First off let me make this statement plain and simple before one reads any further. This is not a hit piece, nor an effort to take swipes at Tony Robbins or worse, some feeble attempt at click-baiting.
I have been a true fan since he first hit the motivational stage decades ago. However, just as I am what many would call an Apple™ “fan-boy” (which I am) it doesn’t stop me from pointing out issues where I see a compelling reason to do so.
As I’ve stated before, I mean it in a manner the same way one would criticize a family member when they are either doing something that doesn’t make sense, or something other. Nothing more, nothing less.
I don’t know Mr. Robbins personally, but for this discussion please excuse the liberty I take with using “Tony.” It just makes the writing easier.
Like many I was intrigued to see Tony has a new book. His first in over 20 years. When I read the title, “MONEY Master the Game: 7 Simple Steps to Financial Freedom,” (2014 Simon & Shuster) I was both intrigued as well as apprehensive. Why?
It’s basically this: I’m also in the same field (e.g. entrepreneur, motivational speaker, coach, et al) as Tony. And my writings and thoughts on money or markets sometimes appear in some of the same arenas. e.g., Business Insider™, MarketWatch™, et al. Which is precisely where I read his thoughts as well as a few questions he was asking some of today’s Wall Street titans. e.g., Warren Buffet, Paul Tudor Jones, Carl Icahn and others.
In an article written by Tony on Business Insider, “Tony Robbins Shatters The 9 Most Common Investing Myths” As I read I and was left shaking my head.
The article goes on to discuss that there are nine “myths.” And you can read them for yourself rather than me list or counter each. However, to demonstrate in a real example of what I’m trying to get across, I’ll use the first in that series.
“Myth 1” starts with quoting Warren Buffett and sums the premise in this paragraph.
“So instead of buying all the stocks individually, or trying to pick the next high-flying hotshot fund manager, you can diversify and own a piece of all 500 top stocks simply by investing in a low-cost index fund that tracks or mimics the index.”
The true myth is that what is actually in the index as a business, its economic makeup, its validity as a true business, or anything else that we once understood as what a business “is.” Is – no longer and doesn’t mean squat.
The only “is” that now matters is this : Is – the index one that has a bulls-eye that the Central Banks deem important? i.e., they will buy it directly or fund its purchase via their proxies. Period.
Want a little proof to put behind that statement you say? Fair enough. Remember when then Federal Reserve Chair Ben Bernanke pointed out in meeting after meeting as to answer the efficacy of the Central Bank’s then quantitative easing programs: “Just look at the Russell 2000™?”
That was then – and now since he’s gone and that’s no longer the Fed’s key “go to” point of reference I’ll state: “Just look at the Russell 2000.”
What “indexing” prowess would one use to describe or answer the current lackluster relative showing as every other index hits another nosebleed level?
To reiterate what I’ve said so many times prior: Since the financial crisis of 2008 not only has the financial markets changed – they no longer resemble what many still believe, let alone think.
As I’ve stated over, and over, and over (did I say over?) again: Without the direct interventionist policies continuing to take place within the financial markets via the Federal Reserve and now other Central Banks such as Japan’s with the unleashing of “Banzainomics” there is no market.
The sad reality in regards to “myth 1” lies the realization that the true unsettling answer is – the markets are the myth. That’s the true revelation. Sorry to sound harsh, but it’s true.
Even Mr. Icahn himself has been expressing some very onerous or cautionary overtones of late. As stated in an article on ZeroHedge™ during a recent Reuters™ Investment Outlook Summit in New York Mr Icahn stated:
“I am still concerned that one day you’ll see a break like you had a few weeks ago but it won’t come back.”
This is what I truly want to hear more of as well as articulated more in-depth as to know what an “investing billionaire” is thinking, doing, contemplating, positioning, and more.
The real issue at hand from my point of view is this: Looking for answers to both financial safety as well as financial freedom in the same light or viewpoint where it seems one only needs to “think like a billionaire” or “tweak” or “slightly modify” perceptions on how one approaches these financial markets today – will hurt more than it will help.
