Ebook Mistakes

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TABLE OF MISTAKES Introduction: Succeeding in a tough economy SECTION I - MISTAKES Mistake 1: Getting Wiped Out by Stock Concentration Mistake 2: Being Deceived by Market Indices Mistake 3: Relying on the Proverbial Breakeven Mistake 4: Failing to Demand Performance Results Mistake 5: Being Vulnerable to the Media Mistake 6: Not Understanding Financial Jargon, or “Where Is My Straight Talk?” Mistake 7: Not Diversifying (and Not Knowing That a 50% Loss Requires a 100% Gain) Mistake 8: Falling Victim to the ‘Ostrich Effect’ During Market Declines Mistake 9: Not Understanding the Dangers of Overdiversification Mistake 10: Not Knowing That Cheap Stocks Are Cursed Mistake 11: Listening to Stock Market Gurus Mistake 12: Getting Discouraged

1 4 7 9 12 14 16 19 21 23 26 28

Frontier Financial Advisors . 44 Wall Street 10th Fl. New York, NY 10005 . 646-419-4444 . www.wallstreetfrontier.com

SECTION II - Tools You Need You Are Invited! Please R.S.V.P. Just Ask Our Clients The Stock Market Wizards www.equitytube.com Letter From The Chairman www.wallstreetfrontier.com www.minerviniprivateaccess.com About Michael Weiss Privacy Policy Disclosure Contact Information

32 34 35 36 37 42 43 44 46 49 51


Whenever I read or hear new advice, I digest it and then consider the source.

Most of the time, it is subjective or infected with special interest. It is not easy to be a successful investor. My journey in the stock market began more than twenty years ago and includes a story that exemplifies the challenges for the individual investor. I was having dinner with a friend and he told me a story about Rich. Rich never expected a speeding ticket to cost him $38,485 Rich was in a hurry to buy some groceries before heading home to watch the Yankees game. He was traveling 45 mph in a 45 mph zone, but missed the sudden sign change to 30 mph. The policeman pulled him over and handed him an $85 ticket. It wasn’t a pleasant way to start his Sunday, but at least, Rich thought “that was that.” 

A few months later, Rich learned that his car insurance payments increased by $75 a month. Now his $85 speeding ticket mushroomed to $985. A hefty price to pay for going just 15 mph over the speed limit, but once again, Rich thought “that was that.” Six months later, Rich went to lock in a new home loan. A $750,000 house with a $500,000 mortgage seemed like a conservative ratio. But what Rich didn’t know shocked him. The mortgage company not only checked his financials, they also checked his driving record. The speeding ticket cost him 0.25% on his interest rate (1/4 point). Over 30 years, 0.25% on a $500,000 mortgage equals $37,500. Adding the higher insurance premiums, the seemingly innocuous speeding ticket wound up costing Rich $38,485. Through repetition, I learned the nuances of investing, and in this book, my first, I illustrates the compounding effect of innocent mistakes and how to avoid them. I will reveal to you those things that I know can make your investing life miser-

SUCCEEDING IN A TOUGH ECONOMY able, including: being deceived by market indices, not diversifying, falling victim to the ostrich effect during market declines, and listening to stock market gurus. Avoid them, be disciplined and dogmatic about your investment strategy, and success will be yours. The book, in simple English, avoids financial jargon and describes strategies that can be instantly implemented by most investors. This book is your definitive list of twelve investment mistakes. Minimizing your investing mistakes is similar to limiting your losses. It is imperative if you are to be successful. Failure is never seen as failure in the investing world, only as a learning experience. The definitive list of twelve investment mistakes will shorten your learning curve and put you in a position to maximize your returns in the greatest investment vehicle in the world - the stock markets of the United States of America. As you read through this list of investment mistakes, keep two simple thoughts in the back of your mind. Please understand that while my list is detailed and definitive, it is by no means comprehensive. Investing requires education, experience and a tenacious will. There are simply too many mistakes that you can make as you enter this world. Second, on page 38, I extend to you a call to action. If you read nothing else, I suggest that you take the time to read and understand my call to action. It will help you in your endeavor. Good luck and best wishes! Michael L. Weiss Frontier Financial Advisors, Founder www.wallstreetfrontier.com www.equitytube.com

Press Play



SECTION 1 The Mistakes



Getting Wiped Out by Stock Concentration The whole point of diversifying your portfolio is so that when some of your investments lose, others gain. This strategy minimizes your portfolio’s volatility. If you are a C-level executive at a public company, do you have a concentrated stock position? If so, watch out, as a major stock market decline can wipe out a decade of hard work.


GETTING WIPED OUT BY STOCK CONCENTRATION If you work for a public company, you are granted stock options and warrants. Your company is on the move. Each year the compounding effect is working for you as you receive more and more. Your stock price continues to rise. Then what? This is your dilemma. Warren Buffett and Bill Gates, two of the world’s most successful and richest men, each took a temporary 50% hit to their net worth within the last decade. You and I can’t afford to take a loss like that, even if it is temporary, and especially if you are nearing retirement.


GETTING WIPED OUT BY STOCK CONCENTRATION (continued) Many of the most well-known stocks will go through a period of massive consolidation of at least a 50% retraction. Companies like Microsoft, GE, Merck, GM, Citibank, Home Depot, Research In Motion and Merrill Lynch have all experienced massive drawdowns. If you own or inherited a stock that has moved significantly higher over the years and now represents a significant part of your investment portfolio, put a plan in place to systematically reduce your holdings. If you want to take your emotions out of the equation, institute a calendar plan that automatically sells a predetermined amount regardless of the market conditions. Lastly, do not let the fact that you have to pay taxes undermine a well-thought-out, balanced investment approach. The consequences could far outweigh Uncle Sam’s take.

The best course of action is to develop a systematic sale system. Decide on a number of shares to be sold every quarter and systematically sell them. If the stock is heading south, do not override your system. By continually selling and diversifying the proceeds, your portfolio and your family’s needs are protected.

