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|Subject: Re: After meeting with a Financial Advisor||Date: 10/4/2003 6:08 PM|
|Author: BuildMWell||Number: 37386 of 73985|
"A good Financial Advisor is like any other good investment, difficult to find but worth the effort. Superior Financial Advisors are just as rare as superior investments." - PosFCF
While I cannot argue with this conclusion, I find the premise severely flawed. How can one find that rare "good financial advisor" without losing many dollars in the search? Since good ones are rare, in your own words, isn't it expensive to sort through all of the bad ones?
In my investing career, which began almost 40 years ago, I have worked with at least 25 financial advisors at at least 12 different investment firms. These firms are represented by lots of great and notable big names such as Smith-Barney, Merrill-Lynch, Bear-Stearns, Edward-Jones, A.G. Edwards, Prudential, Raymond James, and Payne Webber. I worked with some local small firms too. I cannot begin to count the money I lost listening to these idiots. They seldom gave consistent advice that beat the averages. Overall, their loses were far more destructive than their winners were constructive to my portfolio. Unfortunately, I was so busy working at my job and making money to invest for my future that I had no time to figure this out. I just kept sending them money to fund every new idea that they came up with. Heck, they all sounded good to me! What did I know? They were supposed to be the damned experts. I was the raw capital earner!
One day, I sat down and did the math. Of all of the brokers, only one had consistently given good advice. That was Payne Webber, by the way. All of the rest never beat the market...not one year out of many. Some never made money for me...after many years, my account was about equal to the cash I had fed into it over time. I was being fooled by my own contributions. Others made money fairly consistently, but when compared to the S&P 500, they were pitifully tiny gains. Unfortunately, back in those days, the existence of index funds was well concealed. No broker ever suggested an index fund to me. The comparison to their own piss-poor performance would have been too easy to spot!
Luckily, I came to see the real problem. The real problem was me! I was too trusting and too naive. I realized that I could work for myself and make far more money than relying on financial analysts for my success. However, this took too much time away from my work so I retired at age 49 and went to work full time for myself. Today, I beat the market every year because it really is not that hard to do.
At first, I bought some index funds to use as my tell tale. Each year I compared my results to the fund's results. The first year I failed to beat the indices. However, I still had lots of the losers the experts had talked me into. I was slowly learning though. The second year I beat the index funds by a small percentage. Since then it has been no contest. Beating the idex funds is a no brainer once you find out what is going on.
I am not a day trader either. I rarely sell stocks and I buy maybe five stocks at most each year. However, investing has become my full time job. I really dislike mutual funds and indwx funds. Both rob the investor of his ownership in a company.
When you buy a fund, you give up your stock voting rights to the fund manager. Fund managers almost always vote with the company management. In my opinion, this is exactly what caused the problems we now see on Wall Street. The individual investor has given up control to the "experts" who have no real interest in the individual. If they do not like what a company is doing, they do not blow the whistle on the business, they just sell it. Someone else will buy it. There is always a sucker out there to buy anything. The funds will still vote with the management of their new purchases. That has proven to be a real mistake. Management is out for management...not for the stockholder. Stock Options prove that simple fact.
If more folks did what I do, Wall Street would be a far better place. I follow the businesses I own and I vote my shares as I see fit for my advantage. That is how it is supposed to work. The stockholders own the business...not the management. The management works for us. Stockholders provided the capital that made the business possible...the business needs to repay us for our risk taking. Some great businesses understand this fact...many do not. The key is to be able to spot the difference between the ones who care about the stockholders and the ones who do not. It really is not that hard to do. BUt, you cannot do that if you do not own the shares yourself.
Ignorant investors cannot give up their control fast enough. They know how little they really know so they are anxious to leave the decisions to others. That is where the bad experiences begin. For, in the end, after you have been fleeced, you have no one to blame but yourself. For, in the final review, it is your money on which you are giving up control. Who do you honestly think cares as much about your money as you do?
Thank God, I figured this out early enough. Otherwise, I could still be working my ass off, saving like crazy and getting nowhere fast. For, you see, I trusted the experts to have my best interest at heart...and that is just not their job. Their job is to make themselves rich! They do not give a flip about you or me...we are just here to provide the money for their enjoyment. If we happen to make a profit, it is just luck. For, if we fail to make a profit, what can we do except fire our experts? There is always another sucker out here for the expert to fleece. The suckers think they need him because the novices are honest enough to know how little they know. The expert is smart enough to make the sucker think he actually knows something...but he does not. He is just like you and me. He sells what he is told to sell. He is no expert...he just tries to act like he is one.
The investor has go to take back control...otherwise this whole thing is out of control. It bothers me to see how few people actually understand any of this. The only real control is for the investor to know what he owns and why he owns it. He cannot trust anyone else to care. If any company you own starts to make moves in ways that you do not like...sell. It is your company...get rid of it! If the management will not act for your benefit and their story makes no sense to you...get out. Do not be a sucker. Make your own decisions. If they prove to be wrong, learn from the experience. Soon, you will know exactly what to look for in your businesses and beating the market will be easy for you. Great businesses almost always beat the market. It is inevitable because the market is made up of many businesses...some bad, some average and some very great ones who understand what I am saying right here. Indices average all of these businesses. Smart Investors own the great ones! That makes beating the averages a no-brainer.
Remember, everyone has an ulterior motive...except you. You have no ax to grind but your own. That is what gives you an advantage over everyone else. Most everyone else wants something for nothing...they want someone else to do their work for them. That is just not the way it works in America. You must pay for your lack of work in this country. Once you give up control, you are going to be fleeced...one way or another. The sooner we all admit this fact, the better off we will all be in the future.
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