The markets for all intents and purposes are no longer for the “average” person looking to make gains in any form today. What is needed now more than ever is a direct understanding that safety – safety above all else – is paramount. And exactly how one can achieve it. Or get as close to the proverbial “cash in the mattress” understanding of it as humanly possible.
The idea of “diversification” is a great sounding idea in principle and theory. However, it is one of the greatest myths when it comes to protecting one’s assets in today’s financial market place aka Wall Street.
During the financial crisis of 2008 when the markets were in a free-fall and panic was ensuing “a diversified portfolio” did little if anything to help stem the tide. As a matter of fact, many found the “diversification” side of their portfolio which was to help “protect” not only fell just as far in value, but the ability of many to even remain solvent going forward was questioned.
The safest of all presumed “investments” were money-market accounts where many prudent investors with the ability to sell and go to cash were left sitting nervously when it was realized these very funds had begun to “break the buck” and was fueling the panic fire even more so than adding gasoline.
Forget the gasoline reference – it was more like nuclear fuel. Only when the Federal Reserve along with the FDIC stepped in with some bold actions which stemmed the tide within the money-market funds did we finally begin to see some form of stabilization come back into the markets.
Until that point all – and I do mean all – bets were off. Diversification was meaningless.
Today, I believe one must worry even more about safety than what one thought just 5 years ago, for what many still believe or thought about “money-markets” no longer applies.
Why would I say such a thing? Is it because you thought or presumed there’s even more improved safety since the crisis? Where we learned how to make one’s money-market account even safer? Or maybe even a more pragmatic willingness to step in and save probably the most astute financial class in the markets today such as someone prudent enough, or smart enough, to hold cash in a 401K or such? Nope.
Today (which I’ve written and warned about previously) in such an event where if the markets were to once again go haywire there’s no need for the Fed. to step in and help stem the tide of the money-markets. They can let them adhere to the same market forces as the stock markets themselves.
For as one may not be aware or remember, the new rules are that they can now “break the buck” without having to sell assets to protect that breaking quite so hastily.
Another way to state that is: the “dollar” value in your “cash” account doesn’t have to be worth a “dollar” any longer.
Nor if you want that “dollar” (which for whatever reasons could now drop to Oh, let’s say 50 cents or yes lower) you may not even be “allowed” access to it.
Why? Because these new rules also let the custodians of your cash “gate” your cash. i.e., Sorry, no money for you. Just visit our website, or reread that “updated” agreement you received which you probably slid in a drawer with the other five thousand “notices” of fine print you received and “accepted.” Thanks for banking with us!
That’s just handling the myth side discussed in this article. In another article (he just released a book so it’s more than customary to write more than one release article at the same time) that appeared on Market Watch™, Tony went into questions he asked of some very big players known by many on Wall Street. e.g. Mr. Icahn. Mr. Jones, and others.
Again, I understand Tony’s objective in trying to figure out answers to some very intriguing questions by these Wall St. players. Yet, as I stated earlier, I believe he’s asking the wrong questions.
In an opinion piece titled,“Tony Robbins tells you how to make money like a billionaire” Tony tries to get to the underlying premise as to answer how people can control their money and gain financial freedom. In it he makes a statement which I believe he’s sincere,
“After watching the global financial system almost melt down, I began an amazing journey several years ago to find a way for individual investors to take control of their money in a system that seems rigged against them.”
Here is where I both found myself asking the very same question Tony had been asking at the very same time. However, although we are both in the motivation business, and we’re both the same age. We both came to two diametrically opposite viewpoints on how one should proceed in anything financially related. (as far as anything Wall Street is concerned)
Personally I had the unique benefit as well as motivator to find or seek true answers. For I had just retired less than 36 months prior to the financial crash and had a real vested interest in finding those desperately needed “real answers” because, at that time, all the so-called “experts” were not only not making sense – they were more like deer in the headlights. I was then 45 years old.
