Posted February 1, 2012 at 11:47 pm
by Josuha Brown
Why do people hire financial advisers? The answer might surprise you. Sometimes they are merely looking for someone to pull the trigger for them when they’re too shell-shocked to invest for themselves.
Other times it’s a scapegoat thing… when investments go bad, it’s a small comfort to some that “it was all his idea.”
In a perfect world, financial advisers could go about their duties to clients knowing that they were hired only for their expertise. But this is a very imperfect world (Arrested Development was cancelled and yet Two and a Half Men is in season 39).
In this world, the one we actually inhabit, there is a notable swathe of the investing public that feels better putting the decision in someone else’s hands so that they can agonize over something else. And that’s quite alright, part of the job description when you get into the business of Other People’s Money.
I’ve brought in a few dozen new clients in the past year and about a third of them were holding one hundred percent in cash in their brokerage accounts and IRAs. Some of them have been in this same state of liquidity since the credit crisis.
These are very bright people who know full well that their purchasing power was evaporating with every sweep of the second hand, but they simply couldn’t bring themselves to move. Did they need guidance?
Of course they did. But what they may have needed more than anything else was the confidence in someone – anyone but them – to go out there and do some buying.
What they needed, after mass exposure to European debt headlines and a nauseating amount of “America is over” talk, was a Trigger Man. “Here’s my portfolio, do what I know I’m supposed to do and allocate it for me.”
There is another personality type out there that advisers often find themselves catering to: those who feel better having someone to point a finger at during difficult times. And that’s okay, too. I like blaming people also. Whenever I can’t find something around the house, the only solace I have is that my wife or the kids probably misplaced it. After all, I am smart and responsible so there’s no way it could’ve been me, right?
There is evidence that a great number of people are primarily working with an adviser as opposed to managing their own money for the sake of having a scapegoat – look no further than the amount of customer complaints and arbitrations that arise in the midst of a market meltdown.
According to Finra, total arbitration cases filed against investment professionals dropped to 4,729 last year, a 17% drop from a year earlier.
Consider the fact that 2011’s total is a far cry from the 7,137 cases of 2009 (which jumped 43% from 2008) and it’s about half the number from the aftermath of the dotcom boom (a whopping 8,949 cases filed in 2003). In other words, people don’t like when their investments decline in value and, regardless of market conditions, they are quick to point the finger when that happens.
So mazel tov on the new client additions you pick up in 2012, just understand that some of them see you as a guy or gal that can pull the trigger for them and some of them see you as a person to blame if things don’t work out.
Joshua Brown is a New York City-based financial advisor at Fusion Analytics, the author of The Reformed Broker blog and a contributor to RegisteredRep.
Posted February 1, 2012 at 3:26 am
by Justin Goff
I’m sure this post will piss a lot of people off. But if it motivates just 1 person… then it will be well worth it.
And while you’re reading – make sure you look at this as a business advice post. This isn’t political. This is NOT about republicans vs. democrats or anything like that. As a matter of fact, I don’t support either of those parties and frankly despise 99% of politicians.
So unless you’ve been living under a rock for the past 6 months, I’m sure you’ve seen the discussions of the 99% vs. the 1% in the United States. Many of the 99% believe that the wealthiest people in America make too much money, and that more of that should be shared with the lower level workers in companies.
It’s a good rallying cry, and it makes a great political angle to exploit. And just a few years ago, I probably would have been in the corner cheering on the 99%.
But after a few years of running my own business my views have changed.
One of the biggest changes in my mindset that’s helped me be more successful in every area of my life was getting rid of the victim mentality that I held onto for so long. I always had an excuse outside of myself for why things in my life were the way they were. And when you let yourself think like this, you’re capable of rationalizing pretty much anything to make yourself feel better.
But here’s the blunt truth that I’ve learned over the past few years…
The first thing you need to realize if you want to be successful is that no one in this world owes you shit. You don’t deserve anything.
You were born into this world like 6 billion other people and what you make of your life is 100% dependent upon YOU. Until you get this through your head, and you fully understand it, you’ll never reach your full potential.
What most people don’t understand is that just [continue]…
Posted January 25, 2012 at 12:33 am
by Tyler Durden
This is neither here nor there, but is, for all intents and purposes, the best take down of the utter and complete hypocrisy that now reigns supreme in the GOP primary process.
