Why Choose Channer Investment Management?

WHY CHOOSE
CHANNER INVESTMENT
MANAGEMENT?

SIX IMPORTANT REASONS –

  • True Custom Management. Our clients’ accounts are held and managed separately, and in specific consideration of each client’s preferences, tax circumstances, risk tolerances and other individual variables. No two accounts are the same at Channer, because no two clients are the same. By comparison, many investment managers handle all of their accounts approximately the same. In many cases, each account is little more than a slice of what otherwise might be a “one-size fits-all” investment.
  • Stock and bond expertise. The third generation Channer organization is unusually well developed in both areas. The first two generations of Channers specialized on the bond side. The third (present), mentored under the previous, then established new mentors who became three of the greatest stock investors of all time: John Templeton, Peter Lynch & Warren Buffett. At Channer, it is about stocks and bonds, not one or the other. This is a distinguishing difference because most people in the investment business started on either the bond side or the stock side, and then continued to develop that specialty.
  • Twin responsibilities. All investment managers accept responsibility for the management of their clients’ accounts. At Channer we do not believe that is enough. We know that investor behavior, (the tendency to make course changes based of emotion or media influence), is a major hazard for all investors. We therefore accept a second responsibility, which is to help develop the “investment temperament” of each of our clients By contrast many modern investment managers wish to avoid direct contact with clients. We believe that view to be common, cost efficient, but mistaken.
  • Client involvement. Investment managers generally have your written consent to manage your account with discretion. This means they can make decisions without client approval or involvement. The Investment professionals at Channer often do the same, but they also recognize that it is not an all-or-none proposition and that some investors want to be involved in the decision making process. Some investors learn and understand the investment process better by doing so. Accordingly, as unusual as it is, at Channer we encourage investor involvement. We want to build and grow personal relationships with each of our clients. Our clients are not commodities; they are people, and we treat them as intelligent individuals.
  • Pricing alternatives. The financial professionals at Channer offer both commissionable brokerage accounts and fee based management accounts (through LPL Financial). However, it is one or the other, never both in the same account. Our fees are negotiable, depending on the needs, circumstances and investment assets of the client. Most other investment managers are also fee based, but some also charge commissions for each transaction. In addition, some share their fees with referring brokers, which can leads to higher client costs.
  • Buy-side research. “Buy-side” research is created for professional investment managers because they are buyers of securities for the benefit of their clients. By comparison, “Sell-side” research is the product of analysts who publish their reports on behalf of a “sales force”. Sell-side research has been historically fraught with conflicts of interest, and poor results. At Channer, we utilize buy-side research; we find sell-side research to be suspect by nature.

“The decade of the nineties produced a large number of mistaken investors. The markets were so kind and forgiving that many investors, especially those led by the less experienced, lost their perspective. By comparison, the period of financial collapse that began in 2008, produced extraordinary challenges for all investors.

Yet, in both easy periods and the exhaustive periods that follow, investing is difficult and requires adherence to fundamentals. At Channer, we pursue excellence in the conviction that profits will eventually follow. We believe the investment community would be well served should that view be adopted for the decades ahead.”

Bernard Madoff “Ponzi Scheme”

Q: How could the Bernard Madoff “Ponzi Scheme” have happened in this day and age?

A: There are some golden rules, when it comes to investing money. Here are a few that relate:

If you don’t understand it, don’t invest in it.

  • Never let greed get in the way of common sense.
  • Trust, but be and stay informed (verify).
  • Never write your check directly to the financial advisor.

It is quite possible that many of Mr. Madoff’s clients failed themselves on all four of these protective fundamental rules, but as you can see, there is no doubt about the fourth.

Because at least some checks were made out to Mr. Madoff personally, how could investors have understood what they were investing in? Based on news reports, it appears it was the promise of steady and high returns that were “too good to be true”. Staying informed would have also been very helpful, but how does one stay informed on investments that were not properly understood in the first place?

While Mr. Madoff has admitted publicly that his chosen behaviors will likely cause innocent investors to lose billions of dollars, if someone chooses to break the four rules that we have highlighted above, they are also choosing to take risks beyond their ability to calculate. This makes them vulnerable to the schemes of others.

All of this is clearly a circumstance of wrongdoing. But it would not have been possible if so many investors were not in search of a “free lunch”. Very sad, but true. And most astonishing of all is the number of institutional (professional) investors who also drank from Mr. Madoff’s cup.

Madoff


© 2008, CHANNER INVESTMENT MANAGEMENT, INC.

SECURITIES AND FEE-BASED ACCOUNTS OFFERED THROUGH LPL FINANCIAL

MEMBER FINRA/SIPC A REGISTERED INVESTMENT ADVISOR

www.channerinvestment.com 1-800-635-0157 A Channer University Publication™

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. Past performance

is no guarantee of future results. The market for all securities is subject to fluctuation such that upon sale an investor may lose principal.

