It really doesn t matter if you buy stocks that are crossing their 200-day-moving-average, or those whose earnings estimates are being raised, or on which analysts have strong buys or strong sells. Because nothing works all the time. How you pick an investment despite the time and effort we put into it is actually an afterthought.

Instead, as we always point out, it s not what you buy---but how you buy, the technique and portfolio management technique one uses, which has the biggest impact on your bottom line. Consider that you could have bought AIG, Citibank, Freddie Mac and Fannie Mae, every high-profile blow-up of the economic downturn at their all-high-highs, and providing you had a reasonable 5% position size and 20% stop-loss order, have easily lived to trade another day.

So I ve got a specific strategy for every single investment in my portfolio. What if it breaks? What if it rallies? Where would I add exposure? Where would I cut it completely? Seemingly mundane when compared to the excitement of a new stock pick, it s those decisions that make all the difference in the world. With a plan, the disciplined investor is therefore ready for nearly any contingency the market might throw before it occurs.

The Hidden Cost of the Entitlement State

A sign of our inflationary times.

As adults, we still experience the same satisfaction. Regardless of whether you mop floors or manage a corporation, attainment feels good. When we make the sale, or get promoted, or make a profitable investment, we feel pride in our accomplishments. We know we didn t succeed just by luck or by exploiting other people we succeeded because we earned it.

But in growing government and the entitlement state, we further entrench the belief that it s handouts, not hard work, from which values are created. It s no longer selling lemonade, but simply needing it, which entitles you to it. The opportunity for ambitious, industrious producers to succeed is neutered when political pull governs the economy, and all are deprived of the satisfaction of individual accomplishment.

We feel pride from cashing a paycheck. But there is no achievement felt when cashing a Social Security payment, only a bitter sense of both having been exploited and exploiting other ourselves.

At the Close

Here s one stocking stuffer you won t find at Amazon.com. The Manhattan Rare Book Company is selling an extremely rare first printing of a collection of Acts of the British Parliament, including The Stamp Act of 1765, which ultimately led to the American Revolutionary War. Only 1100 were printed almost 250 years ago, and it s estimated that only a small fraction have survived.

British Acts of Parliament, 1764-1776
Photo: Manhattan Rare Books

The price? A cool $85,000. But in a year in which the Tea Party Protests and health care town hall meetings stirred considerable discussion regarding the government s involvement into the free market, it s an irreplaceable and timely reminder of the values on which this country was founded and which have always made us great.