I have great respect for Paul Tudor Jones, Carl Icahn, and the others he questioned. But here comes that word again; “however,” the questions are more or less in my opinion irrelevant and maybe of little value other than “mindset” type thinking for entrepreneurs.
The reasoning why is this: What they are doing is of little value to the average investor to use via making money in the markets or protecting one’s assets from harm. Especially in today’s “markets.”
For as I’ve reiterated over, and over again. “These markets are so adulterated with Central Bank imposed manipulations it would make Larry Flint blush.
The questions that should be asked in my opinion are far removed from what most will ask. Yet, I believe, there are some that not only should be asked, rather – it’s in their true answers that can or may help provide true insight.
An example of these might go like this: As far as exploring a “myth,” the right question for a myth might revolve around answering questions that people like myself and others find themselves in after they just cashed out, retired, whatever and went through the crisis of ’08. e.g., How do you do anything with your money safely where you also need that money to generate income to now pay your bills? And – you have absolutely no trust in what the markets resemble or have become today?
When I first retired you could easily (what was believed to be then) “safely” with “no risk” put your money in funds that would generate 5% (or more) interest. Today? That vehicle doesn’t exist. It only exists in name only i.e., “CD’s” “Direct savings” or “money-market savings” type accounts.
With the Federal Reserve now into another year of a zero interest policy environment now .5% is like “whoo hoo!”
Think I’m off base? Don’t take my word for it. In a recent interview on Bloomberg Surveillance™ another true hedge fund legend Julian Robertson founder of Tiger Management™ stated in a reply to an answer about trying to safely manage one’s own money as in a savings account type vehicle, (I’m paraphrasing) “Take the entrepreneur that sold his business and now has let’s say $3 million dollars in proceeds. Today, that money only produces $60K a year. And that’s before taxes. This is what many now find themselves up against in today’s zero interest rate environment.”
Just 5 years ago if you cashed out with $3 million from “Main St. you thought “Easy St.” was just another boulevard connected to “Wall St.” Today? Wall St. is now a thoroughfare seemingly located in a very high-priced area where at any moment it could turn into “Panic City.” Where the streets are lined with Wall St. styled hotels that sing a different extended version of a tune most know, “You can checkout any time you like – but you may never leave – with your money!”
Today the prudent are squarely focused on another old mantra; It’s no long “a return on” after 2008 it’s now “a return of” that dominates almost any – if not all my questions when it pertains to money. And I know – it’s not just me.
As we once again hit “new never before seen in the history of mankind all time highs” the outflows are still predominately outweighing the inflows. Nobody’s buying these markets – except for Central Banks.
A person I wish was asked questions who is also a top-tier status hedge fund manager that I believe could give some real answers or valuable insights to entrepreneurs and others of all stripes which they could apply is people like Hugh Hendry of Eclectica Asset Management.
Mr. Hendry known to many as a no-nonsense contrarian styled fund manager moved from the proverbial “bear camp” and changed his thinking as well as asset allocation to what’s known as the “bull camp.” His reasoning, and a whole lot more he expressed in his thoughts going forward in 2014:
“Last bear standing? Not any more… I know what you are thinking. You are thinking that the last bear is capitulating. It isn’t a good sign. Maybe it is that simple. But I think it is a little more complicated.”
Although I’m also a Hugh Hendry fan, I myself found his reasoning’s at first blush conflicting. That said, the real insightful answer to a question such as: “How hard was it to go against nearly everything you’ve thought or believed when dealing in the financial arena – to then basically change your business model and investment criteria in the exact opposite direction?
Not only that – in a direction that basically you’ve also railed against and made cogent arguments against that very viewpoint or investment stance?
Or: How exactly are you handling the stresses and strains having to basically push sound fundamental theories or market underpinnings aside and now trade and position money at risk based solely on what some Central Bank will do next?
This is the avenue I wish Tony had driven or sought.
