Feeding Your Flame – 2019 Edition.

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Posted on December 28, 2018 by Richard M. Rosso, CFP

Marcus Aurelius referenced ‘Amor Fati’ often in his work.

Amor Fati – Love of fate. Every moment, every encounter- happiness, suffering, loss – treated as a welcomed visitor.

Embrace the stranger or friend forever at the door. Amor Fati – the zealous acceptance for all that crosses our path.

Author and friend Kamal Ravikant would deem Amor Fati as the light of truth and only in that blinding bright can one discover who they are, who they’re meant to be.

Nothing dark survives in in Amor Fati. We are bigger than any obstacle, even death.

Perhaps a radical acquiescence of suffering and all that is “meant to be,” is truly the Holy Grail of happiness. To fight Amor Fati is to burn inside. Wedged within the hot space between where we wish things were in place of gratitude for how things are, festers a debilitating friction. Ironically, to fight, to wish things were different, is to fall victim to despondency and self-pity.

I admit Amor Fati is a great challenge. Daily, I must focus on what I’m grateful for (even if it’s an unfortunate event), and train my brain to feel happy about all that enters my space. It’s interesting how after months of focusing on gratefulness, I am increasingly sensitive to friction and adept at correcting my course. Like when a car starts to veer into another lane. A spark goes off in the brain, you take corrective action.

My continued challenge in 2019 will be Amor Fati (that loveable scamp). What will you do to accept it into your life?

How can you make Amor Fati a reality?

Some ideas.

Random Thoughts:

CONSIDER THE WORST THAT CAN HAPPEN.

Your brain turns what you believe even if it’s false, into reality. It doesn’t know any better. In other words, if you focus on the pain, you’ll feel the pain. If you consider the worst that can happen in your life then realize it hasn’t occurred, a wave of gratefulness (relief) will take over. I call it ‘endorphin pinging.‘ Turning on the HAPPY TAP.

What you’re doing is training your mind to ponder negative consequences (why bother with positive, we like when good stuff enters our lives), and rewire how you deal with adversity.

I’ve made it sort of a game. On the way to work I imagine I have a blowout and wonder how I’d react; at work I’ll consider losing my best clients then reach out to talk to them grateful they are happy over some life event, or share concerns with me. Get it? Do it.

DOCUMENT GRATEFULNESS DAILY.

Yea, I know. Pain in the ass. At least I thought. Then at night before sleep I started to document 3 things I was thankful for. Some of it was stupid shit like not spilling coffee on my shirt which tends to happen often.

On rough days when nothing seems to go right or I feel like I’m deep in the badlands of dickhead city, even then I find a moment to find something positive. Surprisingly, I find myself grateful for the assholes; I’m able to deal with a situation with grace, not envision the satisfaction of hitting somebody in the head with a bat (obviously, I’m a work in progress).

EMBRACE ADVERSITY WITH VIGOR. Well try at least :/.

Just because you embrace adversity doesn’t mean you sit there and get rolled over. Just the opposite. I had a health scare a couple of years ago based on an aberrant blood chemistry. For an hour I was frightened. Frozen. I became detective Columbo to understand what I may be ahead for me and the latest medical diagnostics available to determine whether I really had something to worry about.

Long story short, I found a prominent specialist who believed in the advanced medical testing I suggested and although expensive I was able to avoid an unnecessary (and highly inaccurate), biopsy procedure. The more research you undertake to understand your obstacle the less you’ll fear it. Trust me.

EXPECTATIONS = 0 = AMOR FATI SQUARED.

Best. Math. Ever. I have 0 expectations of anybody I know, anyone I encounter, every engagement. Truly zero. And with that process comes zero disappointment. It was like my mind subconsciously established a test, set some bar that others needed to pass or jump for me to feel happy. Now? NADA.

This revelation has sparked encouragement to seek the good or at least pleasant, in each encounter and engage the present moment. I’m delightfully surprised on many occasions (hell, it’s not tough to exceed 0). It’s sort of gotten weird because if the experience feels too good, too easy, or events turn out perfectly as planned, I question the outcome. Sound strange? Yes, a bit. However, it keeps me grounded as I realize nothing is permanent.

AMOR FAT(I) SAVINGS ACCOUNT.

The healthier my savings account, the warmer my embrace of Amor Fati. Perhaps having cash to deal with adversities makes it easier to buffer financial fragility and remain calm enough to think a situation through. I don’t know how much cash equals Amor Fati to you. However, an emergency buffer of a year’s worth of living expenses sounds right. Two years sounds even better.

VISUALIZE YOUR FLAME AND UNDERSTAND HOW THERE ARE ALWAYS ASHES IN THE END.

I visualize tossing wood into a fire. I see a stone hearth, raging flames. The core of a log connects with a color I feel at the peak emotion of an event: Blue for heavenly, amber for warm, red for anger, yellow for apathy. All that meets us, crosses us = leaves us. Good or bad, what fate provides and (including us), inevitably turn to ash and forgotten. Each flame is beautiful. Each flame is different. Each flame dies. Within glowing ambers, it is all the same. In this unity and calm of an ending smolders Amor Fati.

So, how will you incorporate Amor Fati into your life in 2019.

May nothing black survive your cleansing process.

Diversification In Its Present Form Is For Suckers. So, Don’t Be A Sucker.

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Posted on September 10, 2016 by Richard M. Rosso, CFP

“If you have large cap, mid-cap, and small-cap, and the market declines, you are going to have less cap.” – Martin Truax

The financial services sales forces as mass storytellers, have morphed once noble, efficient constructs into treacherous fairy tales.

Tenured financial concepts which define the core of advice in the brokerage industry go relatively unchallenged. Investors, due to lack of experience about such matters, have a difficult time challenging the status quo or ask the right questions.

The easiest way to convince investors to “stick with an asset allocation or investment plan” is to use the past as a pacifier, regardless of current market cycle. In other words, if it’s broken there’s no need to adjust the guidance.

The industry just needs to isolate and showcase a cycle where the old confines worked, push that specific period of time into the present and extrapolate the positive, perpetually into the future.

Hey, it’s what the industry does best.

I believe nothing changes in practice on financial front lines, as the priority remains pushing products. Brokerage firm margins are embattled by the profit-draining effects of lower-for-longer interest rates.

I don’t blame the mouthpieces as much as I do the senior management and compliance departments that channel, reward or benefit from the behavior.

As a regional manager at Charles Schwab told me:

“It’s always about shareholders first.”

There are Holy Grail concepts that are rarely revisited except by academics and a select few in the private sector and for their work, I’m grateful.

From experience I’ve experienced how somewhere between academia and implementation in the field, updates or improvements to dogmatic strategies` get lost or ignored, especially when they conflict with the short-term focus on shareholder and analyst expectations.

The insidious or naïve (take your pick) roads most selected are designed to mollify fears and at the same time, leave investor wealth exposed unnecessarily to danger.

An egregious stretch of the truth emboldens the heavily-protected sanctuary of diversification.

It’s a word that makes investors feel good.

It rolls sweet off the tongue. It represents warmth of a blanket fresh out of the dryer, the scent of fresh-baked cinnamon rolls.

However, don’t be duped. Today, diversification as pitched by your broker, is a wolf dressed as Red Riding Hood. Many financial professionals have fooled themselves regarding its effectiveness. At least the way it’s defined, currently.

You must understand what diversification is and most crucial, what it isn’t. Certainly, it’s not the panacea it’s communicated to be.

The outdated definition of diversification requires a tune up. There’s no ‘free lunch,’ here, although I continue to hear and read this dangerous adage in the media.

The word gets thrown around like a remedy for everything which ails a portfolio. It’s the industry’s ‘catch all’ that can lull investors into complacency, inaction.

So, who buys into this free lunch theory, again?

After all, what is free on Wall Street? Investors who let their guard down, buy in to the myth of free lunches on Wall Street, ostensibly find their money on the menu.

Due to unprecedented central bank intervention, there exists extreme distortion in stock and bond prices. Interest rates ‘lower for longer’ and in several cases, negative, have created a frenzied reach for yield in dividend stocks. Global risk-averse investors have purchased bonds with a voracious appetite.

A way to effectively manage risk has morphed into two disparate perceptions. The investor’s definition of diversification and that of the industry has parted, leaving an asset allocation plan increasingly vulnerable.

Today, the practice of diversification is Pablum. Watered down. Reduced to a dangerous buzzword.

First, what is the staid, mainstream definition of diversification?

According to Investopedia – An internet reference guide on money and investments:

Diversification strives to smooth out unsystematic riskevents in a portfolio so the positive performance of some investments neutralizes the negative performance of others. Therefore, the benefits of diversification hold only if the securities in the portfolio are not perfectly correlated.
Diversification benefits can be gained by investing in foreign securities because they tend to be less closely correlated with domestic investments. For example, an economic downturn in the U.S. economy may not affect Japan’s economy in the same way; therefore, having Japanese investments gives an investor a small cushion of protection against losses due to an American economic downturn.

Now let’s break down the lunch and examine how free it is.

Unsystematic risk – This is the risk the industry seeks to help you manage. It’s the risks related to failure of a specific business or underperformance of an industry.

To wit:

This is a company- or industry-specific hazard that is inherent in each investment. Unsystematic risk, also known as “nonsystematic risk,” “specific risk,” “diversifiable risk” or “residual risk,” can be reduced through diversification.
So, by owning stocks in different companies and in different industries, as well as by owning other types of securities such as Treasuries and municipal securities, investors will be less affected by an event or decision that has a strong impact on one company, industry or investment type.

So, think of it this way: A ‘diversified’ portfolio represents a blend of investments – stocks, bonds for example, that are designed to generate returns with less overall business risk.

While this information is absolutely valid, the financial industry encourages you to think of diversification as risk management, which it isn’t.

Here’s what you need to remember:

Ketchup (consumer staples) and oil (consumer cyclicals) all run down-hill, in the same direction in corrections or bear markets.

Sure, ketchup may run behind, roll slower, but the direction is the one direction that destroys wealth – SOUTH.

Large, small, international stocks. Regardless of the risk within different industries, stocks move together (they connect in down markets).

Consider:

What are the odds of one or two companies in a balanced portfolio to go bust or face an industry-specific hazard at the same time?

What’s the greater risk to you? One company going out of business or underperforming or your entire stock portfolio suffers losses great enough to change your life, alter your financial plan.

You already know the answer.

Diversification is not risk management, it’s risk reduction.

When your broker preaches diversification as a risk management technique, what does he or she mean?
It’s not risk management the pros believe in, but risk dilution.
There’s a difference. The misunderstanding can be painful.

To you, as an investor, diversification is believed to be risk management where portfolio losses are controlled or minimized. Think of risk management as a technique to reduce portfolio losses through down or bear cycles and the establishment of price-sell or rebalancing targets to maintain portfolio allocations. Consider risk dilution as method to spread or combine different investments of various risk to minimize volatility.

Even the best financial professionals only consider half the equation.

Beware the lamb (risk management) in wolf’s clothing (risk dilution).

The goal of risk dilution is to “cover all bases.” It employs vehicles, usually mutual funds, to cover every asset class so business risk can be managed. The root of the process is to spread your dollars and risk widely across and within asset classes like stocks and bonds to reduce company-specific risk.

There’s a false sense of comfort in covering your bases. Diversification in its present form is not effective reduce the risk you care about as an individual investor – risk of loss.

Today, risk dilution has become a substitute for risk management, but it should be a compliment to it.

Risk dilution is a reduction of volatility or how a portfolio moves up or down in relation to the overall market.

Risk dilution works best during rising, or up markets as since most investments move together, especially stocks.Think about betting on every horse in a race.

In other words, a rising tide, raises all boats.

So, why is risk reduction but not risk management, the prevailing sentiment?

Sales Goals: Most financial pros are saddled with aggressive sales goals. Risk dilution is a set and forget strategy. Ongoing risk management is time consuming and takes time away from the selling process.

Diversification can be stronger than it is right now. Unfortunately, the financial industry as a whole, has watered it down and widened it so much, it’s become absolutely ineffective as a safeguard against losses. One reason is the sales targets that forces financial representatives to spend less time with client portfolios.