A CIM Special Report: 2010

Where are the Jobs?

Why has the market advanced recently?

Did we have a “lost decade”?

If so, what is ahead?

[As carefully discussed on The Conservative Investor’s Radio Program.]


Where are the Jobs?

The media likes to highlight the “jobless recovery” headline. It sells. It also confuses people, so, lets attempt to correct that now. As the economy continues to recover, more jobs will be added, but it will take time. The job market is what we call a ‘trailing indicator’. This means than improvements typically take place after the economy makes improvements. Unfortunately, it does not encourage those who are looking for early recovery evidence.

It often takes a recession for many businesses to realize they were employing workers they did not actually need. At the same time, when the economy was humming, those same employers didn’t want to rock the boat – or pare their workforce to a leaner condition. Yet, when the economy stumbled badly, they were forced to let as many employees go as they could spare. That was a painful process. It is always difficult to discharge employees, and it is expensive. As a result, employers are not eager to re-hire and run the risk of repeating their recent history. And given the depth of our last recession, this time around there will be unusual reluctance to rehire. This is neither the news nor a reality that anyone wants. It is a very adverse condition that will be especially slow to correct itself.

The happy news is American businesses are making huge productivity gains. They have found they could get the job done with smaller payrolls, and given the burden of payroll taxes today, doing so will reduce costs and improve profits considerably. But sadly, that reality is on the back of many who are unemployed. This brings us to our next topic:

Why has the market advanced recently?

The stock market, unlike the job market, is a ‘leading indicator’. It essentially takes the temperature of investors. In addition, if investor’s decide that stocks have become inexpensive, and that productivity gains will lead to improving earnings, they historically take action in anticipation of those expectations. And that is precisely what has been happening. Yet inspite of the large advances that have taken place since the recession low, the market is still much lower than it was when the decline began. The DJIA (Dow Jones Industrial Average; “The Dow”) was about 14,000 when the mega-banks, Wall Street, mortgage lenders and other nefarious characters began revealing their bad character. They were the causes of the big turndown. So it was much more of a cause-and-effect condition, than a typical ‘top of the cycle’ downturn. A liquidity crisis developed quickly and less experienced investors used their fear to divest. Stocks moved from weak hands to stronger and more experienced hands.

But all of that is history now, and the market is not only moving back to higher and more appropriate levels, but it is “telling”. It is telling the average person that the economy and the liquidity crisis has been attended to, and things are getting better. Not forever, but for as far as the optimists can see, at present.

Did we have a “lost decade”? If so, what is ahead?

Future Past Present
Again, we would say this ‘lost decade’ talk is good for selling what the media sells. But it is not helpful, even though the S&P 500 is roughly at the same level as it was about 10 years ago. A recent quote from Bill Miller, the legendary investor, may help to re-establish perspective:

“…There have been fourteen 10-year periods where stock returns have been negative, including this [last] one. In every one of the previous 13, the subsequent 10-year returns have exceeded 10%, about 50% more than average, and more than double the return of government bonds. So every time stocks have performed poorly for 10 years, they have performed better than average for the next 10 years, and they have beaten bonds every time by an average of 2 to 1.”

Thank you Bill Miller. We would make two more points: First, as soon as you change the starting and ending date of any ten-year period, you produce different results. If you just go back a few years, that trailing ten-year period looks entirely different. That will likely be the case a few years from now, but we can’t make those calculation until we get there. Second, why did the complainers of the last decade fail to mention the decade that preceded this last one? That was a rather incredible decade. In its beginning, in 1990, we saw many positive factors coming together and went public with our view that there was a high probability that the Dow could hit 10,000 by 2000. We were wrong. It actually got there in 1999. However, it was at about 2800 when we made our expectations known. And therefore, the preceding decade had an almost four-for-one advance! While that was hardly a normal or typical decade, we strong submit that the last decade was not normal either. Bill Miller’s good comments above help make that point, and they are a great reminder that things don’t get weak and then stay there forever. Rather, sometimes they move along in a somewhat steady manner, and sometimes they move along in an alternating fashion of too much followed by too little. This serves to confuse us, yes. And unfortunately, it does not serve to provide us with perspective or understanding. This report is our attempt to help investors to see the difference.

Concluding comments:

To say 2009 was memorable is an understatement.

