Why Tony Robbins Is Still Asking The Wrong Questions

Tyler Durden's picture

Authored by Mark St.Cyr,

One year ago this month I wrote an article bearing the same title less the “still.” I’ll premise this one as I did then with the following: This is not a hit piece, nor an effort to arbitrarily take swipes. Or worse; some feeble attempt at click-bating. I’ve been a true fan since he first hit the motivational stage decades ago. However, that doesn’t stop me from pointing out issues where I see a compelling reason to do so. So with that said I’ll get on with it…

Over the last few weeks the financial markets have been on a tear. And not just any tear. The month of October saw gains that were not just spectacular: It now sports the position as the 4th grandest Oct. rally in the history of the markets.

It sure does sound “grand” if you don’t look at what it took to make it so. i.e., A collapse of an also historic nature that preceded it by mere weeks. Suddenly the praise of “grand” looses its largesse when reminded of why it took place to begin with. Yet, not to worry. The financial media will never remind or, alert you to such facts because – “everything is awesome!” once again.

Then on Thursday I was alerted that Tony (I’m using the personal only for ease) was out making the rounds on the financial/business shows. So, I tuned in to see. And what was the bulk of the conversation or questioning about? Fees. In other words, by using different instruments, brokers, et al, you could significantly reduce your brokerage fees by doing many things yourself in different ways such as investing in ETFs and other instruments. One example he used was from his own company’s experience where he reduced his outlays by some $5 million dollars. Sounds great at first blush. However, there’s two things overshadowing this enlightenment in my opinion.

First: The answers to the questions Tony realized are far from groundbreaking. They’ve been around for some time. Yet, it’s the second part that has the most troubling aspect in my view, and that problem is this: Although fees are a very important aspect of financial planning at any level. Where prudence in reducing them should always be sought with vigor. In markets such as these, just one year since Tony’s book “Money Master The Game: 7 Simple Steps to Financial Freedom,” (2014 Simon & Schuster) The most probing questions that should remain front-of-mind, everyday, with no respite should be focused squarely to: The surety for the return of one’s money. Then the proverbial “on.” Period. Confusing that sequence today is a recipe for financial disaster waiting to happen in my view.

Safety today is paramount. I am ever-the-more resolute of the opinion: Everything else is playing around the edges. And as I watched or listened – I heard nothing addressing the preponderance of possible systemic failures or upheavals. Let alone how one might safeguard themselves from one.

Oh wait, yes there was one: “diversification.” All I’ll point to on that note, is what I pointed to last time – 2008. For diversification in the markets was, for all intents and purposes; a meaningless exercise during the panic. Why? Lest I remind you during the panic how everything was going down the drain simultaneously?

If you listen to many a next in rotation fund manager or, economist 2008 is now considered ancient history. Even if it was only 7 years ago, took a government sponsored bailout, three quantitative easing interventions, along with other programs such as “Operation Twist” and more costing TRILLIONS of dollars to circumvent and still remains the benefactor of extreme monetary policy actions via the Federal Reserve and other central banks. That part of history they would like you to both forget as well as never be reminded of. (It’s bad for business.) However, let’s take a trip down “memory lane” with some pictures aka charts shall we?

In June of this year I wrote another article titled “F.T.W.S.I.J.D.G.I.G.T.” This title is a catch-all category for articles I’ve written where I was originally bashed for arguing such thoughts only to be proven out either correct or, far more on point than those of my detractors. In this article I argued many of the same points I’m arguing currently, and to help bolster my argument I posted this chart:

The S&P from Nov.'14 - thru to today.

November 2014 thru June of 2015

In that article I argued since the ending of QE, along with the release of Tony’s book, the markets had done something they hadn’t done since QE originally began. i.e., Gone nowhere.

Not only that; the markets had also experienced out-of-the-blue shocks consisting of selloffs answered with just as breathtaking rallies perpetuated only by central bank jawboning stick saves. “#3” on that chart represented the first of rollovers that took place causing ever more Fed officials to publicly mouth soothing tones following the initial, much larger, and more pronounced “looking into the abyss” moment that was only saved by St. Louis Fed. President James Bullard when he expressed maybe “more QE” was possible. This is now collectively referred to as “The Bullard Bottom.”

In the near 7 months represented on that chart the index stood only a mere 40 points higher. Not withstanding, something else was also “out of character” for a market which had been on fire for years prior: It was gyrating wildly.