Compliance Departments: A targeted diversification strategy places accountability on the advisor and poses risk to the firm. A wider approach makes it easier to vector responsibility to broad market ‘random walks’ so if a global crisis occurs and most assets move down together, an advisor and the compliance department, can “blame” everything outside their control.

“Hey it’s not our fault, it’s the market!”

Convenient excuse, isn’t it?

Diversification requires a shake-up, a smarter approach.

The Clarity team decided to go back to the drawing board. Consider how investors perceive diversification, then create a thoughtful definition which incorporates part of the old along with important enhancements.

My revised definition of diversification:

A targeted selection of investments designed to manage risk within an allocation that’s behaviorally connected to who you are and the goals you seek to achieve. An allocation that fits the macro-economic environment driven by specific investment buy and sell disciplines.

That’s diversification for the new world, post-great recession.

Revised diversification strategies require actionable rules.

The following guardrails should help you identify and avoid the pitfalls that define diversification as it’s practiced in the field of financial services.

Random Thoughts:

Watch for over-diversification. Too much of a good thing can increase risk. That’s not your objective. Do not allow your financial advisor to spread your investment dollars too thin: All you’ll do is create an expensive index fund alternative.The more investments you own, the more a portfolio may mirror or move in unison with the underlying markets (you can do that on your own in a less expensive manner).

Control the number of securities you own or add. Proper diversification can be achieved with as little as 5 to as much as 15 separate investment to represent stocks and fixed income options. You must understand the reasons behind every new investment. Is it additive to increase return or lower risk, or is it duplication of an investment you already own? Most likely it’s duplication.

You don’t need to own every asset class at all times to be diversified from a risk management perspective. For example, where is it written that a portfolio must always hold international stocks when most domestic or U.S.-based companies have formidable international revenue streams?

Why must small, mid, or large-cap stocks be eternally represented in a portfolio, never to be fully liquidated? An active approach to risk management may exclude several asset classes. Frankly, at times it may help returns and reduce risk.

Think outside the box for real diversification. For effective diversification consider passive income from rental real estate, development of human capital (your skill set) to increase earned income, perhaps fund a privately-held business (a riskier option). Remember ‘owning ketchup & oil’ through turbulent markets may not be an optimum risk management strategy.

And speaking of risk management…

Without a sell or rebalancing strategy, diversification can only go so far. This step is more work for your advisor, but that’s what he or she is paid for. To help minimize losses, a portfolio requires periodic rebalancing to take profits and a liquidation component to reduce losses that may be tough to recover from.

Beware the “lunch room effect.” You own 3 mutual funds from the same fund company, XYZ Financial. All have different names, different managers, and different objectives. Every day, the three fund managers have lunch. They discuss the weather, the hometown sports team, and their investment choices.

Manager # 2 based on the parameters of the mutual fund, likes what Manager # 3 has to say about Acme Corporation. She eventually decides, after further investigation, to add Acme Corporation to her fund holdings, too. This is stealth, industry-specific risk that destroyed tremendous wealth during the tech bubble. So the lesson here is to never own more than one mutual fund per fund group to avoid overlap.

The tendency is to perceive diversification a panacea, a Snuggie that allows portfolios to be forged then forgotten, as diversification is considered the ultimate free lunch (that’ll wind up eating your lunch).

Diversification today is a convenient cop-out or weak replacement for risk management.

Schedule a meeting with your financial partner to discuss your concerns.

Ask for a definition of diversification. See if you agree.

If not, it may be time to move on.

And save enough money through risk management to happily purchase your own lunches.

How To Survive a Retirement: The 3 Questions.

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Posted on May 15, 2016 by Richard M. Rosso, CFP

In the AMC’s hit drama “The Walking Dead,” where the world is overrun by rotting corpses with a desire to feed on the living, there’s something even greater to fear.

The survivors.

Staying alive in a post-apocalyptic society appears to bring out the worst of what’s left of humanity. People are ruthless killers. Strength in numbers is the best defense, yet poses an interesting dilemma.

One wrong move, one bad decision, and you’re history.

Just like that.

Sometimes, overcoming the most complicated of challenges comes down to the obvious. Nothing’s perfect however complexity fosters confusion which can shift focus, divert your attention. And when your enemies, especially within, outnumber you, it’s only a matter of time before.

Well. You know (it isn’t good).

The good guys devised a simple screening method.

An initial shield to determine if strangers they encounter are worth entry into their community.

Three questions.

Let’s see how you do. Will you pass or fail?

Are you team material?

Or are you best left alone to fend for yourself?

How many walkers (corpses with an appetite for the living), have you killed?

To safeguard others, a survivor must be willing to take out the undead (a shot or blow to the head does it). Plain and simple. If your zombie kills are minimal or non-existent there will be doubts about your contribution to the survival of the group.

How many people have you killed?

Unfortunately there are instances when tough decisions must be made for the sake of self-preservation. Best the number of walkers taken out exceed the number of people otherwise you may become a victim yourself.

Why?

Tread carefully. The reasons for taking out the living best be because of personal survival. Or request. You see -There are sad instances when victims of zombie bites would rather die honorably, in their control, rather than expire from the disease they carry.

They would rather not wake up. Walk around.

As I ponder the power of simple questions, whether in fact or fiction, I have come to realize how most situations, no matter how serious, can be broken down to three questions you ask yourself or others ask you.

When it comes to preparing for retirement, there are so many differing rules, theories, planning tools – in my mind I need to consider retirement similar to a zombie apocalypse.

Sort of puts things in perspective, doesn’t it?

If today, you could clear all the noise, reduce retirement planning to what concerns you the most, what you need to do to protect yourself – What three questions would you ask?

As I work with individuals to formulate personalized retirement strategies, three questions emerge consistently. As a matter of fact, it’s rare when one of these queries doesn’t arise.

Once you strip out the confusion, target the basics.

Focus comes down to three main concerns.

Random Thoughts:

A confident retirement comes down to the money coming in to a household.

Cash flow is everything.

Question #1: How much spendable income may I have on a monthly basis post-tax to keep me, or me and my spouse comfortable for 20 years? Simply put, how much can I have?

Why 20 years?

Let’s face it. The odds of becoming a centenarian are as slim as the dead coming back to life. OK, not that slim but infrequent enough to understand that age 100 shouldn’t be a default setting for retirement plans.

Everyone I counsel is asked to complete the thorough, thought-provoking life-expectancy calculator exercise at www.livingto100.com. Eight out of ten outcomes come in between 80-85 years old. Women average longer life expectancies at 83-86 years old. Per calculator results, men rarely live past 84 years old.

Thought leader Dick Wagner and author of the new book “Financial Planning 3.0,” in a recent interview with the Journal of Financial Planning, stated “financial planning is very, very young as a profession. If you believe that 1969 was the first year for the profession, then we’re into our 47^th year. That’s not very many years if you compare it to other authentic professions.”

So who are we as advisers to indiscriminately assume that retirees are going to live to 100? I’m not sure why I see this occur so often. Maybe it feels safe. Perhaps it’s CYA. Regardless, it’s inaccurate.

Candidly, even if the profession were a thousand years old, longevity analysis would remain a slim, educated guess at best. I am 100 percent certain however that establishing retirement income plans to conclude at age ‘unrealistic’ is an exercise in disappointment. People won’t adhere to goals, milestones they find impossible to achieve.

Please plan for reality. Not fiction. A reach to age 100 will most likely lead to unsuccessful plan outcomes. You won’t feel secure enough to retire or you’ll wait too long thus placing the quality of life in retirement, in jeopardy.

If you believe, based on family longevity and state of health, that there’s a great probability of living to 100, by all means, don’t ignore preparing for the possibility.

The topic is challenging and uncomfortable to discuss. It requires acknowledgement of our own humanity.

A seasoned adviser doesn’t overlook or dance around the topic of longevity. He or she should handle the conversation with grace and honesty. After all, we are all going to die (and hopefully not return to life like in The Walking Dead).

It’s something we all have in common. We don’t seem to like to think about it happening before age 100, especially when it comes to retirement planning.

In the same interview financial futurist Dick Wagner continues his thoughts on the financial planning profession:

“The mission and purpose of financial planning is to work with individuals and families and their personal relationships with money and the fearsome forces that it generates. There’s something about ‘fearsome forces’ – it’s terrifying. I mean, it’s a quintessential challenge of the 21^st century: just try to survive with this money stuff. People do something that’s really hard, which is to anticipate their needs of the last 20-30 years of their lives. Now how do you do that? You have no idea what your health will be, you have no idea what your date of death is, you have no idea how long you can continue to earn a living.”

Financial planners deal with plenty of their own fearsome forces. One source of angst is to have straightforward, yet sensitive discussions; balance the thin line between a portfolio and human life because as Dick Warner lamented, there are plenty of unknowns.

Take it from me – we’re not fond of zombies in the planning process but they do exist.

Before you look to have a retirement plan completed, take it upon yourself to go through a life-expectancy calculator. Sit with the outcome for a while. Do the results make sense?

Once you’re at peace with the information, share it with your financial planner. Incorporate it into your analysis. You’ll both be in sync. You’ll tackle fearsome forces together. The synergy will lead to reasonable goals, follow up and fulfillment.

Question #2: Will Social Security be there for me?

The assumption that Social Security is a dying social program, regardless of the generation, runs pervasive. Don’t underestimate the importance of properly integrating Social Security into your retirement arsenal. For the majority of Americans, this is their sole income for life.

So, let’s clear up several misconceptions.

According to financial planning thought leader Michael Kitces in a recent voluminous Kitces Report on the topic, the Social Security system is often considered “going broke” by 2034. At that time it’s believed the Social Security trust fund will be exhausted.

Most planning clients have a difficulty believing the funds will last that long. Per the analysis, the majority of benefits will still be paid through tax revenues on workers paying payroll taxes at that time.

Social Security recipients usually receive Cost-Of-Living Adjustments each year. An added bonus to an income you cannot outlive is inflation protection. Unfortunately, COLA is not in the cards for 2016 (a rare occurrence), however overall, Social Security remains the best lifetime income deal available to the masses.

It’s best a retiree in good health plan to wait until at least full retirement age (66, or 67) or possibly later to apply for Social Security. By the time I’m consulted for formal retirement planning, many recipients have already applied for benefits early – at age 62, in fear of not being “grandfathered” into the system and losing future benefits.

Unfortunately, unless a household is cash-strapped or a recipient’s health is poor, there’s rarely a reason to apply for Social Security before full retirement age.

Starting early will have a lasting impact to monthly payouts. For example, a person with a full retirement age of 66 who started Social Security at age 62 would experience a permanent 25% annual reduction in benefits.

When I began my career in financial services during the great bull market of the 80s and 90s, the numbers worked out favorably for a Social Security recipient to apply for benefits early and invest the difference.

Since the year 2000, this strategy has been less effective. Over the last sixteen years I’ve witnessed improving life spans, people working longer and unattractive returns on investment assets, which has made Social Security a formidable hedge against longevity and adverse portfolio conditions.

In addition, Social Security has become a stealth, forced ‘savings’ program for a majority of households stressed to save for retirement in the face of rising college costs, financially caring for elderly parents and adult children, underwater mortgages and chronic underemployment.

For most recipients, waiting until age 70 to take advantage of an 8% delayed retirement credit is a smart strategy. In a majority of cases a retiree should seek to postpone Social Security, enjoy a permanent 8% bump in benefits, along with annual COLA (Cost-Of-Living-Adjustments).

Question #3: What should I be afraid of? I don’t really know.

This retirement game is unfamiliar territory. You’re outside the safe or familiar zone (which in The Walking Dead, is a dangerous place to be). Don’t be shy. Nothing is off limits. After all, this is a new experience. You’re not an expert (yet) at this next life phase.

Why not ask a tenured planner what you should fear? Better yet – ask friends and associates who have been retired – what did they find scary about this new world? What had they overlooked? What are the mistakes they’ve learned from? What were their greatest oversights?