To future historians and economists it will be the year to which all forthcoming bear and bull markets will be compared. For investors, recovery was the word for 2009. In fact, the volume for Google searches and news references for the word “recovery” soared over the course of 2009, especially relative to the word of 2008: “recession”. 2009 began in the midst of a bear market plunge that was the worst since 1932 and the free-fall suddenly rebounded into a “V”-shaped rally of 65% from March 9 through mid-December, the most powerful nine-month rally in the S&P 500 since 1933.

For 2010, ‘sustainability’ may be the word —

not merely because climate change [may] be on Washington’s agenda, but primarily as it pertains to continuing the economic and market recovery witnessed in 2009. In brief, we believe, the recovery is likely to be sustained with economic growth in the 3-4% range in 2010. *

*Courtesy of LPL Financial Research – 600521

Warren Buffett has done it again.

CHANNER INVESTMENT MANAGEMENT

SPECIAL REPORT – NOVEMBER 2009

WarrenBuffett

“It’s an all-in wager
on the economic future
of the United States”

Warren Buffett has done it again.

This is a story that every American investor needs to understand and appreciate.

11/3/2009 – NEW YORK (MarketWatch) — Warren Buffett’s Berkshire Hathaway on Tuesday said it is paying $100 a share to acquire railroad firm Burlington Northern Santa Fe. It will also take on $10 billion of Burlington Northern debt, valuing the total deal at $44 billion. Berkshire said the deal is its biggest acquisition ever.

“Our country’s future prosperity depends on its having an efficient and well-maintained rail system,” Warren Buffett said in a press release. “Conversely, America must grow and prosper for railroads to do well. He added, “Most important of all, however, it’s an all-in wager on the economic future of the United States. I love these bets.”


Yes, Buffett is bullish.

And under the circumstances, could there be better news?

Once upon a time, a very large Wall Street firm loved to say they were Bullish on America. But two things changed. First, that firm had to be merged into a bank, to save it from collapse. And second, Wall Street and the Mega-Banks have not only damaged the Country to its core, they have left many American’s wondering if our country has seen it best days. And who can blame those worried investors? The average American investor has been betrayed. It was not an event, it was non-stop greed and wrong-doing from the very people who held themselves out to be the investors’ friend. When many in corporate America stop behaving honorably, and trillions of dollars in market value are at stake, the psyche of American investors can be in need of repair.

Those who study history know that America is at a point of inflection. It is at a point where those who surrender to their feelings are not likely to be part of the solution. Rather it is those who think about problem solving and unobvious opportunity who will lead the country to its next round of success. History is a great teacher. It teaches us to not repeat the mistakes of the past. In addition, it teaches us to not underestimate the strength of America, the American spirit, and the opportunity that is born out of adversity.

We do not mean to understate the magnitude of today’s challenges. They are great, and they could have been as serious as the 30’s. Yet, they are not because we learned from our mistakes, our resources are far greater, education is everywhere, and our standard of living has given us so much to fight for. And fight is what will take us to where we want to go. In addition, one’s response to leadership is what will determine who moves forward first, and who moves last.

Buffett is the most financially successful investor ever. Yet, it is his character that should impress investors most. He lives humbly, outside of the influences of the foolish, the immature, and greed infested cultures. His greatest accomplishment is not financial wealth. It is personal character. And one of his most valuable character traits is his leadership. He is leading now, and his current wave of leadership began with his letter to investors last year (October 17, 2008) that has become famous for its instruction:

“Buy American. I Am.”

He further said (last year), “ The financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.” (So true.)

“So … I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.”

__________________________________

Warren’s leadership continues today. He just made his biggest investment ever. Right here in America – at the heart of American commerce and transportation. And, while we would prefer that he used less gambling rhetoric, we love his message: “It’s an all-in wager on the economic future of the United States”. His money is where his mouth is. $44 billion more on our recovery, and the future of American business.

One more point for the history fans. Great fortunes have been made in America, and many of them got started in devastating circumstances. In fact, one of our other investing heroes was John M. Templeton. He got his start buy buying stocks no one else had the courage to buy, during the most painful days of the depression. The average person thought he was nuts. He was not. He was courageous, yes, and a believer that maximum opportunity presents itself during maximum pessimism.

Charles Githler, chairman and co-founder of Intershow, the company that has produced numerous well-attended investment conferences over the last three decades, many which featured John Templeton, said that Templeton was “the consummate value hunter [who] seemed to never fade from bargains created from the crowd’s excess pessimism or just plain panic…. Buy at the point of maximum pessimism, Sir John would insist.”

John Templeton


THE AMERICAN INVESTING HEROES HAVE SPOKEN.

WE THINK IT IS SMART TO LISTEN.


The opinions voiced in this report are for informational purposes only and are not intended to provide specific recommendations for any individual. Consult a financial professional to determine what is appropriate for you. The information and data were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed, and the giving of the same is not deemed an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. For additional information, call 1-847-934-3800.