Frontier Financial Advisors . 44 Wall Street 10th Fl. New York, NY 10005 . 646-419-4444 . www.wallstreetfrontier.com




Being Deceived by Market Indices


The Dow Jones and the S&P 500 indices are myopic views of the overall stock market. The media focuses on these indices, and chances are the success of your portfolio is being judged by your comparison to them. Are you comparing apples to oranges? Furthermore, relying on these indices during a market correction can lead to a false sense of security, as they may not provide an accurate picture of the investment climate.


Stock Mix - The Dow Jones Industrial Average - October 11, 2008 Could there be a circumstance where the index advances while the broader number of stocks continue to decline? Absolutely! This disparity is a result of the way the indices are computed. In the Dow, which consists of only thirty stocks, (see chart) stocks with higher prices carry greater weight than lower-priced stocks. So when a high-priced stock rises, it carries more weight in the index. These weights change daily as the prices of the shares rise or fall. When the stocks rise, their rise adds more points to the Dow’s advance.


Consider the comparison of a stock whose Dow weight is less than 1% (General Motors) to one with a Dow weight greater than 8% (IBM). There have been days when the Dow’s rise has been due entirely to the rise of a single stock.


The S&P 500 isn’t much better. You might think that because there are 500 stocks instead of thirty, the index might be more comprehensive. Think again. Each individual stock is weighted by market value, which is the sum of the number of shares outstanding times the price of the stock. As of October 11, 2008, the top ten stocks represented more than 20% of the value of the S&P. Just as surprising is the fact that the bottom ten companies represent just 0.1% of the overall index. Keep an eye on the individual stocks if you really want a comprehensive look at the overall stock market.

Company ExxonMobil General Electric Procter & Gamble Microsoft Johnson & Johnson JPMorgan Chase AT&T IBM Chevron Wal Mart Total

% 4.12 2.87 2.3 2.15 1.98 1.95 1.68 1.51 1.51 1.45 21.52%

Company General Growth Teradyne AutoNation Office Depot MGIC Investment Meredith Ciena Titanium Metals Unisys Dillard’s Total

% 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.10%

Since a small group of companies can move the Dow Jones and S&P 500 indices, do these indices truly reflect the health of the overall stock market? While they might be useful, they are hardly comprehensive. Keep your eye on the individual stocks if you want to know what is really going on.

Frontier Financial Advisors . 44 Wall Street 10th Fl. New York, NY 10005 . 646-419-4444 . www.wallstreetfrontier.com




Relying on the Proverbial Breakeven

In financial circles, the term ‘breakeven’ is heard most often when people are in investments in which they are losing money. It is their hope to get back to breakeven - which equates to neither a gain nor a loss. The danger lies in the attachment to getting back to breakeven. This is especially true during a major market decline, when the previous market leaders could be the new recovery laggards.


The ultimate authority on whether you made a good or bad investment is the price of the stock. The management team, company strategy, product mix, patents - they don’t matter. What does matter is the current price of the stock, which reflects the current value of the company. This is a difficult concept to implement, because no one likes to admit they made a mistake. Most people think that if they have not sold the stock, they still have not lost. Look at every investment for what it is - a public company expected to grow its earnings and thereby reward its shareholders. If you are not being rewarded, chances are the company is not performing. Falling stock prices can be a sign of bad fundamentals. Don’t let the price you paid for a stock influence your investment decisions. Get in the habit of taking small losses and looking for new opportunities with better fundamentals. If you must own the company, you can always buy it at a future point in time. Protect your capital and you will be a winner. Your cost basis for the stock (the price you bought it for) should never influence your investment decision. Look at each investment today, regardless of the price you paid, and ask yourself, “Is this company still worth owning?”



Failing to Demand Performance Results

Every savvy investor must demand intelligent, accurate, clear reporting. How else can you know whether you made money or not? Pretty simple concept, but you would be amazed at just how confusing some financial statements can be. In a bear market, the speed and transparency of your information must increase, which will allow you to make the appropriate adjustments.

FAILING TO DEMAND PERFORMANCE RESULTS Have you ever wondered why your brokerage statements are so confusing? Have you ever wondered why those firms don’t provide you with precise performance results for each of your accounts and then one easy-to-understand consolidated report? I was perplexed by these same questions. In 1994, I demanded change, so I started the first consolidated financial reporting company in America to provide investors with this critical information. Producing performance and tax reports on more than $24 billion in assets for the high-net-worth market made the answers to the above questions extremely obvious.

If you have read this far, I must be engaging you, so in return for your undivided attention, I am prepared to offer you a unique proposition. If you aren’t crystal clear on what you own and don’t understand your portfolio allocation or how you are doing, fax us your statements (212-504-3073) and we will conduct a portfolio X-ray, free of charge and without any obligation. All your private information will be kept strictly confidential (please see our privacy statement at the end of the document or go to: http://wallstreetfrontier.com/privacy).

FAILING TO DEMAND PERFORMANCE RESULTS (continued) Many of the big institutions hold back your information because they do not want you to see how poorly you may be doing! Demand your performance results on a gross and net basis, and have those firms tell you exactly how much you have paid in fees to achieve those results. If you are not getting the results you deserve, move your money into index funds or consult a financial asset management company that is not afraid to be judged on net performance.

Have you ever wondered why those same statements don’t clearly show you how much you have paid in commission and management fees on each of your accounts and a running annual total? Have you ever wondered why the mutual fund companies do not provide individualized performance reports instead of the fund’s performance report and why many of them do not fully disclose all the fees associated with running those funds?

Frontier Financial Advisors . 44 Wall Street 10th Fl. New York, NY 10005 . 646-419-4444 . www.wallstreetfrontier.com




Being Vulnerable to the Media

The media thrives on excitement and tragedy. This is especially true during a bear market. It stimulates you into making quick, uninformed decisions by creating a sense of fear and urgency. Use care when relying solely on the media’s unsolicited, free advice.