There could be enemies hiding in plain sight (it’s tough to trust anyone in a world overrun by zombies), that may be overlooked because you’re too close to the situation.

Frequently I receive questions about fear in retirement. They usually have little to do with money. Ostensibly, information regarding Social Security, healthcare costs in retirement and other crucial topics, is widely available. A comprehensive retirement plan will cover all important financial concerns as well.

What’s difficult to find because a person needs to live it to learn it, is information on how emotionally challenging it is to navigate from the accumulation side of the household balance sheet to the distribution mindset – The new reality where a retiree must depend upon his or her assets to survive. Being outside the protective walls of a job or career is rarely discussed in financial planning circles.

From my experience, it takes at least a year for a retiree to gain comfort with a change in lifestyle, a satisfactory portfolio withdrawal rate, a new purpose for a life away from the office.

Never lose sight of the power of simple questions.

If they can keep the survivors of a zombie apocalypse alive.

Think about what they can do for you.

Watch For Dust People: 5 Lines Of Defense.

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Posted on May 4, 2016 by Richard M. Rosso, CFP

“You don’t have to try to keep the tears back.

You couldn’t cry if you wanted to. You couldn’t cry if you wanted to.

Even your thoughts are dust.

Even your thoughts are dust.”

Lucinda Williams

The Dusters thrive among us.

In the misty whirlwind of false, trenchant phrases and gut-hemorrhaging head games you’ll be captured.

The haze created by the escape, their false feelings that conclude in emotional entrapment, will set the outer reaches of your soul ablaze like high velocity, ghost-pepper shots to the eyes.

The singed ends of nerves you never knew you had will explode in dry fire, like staccato firecrackers going off in a cloying sulfur-mist tethered by a humid summer sky.

The lies will choke off your oxygen.

Your capacity to think straight will evaporate.

You’ll feel yourself shrivel from the inside out.

Because you’re gagging on dry death.

Helplessly falling into the cracks of the parched splintered arteries.

Ground into a foundation of splintered bones and pulverized hearts.

And you won’t. Even. Know. It.

By the time you get it, you’ll be dried out completely.

The hour, the minute, the month, the year you’re shaken from their lives.

As they move to the next dirt destination.

You’ll re-live each terrifying moment.

So you see.

Sadly, you must understand.

Fresh victims are plentiful. Always close. In the wings. Waiting to be dried and shaken while you’re stirred.

Before a Duster rolls down to a new pubic town (population YOU).

Before they release you to a wind that flows on apathy and stinks with the rot of deceit.

Another poor soul is near.

Unaware.

This group? Get to know who they are.

Society is overrun with them.

They feed on on others to build themselves. They fire up egos. Their own.

The Dusters.

Beware of them.

Let me show you the way.

Let me help you understand.

Allow me to help you avoid the dusters.

Because.

If you’re a victim?

****************************************

You’re gone already.

It’s called an expiration date and it’s on your head right from the get go.

Random Thoughts:

Dusters don’t feel remorse. Apathy. Or anything. The antics, every thought they possess, is based on an end game first. the grand exit. They re-live the escape plan. The goal for them is to leave with more than they entered your life with. Their timing is perfect.

Right from the start you are in a burning house with the door padlocked shut.

Dried meat. Turned into a jerk(y).

Oh who knows what keeps them around, sometimes for years.

I rattle this around in my head every day.

Good sex, a sympathetic ear, a travel bud, shared business contacts, an image boost, outright free stuff, a paycheck for nothing, a friendship controlled for personal gain.

Who knows?

The Dusters are indeed a diverse bunch. The breed is a non-partisan feeder.

They come from all walks of life.

Frankly, they represent an epidemic. One that’s going to be around a while because the ongoing deterioration into a Tinder culture demands it. And I fear it’s just begun.

I fear there are more of them than us, now.

So the odds are they will come for you, too.

You’re gonna get dusted.

It’s just a matter of time. The day you’re shaken, swept out to the dustbin of the past.

Once Dusters have gotten what they need from you or something/someone else to play with, you are dust (dead) to them.

And if you’re stupid or unfortunate enough to fall in love with a Duster, you’ll ignore the signs because nobody can be that evil, right?

Wrong.

So. So. Wrong.

Dust storm #1– Dusters create grandiose exit-preparation stories. It’s a first assault. An initial test of your resolve. It’s an attack on your sanity. A Duster wants to gauge the power of your commitment to stick with them long enough to be damaged. Because you see, it’s not a conscious effort to hurt.

It’s a part of who they are.

So, let me ask – How much can you handle?

Duster victims are steadfast suckers.

Others are smart and flee quick.

Who are you?

Dusters swirl words into flirty-dirty demons that revolve around and within you. It’s a tactic designed to confuse a victim before the slaughter.

Since Dusters don’t trust their own actions, naturally they can’t trust yours. In addition, they have not completely shaken the packed-on remnants of past particles (which is interesting) because they abhor how some of their victims have moved on to healthy relationships.

How dare they???

You can’t make Dusters feel bad because they can’t feel. Anything. People who can’t help them and those who have outlived their usefulness are swiftly discarded.

You’re an ash in a flash.

Their love is not permanent. Frankly, there’s no such thing as love (outside of self) for this cancerous spin-off of the species. Oh, they’ll say they love you, they’ll promise long term just to keep you in the storm, as they’re not quite done with your bloody carcass, yet.

It’s like that monster grizzly. You know – In the DiCaprio film “The Revenant.”

Just when you’re convinced he’s finished tearing out your neck, ripping open your back, dragging you like a puppy toy, THE BEAR RETURNS. THE MAULING RESUMES. NO MERCY.

Each lie, a claw to the face: They’ll be a friend forever (slash). They’re working for you (slash #2). They have your back (final gash). Actions prove different. Over and over again.

Love does not reside in their core. It’s not at home there. It dies before it’s able to breach the wall.

The warm fuzzies are icy-knife-ies.

The world is indeed their stage and you’re merely rolling across, stuck in it, used in it, then released from it.

They’re comin’, they’re comin’!

Dust storm #2: Duster emotions are fleeting, float light on the breeze, subject to change in a blink. There’s nothing in the soul when it comes to feelings.

Remember – Duster’s are always on the move even when still, constantly searching for exits. Lusting for the water of another’s life because the newest victims are the juiciest!

It’s how they prosper. Duster victims are flesh commodities.

Dust a dozen.

There are so many choices, so many people they can dry out, it’s like a feeding frenzy.

“Harvest time, all the time,”is their motto.

And surprise!

Look who’s on the menu..

Dusters are ghosts, shells of humans with important stuff missing. People are nothing to them unless you have something they desire. When a Duster shakes you off, it’s done with rehearsed platitudes, false language of leaving they’ve recycled from the dusty remnants of other departures. They’ll even fool your relatives. Suck in the kids!

Dusters thrive deep in finances. They’re the cuts you never do anything about. They’re stealth hits that keep on hitting. Recently, I received an e-mail for fees, an auto-renewal from a service it took me 3 hours to cancel.

Most would rather have their money turn to dust before they halt this auto-finance terrorism. Take a day. Stop all auto-payments. Gain control. I know consumers who have lost hundreds, thousands, robo-paying for services they never use because it’s easier to pay than to stop. Huh? No.

Dusters rarely say “I’m sorry,” or admit mistakes. And why should they? You should bow. Die noble in their grace. Just dust, bury yourself before they get to it. After all, they’re terrific. You’re the reason they’re fucked up, remember?

As a matter of fact they’ll make you feel wrong for being right.

Remember that line from the classic film “Love Story?”

Yea, it’s nothing like that.

Not at all.

Identify Dusters with 3 simple inquiries. No kidding. To kill a Duster you must be the Duster (not for long because that’s not you).

Keep it simple. The best deaths occur in plain sight. Every minute. Not even Kojak would be able to figure it out.

Keep sucking, buddy. You won’t catch me!

Tell me about your long-term friendships. Dusters have few close friendships to speak of. That’s not a bad thing on the surface. Loners can be cool. You just want to get a handle on the quality of the relationships. How a Duster defines them.

If you can’t adequately get a handle on why and how these friendships are maintained, step back. If there appears to be a pattern of breakage and it’s always the fault of others, well you know what to do, right?

Describe your last break-up in detail, please. Dusters are expert ghosters. They refuse to face a victim in person, or communicate verbally, on a forever departure. They conjure up lame-ass, re-hashed excuses through e-mail or other electronic channels. This query is your most insanity-driven dive into the Duster psyche. Stay strong. You’re going in deep.

Break-ups aren’t perfect. You’re not looking for clean, neat separations. You’re seeking to identify respect for a former partner in the throes of a heartbreaking life episode.

Dusters hold below-zero respect for people who love them, especially at goodbye time.

Remember, this is their heart, a life code: They want to slap-clap you off their tails. Like they would from their jeans after a long journey on a dirty mud-cut of ground.

Tell me about something, an incident, you’re sorry about. My personal favorite. You know why? Because Dusters are rarely sorry. About anything! After all, it’s never them. Be sensitive to a consistent string of “remorse code.”

Let me explain.

Remorse codes are strings of negative roads well traveled.The same circle patterns of mistakes. Ghost-like breakups, busted engagements, cheating. Could be they’re tough heartfelt lessons. Perhaps your Duster has vowed never to do this to you. Or maybe you’re delusional and the next stop on the heartbreak express.

Have you fooled yourself, convinced yourself that it’ll be different with you?

Question: Are you up for the risk?

Are you willing to take the chance?

Well, if you do.

Then:

_ _ . _ _ _ _.. … ._ _. . . _ ..

(Morse Code for Godspeed).

It’s not Morse Code, it’s Remorse Code. Silly.

Dusters feel guilt but it’s merely an odd form of self-flagellation. A seemingly strange internal coping mechanism. A futile effort to connect with what’s shoe-string left of their humanity (who am I kidding?). There’s a peculiar sadness that arises their victims move on. Re-hydrate.

The ones who escape really irritate them. So much so they can’t visit the ground zeroes, the towns, where these survivors survive. They feel something odd – REMORSE. Well, only because the ones left behind made it through the pain parlor. Their happiness, their recovery is Kryptonite.

Go figure.

Dust storm #3: Dusters will lament to you about the love or friend who got away. How they’ve mourned. How bad they feel. Really? They don’t. Take it as a warning. A brief wet spot they sit in with us three-dimensional mortals. It’s a worm hole you must crawl through. Listen. Discover. Run!

Dusters relish the stories they create. With disparate mental fragments of dark plot-lines, they form a sick square-fits-in-a-hole puzzle designed to validate an exit strategy, a distrust, even a hatred of their prey.

Dusters believe all people are bad so they must strike.

Destroy them first. Always.

Dusters are narcissists who frolic with sharp blades yet never cut themselves. They are expert slicers, compart-mentalists, molders. They’ll work diligently to galvanize fellow Dusters against you to protect their personal lack of accountability and courage.

I tested this theory recently. I placed my head on the chopping block. It’s in the bloody basket. Rotting. It turned out exactly as I figured it would.

They are steadfast cowards at intimate human interaction, connection, above all else.

Great movie from the 1980s: Basket Case.

It’s personally rewarding to discover people who are so damn good at Duster detection and deft at avoiding attacks from Dusters and their fuck-flunkies (not a dance move from the 1970s, or is it?).

I unfortunately, am not one of those special people, proficient in these skills.

Dusters will push, twist you into a different person. A human you’ll no longer recognize. The ultimate betrayal, the way they depart, the manner in which they leave frayed ends dangling like bloody entrails on a clothesline at a zombie laundry party, will drive you insane, out of your own skull.

You won’t recognize yourself. Your pets will avoid you. You smell different.

It’ll take time to return to the light, the living, the waters. The clear. The still.

Like a storm on the plains they’ll lift, carry, then drop you like a rag doll.

One day it’ll happen, you’ll look up. You’ll stop dragging what’s left of yourself across a gravel road and start all over.

You’ll be boarding the life train again. Sniff the spice off a summer breeze.

The light of day will no longer feel like night.

Oh, you’ve been there.

Sometimes it feels like exposed nerves are rubbing against broken and infected parts of my heart.