© 2009 – a Channer University™ Publication.

1625 Colonial Parkway, Inverness, IL 60067

Securities & fee-based accounts offered

Through LPL Financial

A Registered Investment Advisor

Member FINRA/SIPC

847-934-3800

Attention Financial Advisors, Going Independent…

Attention Financial Advisors,
Going Independent –

  • Are you looking for a new business home? One that assures your clients will come first, and is run cost-efficiently?
  • Are you determined to enjoy the rest of your career away from the influences and conflicts of Wall Street? Where trust is not in doubt?
  • Would you like to be associated with Channer Investment Management, a name in the investment business that has been respected for three generations?

We opened our doors in 2002. Since then, we have experienced every aspect of independence, and we believe it is the future of the investment business.

We are currently comprised of four very happy independent advisors, and a very experienced administrative manager. We benefit from a well-planned support system, in place technology and compliance, and furnished offices. We are ready to add two more advisors. Candidates should have an excellent compliance record and a conservative approach. The ‘size of your book’ is not important.

If you want the rest of your advisory career to be independent, more profitable, and with people you like and trust, call:

Christopher S. Channer

CHANNER INVESTMENT MANAGEMENT, INC.

1625 Colonial Parkway, Inverness, IL 60067

Securities Offered through LPL Financial

A Registered Investment Advisor

Member FINRA/SIPC

1-800-635-0157

www.channerinvestment.com

CHANNER UNIVERSITY™ READERS HAVE BENEFITED

CHANNER UNIVERSITY™
READERS HAVE BENEFITED


The following quotes come from past articles and reports

written and distributed by CHANNER – UNIVERSITY™ regarding

the Banks, The Fed, Real Estate speculation, and Wall Street

11-15-06:

The top five investment and brokerage firms will pay an estimated $36 billion in bonuses to their employees for 2006. Their average compensation is 20 times the national average, and those bonuses are 10 times the U.N. World Food Program’s 2006 budget, which feeds 79 million people.* Wall Street is not only eating our ‘lunch’, they are eating the breakfast, lunch and dinner for 79 million other people for the next ten years. No greater evidence could exist that Wall Street still believes in the words of Michael Douglas in the movie Wall Street, when he proclaimed, “Greed Is Good”. Aside from the disgrace these folks bring upon themselves, the lesson to be learned is that every unnecessary fee investors pay serves to deplete their future net worth, and further contributes to unnecessary, if not disgraceful, bonuses and profits for the elite.

(Note: Warren Buffett continues to draw his modest salary of $100,000. How could anyone really think they should be paid hundreds of times what the world’s best investor is paid?)

*Source: WSJ


9-13-06:

The big Banks have changed. They no longer are caring local institutions that feel responsible for the best interest of their customers. There was a time when a bank would not lend money if they thought the borrowers were going to use the money foolishly, imprudently, or to speculate. They simply said no. But today the Banks are huge impersonal institutions, and are likely to continue this process of change, as the big ones continue to gobble up the little ones.

How about a new credit card at an interest rate of zero for six months, or 5.9% forever? Read the fine print and you will find that there are many reasons they can declare you to be no longer eligible for this rate. They can even do it for “any reason they deem”, if you read the fine print carefully. But typically, just be one payment day late, and your rate changes to 25-30%, or more.

There have always been good reasons for borrowing money; there have always been bad reasons as well. Borrowing money to finance a trip to Las Vegas has topped the list of bad ideas, for as long as many of us can remember. But when speculators borrow huge sums to buy stocks, real estate, or to speculate on energy, they push prices up to unsustainable levels, and someone often gets hurt. If it is the speculator, who cares? If it is the general public, their welfare, their pension account, or their need to sell their home in an orderly market, everyone should care. But the speculators are greed driven, and they don’t care. They are literally laughing – all the way to the bank. And when they get there, the banks have a good laugh as well. Their profits have never been better. Speculating is no longer frowned on by the big banks. And we should be aware. Thank goodness there are still community banks which behave like responsible souls, and who care about the communities they service.


3-18-05:

Alan Greenspan, “super-testifier” before congress, is doing it again. He sees speculative excesses, watches them, and then fails his own convictions by what he doesn’t do.

  • There is excessive price speculation taking place again.
  • There is a cause.
  • There may be significant consequences.
  • Real Estate & commodity speculators beware.

Greenspan won’t do it right, again. We do not know why. We suspect it has more to do with politics than failed intelligence. It amazes us and disappoints us. But that is not the point of this paper. The point is to alert you, the legitimate investor, to three things:

  • Greenspan may not protect you from the behavior of greedy speculators, and their inevitable aftermaths.
  • Speculating is gambling, it is not investing, and it never will be the stuff that salt-of-the-earth folks are proud of.
  • It matters what you pay for assets. A major part of a successful investment is determined by the price paid for it.

