Communist China, 1995--- the dawn of capitalism.

The Hong Kong based guide talked about the free enterprise zones, building
projects, golf courses, and roads with a chest full of pride and visible
excitement. Capitalism was everywhere along the tour route, and judging from the
advertisements on billboards and posters, the world was coming to China!

But although the government was embracing "for-profit" business for the first
time, the train-ride out of the country evidenced the abject poverty of what
would become a willing and able workforce. Another communist built wall was
falling; another socialist society was moving closer to "The Force".

Today, in the very birthplace of capitalism, an entrenched, arrogant, and
incompetent congress equates greedy executives with the demise of capitalism
while the economic force field it demeans catapults third world nations onto the
leader board of global economic growth potential. Capitalism dead? Hardly.

As congressional fat cats lament the corruption of governments throughout the
world, they line their pockets with favors from powerful lobbyists on Wall
Street, within drug companies and insurers, and seek the bed of every
conceivable public and private special interest group, ad nauseum.

Isn't "lobbying" a euphemism for "corrupting"? Isn't our government as corrupt
as any of those that we so pompously criticize? Aren't all business taxes passed
on to consumers?

The failure of the grandiose Health Care Reform movement, or its transformation
into a "we'll just let the taxpayers continue to bite the bullet for spiraling
costs" welfare program is a glaring example. Our eloquent President has changed
his tag line from delivery system cost containment to "what the heck, we'll just
change the definition of insurance and move on".

They just don't get it --- do you? Chinese and Indian economies are glowing
because their businesses are growing. Emerging markets emerge through
capitalism. Why? Because their governments nurture the job providors.

Here, we cut our entrepreneurs off at the knees and expect them to be globally
competitive. We tax and abuse our creative best, allow power mongers to control
the reins of government, and encourage our citizenry to ask: "what can my
country do for me?" Career politicians who can't remember their last private
paycheck are voting American capitalism comatose.

Just as surely as major corporations breed corruption and greed in the executive
suite, they also provide jobs, health insurance, and pension benefits to
millions. Blaming capitalism is an easy non-answer to many questions--- isn't it
clear that greed is a result and not a cause?

If it's shareholder protection we want, lets empower regulatory bodies to insure
it. Require shareholder advocates on boards of publicly traded companies, for
example. Yes Madam Speaker, 401(k) investors and taxpayers are shareholders too,
and they bleed directly and indirectly when congress kills companies.

What taxpayers want from their government is preventative action instead of
post-disaster bailouts and blame deflection rhetoric.

There's no mystery why sub-prime mortgages were allowed to run wild, or any
doubt that derivative creators were encouraged to slither around the regulators
with their too-complicated-to-understand-so-just-trust-me time bombs. Yet the
financial product creativity factory continues to flourish.

Similarly, the financial "Weekend at Bernie's" debacle was a regulatory blunder,
a mirror image of Social Security funding, but definitely not evidence of
problems with capitalism.

If we want to cut health care costs, nearly 90% of my survey respondents listed
tort reform as an essential ingredient in any package--- clearly not a topic
that a lawyer-laden legislature would have an interest in considering. Talk
about entrenched lobbyists!

Fear of frivolous legal action (and absurd jury awards) boosts costs for all
businesses, all professionals, and all consumers. We need laws that prevent
abuse of the system and which demand that people take responsibility for their
own bad decisions and clumsy errors.

We need fresh new independent politicians who want to make things better for
people, not for Republicans or Democrats, liberals or conservatives. You can't
get meaningful change from career politicians who pander for votes with every
decision opportunity.

Class warfare politics is America's shame. The majority of Americans want the
opportunity to succeed at something, to become rich and famous, even. We don't
want free; we want affordable. We want to be in control of our own destinies. We
want jobs, world-class education, and healthcare that doesn't have to look over
its shoulder for ambulance chasers.

Instead of the popular congressional "we can't cut business income taxes,
because that will benefit the rich", let's try "we have to use tax policy to
encourage businesses to increase in the full-time, permanent employee,
population, because that will benefit America.

For every 1% an employer increases permanent staff, it gets a 5% Federal, State,
and Local income tax credit. For every year a more than 20% staff increase is
maintained, all other taxes, levies, fees, charges, and miscellaneous
assessments are decreased by 10%.

Audit the calculations and have strict penalties for those who become too
creative; fine attorneys and accountants double who help businesses circumvent
the spirit of the law. Keep the tax benefits out of CEO mansions.

Within a few years, the new, no-party, independent congress will be
no-business-taxes-ever proponents and will be able to move on to a Flat-Fair
personal income tax combination and a national pension plan that replaces the
Social Security Ponzi scheme.

The cost of hiring and providing for new employees has made it a decision of
last resort for most of us--- the nostrils are just not wide enough. If we want
more jobs, we need to encourage employers to hire additional workers.

Jobs, Permanent Jobs, Millions Of 'Em--- Make it so.


Steve Selengut
sanserve (at) aol.com
http://www.kiawahgolfinvestmentseminars.net
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



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A participant in the morning Working Capital Model (WCM) investment workshop
observed: I've noticed that my account balances are returning to their (June
2007) levels. People are talking down the economy and the dollar. Is there any
preemptive action I need to take?

An afternoon workshop attendee spoke of a similar predicament, but cautioned
that (with new high market value levels approaching) a repeat of the June 2007
through early March 2009 correction must be avoided--- a portfolio protection
plan is essential!

What are they missing?

These investors are taking pretty much for granted the fact that their
investment portfolios had more than merely survived the most severe correction
in financial market history. They had recouped all of their market value, and
maintained their cash flow to boot. The market averages remain 40% below their
2007 highs.

Their preemptive portfolio protection plan was already in place --- and it
worked amazingly well, as it certainly should for anyone who follows the general
principles and disciplined strategies of the WCM.

But instead of patting themselves on the back for their proper preparation and
positioning, here they were, lamenting the possibility of the next dip in
securities' prices. Corrections, big and small, are a simple fact of investment
life whose origination point, unfortunately, can only be identified using rear
view mirrors.

Investors constantly focus on the event instead of the opportunity that the
event represents. Being retrospective instead of hindsightful helps us learn
from our experiences. The length, depth, and scope of the financial crisis
correction were unknowns in mid-2007. The parameters of the current advance are
just as much of a mystery--- today.

The WCM forces us to prepare for cyclical oscillations by requiring: (a) that we
take reasonable profits quickly whenever they are available, (b) that we
maintain our "cost-based" asset allocation formula using long-term (like
retirement, Bunky) goals, and that we slowly move into new opportunities only
after downturns that the "conventional wisdom" identifies as correction level---
i. e., twenty percent.

So, a better question, concern, or observation during a rally (Yes, Virginia,
seven consecutive months to the upside is a rally.), given the extraordinary
performance scenario that these investors acknowledge, would be: What can I do
to take advantage of the market cycle even more effectively--- the next time?

The answer is as practically simple as it is emotionally difficult. You need to
add to portfolios during precipitous or long term market downturns to take
advantage of lower prices--- just as you would do in every other aspect of your
life. You need first to establish new positions, and then to add to old ones
that continue to live up to WCM quality standards.

You need to maintain your asset allocation by adding to income positions
properly, and monitor cost based diversification levels closely. You need to
apply cyclical patience and understanding to your thinking and hang on to the
safety bar until the climb back up the hill makes you smile. Repeat the process.
Repeat the process. Repeat the process.

The retrospective?

The WCM was nearly fifteen years old when the robust 1987 rally became the
dreaded "Black Monday", (computer loop?) correction on October 19th. Sudden and
sharp, that 50% or so correction proved the applicability of a methodology that
had fared well in earlier minor downturns.

According to WCM guidelines, portfolio "smart cash" was building through August;
new buying overtook profit taking early in September, and continued well into
1988.

Ten years later, there was a slightly less disastrous correction, followed by
clear sailing until 9/11. There was one major difference: the government didn't
kill any companies or undo market safeguards that had been in place since the
Great Depression.

Dot-Com Bubble! What dot-com bubble?

Working Capital Model buying rules prohibit the type of rampant speculation that
became Wall Street vogue during that era. The WCM credo after the bursting was:
"no NASDAQ, no Mutual Funds, no IPOs, no problem." Investment Grade Value Stocks
(IGVSI stocks) regained their luster as the no-value-no-profits securities
slip-slided away into the Hudson.

Embarrassed Wall Street investment firms used their influence to ban the
"Brainwashing" book and sent the authorities in to stifle the free speech of WCM
users--- just a rumor, really.

Here we are once again. For the sixth time in the thirty-five years since its
development, Working Capital Model operating systems are proving themselves to
be an outstanding market cycle management methodology.

And what was it that the workshop participants didn't realize they had--- a
preemptive portfolio protection strategy for the entire market cycle. One that
even a caveman can learn to use effectively.


Steve Selengut
sanserve (at) aol.com
http://www.kiawahgolfinvestmentseminars.com
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



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Actually, hindsight and the Investment Grade Value Stock Index (IGVSI) Bargain
Level Monitor tell us that it died early in March 2009. More realistically,
however, corrections don't die quite so abruptly. They are supplanted by
rallies--- and vice versa.

The IGVSI Bargain Stock Monitor tracks the price movements of an elite group of
New York Stock Exchange equities. Their "eliteness" is earned by a B+ or higher
S & P rating, a history of profitability, and the fact that they pay dividends
to their shareholders.

Unfortunately, they are the same companies whose boards of directors allow
senior executives to pillage treasuries with obscene salaries and bonuses--- and
elite does not mean invulnerable to the whims of markets and governments.

But, for Working Capital Model (WCM) equity investments, they are just perfectly
less risky (historically) than the others.

An IGVSI equity becomes a bargain stock (or "OK to add to your portfolio if it
meets strict WCM diversification and price standards) when it falls at least 20%
from its 52-week high. From 15% to 20% down, it is held in a mental "bull pen",
getting ready for the "bigs" after a few more down-tics.

The fewer IGV stocks at bargain prices, the stronger the market, and the more
profit taking WCM methodology investors should be experiencing. The most
important thing most investors fail to do during rallies is to prepare for their
"supplantation" by the next correction.

Fewer equity bargains and higher prices should result in growing "smart cash"
levels. Smart cash results from dividends, interest, profit taking, and
systematic portfolio contributions.

Why smart cash? Its not reallocated to other classes of securities, it
anticipates the next turn in the market cycle, and it patiently waits for new
(and pre-defined) opportunities. Uh-uh, smart cash is never market-timing cash.