BEING VULNERABLE TO THE MEDIA Have you ever seen the financial television shows where a person purporting to be a successful money manager tells you how he made it? He went to a fantastic school, then worked for the big investment banks and now he’s on your television. He freely doles out investment advice to you every night.

appeared, wouldn’t they be focusing on running their own money? Thanks to the Internet, these talkative investment professionals’ recommendations are now being measured. Before you take a stock tip from an actor, advisor, friend or family member, attempt to quantify the person’s past success and understand his or her investment process.

The media has only one goal - to sell advertising. The producers of these shows realize that their audiences are sophisticated and intelligent, so they build a brand around a sense of authority using experts who sound like they know what they are talking about. Their manner is authoritative, and they appear to be people you can trust. So much so, you sometimes follow their tips with without performing your normal due diligence. We must ask ourselves, what are those pundits really selling, entertainment or advice? If these folks were as good as they

Relying solely on the advice and tips offered to you by financial experts on television is one of the biggest investment risks you can take. I encourage you to watch the shows. Learn from them. But don’t rely solely on their advice.



Not Understanding Financial Jargon, or “Where Is My Straight Talk?”

Knowing some of the basics of financial terminology is essential when you’re on the road to becoming a successful investor. I said basics. If you don’t understand what is being said, then ask for clarification or find a financial asset manager who speaks your language. Watch out for the financial rhetoric during stock market corrections.

NOT UNDERSTANDING FINANCIAL JARGON, OR “WHERE IS MY STRAIGHT TALK?” Alpha? Beta? Sharpe ratio? What are these financial pundits talking about? A recent survey conducted by AARP reported that 53% of Americans said they had made a wrong decision on an investment because they were confused or simply didn’t understand the nature of the investment. A shocking 73% stated that financial advisors use more jargon than car mechanics. Throughout the years, we have learned to slow down the auto mechanic. New types of service centers have been created to deliver an easy-to-understand message so you can make an informed decision. It is time for the financial service industry to do the same. Force the analysts to use the same rating system, so there is no chance of misinterpreting their advice. Accountability starts with clear communication. The fact is that you cannot make an intelligent, well-informed decision if you don’t understand what’s being said. Whether you do it yourself or you hire a financial advisor, you owe it to yourself and your portfolio to learn the language.


Accountability starts with clear communication. Practice it and demand that it be reciprocated. If you don’t understand what your financial advisor is saying to you, then ask him to explain. It’s that simple.



Not Diversifying (and Not Knowing That a 50% Loss Requires a 100% Gain)

Owning 1,000 stocks will not protect you in a bear market and may result in the destruction of your capital. A long-only, buy and hold investment strategy is not a diversified investment strategy. All investors need to diversify their portfolios and, perhaps more important, diversify their strategies.


NOT DIVERSIFYING (AND NOT KNOWING THAT A 50% LOSS REQUIRES A 100% GAIN) Ask yourself this question: How many successful professional money managers run a portfolio with ten or fewer stocks? I can’t think of any. Why should you try to be the first? Working with stockbrokers who must call you before every purchase can create the same trap. How many concurrent stocks can you be sold? Be updated on? Make timely decisions on? Compound that with the fact that you are not your broker’s only client and I think you get the point.

Percent Stock Drops 5% 10% 20% 30% 40% 50% 60% 70% 80% 90%

The global investing landscape has changed forever. China, India and other foreign countries are growing in influence and power. The result is increased volatility for the foreseeable future.

What is the risk of being solely committed to a long-only, buy and hold investment strategy during a major market decline? If your portfolio drops 10%, you Percent Gain Needed can make it back with an 11% to Break Even gain. If it drops 20%, you can make 5.26% 11.10% it back with a 25% gain. But if it 25.00% drops 50%, you must make a 100% 42.86% gain just to break even! Look to 66.67% the left, the numbers do not lie. 100.00% 150.00% 233.33% 400.00% 900.00%

A risk-controlled, fast-adapting investment strategy should be a part of everyone’s portfolio. The question is, what does that strategy look like and are you capable of deploying it yourself?

Many investors’ stock portfolios consist of ten stocks or fewer stocks. If you don’t have the capacity to research and own at least twenty separate companies, you should obtain the advice of a financial asset management firm.


NOT DIVERSIFYING (AND NOT KNOWING THAT A 50% LOSS REQUIRES A 100% GAIN) (continued) First off, all investors should consider a strategy that has the capability to hedge their investment. The purpose is to reduce your portfolio’s exposure to a stock market decline. This is a risk reduction strategy that will also reduce your potential profits. When it is deployed with the correct precision, it will help reduce a portfolio’s volatility. While hedging is effective, it does not guarantee portfolio safety in a declining market. The only way to accomplish this is by selling stocks and moving to cash. A properly managed portfolio will move you to 100% cash and eliminate all future stock market risk. These strategies are being used successfully every day. Be aware, and question individuals and financial firms that are dogmatic about one investment approach. Successful long-term investing demands a combination of all investment approaches.

Remember: Losing 50% of your portfolio value forces you to make a 100% gain just to get back to breakeven. That is why this is an area where every investor might be better off consulting with a sophisticated financial asset management firm. The cost of being wrong is too great.

Frontier Financial Advisors . 44 Wall Street 10th Fl. New York, NY 10005 . 646-419-4444 . www.wallstreetfrontier.com




Falling Victim to the ‘Ostrich Effect’ During Market Declines

“If you can’t see trouble coming, then trouble can’t see you.” We all know this isn’t true, but investors are notorious for ignoring their portfolios when bad news is imminent. Not opening your statements (the equivalent of sticking your head in the sand) is falling victim to the ostrich effect.


FALLING VICTIM TO THE OSTRICH EFFECT DURING MARKET DECLINES There will always be times when the stock market looks like it will never recover from an extended correction. Investors are fearful and concerned, which is exactly where the financial reporters want you. Bad news delivered in a compelling way increases viewership and increases profit potential, at your expense. The financial media brainwash us, making a case that this current cycle is like no other. Market corrections are a fact of life. There is nothing that can be done to prevent or stop these corrections. They come and go. Don’t ignore your problems; they don’t simply go away. As hard as it may be, you must open your statements, log in to your accounts and evaluate your position. Again, doing nothing is a certain recipe for disaster. Routines are a necessary part of investing, and discipline is required. Make it a habit to routinely monitor your investments during good times and bad, and if you are too upset to take on the task, call an objective professional for advice.