In conclusion, write your representatives. Make your voice heard. Tell them:

“You failed us in the nineties; are you going to do it again?” Get the congress talking turkey. The growing of bubbles is to be prevented. It’s the 21st century.

“Are you really going to let the vigilantes, the hedge funds, and the banks chase profits with no regard for the public? If you look the other way again, you will lose my vote.”


2005 (from Wall Street is Broken):

Brokers are really professional sales people. Any person of average intelligence can acquire the registration required to be a broker. Revealingly, the registered brokers are regulated under the “Uniform Sales Practices” regulations. There is neither a requirement nor a provision that brokers have the knowledge or experience to be investment management experts. Ironically, it is the same great sales people that have the ability to cause their customers to lose sight of these realities.

Further, many of the brokerage offices that employ these sales people may not be designed to protect your best interest either, which is why they need exceptional sales people to keep the business model going. The proof? Check the “want ads.” Look at the ads for stockbrokers. Read those ads and you may quickly find proof that it is sales skills, not investment skills, which are sought. It’s right there, in black and white. Or if you have the courage, go to a large branch of any major brokerage firm and ask the Branch Manager (Sales Manager) to point out the top two brokers, based on profits for the branch. This question may embarrass them, but they will be able to answer it, if they choose – because they measure those results very carefully, and they know precisely who makes the most for the branch, and who makes the least. Now ask them the question that really counts. Which brokers make the greatest profits for their trusted clients? They may not be able to tell you. Why? Because historically, these organizations have chosen to not measure it. And common sense dictates that if they cared about it, they would measure it. The truth is – they care about their profits and paychecks, but they do not care about brokerage account performance – or they would measure it. Ever get a performance report on a brokerage account?

Fall, 2003:

The Wall Street crowd has historically been so driven by greed that Hollywood even made a movie about it that (actually) attempted to convince people that “Greed is Good.” No apologies for the traditions of this club. Not long ago, I heard the following characterization: Wall Street steals from the public, gives a piece of the take to the politicians, then the politicians create a few rules hoping to convince the public that are being cared for. Sound cynical? 27 years in the business confirms that description. Fortunately, there are exceptions. A hand full of regionally managed firms were different. But in the overall, the ways of Wall Street have not historically put the customer first. The fines levied on the big firms in 2002 and 2003 barely impacted their earnings. There is no reason to believe these institutions will ever have trusted relationships with either their customers or their brokers, who are leaving in some cases, in search of independence and legitimacy.

The opinions voiced in this report is for informational purposes only and is not intended to provide specific recommendations for any individual. Consult a financial professional to determine what is appropriate for you. The information and data were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed, and the giving of the same is not deemed an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. For additional information, call 1-847-934-3800.

1625 Colonial Parkway, Inverness, IL 60067

Securities Offered through LPL Financial

A Registered Investment Advisor

Member FINRA/SIPC

1-800-635-0157

www.channerinvestment.com

Neither Channer Investment Management, Inc., nor LPL Financial have any proprietary investment products to sell, investment banking relationships to promote, or any other business conflicts to get in the way of providing our trusted clients with unbiased advice. Our fee-based compensations are not tied to any revenue-sharing arrangements; they are tied to the performance of our recommendations.

In The News

SUNDAY August 23, 2009

BY DAVID ROEDER Sun-Times Columnist

David Roeder

DOW DIVINER: With the Dow Jones industrial average clawing back to 9,500, I thought it was time for a conversation with Christopher Channer, founder of Channer Investment Management Inc. in Inverness. He earned his stripes as a [forecaster] of the Dow in the Sun-Times way back in 1990, when he correctly forecast that it would hit 10,000 (in 1999).

Alas, we all know what has happened to the Dow since then. But Channer believes a return to 10,000 is [possible] in a few weeks. Can it stay there? “That’s anybody’s guess”, he said, “Since the market amounts to a mirror for its participants’ greed and fear.” But looking long-term and basing his view on historical performances, Channer believes the Dow will breach its all-time high of 14,164.53, and Dow 20,000 is a good possibility 7 to 10 years from now.


1625 Colonial Parkway, Inverness, IL 60067

Securities offered through LPL Financial

A Registered Investment Advisor

Member FINRA/SIPC

1-800-635-0157

[Note: DOW re-crossed 10,000 on Oct 14, 2009]

“Mad Money” vs. “The Conservative Investor”

Jim Cramer’s
“MAD MONEY”
VS.
Christopher Channer’s
“THE CONSERVATIVE INVESTOR”

“When Mad Money first appeared on CNBC I felt a headache coming on. The noise alone was enough to reach for pain relief. Every disciplined aspect of my three decades in the business cried out to make the ranting and raving stop. Now, BusinessWeek has placed his explosive persona on their front cover. They talk about their (cover story) personality as though he just might have redeeming qualities for legitimate investors. It is time for a rational look, and for tempered observations to be made.”