Thank you Jon Stewart for doing the thinking that so many other Americans seem utterly incapable of any longer.
Posted January 11, 2012 at 6:58 pm
by Mark Pagel
A tiny number of ideas can go a long way, as we’ve seen. And the Internet makes that more and more likely. What’s happening is that we might, in fact, be at a time in our history where we’re being domesticated by these great big societal things, such as Facebook and the Internet.
We’re being domesticated by them, because fewer and fewer and fewer of us have to be innovators to get by. And so, in the cold calculus of evolution by natural selection, at no greater time in history than ever before, copiers are probably doing better than innovators. Because innovation is extraordinarily hard.
My worry is that we could be moving in that direction, towards becoming more and more sort of docile copiers [continue]…
Posted January 9, 2012 at 7:55 pm
by Don Watkins and Yaron Brook
Reacting to calls for cuts in entitlement programs, House Democrat Henry Waxman fumed: “The Republicans want us to repeal the 20th century.” Sound bites don’t get much better than that.
After all, the world before the 20th century—before the New Deal, the New Frontier, the Great Society—was a dark, dangerous, heartless place where hordes of Americans starved in the streets.
Except it wasn’t, and they didn’t. The actual history of America shows something else entirely: Picking your neighbors’ pockets is not a necessity of survival. Before America’s entitlement state, free individuals planned for and coped with tough times, taking responsibility for their own lives.
In the 19th century, even though capitalism had existed for only a short time and had just started putting a dent in precapitalism’s legacy of poverty, the vast, vast majority of Americans were already able to support their own lives through their own productive work. One estimate puts the ratio of paupers to a 1 million population in 1890 at 1,166. Only a tiny fraction of a sliver of a minority depended on assistance and aid—and there was no shortage of aid available to help that minority.
But in a culture that revered individual responsibility and regarded being “on the dole” as shameful, formal charity was [continue]…
Posted January 9, 2012 at 3:27 am
by Rhiannon Hoyle and Francesca Freeman
There are few assets that stir up the emotions quite like gold. Love is declared using it, nations have fought wars over it; even its categorization as a “precious” metal puts it into a different class. But what is it about the shiny, yellow metal, which ultimately has few industrial uses, that causes it to represent such great value that as soon as it’s dug up, huge swathes of it are locked securely away in vaults?
Experts in behavioral finance put it down to a combination of factors, mostly psychological. Gold’s value is largely defined by the emotional, historical and cultural baggage that has been attached to it over thousands of years.
Yale University economics professor Robert Shiller, who is also a former vice president of the American Economic Association, says:
“The reason why people buy gold seems to be the same reason why people stick with old religions. Anything people have stuck with for thousands of years must have some merits, right?”
Investor returns on gold have certainly been rewarding in recent years [WW Note: the editors here don't classify gold as an "investment."]. Having fallen out of the investment mainstream during the 80s and 90s following a relatively appalling performance, gold began a steady, decade-long bull run that rapidly accelerated following the global financial crisis. In the year after the October 2008 collapse of Lehman Brothers, the spot price of gold traded in Europe rocketed by 50%.
As the world’s largest economies continue to struggle with sovereign debt, high unemployment and sluggish economic growth, gold’s path higher has continued. In 2011, spot gold has soared 47% from a January low at just over $1,300/oz to an all-time high at $1,920.94/oz in early September.
But if fear and anxiety has been driving gold’s gains, why is the precious metal seen as a so-called safe-haven in the first place? [continue]….
Posted January 9, 2012 at 1:10 am
by Miriam Metzinger
On a day when the Dow rose 180 points, Cramer discussed the top 10 bearish myths of 2011.
1. The U.S. would be one of the worst performing markets. The Dow was up 5.5%, led by McDonald’s (MCD) up 30%, IBM, rallying 25% and Pfizer (PFE) up 24%. All of these stocks performed well in spite of having significant European exposure.
2. The dollar was going to go down. The dollar index started 2011 at 79 and finished at 80.
3. Interest rates had to go higher. “Buying U.S. treasurys in 2011 was the trade of a lifetime,” Cramer said.
4. Oil trades with other commodities. As commodities declined, oil still went higher.
5. Our natural gas reserves are understated.
6. Gold peaked when we headed down. While gold didn’t finish the year at its high, the GLD ETF (GLD) gained 10% for the year.
