In two weeks, the 2003 Stock Market Trifecta will be over and little
green monsters will replace the sugarplums dancing in your heads. You know, the
ones that attack as soon as it is evident that YOU lost the annual race against
the numbers, again! While you decorate your home for the holidays (and I wish
all of you the best of the season), Investment Company Managers decorate their
Mutual Fund portfolios with the most popular items of the past twelve months
and make sure that neither parents (bosses), nor children (unit holders) will
be upset by the presence of last year's non-performing toys. Ah, the year-end
numbers we worship. Are they fact or fiction? Probably neither, but what fun!
And the Media madness...how can you stop laughing?

Statisticians calculate percentage changes in well respected but
seriously overcooked averages; Wall Street Gurus brag about their predictive
prowess;
Mutual Fund profiteers boast outstanding performance; securities sales persons
fuel their "buy high" engines. As always, when Institutional Wall Street has
strong numbers to deal out to the media, the Plan, the Strategy, and the
Common Sense slip silently away. The suspendered shepherds push their flock
toward
ever more speculative and high priced products, "greed food" permeates
advertising copy, "hindsightful analysis" rears it's ugly head, and conservative
(value/income) investors feel pangs of strategic "self doubt". Did I hear
someone
say IPO? Is Gold dead...again?

Let's be "investors" this time around and examine "performance" as a
measure of movement toward stated objectives and fulfillment of expectations.
Averages are just not portfolios. Wall Street numbers are illusions, action and
transaction generators. Ignore them if you can. Are you up for comparing values
from Market "Peak to Peak" or "Valley to Valley"? That's the way it was done
in more rational times...before the Mutual Funds and the Media burned the
principles of investing at the stake. Let's look at the realty of performance on
Wall Street. And this time people, try to remember the lessons of the past.

The market averages are up significantly and Mutual Funds are at their
highest levels in nearly four years. "What a great year", the spokesperson says,
"and with a strengthening economy, now is the time to jump into the new bull
market." The underlying rationale is that 20% to 40% increases in averages
beget similar advances until, low and behold, we are back at the levels we
experienced four years ago. Reasonable, right? Sounds like a good deal to me!
The
point of all this history is that it does not include "the rest of the story".
This is the Wall Street sales brochure version.

The investor's reality version reads differently. At current levels, the
DJIA needs an additional 15% spurt to regain the level it abruptly left behind
more than 4 years ago. The S & P 500 needs to tack on 26%. The NASDAQ (after
gaining a spectacular 40%+ this year) needs no less than 3,000 points, or a
rocking 150%, just to get to March '00 levels. In reality, there is not one
Equity Mutual Fund that has had positive performance over the past four years.
You
would never know it from the hype. How quick they want you to forget. But
let's assume that the averages explode for a few more months and actually do
achieve new highs in 2004. During the hoopla and fire works that will inevitably
follow such an achievement, try to keep in mind that you are celebrating a four
year period of zero growth in your nest egg! Don't believe for even an
instant that this is the way it had to be. Pay attention.

In the old fashioned real world of Stocks and Bonds (where the popular
investment products are not allowed and where rational beings focus on Quality,
Diversification and Income within a cost based Asset Allocation model) the
entire past four years have been a rally! In this world, real live investors are
at their highest profit levels ever, portfolio value growth has exceeded 12%
per year and not one single portfolio of any size or in any allocation is worth
less than it was when those stock market averages last experienced their high
water marks. What does this mean? It means that, until you break loose of
Institutional Wall Street's self serving product factory, you are destined to
investment disappointment and failure. Find an advisor that will help break the
product habit. Buy him "the book" (you know which one I mean), and make him
implement the strategy for you.

Where should you be now? What should you be doing? Finding good quality
companies that are not overpriced is extremely difficult right now, but good
paying fixed income securities (over 6% tax free and taxable are everywhere).
Focus on filling the fixed income portion of your portfolio (without changing
the allocation percentage). Once that is done, patiently wait for new equity
opportunities and add them in the normal manner. Continue to take profits as
they
become available even if that means holding large quantities of "smart cash".
Smile, this means that you have made money, and paste "The Investors' Creed"
somewhere that you can refer to it often. If you change your strategy now,
you'll be bruised again later. Now that was the "rest of the story".


An interpretation, in part, of "The Brainwashing of the American Investor".



Steve Selengut
843-243-0494

-----------------------------
Why you? Because the investment life you save may be your own.
Remove? Sure, just say the magic word.



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