The old “put a ruler down and draw a line upwards” was now absent. Again, something I stated would be the result (and worse) once QE’s lingering effects finally wore off. For as I’ve stated all these years “Without the Fed. – there is no market.”

That was then, so what about now? To wit:

2015-11-07-TOS_CHARTS

The S&P as of today

This is the same chart as the previous. Only I added a little more time (Sept-Oct of ’14) for context, as well as a few more notations.

First, as you can clearly see, is the initial market selloff that transpired when the markets began adjusting to the fact that QE was indeed ending. (i.e, Oct/Nov) The reaction was both ugly as well as rapid to which it only reversed once a senior Fed. official publicly stated maybe “more QE” was possible. e.g. “The Bullard Bottom.”

The initial reaction takes you right to the point (#1) where Tony’s book came out a few weeks later. However, as I noted on that chart using “#3,” there, and nearly every other subsequent selloff was met by one Fed. official after another in concert with other central bankers jawboning the possibility of “more intervention” in one form or another till finally; the market just acted in faith that “The Fed. had its back” and the gyrations were less and less pronounced. Until…

In August China’s stock market along with its currency market began fluctuating wildly. So wildly it caused out right panic within their own markets that spurred a contagion effect into the markets as a whole.

Some will point (which I am of this thought) this was primarily a result of not only issues distinct to China, but rather, issues that were being exacerbated by the realization that the Fed. was indeed going to raise interest rates in September. The resulting chaos of such a hike to the emerging market currencies during a margin fueled bubble popping of the Chinese/Asian stock markets had the look and feel of taking down or, at the least, causing a global rout in the financial markets.

On August 24th the U.S. experienced a 1000 point plunge in the overnight markets. This plunge caused a never before seen in history halting of all three major future’s indexes before the opening bell. By the closing bell the markets would recover some, yet, still less than half closing down a whopping 588 points at the final bell. Although the damage was severe, what was the catalyst for it not being the full 1000? Or worse?

Many point to the now infamous “Note from Tim Cook” CNBC™ host Jim Cramer produced and read on air stating: China was better than anyone thinks based on iPhone® figures. This followed with more Fed. speakers hitting the airwaves and print with soothing tones of “We’re here at the ready” seemed to quell the ever-growing onslaught of panic. But it was not to last very long.

Again, as one can see on that chart the markets once again began to roll over. This is where the “panic” once again became palpable. Then, to the astonishment of many – the Fed. blinked and did not raise interest rates at their September meeting. Even though it was the most telegraphed, as well as anticipated in recent memory.

And with that it signaled to the markets that the Fed. was indeed painted into a corner and BTFD (bought the dip) with both hands, feet, and truck that could carry a stock ticker. The result? Another short covering fueled rally worthy of the record books. However, once again – there’s a problem. Or, should I say “question” that needs to be addressed. And this question has far greater implications than anything resembling a “fee.”

Now, one year later (almost to the day) the markets are right where they were previously – with one exception. All the things such as “wild gyrations, panic selloffs” and more that were supposedly vanquished with the Fed’s intervention as expressed by the financial media et al. Have not only reappeared: they’ve shown to be far more frequent, as well as volatile, and extreme as those not seen since the original crisis in ’08. Funny how this has only occurred since the ending of QE, no? Coincidence maybe? Hardly. And I personally believe it’s far from over.

As both myself and a few others have reiterated more times than I can remember: “This market is all about Fed. liquidity.” And if you want to see warning signs – just look to markets that are the most liquid in the world. For if they show signs of stress – you know there’s potential for really big trouble to fester.

So just what did a “fantastic jobs report” do to the most liquid capital market in the world known as “Bonds?” It caused a halt. But remember “the Fed’s got your back.” No need to question why here. Best leave those questions for other areas such as “what’s the cheapest ETF I should invest in?”

Or how about a few other questions that really should be front-of-mind knowing now what one didn’t expect to see ever again. i.e., Historic panic out-of-the-blue selloffs.

How does one go about contemplating “fee structures” or “diversification” in an environment that is far more precarious, and far more onerous than the market of just months ago let alone a year? Are these the correct “questions” for times such as this? After all…

The conditions that were stated to be the catalyst for China’s original markets issue was “margin debt leveraging.” This issue was supposedly being wound down, and ring-fenced as to not interject itself again causing a remake of such events. But a funny thing happened over all these few weeks since that late August rout. Margin debt has been reported to be back on the rise – and with a vengeance, with Asian markets vaulting once again to ever higher levels. Yet, this is only one of the factors that is once again back on the table for questioning.