7. The euro is falling apart. Actually, FXE finished 2011 where it started.
8. Big pharma is dead. Pfizer was one of the top performers of the Dow. Eli Lilly (LLY) rose 25% and Bristol Myers (BMY) zoomed 40%.
9. The Consumer is not spending. Consumer spending actually has been strong.
10. The Dogs of the Dow are the place to be. Alcoa (AA), Bank of America (BAC) and Hewlett Packard (HPQ) are all performing badly.
Miriam Metzinger is a freelance financial writer and editor with extensive experience in the personal finance field. On Seeking Alpha, Miriam is responsible for recaps of Jim Cramer’s stock picks and excerpts from leading financial publications.
Posted January 4, 2012 at 1:20 am
Click the image to enlarge and get the answer the the question:
Posted January 3, 2012 at 12:11 am
Managing Editor, The Wealth Vault
In early November last year, a respected asset protection attorney (I’ll call him Mr. D) decided he needed a good scare story to give the people on his prospect list a reason to widen their eyes — and keep them open, fueled by addicting fear (his hope, at least).
He explained how because a small fry county in Alabama (Jefferson county) had the largest default on Municipal Bonds in U.S. history (dwarfing the previous record holder, Orange County) that we should all just simply [paraphrased] batten down the hatches.
In investing parlance, the message was: keep staying vigilant for such severe debt stresses on the economic system and keep your money in lock-down mode.
In his own words, “I personally see this municipal bond default as the ‘canary in the coal mine‘.” Er, yeah sure… just like Silver was.
Yet, the first line of his email was: “My goal in this email is to convey a sense of urgency without panic.”
Oh, well, so much for him keeping his initial desire and intent congruent with how he finished up.
Of, course, with the Barry chicken-little meter then on full red alert, and my grander sense of calling BS out on itself, I had to fire off an email to Mr. D.
It went like this…
Posted January 2, 2012 at 1:20 am
by Doug Casey
This isn’t a quote from Mencken, Gibbon or Bakunin – my perennial favorites. But I’ll warrant they all would approve of the sentiments. I saw the essence of this on the Prison Planet website and then modified it a bit. It owes its format to comedian Jeff Foxworthy, whose routine is heavy on lists that start with “You might be a (pick a word – redneck is his favorite) if…”
I’d be impressed if Foxworthy added this list to his skit. But he won’t, because it strikes way too close to home. It’s kind of cool being a redneck in some circles. But not so cool being a slave, even though there are about three hundred million of them in the US. So Foxworthy won’t use this routine for that reason alone – but also because it’s not funny.
You might be a slave if…
1. You hate when your alarm clock buzzes: If you don’t wake up every day with fantastic anticipation to be alive, you might be living under someone else’s command. In fact, if you have to wake up at the same time every day, you’re probably someone’s slave, especially if you then have to spend an hour commuting to a job you despise, because your time and life belongs to someone else.
2. You’re forced to pay for causes you vehemently oppose: If you’re a peaceful person but are forced to pay for wars done in your name, you might be a slave. Likewise, if you’re forced to pay for corporate welfare of failed institutions while you struggle to stay healthy, you’re surely a slave.
3. You expect someone else to take care of you: If someone other than yourself takes care of you, then you’re likely beholden to them in countless ways. Be careful, you might be a slave if you demand that the government give you something other than freedom.
4. You must follow laws that your Master may break: If the rule of law only applies to you and your lowly peers, while the Masters get away with murder, you’re clearly a slave in an unjust system.
5. You think mob rule is better than personal freedom: If you believe that majority rule is always better for you than free will, then you’re most certainly a slave.
6. You condemn beliefs of others you don’t even know: If you’re taught to hate the beliefs of others who have never harmed you, then your mind has been thoroughly confined by your Master’s implanted beliefs.
7. You believe people should be caged for consuming a product: If you believe that it’s okay to cage humans for consuming a product in private, then you probably love your enslavement.
8. You’re forced to wear a uniform: If you’re forced into a dress code of any kind, possibly including a suit and tie, you’re a show clown with someone to impress in order to receive your daily bread.
9. You watch over 20 hours of TV per week: And if you do that, you probably believe most of what they tell you.
10. You grin and make supplicating noises when dealing with a cop, a customs agent, or (if you’re really degraded) even a TSA goon. Clearly, you’re in fear of The Man.