Investing in stocks

[K Frame]

Depending on what happens with the stock in my company when it goes public, I might have a much better shot at retiring at 45...

If it tanks, however...

Sigh, I don't even want to think about it.

[Justin]

Since people's biggest fear, so I understand, is not having enough money, especially in retirement, maybe you can explain with your superior insight why they would then voluntarily take steps guaranteeing them that outcome.

Perhaps you'd care to explain why going to the trouble to hire a financial advisor and have him/her judiciously invest on behalf of yourself is no different than choosing not to invest at all and go blow the money on a plasma screen and 27 inch rims.

Rabbi, how much time do you spend on an average day researching stocks and keeping tabs on the market?

[The Rabbi]

Since people's biggest fear, so I understand, is not having enough money, especially in retirement, maybe you can explain with your superior insight why they would then voluntarily take steps guaranteeing them that outcome.

Perhaps you'd care to explain why going to the trouble to hire a financial advisor and have him/her judiciously invest on behalf of yourself is no different than choosing not to invest at all and go blow the money on a plasma screen and 27 inch rims.

I wouldnt say that at all.  When you buy a plasma screen TV and rims you are actually getting what you were promised.  If there is a problem with those products you can usually bring it back and get a full refund.  If your adviser gives you lousy advice and you buy a stock that loses money, will he give you your money back?

Rabbi, how much time do you spend on an average day researching stocks and keeping tabs on the market?

I am not sure why that matters.  In fact it is several hours a day.  But a person could be a much better investor spending even 5 hours a week learning and researching.

[...has left the building.]

4) Not everyone has the desire/skill/time/etc. to watch their market investments properly.

Not everyone has the desire/skill/time to do whatever.  But there are two kinds of people: those with assets and those without assets.  Someone can choose to not have sufficient assets for his retirement and so on.  But why anyone would voluntarily choose that is beyond me.  Since people's biggest fear, so I understand, is not having enough money, especially in retirement, maybe you can explain with your superior insight why they would then voluntarily take steps guaranteeing them that outcome.

You could "there are two kinds of people" about anything so that is irrelevant. There are plenty of people out there who can't believe someone would spend hours each day on the markets when you could be out on a motorcycle, getting laid, being with friends/family, reading a good book, and so on and so forth. Regarding people's fears, many people think about retirement and long term money issues as much as they think about what color coffin they want. That is a simple fact of life. I do believe I have superior insight because I actually possess something called "emotional intelligence", which is also the title of an excellent book by Daniel Goleman by the way. This so called "emotional intelligence" clearly escapes you; you have provided evidence of this time and time again because you can't even deliver friendly advice without trying to belittle someone else. Not everything in life is dollars and long term thinking.

[...has left the building.]

5) No one, and I mean NO ONE, is as talented as The Rabbi.

*smacks forehead*

Right!

I'm such an Idiot!

Tina, come get your food!

Don't be jealous that I've been chatting online with babes all day. Besides, we both know that I'm training to be a cage fighter.

[Justin]

I thought the only people who quoted that movie were emos who wanted to look cool to their friends.

That's preposterous.  Everybody knows emos aren't cool.  Even emos.

[Justin]

I wouldnt say that at all.  When you buy a plasma screen TV and rims you are actually getting what you were promised.  If there is a problem with those products you can usually bring it back and get a full refund.  If your adviser gives you lousy advice and you buy a stock that loses money, will he give you your money back?

So, Rabbilicious, what you're saying is that no one with a financial advisor has ever made money?

Now, it could be argued that if I invested as wisely as a financial advisor, I would come out ahead because I wouldn't be paying him to do the job.

But I guess that maybe you never figured out that some people don't want to do that and don't mind paying the extra cost, especially if it means delegating a job to someone who is eager to do it, rather than doing it halfassed on their own.

But I guess that when I'm on the street in my retirement years, begging for change and food, you'll be able to spare a dollar or two, since you're Mr. Bigshot Moneybags.

[...has left the building.]

I thought the only people who quoted that movie were emos who wanted to look cool to their friends.

That's preposterous.  Everybody knows emos aren't cool.  Even emos.

Death, you are my bitch lover!!!

[...has left the building.]

But I guess that when I'm on the street in my retirement years, begging for change and food, you'll be able to spare a dollar or two, since you're Mr. Bigshot Moneybags.

Hey dude I'm first!

I'm guessing that you're in your mid 40's because you're old enough to be a miser but not old enough to have a brush with death (which cuts way down on the ahole-dom, even online). You talk about rental properties, stocks, IRAs, and all that with fairly solid knowledge. Using my clientele as a yardstick I'd say the Rabbi is worth at least $25M...

...you're worth at least that right Uncle Pennybags?