Back in Aug. another of the very prominent reasons for market turmoil in China was the impending “Fed. rate hike.” Even the Economist™ pointed out this issue in their article, “The causes and consequences of China’s market crash.”

“…Emerging markets have also been squeezed by the Fed, which has been preparing the world economy to expect the first interest rate rise in nearly a decade in September. Tighter monetary conditions in America have led to reduced capital flows to big emerging economies, to a rising dollar, and to more difficult conditions for firms and governments with dollar-denominated loans to repay.

 

The global economy is right in the middle of a significant transition, in other words, as rich economies try to normalise policy while China tries to rebalance. That transition is proving a difficult one for policymakers to manage, and markets are wobbling under the strain.”

So another very important question (which no one’s asking) that needs to be asked and addressed today is: With the Fed. all but signalling come heck or high-water – they’re raising in December. Do the global markets once again stand at the same ledge they did in early August?

And if that is indeed so, the question that is self-evident is this: Are you now better equipped both psychologically, as well as strategically and tactically adroit to handle such gyrations? Or, have you focused on “fees” and “diversification” as expounded via today’s financial books with a tendency to just BTFD because it’s worked so well in the past regardless of forethought or angst?

If it’s the latter, the real question becomes more of one resembling Clint Eastwood’s now immortal “Do you feel lucky?” For that’s really all you’ll have if the stuff truly does hit the fan once again. Because this time – The Fed. doesn’t want to get in the way of it either. At least that’s what they’re saying or implying. But right now it’s anyone’s guess. Besides, once again…

“Everything is awesome!” And there’s no need to question that. Right?

 

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NihilistZero's picture

With the Fed. all but signalling come heck or high-water – they’re raising in December

Wasn't the FED all but signalling come heck or high-water they’d raise in September???

I'll believe it when I see it...



Sudden Debt's picture

The FED knows there are massive inflation spikes comming and that's why they want to raise rates, if need be they'll go to 20% or more.

They just want to be in time before it happens, they won't be, they're always to late and rate rises can't happen before it does so they're between a rock and a hard place.

And as long as those signs of inflation don't pop up they won't act. But they have credible faers that they'll come and come fast.

And the longer it takes, the worse it will be so easing is the last thing they want.

BUT... without the easing we'll have collapse that could put 30% of the workforce unemployed in a hartbeat so they'll have to.

Either way, the FED has painted itself in a corner and honestly, I wouldn't want to be in their place now because they'll be blamed for everything.

And somebody will be blamed and burned. 

sprintjump's picture

SD, with that being said, I'm a young guy/single/no kids... I have no outstanding debt, and 10-20k available for some kind of investment/hedge purpose. What should I look/consider closely at? My folks have stacked for years now, and they are pretty good in terms of having stuff to fall back on, if ever need be. So, is there any good advice that I can get from you or anybody else reading?

I feel like there are more of 'me' reading these articles and comment sections, so I hope I'm helping others out with my questions.

Thanks

DontWorry's picture

Whats coming next will be like a financial earthquake or hurricane.  The focus will be return OF capital, not return ON capital.  There are too many paper claims on wealth.  Promises will be broken, and lots of bagholders will be Corzined or stuck with worthless paper.  If you don't hold it, you don't own it. 

Most investments now are some sort of swindle or scam. Every scam has a sucker.  If you're looking to invest and you don't know who the sucker is in the deal, then you're the sucker.

mkkby's picture

@SprintJump -- $20k isn't enough savings to start investing in any meaningful way.  If that is all you have, hold on to it as a rainy day fund.  Nobody's income is secure these days.

Focus on cutting your burn rate.  Get rid of any expense that is not absolutely necessary.  The typical guy has hundreds a month wasted on cable, apple bullshit toys/cell phones, car loans, credit cards, gourmet coffee and on and on.  Spend the time outdoors and lifting weights.

If you live in a major city, look to move away from all that traffic, crime, pollution, forced diversity.  You'll save a few more hundred a month just on rent.

Eventually the markets will have a major correction.  They always do.  A few months after the dust settles is the time to look for dividend yield or bond yield.  If you are being paid, it's an investment.  If it's about hoping an asset goes up, that's speculation (ie gambling).