Here's what the Bargain Level Monitor has been reporting:

* The 2007 monitor showed a decreasing number of bargains through May, followed
by rapidly increasing numbers through year-end when nearly half the population
was down 15% or more.

* The trend worsened in 2008, and at the February 2009 month-end bottom, a
dartboard stock selection approach would probably have worked fairly well.

* Second Quarter numbers were the best in nearly two years--- meaning there were
far fewer investment opportunities to choose from. The Third Quarter figures
surpassed them by 31%.

* September was the best rally month since early in 2007, with fewer than 8% of
the entire IGVSI selection universe qualifying as "bargain stocks" by month end.

Here's what the Bargain Level Monitor is telling you:

* The seven-month-old "fat lady" is signaling the death knell of the last stock
market correction. WCM portfolios should be within striking distance of the all
time market value highs achieved 28 months ago.

* We are absolutely in a potent rally, in both equities and closed end income
funds. Profit-taking opportunities are staring you in the face, heckling,
whispering to hold on for even greater returns.

* The last time we experienced six consecutive months with less than 20% of the
IGVSI population down 20% or more from 52-week highs? Yup, the third quarter of
a 2007.

So if you have not taken profits (and realized a few not quite as bad as they
might have been losses in your major "thank you Mr. Congressman" disasters), one
of these things is happening:

* You are being greedy by ignoring the WCM profit taking guidelines.

* You have no profits because you believed "the financial world is coming to an
end" thesis and kept your stash in some form of mattress.

* You don't want the tax burden associated with short-term gains or you think
this new rally will actually last forever.

* You are waiting for the experts to pronounce that this upturn has become a new
trend and that you may once again feel good about paying more for something than
anyone else on the planet has ever paid--- ever.

There is no question that we have experienced a powerful rally. The only unknown
is its duration. So what do we do in rallies?

Steve Selengut
sanserve (at) aol.com
http://www.valuestockindex.com
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



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Kiawah Golf (or not) Investment Seminars Presents a one-hour web-workshop,
September 25th at 11:00 AM, Eastern. For more information and sign up
instructions go to:

http://www.kiawahgolfinvestmentseminars.com/InvestmentWorkshopWebinars.htm

Managing the Retirement Income Portfolio: a) Types of income securities; b)
Reasonable yield assumptions; c) Intellectual and emotional blinders; d) The
"total return" shell game. e) Keeping your eye on the ball--- spending money.

This is an interactive experience; questions are welcomed, AND your next
workshop is free if you send a paying friend.


Steve Selengut
sanserve (at) aol.com
800-245-0494
Search Kiawah Golf Investment Seminars



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My survey produced an interesting anomaly--- several respondents felt that
excessive consumer spending was the primary cause of the economic problems we
face today, and that spending is not to be encouraged.

But the root problem they were correctly speaking to is the source of the
spending money, not the spending itself. Spending is essential for demand
creation, and increasing demand is what produces jobs.

So why we ask, does government remove the dollars from the economy before they
accomplish the demand stimulus "thingie" (highly technical economics jargon)?
Nearly half the survey responses observed that consumption taxes (The Fair Tax)
are far more productive/creative than income taxes.

The other half wants to replace the IRC (Internal Revenue Code) with a Flat Tax
on all forms of income. Both suggestions are simple, and quantum leaps better
than anything being seriously considered by congress--- "seriously" being the
operative word.

A combination of the two--- priceless, but later!

The single, easiest, fastest, biggest, consumer-spending instant winner bonanza
is not even a twinkle in an old politician's eye--- there are far too few new
politicians. Replace the Social Security Retirement Program with a plain vanilla
pension plan, pre-funded by smaller, mandated employee contributions.

The current methodology is simple: it takes money out of our pockets (and our
employers) puts it though governmental blenders, and spits out IOUs for a meager
benefit at retirement. Why not let the private sector provide pension benefits
to all employees under the direction of a trimmed down Social Security
bureaucracy?

How? By purchasing Social Security Retirement Income Annuities (SSRIAs). Google
"A Capitalist's Social Security Reform" for the nitty-gritty details, but here's
what we accomplish:

We stimulate spending immediately by only withdrawing 3% of income from 300
million pockets and pocketbooks, and nothing from employer treasuries. We
provide demand-push spending money and reduce demand for consumer credit.

And, looking forward an article or two, we collect a tax on every dollar spent
in the economy--- except those for food, healthcare, and higher education; even
from our friends and neighbors in the Underground and Internet economies.

Some SSRIA details include: (1) No sales commission, no more than 10% in an
approved list of equities, no multilevel derivatives or open end Mutual Funds,
and no speculations; (2) Limited voluntary contributions and unemployed
dependent eligibility; (3) Phased in transfer of existing Social Security and
government employee pensions (including congress).

Using life annuities + a 50% of cash value, pre-retirement, term-life insurance
benefit could prepay retiree Medicare benefits as well!

There are several other ideas on the more-spending-money-in-consumer-pockets
agenda, and some thoughts about consumer confidence. It's tough to be confident,
for example, when you click the links between congress and business lobbyists.

It's tough to be confident when we see Wall Street control its regulators,
constantly produce the same speculative garbage, and reward its senior employees
and sales persons from the carcasses of mutilated shareholder-owners and
"hostaged" taxpayers.

These confidence destroyers can be dealt with, but first the rest of the story,
on increasing consumer spending without credit abuse:

One: Reduce the interest rate on all mortgages at least twenty-five basis
points, and adjust monthly payments accordingly. The banks owe us, and will
make-up the difference from increased business activity.

Two: Bring the credit card mafia to its knees by enforcing reasonable usury laws
(a 15% APR cap, for example) and include all fees, late charges and other debris
in the calculation. Make minimum payments include a percentage of principal, and
treat credit abuse like drug abuse.

Three: Eliminate all nuisance fees, taxes, surcharges, etc, forced on businesses
and passed through to consumer statements. A $65 motel room should be a $65
motel room.

Four: Reduce state and local property taxes 10% per year for all persons over
age 65, and devise a way to prorate this into rents paid by seniors--- i.e.,
require landlords to pass through their savings.

Five: Eliminate all toll collections on highways, bridges, tunnels, subways
etc.--- everyone benefits from our transportation resources, the green impact is
obvious, and demand for gasoline would be reduced significantly.

Six: Establish a combined federal/state/local $1,000 per month tax-free program
for all workers. (The first $12,000 of each person's income is untaxed). Workers
earning less than $12K annually receive the difference in bank account debit
cards. Usage could be restricted to essentials (no alcohol, gambling, tobacco,
guns, jet skis, etc.)

Seven: Establish a $750 per month workfare program for the unemployed actually
seeking work, but requiring no less than twenty hours of community service per
week. Offset would be reduced numbers of government workers, shorter
unemployment lines, and lower employer overhead expenses.

Thank you again for participating. I hope you all appreciate how important it is
for you to help get simple ideas like these into the legislative arena. Find the
time to address some of them aggressively in blogs, networks, and communications
with elected officials.

Wall Street's "Emperors New Clothes" game plan has infiltrated the federal
government. The financial community has no interest in protecting investors from
speculation and our elected representatives seem interested only in expanding
their power by catering to the most generous special interests.

Do I hear congressional term limits as a "write-in" candidate for number eight?


Steve Selengut
sanserve (at) aol.com
http://www.kiawahgolfinvestmentseminars.com
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



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My recent survey produced a variety of ideas, but most of them had these common
elements: replace the Internal Revenue Code with a simpler model, encourage
businesses to increase employment, and insist upon tort reform everywhere.

It also brought two disturbing realities into focus: We are painfully apathetic
(less than 1% of the people I contacted took the time to respond) and, although
we have great problem-solving ideas, few to none of them are included in any of
the reforms being considered by congress.

For those who participated, thank you again. I hope that you will appreciate how
I've synthesized your thoughts and suggestions into the commentary. I also hope
that you will find the time to address some of these issues more aggressively
with blogs, networks, and elected officials.

Major changes are being proposed in six inter-related areas. All the dots cannot
be connected in one article. Government revenue is cut in this article and the
next without a hint about a replacement plan. I'll get to that later, and
painlessly for all of us.

So how do we create more jobs?

Perhaps the first step in creating more jobs is to take a giant step backwards
and define what a job is. In the simplest of terms, your job is the principal
moneymaking activity in your life.

The more qualifications and skills you have (physical, technical, intellectual,
etc.) the more valuable you are to employers, customers, and clients. Thus, more
practical, job specific, education becomes a vital part of the jobs picture.

For the self-employed, the amount of effort expended, marketing skills, and the
product or service itself is as important as the qualifications. But the
objective of the job, the career, and the company, is to make money.

Government jobs are of a service, regulatory, and social problem solving
nature--- unquestionably necessary, but the primary motive is not to create
personal wealth or economic gain, hence the thousand-dollar toilet seat
scenario. These jobs are paid for by taxes collected from all employed people---
except our friends in the "underground economy", who pay virtually no taxes at
all.

The more government jobs, the more taxation; the more government regulation, the
more need for cost analysis of the regulations spewed forth. Consumers
ultimately pay all of the costs of compliance, everywhere.

Most self-employed people start off working for others; large or small really
doesn't matter. What matters is that employers hire these people to make the
enterprise more productive, safer, more efficient, and more profitable.

In theory, employees must contribute to profitability, and each is compensated
based on his or her contribution, as determined by the owners of the enterprise.
In larger organizations self-serving executives are able to pillage the profits
of the enterprise, to the detriment of both owners and employees.

Employee benefit programs (health & dental insurance, pension & savings
programs, investment education plans) were originally implemented to attract and
retain the best employees.

Today, employers are reluctant to create jobs because the mandated
non-productive "overhead" associated with each worker adds significantly to the
cost of running the business--- worker's compensation, unemployment insurance,
OSHA compliance, liability insurance, social security contributions, minimum
wage/union pay scales, etc.

No job deserves to exist economically if it doesn't add to the profitability of
the business. The more costs per employee, the fewer jobs get created. So how do
we create more jobs in this environment?

Corporate Income and Nuisance Taxes.

Politicians have succeeded in demonizing the large corporation by exploiting the
greed of obscenely overpaid executives and employees, while ignoring their own
complicity in the conflicts of interest and lobbyist graft that steer the
legislation they produce.

What Congress, a long line of Presidents, and much of the population have lost
sight of is the fact that even the dirtier businesses are job providers. They
must be pampered, not pummeled; supervised and reined in but not tethered and
broken.

