I got an email from a friend the other day, asking for a referral for a financial advisor. My advice is to never use one.
I have never used financial advisors. I have talked to them, but honestly - and this is really really the case - they usually do not know anything. They will show you charts and graphs, but with the disclaimer, "past performance is no guarantee of future results".
Far better to invest with a few basics in mind:
1) "forecasting is simply determining where imbalances will ultimately resolve"
2) an investment class either has value, or there is a belief that one exists. The second case is very dangerous
3) Never ever invest amounts that you can't completely lose without losing a night of sleep
4) Never - ever - invest using leverage (option accounts, margins, hedges, derivatives)
5) When you invest, consider that money gone forever. Just like blowing it in Vegas. That way you won't care if you have to go long. Investing for cash returns is just like gambling in Vegas
6) Never buy stocks, especially in the U.S. People who buy stocks always try to time the market, and put far too much money into their bets. Far better to ask yourself what is out of balance, and then invest in that.
Financial advisors know only what the company newsletter tells them, and that news is provided by their "research" teams with buy/sell recommendations. These people are in the business of selling you their products.
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8 comments:
...And it seems like advertising by financial advisors has increased ten-fold in the last few months too. Gary, you're in that top 1-2 percent that are able to principally invest in their own enterprises. The rest of us are stuck in a real quandry right now. Put it in the bank? By stocks and mutual funds? Invest in real estate? We all agree: the answers right now are no, no, and no.
I also can't help but feel that the market is being very heavily manipulated right now, and there 300+ point daily "rallys" and "plummets" are making some people tons of money...Those with enough power to get in, manipulate the market in their favor, then get back out. Then...repeat!
Paul - if you've noticed (or not) let me just point something out that should seem kind of odd:
Gold hovers around 850, dow around 8,500 - regardless of the news. Hamas bombing Israel typically would create a flee to metals in times of geopolitical instability.
Massive unemployment should whack the DOW. Auto bankruptcies and bailouts of entire industries should tank treasuries, but this isn't occurring.
That's why I think Mutual Funds and stocks are very very scary. The fundamentals don't support the current levels, and they certainly don't make sense.
Financial advisors have called the bottom of the market all the time. Same with the people on the news.
if you believe half the shit you post, and take your own financial advice, you really should seek professional help. I find it very hard to believe that you have the amount of money we assume that you have and do not have anyone providing financial support to you.
Yes there are alot of shitty financial advisors just like there are shitty photographers. With you level of wealth you could get a good advisor that outperforms the market
I never learned how to read the market. I see myself having money to invest in the near future. Where would I get the info on how to read the markets so I know what moves to make like you do?
Nothing in the market is making any sense right now. How can anyone "read" a market that will go up 500 points one day and then back down 500 points the next? Several weeks ago it went up almost a thousand points in just a couple of days! Then it tanked a thousand points, again in just a couple of days. And what Gary said is indeed startlingly true - huge bad things can now happen in the market and it is not responding in kind. It's my opinion that NOBODY can accurately "read" the market right now.
nobody can read the market because of the "plunge protection team" (google it). That two trillion dollars of treasury dollars that Paulson won't disclose -this keeps both the DOW and gold comex futures in the mid 8's. It makes no sense.
The one guy that I really respect is Dave Ramsey. www.daveramsey.com.
He has some sound principles. All about getting out of debt. He does have some high profile clients that use him. Wouldn't hurt to check him out........
Your advice is straight forward common sense to minimize disappointment. But I think your audience would also want to know where YOU put your money and what investments you make. That way they can follow your example without having to guess.
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