When the financial news is bad and your stock accounts are down, do not stick your head in the sand like an ostrich. This is very dangerous. Instead, recognize that the market is correcting, turn off the TV and examine your risk. This is when an experienced, educated financial advisor is truly worth his or her weight in gold.




Not Understanding the Dangers of Overdiversification

Diversification is the hallmark of the responsible investor. Is it possible to own too many different investments? If that occurs, your investment returns may be diluted while your portfolio achieves little additional protection during a stock market meltdown.


NOT UNDERSTANDING THE DANGERS OF OVERDIVERSIFICATION As we discussed earlier, diversification is the mark of a responsible investor. What is the effect of too much diversification? Let’s take two popular examples:

objective is to perform identical to the market, then why not own a portfolio of index funds, which have a much lower fee structure and have favorable tax treatment?

Mutual Funds: Many of the best-known mutual funds own hundreds of stocks (e.g., Fidelity ContraFund owned 361 stocks and American Fund Capital Income owned 1,812 stocks as of October 27, 2008). On average, most mutual fund owners own four mutual funds. Four mutual funds multiplied by 200 stocks each means that investors own, on average, 800 stocks.

Warren Buffett got it correct when he said that “wide diversification is required only when investors do not understand what they are doing.” If your objective is to outperform the indices, you might be better off working with a financial asset manager who can provide you access to a professional money manager.

Wrap Accounts: he same holds true for wrap account investors. A wrap account is a money management program in which investors choose multiple managers under one fee arrangement. Any time investors choose multiple money managers, they must watch out for overdiversification. The S&P 500 represents a broad index of 500 stocks. If you were to own all 500 of those stocks, could you outperform that index? If you owned 800 stocks, what would your chances be? Given that the only reason to own a mutual fund is to outperform the indices, by overdiversifying you make it nearly impossible to accomplish your goals. If your


It’s important to remember that no matter how diversified your portfolio is, your risk can only be minimized. You can reduce your risk associated with individual stocks, but no amount of diversification can prevent losses from a stock market correction. The only way to eliminate all market risk is to move to a cash position.



Not Knowing That Cheap Stocks Are Cursed


Low-priced stocks usually indicate depressed fundamentals. Price is a excellent indicator of buyer interest levels, which are normally driven by a company’s ability to grow its earnings. Low price may be indicative of things to come, and during a major market decline, low-priced stocks may be the first to decline and the last to recover.

NOT KNOWING THAT CHEAP STOCKS ARE CURSED New investors are often obsessed with the idea that the best opportunities for a huge payday are low-priced stocks. The idea of owning tens of thousands of shares can make you feel like you are in position for a big win. The problem with this strategy is that there is a reason why the stock price is depressed - the fundamentals may be depressing. In addition to poor fundamentals, there is another set of dynamics that negatively affect low-priced stocks and make recovery tougher. The first is the lack of liquidity, or the daily number of shares bought and sold. Hedge funds, mutual funds, pensions and other large institutional accounts generally won’t invest in companies unless they know that they can easily move in and out of the investment. If it is too difficult to accumulate the amount of stock they need to make a meaningful investment without driving the price up, they will pass. Stocks move higher because there are more buyers than sellers. One reason (which might appear too obvious to carry much weight) why a stock price is cheap is that there is a lack of buyers interested in these companies’ fundamentals. Most people want to buy low and sell high. Have you ever thought about buying high and selling higher? For a detailed explanation of how this works, please go to: http://www.equitytube.com/sepa




If you are comparing apples to apples then your total net return on an investment has nothing to do with how many shares you own EXAMPLE 1 Trading Cost equal $0.03/share Investment A Investment B Symbol ABC Price per share $1.25 Amount invested $25,000.00 Shares 20,000 Percentage gain 15% Gross Profit $3,750.00 Cost to sell ($.03/share) $(600.00) Net Profit $3,150.00 Assuming the same percentage gain, you make more money owning higher priced stocks ------> EXAMPLE 2 Trading Cost equal $0.06/share Investment A Investment B Symbol ABC Price per share $1.25 Amount invested $25,000.00 Shares 20,000 Percentage gain 15% Gross Profit $3,750.00 Cost to sell ($.06/share) $(1,200.00) Net Profit $2,550.00 Assuming the same percentage gain, you make more money owning higher priced stocks ------>

XYZ $197.00 $25,000.00 127 15% $ 3,750.00 $(3.81) $3,746.19 15.91%

XYZ $197.00 $25,000.00 127 15% $ 3,750.00 $(7.62) $3,742.38 31.86% 25





The stock market has dropped 32% from its October 2007 high. Blindly following the stock market gurus, who sometimes resemble carnival hawkers, is a sure way to lose money. Their claims may be unsubstantiated and possibly exaggerated. Sound financial advice from proven, established investment firms should provide more consistent results than any claims made by these Johnny-come-lately types.

LISTENING TO STOCK MARKET GURUS At any time of the day or night, you can turn on your television and see what I am speaking about. These gurus claim they made an outrageous return and, for a small fee, so can you. The infomercials show a lot of colorful graphs interspersed with powerful advertisements assuring you of success if you buy this trading software. I have even seen some that claim their software is fully automated.

I implore you to thoroughly investigate any claim before you arbitrarily relinquish your money.

Claims of stellar past performance may be truthful; after all, everyone gets lucky sometimes. But past performance is not a guarantee of future results, especially when a stock market guru’s success is not readily measurable by an objective third party. Furthermore, anyone can take multiple huge risks and have one pay off, which of course might be the only one you are made aware of. Please, don’t fall for this trap. There is a better way. To be successful, you must accept one simple fact: there is no easy way to make money in the stock market. Soliciting and obtaining advice is important. I actually encourage you to do so. I make my living giving financial advice and have done so for more than twenty years. My rule of thumb is simple: if I can’t understand the investment, I don’t make it.