Business income taxes are 100% inflationary; costs associated with employees
(yes, even the minimum wage, which some suggest is the cause of our illegal
alien problems) result in fewer employees hired. Period. Capitalism is not
broken--- its success formula has been compromised.

Repealing the corporate income tax, and prohibiting any and all levies, fees,
charges, and taxes on any form of business could instantly produce millions of
job openings, lower prices, and create new business opportunities throughout the
economy.

Repealing business income taxes would instantly make export products more
competitive in world markets, as businesses reduce prices while maintaining
profit margins. Greater profits should translate into growth in economic
activity.

Finally, the elimination of these taxes would make all businesses run more
effectively because there would be no need to spend money (or create losing
transactions) just to cut the tax bill.

Government Programs:

Tax dollars can create jobs when they are used to: protect consumers and
businesses from fraudulent and disruptive forces, fund infrastructure repairs
and improvements, protect shareholders from greedy officers and directors,
provide free education to the most talented students in all fields, and provide
seed capital for new public interest development projects.

-------------------
Still looking for your ideas on: growing consumer spending, lowering health care
costs, helping the environment, reducing the size of government, and producing a
fairer tax environment.


Steve Selengut
sanserve (at) aol.com
http://www.kiawahgolfinvestmentseminars.com
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



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lower health care costs, (4) help the environment (5) reduce the size of
government, and (6) producer a fairer tax environment.

I'm writing a series of articles and your input would be greatly appreciated.
Your top five ideas only, and in any category.

I'll get back to you if I need more info.

Thanks for participating.

Steve Selengut
sanserve@...
Kiawah Golf Investment seminars



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Investment Performance Expectations And Broker Account Statements

As impossible as it is to predict the future of the markets, it's relatively
easy to anticipate what you are going to experience when you view your next
brokerage account statement.

Whether you go the discount route through Schwab, Ameritrade, Fidelity, etc., or
enjoy a higher level of service through an independent like LMK Wealth
Management, you should never be surprised by the market values reflected on your
monthly statement.

None of the firms make it easy for you to examine asset allocation, particularly
on a working capital basis, and most refuse to even acknowledge that Municipal
CEFs should not be lumped in with the equities. Additionally, no brokerage
statement ever includes a warning label about the dangers of margin borrowing.
Surprised? Not.

But you can be sure that all statements will emphasize (in every conceivable
way) the short-term change in your market value. Any long term or cyclical
analysis (if any) is reserved for the "we understand your long term objectives"
propaganda that fills their prospect-only glossies.

Statement market value movements in both directions need to be anticipated and
understood, not labeled bad or good (rhyming not intended). Investigation is
required when you reasonably expect one direction and you wind up with
another--- with the emphasis on the reasonableness of your expectations.

Someone should provide a simple analytical mechanism that will allow investors
to know precisely what to expect from the monthly statement opening ritual---
and to have a fairly good idea of why the values have changed the way they have.
No shocks, surprises, or indigestion.

I'll take a shot at it, but you should know that IGVSs are those few "value
stocks" (in the classic definition) that are also B+ or better rated by S & P,
dividend paying, generally profitable, and traded on the NYSE.

The IGVS expectation analysis process will prepare you for the dreaded monthly
account statement--- whether you get there by password and click or by post
office and letter opener.

Only four bits of information are really needed (for WCM users), and I'm
assuming a 70% to 30% portfolio asset allocation--- equities vs. income,
respectively.

One: An increasing Investment Grade Value Stock Index (IGVSI) will lead to
higher market values for the stocks in your portfolio, but not if you just think
that you own mostly IGVSs in your Mutual Funds.

Two: When you are looking for stocks that fit your buying parameters (not hot
tips from "Heard on the Street", "Mad Money" or CNBC), a higher number of
"bargains" will generally mean lower equity market values.

Three: If monthly (IGVS) Issue Breadth numbers are significantly positive,
higher market values should be expected. For the uninitiated, issue breadth
analysis compares the daily number of stocks going up in price with the number
going down.

Four: If there are fewer IGVSs establishing new 52-week lows than new 52-week
highs, it is likely that overall equity market values are rising.

So how do you think you did in August--- click, click, head-scratch?

The Investment Grade Value Stock Index was up for the fifth time in the past six
months. The number of bargain stocks was below the average of the past six
months. Issue breadth was positive. There were more 52-week highs than lows---
only one new 52-week low all month.

In other words, all indicators point to a higher market value in August than in
July and a continuation of the upward trend that started in March.

Additionally, in spite of conditions where interest rates cannot really go much
lower, rate sensitive CEFs continued to move slightly higher--- signaling
further strengthening (for now) in the credit markets.

So what could keep you from having a better portfolio picture this month than
last (from a short-sighted market value perspective)?

Well, Virginia, in the non-government world where most of us attempt to survive,
disbursements in excess of income and deposits will do it every time. And when
the market corrects, as it absolutely always will to some extent, the double
whammy on the bottom line can be painful.

Tracking breadth, new highs and lows, bargain numbers, and an index that mirrors
the types of securities you hold in your portfolio, can explain what is
happening. Regular additions to your portfolio can soften the impact of a
correction and help you prepare for the rally that inevitably follows.

Now if we could only convince the SEC to require that account statements be
divided by security purpose (growth or income, for example) instead of by
trading unit.

And market cycle analysis--- maybe next year.


Steve Selengut
Sanserve-at-aol.com
http://www.kiawahgolfinvestmentseminars.com
Professional Investment Management from 1979
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



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You knew it the moment it left the club, that spark at contact when you catch it
just right. You look up. It's just reaching the top of its climb--- and heading
down right at the pin, a pin positioned left of center on the elevated green,
much too close to the water.

This could be the one! Four mouths hang open, not a sound. Then whack, the ball
strikes low on the stick and disappears; the pin wobbles; the ball is nowhere to
be seen---

Moe and Curley are certain it dropped into the hole as they hurry their tee
shots and rush to their cart. "My buddy Stan holed out like that at Disney a few
years ago", you hear, as they search the cooler for four cold brewskis.

Larry isn't ready to slap you on the back yet. "With my luck", he says, "the
ball would go dead left, down the hill and into the water". He calmly puts his
tee shot on the green, far to the right of the pin--- about where you were
really aiming. What are your expectations? What scenario fits your game today?

If it weren't for optimism, few of us would continue to be golfers. The
perfectly struck ball can encounter a myriad of obstacles on its way to your
target. Experienced golfers expect some adversity, even when they are playing
well. For most of us, it only takes one or two good shots to keep us coming
back.

High handicappers shout "golfshot"--- as one word, when they think one of those
has occurred.

Similarly, if not for optimism, few investors would have the courage to take
advantage of the hundreds of opportunities that are created every time the
financial markets hit the wall and tumble down Canal Street into the Hudson.

Are you headed for an ace or a double bogey, a nice solid profit or another
disappointment? The decisions we make at the highs and lows of our experience
are the most significant, always. Were you selling or buying six months ago---
eighteen months ago?

Just as Moe and Curley are certain the ball is in the cup as they rush to the
green, many independent financial pros were certain that the markets would
rebound throughout what seemed like twenty rounds without a single par.

After months of hazards, tree roots, hardpan, lip outs, and high winds in their
faces, investors are experiencing a string of "gimmie" birdies--- in the form of
a robust rally. Once again, Investment Grade Value Stocks and income producing
closed end funds are leading the way.

Were you selling or buying six months ago--- eighteen months ago?

Being optimistic is critical for long-term investment success.  When things
don't seem to be just right, ratcheting-up your focus on basic principles,
fundamentals, and the cyclical realities of the playing field is the type of
practice session that gets those security (and club) selections back on track.

Optimism needs to be controlled or it morphs into speculation--- and speculation
breeds both losses and snowmen. Most investors miss the early hours of the new
party because their gurus don't think it will be much fun. Eventually, market
cycles repeat; with practice, so will your swing. Don't forget to leave the
party before midnight, pumpkin.

Remaining focused on the QDI rules you've developed for your investment program,
and the few swing thoughts that fine-tune your pre-shot routine, bridles the
optimism and allows you to focus on the major hazards that could keep you from
goal achievement.

In both golf and investing, too much thinking about too many inputs from too
many experts is as bad for the game plan as simply doing the things that haven't
worked over and over again.

The key to attaining and maintaining a satisfying skill level is to understand
what it is that you should practice. You're not going to three-putt less often
by complaining about it. Find someone who rarely three-putts and ask for help.
Focus on how things work, and you'll formulate more accurate expectations.

It's easier and less expensive for golfers to practice than for investors and
there's a whole lot less at stake, financially. But practice means more than
loosening up on the range and stroking a few putts before moving on to the
"breakfast ball" or "Mulligan" that often describes your opening tee shot.

Practice means addressing the problem areas of your last effort before the next
one. You need to be confident that you have it right so you can focus on the new
challenges of today's pin placements.

Investment practice sessions are different, and I've learned that investors are
more stubborn, lazy, impatient, and fickle than golfers. Both crave shortcuts to
success and gadgets that will instantly improve their performance. But few
investors are able to bring their focused course management skills to the
long-term financial playing field.

Golfers will spend thousands on instruction, gadgets, machines, clinics,
magazines, lessons, drivers, and putters. Investors love the gimmicks,
shortcuts, and expert recommendations, but they seem allergic to anything really
educational. They must see it as a sign of weakness.

Golfers should be better investors. Investors need to introduce themselves to
some basic education.

Hello ball!


Steve Selengut
Sanserveataoldotcom
Search - Kiawah Golf (or not) Investment Seminars
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



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Kiawah Golf (or not) Investment Seminars Presents a one-hour web-workshop,
August 26th at 1:00 PM, Eastern. For more information and sign up instructions
go to:
http://www.kiawahgolfinvestmentseminars.com/InvestmentWorkshopWebinars.htm

Meeting Agenda:

a) Tools: S & P Stock Guide, IGVSI Website, Personal Worksheets, "Watch List
Program", WCM friendly stockbrokers; b) Rules: Cost based asset allocation, QDI,
profit-taking, macro & micro buying, ATH decision making: c) Concepts: The
Working Capital Model, Smart Cash, The Investor's Creed, Base Income, WCM
performance "Line Dance", Aging, IRE, money streams.

This is an interactive experience; questions are welcomed, AND, if this is your
first workshop, it's a "twofer".

Steve Selengut
sanserve (at) aol.com
800-245-0494
Search Kiawah Golf Investment Seminars



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The White House has released another of its health care reform clarification
emails--- there will be more. It seems strange to me that the focus is on
insurance coverage rather than on the spiraling costs of health care itself.

