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Book Reviews

The Brainwashing of the American Investor

About the Book

Brainwashing is a hands-on investing manual that challenges the prevailing wisdom of Wall Street. In his 30+ years as a registered investment advisor, Selengut developed a unique portfolio management process that guides investors toward their long-term financial goals.

Steve explains the realities of the financial markets and guides investors toward quality-based investment selection rules, risk minimizing diversification standards, and an appreciation of the importance of income development.

Readers will study the principles of investing, learn to apply cost-based asset allocation and diversification techniques, and adopt a targeted profit-taking approach that builds working capital.

“Readers will grow to love market volatility, take reasonable profits without looking back, and smile broadly as they see realized spending money growth, quarter by quarter, year after year, until true retirement readiness is achieved,” says Steven R. Selengut.

Steven R. Selengut

About the Author

Steven R. Selengut, MBA, is a private investment portfolio manager, with nearly 50 years of investing experience. At age 25, he developed the “Working Capital” asset allocation model, and the Market Cycle Investment Management process. These unique strategies provided the financial independence necessary to launch his portfolio management career at age 33.

The Brainwashing of the American Investor

Excerpts

Someone once made the point that power corrupts and that absolute power corrupts absolutely. In order to protect the investing-speculating public from being manipulated and abused by this smiling, red-suspendered beast in pinstripes, we probably need volumes of better regulations and an encyclopedia of less self-serving rules of behavior. But as unlikely as it is that meaningful change will happen anytime soon, we need to educate the investing public about how they should interact with those conspiring to separate them from their money. It is this conspiracy that really makes Wall Street tick.
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As you go through your daily routine, you will become totally aware of what has been happening in your territory. Today’s plan is ready for implementation. You can’t wait for the opening bell. But where are “they”? What do “they” recommend? What do “they” see happening? How do “they” explain what has been happening? Just who are “they” anyway?
You don’t need them anymore. You have become a “they.” No other opinion is relevant, considering how well trained you are in a discipline that just makes sense. Upon completion of your daily buy list, you are aware of the opportunities that may be out there today. The more buys there are, the better a 6-to-9-percent profit looks. This is it—profit-taking time. Time to pull the trigger.

At first, you may want a second opinion. You may have heard a good report or seen a favorable write-up. Merrill Lynch says it’s a $60 stock, and here you are thinking of selling at $52. Don’t be confused by Wall Street greed food. There are no facts, remember—only speculation and opinion. You really do know, however, that if you sell your XYZ Widget Ltd. at $52, not only will you have made money, but you already have identified several new opportunities for reinvestment of the proceeds. Pull the trigger and move on to the next opportunity.
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“The market went down today because there are just too many people employed. The strength of the economy is someday going to cause prices to go up. When that happens, inflation could become a problem, and the Fed will have to raise interest rates to slow things down.” Sound familiar? How about this one: “The market jumped up today, rejoicing over the increase in first-time jobless claims during the latest reporting month.”
This topsy-turvy kind of thinking is not going away anytime soon, and by now, I’m sure that you don’t want it to. It produces the day-to-day, month-to-month directional changes that make for successful trading. An irrational market that moves unpredictably and quickly in both directions is the easiest market environment to manage.

Get In Touch

Hi! I hope your eyes have been opened to some new ways to look at the total investment process. You’ve been exposed to concepts you will not find anywhere else. Please share your concerns and questions; I’d like to hear what you have to say.

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