Education and Making Smart Investment Decisions
Transcription of interview with Marc Mandel on June 13th 2011.
Douglas Goldstein, CFPÆ, Financial Planner & Investment Advisor
Douglas Goldstein: We are talking to Marc Mandel.
Marc is not only a graduate of the Wharton School of Business at the University of Pennsylvania,
where actually my brother went, but he and I are old time colleagues from the old country.
We both grew up in Scarsdale and followed a very similar path in terms of our investment
advisory career.
I guess the big difference is that I went to the East towards Israel, and he went to
the West towards Boulder, Colorado, and now he has his own radio show.
He is the chairman of the Financial Services Company and he has Wall Street Radio.
So Marc, Iíd like to welcome you.
Marc Mandel: Douglas, itís great to be here, thank you.
Douglas Goldstein: I just want to ask you, on your radio show how do you help investors
succeed in the stock market?
Marc Mandel: Well, you know first off, itís about education.
The more educated people are, the better and more they will succeed, and so we teach people
about how to successfully approach the market.
Now, our focus is on technical analysis.
Thereís a difference.
Thereís fundamental analysis and thereís technical analysis.
Douglas Goldstein: Go ahead and describe or define each of this.
Marc Mandel: Sure.
Fundamental analysis is a macroeconomic financial ratio.
You talk about management, you talk about valuation, PE ratios and things like fundamental
information, earnings and basing evaluation on the earnings, and the growth rate of a
company.
Technical analysis is the study of price and volume.
The law of economics is the law of supply and demand.
Now, supply and demand is the key to an asset going up or down.
Itís the key to price.
So basically, supply our sellers and demand their buyers.
We are using technical analysis to study price, volume, psychology, and patterns.
So technical analysis is about the study of what insiders, smart money, hedge funds, and
people who have information before it is made public are joined by when buying and selling.
Weíre studying what people are doing with information before itís announced.
Price always leads in this.
So we gain an edge by using technical analysis and understanding whatís happening with a
particular stock or the market based on the pattern.
Douglas Goldstein: Are you suggesting that someone else is trading with some sort of
advanced knowledge?
Marc Mandel: Absolutely.
Wall Street is manipulated.
Wall Street is a rig game.
The U.S. stock market is, for sure.
Douglas Goldstein: Isnít it too big for that or are there any laws against it?
Marc Mandel: There are laws against it, but the laws are not enforced and we see it all
the time.
We just had a hedge fund manager who used to be on the board of Goldman Sachs.
He was charged and convicted of insider trading.
Thatís just the tip of the iceberg.
Investors really donít have a chance if they are relying on information because the information
is about what has happened.
Wall Street, the stock market, is about discounting the future.
Itís about whatís going to happen.
Thereís no way we can predict the future.
So the key to technical analysis is it shows us what people who know are doing, the buying
and the selling.
And it gives us an advantage, itís amazing.
Douglas Goldstein: Is this only for short term or is this really for the long term?
Marc Mandel: No, itís long term.
It depends on the time frame because we use charts: daily charts, weekly charts, hourly
charts, and minute charts.
The shorter term the chart, the shorter term your time horizon.
So there are three types of investors.
Thereís the day trader who is trading in and out during the day.
Thereís the swing trader, a person who holds their positions for two weeks or two months
and thereís the investor who holds it for 6 months to a year.
By the way, we have found that day trading doesnít work.
Itís very difficult for people to day trade.
You have to make too many right decisions.
Emotionally, you have to be really stable and not be affected by emotions.
Itís like gambling, and itís very popular in America, but itís not aligned to help
people who can truly be successful in the market.
We think you have to identify the trend, the long-term trend, and then invest with that
trend and be an investor.
Holding positions is much more aligned to whatís good for people and a way for them
to make money in the market.
Douglas Goldstein: Do you think to hold these positions only for a couple of weeks for the
swing?
Marc Mandel: I would say two weeks, two months, to two years.
It depends on the time frame.
Iíll give you an example.
Back in March of 2008, when the market bottomed, we bought Las Vegas Sands at a casino stock
at $3 a share.
We sold it at $5 a share, thinking we were geniuses.
It went to $55 a share.
Douglas Goldstein: Oh my gosh!
Marc Mandel: If we had been an investor, we wouldíve made 200 times on our money.
Instead, we were traders and we gave away all those profits.
I can give you example after example that had we held positions and just been an investor,
been patient, we wouldíve made so much more money than by trading and taking short-term
profit.
Douglas Goldstein: I got you.
Marc Mandel: Now, weíre in a bull market in America.