Frankly, the drafters of the insurance reforms have little, if any,
understanding of insurance, risk assessment, or underwriting--- and nary a clue
about running a business. But why should they care? This is Robin Hood politics,
not business. Why do we continue to re-elect them is a far better question.

Incidentally, I am not a health insurance salesman or healthcare professional---
just a payer of far too much in small-group insurance premiums in spite of a
crazy-high deductible!

Insurance is neither a cost of obtaining healthcare services nor an expense
associated with those services. Insurance is an agreement in which a private
company agrees to pay part of someone else's medical expenses in exchange for
premiums it collects in advance from all of its insureds.

If President Obama owned the New World Order Health Insurance Company, he would
not be willing to insure an applicant with brain cancer nor would he be willing
to pay an unlimited lifetime benefit to all insureds--- not without a premium
that reflects the risks to his personal bank account.

Theoretically, insurance companies collect enough in premiums to operate
profitably while paying all the claims they have agreed to pay under contracts
with the individuals and groups that they insure. If we add more risk, the
insurance company has no choice but to increase premiums.

The persons who own the insurance companies (you and me, pal) expect them to
operate profitably. The companies employ thousands of actuaries, healthcare
industry expense analysts, claims adjusters, fraud inspectors, service
personnel, underwriters, risk assessors, etc. to assure that this happens.

Insurance companies protect us by standing ready to pay "covered" expenses over
and above whatever deductions, exclusions, and limitations are agreed upon in
advance. There is a viable legal contract between the parties--- financial
disasters are avoided if we get really sick.

Within the terms of their agreements, insurance companies determine who is
insurable, and at what premium. Their job is to pay covered medical expenses---
and they have a vested interest in keeping medical expenses as low as possible.
But do they really?

Just as the financial crisis was partially caused by business conflicts of
interest so too are there conflicting interests in the
insurance-healthcare-drug-medical supply industries. These conflicts reduce the
natural desire to control the costs of all healthcare services.

We can control the industry to eliminate the conflicts of interest. We can (and
should) police the boardrooms of insurance companies to eliminate "abuse of
shareholders" through excessive salary packages.

Perhaps we should require health care insurers to be "mutual" companies, or
maybe "network" doctors should not be allowed to bill patients for amounts above
what the insurance actually pays. Maybe the annual deductible could be dealt
with differently without increasing premiums.

We can tax for-profit hospitals higher to encourage more non-profit care
facilities; we can keep doctors, insurance and drug companies from owning
hospitals; we can cap jury awards for medical malpractice or error, and we can
give tax relief to medical practitioners who provide free health services to the
indigent and uninsurable.

But the government's efforts to redefine insurance are counter-productive. As
cold as it may sound, if we make insurance companies cover pre-existing brain
tumors, the expense is coming out of your pocket in the form of higher insurance
premiums or higher taxes--- and it's likely that the healthiest among us will be
the ones paying the increased taxes.

The White House list of reforms, every one of them, would increase insurance
company costs and our premiums while doing nothing to reduce the price of the
medical services we receive. They only sound good to those who do not understand
insurance.

Insurance is designed to pay the bills--- reforms need to make the bills smaller
for everyone. Does this plan cut any costs, or just increase insurance premiums
for those who will still be able to pay them?

Group health (and even dental) insurance is a benefit used by many employers to
attract and retain employees. I've heard rumors that the reform plan will tax
employers who don't provide insurance and tax those employees who receive the
benefits. True or not, neither approach helps the economy or reduces health care
expenses--- both raise taxes for everyone.

Insurance can only be made more affordable by reducing the costs of the
healthcare that is provided. Let's focus on streamlined record keeping,
controlling ambulance chasers, jury awards, drug company advertising, an army of
lobbyists, and industry conflicts of interest.

We should also make all government employees, from the top down, dance to the
same tune as the rest of us--- that'll do away with the tax on benefits. Then,
next chance you get, do away with an incumbent.


Steve Selengut
http://www.sancoservices.com
Professional Portfolio Management since 1979
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



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This is a real world situation that could impact each of you as professionals,
investors, and friends of persons who could fall for such schemes. So please get
angry about it!

An envelope arrived yesterday from a worried investor (not a client of mine) in
Appleton, Wisconsin. He had been contacted with an "investment partner"
opportunity touting a "guaranteed investment program" that would absolutely
"double and triple his money every sixty days" with no worries, work, or risk
involved.

So why was this total stranger contacting me?

Inside the envelope were four separate documents: (1) a call for twenty-five new
investors who would become partners in this special, private, guaranteed
investment program, and (2) an endorsement of the program from Helen Taylor, the
founder of ResponseLink Pros, Inc.

(3) An acceptance letter from Chris Jenkins, Advertising Manager of Moyer
Direct, Inc., the investment management company, and (4) a special offer coupon
that allowed the new partners to make additional deposits of fewer dollars while
promising an even greater rate of return.

So why was this total stranger sending this information to me?

Two of the documents were fraudulently attributed to me and had been signed by
someone using my name--- bet that got your attention!

In the others, a fictitious Helen Taylor claimed to be my good friend and
mentoring student while a non-existent Advertising Manager (Chris Jenkins) was
distributing "one-time-only" discount offers that I was making in my capacity as
president of Moyer Direct, Inc.--- a company I had never heard of until
yesterday.

Obviously, this scam artist (the now indicted Wayne C. Scott a/k/a Chris Harper)
was able to paint a believable picture by trading on the good names,
reputations, and achievements of well-known people in the financial industry. I
would guess that I'm not the only one who has been unknowingly abused by such
con artists.

And that is probably why I wasn't contacted by anyone until now. Was your name
used on documents sent to other victims? Did you sign up for a Warren Buffet or
Ben Graham program?

Court documents (US District Court, Northern District of Illinois) indicate that
Wayne Scott has bilked hundreds of small investors to the tune of nearly one
million dollars. Other prominent investors, advisors, experts, and financial
writers have probably had their reputations compromised as well.

Please forward this warning to your friends, colleagues, clients, relatives, and
employees. We need to prevent such scams from spreading any further

So why haven't we (and the investing public) been warned about this outrage by
someone official? Hmmm.


Steve Selengut (The real one!)
http://www.sancoservices.com
Professional Portfolio Management since 1979
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



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Kiawah Golf (or not) Investment Seminars Presents a one-hour web-workshop, July
30th at 11:00 AM, Eastern. For more information and sign up instructions go to:
http://www.kiawahgolfinvestmentseminars.com/InvestmentWorkshopWebinars.htm

This workshop considers 30 True or False statements, based on concepts, news
stories, investment strategies, product ideas, and conventional Wall Street
Wisdom. Things you should know in order to invest intelligently. You will have
15 minutes to submit your answers to the moderator. The balance of the workshop
will focus on those statements where there was not 100% agreement.

Remember, what you get for nothing is probably worth it. If this is your first
workshop, it's a "twofer".


Steve Selengut
sanserve (at) aol.com
800-245-0494
Search Kiawah Golf Investment Seminars



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Kiawah Golf (or not) Investment Seminars Presents a one-hour web-workshop, July
28th at 1:00 PM, Eastern. For more information and sign up instructions go to:
http://www.kiawahgolfinvestmentseminars.com/InvestmentWorkshopWebinars.htm

Investment Terms YOU Need To Dig Into:

Average Pricing, Buy More Target, Conventional Wisdom, Day-Limit Order, Float,
Fundamental Analysis, Ginny Maes, Issue Breadth, KISS Principle, Leverage,
Liquidity, Market Timing, Model Record Keeping, Open Order, Principal, REITs
(private), Revenue Bonds, Selection Universe, Socially Conscious Investing,
Spread, Stock Dividends/Splits, Stock Quotation, Tax Lots, Technical Analysis,
Tick, Total Return Analysis, Uncertainty, Unit Trusts, Variable Annuity, Window
Dressing, Working Capital, WRAP Accounts,  etc.

This is an interactive experience; questions are welcomed, AND, if this is your
first workshop, it's a "twofer".


Steve Selengut
sanserve (at) aol.com
800-245-0494
Search Kiawah Golf Investment Seminars



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Kiawah Golf (or not) Investment Seminars Presents a one-hour web-workshop, July
14th at 1:00 PM, Eastern. For more information and sign up instructions go to:
http://www.kiawahgolfinvestmentseminars.com/InvestmentWorkshopWebinars.htm

Managing the Equity portfolio Agenda:

a) The equity investment universe; b) The QDI rules, and the rules of QDI; c)
Using the IGVS "watch list" program; d) Profit taking targets; e) The Investor's
Creed; f) Keeping your eye on the ball--- realized capital gains.

This is an interactive experience; questions are welcomed, AND, if this is your
first workshop, it's a "twofer".


Steve Selengut
sanserve (at) aol.com
800-245-0494
Search Kiawah Golf Investment Seminars

Before Wall Street and the media combined to make investors think of calendar
quarters as "short-term" and single years as "long-term", market cycles were
used as true tests of investment strategies over the long haul. Bor-ing.

There were four types of standard analysis used by most financial institutions,
Peak-to-Peak, and Peak-to-Trough being the most common found in annual reports.
There were also basic differences in purpose and perspective in the old days,
and a focus on results vs. reasonable expectations for actual portfolios.

Even more boring, and not nearly as profitable for "the wizards" as today's
super Trifecta, instant gratification, speculative, mentality.

Portfolio performance analysis was intended to be a test of management style and
overall methodology, not a calendar year horse race with one of the popular
averages. The DJIA was (I believe) originally conceived as an economic
indicator, not as a market-performance measuring device.

No real-life, personalized, portfolio should ever be a mirror image of any
other, or comparable to any particular market index. Analysis should be of
process, content, and operating strategy; the objective should be fine-tuning of
either the philosophy or the discipline.

If the portfolio market value, in a Peak-to-Trough scenario, fell by a greater
percent than the benchmark(s) being used, the overall approach would be looked
at for reasons why. Was there excess speculation? Did interim profits go
unrealized? Was an issue or a sector overweighted?

Theoretically, portfolios with 30% or more committed to income securities would
fall less in market value than 100% equity portfolios --- they would also be
expected to rise less than their more speculative brethren in a Peak-to-Peak
analysis. Formulating valid expectations are important for long-term investment
success, and sanity.

November 1999 to Mid-March 2009 would have been the ideal analytical period for
a Peak-to-Trough review of WCM (Working Capital Model) portfolios, but the
November to May time period illustrates the cyclical approach to market value
performance evaluation just as well--- and the data was easier to obtain.

Here are seven tests you can use to determine how your investment portfolios (or
your clients' portfolios) have fared since the stock market peaked toward the
end of 1999, using a 60% Equity/40% Income, WCM asset allocation as an
expectation producing benchmark.

One: The percent fall in the S & P 500 average was about 33%. Your portfolio
market value should be up by around the same number.

Two: "Smart cash" should have been huge toward the end of 1999 and on the rise
again through the middle of 2007, reflecting much too high IGVSI stock prices.
Then, portfolio smart cash should have been shrinking (while equity prices
tanked) to nearly zero until the second quarter of 2009.

Three: Planned disbursements for expenses should have continued unabated
throughout the entire ten year period without ever the need to sell any
securities, or to reduce payment amounts--- except in (client) emergency
circumstances.

Four: Portfolio market values should have rebounded to a greater extent (closer
to the most recent all time high) than the gain in the S & P average relative to
its latest ATH--- after both the dotcom bubble debacle and the latest financial
meltdown.

Actually, the dotcom fiasco was pretty much of a non-event for WCM portfolios
because of disciplined operating rules boiled down to: "no IPOs, no NASDAQ, no
Mutual Funds, no problem". This time around, the "problem" was a stake in the
heart of what once were some of the best of the best financial institutions.

Five: Portfolio "working capital" should be higher than it was at its peak in
2007, adjusted for net additions and withdrawals, and possibly about twice the
level of May 1999.

Six: Total portfolio "base income" should be slightly higher than it was in
mid-2007, again adjusted for net portfolio additions and withdrawals (and
drastic asset allocation changes)--- but the 2007 base income level would have
been significantly above that in 1999.

Seven: Finally, there should not have been any major profits left on the table,
on any security, of any kind, in any portfolio throughout the ten-year period.

Here's to a return to the boring investment portfolio!

Note: To understand these "indicators", it would be helpful if you knew the WCM
definitions of: "base income", "working capital", "smart cash" and "major
profits". I'll provide a free copy of the "Brainwashing" book to the first ten
people who can define all four--- in a private email please.


Steve Selengut
http://www.kiawahgolfinvestmentseminars.com/InvestmentWorkshopWebinars.htm
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"
PGA Village Golf Outing - Seminar October 2009



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Understanding the Investment Environment

Sign up here before 11:00 AM tomorrow and get any other group workshop for free:
http://www.kiawahgolfinvestmentseminars.com/InvestmentWorkshopWebinars.htm

This is an interactive experience with ABSOLUTELY NO PRODUCT SALES; questions
are welcomed, AND your next workshop is free!

Here's the agenda:

Understanding the Investment Environment: a) Learning how to recognize and to
deal with three (long-term) cycles that impact investment portfolios; b)
Formulating realistic expectations about investment securities--- by class and
by type; c) Dealing with short term events, disruptions and dislocations; d)
Identifying and minimizing the true risks inherent in individual Investment
Securities;


Steve Selengut
sanserve (at) aol.com
800-245-0494
Search Kiawah Golf Investment Seminars

Investment markets got you down, Bunkie? Been blown away by derivative stun
guns?  When will portfolio market values move back to 2007 levels--- and then
what will you do about it?

It's time to overthrow the evil Masters of the Universe and deactivate their
weapons of financial destruction. Let's outlaw the brainwashing that has changed
how average investors look at and value their investment portfolios.

It's time to exorcize the Wall Street demons and return to stocks and bonds---
and to QDI, "the Force" for long-term investment portfolio security.

Speculating is complicated, even for financial rocket scientists. What most of
us want (or would certainly settle for) is simplicity, stability, and reasonable
growth in our productive working capital.

A return to plain vanilla investing strategies with operating procedures that
minimize risk and encourage understanding of the financial markets needs to
become part of our financial force field.

As bad as things have been since this black hole appeared, investment models
true to fundamental concepts, simple strategies, and disciplined operating rules
have probably bettered the market numbers in at least six important ways:

One - Higher lows during market downturns: Equity portfolios managed using basic
principles of quality, diversification, and income (the QDI) and disciplined
profit taking rules should not fall as much in market value as most mutual funds
or poorly diversified portfolios.

Constant cash flow, even if not reinvested, places a floor under market values,
and investors feel better when their values fall less than the market averages.
In soundly managed programs, buying activity slows as prices rise--- increasing
"smart cash" for buying at lower levels later.

Two - Moves to cash or other sectors before bubbles burst:  Disciplined profit
taking automatically moves dollars from overheated sectors to cash or
undervalued sectors during rising markets. This process creates capital that can
be used to lower the average cost of remaining positions or to take advantage of
new opportunities.

Investors feel better when no profits have been left on the table.

Three - Maintenance of planned income streams during financial crises: Most
financial plans focus so strongly on growing market values that they lose touch
with the need for planning a dependable retirement income. They rely on selling
equity fund units or inflated indices for cash flow, instead of generating
stable income with less exciting cash producing staples.

Steadily increasing annual income can be placed on "cruise control" through the
use of the cost basis asset allocation methods contained in the WCM (Working
Capital Model). How many would-be retirees are searching for jobs because of
improper income planning?

Four - Faster movement to new all time market value highs: When investors have a
reasonable understanding of the various cycles impacting their investment
portfolios, they develop valid expectations about the market value "performance"
of their portfolios.

They are less likely to initiate knee-jerk or panic driven transactions and more
likely to take advantage of the new opportunities that lower security prices
always create. Additionally, higher quality securities invariably are in the
first group to regain popularity with investors as good news reports begin to
dominate.

Five - Steady growth in working capital in all market environments: Working
capital is measured in terms of cost basis instead of market price. As a result,
all income generated from interest, dividends, and realized gains grow working
capital regardless of the direction of market prices.

A treasury bond generates the same income at $85 as at $115. Most closed-end
municipal bond funds (CEFs) maintained their 5% to 7% tax-free cash flow
throughout the financial crisis--- in spite of their reduced market values.
Similarly, short-term profits on high quality securities have been growing
working capital since the current rally took hold in March.

Six - Annual growth in realized "base income" in standard portfolios: WCM
portfolios are income machines by design. No security is ever purchased if it
does not produce regular dividend or interest payments; at least 30% of all base
income should be reallocated to income-objective securities.

Similarly, every dollar of capital gains income, and net portfolio additions are
partially allocated to income producers--- and the use of a cost based asset
allocation formula insures annual income growth.

Few financial professionals begin their careers with any encouragement to become
comfortable with individual equity securities and the surprisingly large variety
of individual, relatively uncomplicated, and generally safe(r) income producers
available for their clients.

Financial products are far more lucrative for their institutional employers and,
as a result, the incentives for brokers and advisors to sell products is pretty
much irresistible. Few pros can afford to be one with "The Force".

The Dark Side of investing beckons like a Siren's song, luring the majority of
professional advisors away from the safety and simplicity of QDI. Institutional
propaganda, projections, predictions, and hype have the same affect on
unsuspecting boatloads of speculators who most often become shipwrecked on the
derivative rocks.

Investors and their professionals need to re-evaluate their product orientation
and plot a global escape from the Dark Side of investing.

Contact the "Skywalker" foundation for emotional and financial support while
making the transition--- and may the force be with you.


Steve Selengut
http://www.kiawahgolfinvestmentseminars.com/InvestmentWorkshopWebinars.htm
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"
PGA Village Golf Outing - Seminar October 2009



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Kiawah Golf (or not) Investment Seminars Presents a one-hour web-workshop, July
9th at 11:00 AM, Eastern. For more information and sign up instructions go to:
http://www.kiawahgolfinvestmentseminars.com/InvestmentWorkshopWebinars.htm

Managing the Retirement Income Portfolio: a) Types of income securities; b)
Reasonable yield assumptions; c) Intellectual and emotional blinders; d) The
"total return" shell game. e) Keeping your eye on the ball--- spending money.

This is an interactive experience; questions are welcomed, AND your next
workshop is free if you send a paying friend.


Steve Selengut
sanserve (at) aol.com
800-245-0494
Search Kiawah Golf Investment Seminars



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Kiawah Golf (or not) Investment Seminars Presents a one-hour web-workshop, July
7th at 11:00 AM, Eastern. For more information and sign up instructions go to:
http://www.kiawahgolfinvestmentseminars.com/InvestmentWorkshopWebinars.htm

This is an interactive experience with ABSOLUTELY NO PRODUCT SALES; questions
are welcomed, AND your next workshop is free if you send a paying friend.

Understanding the Investment Environment: a) Learning how to recognize and to
deal with three (long-term) cycles that impact investment portfolios; b)
Formulating realistic expectations about investment securities--- by class and
by type; c) Dealing with short term events, disruptions and dislocations; d)
Identifying and minimizing the true risks inherent in individual Investment
Securities;


Steve Selengut
sanserve (at) aol.com
800-245-0494
Search Kiawah Golf Investment Seminars

Kiawah Golf Investment Seminars Presents a one-hour web-workshop, June 23rd at
1:00 PM, Eastern Time. For more information and sign up instructions go to:
http://www.kiawahgolfinvestmentseminars.com/InvestmentWorkshopWebinars.htm

Appreciating Basic Risk Minimization Techniques: a) Understanding the
purpose/use of Asset Allocation; b) Developing appropriate security selection
criteria; c) Establish diversification and income rules; d) Adopting downward
flexible profit taking guidelines; e) The WCM & Investor's Creed.

This is an interactive experience; questions are welcomed.

Steve Selengut
sanserve (at) aol.com
800-245-0494
http://www.kiawahgolfinvestmentseminars.com/PGAVillageGolfInvestmentSeminar.htm
PGA Village Golf Outing - Seminar October 2009
Search Kiawah Golf Investment Seminars or click link above



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I think it was the immortal Ben Hogan who quipped: I can put "left" on the ball
and I can put "right" on the ball--- "straight" is essentially an accident. Most
amateur golfers would make a slightly different observation. We can hit the ball
left or right with no problem; we just have no idea when either will occur.

As to straight, most of us refer to that phenomenon as "the dreaded straight
ball"--- and it's this lack of straight that makes it so critical for us to
master the art of working the ball. We need to understand how to move the ball
left or right, consistently, on the golf course, under pressure, but without
ever aiming out-of-bounds or into a lateral.

Yeah, sure, just like that.

It is doable though, and Ehow.com is a great place to start. There, at
"work-golf-ball" is a simple five-step tutorial that anyone should be able to
master with countless hours of range work. Of course it's more difficult on an
actual golf course, with those red and white stakes, trees, bodies of water,
marsh grasses, and back yard barbequers.