[Justin]

Dude, I bet that, if the Rabbi wasn't already rich beyond the Wildest Dreams of Han Solo, he would think about being a financial advisor to people, in order to help them grow their wealth, and to get wealthy himself.

But then he'd realize that he'd have to become what he hates, and he'd be all "Screw that, yo!"

And it would make Chuck Norris cry for the first time in his life.

[...has left the building.]

Dude, I bet that, if the Rabbi wasn't already rich beyond the Wildest Dreams of Han Solo, he would think about being a financial advisor to people, in order to help them grow their wealth, and to get wealthy himself.

But then he'd realize that he'd have to become what he hates, and he'd be all "Screw that, yo!"

And it would make Chuck Norris cry for the first time in his life.

Then he would bottle Chuck's Tears (TM) and sell it to cure cancer, being the savvy businessman that he is.

[Justin]

Forget Napoleon Dynamite, this thread makes me want to cut myself and listen to The Cure.

I wish my lawn would listen to The Cure and then cut itself.

[brimic]

Jeez keep ripping a guy for having an opinion. I don't have a financial advisor and have done very well over the last 16 or so years that I've done-it-myself. Investing is something you learn by doing, like riding a bike or building a house. If you aren't willing to try to do either, you will never learn how to do it. You'll make mistakes, I have, but you learn from them and move on. Some people don't have the courage to take on the responsibility of their future and at best might leave it up to someone else. I spend probably 10-15 hrs a week researching, reading investing books, taking online seminars etc to educate myself. I have a vested (no pun intended) in doing the best with my money as I set aside a lot of money out of each paycheck that I could be spending on trinkets, junk, and other momentary satisfactions instead of my future. 10 hrs a week is nothing to   me, most people waste more time a week unfunny sitcoms with laugh tracks built in to cue them in to when they are supposed to laugh, or watching overpaid millionaire athletes chase a ball around with less skill than the golden retreiver I had as a kid . If you want to talk about emotional intelligence, how much time of your week is wasted on mindless crap when you could be educating yourself on securing your future?

[...has left the building.]

Jeez keep ripping a guy for having an opinion.

It isn't the opinion, it is the attitude.

If you want to talk about emotional intelligence, how much time of your week is wasted on mindless crap when you could be educating yourself on securing your future?

I don't understand what planning for the future has to do with emotional intelligence.

[Justin]

What Dan said.  I've always had a problem with condescending know-it-alls.

I don't watch sitcoms or ballgames.  Not to say I don't waste time in other ways, but I'm also preoccupied with several other important things in my life as well.

[The Rabbi]

I wouldnt say that at all.  When you buy a plasma screen TV and rims you are actually getting what you were promised.  If there is a problem with those products you can usually bring it back and get a full refund.  If your adviser gives you lousy advice and you buy a stock that loses money, will he give you your money back?

So, Rabbilicious, what you're saying is that no one with a financial advisor has ever made money?

Now, it could be argued that if I invested as wisely as a financial advisor, I would come out ahead because I wouldn't be paying him to do the job.

But I guess that maybe you never figured out that some people don't want to do that and don't mind paying the extra cost, especially if it means delegating a job to someone who is eager to do it, rather than doing it halfassed on their own.

But I guess that when I'm on the street in my retirement years, begging for change and food, you'll be able to spare a dollar or two, since you're Mr. Bigshot Moneybags.

I am actually going to answer this.

Some people don't care about anything other than the here and now.  That doesnt make it right.  Some people won't spend 40 minutes a day 3 times a week on exercise even though they are overweight with high blood pressure and bad cholesterol readings.  Reminding them that strokes are pretty debilitating is useless since they would rather spend the time drinking beer and watching NASCAR or spouting their worthless opinions on THR.  The only word for such people is stupid.  And you can't fix stupid.
Similarly, no one manages your money as well as you can.  Are there good advisors out there?  Sure.  But for every good one there are probably a zillion clowns and losers and separating them is tough.  And if someone doesn't bother to get a financial education it isnt tough--it is impossible.
But maybe you are better off letting someone else manage it.  Maybe you shouldn't learn basic principles of investing so you can tell the difference between preferred stock and livestock.  

More to the point: from 1998 to 2003 millions of investors lost trillions of dollars listening to advisors, either stock brokers or mutual fund managers.  The record of such managers is appalling, whether we are talking about '98 to 2003 or 1987 or 1973.  They charge high fees and deliver sub-standard product.  The industry has periodic insider trading scandals and other mismanagement issues and has had them for as long as I can remember, which is over 30 years.  The vast majority of investors either lose money outright or have results which are sub-par.  So blithely turning over your hard-earned dollars to someone who is a self-proclaimed genius seems just a little risky.
How does your advisor make his living?  Is he a professional investor or a salesman?  How much money did he personally make in the market last year, last two years, last five years?  And what do you think he will answer when you ask these questions?  Do you think it is rude to ask someone who holds himself out as an expert whether he follows his own advice and what his track record is?  I dont.  I think those are excellent questions.
If you want to see a real expert look at Buffett and Berkshire-Hathaway.  He has made billions of dollars for his investors but most of his wealth is also in the company.  If your advisor is on a par with Buffett then you are in great shape.  But there arent too many like him around.

