By Steve Sanduski, CFP^®

Back in the early 1970s, pundits fawned over some of the era’s fastest growing, industry-leading companies who seemed to defy the sluggish overall economy. Dubbed the Nifty-Fifty, these glamour stocks were well-known “one-decision” stocks that institutional investors clamored to own. So, how well did these stocks do over the last 40 years? Were they truly “one-decision” stocks?

While there was no official list of the Nifty-Fifty, two competing lists of 50 stocks are commonly cited, according to a research report titled, “The Nifty-Fifty Re-Revisited,” by Jeff Fesenmaier and Gary Smith of Pomona College. For today’s purpose, we’ll look at the 24 stocks that made both lists and were dubbed the “Terrific 24” by Fesenmaier and Smith.

Some of the household names on the Terrific 24 list include: McDonald’s, Walt Disney, Avon, Johnson and Johnson, and Coca-Cola. These companies are still doing well. However, some other household names on the Terrific 24 list performed poorly. Consider the following:

Xerox: It’s still around, but is a shadow of its former self and trades for about $8 per share.

MGIC Investment Corp.: It went through various corporate restructurings throughout the years, but is still around as a private mortgage insurer. However, it got battered in the mortgage insurance meltdown of recent years and trades for about $4 per share.

Polaroid: The inventor of instant film couldn’t make the transition to a new world and filed for bankruptcy in 2001. It reorganized and is now trying to reinvent itself.

Eastman Kodak: Perhaps the saddest story of the bunch, Kodak has struggled for years to make the transition to a digital world and is now rumored to file for bankruptcy as early as this month, according to Reuters. Its stock sold for less than 50 cents per share last week. Ironically, Kodak invented the digital camera in 1975, but was never able to capitalize on it.

With 40 years of history, here are three key lessons we can learn from the Nifty-Fifty story:

1. Some “glamour” stocks do remain glamorous for many years, e.g, McDonald’s, Walt Disney, and Coca-Cola (although each had its “rough periods” over the past 40 years).

2. Promoting “one-decision” stocks is more of a headline-grabbing marketing strategy than a sound investment strategy.

3. Even the “best” stocks can fall to zero so it’s important to have a sell discipline. 

As the British statesman and philosopher Edmund Burke said, “Those who don’t know history are destined to repeat it.”

Read Steve Sanduski’s latest article, for Financial Planning magazine’s The Prosperous Advisor, Do You Have the Right ‘Why?’

Steve Sanduski, The Prosperous Advisor, says it’s important for financial advisors who want to succeed to understand the “why” behind each of their goals and ask themselves if they’re setting these goals for the right reasons and whether or not they’re in the best interests of their clients.

By Steve Sanduski, CFP®

Huh? Shouldn't you try to avoid controversy and not ruffle any feathers? No. In fact, you need to have a strong opinion and have people disagree with you in order to grow your business.

American Idol’s season one winner, Kelly Clarkson is the latest example of somebody who shared her opinion, ruffled a bunch of feathers, but laughed all the way to the bank as her CD sales soared. On December 28, Clarkson tweeted that she loved Ron Paul and would vote for him if he's the Republican nominee. Whoa! Clarkson was attacked on Twitter and the blogosphere for her stand.

But, guess what happened next? Sales of her latest CD soared as she picked up new fans. In fact, sales for the CD jumped more than 400 percent in a 24-hour period on Amazon.

What does this mean for you? As an advisor, don't be wishy-washy. Take a stand on important issues such as the budget deficit, the euro crisis, Washington politics, and how to grow our economy. Sure, you may "ruffle a few feathers," but you'll get attention and gain new clients and referrals who agree with your stand and want to work with someone who thinks the same way they do.

By John Mason
Manager, Information Technology
Peak Advisor Alliance

“The pen is mightier than the sword.” - Edward Bulwer-Lytton ,English author, 1839

Fast-forward one hundred fifty years or so and the modernized quote could be: “The media is more influential than weapons of mass destruction.”

We all get suckered in, whether we realize it or not. Perception is reality and the world is full of seemingly credible sources of information that aim to shape our perception. But, for whose benefit?  With the markets being so erratic and the resulting emotions that seem to be driving investment activity, one should acknowledge and consider the impact that media has on the world economy.

We've seen how the world has dramatically shrunk with the advancement of telecommunication technologies. Take the Gulf and Iraq wars, for example. Media coverage drew the average person into a new arena of war perception by putting them on the front lines and in the military planning rooms, so to speak. The impact played a large part in shaping public support/condemnation of those actions. In many cases, it could be argued that media coverage actually worked against the coalition’s efforts and what they were trying to accomplish. In fact, in some cases, it actually put military personnel in harm’s way.
 
Now, consider media coverage as it pertains to the global economy. At any time, people can turn on CNBC or navigate to their favorite financial website (e.g., Yahoo Finance) and get real-time updates on markets, etc., complete with "expert" opinions. But, haven't people preached for a long time that you shouldn't "watch" the daily markets? Doesn't long-term performance matter the most? It would seem logical that once you get people focused on the short-term activity, the standard rules of rational investing go out the window.
 
The bottom line is that the media is playing a large hand in shaping our perceptions, opinions, and, thus, our behaviors. This is in large part done via our emotional connection/reaction to what is being communicated through mainstream media. But, we must consider that the media does not exist as a public service. It exists to make money itself. Thus, the media will cover whatever it feels will draw interest. In most cases, this means it will cover issues that play to people's fears and other "negative" emotions. If you need proof, tune into your local nightly news. "Balanced" journalism only goes so far; ultimately, the opportunity to make money wins out.
 
So, in summary, freedom of the press, while one of our country's greatest assets, is also one of our country's greatest liabilities. Personally, I think our country is going through a major adjustment/re-acclimation phase, though not everyone realizes it yet. The media seems to be promoting irrational decision-making, whether intended or not. Thus, we are being forced to learn how to operate and thrive amidst the evolving challenges the media presents. For a financial advisor, this means they need to find effective ways to offset the potentially poisoning affect the media has on their clients’ perception of what they should do with their money.

The good news is: now you know and “knowing is half the battle.”

On December 28, one of our Peak Advisor Alliance members was notified by an affiliated CPA that a client needed to set up a Solo 401k by December 31. To expedite the process, our member went to our private message board and asked the membership who were their favorite Solo 401k providers. Within 24 hours, he had four responses and he was on his way.

That's the power of the country's largest network of financial advisors headed by the country's #1 independent financial advisor, Ron Carson.

If you're looking to save time and tap into the brain power of hundreds of the country's top financial advisors, then call us now at (800) 514-9116 and learn how you can become a member of our practice management Resource Center or our financial advisor Coaching Program.