I would warn against these infomercials and suggest that if you are just looking to give your money away, then donate it to a local charity. Your money would benefit more people more directly and you could actually take a legitimate tax deduction. In other words, if you subscribe to these ‘late-night heroes,’ you are likely throwing away your money.



Getting Discouraged

Investing is like anything else. The more you do it, the easier it gets. This shouldn’t be misconstrued to mean that the more you do it, the easier it becomes to make money. What it does mean is that the more familiar you are with the process of investing, the easier it becomes to make rational and prudent decisions. Once you successfully navigate your first bear market, future bear markets will appear as normal stock market cycles.

GETTING DISCOURAGED Few people ever become impassioned by investing. The concept of investing can be overwhelming. Not only should you have a good understanding of basic investment concepts, you also need expertise (internal or external) in portfolio risk management. And as the saying goes: “this is where the rubber meets the road.” Even if investing isn’t your cup of tea, you must find the right partner to work with. Some investors have a larger appetite for risk than others; some investors are more cautious and tend to look at a longer investment time horizon. One thing is for certain, you must deploy a riskcontrolled investment strategy. I’m sure that many of you reading this are familiar with the concept of ‘paying your dues.’ Investing is no different. There is a substantial time investment that you will have to commit to. Otherwise, you risk losing your hardearned money. Buy the books, talk to the professionals, but before you try your hand at managing your money, I recommend that you allow a financial advisor to help you develop a strategy.


There is too much at stake to falsely believe that you can develop, implement and effectively manage an investment plan if you have never done it before. There is a lot to be said for relying on the experience of others. Once you have a strategy in place, monitoring and managing that strategy can be a full-time job.

Visit www.equitytube.com for more information

Thank you for coming along on this important journey. I hope that we have stoked your fire and your investment coals are glowing. There is a significant learning curve, so dig in and expect your first investment to be the most important investment you will ever make. Invest your time! The United States stock markets are among the greatest places in the world to grow capital and achieve your financial goals, so don’t get discouraged. I will leave you with a secret that has proven true every time I have shared it. The secret to wealth is learning to hold on to what you have earned and then grow it.



SECTION 2 SECTION 2 Tools You Need

Your Are Invited! PLEASE R.S.V.P.


You have just finished reading Mike’s definitive list of twelve investment mistakes and, if you are like most readers, you are likely wondering what you should do next. Mike is accustomed to giving advice and, as you will see here, there is a simple, logical process to getting started (with no obligation). There are two options: the first is for qualified investors and the second is for investors who want to learn more. Please choose one.

OPTION 1: YES, please contact me. Frontier Financial Advisors (Website) offers financial asset management services based on Mark Minervini’s SEPA® methodology for qualified investors with portfolios in excess of $1,000,000. To schedule a free/no obligation consultation, and to learn more about our risk-controlled investment program.



Contact Us: Frontier Financial Advisors Michael Weiss, Founder 44 Wall Street, 10th Floor New York, NY 10005 Phone: 646-419-4444 E-mail: [email protected] www.wallstreetfrontier.com www.equitytube.com www.minerviniprivateaccess.com

Your Are Invited! PLEASE R.S.V.P. OPTION 2: You must establish a baseline. Due to the lack of clarity on your statements and number of statements this can be a daunting task. We offer a free comprehensive portfolio X-ray that will establish your baseline in one easy to understand report. Step One: Fax your statements to 212-504-3073. Our team will complete the analysis of all your stock and mutual fund positions. Your information is safe. Please read our privacy policy. Step Two: Your portfolio will go through an internal review. After the process is complete, a phone appointment will be scheduled to discuss our findings. Be advised that this review is noncommittal and free of charge.

do business with us. I’m sure that you can understand and appreciate that. If you are ready to move forward, the due diligence call will be scheduled. Step Four: The due diligence call will last one hour and will be conducted in person or via a live video appointment. This time is necessary for us to clearly lay out a plan for you, and it allows both of us to establish and build rapport. This rapport is necessary because we view all our client relationships in the long term. We don’t want to waste your time or ours. Please feel free to call at anytime 646-419-4444

Step Three: A follow up call will be scheduled to disucss any additional questions. At this point, if you like what you hear a final due diligence call will be scheduled. I want to emphasize that we do not rely on sales pressure tactics. Our goal is to educate you and let you decide if a risk-controlled investment strategy is an appropriate investment choice for you. Ultimately our objective is to identify those individuals who want to Frontier Financial Advisors . 44 Wall Street 10th Fl. New York, NY 10005 . 646-419-4444 . www.wallstreetfrontier.com




There is one simple measure that defines our success: the quality of the conversations we are having with our clients. While they were impressed with our impressive net returns for 2007, many were struck by how effectively we were able to preserve capital through this terrible bear market. Our vision is to deliver an actively managed, risk-controlled investment strategy that capitalizes on trading efficiencies and focused research to deliver superior returns. We are comfortable saying, “Mission accomplished!” In 2007 and 2008, we were able to leverage two key components of Mark Minervini’s SEPA® methodology: First, protect capital by going to cash and using short positions when appropriate. Second, identify new market leaders coming out of a correction. The execution of the SEPA® methodology is complex, but the concept is simple: don’t take big losses but do own the best growth companies the market has to offer. The commitment to avoid big losses is what drives us to cash, as we have done five separate times over the last fourteen 34

months. It’s a simple concept: when stocks break down, we sell them quickly. Not only does this steadfast rule protect us in down markets, but it also helps us lock in our hard-earned profits. What does it look like from our vantage point sitting in 100% cash waiting out a correction? Clarity. While most others are conducting damage control, we are focusing on identifying the new market leaders that will drive us out of the correction. Mr. Minervini’s SEPA® methodology provides us with the confidence to weather the inevitable storms. Our clients have found this program to be a perfect addition to the long-only, buy and hold products delivered by the traditional investment houses. Our focus remains on providing you with unique risk-controlled investment opportunities that complement a traditional portfolio. Please don’t hesitate to call our team of professionals at 646-419-4444, as we look forward to providing you with the outstanding service your hard-earned money deserves.