Christopher S. Channer, October 2005

Conservative Investor Picture

Lets go back to the 80’s. That is the one period of time where Cramer and Channer might have appeared to have something in common, although that commonality had nothing to do with philosophy or personality. Actually the opposite was true, and remains true. Channer and Cramer are near diametrically opposed in their attitudes and sense of responsibility toward investors. But one thing they did have in common was a desire to have an effect on investors through the medium of financial programming. Cramer, according to BusinessWeek, initially became interested while living in his college dorm (in 1981) watching FNN (Financial News Network). Channer became interested in financial programming while watching FNN and The Stock Market Observer that aired on WCIU in Chicago.

Channer became a regular guest on The Stock Market Observer; he was featured regularly on a daily telecast show known as Ask An Expert. After a while, Channer, and another individual, who was a Chicago stockbroker, decided that better financial programming was needed, and they co-created, produced, and hosted a new show called The Conservative Investor. The show aired in Chicago initially, and then aired nationally on FNN. For several reasons, including time constraints, and then financial difficulties at FNN (which was the forerunner to CNBC), the show ended in the 1988-89 season, but not before educational publisher Scott Foresman made a book deal entitled Ask The Conservative Investor.

Channer’s best television days are likely behind him, as he is nearly a decade older than Cramer, but Channer suspects that Cramer’s best days may be behind him as well. Why? Because Channer believes that Cramer’s flamboyant personality is likely to hurt far more investors than will be helped.

Channer suspects there are reasons for naming Cramer’s show Mad Money. He thinks the regulatory authorities are less likely to harness or sanction the hype, if his producers can preclude the criticism with a self-proclaimed title that admits to madness.

But Mr. Conservative Investor (Channer) also thinks there is an exploitive theme that will eventually take its toll on investors, and then on Cramer himself.

There is a great deal of evidence in the investment community that temperament, a level head, and applied patience are the real variables that account for the successful management of financial assets. Warren Buffett and his partner Charlie Munger have argued for years that an unusually high IQ is not the critical characteristic. They maintain that if intelligence is at a reasonable level, then the maturity and emotional makeup of a given investor (or investment manager) become the primary determinates of success. Yet when one watches Cramer, it is clear that showmanship, entertainment, and outrageousness are the order of the day. Cramer loves to say, “Some people want to make friends, but I just want to make money.” But do not believe it. He wants the money all right, but he also wants a national audience that adores him, and who will award him stardom status. Such avarice is not uncommon in Hollywood, though it rarely leads to happiness. But it should be barred on Wall Street and in financial programming because those personality characteristics are harmful and inappropriate in the field of investment advice.

Anyone who has watched Mad Money may have experienced several emotional sensations that go well beyond the noise and hype. Sometimes the pitch seems intelligent, often it feels like insights from a true insider, and the stock picks are not only presented in a way that is humorous, if not absurd, but are presented with the authority that only Cramer delivers, and it stirs up a sense that easy money may be just around the corner. His allure is real, powerful, and could be the best catalyst for human greed that has ever been aired on television. Sadly, all this produces what the presenters’ want: viewers, and more viewers. Viewers make Cramer famous, and at the same time it rakes in the advertising dollars for CNBC – with little regard for the best interest of their audience.

Of substantial importance, none of this is remotely correlated to being a Conservative Investor. Channer’s passion is to dig deeply and to discover what really works for legitimate investors: To tell the truth about what works (and what does not) to those who rely on that advice, and to help each investor develop the most disciplined investment temperament possible. Can Cramer’s narcissism be helpful in this regard? No, it actually is more akin to pouring flammables on objects that are too hot to begin with.

What starts poorly, and is based upon incorrect fundamentals, rarely ends well. When judging whether something is good or bad, with respect to the impact it has on viewers, it is often helpful to look first at the stated or implied premise (of the practitioners). In that light, Cramer is doing exactly what BusinessWeek says. He is earning himself the title they offered: The Mad Man Of Wall Street. They are right because it is madness to pretend your purpose is to help the less experienced, when all the real experts – at advising the investing public – rank ‘emotional appeals’ as poisonous to the well of understanding. Peter Townsend, of the rock band The Who, became famous for smashing his guitar on stage to the adornment of 20,000 intoxicated teenagers. Cramer imitates that behavior by smashing furniture on the set of Mad Money. That in itself should tell most adults what they need to know when it comes to Cramer.