I wish Johnny Cash were still alive.

I would have loved to share my dust theory with him.

Would my thoughts be set to lyrical magic?

How would he take the words. Improve them?

Hmm, maybe this?

Dusters.

In this world.

As a new day bursts blue. Clear-on-clear.

They have their smoke eye on you.

For now.

I’ll wish you good thoughts.

I’ve walked there. I fear the footfalls.

And when the time arrives for you to be a target.

Or no longer play with the player.

Perhaps you’ll remember my words.

Heed the warnings.

Consider and respect my ongoing torment.

And dust the Dusters at their own dirty game.

I’m on your side.

Breathe in deep.

As deep can be.

Hold.

Release.

Walk.

Now you’re steady.

Prepared.

Thriving.

Dust free.

And a connect with the universe again.

Where it’s cool and clean.

And calm again.

*****************************************************************

Sidebar: The Dusters know who they are. They know this post is about them, don’t they?

They’re reading right now. In denial. Ready to strike.

Listen. Learn:

Lucinda Williams’ Dust.

Writing is part of my healing process . A closure activity.

I hope ya’ll enjoyed this lil’ ditty.

Dedicated to my very clever friend – Tami Denny.

Three Financial Lies that can Reset or Ruin your Retirement.

Posted on February 13, 2016 by Richard M. Rosso, CFP

A version of this writing appears in MarketWatch’s Retirement Weekly.

The financial sector still gets a bad rap.

Seven years after the financial crisis.

Justifiably so.

In his 2013 book “Finance & The Good Society,” economist Robert Shiller describes a utopia where finance can benefit today’s society. He identifies how financial innovations of the past, like insurance and pensions for example, improved the lives of the masses. The lauded professor at Yale shares his suggestions about the future of finance and how the industry can reform and prosper by serving the common good.

Can you imagine?

Yea, me neither.

I’m sorry to be cynical but you have a better chance of finding a unicorn in your driveway and taking it for a trot over a magical rainbow.

The halcyon days for finance are over.

Today, in the shadow of the Great Recession, forgotten by Wall Street and insidiously faded into the fog of averages, the financial industry is more than ever a marketing machine designed to convince the masses to purchase products they don’t need and to stick with investments that offer more risk for less reward.

The pundits seek to convince, not enlighten. They warn (scare) that if we don’t invest in the manner they suggest, we are in great danger of outliving our money, the boogey-man of inflation will inevitably arise from under our cash and devour our nest egg while we sleep.

From behind their manipulated statistics, these ‘experts’ communicate in serious tones a cozy belief that your household balance sheet has recovered from the Great Recession.

You know better.

Now, more than any other period since 2008, retirees and those near retirement, are vulnerable to the lies that appear pervasively in financial media.

Survival depends on you knowing the difference between white lies that don’t matter and dark fabrications that have the potential to derail your retirement planning.

There are three financial lies you must ignore to preserve your wealth right now.

Lie #1 – Cash is trash.

Many financial talking heads consider holding cash dangerous to their livelihoods. Why maintain cash when money could be allocated to expensive managed accounts or locked up in investment vehicles where ongoing fees can be charged.

These cunning souls know if they can convince you to remain invested at all times, especially when markets are sliding, then the financial firms they represent can continue to make a predictable revenue stream to appease shareholders.

The experts hope you fall victim to the behavioral pitfall labeled anchoring. When emotionally connected to a loss, you’ll wait for that losses to recover to your original purchase price before taking action, even if the current value reflects a change in fundamentals. The opportunity cost of sticking with losing investments and waiting for recovery can be detrimental to your financial health.

Gregory L. Morris, author of “Investing With The Trend,” showcases how it takes on average, five years to recover from a 20% loss in stock prices (as represented by the S&P 500). Five years can add up to a healthy stream of fees if you ‘stick with the program.’ Don’t you think?

So, let me ask: How many five-year periods can you survive in the span of a human life, to break even?

Never underestimate the value of cash as a component of your long-term asset allocation.

Mainstream media will never embrace the concept of holding cash. They’ll tout long-term returns as the reason to remain invested in both good times and bad. Most individuals lack the “time” necessary to truly capture 30 to 60-year stock return averages.

For individuals trying to save for retirement, there are several important considerations with respect to cash as an asset class:

Cash is an effective hedge against market loss.
Cash provides an opportunity to take advantage of market declines.
Cash provides stability during times of uncertainty (reduces emotional mistakes)

It doesn’t mean you should be 100% in cash. Holding an increased allocation to cash during periods of uncertainty provides both stability and future opportunity.

When inflation is low and stock valuations as measured by Robert Shiller’s CAPE ratio is at 23x earnings which has historically represented the peak of secular bull markets, the significance of holding cash is revealed.

As the chart above outlines, if you purchase stocks when the CAPE is 6x and switch to cash at 23x, the adjusted return of $100 increases dramatically over time. Of course, cash will lose out during periods of above average inflation like in the 1970s, however holding and investing cash during periods of low valuations produced substantial outperformance compared to waiting for lost capital to recover.

At this juncture, increasing portfolio cash to 20-30% to weather the storm will not kill your returns. As a matter of fact, your portfolio will survive. You won’t need to alter your retirement plans.

Lie #2: Stocks average 10% a year.

This lie may be the most lethal. Recently, I heard a pundit on a popular financial channel flippantly throw out a statement to an afternoon television audience. He said not to worry: Stocks average 10% a year if you hold tight.

Currently on their Twitter feed, a popular roboadviser called WealthFront which is an electronic portfolio asset allocator, regularly shares a chart alone and within blog posts. It shows how the growth of a dollar invested in the stock market appreciates to roughly $34,000 if invested from 1871 through 2015.

1871.

The president of the United States was Ulysses S. Grant.

Orville Wright of the Wright Brothers was born in August of that year.

Is 10% completely false. No.

Misleading, yes.

Is it realistic to base return assumptions for retirement planning on numbers many pundits share in the national media?

No.

From 1871 to present the total nominal return was 8.08% versus just 6.86% on a “real” adjusted for inflation basis. While the percentages may not seem like much, over such a long period the ending value of the original $1000 investment was lower by an astounding $270 million dollars.

Since 1900, stock market appreciation plus dividends has provided investors with an average return of roughly 10% per year. Historically, 4%, or 40% of the total return, came from dividends. The remaining return (60%), came from capital appreciation that averaged 6%.

There are several fallacies with the notion that the markets long-term compound at 10% annually.

The market does not return 10% every year. There are many years where market returns have been sharply higher, significantly lower or flat lined.

The analysis does not include the real world effects of inflation, taxes, fees, and other expenses that subtract from total returns.

SHOCKER – You don’t have 144 years to invest. Using ‘perpetual’ holdings periods for something as finite as a human life is plain irresponsible.

Lie #2 will allow false hope to permeate your retirement planning outcomes. Incorporating unrealistic return projections increases the likelihood of shortfall surprises later in retirement. Perhaps at an age where returning to work is highly unfeasible.

Then what?

This whopper will indeed sneak up on you. If you’re three years from retirement or in retirement, now’s the time to re-visit the return estimates that were used in your financial planning analysis.

Lie #3: Annuities = bad.

For years, several well-known money managers and syndicated financial superstars, have overwhelmed print, social, television and weekend radio media outlets with negative and false information about annuities.

It’s like saying repeatedly – a paycheck for life should always be avoided.

The wide universe of annuities are given an unfair rap as financial professionals with an agenda play on investor misunderstanding. With irresponsible blanket statements like ‘annuities are high commission and good for brokers, not for you,’ this group exploits the masses’ ignorance for their own gain.

They play on a human behavioral pitfall called heuristics. Heuristics are mental shortcuts we employ to digest the onslaught of information we’re slammed with daily. As busy individuals with access to limited information, we create rules of thumb to quickly come to conclusions and make decisions.

Annuities, specifically variable annuities, a blend of insurance and mutual funds, have been the subject of bad press and regulatory scrutiny for decades. Justifiably so. With exorbitant fees and generous commission structures these products were sold inappropriately in many documented cases.

Today, novice recipients of the adverse messages recall how they were told, read or heard somewhere that annuities must be avoided. So it must be true.

What an injustice to investors who would benefit from these products.

To mitigate the risk of outliving a nest egg or as a replacement for conservative investments like bonds, deferred-income and immediate annuities can be used effectively to supplement Social Security and portfolios that cannot carry the retirement income responsibilities alone. These annuity types are affordable and can play an important role in a holistic financial plan.

To understand the truth about annuities avoid the ‘real story’ touted in media and advertising. There’s something ‘Fisher’ about this bullshit. As in Ken Fisher.

Instead, check out your resident state’s department of insurance website for objective information. Meet with a Certified Financial Planner who is compensated on an hourly fee basis to understand annuity types and to determine if a lifetime income option, in addition to Social Security, is suitable for your personal situation.

Unfortunately, dystopia thrives within the financial industry.

Now more than ever.

As we appear to be entering the storm of a bear market in stocks.

To survive you must dig deeper, stay vigilant, possess a healthy dose of skepticism.

Because pundits will not disappear as quickly as your wealth can.

And finance and the good society shall remain just a fairy tale.

All charts are the courtesy of Clarity’s Financial Chief Investment Strategist Lance Roberts.

Rules To Live & Die By: Life, Money & Otherwise.

Aside

I appreciate rules.

Rules derived from the heart and mind have saved me.

Rules, forged from experience, can safeguard precious resources – financial and otherwise.

They will protect you from losing your pants.

Naked rules are best.

Pure, simple, raw.

Here are mine.

What are yours?

Random Thoughts:

Part I: Life Rules.

If a woman can’t listen to the Eagles’song Lyin’ Eyes without wincing, or quickly changes the station, run.

Beware of people who carry a stash of ’emergency’ condoms (indeed run, but feel free to have sex first).

You can’t wipe your ass enough (especially men – we’re the worst). When you believe it’s all clear in the deep, take another swipe. Just to be safe.

Never trust a person who rarely uses turn signals.

Be cautious of those who judge based on past mistakes when they’ve made the same ones or worse.

Don’t step back without looking (there’s a dog there, especially in the kitchen).

Never let open wine go to waste. Never. (Did I say never?).

Distrustful people are black pitch through the soul. Avoid them.

Be wary of those who can’t maintain close long-term relationships of any kind.

When I ignore rules I create, bad things happen.

Misjudgments remain with me. I see injury in the mirror every day. I lose a spark that will most likely, never return. Perhaps it’s part of a natural process, like aging.

Living without a personal guide book can hurt you.

Along with Clarity’s Chief Market Strategist Lance Roberts, we’ve created rules to help you protect and understand the key drivers of your wealth.

Remember – For every beginning there is an end. Investments have a shelf life. Eventually you’ll need to liquidate them to fulfill a financial goal, create a paycheck in retirement, gift to loved ones. Whatever. Money is to be spent, enjoyed.

Not hoarded.

And yes, you can indeed sell investments to protect capital.

Huh? What?

Sell: The scariest 4-letter word on Wall Street. Just the mention of it and you’re branded a loon. Leprotic, running amok and licking the neighborhood children.

Part II: Investment Rules:

Cut losers short. Let winners run. Underperforming positions are reduced or removed from portfolios on rallies.

Set financial life benchmarks and take action. Every position purchased has a sell target. Investments without goals are arbitrary, which increases portfolio risk.

Emotional biases are not part of the investment management process.

Follow the trend. 80% of portfolio performance is determined by the underlying trend.

And the current trend is south.

When markets break their long-term bullish trend supports combined with important long-term sell signals and a sharp decline in momentum, it has historically denoted the start of a “bear market trend.” The red highlight denotes the start of the bear market. The yellow highlight shows the ensuing bear market completion.

Never let a profit turn into a “loss.”

Investment discipline is successful if consistently followed.

Losses are part of the investment process. Losing positions are regularly culled to reduce portfolio risk and free up capital for better investment selections. However, you can’t completely avoid losses. Sorry. If that’s the case you’re better off in certificates of deposit. You can minimize but not eliminate. You play, you pay.

