Smart Investing


January 20, 2012


Learn the smartest investment strategies from the experts

I’m not sure how to phrase this, so please don’t take it the wrong way, but I’ve been called a genius, very smart, brilliant. I would like to stop there and say, "Yes, that’s me."

To be honest, I think I’m of average intelligence. I’m always willing to learn from someone who knows more than me, and I think that has helped me become a successful money manager. I have learned that if someone has been successful at something, it's best to find out what they are doing and do the same thing.

Some people, in these situations, would try to do things differently, for reasons of which I’m not sure. I would prefer to follow the guy or gal who knows how to do it best. I learned this from Tony Robbins many years ago, and it made sense and has worked for me and my clients.

Last month I read an article in Barron’s titled “The Best Opportunities in a Half-Century,” about a money manager named Joe Rosenberg who has been investing for 50 years.

Rosenberg began his investment career in the 1960s and was hired by the late Larry Tisch from Loews, the New York conglomerate controlled by the Tisch Family. This is not the home improvement company — this is the company that has insurance, oil, natural gas and hotels in its portfolio.

Rosenberg says that while he doesn’t know what will happen in the near future, equities can easily generate a 10 percent annualized return over the next five to 10 years and still not be overvalued. I don’t understand why anyone would try and time this market or wait for “things to get better.” And please don’t tell me that the markets are a bad place to be because, over the last 10 years, you or the markets haven’t made any money. That means you probably bought high. Don’t make the mistake of selling low now.

I also hear many times that things have never been this bad before, and it is different this time. I ask people what they think it was like back in the 1960s during the Cuban Missile Crisis. Rosenberg was around then and in the investment business.

“That was a much worse scare than this one," he said. "The country was on a nuclear alert."

His words of wisdom: You can have cheap equity prices or good news, but you can’t have both at the same time.

Don’t be the last one to the equity party. You will have to put up with some extra volatility, but you will be getting some great values. Rosenberg says, relatively speaking, stocks are as cheap as he has seen in his long career. He also points out that many investors are underweight in equities, but that will change, much like it did after the 1940s.

I know you may be thinking this all sounds good, but, my gosh, we have government budget deficits out of control. Back in the 1980s, Rosenberg was buying five-year U.S. Treasurys that yielded 16 percent. Just like today, people would argue with him and say he was nuts. Why? They would say, “Government budget deficits are out of control, and that’s why yields are so high." Now, with some Treasurys yielding less than 1 percent, budget deficits are still out of control. Is it possible that we expect too much from our political leaders and this is the norm for the government? In the meantime, life goes on, people consume, and businesses make money.

I know investing is hard on the emotions, but we can learn so much from investors like Rosenberg who lived through a lot and worked in the field. It is important to pass this on to you so that you will be able to use these same lessons to invest money wisely for your children, the same as I have done for my clients over the past 30 years.

Wilsey is president of Wilsey Asset Management and can be heard every Saturday at 8 a.m. on KFMB AM760. Information is provided by Reuters.


January 20, 2012