Invest Like a MARINE!

Invest Like a MARINE!

I recently attended a Marine Corps reunion where I re-bonded with several fellow Marines from years gone by. This particular reunion was a gathering of former A-6 Intruder aircrew. Although the sophisticated carrier-based A-6 fighter has long since been retired to museums, the old warriors who flew them are still kicking.

The guys I served with are some of the bravest and smartest people I know. They have an intuition that kept them alive in dangerous situations. This intuition is like a sixth sense — we call it “situational awareness.”

Most of my squadron mates from the 1980s either made the Marines a career or went to fly for the airlines.  I was one of the very few who did neither (although I did retire from the Marine Reserves). My North Star pointed to Wall Street, and that’s where I’ve hung my hat for more than 20 years.

When fellow aviators find out that I’m a Wall Street guy, many feel compelled to express their expertise in this area (even though most have no expertise)…but you have to know Marine aviators. One fellow, a few years my senior, went so far as to say he was an “independent stock broker.” When I asked what brokerage firm he worked for, he said he wasn’t affiliated with a firm. I then explained that all brokers, by law, must be affiliated with a brokerage firm. He then admitted that he wasn’t really in the business but had a great idea for an options trading strategy and wanted me to look at it. Oh, boy! We’re having fun now.

I had several other sobering conversations with squadron buddies about how they were investing their retirement money. All in all, it’s a mess. That sixth sense they had for staying alive while flying didn’t transcend well into the investment arena. I cringed with every story they told. These guys lost money day trading, in stock options, commodities, hedge funds — you name it. One couple was even swindled by Bernard Madoff himself.

Practically every investment mistake you could think of was made by someone in this fine group of men and women. It was disheartening to me.  I left the reunion elated to see everyone, but feeling badly that so many were being fleeced by their advisors, investment schemes, and the money machine known as Wall Street.

Here is my simple advice to you, Comrades in Arms:

S-M-E-A-C

You remember SMEAC. It’s the acronym for a Marine five paragraph order. It’s the stuff we lived and breathed every day of our lives for years:

S – Situation
M – Mission
E – Execution
A – Administration
C – Communications

Let’s take something you know, SMEAC, and apply it to investment principals:

Situation: This is where things are now. It is your current situation: how much money you’ve saved, how much you’re saving, your current income, expenses, job security, age, health, and everything that is here and now expressed in today’s dollars.  

Mission: This is where you want to be financially — your goals, desires and needs expressed in future dollars. Your mission is to get from where you are today to where you want to be in the future.

Execution: This is how you’ll accomplish your mission. It’s the plan that takes you to your objective. This plan will be a combination of detailed budgeting, diligent saving, wise investing, and controlled spending.

Administration: This is the nitty-gritty details of how you’ll save and invest and who you’ll invest with. I can tell you from years of experience that investing isn’t speculating. Don’t try to beat the markets. Rather, learn about asset allocation, low-cost index funds, and the Vanguard Group of mutual funds.

Communications: Know who to talk with and trust. Dump anyone who tries to sell you investment products they make a commission on or wouldn’t touch themselves. Learn the “Bogleheads.” They are an unbiased, online group of level-headed individual investors who follow the investment principals of John Bogle, the founder of the Vanguard Group of mutual funds. Go to www.Bogleheads.org and this fine organization will set you straight. It’s free.

If you have a good investment plan, then you have a fighting chance. So, get a plan, believe in the plan, and follow the plan. Don’t wing it.

I’ve been in the investment business for more than 20 years. If there is one thing I have learned, it’s that Wall Street wants to make money fromyou, not for you. There are deceptions and ambushes at every turn. Don’t fly into this mess without doing intense research and planning. Trust your judgment, and don’t trust people you wouldn’t trust with your life.

There are a few principals that make a big difference in investment returns. One of them is cost. Keep your investment fees as low as possible. A second principal is to avoid chasing the latest hot trend. Past winners are destined to disappoint in the future. Investing is easy when you K.I.S.S. – keep it simple stupid.  Learn the basics and stick to them.

I’ve written six investment books that will help you reorient your portfolio to True North. Each book is on a separate topic, although they’re all written for individual investors. The royalties from my books are donated to the Semper Fi fund and other organizations that help wounded warriors. Contact me if you don’t know which one to read and I will personally make a recommendation. There’s also a free book and blog on my website at www.RickFerri.com.

Semper Fi,
Major R.A. Ferri, USMC (retired)