$Math-Of-Loss-122115.png$

As fiduciaries of OTHER PEOPLE’S money, the biggest concern is not how much money we make during market advances, but rather how much we keep from losing during market declines.

While this seems counter-intuitive, in reality it is where long-term gains are generated. As William Lippman, CEO of Investment Management at Franklin Templeton quipped:

“Better to preserve capital on the downside rather than outperform on the upside”

A strict discipline of portfolio risk management will NOT eliminate all losses in portfolios. However, it will minimize the capital destruction to a level that can be dealt with logically, rather than emotionally.

This isn’t market timing, people. That doesn’t work. ‘All-or-none’ is a losing strategy. Never go all cash. From a management standpoint, this is a bad idea. Trying to “time the market” is impossible over the long-term and leads to very poor emotionally based decision making.

The objective is to reduce portfolio risk to manageable levels to preserve capital over time. We can do that by increasing and reducing our exposure to equity-related risk by paying attention to the price trends of the market.Odds of success greatly improve when the fundamentals are confirmed by the technical indicators (see? Another rule).

Don’t add to a losing position. This is called “averaging down” and rarely is it effective. How many investors are caught in the energy sector value trap? Or treated master limited partnerships ‘safe’ as fixed instruments?

The slide has been ugly and getting uglier.

Don’t be a hero. Buying energy or “averaging down” at this juncture will most likely be hazardous to your wealth.

Markets are “bullish” or “bearish.” Remain neutral or long in bull markets. In bear markets be neutral and increase cash.

When markets or portfolio positions are trading at extreme deviations from long term trends, do the opposite of “the herd.”

If you haven’t trimmed positions yet –Wait for an opportune time. Most likely, a market bounce is coming. Trim your weakest holdings into strength especially if your gut is in turmoil or you’re 5 years or closer to retirement.

A goal of portfolio management is to achieve a 70% success rate. No process is perfect. Consistency wins the long game.

Manage risk and volatility, not returns. Also, manage emotions. Humans are not wired to invest. Knee-jerk reactions, overconfidence, seeing trends that don’t exist will only destroy portfolio returns.

Never discount the importance of financial planning. The investment process is an element of a financial plan. An important one. However, it’s not the full story. It’s the sexiest chapter, I know.

There’s more to consider.

So we created.

Part III: Clarity’s Financial Planning Rules.

Take a holistic approach. Proper planning integrates all assets, liabilities and sources of income for a complete perspective.

Money is fungible. For planning to be effective, remove the mental boundaries around the dollars you earn and save so they may be allocated to their highest and best use.

Don’t discount Social Security strategies. Take steps to maximize earned benefits. Coordinate Social Security withdrawals with those of other accounts to minimize the impact of taxes.

Healthcare costs including Medicare, and senior housing options must be included in the planning process.

Successful plans are grounded in financial self-awareness which includes prioritizing needs and wants.

Conversations with loved ones and friends about aspects of your financial plan are important. Make sure your estate, gifting and future housing intentions are clearly communicated.

Don’t Get Fooled By Averages. The financial markets do not return 8% a year. A realistic financial plan includes variability in returns, including losses, over time.

Accountability Matters. A financial plan not followed is not a financial plan at all. Long term financial goals need to be broken down into monthly objectives and you and your adviser are accountable in meeting those objectives. (It is easier to consider a savings goal of $500/month versus $6000/yr.) Mental trickery works. Milestones broken down to millstones will convince your brain to take action. Move forward.

Rules.

Boundaries.

They work.

Follow them.

Survive.

With less wear on your face.

Less dark circles under the eyes.

You’ll preserve joy in your heart.

Stamina.

Will be yours.

And you’ll live to play another day.

For a glossy (fancy) copy of our investment and planning rules email me at RichardRosso@myclarityfinancial.com.

Charts by Lance Roberts. Sign up for his weekly market/economic newsletter at http://www.realinvestmentadvice.com.

10 Shots At A Life Worth Living From The Rifleman.

Posted on November 7, 2015 by Richard M. Rosso, CFP

“Guns don’t make you strong, they make you hesitate and respect the value of human life.”

Lucas McCain

With a foundation in New York, now a life (or mid-life), in Texas, I’m sensitive to the frenzied disparate bombardment of opinions.

About everything.

On social media it’s North meets South, again.

Gun control, border walls, homegrown terrorists. Workplace violence.

Kim Kardashian.

Donald Trump.

Rhetoric, vitriol.

Electronic bullets.

People blown to bits in 140 characters or less.

Makes me realize.

People are shooting off their mouths indiscriminately.

The world needs The Rifleman more than ever.

Let’s return to September 1958, shall we?

Turn the clunky black dial flush to a rich, mahogany console. Fire up the RCA Victor, boys and girls.

TV tubes resonate a low hum. They sound like the wings of a thousand agitated bees until a black & white moving picture emerges. Out of nowhere from behind thick glass.

No matter how clear the picture, a perpetual cinematic room for a clearer clear exists. You toil endlessly with dual rabbit-ear antenna rods.

Feverishly you orchestrate two straw-thin antennas, stare at the screen. Stop. Work again. An awkward tango with thin aluminum arms. You’re expecting magic. Only you know when it’s found.

Battling rabbit ears is lost to the annals of American household pop culture. The endless search for medieval high-def is history. Dead.

Warmth seeps in on air waves. Vacuum tubes that resemble bulbous laboratory vials glow yellow. Heat rises. Conjures a musty, heady aroma from a warm brown felt grid stapled to the back of the set.

Cozy up to a screen of the thick glass. Watch your arm hair come alive, tingle to attention from static electricity.

You feel good all over.

And then.

Mom bellows from the kitchen because of course, she knows everything.

“Don’t sit too close, you’ll ruin your eyes!”

The Rifleman, a half-hour western drama, ran for five seasons: 1958-1963. Prime time on ABC.

Chuck Connors portrayed chisel-jawed Civil War veteran Lucas McCain. A widower raising a young son Mark McCain, alone. Building a life, a ranch, in the fictional town of North Fork.

I feel the ladies fading fast.

“I don’t like westerns.”

OK, The Rifleman is officially a western. You got me. However, life lessons roll larger than thunder arteries blistering the clouds in Oklahoma skies. The guns, bullets, dust, horses, and saloon brawls are set dressings for stories of challenge and perseverance. True grit.

Now, let’s get those ladies corralled into readin’.

A 6’6″ Lucas McCain holds a rigid stance against the searing heat of nature. Overworked boots. Heels in dry dirt. His broad shoulders glisten wet under the blistering New Mexico summer. The straight-line high blue gushes the same color as his eyes. Jaw clenched in determination, he removes his hat, the felt brim dark with sweat.

The salty sting in his eyes feels good. He’s alive. One with the land. His land.

Cotton is wet-heavy. A blast furnace against his skin.

Soaked with the fire of his toil.

He pauses to toss his shirt. Abruptly, it lands with a thick thud and soaks the parched earth underneath. A seldom breeze lands cool on his back. At 37, Lucas is fit, perhaps more so than a decade earlier.

His bare torso is lean. Working the earth, relishing the ‘sodbuster’ way of life has made him hard in body, sharper in mind. His farming a cleansing of where he came from, buried under black-pitch soil mixture of the present. Hopeful yet guarded for the future.

For him.

For Mark McCain. His boy.

Lucas reaches for a nearby bucket. Drinks deep from it. The sweet liquid from the ladle is lukewarm but invigorating. He carefully pours the precious liquid over his upper body. Drops embrace and crawl down his tired muscles.

The anterior of his right shoulder is tight but pliable. It had to do. Only a short time for a breather. There are more chores before sunset.

Lucas returns to his regimen. The thick spade handle grips small in large, callused hands. It comes alive. Ironically, his hands could kill yet it was easier to save a life. Grow it, too.

Whew, the ladies have returned.

Lucas McCain. A man of determination and wisdom formed by serving as Union lieutenant in the Civil War. Behind steeled eyes that witnessed the worst of the human condition, Lucas McCain became a master of placing himself in another’s veins. He knew when to strike and when, as a man of wisdom, back down.

Yea, there’s much one can learn from watching, no observing, The Rifleman.

Random Thoughts:

Shot #1: How much pain will it take to release the truth inside?

The emergence of your internal compass, a definition of truth as it breaks away from the fence lines of long roads traveled. How does this happen?

An uncompromising life philosophy.

What I call “Rifleman’s Awareness” is not born of happy or pretty.

It’s not of sunshine.

The source is internalized writhing maggots. Thick layers of spilled blood that attach to every cell. A tight-wedged coagulation of unhealed festering wounds that slither from unresolved torment under relentless pressure. A billion lifetimes in the making. The rot of past trials go back that far.

Sharp enemies of the past, the ones that carry and cut with rusted blades, never die. They continue to pierce until an injured limb goes numb and severed. At that point, you’ve won against fear and pain.

The opportunity has arrived for you to crush hideous demons into beautiful diamonds.

Nothing can hurt you. The higher plain is no longer fallowed grounds but an endless bounty.

You must learn to train these devils to do your bidding or allow their disease to stick to you. Consume who you are. Who you can be. Until you’re dead.

The Rifleman corralled and controlled internal torment. He could aim and fire the perfect dose of justice every time. His skills with a rifle were legendary. Known for miles. His words were delivered with similar velocity as bullets.

It’s safe to assume from binge watching what moves Lucas forward is life earned (and learned) – a bloody war, the loss of a spouse, a vigilance over his only child.

It can take years, decades (perhaps never) to develop a personal truth, an internal guide that motivates daily actions. The release of wisdom from a greater guide than self is an exhausting, ongoing process.

Beliefs that seed in the soul can break away to help you conquer the renegades in black hats. The gatekeepers. The enemies. When forced to protect everything you hold dear, those seeds will grow to mighty oaks.

Your personal rule book will be lived only after you’ve tamed the beast of fear. That mastery comes from confronting and melting the freeze that is born of it.

But first, you’re going to need to understand who makes the rules and why.

If you feel sick going into work every day, ostracized for disagreeing with your boss, shunned by co-workers, well then you sort of know already.

You’re walking the path of The Rifleman.

Recently, my friend and greatest teacher James Altucher wrote about personal rules on Facebook.

You see, he appears to be a nerd. However, he’s a self-aware rifleman (armed with pen and a waiter’s pad):

ARE YOU FOLLOWING THE RULES?

The government has rules.
Schools have rules.
Society has rules.
Parents and then family have rules.
Relationships have rules.

I tried to follow all the rules. I was a good boy.

Sometimes it’s hard to keep track. The rule book is too big.

And then I got the phone calls. Why didn’t you follow that rule?

I don’t know. It didn’t make me feel good.

Well, if the only thing that is important to you is feeling good you would just kill and steal and lie to people all the time.

Why would any of that make me feel good?

Well, what does make you feel good?

Talking to you on the phone makes me feel good.

Aside from that.

Walking outside and looking at people. Feeling the last remnants of sun on my cheek before the winter comes.

Being kind to someone when they least expect it. Surprise makes me feel good.

Knowing that every now and then I can still make my teenage children laugh.

I gave a talk a few months ago and I heard my youngest laugh. That is the best feeling I’ve ever had. She laughed right after I said something that felt like it was breaking the rules (I forget the statement: I was describing either lying or stealing or saying something about my mom).

Seeing the smile of a woman up close after a first kiss. That makes me feel good.

Being with friends who love me and I love. Anybody else…and I don’t feel so good. I feel sick.

Feeling like I’m improving at something I love. Because that grounds me and let’s me enjoy the company of others with the same passions.

Feeling like I need less than I thought I needed. Because needing less allows me to float into the sky without feeling scared, without feeling burdened to the ground.

Feeling always like I’m exploring.

Writing something really really awful. Because who gives a fuck.

Like this.

—-

So many times I hear from people who say: I have to follow the career (or marry the person), my parents want.

Or someone says: I have to go to college or nobody will give me a job.

Or someone tells me: you should be around these people. They can help you succeed. (But I don’t like them so what should I do?).

Or someone says: I want to have ten million dollars to relax. And own a big home so I can feel roots.

Or someone says: You have to vote in order to have your voice heard in society.

