John Wasik

My theme for 2011 is how to be abnormal, which is a new geeky independence that ignores the markets. Stop following the crowd and tend to your portfolio and life goals. Ignore what’s being bloviated on the business channels.

In order to understand abnormal behavior, which in my definition will make you more successful, you first need to identify “normal” behavior.

In the eyes of a behavioral economist like Prof. Meir Statman, author of “What Investors Really Want“  it means we place a premium on winning and special knowledge of the markets, something that rarely happens to average investors.

“We want to beat Wall Street through active investing,” Statman says, “but Wall Street is more likely to beat us.”

It’s far-too-normal behavior to pick stocks, real estate or exotic investments that we think could be winners or pick funds that have run up good returns last year. Yet research shows that we have no idea what we’re doing and get needlessly burned. If you want to improve your returns, be abnormal, turn off your inner Cramer and heed the following:

For most of us, a 401(k) is like a big rock that we don’t want to turn over. We’re afraid of what may be skittering out when we do.

An untold number of 401(k) plans are charging employees too much to manage and administer their retirement kitties. The gremlins of excessive fees add up over time.

While it doesn’t sound like a lot, a one percentage point increase in plan investment fees can cut your retirement income by 28 percent over a work life of 25 years, according to the U.S. Department of Labor (DOL).

I was in a homeless shelter recently with my daughters and neighbors serving a hot meal to some folks who didn’t have a roof over their heads.

They smiled gratefully and thanked us as they sampled my pasta recipe and other dishes. This was a frozen moment when I had to ponder the investment one makes not in stocks, bonds and funds, but life itself.

My friend Mitch Anthony, speaker and author of “the Bean is Not Green,” always has great insights on this process. He says we need to take stock of our “return on life (ROL).”

I doubt if many year-end checklists include the item “insurance policy review.” It’s about as exciting as road salt.

Yet this is a great time of year to see how you can save on all of your policies. Since my homeowner’s policy is up for renewal the end of the month, I usually check to see how I can cut my premium.

Last year I took the plunge and pulled nearly all of my policies from one insurer. I got a better deal, surprisingly enough, through a college-savings program in which I’m enrolled (Upromise.com).

The new tax bill just passed by Congress added a few more turrets to a hopelessly medieval fortress.

Each tax break still supports thousands of economic fiefdoms: $6 billion for the ethanol industry, $235 million for Puerto Rican rum makers, $40 million for NASCAR stock car track owners .

Then there are the write-offs that largely benefit the affluent: $498 billion for interest paid, $470 billion for home-mortgage interest, $467 billion for charitable contributions.

The best investments often don’t have the highest returns. I know this is heresy to most, yet mass behavior can be a siren song.

About this time every year, we gaze intently at our portfolios, hoping against hope that we did something right. Sometimes we get lucky.

Two years ago, we didn’t even want to open the envelope containing the bad tidings of the market meltdown. I kept my mutual fund statements sealed that year.

The government’s Home Affordable Modification Program (HAMP) should be scrapped. It was flawed from the beginning and is not going to get much better in helping people keep their homes. It’s time to start over.

This is not a Scrooge-like gesture, and it certainly won’t decrease the surplus population of foreclosed homes on the U.S. market. The HAMP should be put out of its misery because it’s ill conceived and can be replaced with some more effective measures.

If the White House was truly serious about preserving homeownership, it would have never designed HAMP the way it did. It was loaded with laughable incentives for lenders to lower rates on troubled mortgages, including a $1,000 payment to servicers and lenders. What was the White House thinking? Just getting a decent lawyer to open a file could cost a bank $1,000.

Ready to hurdle back into the housing market? There hasn’t been a greater inventory of distressed homes in recent memory, so you will find some deals.

With prices dropping to a seven-year low and housing starts down, this may be a screaming buyer’s market. Yet you’ll need to keep your optimism at bay because it will be difficult to see any appreciation in the near future. There are also plenty of headaches in buying a distressed property.

But the supply is there, as a combination of  unemployment and bad loans continue to force ever more homeowners into foreclosure, and defaulted properties are continuously being put up for sale. A recent report by the research firm CoreLogic found that there are more than 4 million unsold housing units on the market now, which translates into a 15-month supply in normal times. There’s also something called an invisible “shadow inventory” — homes with defaulted mortgages that haven’t hit the market yet.

Congress needn’t be cruel to be kind in cutting the U.S. budget deficit while saving popular programs like Social Security and Medicare.

That’s not to say that taxes don’t need to rise, deductions pared and giveaways to corporations eliminated. That all needs to be considered, although the recent deficit commission report doesn’t do the dirty work in an equitable manner. It places far too much emphasis on paring Social Security benefits, a system that works and won’t be in deficit mode for several decades.

There’s plenty of pain to go around in the deficit commission’s proposal. The most compelling trade-off is based on the idea that lowering personal income-tax rates will achieve some long-term economic stimulus. That thinking hasn’t worked in the past and won’t work now.