[280plus]

I met an "adviser" once who I SWEAR had a staged call come in while I was at his desk so that he could tell whoever was on the other end of the line how well his stock choices had done for them. I'd almost bet he had a button rigged so when he pushed it the phone rang. He was very adamant about my turning all my assets over to him. THAT never happened.

[Art Eatman]

The Rabbi is doing what I've said several times:  Do your own due diligence before sticking any money anywhere.  I think where folks are all crosswise is "turn your money over to..." which ain't what any half-smart person does.  You can go to AGEdwards or MerleLynchpin and tell the broker what you want to do.  BUT, you can discuss your ideas with him, using him as a sounding board and doing some thinking out loud with somebody who's in the business.

You don't even have to use only one or the other company, for that matter.

And Google is not very expensive, if you want to check out what some broker is telling you.  You can quickly find out if he's sharp or is merely wanting to churn an account.

One place where for sure I'll agree with The Rabbi:  Too many people want the here-and-now instant gratification to ever have enough disposable income with which to invest.  I'll do a one-man standing ovation on that.

As for spouting off at THR, I've come to strongly believe, "The less that is known, the stronger the opinion."

, Art

[garrettwc]

I'm certainly no expert on financial stuff. I've asked a few questions here and am still out reading and trying to learn.

One thing I have figured out re: financial advisors/brokers/whatever you call them. Most of them have no money. They are mortgaged to the hilt with payments on the trendy condo in the right 'hood, the BMW, and the credit card bill for all their designrer suits. They're about 1 paycheck away from the cheese line because they have spent it all on impressing you.

Their income is not from their investments, but from the commissions they get selling you all manner of things. Sort of like a used car salesman. You ever give a car dealer $30 grand of your hard earned greenbacks without checking the product out for yourself? Then why on earth would you give the same amount of money to a guy who has little or no net worth who says he can make you rich?

[Justin]

I love how Rabbicide's responses to me are all phrased as completely black-and-white, either-or choices.  I have a financial manager, therefore I must not know anything about basic investing, etc.   Cracks me up.

Reminding them that strokes are pretty debilitating is useless since they would rather spend the time drinking beer and watching NASCAR or spouting their worthless opinions on THR.

And some of us can't even spout our opinions on THR.

More to the point: from 1998 to 2003 millions of investors lost trillions of dollars listening to advisors, either stock brokers or mutual fund managers.  The record of such managers is appalling, whether we are talking about '98 to 2003 or 1987 or 1973.

You imply that individual investors came out of that ok.  Uh, no.  Nearly everybody took a dive when the tech market fell.  Before that market, I recall seeing tons of ads on television touting how easy and simple it is for you to sign up with XYZ online stock trading website and do it all yourself.  Don't see much of that any more.  Even the current Scott Trade ads phrase it in terms of "trading is difficult, but you can do it."  That hardly measures up to the ads in the 1990's where they made it look like anyone could do all their own trading on line and it was a license to print money.

The vast majority of investors either lose money outright or have results which are sub-par.

Source please.  Also, define sub-par.

So blithely turning over your hard-earned dollars to someone who is a self-proclaimed genius seems just a little risky.

I am neither blithe nor is my broker a self-proclaimed genius.  We both tend to be rather conservative in investment strategies.  (Him a touch more than me.)

How does your advisor make his living?  Is he a professional investor or a salesman?  How much money did he personally make in the market last year, last two years, last five years?  And what do you think he will answer when you ask these questions?  Do you think it is rude to ask someone who holds himself out as an expert whether he follows his own advice and what his track record is?

Dude, I do happen to know most of that info, and were I to ask on the other, he'd provide it.

Do your own due diligence before sticking any money anywhere.

Of course.  And I'll admit to following most of the funds that I'm invested in on a semi-regular basis.  In addition to being on the lookout for new funds or stocks that hold promise.

Too many people want the here-and-now instant gratification to ever have enough disposable income with which to invest.  I'll do a one-man standing ovation on that.

Of course.  Bonsai Tree, not Kudzu.

[The Rabbi]

I love how Rabbicide's responses to me are all phrased as completely black-and-white, either-or choices.  I have a financial manager, therefore I must not know anything about basic investing, etc.   Cracks me up.