Or someone says: I feel stuck because I can’t quit my job because I have all of my family responsibilities.

I built a prison for myself also. It had triple locks. It had lots of guards. It had solitary confinement when I was bad. I didn’t much like my fellow prisoners but they were in here with me so I figured I would be with them.

I felt ashamed when I broke the rules of the prison. When I went broke. When I didn’t take the career I was supposed to.

When I didn’t return the calls or network with the right people or when I quit without warning the job I didn’t like or lost the homes I could no longer pay for.

Or when I was thrown out of school or when I didn’t pay the IRS or when I didn’t love enough the people I was supposed to love. Or the things I have done when I was so scared about money I thought I would go broke and die.

Or when I tried to live in a homeless shelter just to meet women or when I demanded love back from the women who didn’t love me or when I cried because I was scared that my life would disappear and nothing would be left behind.

This was solitary confinement. And it was lonely and I was afraid.

And one day I walked out.

And nobody ever saw me again.

That is some Lucas McCain kind of shit.

Lucas’ motives are consistently noble. No. Perfectly noble. Even when he’s left little choice but to use his modified Winchester Model 1892 to take out villains, he is delivering justice. His guide is a higher calling. A shiny key to living a life in the rough.

When you do a Lucas on who or what threatens you (and you will; rifle not required), be noble in your intentions. Standing for something you believe in is important to not only you, but to others.

Half-assed nobility is better than none.

I worked for (was enslaved by) Charles Schwab. Plainly speaking, my perception, my code, defines them as bad guys in white hats. Difficult to detect a rotted underbelly unless you’re homesteading within their bowels for a spell (cowboy lingo).

They hide behind edicts created by terrifying gatekeepers and spend hundreds of thousands of dollars on vigilante attorneys to intimidate and in many cases, destroy others. They’ll lie in cold-blood to slaughter the warm blooded.

They live to frame you for horse stealing or cattle rustlin’ and immediately call for your neck in a noose and a swing until you’re dead.

Underneath their so-called ‘code’ rolls an insidious dark residue of unethical dissonance. I know their employees work in fear. At least 100 of them have contacted me. They reach out from the shadows. Punch smartphone keys from hidden places. They ask me questions about how to break free. I’m happy to provide information.

It’s part of who I am. Help others. Don’t ask or seek anything in return.

I cut the wire fence. I spoke out. I did a Lucas McCain.They tried for years to wipe me out. High-noon style. I was willing to go broke exposing them. Ultimately, they were exposed for who they truly are. I’m still damaged. It’s fine. I learned. I won.

Oh, I forgot to mention: Every noble effort requires spilled blood. Your own or others. Not literally, silly. Well, perhaps, but let’s not go there. Could be money, an internal organ, a relationship.

Be prepared to lose something close or dear to you.

However I now live according to my own definitions. Rifleman-style.

Most likely, aggressively staking out villains is not for you. I don’t recommend it. Like The Rifleman, know when to take pressure off the trigger.

Those with personal codes think clear. Even under tremendous stress. They’re in control. Admittedly, I’ve made mistakes. Lucas rarely outed the rogues or took violent action unless those he loved or he, was in danger.

Recall what James wrote: Walk. Never be seen again. Fleeing from a cancerous environment can prevent well, cancer. Or worse. A long meaningless life within an unhealthy, suffocating environment.

“There’s dark corners in everybody’s lives. Sometimes it’s doesn’t pay to poke around in them.”

Lucas McCain

Like Lucas McCain did on several occasions, retreat from the gatekeepers. But walk with your front to them. Don’t take your steeled glance off them.

Don’t blink.

Never trust the fuckers.

Heed The Rifleman: Sometimes it pays to stay out of dark corners.

Be at peace. Take your ego out of it and understand you cannot change those who harm others even if they do it unintentionally. However, you have a choice. They can’t fathom a choice. In their minds, their worlds, there are no other roads.

Hey, you can move to another town (North Fork is coming along).

Perhaps you require more time, life experience, sorrow, regret, before you act. That’s OK, too.

Your time will come. No need to exhaust all your ammo right now. I’m not saying you won’t need to fire multiple shots. I’m saying it’s not required for every situation.

You’ll choose what’s right. Live to die. Or die to live. Codes don’t need to be complicated. Simple and powerful will get the chores done every time.

Go ahead: Get ready to fire your first shot. Tap into the diamond of your greatest powers. What are your personal beliefs? The ones the gatekeepers seduce you to believe cause grief for them and great obstacles for you.

The ones that scare the rule makers out of town.

“The rules tell me I can shoot. My own rules tell me that I hate gunfightin’ and will avoid it until I can’t.”

Lucas McCain.

Shot #2: Be Lucas McCain for only an hour a day. What you tell your brain, it will believe. It’s that simple. For an hour a day be – The Rifleman. Embrace his spirit of uncomfortable wisdom. Navigate a tough, admirable road you’ve been afraid to travel.

Like my friend Tanya. She’s battling a bully. She’s relentless to seek justice against a predator and helping other victims to speak up. The episode has affected her health. However, she’s steadfast and has a deep passion for justice.

The Rifleman lives in Tanya.

Like her, take one uncomfortable action that will draw you closer to understanding why you were put on the planet. One heroic act before you go.

Never be afraid to question your personal code. Lucas did. He was willing to listen when people he trusted advised him of a misconception. He kept an open mind. He was seasoned enough to adjust his thinking. Humble enough to apologize (and mean it).

People tell me The Rifleman isn’t real.

I call those renegades out at high-noon to face their bullshit.

Perhaps I’m immersed. Too deep in writing for television. Regardless, fiction and fact are cut from two sides of a blade. One man’s reality is another man’s fiction. Fiction and fact co-exist and shoot from the same barrel.

One hour a day to heed a higher calling, an enriched life.

Not much to ask.

See those eyes? Lucas McCain is watching (I advise against resistance).

Shot #3: Don’t let bad guys off the hook until (unless) they have proven change. Lucas’ history collided with his present, often. He knew he couldn’t escape (for long) the bad inflicted on people or the horrific marks others have left.

In many episodes, the karma coach rolls into town. Like a wagon wheel across the mid-section. Straight out of the Oklahoma territory.

Lucas’ dark place.

Ironically, the beasts entered North Fork frequently (drama folks, is good television). At times, he overreacted to their presence. He relived what they did to him. Like it was yesterday, he recalled their evil behavior.

Those who had proven redemption were forgiven. The others? Well, a dead-eye trigger finger took care of them. Lucas believed everyone could change, even the vilest of characters. If not, western justice was served.

You’ve lived long enough to be fooled by the bad guys. I bet they outnumber your good souls 2 to 1. Most of them can’t change. Too far gone. You can’t shoot them. I wouldn’t advise it.

Unless ‘The Purge’ becomes a thing, then go for it. I keep my ‘purge’ list fresh.

Hey, you never know.

Nah, you don’t need to resort to anything ugly. As a matter of fact, even under the intensity blasts of an August New Mexico sun, beauty will eventually appear out of the dirt for a patient sodbuster.

The strength in beauty bursts from heat. Cold is death.

Heat is life.

So don’t forgive the bad ones. Whatever you do. Don’t let them off the hook. Forgiveness just for the sake of it, for nothing, is death by ice. A soul in deep freeze. It signals you’ve given the bad ones a free pass. It’s you crawling belly down through the tundra, all the way cutting your gut open, dragging entrails.

Forgiving those who never seek redemption is a crime against your own heart.

Forgiveness foolishly exposes your hand, weakness. The seasoned poker players of North Fork would shoot you dead before you back away from the table. Embrace the anger. Let it take you. Allow it to scorch a personal path to victory.

The anger furnace will fuse your internal organs into barbed wire. Every cell grows sharp and deadly. You’ll become a master at detecting the presence of those who put your mental health at risk and seek to drain precious internal resources.

Because if you don’t learn, it’ll keep happening. Until the darkness saddles up alongside you and sticks to you forever like the spiny wings of Canadian thistle.

Back to our regularly scheduled program…

One early Saturday morning, Marshal Micah Torrance found out some disturbing news.

A woeful cloud recently rolled into town.

And he needed to think fast.

Or a friend’s life held in the balance.

Behind heavy-iron lattice of a lawman’s office office, Micah appears to require Lucas’ assistance with reinforcing a shelf to the deep interior of the middle jail cell.

For 62, the silver-haired lawman is surprisingly swift in gait. With Lucas holding the shelf against the wall, ready for the marshal to secure it, Micah makes his move.

Backwards exit.

On quiet footfalls. Steady. Micah clears the heavy cell door, shuts it quickly with a loud clank. Lucas at first believes his old friend is reciprocating a prank that embarrassed Micah the night before.

Far from it.

Micah was protecting Lucas from himself.

Reef Johnson was back.

Reef Johnson.

Once Lucas’ best friend.

Until.

He shot him in the back.

Until.

He left him to die.

Until.

He attempted to steal Lucas’ wife.

Ten years had gone by. For Lucas, it was a minute.

It was said that Lucas and Reef could pass for brothers back then.

A decade later, Lucas cared only about one thing.

To find this man. Track him. Destroy him.

No pass go. No collect $200. Just a death wish fulfilled.

Locked behind the cell door, the rage in Lucas’ eyes turned bars into molten steel.

“Micah, let me out of here. NOW!”

Tough lives roll the travails of revenge road.

Both parties lose a piece of themselves in the gravel. Their souls forever connected in a demon’s gambol. They spin and grind worn under the passage of time, or death.

Or confrontation.

From behind stark-black lines of shadows. Into dust-frizzed daylight that slivers through wooden slats of an old barn wall, a man emerges from a distant corner.

Tired of running.

As the enemy moves into half/dark half/light, Lucas full of anger, gun sharp and raised. He is a thick step closer to get a better look at the fire, his invidious focus.

As slit light slashes across Reef’s face you can’t stare. You can’t look away.

His hair matted, disheveled.

Deep lines across his cheeks, facial skin as sallow as worn leather.

“I’m here, Lucas. I can’t run any longer. Kill me! Get it over with!”

This man. What’s left of this man. A man who once resembled Lucas McCain, smooth of youth, clear of eye was nothing but a shell. He looked 77, not 37.

Lucas lowered his rifle. Revenge no longer held captive the ready grip on the trigger.

“Lucas! You can’t leave me like this! Please!”

As The Rifleman created distance between himself and that barn. That place where his anger ceased. The place he left in silence, yet heard the screams for miles…

He realized.

What he felt was pity.

The heave in Lucas’ chest was sorrow.

This wasn’t forgiveness. Release wasn’t forgiveness.

Never forgive those who shoot you in the back and leave you to die.

Time and the universe will take care of those villains in the proper manner.

In due time.

Sit back. Tend to your fields. Nurture the ground.

Be patient.

Shot #4: Forge strong financial boundaries around you and yours.

The financial landscape post-Great Recession is enemy territory.

Oklahoma badlands.

Your money isn’t safe.

There’s not enough barbed wire to protect the homestead.

And the soil. Underneath the dirt, a bounty in stocks for 6 years or so, is over. Frankly, many retail investors didn’t participate in the 159% total return of the S&P 500 off the March 2009 bottom, anyway. They’re still trying to recover from the 2000 tech wreck and a flat-lined market from 2000-2013.

It’s still a whirlwind ribbon of dust.

Lance Roberts, Clarity Financial’s Chief Investment Strategist revealed his truth, discovered his rifleman years ago through his thorough, no-spin analysis of the stock market and the economy.

Refreshing. Rare.

The accounting magic used to prop up earnings, the foolish optimism of estimated earnings, profit-margin reversion. It’s all here, folks. You want fiery shots of wisdom in your gut? Read it.

And people call The Rifleman fiction and the stock market reality.

It’s silly, isn’t it?

Lucas is not amused by this information.

You shouldn’t be either.

Shot #5: Always teach and always expect nothing in return.

One of the greatest rewards in life is teaching others and expecting zero. It’s a positive rate of return to the world, the universe. It makes the stars shine brighter above a blue-black New Mexico sky.

The Rifleman shares memorable words, bits of shotgun-wisdom with his son Mark. He never holds back. Even when Mark doesn’t quite get it.

Doesn’t matter. Eventually Lucas’ invaluable guidance kicks in. On occasion, it saves Lucas’ hide.

“How can a man be so good with animals and so mean to people?

Lucas McCain: That’s a sign you’re growing up.

Mark McCain: What do you mean, Pa?

Lucas McCain: The older you get, the more questions there are without answers. ”

Today, I teach young investors how to not get killed by the buy-and-hold investment mantra and how true diversification includes investment in personal education and health.

I guide gifted financial services pros away from big box financial retailers and direct them to havens that have fiduciary intent. It’s a part of what I do. They’re my Mark McCains. My kids. I set them forth with noble intentions and a different world view.

How will you teach today? Who will you inspire?

Will you seek nothing in return except the stare at the stars in the sky?

Shot #6: now the difference between dumb fear and smart fear. Those who are reckless with your heart, your money, your emotions. Predators who dig beneath your vulnerability and then rip you apart from the inside, should be feared and avoided.

Individuals who have a track record of apathetic and non-empathetic behavior should never be allowed on the ranch. You’ll know them. You’ll be sickened by what you’re feeling. You’ll ignore what your intuition is telling you.

That’s plain dumb fear. And that will eventually leave you out in the desert with no water.

Vultures circling. Dead meat. You’ll crawl to safety but some part of you will be gone forever.

However, smart fear will keep you alive.

How do you develop smart fear?

Unfortunately, smart fear only comes with experience and knowledge.

You’ll require a construct. Questions are a solid foundation for said construct.

Create a simple framework to identify, fortify your defenses against enemies.

Start small. Big results.

All you need are three questions to get to the heart of anything.

My humble opinion.

Here’s a trio I use for dating (based on personal experience – yours will indeed, differ).

Let your inquiry flow naturally. You’ll become The Rifleman at separating friend from foe, now from forever, life from death.

How would you describe your long-term relationships with friends and family?

Big one. If she doesn’t have any close ties, or they’re full of weird sexual or resentful experiences I’m dodging a bullet.

Have you ever broken off an engagement?

Sure, nobody’s perfect: I’m just looking for an inability to commit, serial monogamy. Murder. “He fell from the upper deck on a Carnival cruise.”

How many times have you accused others of something you’re guilty of yourself?

Somewhat inflammatory. Granted. On purpose. We’re all guilty. I’m seeking to get a handle on frequency, accusations, assumptions. “Never” is not a good answer either.

Three questions.

For everything.

To create a personal SFDS – Smart Fear Detection System.

“It’s the price you pay on staying alive and in your right senses, it’s manhood. And I can promise that when you come to the far end of it, you’ll raise your old hands to bless this wonderful life you’ve been given, taken all together with the roast beef, and the moon rises, and a boy and his father riding out in the morning, after you’re grown up to be a father yourself.”

Remember – SMART FEAR SAVES A LIFE. YOURS.

Shot #7: Get in or cause trouble for the right reasons.

My favorite bullet. Hits me in the heart every time.

There’s a point in your life where you don’t give a shit any longer about what others think. You’ve been living your code. Those who fit in stay. Those who don’t, go. Life gets simpler. You begin to figure shit out, you begin to help others figure shit out.

The ranch is humming along, the crops are bountiful, the soil is the right composite, the enemies are at bay.

Then there are times when the trouble in your life resembles weather systems. When the turbulence begins, you also know it will pass. Makes it easier to deal with the aftermath, the cleanup. Healing.

And you can create your own weather. Spark your own thunder as the needs arise. For the right reasons.

Shot #8: Don’t be afraid to confront a person with their truth.

Lucas will place himself in precarious situations. Smack in the middle of the rough.Tip toe on the blade.

He’ll go out of his way to wake people up. Help them understand their truth. Most of us live in a state of denial. We hurt others, we lie, we make promises, we kill, we have little empathy and yet we want to be perceived as ‘good’ people.

Frankly, most people are assholes. They use you for what you can provide and then move on. That’s fine.

But make sure to tell them they’re assholes and deal with the consequences.

Perhaps you’ll enlighten. Regardless, you gave them some shit to chew on whether they like it or not.

Shoot the asshole a verbal bullet. Then walk.

You know how to eat shit, right?

Best not to nibble.

Bite, chew, swallow, repeat.

Because if you deliver, you’ll eat it, too.

Comes with the territory.

Shot #9: Learn when somebody confronts you with yours.

If you dare to shoot, you must be willing to be shot. You can’t protect yourself from a gunfight. The key is for bullets to graze, but not kill.

You must respect your opponent, however. That’s the key.

Hey, if you’re going to learn a tough lesson best to get it from a person you respect for whatever reason. Doesn’t need to be a grandiose reason. There’s just something about this individual you admire.

When Lucas shoots his mouth off and Micah gives it to him straight, Lucas doesn’t like it but he listens because he respects the marshal.

“Lucas, I think you’re wrong about this one.”

If someone provides constructive criticism, it’s acceptable, normal, to hate it at first. It’s fine to feel the sting of the words like bullets, and bleed out.

Right there on Main Street, North Fork.

Just as long as you step back, dig out the fragment. Feel the pain. Examine it. Ponder why you were shot. Was it one of the best shots of your life?

Learn from the bullets that hit and take you off balance.

Just as long as you respect the shooter.

Otherwise it’s an enemy and you need to return the blast.

Rifleman-style.

Shot #10: Stick your neck out for those you love. Place your neck in the noose if it means someone you love remains happy, moves on, sticks around.

What else you got?

Sacrificing a part of yourself for someone you cherish isn’t a bad thing. It’s walking like McCain.

I did it for clients and a fiduciary right to care for them.

You’ve done it for children. Parents. Friends. Animals.

Recognize, remember, reward yourself for sticking your neck out for those you love.

Heck, you’ll be called horrible things. I know.

You think everybody loved Lucas?

Why do you really think he needed that rifle?

The thing in this life is to stay alive. Ride easy.

Like in the old west.

Lucas McCain never spoke the words at the start of this blog post.

As I write dialogue for television I place words in mouths of fictional characters. The commentary would have been delivered perfectly however. I can hear the deep-baritone voice of The Rifleman resonating right now.

You don’t get endless shots at this stuff because eventually you’re in adult diapers and drooling into a liquefied breakfast.

Give yourself a number. I chose four.

Four bullets in my rifle.

I believe Lucas suffered from overwhelming, lasting grief that he channeled into something bigger than himself.

Last, I learned from Lucas that death isn’t frightening.

Bad memories?

Ghosts from the past?

Now they’re frightening.

They haunt, relentlessly.

Yet there’s something good that arises.

When the demons dance.

They create.

Riflemen.

Dedicated to radio host, veteran broadcaster, all-around good guy and most important: Hard-core “The Rifleman” fan – Gary McNamara.

Special mention to dear friend Tanya Bilisoly, Austin realtor extraordinaire who is taking on a bully, living her “Rifleman moment,” right now.

Jurassic Money: 5 Financial Dinosaurs to Avoid.

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Posted on July 25, 2015 by Richard M. Rosso, CFP

In the 1993 film “Jurassic Park,” Jeff Goldblum’s character argues with the scientists who have assured him that their cloned dinosaurs cannot reproduce. “Life finds a way,” Goldblum says.

Extinct for millions of years, dinosaurs survive on the big screen. They frighten and thrill us out of our cash and generate big box-office bucks. (Their latest romp, “Jurassic World,” has grossed more than $600 million this summer.)

Dinosaurs exist in the real world, too — financial dinosaurs that stomp on your goals and chew up your money.

Don’t feel bad: These prehistoric remnants often thrive in the portfolios or financial activities of even the most astute investors. For massive creatures, they are mysteriously stealth-like when it comes to devouring cash from wallets. Life, you could say, finds a way.

Can you detect the beasts that smash portfolio performance and endanger overall financial progress? Consider these five fossils that require burial deep within the archives of financial services history.

Random Thoughts:

1. Load mutual funds

These ancient beasts roaming the asset classes of your portfolio have long since reached their life expectancy. With more than 16,000 no-load managed or index funds available, paying sales loads on mutual funds is akin to taking a big bite out of your investment returns before they have a chance to run.

Whether it’s the A-share price of admission of 3%-5.75% upfront or the creative B- and C-share classes, where load charges are supposedly deferred (but not really), the total expenses of these investments are a challenge to justify. Stay away from this Jurassic world. It will only lead to financial chaos. If you own loaded funds, monitor them regularly with a watchful eye for exit. Move into more affordable options as soon as their performance lags their benchmarks for two quarters.

2. Variable annuities

This blend of mutual funds and insurance busted out of containment long ago and has wreaked financial havoc on thousands of investors. As with the Indominus rex of “Jurassic World” — the product of combining the DNA of multiple creatures into a terrifying monster that would sell more theme park tickets — the financial services industry created these hybrids to benefit themselves through lofty commissions and high fees.

If you own a variable annuity, you’d get better acquainted with what makes this creature tick. Don’t be surprised to learn that annual expenses can be 4% or higher. That means every year a significant portion of your return gets devoured by the ravenous VariableAnnuitus rex. Pay attention to surrender or “exit” penalties that can range from 1%-10% and decrease over a period of years. These charges are designed to hold you captive in the cage with these costly beasts for as long as possible.

Work with a financial or insurance professional to devise a strategy to transfer variable annuity proceeds to less expensive alternatives. To defer taxes, an advisor, if properly licensed, can initiate a process called a 1035 exchange.

Take heart: Not all annuities are prehistoric relics. Deferred-income or single-premium income annuities are becoming more popular as ways to supplement Social Security and generate an income you cannot outlive.

3. Payday and title loans.

These types of loans for quick cash are growing in popularity. Like the velociraptors of “Jurassic World,” they don’t seem too dangerous until the sharp teeth of interest charges and other fees dig deep into your wallet. With interest rates that can easily top 300% APR, rarely are they a smart choice. Several states have passed legislation to help consumers understand how these loans work. Fast-cash lenders cater to people in a liquidity crunch, usually lower-income groups with poor credit opportunities.

The Consumer Financial Protection Bureau is gaining a better understanding of the nature and magnitude of payday, title and other installment-type loans. It’s customary for a borrower to “roll over” these loans and continue to pay fees and interest charges, thus creating a debt trap that’s tough to escape. If you must use these loans out of necessity, realize that the federal government is actively forming a framework to harness these financial beasts and determine how people can seek credit relief in an affordable manner.

4. Emotion-based investing

Our brains are primal. They’re built to keep us alive, not necessarily to maximize our investment returns.

Dalbar recently released its latest “Quantitative Analysis of Investor Behavior” study. This 21-year analysis consistently shows how poorly mutual fund investors have performed compared with market benchmarks. For example, in 2014, the average equity mutual fund investor underperformed the S&P 500 by more than 8.19%. In fact, the return from the broader market was more than double that of the average equity mutual fund investor: 13.69% vs. 5.50%.

One of the more prominent investor pitfalls is called “anchoring.” An anchor can sit heavy on net worth — like a brontosaurus on the chest. Investors who anchor are focused solely on the price they paid for an investment. If the investment turns out to be a loser, anchoring prevents the investor from selling regardless of whether conditions warrant a sale. They strive to “get even.” Anchoring results in opportunity costs or even bigger losses as additional money is put into underperforming investments. To battle this primal enemy, create a buy and sell rule for every investment or work with a professional to guide you.

5. Brick-and-mortar banks

For higher yields, exit the Jurassic period. Virtual banks can link easily to brick-and-mortar options and are FDIC-insured. Even if not for day-to-day banking, online choices are perfect for savings, especially emergency reserves which ideally should hold six to nine months’ worth of household living expenses. NerdWallet offers a comprehensive hub with savings account basics, tips to find higher savings accounts rates and a list of the best online savings accounts.

There’s no place in household balance sheets for colossal animals, especially those that have a ravenous appetite for cash. Keep the dinosaurs limited to movie choices, and financial success will be more reality than fantasy.

This post first appeared on Nasdaq.

