BUZ LIVINGSTON: Marketing hokum exposed

Published: Sunday, January 20, 2013 at 05:06 PM.

Income investors, by shunning Europe, got a triple shot of bad news/luck/advice. It you like setting your money on fire, be my guest. It never ends. Remember Meredith Whitney’s famous municipal bond call on Sixty Minutes. Instead of collapsing, municipal bonds, generally speaking, soared in value. 

My friend and Marine aviator Rick Ferri recently said it best, “Forecasting isn’t about predicting the market; it’s about marketing the prediction.” Mad Money’s Jim Cramer worked his 46 percent accuracy into a lucrative CNBC gig.  Another forecasting corollary involves a financial alchemy known as tactical asset allocation.

Wizards posing as investment advisors recommend overweighting particular sectors. While it sounds great, it doesn’t work, see Europe in 2012, Meredith Whitney, et al. Tactical asset allocation linked with market forecasting is an example of financial pornography. The combination only titillates, provides no redeeming social value and is hazardous to your wealth.

Investments and your asset allocation should match your time horizon, your goals and risk tolerance. It’s really simple but hard to execute; even I get a little help from my friends. Early in the morning I dabble as a gardener (so did George Harrison).

Market timing/tactical asset allocation makes as much sense as pulling up all my perfectly good arugula or bell pepper and moving them to another spot. To everything, there is a season and a time to every purpose.

Buz Livingston, CFP, is a fee-only certified financial planner. He operates Livingston Financial Planning Inc. focusing on hourly financial planning and investment management. Contact him directly at 850-267-1068 or at buz@LivingstonFinancial.net.


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