or been quoted in: The Wall Street Journal, The Salt Lake Tribune, The Enterprise Newspaper, The Utah Business Connect Magazine, US News & World Report, and Newsmax.com, just to name a few. You may also have seen him on KUTV Channel 2 or as a guest speaker at a local association or business. His philosophy is that his client's vision comes first and it's the only vision that matters. Your vision is his number one priority. He grew up in Utah and currently lives in Alpine with his wife and two kids.

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      Book preview

      The Effective Investor - Mark K. Lund

      come.

      PREFACE

      A Bellman in Las Vegas

      My Twenty Secrets for ordinary people to build extraordinary wealth

      The future depends on what we do in the present.

      —Mahatma Gandhi

      I often get asked how I got into this business (investment management). I can trace it to one specific event. When I was in my early 20s I wanted to go into hotel management. Since the best school for that field was UNLV, I moved to Las Vegas and got a great job at the Monte Carlo Hotel as a bellman to pay for college. I got to meet many interesting people from all over the world, including celebrities. It was fun to visit with the guests that were checking in and hear their optimism about coming to Vegas. Many had some strategy they had heard about or a book they were reading to help them win big. However, it was a different story for those checking out of the hotel. I never heard about great winnings.

      While living there, I realized I did not want to go into hotel management. I was saving money and did not know what to do with it—that was always on my mind. I did not just want to keep putting my savings into the bank—I knew there had to be a better way to save. That is why one day a particular TV commercial jumped out at me. It was about how to make your child a millionaire. I called the TV station, found out who did the commercial, got their number and met with the people who had produced it. While talking with them I realized that they were doing what I wanted to do. With the encouragement of a good friend I made there (named Ed Denyko), I decided to give up the hotel business. To make the story short, I moved back to Utah where my family was, married my sweetheart and shortly after entered the investment management business in 1999.

      From the very beginning I was introduced to many money managers, investment strategists, investment firms and so forth who all said they had it figured out—that their strategy to invest would beat the market. Many of them really made a lot of sense and I was pulled into the romance of thinking we can predict the future and beat the market. When this did not happen, I was always told something to the effect, We were not able to foresee this terrorist attack or this credit crisis or this housing collapse. If these things had not happened the way they did, we would have been just fine.

      Well, hello! Isn’t being unknown the very nature of the future? In essence, what these so-called money managers, economists, and investment managers were telling me is that We could not see into the future after all, and sorry, but we have lost your client’s money. I then had to go meet with my clients and try and explain why the investment strategy we were following ended up not working. Let me tell you: that was not very fun. One of my favorite quotes says, wise people learn from experience, and super wise people learn from other people’s experiences. (The author is unknown.) This book will help you learn from other people’s experience.

      No matter how good an investment strategy may sound or how good the numbers may be or how good the past performance and track record has been, no one can predict the future. And if all your eggs are in that basket when it’s their turn to be wrong, you will lose your money. Despite this fact, we were constantly encouraged to continue pushing these strategies. You see it in the magazines all the time. These magazines always give the illusion that if you follow their advice, you will make money. It was never about how to give our clients peace of mind or how to build our clients a well-diversified portfolio. I am giving you my perspective as someone who is in the business. This system just doesn’t work. This system is making the mutual fund companies, magazines, brokerage firms, and insurance companies a lot of money, but it isn’t making and delivering what we always talk to clients about providing. No one wants to talk about it, but it’s happening all the time.

      I felt like we were just being used and I saw us as victims along with our clients. I knew there had to be a better way. I needed answers. My clients needed answers, and you need answers to a very important question: How can we be effective at investing without using speculative methods?

      The answer came from a few experiences. I was fortunate enough to go to a conference and listen to two presentations on different theories and philosophies on how to invest. One theory was based on what we call active management and the other was what I call Structured Market Portfolios that are more passive in nature. In the former, one tries to beat market returns by trying to pick stocks based on a belief they will do better than their bench mark. In the latter, one tries to capture market returns by owning as many stocks of one asset category as possible.

      As I was listening, it became evident that if these active managers make enough predictions, some are bound to come true. In the meantime they would be getting it wrong. Their ability to pick stocks in the past had nothing to do with their ability to pick stocks in the future. And you would never know until after the fact if they were right.

      As you can see, I was at a point in my life where I could not keep doing what I was doing in good conscience. So, I made the necessary changes to be in a position to best help my clients.

      I wrote this book as a way to share the answers I have been able to find. The answers are what I now refer to as my Twenty Secrets for ordinary people to build extraordinary wealth. These secrets will eliminate the need for speculation when investing.