Seeds: How A Millennial Farms a Retirement Portfolio.

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Posted on July 18, 2015 by Richard M. Rosso, CFP

A version of this writing appears in MarketWatch.

“You’re a farmer now. Will you be a proficient one?”

“Rich, you do realize I work for a startup tech company in Austin.”

“Yes, as I said. You’re a farmer.

What are you planning to grow in your new fields? How will you tend to them? How many can you manage?”

Ely recently earned more seeds than he’s ever held. A six-figure bonus. For this Millennial, a bounty received. Smart enough to seek objective guidance and lay the groundwork for a strategy before the windfall is spread. Not to be cast to the wind. Conditions needed to be perfect for what he was seeking to grow.

“I don’t have fields. I’m from New York City, remember?”

“A seed is an organism. The shell encases life and vigor that will break out and grow strong if tended to as it should be. It works the same for money. Now that you possess financial seeds, you must consider planting them in multiple fields to reap rewards that will sustain you over a lifetime. Picture this…”

Plentiful tracts. Spider webs of rich soil. All different. Tilled with a specific mix of nutrients and attention. Fortified by a plan and philosophy designed to produce opportunities diversified enough to endure changing climates.

Investing for retirement is a robust, varied harvest that may be reaped for decades.

Here’s how an industrious Millennial became a financial farmer.

It starts with a refreshingly different philosophy about life and money. A young farmer’s mindset has the potential to send chills up the spine of every financial services organization that believe stocks are the only crops in town. Wise stewards of money understand that true diversification and investing is more than stocks.

Ely and I call it “holistic diversification.”

Stocks are not ignored; however they represent one field among four deserving attention.

According to Investopedia, diversification is “a risk management technique that mixes a wide variety of investments within a portfolio. Diversification strives to smooth out unsystematic (business) risk events in a portfolio so that the positive performance of some investments will neutralize the negative performance of others. Therefore, the benefits of diversification will hold only if the securities in the portfolio are not perfectly correlated.”

The information then goes on to outline how to diversify with stock investments. If diversification is truly risk management and is a technique that “mixes a wide variety of investments within a portfolio,” why is a portfolio defined solely as a mix of “domestic and international securities?” Is this the “wide variety” that controls or contains risk?

I’m sorry, this definition is not accurate. Farmers shake their heads in disbelief.

Over the years, especially since the financial crisis, stocks have become more positively correlated. In other words, in times of crisis, defensive industries like food and beverage and cyclical growth sectors like industrials have moved increasingly in the same direction: Down. The majority of stocks follow the general trend of the market, especially during bear cycles. So, when diversification among stocks is needed the most, it disappoints the most.

Holistic diversification is grander way to think and invest.

It breaks down mental barriers around money, inspires self-discovery, fosters creativity and generates a thought process where opportunities can seed, plant and prosper in a beautiful lifetime patchwork. Each field requires different levels or types of care.

That’s diversification the way it should be.

Ely (with my encouragement and his self-assessment) re-defined diversification with the wisdom of an investor three times his age (I had him write his philosophy and send to me.)

“I will seed 4 fields with my bonus to increase diversification and wealth: Personal growth (maximize the return on me), my stock and bond portfolio allocation, private investment (perhaps rental real estate or a few startups I’m interested in), and a long-term annuity to help supplement my social security and portfolio income at retirement.”

As you ponder a philosophy that blends life and money in soil where the nutrients are a unique blend of your personal needs and desires, remember to go beyond traditional thinking to cultivate multiple streams of future retirement income.

Cultivate the ROL or “Return-On-Life.” An astute farmer enriches the soil of life by nurturing mental and physical growth. A quarter of Ely’s bonus will seed recreation. A beach vacation, a personal trainer, wine flights, fine dining and a creative writing class.

Return-On-Life isn’t a mathematical calculation. The farmer’s formula is personal. Results are calculated by the health of the bounty from all the fields. A guilt-free plan that blossoms or hones a marketable skill, creates an experience, relieves stress. It’s the spending which provides the farmer a clearer head, endurance and energy to work the other fields to yield maximum output.

Add nutrients to a stock allocation but set realistic expectations. Traditional asset allocation plans deserve attention however farmers have been advised by financial media and popular publications that stocks, bonds, hedge funds and other liquid investments make up the centerpiece of the farm. I was able to help Ely question this guidance: Help him broaden his perspective about planting landscapes and think smaller about the future riches sowed from this area. I needed to set expectations. A likely scenario over the next decade is the returns from this field may reap less return, perhaps close to zero.

Using a formula from money manager Dr. John Hussman of the Hussman Funds to mathematically determine what stock market returns may look like over the next decade, the following result is calculated.

Assume GDP averages a consistent, recession-free 4% annualized growth rate, the current market cap/GDP remains at 1.25 and the current S&P 500 dividend yield of approximately 2% doesn’t change for ten years, forward stock market returns do not appear to aid a formidable bumper crop:

(1.04)*(.8/1.25)^(1/10)-1+.02 = 1.5%

Assumptions are just that: Obviously, change is the only realistic constant. These long-term estimates are based on decade-long rolling periods therefore they are highly inconsistent when it comes to short-term market cycles. Regardless, it allows a farmer to plan and diversify accordingly. The potential of this field is consistently on the radar as resources are directed most often to this space through regular contributions to a retirement plan and a taxable brokerage account.

Plant seeds in unfamiliar terrain with the richest soil for growth. The diversified farmer understands that investing in non-publicly traded ventures is risky, requires patience, yet can reap great personal and financial rewards if the landscape is properly understood and receives the correct balance of nutrients, attention and ongoing provision of resources. Tilling a private field takes passion and focus above and beyond what’s required to sustain consistent pastures. It’s a direction that requires guts to pursue. After all, that part of the farm can go busy, is fragile. A young farmer with vision handles the responsibilities with alacrity and maturity.

Ely set seeds aside for rental real estate to generate passive income and will diversify his farm more effectively than publicly-traded real estate investment trusts that correlate higher small company stocks. He’s also seeking to purchase units of a limited partnership in a wine-tasting venue opening in downtown Austin, Texas.

I’ve experienced a willingness by pre-retirees and recent retirees to invest 5-15% of their net worth in private ventures and small business franchise opportunities as a way to diversify from traditional stock and bond portfolios. It’s a growing trend as investors know they’re not getting the full story on how diversification works. They’re “reading around” Wall Street. Flanking the field, venturing out to undiscovered, fertile ground. I greatly encourage them to take the chance as long as a team we understand the impact of a formidable loss on their retirement strategy.

Grow a pension and supplement Social Security. Safe is a field. It produces the steady, ongoing sustenance a farmer can never outlive. It’s the poster child of proper diversification. An annuity that will provide reliable income to bolster Social Security. The use of insurance to transfer risk in case something goes wrong that sets our farmer back financially in the future, is a smart addition of acreage to the farm. Nothing fancy. Nothing variable: A simple deferred-income option or a single-premium immediate annuity where the farmer knows exactly the bounty to be received on a periodic basis as part of long-term retirement income planning. There’s nothing variable here. No storm fronts that can create loss and vulnerable conditions. Ely believed that this field balanced and fit perfectly into the farm he’s working.

“So you see Ely, you’re a financial farmer. You’re working at a startup in Austin. For the seeds.”

I met with silence at the other end of the phone. Ten seconds max. Felt like 60.

“You know Richard, I understand now. I’m seeking to maximize the fruit of my labor and enrich the other non-financial riches that will blossom.”

I couldn’t have said it better myself. Well done, farmer Ely.

Well done.

8 Ways To Go “Money Active” With Your Kids.

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Posted on April 19, 2015 by Richard M. Rosso, CFP

Children are naturally curious.

How do you spark an interest in money?

As a child, I was an observer. My mother didn’t have money and my dad always lived for the moment. He died with nothing.

Today, with your children bombarded with messages you need to attempt to “sneak” money lessons in whenever possible.

Success comes from changing up old beliefs about how you think you should go “money-active” with the kids, creative thinking, remaining interactive.

Praying helps.

Random Thoughts:

Be an Example – Here’s an easy one because you don’t need to say a word – your actions are enough.

You children are monitoring your feelings about finances. What is your outward expression towards debt, savings and general household financial management, especially when communicating with the family?

If your relationship with money is positive or one of control and discipline, your children will learn from the example. If your relationship with money is negative, stressful, extravagant or reckless, the kids will pick up on that, too. Smart money beliefs and actions can lead to smart money imprints by the younger generations around you.

Anytime is the Right Time – One simple question framed in a positive tone may provide the right spark to get a money conversation underway. I call it “financial curiosity.” And you can be financially curious with your child anywhere – at the mall, at the supermarket, in his or her room. If your teen makes a purchase, inquire about it with sincere interest. Out of non-threatening curiosity I ask my daughter for her reasons behind purchases and services she uses. She never feels like I’m prying (at least I don’t think so).

What compelled your child to buy a particular item? What does it do? What other choices are available? Is this item something the family may find useful? How does it work? Will this make their lives better, easier, more fun? How so? Was it a challenge to save up? You’ll gain information about the motives behind purchases and discussions regarding other money matters will blossom.

Get Them Involved – Talking about money is fine, however, it doesn’t compare to having your kids experience money management firsthand – something I call “money active.” Have the kids be responsible for specific money projects, let them fully experience the rewards and feel the sense of accomplishment when the plan is executed.

For example, provide children an opportunity to budget a family vacation or weekend getaway and then all enjoy the fruits of the labor. Partner with them to set savings goals for future purchases, especially the bigger-ticket items. Assist your teens with the research, or offer to match a percentage of the purchase price as a reward for good money habits.

Are the products or services the kids are using viable investment prospects? Now open the door to the investing conversation. And what better way to ignite the money flame — a possible investment into a company that manufactures a product or provides a service the children are passionate about.

It’s OK to Seek Help – So you’re still having difficulty getting the conversation going? Let someone else help you get the fire started. Seek assistance from an objective person who would be willing to provide money lessons to the kids; perhaps someone in the family, or a friend successful with money management, would be excited to share an experience. Don’t be reluctant to seek assistance and allow someone else to tee up your involvement. I’ve witnessed grandparents do a great job at getting through to the grandkids with stories and financial lessons.

Make Money Real Life – Be candid. Your kids like to know you’re human, and occasionally make financial mistakes. They also want to understand what you did to correct a money mishap. You may need to be a bit creative; children are accustomed to movies loaded with action and special effects.

Take time to compose a compelling story about how you faced a financial obstacle head on and came out a winner. Or if the story doesn’t end well, explain specifically what you learned.

Kids are very comfortable with technology so become “money active,” and take advantage of online money-management tools to help kids achieve financial success. For example, at www.moneyasyougrow.org there are activities that guide you to help the children work through money milestones grouped by age, beginning at 3-5 year-olds.

Begin a Money Mindset. Out of each dollar of allowance, figure out how much goes to savings, to charity and to spending. You need to help children establish guidelines early on. There are several products that make this division of money fun. Like the Money Box available from www.Moonjar.com. Also, there is an item called Money Conversations To Go which can jumpstart fun family discussions about money.

Have Children Handle Coins – It’s a great way to get very young children comfortable with money – When my daughter Haley was 3 I had her handle nickels, dimes and quarters, they were shiny and fascinated her. From an early age I would have her place the coins in a bank and shake up that bank from time to time and it would sound like a rattle of sorts. Placing the coins in the bank was a sense of accomplishment for her and it started her on the road to fiscal success – Now, at age 16, she’s become a first-rate saver!

How About a Funky Money Diary? Purchase a three-subject notebook to help the younger kids keep track of the money they want to spend, share & save. Decorate with stickers related to money or cutouts of items the kids want to purchase in the future. Interactive fun!

The most memorable interactions with children about money are ones you may overlook.

You’ll find discussing money at different times, in various places.

Out of nowhere.

It’ll become so routine, you’ll be smitten with delight.

Then you can focus on the tough discussions.

Like sex.

I’m still not ready.

Random Thoughts of a Money Muse

Stories of Life. And Money. On the Fringe.

Tag Archives: money

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