To become a lower handicapper, work the ball we must--- unless your name is Moe
Norman. Making the shot go higher or lower than normal is another of those ball
working skills that you need to master to save strokes. Mother Nature really
appreciates it when you maneuver the ball below Live Oak branches and over
environmentally protected "no search" zones.

Really, it just takes some practice, keeping the club on the target line, a
consistent tempo, head down, either an open or closed stance, relaxed hands,
etc. OK?

Mother Nature's investment twin sister is not nearly as difficult to deal with,
but is often treated by the media with a level of disrespect normally reserved
for ladies whose profession involves a whole "nuther" sort of market making.
Perhaps deservedly so, but the media is an instant gratification or blame
environment little suited to either golf or investing.

Today's product sideshow and short-term roulette-like atmosphere is just not
what the investment gods had in mind when they developed trade, created world
business, and gave birth to the building blocks of the financial markets.

Even Pete Dye would be shocked at the way Wall Street's financial course
architects have turned the most rudimentary of tracks into a moguled, windswept,
bunker field, fraught with hazards unimaginable even by their creators. Whatever
happened to stocks and bonds?

One financial triple-bogey at a time, the world's amateur investors are learning
that they either have to "Work the Investment Ball" or drop out of the
tournament. In this case however, a lifetime of short straight strokes down the
middle of the fairway will achieve par most of the time. The sooner investors
apply the K.I.S.S. principle to their investment program, the easier the process
becomes.

The Working Capital Model is a boring, conservative methodology for lowering the
slope rating of the most diabolical wealth accumulation courses. Market hazards
are avoided with reasonable expectations, and retirement approach shots that
grow the annual income chip by chip, throughout the wealth accumulation period.

In 2008, this approach maintained income levels with market values falling at a
relatively lower rate. In 2009, market values have grown acceptably (relatively
speaking) while income levels have been bolstered by robust profit taking.

Thinking about the next hole or two, too soon, spoils many a round of golf. Not
thinking about the next turn of the market, interest rates, or the economy soon
enough will sabotage most normal investment portfolios.

Most of us recognize that, without full time instruction and practice, golf is
just not easy to master. Less than 10% of amateurs break 100 regularly
(unadjusted), but most of us could do better if we had the time and money to
play more frequently.

Similarly, most amateur investors are unable to practice frequently enough to
learn how to "work the ball" away from the hazards that always become headlines
much too late to be useful.

Practice with market simulators of any kind, by the way, is as useless as
pounding balls at a video screen image of The Ocean Course. When it's your own
money, there's a whole new set of emotions to be dealt with. How often have you
brought that "poifect" drive from the range to the Number 1 tee box?

Really, above par (a good thing) investing just takes practice, keeping the
targets reasonable, consistent selection rules, patience, media noise muted,
proper asset stance, relaxed emotions, etc. OK?

Here's to the search for the holy repeatable swing.

Steve Selengut
PGA Village Golf Outing - Seminar October 2009
Search - Kiawah Golf Investment Seminars
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



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You're invited--- and it's a "twofer" for my friends, associates, and contacts.

Workshop #1 focuses on the development of an investment plan. We'll discuss:
a) Identifying personal financial goals, objectives, and timeframes, in terms of
income requirements; b) Determining the appropriate Asset Allocation for goal
achievement; c) Changing an existing investment portfolio.

There are 9 openings for the Thursday, June 18th meeting.

  Sign up instructions are here:
http://www.kiawahgolfinvestmentseminars.com/InvestmentWorkshopWebinars.htm

Help me fill up the class and your attendance at Workshop #2 (Appreciating Basic
Risk Minimization Techniques) is a freebie.  Code word for twofer offer is
"Hannah".

Steve Selengut
sanserve (at) aol.com
800-245-0494
http://www.kiawahgolfinvestmentseminars.com/PGAVillageGolfInvestmentSeminar.htm
PGA Village Golf Outing - Seminar October 2009
Search Kiawah Golf Investment Seminars or click link above



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Is it luck or skill that gets us to the goals and objectives we set for
ourselves--- gimmicks and software programs or practice and understanding? How
many golfers are still using the putter they started with decades ago at a
nine-hole cow pasture? How many of you are still bouncing between investment
gurus and hedges in your search for the investment holy grail?

The best athletes come to the competition with sound fundamentals, well thought
out objectives, and the discipline to hone their basic technique with countless
hours of practice. The most successful investors come to the process with sound
fundamentals, realistic goals and objectives, and a consistently applied
discipline that embraces the cyclical nature of markets and economies.

Discipline is an ingredient in most long-term success recipes--- business,
sports, relationships, politics, veal scaloppini, etc. Well, maybe not politics.
There are "fundamentals" involved in each.

Favorite foursome conversations provide clues to the particular fundamental that
just failed you, as your duck-hooked tee shot comes to rest at the base of the
dead pine tree, and possibly, just beyond the white stake. "Have you weakened
your grip?" comments Larry. "Nah, he was lined up that way; went right where he
aimed it," Curley offers.

"Might have worked out just fine if he hadn't picked his head up so soon,"
spouts Moe. "What are you guys talking about? I was set up to fade the ball but
I swung way too hard at the bottom and closed down the club face," you bark as
you tee up a provisional.

Grip, alignment, focus, target, and tempo--- some major golf fundamentals.

During the cocktail hour at monthly AAII and NAIC meetings, or around the
country club bar, you might overhear some of these:  "I can't afford to play a
lot of golf anymore. My junk bond fund has reduced its payout to barely 2%."
Yeah, my retirement plans have been put on hold too. I lost 60% of my net worth
when the government killed Lehman Brothers and Washington Mutual."

"I was counting on my short-term Munis, CDs, and T-Bills to provide enough
income to pay the bills, but the yields have gotten so low." "Two years ago, my
portfolio was worth twice what it is today; if only my advisor had taken the
profits when we had them, and added to the income bucket of the portfolio."

Quality, diversification, income, asset allocation, and profit taking--- some
biggies in investing.

Surprisingly (or perhaps not), it is more likely that the newbie or
high-handicap golfer will seek help with the game's fundamentals than it is for
the new or inexperienced investor to spend moment one on the basic concepts of
investing. Serious amateur golfers work at their game constantly; amateur
investors seriously avoid the work required to fine-tune their expectations.

Neither seems capable of avoiding an endless parade of props, programs, and
short-term panaceas as they make their way around and through the hazards that
torment all levels of golfer and investor from the very beginning of their quest
for brilliance.

A round of golf has its ups and downs, hot streaks and bad breaks. Investing has
its rallies and corrections, scandals and frauds. Why are these two frustrations
so popular?

Fundamentally speaking (but not analyzing), investors need to wrap their heads
around an asset allocation formula that is most likely to get them to a
comfortable nineteenth-hole lifestyle. Golfers need to wrap their hands around
their clubs in a manner that will help them get to shorter term targets often
enough to keep their Nassau partner smiling.

A properly aligned investment portfolio will be constructed with regular income
producers and equities expected to have capital gains potential. Each are viewed
differently in terms of time and distance. Golfers attempt to align themselves
in a manner that will get them to the safest and most opportune position for the
shot that comes next.

A golfer without a clear target for every full swing, chip, and putt will be
thrown off course more often than not, gaining only the exercise value.
Similarly, an investor who fails to set multiple targets (at least three: buy
more, sell, and yield) for every security will fail to gain full value from the
investment exercise.

To be successful at either requires patience, reasonable expectations, and a
mastery of the fundamentals. With that in your bag or briefcase, you'll be
prepared to follow in the footsteps of the Great One's fundamentals coach and
say:

"Hello ball."


Steve Selengut
PGA Village Golf Outing - Seminar October 2009
Search - Kiawah Golf Investment Seminars
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



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Benjamin Graham was an economist, financial analyst, and professional value
investor. He was one of the first to advise investors to look beyond the media
hype and confusion to find undervalued stocks that would become part of a
diversified portfolio.

Roy McAvoy is a fictional professional golfer (in the 1996 film "Tin Cup") whose
pride, ego, and stubbornness combined to let the U. S. Open championship slip
through his fingers.

Graham developed his skills and understanding of the financial markets into a
discipline that, most expert investors would agree, helps to minimize the risks
associated with investing. McAvoy recklessly ignored the risks associated with
visible hazards while he allowed his internal environment to bring a defeat he
clearly had the skills to avoid.

For an endless variety of reasons "tin cup" amateur investors bring on their own
demise by failing to minimize risks using well known basic techniques that are
thoroughly documented and supported by sand traps full of statistical evidence.
They hit driver with every selection--- it's the only club in their bag.

Institutional plus-handicappers defied the investment gods by developing
derivative monstrosities. They now resemble depression era "tin cuppers",
sitting crumpled by the curb, looking for government handouts to remove the
snowmen from their investment product scorecards.

Some of the mightiest institutions have fallen because they disrespected the
BING (Basic INvestment Guidelines). The investment gods are ticked.

In amateur golf, most of us are aware of the basic elements of the game and are
all too familiar with our own personal, and seemingly unsolvable, shortcomings.

I invariably take all but the shortest irons back too far. My biggest head
problem is the focus destroying "ageda" of the rude group behind us either
hitting to close or impatiently taking practice swings just fifty yards back---
thinking that they are speeding up play in the process.

Knowing better, my course management often falls prey to McAvoyian exercises in
futility--- the weekend's silly attempt at a Mickelson full swing flop shot over
a palmetto guarded sand trap, for example, when a simple chip to the clear side
of the green was so much more doable for a Sunday-15 handicapper.

Given a choice between safe and risky, I seem to choose risky every time--- but
only on the golf course! I've not learned that a clear and calm bogey-every-hole
objective produces far more pars (and fewer "others") than a par-every-hole goal
that makes each second shot a masochistic head shaker.

I just don't play enough to master the safe approach--- something I've grown
used to in investing because I do it every day. Knowing our own limitations
should make things easier. Yeah, it should.

Investing is not as easy to master as many non-professionals seem to think---
and as even more commissioned professionals would like them to think. It is
likely that most golfers fail to break 100 ninety percent of the time. Equity
investors eventually lose money on their selections most of the time--- and
mostly because they forget to take profits. Now there's a double-bogey off a
perfect drive!

The most difficult aspects of golf and investing are similar: planning an asset
allocation and investment course management, minimizing risk of loss with higher
quality securities and taking hazards out of play by selecting the proper club,
trajectory, or landing area, etc.

