During my many years of investment advising and personal investing experiences — while helping and training new stockbrokers and individual investors who manage their own capital with what I am certain they need to think about, learn, know, do, have, use, forget, and avoid to advise effectively and to invest wisely — I have developed a respect for and a better understanding of the realities of investing, of the laws of investing, and of the dynamics of investment advising and investing success:

• I started as a stockbroker with Dean Witter & Co. in San Francisco, California.
• Without detailing every experience, needless to say, I have seen, said, done, heard, and thought about it all; all well intentioned—most smart, but some not so smart.
  • Having 'been there' and 'having done that' I did not ever want to revisit the not so smart portion of 'been there' or 'done that' again.
• Extinction of the noble and important profession of investment advising, as I know it, is a distinct possibility because all markets eventually close the inefficiency gaps between value and price, competent and unqualified, skilled and unskilled, serving and self-serving, and most of all, good investment advising judgment and management and bad investment advising judgment and management.
  • The leading indicator of this increasing and expanding trend towards extinction is the exodus of investors from traditional sources of investment advice to the ever expanding 'investment advising' Internet where, at worst, they will find for free what investment advisors offer for fees and commissions as they seek what is so rare, very hard to find, and priceless; sound investment advice and disciplined investment judgment and management.
• I am not so presumptuous as to suggest that there is but one way to invest in the financial markets; however, I am certain that there is a critical path to learning how to advise and how to invest:
  • Knowing that as stockbrokers and investment advisors we can be better, much better, that we can do better, much better, and that investors deserve more, much more.
  • Not being so presumptuous as to suggest that there is but one way to invest in the financial markets; however, while at the same time being certain that there is a critical path to learning how to advise and how to invest; leave out a step, proceed with greater than necessary investing risks.
  • Making mistakes, observing the mistakes of others, not repeating either, and occasionally making new mistakes and not repeating them.
  • Recognizing that there were and still are many investing tools that detail what needs to be done — establishing and funding goals, analytics; however, there were and still are no tools that drill down to investing bedrock to address the ongoing processes that help investment advisors achieve investing objectives for their clients.
  • Discovering that investment portfolios rather than individual investments, at least conceptually, should be the basic unit of trade.
  • Studying and learning from those who have achieved investing performance excellence.
  • Distinguishing between sense and nonsense, sound and unsound, rhetoric and results, and value that serves vs. self-serving value.
  • Deleting the investment past, other than as an historical point of interest, as the basis for advising and for investing; depending almost exclusively on '20/20 foresight' rather than almost exclusively on '20/20 hindsight.'
  • Learning that portfolio management, a 'sense of the markets' and investment timing contribute as much to investment performance as does investment selection.
  • Concluding that the failure to thoughtfully define, relentlessly apply, and rigidly enforce investment selection and management disciplines, rules, and procedures and portfolio design, management, and performance disciplines, rules, and procedures are the critical weakest or completely missing investment performance links for most investment advisors and almost all individual investors who invest for themselves; the primary reasons why investment advisors and individual investors underperform most market indexes most of the time.
  • Designing and continuously upgrading investing software to help me to process and to manage what I have learned and to help me to advise effectively and to invest wisely; organized, efficient, disciplined, and in control.
    
    
• After deciding enough was enough, after deciding 'I'm as mad as hell and I'm not going to take this anymore!' (Howard Beale, The Movie Network, 1976), I resolved to get it right.
  • The firm was offering yet another round of Bond Mutual Funds!
• Imagine an investment advising and investing industry that invested as much in developing truly skilled investment advisors and sound investing tools as is currently being invested in product design, promotion, marketing, and sales.
  • An imaginary world, by the way, that you will never see in the real world unless you choose to create one for yourself; which, for me , is reflected in mhj3.com.
    • For the most part, I had abdicated my greatest assets; the ability and the responsibility to take direct and personal control of managing investments; the art form of creating investment portfolios.
      • Far more interesting, challenging, and rewarding to create, manage, modify, monitor, maintain and measure unique investment portfolios for individual investors than going though the tedium of the recitation of investment fundamentals for individual investments, the investing skills of others, and the 'Morningstar Rating' when referring to investments such as mutual funds.
• Build a personal, proprietary investment advising net worth; feel better, do better, and beat the competition:
  • Create an organized and efficient investment advising and investing environment in which each investor, regardless of investment need, knowledge, experience, and the amount of investment capital, will be honorably, properly, intelligently, and efficiently served consistent with each investor's investment profile and investment goals, the current market conditions, and the market outlook; nothing learned the hard way, do it right the first time, suitable, hopefully timely investments, full disclosure, and investor informed, economic best interest investing with specifics and in detail.
    • Individual bonds and equities wrapped in a disciplined portfolio creation and management environment; the most efficient use of capital — direct and undiluted participation in investment opportunities, lower investment risk because free from flawed packaged investments and predatory investing strategies, and little or no fees and commissions constantly leaching from capital.
  • Rather than attempting to predict the short-term oscillations of the markets and investment prices—something no one can do on a consistent basis—control what can be controlled—judgment, skills, and strategies—to take control of and to take advantage of the uncontrollable and unpredictable; the markets and investment prices.
  • Build an investment advising and management model that does not depend (entirely) on the correct prediction of the direction of the markets and individual investments (both always help), but more on a business model that anticipates change and the certainty of the need to change.
• 'I think I know what is going to happen; however, regardless of what does actually happen, I am thinking and looking ahead and I am prepared to decide and to act.'
• Create an almost perfect investment advising and investing environment:
  • Use the best of both worlds; a lot of the old school and a little of the new:
    • The old:
      • Investments; individual bonds and equities and the best names in value mutual funds.
      • Investment selection; fundamentals, earnings, growth, value.
      • Management and timing; what, when, why, how, how much, and what if.
      • Investment portfolios; unique, structurally sound, competitive.
      • Advisor/Investor; knowledge, judgment, skill, discipline.
    • The new:
      • Investing software; to manage, control, and process the old.
• I needed investment advising, portfolio management bulldozers to create and to control almost perfect investment portfolios consistent with investor investment profiles:
  • I needed the ability to create detailed investment plans; where you are trying to go.
  • I needed the ability to create portfolios for clients with the client present; how you are going to get there.
    • No cute, current fad investing marketing tools—such as Monte Carlo Analysis, MPT, and Efficient Frontier Analysis—to create the illusion that I knew what I was doing.
      • In effect, doing nothing more than 'bluff' (poker, OK, investing no) my way through an 'investment selling' moment, not an 'investment advising' process.
      • Not as a "back office" accounting software program, though it accounts for every penny (leave that to the custodians and the accountants), but rather as "front office" investment advising tools and client communication software programs.
        • To see the logic of the build, my plan and strategies, and the possible reasons for change in the future.
          • Starting with cash only or already having some investments.
          • Do it all in an instant.
          • Orchestrate a universe of different portfolios easily.
  • I needed the ability to measure performance; if it is measured, it will get done.