Mark Minervini featured in Stock Market Wizards

only three down months (the worst, a minuscule 2% loss).

Stock Market Wizards gives you stories, tips and an inside glimpse into today’s vibrant market and the traders who can ride the bull, battle the bear and still come out on top.

Mark Minervini, who has averaged a 220% annual return during the past five years while keeping his maximum quarterly loss to a fraction of 1%.

After brief but interesting introductions that place the subjects’ trading practices into perspective, Jack Schwager, the books author, coaxes from them penetrating observations on setting goals, finding opportunities, learning from mistakes and operating on a day-to-day basis.

These are just a few of the traders you’ll meet in Stock Market Wizards’ all-star lineup of market masters.



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Schwager gets the answers from phenomenally successful traders, including: Michael Lauer, an outspoken fund manager, who explains why he believes many of the country’s leading mutual funds are following a flawed strategy and whose own fund provided investors with a fifty-fold return in seven years. Steve Cohen, a modern-day trading legend who manages billions and who has averaged trading returns of 90% during the past seven years, with 
 Frontier Financial Advisors . 44 Wall Street 10th Fl. New York, NY 10005 . 646-419-4444 . www.wallstreetfrontier.com


WWW.EQUITYTUBE.COM Visit EquityTube.com to access our exclusive videos. Within these videos, you will learn: • Up-to-date analysis of major market events and what they mean to you. • The up and coming market opportunities that need your attention right now. • How to effectively manage your risk profile


to take advantage of the biggest opportunities while keeping your money safe. • Upcoming market trends with the potential for huge rewards. • And much more!

Dear Investor,

The Problem Creates a Business Opportunity

Welcome to Frontier Financial Advisors, a registered investment advisor specializing in financial asset management. The Investment Advisory platform has many advantages over the traditional brokerage platform, and I look forward to sharing these benefits with you over the next several weeks.

Early in my career, the financial asset management industry frustrated me no end. My clients complimented me on my attention to detail, as well as my ability to identify their needs and ultimately deliver quality service. However, I received minimal praise for the investment products, because they were unsuccessful in delivering consistent investment returns. My investment choices were limited to off-the-shelf firm products such as wrap accounts, mutual funds, index funds and stock recommendations generated by in-house brokerage analysts. Selling investment products tailored to the mass market led to inconsistent performance of client accounts then, and this still remains an all-too-common dilemma among most investors today.

A number of years ago, I set out on a mission to build a financial asset management firm designed specifically to solve what I believe is a problem most high-net-worth investors continually experience. This vision was drawn from both my twenty years in the financial service business and proprietary knowledge gained through my experience in the consolidated financial reporting industry (see GreenTrak below).

Frontier Financial Advisors . 44 Wall Street 10th Fl. New York, NY 10005 . 646-419-4444 . www.wallstreetfrontier.com





Knowledge I conducted an exhaustive research project, and the results of this venture supported my hypothesis that most high-net-worth investors were experiencing similar frustration in the asset management business. My findings led me to co-found GreenTrak, a consolidated financial reporting firm created to provide investors with performance information about their investments. GreenTrak aggregated investors’ numerous brokerage statements into one sixteenpage report that disclosed the results. GreenTrak grew to more than 100 employees and tracked in excess of $25 billion from highnet-worth investors and investment professionals. We tracked hedge fund managers, institutional managers, index funds, mutual funds, wrap-account managers, brokers and individual stock traders. We tracked it all, and based on this proprietary evaluation, we discovered:


• More than 85% of our clients were underperforming the market over any given cycle. • Most clients were unhappy with the results they were achieving. • Most clients were generally dissatisfied with the services rendered. • The investors with the best results were using highly exclusive - and sometimes inaccessible - money managers who specialized in the financial asset management business. Attacking the Problem by Creating the Solution GreenTrak was sold in 2000, and I set out to leverage my experience and unique industry perspective to build a financial asset management firm that would address and conquer these problems. The firm, based on the simple premise of true investor satisfaction, would:


• Establish and maintain relationships with revered money managers whose investment decisions would consistently reflect their expertise, and then introduce them to a select group of high-net-worth clients. • Build an investment platform that would offer an exclusive community of high-net-worth investors the chance to invest alongside these managers without being obliged to meet their restrictive high-minimum investment requirements. Moreover, our financial asset management firm would strive to provide great service and operate with absolute integrity, courtesy and professionalism. As an entrepreneur since the age of thirteen, I knew it could be done, and Frontier Financial Advisors is the product of over $1.5 million invested and many years of development. Today we operate on a solid foundation, with our lead money manager regarded as one of America’s top stock traders.

Mark Minervini is One of America’s Top Stock Traders Mark Minervini, by using his proprietary SEPA® methodology, delivers a risk-controlled investment strategy that has proven to be invaluable, as we did an incredible job protecting our clients’ capital in a very difficult stock market environment. I am proud to declare that we are quickly becoming a leader in the financial asset management industry. As an investment advisory firm, we are compensated based on management fees. The management fee is derived from a percentage of your assets under management. We are fiduciaries and must always prioritize your interest above the firm’s. Furthermore, prior to initiating a relationship, we will send you our Form ADV, which is our legal brochure that provides full disclosure. Lastly, before any advice is given,

Frontier Financial Advisors . 44 Wall Street 10th Fl. New York, NY 10005 . 646-419-4444 . www.wallstreetfrontier.com



we sign an advisory agreement, a contract that clearly outlines our terms of service. These policies are typical of Investment Advisory firm’s and exist in stark contrast to those of the brokerage industry. Our goal is to change your investment experience by providing you with an opportunity to successfully grow your capital using Mark Minervini’s risk-controlled investment strategy. Our methodology is straightforward: 1. We utilize our knowledge, experience and network to perpetually seek out experienced money managers. 2. We team our clients with these managers, who create investment strategies designed specifically and individually to leverage their expertise.