 

Bossman1967's picture

20,000 k silver guns food water. You have many years as I do to watch my investments manipulated but one day Ill be the smart one and cash out.

stacking12321's picture

best bet is to invest in yourself. if you have your own property, get some solar. get some insulation to reduce heating bills. get a garden / orchard. pay off debts, reduce expenses. build resilience in your life. invest in your business if you have one.

individual situations are different, you have to look around and see for yourself what is needed, no one can give you good advice without knowing the specifics of your situation.

analyzer_66's picture

Take your 10-20 grand and become a cocaine dealer or a pimp with some high class working girls in your stable.  The revenue stream and profits are all off the books and hense non taxable.  If you take your money and double it in stocks/bonds/etfs/mutals funds and then cash out, the capital gains tax will demolish your profits. 

Jason T's picture

You sound like you have potential to make a great husband, father and role model with your given family backround and ability to save $ and avoid debt.  

You're estate, if you desire to get married one day, have kids and the like, will require a house ($200k),  a car or two, ($15k) appliances, furniture, tools, etc.  The $20k would prove best used to be put toward the building of your estate for you and your families sake.

Invest in tools that help you become more productive.  The important things in life are good food, shelter, clothing, health, friends and family .. and accomplishment.  

Folks with a house they own, cars they own and  some land and are healthy and capable of laboring are very hedged.

Sudden Debt's picture

Stacking is good and everybody should do it. But don't put all your money in it because you need to have a time horizon of 10 to 15 years to see real profits.

Don't expect a exponential rise in that just yet. And that exponential rise will be because of inflation so it will be just to keep your money.

So buy some, 1 roll a month and keep that growing in a relaxed way.

The best advice I can give you is to save your money and develop your skills and try to become a freelancer, contractor or start your own bizz.

There's no better investment than yourself. Being your own boss is the greatest thing a man can be. 

And once you're 40, for the market you're already a old man. You'll cost to much for your company and you're easy replace by 2 younger kids who cost less.

It's weird to think about that now but once you're 40 that becomes a hard reality. So be a independant person and your own boss, and they'll always respect you.

And as a independant, be greedy, never try to impress anybody because that's like bringing water to the sea and that's the downfall of a lot of companies. Before you get succesfull, remember your friends and all the new friends are parasites.

And then, that 20K will be worth 200 to 400k in less then a decade and in 2 decades you can be rich guy.

 

And do you want to know what the best part is in being your own boss? You can say "Fuck off" to people you don't like.

And if you work for a boss, you'll need to say "thank you" to people you hate.

jaxville's picture

 The best thing you can do is stay out of or reduce debt.  The artificial low rates are creating a deflationary expectation that can only be broken through much higher rates.  You don't want to be owing on a debt that will reflect higher rates as they unfold. 

  There are those who point out the damage to the economy should rates rise.  They suggest that we won't see higher rates because of that.  The bigger threat to the financial authorities is a general loss of confidence in the system. The economy will be quickly thrown under the bus if prolonging the system requires it.

  Since you have investable assets..... My personal formula (which has done quite well over the last fifteen years in spite of what has gone on over the last three)....

  70% gold specie (coins and smaller bars)

  The remaining 30% in cash (banknotes you have secured and stashed), silver specie and a small position in speculative equities ( I like gold producers).

  It seems silly now but gold is going to be really important in the not too distant future.  I don't believe that the Fed or other central banks are going to be able to thwart a generally fall in confidence and flight from the financial sector.  Essentially you remove your wealth from the financial sector.  It is true that the financial sector is setting the valuations on your assets but that too will change. 

  The train is heading for a wreck and the best advice I can give is just get off it and stand aside.

Yen Cross's picture

  Where's this mysterious inflation coming from?

  Asia and Europe are exporting all their deflation to the U.S. through devaluation, andloose monetary policy. Commodites , manufacturing, shipping is still falling, and employment is in the shitter.

 To make matters worse the $usd is on a tear, and destroying exports.

  If the Fed. raises rates and lets the markets crash, then they have an excuse to print more money and that will cause pseudo inflation through devaluation. It will fail just like the last 3 times.

analyzer_66's picture

Inflation on apartment rent, healthcare/Obamacare and food(eggs/red meat etc) are real.  Add that to the costs of owning, insuring and operating a motor vehicle and you can readily see why consumer demand is mostly stagnant.

Yen Cross's picture

 Housing inflation is only in certain areas, and the housing numbers are flat to down in sales. They have to practically give autos away, to get people to buy them. I haven't noticed any large increases in auto insurance as of  late.

 Healthcare is completely manipulated by the Zerocare law.

  Red meat is expensive but pork has come down in price. Food is a a necessity, and not indicative of over all demand inflation. The weather and currency swings also greatly affect food prices. Commodity prices are low across the board.