      You can learn these secrets I will be sharing with you on your own, but be forewarned, however, the stock market sends out really expensive tuition bills.

      INTRODUCTION

      The Effective Investor

      The question every investor must answer

      The person who makes a success of living is one who sees his goal steadily and aims for it unswervingly.

      —Cecil B. DeMille

      I am going to share with you a strategy that will help you to eliminate the need for speculation when investing, lower expenses, reduce risk and capture market returns. My clients who are the most effective with this are those who can answer a very important question. The question every investor must answer is, Have you discovered your true purpose for money, that which is more important than money itself? Those who can answer this question with conviction and passion are those most likely to reach their financial goals.

      Once you can define your true purpose for money, the Twenty Secrets in this book will be more meaningful to you. When you have a true purpose you will have a strong desire to learn and understand how to build extraordinary wealth.

      Steven Covey once said, In order to reach your wealth ambitions you must first start with the end in mind. That is, if your true purpose for money is love, charity, freedom, or security you must define what that means for you. For example, security might mean to have one year’s worth of expenses saved to pay your bills and maintain your family’s lifestyle in the event that you lose your job. If your definition of security is to be able to retire or have the choice to retire, then you must first define what retirement means. In other words, you must determine how much money in today’s dollars you would need each year and for how many years you would need it. Or perhaps you have a special needs child or grandchild and you want to make sure the needs of this child are provided for when you die. You may want to be able to give money to charity, pay for college for your kids or go on a special vacation. Whatever your purpose for investing or saving, money must have a true purpose or definite goal. The more definitive you are, the more likely you are to reach those goals.

      Any decent goal-setting book will tell you to write down your goals. In his book Think and Grow Rich, Napoleon Hill stresses the importance of being specific and using deadlines in goal-setting. For example, instead of I want to be rich someday, you might say, I want to have three million dollars by the time I’m 65.

      Another way of saying start with the end in mind is simply work backwards. If you are 45 and you want $3 million by the time you’re 65, then figure out how much you must save each month between now and when you turn 65, assuming various rates of return.

      As you will find, I like to use analogies to illustrate different points. I will use one now to illustrate the importance of implementing all of the strategies in this book. When I was a kid I remember going to the mall with my friend Patrick. One of our favorite mall activities was to try and run up the escalators. Maybe you did the same thing when you were a kid. As you can imagine, if the escalator was moving down quickly it took a great deal of effort to reach the top. If the escalator was going slowly we could run up to the top with much less effort. Think of the escalator as your journey to reaching your desired financial goals.³ The strategies discussed in this book will slow down your escalator, making it easier to reach your goals.

      Obviously, you must first get on the escalator in order to get to the top. Setting goals will put you on the escalator. Goals reflect the desires of our hearts and our vision of what we can accomplish. If you have defined a true purpose for money, your desires to reach those goals will naturally be stronger. So, first you must believe that you can reach your goals. Second, you must have the desire. Desire and belief are the key ingredients in reaching your goals. Third, determine the exact amount of money you desire. You can’t get what you want if you don’t know what you want. This also involves writing down or formalizing your goals; although not a difficult task, it’s an easy one to put off. Fourth, set a date by which you want to reach your goal. Fifth, put your plan together and begin at once.

      The planning we do and the steps we take to reach our goals are acts of faith. If we did not have faith that we could reach our goals we would not do anything about them. On the other hand, the more we believe we can reach our goals, the more we will do to reach our goals. Secret Number One in building extraordinary wealth is, DEFINE YOUR TRUE PURPOSE FOR MONEY.

      Once you have defined your true purpose for money, you are then ready for the rest of my Twenty Secrets—and I can’t wait to share them with you!

      Brevity is usually an admirable trait, but not at the expense of important information. And what we have here is very important information. In fact, it takes a whole book to share with you the rest of my Twenty Secrets—secrets that I believe will give an ordinary person the power to build extraordinary wealth, or in other words, turning that ordinary person into what I like to call, The Effective Investor.

      So, let the fun begin! Go get a soda or your favorite drink and take some relaxing time to read this book. The time spent won’t be wasted!

      CHAPTER ONE

      This Time it’s Different

      The investors greatest enemy

      The ultimate measure of a man is not where he stands in moments of comfort, but where he stands at times of conflict and controversy.

      —Dr. Martin Luther King

      For most people, investing can seem complicated and overwhelming when trying to uncover facts.

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