3. We focus on delivering excellent service. 4. We deliver timely and concise performance and tax reports. 5. We operate with unwavering integrity. Specialization is the art of doing one or a few things exceptionally well. We pride ourselves on executing the most vital tasks to perfection. This, of course, sounds simple and similar to some of our competitors’ jargon, but after having been an SVP at a few of the large brokerage firms, I know what the competition is offering. What they are not offering you - strong performance, steadfast commitment and peace of mind through a risk-controlled investment program - has been the primary focus for creating Frontier Financial Advisors. Today is the best time to improve your current financial relationships. Part of the success of


General Electric’s turnaround was Jack Welch’s staunch pledge to terminate marginal employees and continually upgrade GE’s workforce. That same pruning process should be employed by all investors: • If your brokerage firm stinks, send them to the showers. • If your stockbroker’s service light is not on, send him to the garage. • If your mutual funds act like dead fish, throw them right back. • And finally, if you’re not a good stock picker, limit your self-inflicted pain. We have celebrated 25 years of declining interest rates, which has led to great gains in both bond prices and portfolios, but this rally is over. The real estate market, which has been a great place to grow capital for the past five years, has cooled. Money flows to perceived value and new opportunity - toward investments that people believe will demonstrate a significant and stable rate of return - and due to the recent bear market, the

growth stock sector of the equity markets is the right place to be. It is critical that you have the best financial team in place today to position yourself for the next three to five years. Complacency is inexcusable when it comes to your hard-earned money. We welcome the opportunity to fully demonstrate our innovation and how we might be a great addition to your current team. Sincerely, Michael L. Weiss, Founder Frontier Financial Advisors P.S. Our website, www.wallstreetfrontier.com, provides a wealth of information. Of particular value is our exclusive EquityTube. Our monthly threeminute video depicts what has transpired in our clients’ accounts during the prior thirty days, and I invite you to take a peek at www.equitytube.com.

Frontier Financial Advisors . 44 Wall Street 10th Fl. New York, NY 10005 . 646-419-4444 . www.wallstreetfrontier.com





Frontier Financial Advisors . 44 Wall Street 10th Fl. New York, NY 10005 . 646-419-4444 . www.wallstreetfrontier.com



ABOUT MICHAEL WEISS The most important thing to our customers - and to us - is that we do exactly what we say we’re going to do exactly when we say we’re going to do it. After two decades in the financial industry, Michael is still innovating in the arena of high-networth investing. His investment products and enterprises have included the Reflection Portfolio, an independently managed discretionary investment fund program for high-net-worth individuals that he successfully ran for six years, and GreenTrak, a groundbreaking financial performance reporting company that was the first to offer investors the ability to review their accounts on a consolidated and individual account basis. By the time GreenTrak was sold to a public company, it was monitoring performance and preparing tax information for more than $25 billion in assets and counted some of the best-known financial companies as its clients, including Merrill Lynch, Chase Bank, UBS and


Donaldson Lufkin & Jenrette, as well as some of the largest U.S. accounting firms. In addition to being involved in his own enterprises, Michael has served as senior vice president at such established financial institutions as PaineWebber, S.G. Cowen & Company and CIBC Oppenheimer & Company.

ABOUT MICHAEL WEISS As CEO of Frontier Financial, Michael continues to invent alternative strategies for financial asset management. In choosing to create Frontier as a small, exclusive firm, Michael has focused sharply on the needs and concerns of investors, rather than solely on expanding the amount of assets under management. Michael is also chief investment officer of Weiss Capital Group II, LLC, which is a general partner of two U.S.-based hedge funds. When he’s not busy thinking about smarter approaches to investment, Michael can be found paying it forward. Michael has had some great sports, business and life coaches and believes in volunteering his time and sharing his experiences to help others. He lives in New York City with his wife, Leslie, and their goldendoodle, Callie.

Examinations: NASD Series 24 - General Securities Principal (June 2003) NASD Series 7 - General Securities Representative (December 1987) NASD Series 65 - Investment Adviser (February 2005) NASD Series 63 - Uniform Securities Agent State (December 1987) Life and Health Insurance License (July 2003)

Education: B.A. Economics, 1986, Union College

Frontier Financial Advisors . 44 Wall Street 10th Fl. New York, NY 10005 . 646-419-4444 . www.wallstreetfrontier.com



PRIVACY POLICY Frontier Financial Advisors, herein referred to as FFA, requires that you provide current and accurate financial and personal information. FFA will protect the information you have provided in a manner that is safe, secure and professional. FFA and its employees are committed to protecting your privacy and to safeguarding your information. Safeguarding Customer Documents We collect nonpublic customer data orally, in checklists, in forms, in written notations and in documentation as provided to us by our customers for evaluation, registration, licensing or related consulting services. We also create internal lists of such data. During regular business hours, access to customer records is monitored so that only those with approval may access the files. During hours when the company is not in operation, the customer records are locked. No individual who is not authorized shall obtain or seek to obtain personal and financial customer information. No individual with authorization to access personal and financial customer information shall share that information in any manner without the specific consent of a firm principal. Failure 46

to observe FFA’s procedures regarding customer and consumer privacy will result in discipline and may lead to termination. Sharing Nonpublic Personal and Financial Information FFA is committed to the protection and privacy of its customers’ and consumers’ personal and financial information. FFA will not share such information with any affiliated or nonaffiliated third party except: • When necessary to complete a transaction in a customer account, such as with a clearing firm or account custodians; • When required to maintain or service a customer account; • To resolve customer disputes or inquiries; • With persons acting in a fiduciary or represen tative capacity on behalf of a customer; • With rating agencies, persons assessing compliance with industry standards, or attorneys, accountants and auditors of the firm; • In connection with a sale or merger of FFA’s business; • To protect against or prevent actual or potential fraud, identity theft, unauthorized transactions, claims or other liability; • To comply with federal, state or local laws, rules and other applicable legal requirements;