Another relevant question I believe that would have brought greater insight would be to ask principal and veteran Wall St. trader Joseph Saluzzi of Themis Trading™ how he handled the backlash and dismal by industry mavens, as well as the financial media at large, with his nascent warnings that trading as we all once knew it – was no longer present. And – had morphed into what many now would call the greatest financial monster threatening the stability of the financial markets in a way never before imagined. Known today as High Frequency Trading (HFT).
I remember as I was trying to wrap my own head around the distortions that perplexed me I would watch Mr. Saluzzi take barb after barb laced “C’mon, you can’t be serious” brush offs from one after another Wall St. financial media commentator.
Everyone including the very regulatory bodies in charge dismissed his clarion call. Then to be vindicated overnight suddenly for everyone to see when Michael Lewis’ Flash Boys: A Wall Street Revolt (2014 W.W. Norton & Co.) came out and rocked the proverbial house of cards being built.
Personally I remember one exchange that still sticks with me when one show host quipped to Mr. Saluzzi: (I’m paraphrasing) “What proof do you have?” And the reply was, “Proof? All I have to do is look at my screens!” It really was a noteworthy reply. However, at that time, no one listened – let alone would acknowledge the possibility.
Remember, this was a person working on Wall St. Imagine the sort of peer pressure alone and handling it, while not abandoning your conviction to what everyone (and I mean everyone) wants you too just keep quiet about – and play along. That is a question worth hearing the answer to for my money.
Again these are the forms or types questions that I personally would like to both know, as well as fully comprehend all the intricacies. For I feel there would be real pragmatic, useful insights any entrepreneur, as well as anyone watching their own money should hear.
I say it because just like Tony I feel it is something that anyone looking for financial freedom as to control their own monetary aspects needs to know the answers to.
Today I feel it is more important than ever. And Tony is a giant in more ways than one and commands a very big stage. It’s just what I’ve seen and read so far of the questions posed appears to have missed an opportunity. I could be wrong for I have not read the book, just what I’ve read in his most recent articles. And – it’s only my opinion. Nothing more.
The Wall Street everyone believes they are dealing with today is just in name and memory. What made sense just 6 years ago not only doesn’t but rather if you try to apply any sense that resembles “common sense” you might as well be asking the Cheshire cat for a more straight answer.
And as we stand today, the only place seemingly left thinking this meme of “Wall Street still leads to Easy Street” is Silicon Valley. Where many of today’s newly minted “billionaires” believe 2014 or ’15 “Is different this time” than it was in 1999 or ’00. It is – but is isn’t.
And the issue here is when the realization kicks in that the once “billion dollar darlings of Wall St.” realize they are no longer loved or sought after as vehemently as they were just a year ago, now that the Fed, has ended the open spigot hot money supply aka QE. What happens then?
There’s also another question that should be answered but this one comes from Tim Knight owner and prolific blogger of one of the top “bear focused” trading blogs on the web today: Slope Of Hope™.
He lives smack dab in the hottest real-estate market in Silicon Valley – Palo Alto CA. Where his neighbors are Mark Zuckerberg of Facebook™, and Marissa Mayer of Yahoo™, just to name a few.
He openly opines he’s trying to find a workable answer to a very relevant question as these markets are hitting these all time highs. His question?
“I wish there was a way I could buy a put option on my house value, because this place is just nuts!”
There’s a lot of answers to many questions about Wall St. in that above statement alone.
© 2014 Mark St.Cyr
Addendum: I was alerted by a reader of an article that came out on MarketWatch™ on Nov. 25, 2014 written by Cullen Roche titled: “Tony Robbins doesn’t quite master the game of money in his new book”
Similarly to my stance the article is not in any way a designed hit piece or slam against him, far from it. However, where my initial view and reaction was from reading Tony’s articles and synopsis styled presentation this article is written by a person that both read the actual book, as well as has standing in the financial money management class proper. I believe it helps move my initial response onto further footing.