Next time Mad Money comes on, do yourself a favor that will honor the best interest of your portfolio. Grab the remote control. Then pick up a copy of John Train’s original book, The Money Masters. You will be better off.

Anti-Mad fundamentals to remember:

  • Trading is not investing – rather, trading is a ‘zero sum game’.

  • Short selling is very high-risk speculation.

  • Stock “tips” are designed for the inexperienced, who seek a free lunch.

  • A voice of reason does not yell at you.

  • Investing is not easy or entertaining; it is hard work.

This report is for informational purposes only and is not intended to provide specific recommendations for any individual. Consult a financial professional to determine what is appropriate for you. The information and data were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed, and the giving of the same is not deemed an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. For additional information call 1-847-934-3800.

1625 Colonial Parkway, Inverness, IL 60067

Securities & fee-based accounts offered through

LPL Financial, Member FINRA/SIPC

A Registered Investment Advisor

847-934-3800

It’s a Market of Stocks, Not a Stock Market

It’s a Market of Stocks, Not a Stock Market

offered by Christopher S. Channer


How we think of things, often determines how well we think. Sadly, much of how we think of things is determined by the media, society or culture. Yet, we can train ourselves to frame our thoughts with greater accuracy and clarity if we choose. And therefore, the concept of “The Stock Market” is worthy of careful analysis by conservative investors.

We call it a Stock Market, but “it” is really us. Yes, “The Market” is a place where stocks trade hands, so in that sense, it is a place that exists. But conceptually, the stock market is really a huge mirror reflecting the behavior and choices of all if its participants. It simply tells us, with each and every little flutter, what people are doing. The market is up, says someone. What does that mean? It means that more buyers than sellers are expressing themselves in that moment. Of course, the opposite is equally true. So when the market changes, it is acting like a gauge or a thermometer. It is an indicator telling us what people are doing. It is not capable of taking action of its own.

We sometimes refer to the market with different characterizations. We say, in the short-run, it is a voting machine. This means it is reflecting precisely what people are saying yes or no to, as they place their buy or sell orders. But we also say that in the long-run, it is a weighing machine. This means that over time stock prices do not change based on the daily buying or selling pressures. Rather, over time, stock prices – for a given security – tell you whether there is more value in a company, or there is less. Therefore, if one wants to think of the market as being the aggregate of all stocks prices, it is best to think in terms of weight, rather than daily popularity.

As wise conservative investors, the important thing to teach yourself is that the focus belongs on the individual security. They are the real thing. They are what we can study, own, and with which we can achieve asset growth. The more we focus on stocks, as opposed to the market, the more we act for the right reasons, and the less apt we are to be induced to play “market games”.

Further, when we lose focus on the securities we get refocused on “the market” and all of its interesting (or silly) characteristics. This serves to take our eye off the ball, which is a terrible mistake, as any golfer or ball player will tell you. They will tell you that success in those endeavors is based on mental toughening and clear focus. They know that if you start shifting your focus to the scoreboard, the audience, or the other players, success will slip away. The market is an exchange; stocks are wealth builders – and the basis for the powerful concept of “ownership”.

There is currently a debate as to who should regulate new “product creation” on Wall Street. In most areas of business, new products are a function of what the public could benefit from, and therefore supply demand for. But when it comes to Wall Street, it is not what the public will demand, but what they can be sold, because the public is easy to fool and exploit when it comes to things that promise easy money. Accordingly, Wall Street does need a responsible parent to oversee what (and why) it is creating for the public in the way of new products.

Congrats go to Jamie Dimon who came out on top, as the top boss at JP Morgan Chase. They made it through the crisis better than any of the major too-big-to-fail banks. He was more conservative and better capitalized, and he has been rewarded with prestige. He is now king of the mountain. “JPMorgan Chase, as it exists since 2008, is the result of the combination of several large U.S. banking companies over the last decade including Chase Manhattan Bank, J.P. Morgan & Co., Bank One, Bear Stearns and Washington Mutual. Going back further, its predecessors include major banking firms among which are Chemical Bank, Manufacturers Hanover, First Chicago Bank, National Bank of Detroit, Texas Commerce Bank, Providian Financial and Great Western Bank.” (Source: wikipedia)

Yet the result now is the bank, and several others, is/are so big that they cannot be allowed to fail – because they could take the whole banking system down in the process. And therefore, they must be broken up. In other words, like a very wise grandmother might have said to the CEO, you win, but you don’t get anything. Rather, when the dust settles, we will see if the Congress has the courage to correct this economic risk, on behalf of the general population.