PRIVACY POLICY • In connection with a written agreement to provide investment management or advisory services when the information is released for the sole purpose of providing the products or services covered by the agreement; • In any circumstances with a customer’s instruction or consent; or • Pursuant to any other exceptions enumerated in the New York Information Privacy Act. Frontier Financial Advisors Client Opt-Out Provisions It is not a policy of FFA to share nonpublic personal and financial information with affiliated or unaffiliated third parties except under the circumstances noted above. Since sharing under the circumstances noted above is necessary to service customer accounts or is mandated by law, there are no allowances made for clients to opt out. Newsletters If you wish to subscribe to our email communications, we will use your name and email

address to send the newsletter to you. Out of respect for your privacy, we provide you with a way to unsubscribe. Please see the “Choice/ Opt-out” section, below. Choice/Opt-out When you register for our site, we use your email address to send you internal communications from www.wallstreetfrontier.com. If you’ve registered to receive email communications from us and later change your mind, you may contact us to have your name removed from our distribution lists. You may also opt out of any of our communications by simply utilizing the “unsubscribe” link in any email or newsletter we send. Removal from Frontier Financial Database Individuals who willingly provide contact information to us by mail, phone or email, through our website or in any other way in response to our marketing activities may receive subsequent periodic information from FFA on new products

Frontier Financial Advisors . 44 Wall Street 10th Fl. New York, NY 10005 . 646-419-4444 . www.wallstreetfrontier.com


PRIVACY POLICY and services or upcoming events. If you don’t wish to receive such information, please let us know by sending an email to [email protected] or by writing to the following address: Frontier Financial Advisors 44 Wall Street, 10th Floor New York, NY 10005 Please provide FFA with the exact name and address as it was originally provided. We will be happy to remove your name from our database and will do everything possible to honor your request for removal. To unsubscribe from FFA’s email communications, send an email to [email protected] Please put “UNSUBSCRIBE” in the subject field and include the email address where you received the content, along with any additional email addresses you would like suppressed. We will do our best to prevent our email content from being sent to you in the future.


Frontier Financial Advisors is a registered investment advisor located at 44 Wall Street, 10th Floor, New York, New York. This information is intended only for clients and interested investors residing in states and countries in which Frontier Financial Advisors is qualified to conduct investment advisory services or is qualified for exemption from exclusion registration requirements. Nothing in this presentation is intended to provide specific financial advice to any investor nor is intended to be the primary basis for investment decisions. Please contact Frontier Financial Advisors at 646-419-4444 to find out if we can conduct advisory business in the state or country where you reside. Any subsequent direct communication with a prospective client shall be conducted by a Frontier Financial Advisors representative who is either registered or qualifies for exemption or exclusion from registration in the state or country where the prospective client resides. Before investing in any program, you must obtain, read and thoroughly examine its disclosure documents, which include Form


DISCLOSURE ADV, the Advisory Agreement and all other documents provided by the clearing firm. The Minervini Select® Program engages in leverage and short sales, which may increase the risk of investment loss. You should commit only risk capital to any investment in the stock market. Capital invested in the Minervini Select® Program will experience volatility, which means that if you need to close your account at an inopportune time, you may lose a substantial portion of your investment. The Minervini Select® Program has only three-plus years of operating history. Keep in mind that the past performance of any investment is not necessarily indicative of future results. The information contained in this document may not be reproduced or reorganized. The user assumes the entire risk of its use. Frontier Financial Advisors, LLC, expressly disclaims all warranties of originality, merchantability or fitness for any particular purpose. This material and any views expressed herein are provided for informational purposes on an

Frontier Financial Advisors . 44 Wall Street 10th Fl. New York, NY 10005 . 646-419-4444 . www.wallstreetfrontier.com


DISCLOSURE “as is” basis only and should not be construed in any way as an endorsement or inducement to invest in any specific program. This document does not discuss any advisory services provided by Frontier Financial Advisors or performance returns by clients of Frontier Financial Advisors and represents only Michael Weiss’s personal opinions and viewpoints. Frontier Financial Advisors manages its clients’ accounts by using a variety of investment techniques and strategies not necessarily discussed in this book or appropriate for all types of investors. Any investment program may be volatile and can involve the loss of principal. Past performance is no guarantee of future returns. Frontier Financial Advisors’ website, emails and books provide links to websites produced by other providers, for your convenience. FFA is not responsible for errors or omissions in that material and does not necessarily approve of or


endorse the information provided. Users who gain access to that material are subject to copyright and other restrictions on its use imposed by those providers.


INFORMATION Credits: Written by: Michael Weiss Layout and Design: Dion Cini Market Analysis and Research: Daniel Mendoza Integration: Faheem Muflahi Video Production: Phil Petrie Special Thanks To: Marc Weiss, Frank Cordovano, Martin Alberti, Joey Lowe, Dennis Tang, Jessica Cox and John Assaraf Contact Us: Frontier Financial Advisors Michael Weiss, Founder 44 Wall Street, 10th Floor New York, NY 10005 Phone: 646-419-4444 E-mail: [email protected] www.wallstreetfrontier.com www.equitytube.com www.minerviniprivateaccess.com

Frontier Financial Advisors . 44 Wall Street 10th Fl. New York, NY 10005 . 646-419-4444 . www.wallstreetfrontier.com



Frontier Financial Advisors 44 Wall St. 10th Floor New York, NY 10005 www.wallstreetfrontier.com www.equitytube.com Phone: 646-419-4444

The Wall Street Institute For Stock Market Professionals

Wall Street

Money Management Secrets 12 Financial Asset Management Strategies That Professionals Use To Succeed In Declining Stock Markets

Michael L. Weiss

The Wall Street Institute For Stock Market Professionals

Whenever I read or hear new advice, I digest it and then consider the source. Most of the time, it is subjective or infected with special interest. It is not easy to be a successful investor. My journey in the stock market began more than twenty years ago. Through repetition, I learned the nuances of investing, and in this book, my first, I will reveal to you those things that I know can make your investing life miserable. Avoid them, be disciplined and dogmatic about your investment strategy, and success will be yours. This book is your definitive list of twelve investment mistakes. Minimizing your investing mistakes is similar to limiting your losses. It is imperative if you are to be successful.

Michael Weiss is a successful investment advisor and entrepreneur in practice for over twenty years. He is the founder of Frontier Financial Advisors, a registered investment advisory firm specializing in managing money based on Mark Minervini's SEPA® methodology.

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