 Consumer demand is low because of lack of wage increases, caused by lack of demand/deflation, and exacerbated by 7-8 years of devaluationfrom printing money.

 The $usd isn't strong right now. It's just the best horse in the glue factory, vs other currencies.

jaxville's picture

  Much of the inflatiion or, more accurately; rising costs you point to are the result of either malinvestment or government interference in the economy.  Not so much a matter of too much cash chasing too few goods or services.

   It's true that the Fed is creating currency like Scotty is making toilet paper but the problem is that the currency comes with even more debt as it finds it's way into circulation through fractional reserve banking.  Most of that currency is not making it's way to where it can easily lead to higher prices as consumers are at the limits of debt they can carry.  Consumer borrowing is the main source of fresh funds for the economy.  

    In spite of the huge ramp up in currency production, the amount required to service existing debt falls far too short to do so.  Only a reset of some sort will rectify this but it will be resisted by the financial authorities as long as possible. 

 

 

Amish Hacker's picture

Everything's awsome. Buy all the things.

Ignatius's picture

Tony Robbins?  Can't we do better?

Scooby Dooby Doo's picture

Gotta pay the bills, no? Have you ever seen Robbins? He is like an ape. Perfect pitchman for the Obama age. He blends in so nicely with all the racial MSM themes.

Go negros!

.National Suicide 1980's picture

Robbins is a clown. He has been around for a very long time. When he first slithered out from under that rock, he was a true Reaganite. He keeps his snake-oil current by adapting to all criminal regimes.

Greenie's picture

I always thought Tony Robbins was the guy that played Lurch on Addams Family

https://www.youtube.com/watch?v=lClaQLsBb-4

Demdere's picture

We inhabit a failing system administered by failing institutions.

If we repealed 100 years of laws, our system could and would fix itself.

But government spending and taxes and subsidies prevent that and continue the brokenness.

https://thinkpatriot.wordpress.com/2015/10/27/military-priorities/

If we do not abolish the fed and stop military spending, no reform can be effective.

buzzsaw99's picture

All I’ll point to on that note, is what I pointed to last time – 2008. For diversification in the markets was, for all intents and purposes; a meaningless exercise during the panic. Why? Lest I remind you during the panic how everything was going down the drain simultaneously?

Bullshit. I'm guessing he wasn't long TLT or GLD in 2008.

cowdogg's picture

There is no possible way that the Fed can raise in December on any other time in the near future but they can lie about it all day long and a lot of people are willing to believe that lie. They have them dancing around like puppets on a string.

Blano's picture

IMHO there will be a symbolic 1/4 rate hike in December. 

Then comes an election year.  I haven't looked back yet, but how often does the Fed raise rates in an election year?

Yen Cross's picture

     Tony Robbins reminds me of the Sasquatch from the beef jerky commercial.

  I'll be he has a private equity fund called JACK LINKS LLP.

buzzsaw99's picture

He probably bought california and florida real estate at the top of the market with an ARM. lulz https://www.youtube.com/watch?v=bNmcf4Y3lGM

Last of the Middle Class's picture

The questionis how many more BLS stat releases before they decide?

evokanivo's picture

"Suddenly the praise of “grand” looses its largesse"

... I stopped reading right there. If by adulthood you still can't figure out the difference between loose and lose, or their/they're/there, you certainly can't figure out the markets.

RockyRacoon's picture

The thing is chock full of errors.  There are lousy spellings, misplaced punctuation (the "FED." has no period), and sentence fragments, dangling participles and... well, it's a mess and hard to read.  His point could have been made by saying the the magician (Robbins) is using slight of hand to divert attention from the important issues of solvency and prudent money management.  See?  That's not so hard, is it?

TheReal_JimmyK's picture

Two problems with Tony Robbins writing a book on investing.

1. When you start trading stock tips with your motivational speaker you know a top is near.

2. When unconvential wisdom becomes convential wisdom it no longer works.

alfbell's picture

 

 

TR is a great businessman and marketer. He's made millions. He is NOT an investor. I heard a pitch about his book which caused me to buy and immediately read it. It is all conventional, obsolete information and does not interface with the times and reality. I was very disappointed. The only thing of interest was the section on "hybrid annuities" with guaranteed yields and capital insurance protection (although I'm not sure if they would really be a workable vehicle). Also, interviews with top financial people and big hedge fund managers have little to no value to the average person who is looking for safe yield and wealth building for their retirement. Nice gesture Tony, but no cigar. And if you wrote this book just to make money... then go jump in the lake.