Steve McDonald: Hi, everybody. I’m Steve McDonald. This is your Market Wake-Up Call.

The most difficult part of working in the money business isn’t picking winning stocks or even bonds, it’s the realization that most of your clients don’t have any idea what to do with their money. And that makes life very difficult. The worst part of the whole situation is that it isn’t their fault – not really. And in the 28 years I’ve been in the business, it’s actually gotten worse.

I don’t know about you, but no one in high school or college gave me any usable information about savings, inflation, investing, money management or finance. Most of us leave school and enter the work world as money morons, and that described me at one time.

Even the people you would expect to have a good handle on this don’t. When I was working as a broker and advisor, I somehow always attracted the interns who were working in our office. And these people came from great business schools, but it always amazed me how little they knew about money and investing. And they were from reputable MBA programs.

The other day, Chief Investment Strategist Alexander Green and I were on the phone, and we were swapping war stories about how bad the situation was and still is. Now, I enjoyed the conversation so much that I asked him to come on the program this week to share his insights about financial literacy and what we can do to change the terrible financial illiteracy situation we have in this country.

Now, if you follow me at all, you know I think Alex is the best money mind in the business. I’ve never had a conversation with him that I didn’t learn something new about the business. He’s the Chief Investment Strategist at The Oxford Club and is the person I credit with making The Oxford Club the amazing organization it is. Well actually, on second thought, I better clarify that because there are a lot of people behind the scenes, who you never get to know, who make it happen as well. But Alex is our fearless leader. Welcome, Alex.

Alexander Green: Thanks for that overly generous introduction, Steve. How you doing?

Steve McDonald: Well, that’s what you pay for, Alex. Give us an overview here. What are the biggest mistakes people make? Or maybe the question is: Where do you see the greatest need for improvement?

Alexander Green: Well, there’s a lot of need in a lot of places. Like you, I was in the money management business for many years, and people would come to me with not even the most rudimentary understanding of the stock market, the bond market, or how interest rates, currencies, commodities or what have you worked. It’s a shame because people graduate from high school and they don’t know what compound interest, a 401(k), or an adjustable rate mortgage is. Then they go off to college and their professors tell them that we live in this unfortunate economic system called “capitalism,” which is based on greed, selfishness and exploitation. They don’t even have any idea – probably the professors as well and the students – why we even have a stock market.

You can be historically illiterate, and that’s unfortunate, but it’s not going to cost you a lot of money. You can be scientifically illiterate, but that’s not going to ruin your life either. But if you walk around as a financially illiterate individual, it’s going to cost you a ton of money because you’re either going to fall into the hands of someone who manages your money for you at a great cost (and probably not great performance), commit hara-kiri in a discount brokerage firm, jump in and out of mutual funds, or whatever. It’s a shame, really, because this is important knowledge that’s going to determine the quality of your life, the things that you can afford, where you can live, what you can do, when you can retire and whether you can retire. So it’s a pressing need, and it’s a shame that the financial literacy in this country is so low.

Steve McDonald: One of the things that we talked about the other day was when someone would come to us with an existing portfolio and ask us to review it when we were advisors.

Can you share with our Members what we talked about?

Alexander Green: I mentioned the fact that back in my previous life as a money manager people would come to me and say, “Can you help me with my investments?” I would generally answer, “Well, I don’t know. Let me see what you’re doing.” They would show me their portfolio, and there was just no rhyme or reason to it. They didn’t really know what they owned, why they owned it, when they would sell it or if they would sell it. Oftentimes they weren’t even aware of what the companies did. But beyond that, they didn’t know what would happen to their bonds if interest rates went up. They didn’t know the difference between a high-yield bond and a high-grade bond. They didn’t know what an inflation-adjusted Treasury is, what a real estate investment trust is or what a master limited partnership is.

And of course, probably most of the people listening to this at least have a general idea of how these things work, but to the extent that you increase your own knowledge about how the financial markets work, the choices available and what’s likely to happen under various scenarios. If you don’t have that basic understanding, you can’t possibly maximize your returns. So people are sort of forced to turn their money over to an expensive money manager who generally is not worth what they pay them. Or they stumble and bumble along by themselves and end up costing themselves a lot of money again. So that’s the real problem – a lack of understanding and lack of knowledge. It hurts people’s returns, limits their lifestyle and limits their quality of life.

Steve McDonald: You and I have both been contributors to Investment U for years. As far as I’m concerned, it’s the only place I know of that people can go to for basic information – to understand investing, money management and the stock market. What components of that program do you think benefits our Members most?

Alexander Green: Well, what I think benefits the most is, first of all, an understanding that investment success is not based on following the right predictions. Investment success is based on following the right principles. If you don’t know those principles or if you’re not putting them to work in your portfolio, again, your returns are bound to suffer.

So what we do at Investment U and Liberty Through Wealth is explain to people how those principles work and apply them to what’s happening in the markets today. If you don’t understand that interest rates are at a 37-year low (or close to it), if you don’t know how inflation in the past has affected investments, if you don’t know what changes in the value of the dollar, if you don’t know the price of oil, or if you don’t know various legislation that’s going to pass – and how those things are going to affect your portfolio – it’s bound to diminish your returns.

Steve McDonald: Now, the Investment U Conference is coming up in St. Petersburg, Florida, in just a couple of days as a matter of fact. We’re going to have livestream there. Can you tell our Members how they can get involved with Investment U LIVEstream 2019 and what that is going to do for them?

Alexander Green: Yes, absolutely. First of all, let me say we’ve got experts across the spectrum. People will be talking about stocks, bonds, interest rates, currencies, commodities, energy, precious metals, coins, real estate, etc. – everything under the sun. No one could possibly be an expert in all these areas, and we have the best people with the most knowledge across the spectrum coming to speak. So that in itself is good.

But the Investment U LIVEstream 2019 is great for all those people who can’t get off work or can’t travel to St. Petersburg for a conference. You can just sit down at your desk or your laptop and watch in real time as it’s happening. You can see what’s happening at the conference, hear everybody’s talks, hear the best of the workshops and be a part of it without having to travel all the way to St. Petersburg.

Steve McDonald: That’s fantastic. Let me point something out to the folks at home. There’s a link just below, click on it. It gives you all the details about how to get into this and when it’s live. It’s a great deal – it will save you all the travel, all the headaches of getting down there and having to put up with this wonderful weather we have here in Florida.

Alexander Green: Now, we’d like to have everyone there of course, but that’s not possible. So the next best thing to hear what’s going on in the markets, how things are likely to unfold and what you can do about it is tune in for Investment U LIVEstream 2019.

Steve McDonald: Alex, it’s always a pleasure to have you on. Thanks for taking the time.

Alexander Green: Thanks for having me, Steve.

Steve McDonald: It’s my pleasure. For everybody here at the Market Wake-Up Call, I’m Steve McDonald. Thank you so much for being a part of this. We’ll see you next week.

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