UnThreaded | Threaded | Whole Thread (21) | Ignore Thread Prev | Next
Author: WatchingTheHerd Big red star, 1000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 454831  
Subject: Re: Is expensive advice better than no advice? Date: 12/10/2012 10:57 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 49
Looking at the history of the market over the last 15 years, I would guess that probably 60-70 percent of the profits produced in financial markets probably went to 5-10 percent of individual investors. The other 90-95 percent of individual investors probably treaded water at best while a few bet on dogs at the worst possible time or failed to cash out gains of legitimate gainers and wound up losing quite a bit.

It's a safe bet that the 5-10 percent that did well and kept their profits were smart enough to manage their portfolios on their own. Show of hands... Has ANYONE here heard a story of a friend getting called by a broker saying "Hey Joe, I think we really need to dump your XYZ position -- it seems priced for perfection and my firm's research department has some questions about their last 10k..." a month before XYZ drops 10 or 20 percent?

Me neither. That's right up there with "That's the banjo player's Porsche" on the list of "Things You Never Hear."

I am convinced that for average individuals whose income only yields $5000 to $20,000 per year in "investable" disposable income, their time is MUCH better served first focusing on careful management of their health (to avoid the onset of chronic issues later which can cripple them literally and financially) and management of their basic household budget (LBYM) to just SAVE money. When interest rates are virtually zero and riak adjusted stock returns are in the 3-5 percent range if you're GOOD and know what you're doing, the "opportunity cost" of not actively investing money is nearly zero. For the non-sophisticated investor, the risk-adjusted cost of investing may be quite high if they are churned through an ever-changing list of broker favorites and "special deals" on things like Jefferson County Alabama sewer bonds, etc.

The average would-be investor is probably better off just keeping things simple, minimizing or eliminating the use of credit and avoiding the stress of handing their money over to a system they don't understand through a third party that probably doesn't deserve to be trusted.


WTH
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (21) | Ignore Thread Prev | Next

Announcements

Post of the Day:
Value Hounds

Medallion Financial: TAXI!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement