Great Expectations
Research for Online Investors

by John Dalt

12/30/10

I was looking through the offers from competing investment newsletters to encourage people to subscribe and pay for their services.  At times I have been guilty of promising more than we can possibly deliver.  Galtstock is the only investment website I know of that makes all of our past results available at all times.  Good or bad, you can look at our past results.

We may not meet your expectations, but we don’t lie to you, only to disappoint with our actual performance.  We offer a guarantee on all of our investment services.  It is the only way I know to do business.

One of the secrets to life and investing is to not be one of the ‘herd.’  How many of us have been encouraged to buy a widget after promises of its utility to improve our life?  We are all guilty.   How many of us have bought an investment program actually believing that the seller’s advice can turn $1,000 dollars into a million in less than six months?  If they could do that, why would they sell it?

According to the Wall Street Journal, the average hedge fund made just less than 20% return on investment in 2009. This was the same year the S&P 500 gained 23.5%. The ‘average’ hedge fund has the best and brightest researchers, the smartest analysts, the fastest computers, the most experienced traders, and the best sales operation available; but they still returned less than the market indices.  We returned over 25% in our long term service with a well diversified portfolio.

Sure, a few of them recorded fantastic results.  But, they probably did it with one large bet.  If they would have been wrong…investors would have been lining up at their door to pull their money out.

What is an investor to do?  Lower your expectations, be realistic.  New investors always have stars in their eyes about the gains to be made.  The easy road to riches the stock market promises them.  My mind drifts to other big events in my life.  Remember the sage advice to add a bean to a jar every time you had sex as a newlywed?  After the first year, start taking a bean out…for the rest of your life.

Sage advice in the stock market may not be as humorous, but can be just as disappointing to anxious investors.  One of the worst experiences a new investor can have is a big winner.  It will encourage risk taking, hunches, and wild activity.

Most investors have accumulated their assets by hard work, dedication to their business, and executing a plan over a very long time.  Investing is EXACTLY the same.  Work hard at understanding economic forces, dedicate your efforts to disciplined actions, and have a plan.

One other point about a difference between operating a business and investing in the stock market needs to be made.  Don’t be bold!  In business, sometimes we have to lead when everyone else thinks we are nuts.  In business, dogged determination makes a difference.  In business, putting your shoulder to the wheel can pull you through a tough time.  In the stock market, these attributes can get you slaughtered.

I am a contrarian investor.  I like to buy when everyone else is running away.  That is different from staying with a trade that is going south fast, because of hard-headedness.  Buying when there is ‘blood in the streets’ is different than draining your own blood in the streets!

Your investment plan should involve research of potential investments, position sizing, stop losses, and diversification of your holdings across sectors.  You can read our article in Investor Resources titled the Four Legs of Wealth.  This should help you clearly define some issues of importance.

The important take away is; lower your great expectations.  You can make money in the market, but it is not easy, it won’t happen without work, and it won’t be the next best thing to sliced bread!

I would like to encourage you to sign up for one of our premium services.  A popular statistic is that 90% of all direct manage investors lose money in the market.  We work hard to make sure our subscribers do not. We take a lot of the work out of the market, for a very small subscription cost.

Let’s make 2011 a great year.

To the mailbag:
I currently use your long-term portfolio model.  I appreciate the good advice I receive from your daily e-mails. Probably, the best $100 I have spent!  Thank you for your insight as to what is happening and why!--- paid up subscriber G.C.

John’s reply: Thanks for the kind words.  We try to give you information that is important to investing but also news that can affect your investments.  I know it is hard to stay current on news when working; hopefully we fill a void for all of our subscribers.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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