Managing your emotions during the post-birdie tee-shot or in the throes of a
triple-bogey is a microcosm of the emotional control needed to ride the roller
coaster produced by market, interest rate, and economic cycles.

Similarly, mastering the short game (where the most shots are wasted in chunks,
skulls, and three-putts) is every bit as bottom-line relevant as fine tuning a
trading strategy that operates realistically and profitably along side the
short-term gyrations of the markets.

The parallels between golf and investing are many--- risk management is just the
most obvious. Fore!

Steve Selengut
Kiawah Golf Investment Seminars
Author of: "The Brainwashing of the American Investor: The Book that Wall Street
Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"



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Mark your calendar---

LGPA Pro Randy Friedman & I have organized a Golf Outing & Seminar October 23
thru 25 at PGA Village in Port St Lucie, FL. The Saturday morning seminar will
be on "The Mind Game" in both Golf and Investing. Randy's website is
GolfMindPower.com; mine is kiawahgolfinvestmentseminars.com.

All participants get a free copy of our books, a free Short Game Clinic, 2
rounds of golf, free gifts from sponsors, cocktail parties, meals, two short
seminars--- the works

We would welcome your participation as a golfer and/or as a program sponsor.
Bring a foursome and earn a free sponsorship listing. If you want, we will
distribute (appropriate) sponsor-product-samples as door prizes.

Sponsorships are $125 and include a three or four line ad on the Golf Outing Web
Page, a similar ad in the handout materials emailed and handed to all
participants, and the opportunity to give away free samples of your books,
magazines, CDs, tee-shirts, business cards, etc.

Please pass this information along to your friends, contacts, and business
associates. Visit Kiawah Golf Investment Seminars and click on "PGA Village Golf
Outing and Seminar" for all the nitty gritty details..

Steve



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The Working Capital Model (WCM) looks at investment performance differently,
less emotionally, and without a whole lot of concern for short-term market value
movements. Market value performance evaluation techniques are only used to
analyze peak-to-peak market cycle movements over significant time periods.

Security market values are used for buy and sell decision-making. Working
capital figures are used for asset allocation and diversification calculations.
Portfolio working capital growth numbers are used to evaluate goal directed
management decisions over shorter periods of time.

WCM tracking techniques help investors focus on long term growth producers like
capital gains, dividends, and interest--- the things that can keep the working
capital line (see Part One) moving ever upward. The base income and cumulative
realized capital gains lines are the most important WCM growth engines.

Please refer to the chart in Chapter 7 of The Brainwashing of the American
Investor: The Book that Wall Street does not want YOU to Read, or search Working
Capital Model.

The Base Income Line tracks the total dividends and interest received each year.
It will always move upward if you are managing your equity vs. fixed income
asset allocation properly. Without adequate base income: 1) working capital will
not grow normally during corrections and 2) there won't be enough cash flow to
take advantage of new investment opportunities.

The earlier you start tracking your dependable base income, the sooner you will
discover that your retirement comfort level has little to do with portfolio
market value.

The Net Realized Capital Gains line reflects historical trading results, and is
most important during the early years of portfolio building. It will directly
reflect the security qualification criteria you use, and the profit-taking rules
you employ. If you use investment grade value stocks and WCM buy/sell
disciplines, you will rarely have a downturn in this important number.

Any profit is always better than any loss and, unless your selection criteria is
really too conservative, there will always be something out there worth buying
with the proceeds. Obviously, capital gains growth should accelerate in rising
markets, and cost based asset allocation assures that such gains add directly to
future base income growth.

Note that an unrealized gain or loss is as meaningless as the quarter-to-quarter
movement of a market index. The WCM is a decision model, and good decisions
should produce net realized income.

One other important detail: no matter how conservative your selection criteria,
a security or two is bound to become a loser. Don't judge this by Wall Street
popularity indicators, tealeaves, or analyst opinions. Let the fundamentals
(profits, S & P rating, dividend action, etc.) send up the red flags. Market
value just can't be trusted for a bite-the-bullet decision--- but it can help.

The Total Portfolio Market Value line will follow an erratic path, constantly
staying below Working Capital. If you observe the chart after a market cycle or
two, you will see that the Working Capital, Net Realized Capital Gains, and Base
Income lines move steadily upward regardless of what the market value is doing!

You will also notice that the lows in market value begin to occur above earlier
highs--- but this may take several cycles to develop. It's comforting to know
that, although market value movements are not controllable, the WCM growth
engines are. We can actively manage a portfolio to produce increasing base
income levels, and we can conservatively select and monitor our equities to
assure that all reasonable profits are brought to the bottom line.

The market value line should never be above the working capital line, except
occasionally in 100% income portfolios. When it gets close, a greater movement
upward in Net Realized Capital Gains should be expected. If it hasn't, you've
become greedy--- let no profit go unrealized must become your success mantra!

Studies show rather clearly that the vast majority of unrealized gains are
eventually brought to the Schedule D as realized losses--- and this includes
potential profits on the boring securities housed in the income side of your
portfolio.

One other use for market value: When that line is at or near an all time high,
look around for a security that has fallen to a below investment grade S & P
rating, and bite that bullet. Loss taking should be done slowly, and downgraded
securities should be the first to go.

What's different about this approach, and why isn't it more high tech? There is
no mention of an index, an average, or comparisons with anything except valid
expectations based on securities and market cycles. It will get you where you
want to be without the hype that encourages unproductive transactions, foolish
speculations, and incurable dissatisfaction.

In the WCM, market value is used as an expectation clarifier and an action
indicator for the portfolio manager. Most investors focus on market value and
market indices out of habit. Market values, realistically, are neither bad nor
good. You need to step outside the market value vs. something box, and focus on
the opportunities for growth that security price changes provide.

All performance assessment lines need to be treated as learning tools instead of
knuckle slappers, and they need to be looked at as inter-dependent pieces of the
road map to goal achievement. But there is one more line to add to the chart.

The Net Invested Capital Line is the pulse of your investment plan and it should
beat most rapidly in the early years of portfolio building. Steady deposits
assure that opportunities are not missed and that base income attains the levels
needed many years in the future. Most investors curtail their deposits in bad
markets--- a major error in judgment.

The retirement phase of the investment plan should be based on a 70% or lower
withdrawal of base income. In tax-deferred plans, the 70% level includes Uncle
Sam's portion. Gotcha! With that discipline in place, the base income line will
continue to grow at a rate in excess of most recent inflation levels.

Steve Selengut
http://www.sancoservices.com
Professional Portfolio Management since 1979
Author of The Brainwashing of the American Investor
Investment Instruction provided through Kiawah Golf Investment Seminars



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It matters not what lines, numbers, indices, or gurus you worship, you just
can't know for certain where the stock market is going or when it will change
direction. Too much investor time and analytical effort is wasted trying to
predict course corrections--- even more is squandered comparing portfolio market
values with a handful of unrelated indices and averages.

Annually, quarterly, even monthly, investors scrutinize their performance,
formulate coulda's and shoulda's, and determine what new gimmick to try during
the next evaluation period. My short-term performance vision is different. I see
a bunch of Wall Street fat cats, ROTF-LOL, while investors beat themselves
senseless over what to change, sell, buy, re-allocate, or adjust to make their
portfolios behave better.

Why has performance evaluation become so important short-term? What happened to
long-term planning toward specific personal goals? When did it become vogue to
think of investment portfolios as sprinters in a race with a nebulous array of
indices and averages? Why are the masters of the universe rolling on the floor
in laughter?

--- Because an unhappy investor is Wall Street's best friend.

By emphasizing short-term results and creating a cutthroat competitive
environment, the wizards guarantee that the majority of investors will be
unhappy about something, most of the time. In the process, they create an
insatiable demand for an endless array of product panaceas and trendy
speculations that regulators fall bubble-years behind in supervising.

--- Your portfolio needs to be uniquely your own, and in line with some form of
realistic investment plan.

I contend that a portfolio of individual securities rather than a shopping cart
full of one-size-fits-all consumer products is much easier to understand and to
manage. You do need to focus on two longer-range objectives, however: growing
your productive working capital, and increasing your base income. Neither number
is directly related to any of the market averages, interest rate expectations,
or the calendar year.

A focused approach protects investors from their too normal reactions to
short-term, anxiety-causing events and trends, while facilitating objective
based performance analysis that is less frantic, less competitive, and more
constructive than conventional methods. Unlike most techniques, it recognizes
the importance of income generation as a long-term growth enhancer.

The terms "working capital" and "base income" are tenets of The Working Capital
Model (WCM). The former is simply the total cost basis of the securities and
cash in the portfolio, while the latter refers to the total dividend and
interest production of the portfolio. The discussion below is based on the
complete WCM methodology.

If we reconcile in our minds that we can't predict the future (or change the
past), we can move through the uncertainty more productively. We can simplify
portfolio performance evaluation by using information that we don't have to
speculate about, and which is related to our own personal investment program.

Let's develop an all-you-need-to-know chart that will help you manage your way
to investment security (goal achievement) in a low failure rate, unemotional,
environment.  The chart has five data lines, and your portfolio management
objective will be to keep three of them moving upward through time.

Please refer to the chart in Chapter 7 of "The Brainwashing of the American
Investor: The Book that Wall Street does not want YOU to Read", and on-line here
(sancoservices.com/WorkingCapitalLineDance.htm).

The Working Capital Line: The total portfolio working capital should grow at an
average annual rate between 5% and 12% plus, depending on your asset allocation
and current interest rates. Higher equity allocations should produce greater
growth over the course of a complete market cycle. Note that this major-focus
line is absolutely not a measure of market value.

In fact, the market value line is expected always to track south of working
capital. If market value breaks through, it means there are unrealized capital
gains in the portfolio--- you'll want to avoid that scenario. This line is
increased by dividends, interest, deposits, and realized capital gains and
decreased by withdrawals and realized capital losses.

The WCM is an investment-grade-only methodology, and it includes techniques that
cull downgraded or non-productive securities from portfolios at pre-defined
times during the market cycle. Thus, high cost basis junk doesn't
inappropriately impact the long-term slope of the working capital line.
Similarly, the WCM attempts to keep tax code based decisions out of the process.
For example:

Offsetting capital gains with losses on good quality companies becomes suspect
because it results in a larger deduction from working capital than the tax
payment itself. Similarly, avoiding securities that pay dividends, and/or paying
flat-fee commissions in advance, reduces the income compounding effect that the
WCM attempts to nourish.