Justin, the purpose of the discussion is to help people take control of their finances and ways for them to begin educating themselves.  If your advisor is wonderful then that's great.  But for people without access to wonderful advisors the answer is to learn about investing to become a better investor and not be at the mercy of some self-proclaimed professional or the advertising machine that the financial world is filled with.
And Justin, it is not about you.

[Justin]

Justin, the purpose of the discussion is to help people take control of their finances and ways for them to begin educating themselves.  If your advisor is wonderful then that's great.  But for people without access to wonderful advisors the answer is to learn about investing to become a better investor and not be at the mercy of some self-proclaimed professional or the advertising machine that the financial world is filled with.

Indeed.  And there's more than one way to do it.  That's been my contention all along, which you have continually derided.  At no point did I say one should just hand their hard-earned ducats over to anyone who claims to be a financial expert.  It's something that one should be careful about, but there are good advisors out there.

And Justin, it is not about you.

Don't be preposterous! It's all about me.

[The Rabbi]

No, you obviously don't read your own posts, much less mine.
You wrote:

If you're looking for good, long-term performance in a conservative investment, consider looking at mutual funds.

Find a professional who can help you flesh out your long-term financial goals.

That doesnt look like advocating "more than one way to do it" to me.

My advice was:

The best investment is in yourself.  Buy good books and periodicals about companies and investing.

That doesnt look like deriding anyone's contention, except those who give the kind of advice you did.

For educational purposes I'll put this one on the table.
In 1996 Fidelity's Magellan Fund was considered one of the best, if not the best fund.  It was conservative and had a great track record under the legendary Peter Lynch.  It was recommended by probably 3/4s of all investment advisors.  If someone had taken your advice and invested in the fund "for the long term" (and ten years sounds pretty long to me), guess what?  His returns would have been sub-par:
http://quicktake.morningstar.com/Fund/TotalReturns.asp?Country=USA&Symbol=FMAGX

What is sub-par?  It is not exceeding what he could have gotten elsewhere with less risk.  In this case that would have been buying an index fund in the S&P 500.  If someone had followed your advice and thrown $10k at Magellan in '96 he would have today about $22,000. If he had put it in the index fund he would have closer to $25k.  And I do not think that counts fees and expenses.  Anyone interested in fees and expenses should go to the SEC website where they have a calculator and you can see what they do to return.  
Doing this for both Magellan and a typical index fund I find that the index fund with less than 1% expense ratio (which is about the norm) would return over $6,000 more than Magellan with its 3% expense ratio.  That is assuming they have the same rate of return.  In fact, Magellan trailed the S&P 500 over those 10 years so your result would be even worse.  If you were to add in fees for an advisor the results for Magellan will be even worse.
This is why my advice was to spend time (and maybe money) reading books and articles on investing.  That is the best investment of all.  Yes, Justin, even for you.

[...has left the building.]

The Rabbi- I'll let Justin respond to all of the other stuff but I can't help but be curious...what was your average rate of return for the past 5-10 years or so? You are constantly drilling the idea that most people make terrible investors so it makes me wonder if you're kicking ass or just hiding behind index funds and a copy of Random Walk.

[Justin]

Rabbledabble, perhaps you really ought to stop arguing with the Justin in your head.  I'm right here, big guy.

In 1996 Fidelity's Magellan Fund was considered one of the best, if not the best fund.  It was conservative and had a great track record under the legendary Peter Lynch.  It was recommended by probably 3/4s of all investment advisors.  If someone had taken your advice and invested in the fund "for the long term" (and ten years sounds pretty long to me), guess what?

1) So you cherry picked one mutual fund that has had a non-stellar return, during a point in time when the stockmarket, as a whole, was not doing well over the intermediate term and that's an indictment of all investing via mutual funds?  Ten years isn't a long term investment by any standards that I'm aware of.  In fact, if you only have ten years before needing to cash out, then you'd be far better off going with something that's more aggressive.  If I were a less trusting individual, I'd suspect that you were being deliberately disingenuous.



Nice straw man, chief.


2) Where did I ever advocate investing in the Magellan Fund?  Please, feel free to post a hyperlink to a post by me on this forum, or anywhere else on the internet where I sing the praises of the Magellan fund.

3) But what if one were to invest in, oh, I dunno, perhaps the Munder Small Cap

Well, I'll be damned.  12.5% return, and it beat the S&P 500 in what would be considered a short-term hold.

That doesnt look like advocating "more than one way to do it" to me.

Hey, if it works for you, that's just fantastic.  In fact, I've already said the equivalent of that several times in this thread.   Am I going to advocate what has worked for me? Sure.  But, as I already stated, that doesn't mean it's the only way.

You, on the other hand, have made numerous condescending posts that vascillate wildly between stating that anyone can do this and that the average person doesn't know what they're doing.  Yet, you sneer at Joe Average who is willing to admit that he's smart enough to know what he doesn't know and seek out someone who does know more than himself.