Weíre in a major bull market that we believe has many more months, maybe years to go.
Itís because of low interest rates, itís because of easy money, and the U.S. Federal
Reserve Board is behind this market, and they are the wind behind the sales of the market.
So as long as the trend is higher, people who invest and who hold positions should succeed.
Douglas Goldstein: Weíre talking to Marc Mandel.
Marc is the Chairman of the Financial Services Company.
He has got a radio show based in Boulder, Colorado, called Wall Street Radio and he
specializes in teaching people about how to invest money, and he is very focused on education.
So tell me Marc, how much education can the average guy really get to make him a successful
trader as opposed to buying index funds or mutual funds?
Marc Mandel: Well, thatís a great point and basically, if the person wants to be empowered,
they want to be involved, they want to take control of their financial future and education
is really important.
And Iím talking about education about how the markets work, education around being an
investor, identifying trends, staying with the trends, identifying patterns in the market
that repeat ñ thatís the education part.
If someone doesnít want to be empowered or involved and they just want to leave their
money to a money manager or financial planner, thatís a totally different approach.
In that sense, just buying an index fund is probably the best way to go, or having their
money managed by someone who has a good track record is a good way to go.
So the education is really for people who want to be involved in their own financial
future and making decisions for themselves.
Douglas Goldstein: Let me go back to something you mentioned before about the U.S. being
in a bull market.
That, in fact, could be defined as a very controversial statement because anytime you
turn on Bloomberg, thereís always going to be some incredible doomsayer, who in fact
seems to be saying things that are reasonable.
For example, the U.S. is suffering from a huge debt both on the national level as well
as on the individual level.
How do you see that corresponding with your bull market feeling?
Marc Mandel: Well, again our focus is on price.
Our focus is on what the market does, not what the people think it will do.
Thereís an old saying on Wall Street, ìThe news is not important, itís how stocks react
to the news.î So as a matter of fact, bull markets do climb a wall of worry.
So the more negative people are, the better it is for the bull market.
Basically, weíre in a situation now where itís really shielded by easy money and low
interest rates, and until that changes this bull market will continue.
I understand that we have a trillion dollar deficit and to be quite honest, there are
only three ways the U.S. Government could fund that trillion dollar deficit.
One way is by raising taxes and of course, itís not politically favorable so theyíre
not going to do that.
The second way is by selling bonds and of course, the Fed has done their QE 1 and QE
2.
Theyíve been buyers of bonds and theyíve been the only buyers of U.S. bonds.
China has been selling bonds, so we donít think U.S. will be able to sell a lot on the
bonds.
The third way is by printing money.
So when you print, itís going to be highly inflationary.
What happens to asset values when we have higher inflation?
Itís not that the dollar goes up.
Itís to take that many more dollars to buy the same amount of stocks.
So again, we couldíve a bull market just because of higher inflation and the increasing
commodity stocks, silver stocks and gold stocks, things like that.
But certainly, thereís an issue around our trillion dollar budget deficit and how weíre
going to fund that.
I think theyíre going to print a lot of money to do it and thatís going to be highly inflationary.
So asset values will rise because the dollar will fall.
Douglas Goldstein: Interesting.
Marc, weíre just about out of time, but maybe you could tell people about your radio show.
How can they learn more about your ideas and how can they tune in, especially from Israel?
Marc Mandel: Sure, our website is www.winningonwallstreet.com.
Thatís actually the name of the radio show, and they can email me if they want more information
at wizard@winningonwallstreet.com or they can listen to our radio show live through
an internet site www.radioconetwork.com.
And of course, we have our shows on iTunes, so they can download and listen to past shows
whenever they want.
Douglas Goldstein: Great.
Marc Mandel, I really appreciate you spending a few minutes with us today.
Itsí been very interesting and I encourage people to take a look at the website and learn
from www.winningonwallstreet.com.
Marc Mandel: Douglas, thank you so much for being here, and I really enjoy your show.
Thank you.
Douglas Goldstein: Thanks.
Douglas Goldstein, CFPÆ, is the director of Profile Investment Services and the host
of the Goldstein on Gelt radio show (Monday nights at 7:00 PM on www.israelnationalradio.com.
He is a licensed financial professional both in the U.S. and Israel.
Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA,
SIFMA.
Accounts carried by National Financial Services LLC.
Member NYSE/SIPC, a Fidelity Investments company.
His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered
at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.
Disclaimer: This document is a transcription and/or an educational article.
While it is believed to be current and accurate, divergence from the original is to be expected.
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