In the meantime, while the mega-banks can offer some conveniences based on their geographical spance, smaller regional banks are more likely to be your friend, when you are in need of a friend. JP Morgan, after making millions of offers (to consumers) to run credit card balances up to unmanageable levels, has just recently raised the minimum monthly payment on their credit cards to 5% of the outstanding balance (that is nearly a 60% retirement rate in the first year). Many of their credit card holders will find it impossible to meet this demand, will default, will see their credit go down the drain, and their interest rates explode. Perhaps too big to fail is also too big to be held accountable.

The opinions voiced in this report is for informational purposes only and is not intended to provide specific recommendations for any individual. Consult a financial professional to determine what is appropriate for you. The information and data were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed, and the giving of the same is not deemed an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. For additional information, call 1-847-934-3800.

1625 Colonial Parkway, Inverness, IL 60067

Securities Offered through LPL Financial

A Registered Investment Advisor

Member FINRA/SIPC

1-800-635-0157

www.channerinvestment.com

Neither Channer Investment Management, Inc., nor LPL Financial have any proprietary investment products to sell, investment banking relationships to promote, or any other business conflicts to get in the way of providing our trusted clients with unbiased advice. Our fee-based compensations are not tied to any revenue-sharing arrangements; they are tied to the performance of our recommendations.

Ask An Expert Article – How Does It Feel?

Q: I know what it feels like to be an investor in this environment. It is terrible. However, since much of today’s problems are related to the collapse of Wall Street, Banking and financial services, how does it feel to be in the investment management business right now?

A: Thank you for your question. The short answer is: It is very difficult. Yet, we were trained – when things look adverse – to help others and to be problem solvers. When we place our focus on helping others who may be less fortunate, our difficulties appear smaller. When we focus on problem solving, rather than on how the problem feels, we move toward solutions. We believe this is the right formula for our organization, and it could be the right one for our country as well.

In circumstances like these, which developed from a series of false statements, wrongdoing, congressional failures, regulatory failures, excessive greed coming to light, and then, pervasive fear, it becomes prudent to adopt a “prepare for the worst but expect the best” approach.

We have prepared for the worst in many ways. We continue to rely on LPL Financial to be our custody broker-dealer, the most experienced and best managed in this area of business (in our carefully considered opinion). We continue to attract new assets, new clients and new financial advisors with deep experience. Given the circumstances, our business is healthy. Yet given our experience, we do not take success for granted.

Philosophically, we decided long ago that we wanted to be on the same side of the table as our trusted clients. Therefore, most of our business is fee-based, rather than commission-based. This means that we are “in it” with our customer. When the market is healthy, we both feel the wind at our backs. But when the market makes a once-in-a-lifetime downturn, we both feel its full force. Importantly, we council our clients to stay invested and to not sell out at the bottom. They are therefore, in a position to experience a recovery. On the other hand, the revenues that we lose in a bad market condition are lost forever.

Some might say that if the market is cut in half, then we deserve to have our business revenues cut in half too, because we have less work to do. Ironically, we actually have more work to do. Good markets are forgiving and investors are naturally happy. However, in this market, we must be doubly careful in every decision we make. We must spend many more hours counseling clients, and researching a changing landscape.

Our job is probably twice the challenge in a market like this, our responsibility to council our clients wisely is far greater, and the decision to act – or not act – is far more stressful. Further, we must be compassionate and we must be good listeners.

However, we are in this business of our own free choice, and of our own free passion. Moreover, we are truly grateful to live in a country where such freedoms exist. Opportunity is abundant. Yet, this is the most difficult environment, in nearly every way, that even the most experienced have seen. It is our belief however, that this is when our clients need us most. And while it is financially taxing, we know our reason for being has never been greater. But like challenges of the past, we expect today’s circumstances will bring an even stronger bond between our organization, and our clients, which we are deeply committed to.

In conclusion, we encourage you to be mindful that this too shall pass. If you believe in America, you believe in the future. We do, with conviction. Thank you again for your question.

– Christopher S. Channer, Founder

Note: Our condolences to those who were long-term loyal employees at one of the fallen firms. Many hard-working people not only lost their jobs, but also had much of their net worth in the stock of the company they worked for. We also offer our condolences to those who were affected by the Ponzi schemes that have come recently to light. These situations are sad beyond description, and are the ultimate reminder that if you have all of your eggs in one basket, or if you reach for returns that are “too good to be true”, you are taking huge and unnecessary risks.

© 2009, CHANNER INVESTMENT MANAGEMENT, INC.

SECURITIES AND FEE-BASED ACCOUNTS OFFERED THROUGH LPL FINANCIAL

MEMBER FINRA/SIPC A REGISTERED INVESTMENT ADVISOR

www.channerinvestment.com 1-800-635-0157

A Channer University Publication™


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.2-27-09