A declining working capital line can be very informative. If you are
experiencing too many capital losses, it's a sure sign that you selection
criteria are too speculative; you aren't diversifying properly (or in 2008 and
2009) that you were victimized by misguided federal government intervention both
before and during the financial crisis.

Excessive withdrawal activity, for whatever reason, reduces more than just
working capital. It also reduces current base income and stunts the future
growth rate of both numbers. Long-term portfolio and income growth demand
control of expenses at a level below base income.

Hmmm--- I wonder if that would work in Washington?


Steve Selengut
http://www.sancoservices.com
Professional Portfolio Management since 1979
Author: The Brainwashing of the American Investor
Investment Instruction provided through Kiawah Golf Investment Seminars



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Every correction is the same, a normal downturn in one or more of the markets
where we invest. There has never been a correction that has not proven to be an
investment opportunity. You can be confident that governments around the world
are not going to allow another Great Depression "on their watch".

Every correction is different, the result of various economic and/or political
circumstances that create the need for adjustments in the financial markets.
While everything is down in price, as it is now, there is actually less to worry
about. When the going gets tough, the tough go shopping.

In this case, an overheated real estate market, an overdose of financial bad
judgment, and a damn the torpedoes stock market, propelled by demand for
speculative derivative securities and Hedge Funds, finally came unglued.

But it is the reality of corrections that is one of the few certainties of the
financial world, one that separates the men from the boys, if you will. If you
fixate on your portfolio market value during a correction, you will just give
yourself a headache, or worse.

Few of the fundamental qualities that made your IGVSI securities sound
investments just two years ago have permanently disappeared. We'll be using
credit cards, driving cars and motorcycles, drinking beer, and buying clothes
twenty years from now. Very few interest payments have been missed and
surprisingly few dividends eliminated.

Only the prices have changed, to preserve the long-term reality of things---and
in both of our markets.

Corrections are beautiful things, but having two of them going on at the same
time is like a trip to Fantasy Land. Theoretically, even technically I'm told,
corrections adjust prices to their actual value or "support levels". In reality,
it's much easier than that. Prices go down because of speculator reactions to
expectations of news, speculator reactions to actual news, and investor profit
taking.

The two "becauses" are more potent than ever because there is more self-directed
money than ever. And therein lies the core of correctional beauty. Mutual Fund
unit holders rarely take profits but rush to take losses. Additionally, the new
breed of unregulated index-fund speculations is capable of producing a constant
diet of volatility overload. New investment opportunities are everywhere.

Here's a list of ten things to think about or to do during corrections:

1. Don't beat yourself up by looking at your market value. You don't live in a
vacuum and you should expect lower valuations. That is why you should only buy
the highest quality securities in the first place and stick with a well-defined
asset allocation plan. Look for ways to add to your portfolios.

2. Take a look at the past. There has never been a correction that has not
proven to be a buying opportunity, in spite of the media hype that this one is
somehow special. When they are broad, long, and deep, the rally that follows is
normally broad, long, and steep. Get ready to party.

3. The "Smart Cash" produced by interest and dividends should be placed in new
stocks for rapid profitable turnover--- don't be shy when you're looking at 50%
discounts from recent highs. Buying too soon, in the right portfolio percentage,
is nearly as important to long-term investment success as selling too soon is
during rallies.

4. Take a look at the future. Nope, you can't tell when the rally will come or
how long it will last. If you are buying quality securities now, as you
certainly should be, you will be able to love the rally even more than you did
the last time--- as you take yet another round of profits.

5. Buy more quickly in a prolonged correction, but establish new positions
incompletely so that you can add to them safely later. There's more to "Shop at
the Gap" than meets the eye, and you should remain confidently fully-invested at
least until the media starts whispering: "rally".

6. Cash flow is king. Take smaller profits sooner than usual as long as there
are abundant buying opportunities. Today, nearly sixty percent of all Investment
Grade Value Stocks are down more than 25% from their 52-week highs. As long your
cash flow continues unabated, change in market value is just a perceptual issue.

7. Note that your Working Capital is growing, in spite of fallen market prices,
and examine your holdings for opportunities to average down and increase your
yield on fixed income securities. Examine both fundamentals and price, lean hard
on your experience, and don't force the issue.

8. Identify new buying opportunities using a consistent set of rules, be it
rally or correction. That way you will always know which of the two you are
dealing with in spite of the Wall Street propaganda. Focus on Investment Grade
Value Stocks; it's easier, less risky, and better for your peace of mind.

9. Examine your portfolio's performance in terms of market, interest rate, and
economic cycles as opposed to calendar time intervals. Apply your asset
allocation to your analysis for meaningful-to-you results.

10. So long as everything is down, there is little to worry about long term.
Downgraded, or simply lazy, portfolio holdings should not be discarded during
general or group specific weakness--- unless you don't have the courage to get
rid of them during rallies.

Corrections of all types will vary in depth and duration, and both
characteristics are clearly visible only in institutional-grade rear view
mirrors. The short and deep ones are most lovable; the long and slow ones are
more difficult to deal with.

Most corrections are relatively short and difficult to take advantage of with
mutual funds. So if you over-think the environment or over-cook the research,
you'll miss the after-party. Unlike many things in life, Stock Market realities
need to be dealt with quickly, decisively, and with zero hindsight.

Amid all of the uncertainty, there is one indisputable fact that reads equally
well in either market direction: there has never been a correction-rally that
has not succumbed to the next rally-correction.

Steve Selengut
http://www.sancoservices.com
Professional Portfolio Management since 1979
Author of The Brainwashing of the American Investor and A Millionaire's Secret
Investment Strategy



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Hedge Fund ETFs: Under The Radar Wall Street Con

The other day, with the market giving up about a third of its March gain in DJIA
points, I went looking through my favorite market stats to see if any remaining
profits could be pounced upon. Typically, profit possibilities can be identified
quickly on NYSE lists of the largest dollar and percent gainers.

Alarmingly, 75% of the largest percent gainers were ETFs, and many of those
operate using the same strategies as classic hedge funds--- most owned no common
stock at all! At the same time, 93% of the largest dollar gainers were ETFs with
a large proportion plainly operating like a hedge fund.

Earlier in March, while we were all sunning ourselves in the
far-too-infrequent-lately UVs of a brief rally, I was doing a similar search for
undervalued IGVSI stocks. Yes, Virginia, there is an equally impressive array of
hedge funds betting that the markets (and the South) actually will rise again.

What is a hedge fund, and just what does it try to accomplish? I think the key
legal element is that they don't say how they intend to get the job done.

Initially, hedging was used as a risk mollifier in the securities markets in the
same way as insurance is used for protection against disasters impacting life,
health, and personal property. Taking a short position on an owned security, for
example, protects an investor's profit if the company's market price plunges.

Naked shorting, shorting baskets of securities, and shorting indices, however,
have morphed into a risk creator, not a risk reducer. Similarly, hedge funds
that hold index funds as betting devices on market sector performance are not
what the investment gods envisioned when they blessed the sector experiment.

The new definition of hedge fund speaks of an aggressively managed entity that
uses leverage, long, short, options, futures, and derivative positions with the
goal of generating high returns. Risk reduction is no longer the objective.

Hedge funds have never been regulated like their open-end mutual fund cousins---
the rationale being that they cater to a wealthy and sophisticated clientele. In
fact, the law requires that participants in hedge funds jump over income, net
worth, and investment high-hurdles before being eligible to participate.

Investopedia refers to them as mutual funds for the super rich, but the only
similarities to the plain vanilla equity mutual fund are the pooling of
participants' money and professional management. During the past decade, a
series of ill advised and shortsighted rules changes gave hedge fund managers
destructive powers that exacerbated the financial crisis that will mourn its
second anniversary this summer.

But regulating the hedge fund is clearly a too late closing of a barn door
encrusted with diamonds (no pun intended). A few years ago, the masters of the
universe rediscovered, redefined, and complicated the world of closed end mutual
funds by creating many different forms of passively managed index/hedge funds.

As innocent as these funds may appear, they too have altered the investment
landscape. Speculators (not investors) place their bets on the rise or fall of
the index. These bets artificially impact the market price of securities because
many (if not all) of the funds actually own the securities they are tracking.

Additionally, many individual stocks fall into several indices, and most of the
major ETF marketing companies sell similar index funds. Didn't we just go
through this with mortgage-backed securities? Aren't these funds artificially
taking common stock pricing further and further away from the fundamentals of
the companies themselves?

Today, it appears that every passive fund has two or three accompanying
short/bear ETFs plus an equal number of bull/long funds to choose from.
Apparently, the SEC has not taken the trouble to look inside the thousands of
boutique ETFs that by now must outnumber the securities they are tracking.

Wall Street wants all CEFs (index, hedge, bond, equity, real estate, whatever)
to be regulated and reported upon as though they were simply common stocks. As a
whole, they aren't even close. In fact, there are more of these derivatives
traded on the NYSE than common stocks and preferred stocks combined.

And the real crime is this: investors as naive as the wet-diapered E-Trade
spokesbaby can push a button and buy operational hedge funds more bizarre and
sophisticated than any ever imagined buy the rich and famous.

If an ETF harbors a hedge fund, but doesn't call it a hedge fund, is it really
not a hedge fund? If Merrill Lynch creates a mutual fund with pro rata
individual account statements, is it any less of a mutual fund? Is it really
individual account management? Have the commissions really disappeared? The SEC
thought so.

Shouldn't the regulators be smart enough (and brave enough) to put an end to
these legal-in-name-only frauds? Should your mother's IRA be speculating in puts
on Netherlands Tulip Bulb futures? How about 200% of the inverse of the
Financial Select Sector Index?

A search at ETF-Connect for US Equity ETFs finds roughly 500 potential
speculations that absolutely anyone can buy into. All are self-directed IRA
eligible--- 401(k) eligible, possibly. A look inside reveals hedge-fund-like
operations. But technically, they are not hedge funds because they describe the
strategies employed.

So long as we tolerate Wall Street attorneys circumventing the intent of our
securities laws, and so long as we reward regulators for their blind worship of
the letter of these laws, we will have this kind of manipulation.

Index ETFs (and the no doubt about it hedge fund casinos they front) need a
league of their own, located in Vegas, AC, or Uncasville. (A free "Brainwashing"
book to the first three people who explain Uncasville!) They demand a new
rulebook that recognizes content and strategy--- not trading form.

The ETF derivative market requires a fresh new breed of big picture aware,
loophole fillers --- the Obama team is accepting applications.

Whatever happened to stocks and bonds?


Steve Selengut
http://www.sancoservices.com
http://www.kiawahgolfinvestmentseminars.com