Why I Fired My Broker

Tropo · 19th Apr, 2009

Why I Fired My Broker

...I’ve learned, however, that it’s quite possible to ride the Dow 30 a far way along the risk curve.
And I’ve learned another thing: I once believed that a buy-and-hold strategy would make me rich. This was a mistaken belief.
“The economy comes in cycles,” Robert Soros said. “If you believe that the economy is not cyclical, then buy-and-hold is for you.
” He taught me a Wall Street expression: “An investment is a trade gone bad.”
more....The Atlantic Online | May 2009 | Why I Fired My Broker | Jeffrey Goldberg

AsxBroker · 20th Apr, 2009

Interesting article Tropo...
There are some great things that made me laugh...see below

I took a random walk down Wall Street and got hit by a bus.
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Lol, I wonder if he pressed the walk button first?

We have substantial equity in a small but perfectly nice house in Washington, D.C., a city that is now, among other things, America’s financial-services capital, which should help keep real-estate prices steady.
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Isn't this the Global Financial Crisis which started in the US Finance industry? Surely this would mean the real-estate prices would drop as a higher percentage of home owners lost their jobs with the finance industry slowing so quickly?

Of course, even if he had said something, my financial adviser might not have relayed the message.
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Was your contact really a financial adviser? I think not...More a stockbroker who tells someone which stocks to buy or sell, not a financial planner or adviser who is involved in the client's whole situation.

I stayed away from mutual funds because I couldn’t figure out who ran them.
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The Mutual Fund manager...crickey, it would have been in the offer document (I don't know what the US call a Product Disclosure Statement but that is where the information is on who runs them).

It turns out that my crucial mistake was believing that the brokers and wealth managers and cable-television oracles who make up the financial-services industrial complex actually had my best interests at heart.
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And you forgot the media of that financial pornography which you were reading...Oh, that's right your a cog in that financial pornography...And even follow the recommendations...

“What about Chuck Schwab?”

“All brokers move products based on volume and commission,” he said.

I had a benevolent, advertising-induced understanding of Schwab. It was the billboards: “I’ve got a lot less money. And a lot more questions. Talk to Chuck.” And: “It’s not just money. It’s my money. Talk to Chuck.”

I thought that perhaps Schwab, a discount broker, might be able to answer the question Soros could not: Why had my full-service financial adviser stopped calling me?

I did what I was told, and called Chuck. His spokesman intercepted the call. I explained that I was trying to understand the role financial advisers play in the life of the small investor, but the spokesman, Greg Gable, said that Chuck would not, in fact, talk.

“We’re not going to be able to help you out,” he said.
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Lol...Does this mean he got chucked by Chuck? Surely there is a reason why Etrade, Schwab, etc are called Discount Brokers? Oh, that's right, they don't give advice...

“It used to be that in America, if you were a successful businessman, you were well-regarded. Now it seems that you are an evildoer if you’re successful, particularly in the financial world. Your profile is getting bigger. Do you think that’s good, or do people say, ‘He should be spending more time in the office and not so much out there’?”

Ackman responded: “A lot of hedge-fund managers I know are incredibly charitable and also fundamentally great people. But the press—first of all, you don’t make that much money working for the press. Take The New York Times. The New York Times doesn’t make that much money, and the people who work there don’t make that much money. So you think about people who work for the press—generally, they resent people who have financial success. A combination of that, plus some bad actors in the business, is a negative. Why did I go on Charlie Rose? Why have I been a little more public? Part of that is to blunt some of the negative associations with our industry.”

Hmmm. Yes, well.
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Very true about all media around the world...Even the author of this article couldn't say no...

“It’s all about regulating core body temperature.” For long hikes in the snow, he wears three pairs of socks, without shoes. He suggested I try this.

Other things Lundin asked me to try include making fire with sticks, eating mice—“a free source of protein in survival scenarios”—and living without electricity for a week to “see where it hurts.” Lundin himself eats mice and rats he traps at his off-the-grid passive-solar house in the wilderness, because “why waste free protein?”
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I think for the time being I'll skip this handy tips...

When I told Seth Klarman, one of the country’s leading value investors, about my visit with Cody Lundin, he said, “It’s always smart to prepare for disaster. In investing, that means holding disaster insurance. In your personal life, it makes sense to have inexpensive disaster protection, so come what may, you’re ready for any eventuality. I like to store some extra bottled water in the basement, but my wife thinks it’s too much clutter. I told her I’d share my water with her anyway.”
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And the wife would have moved his bottled water out if he said he wasn't going to share it!!!

“Successful investors like stocks better when they’re going down. When you go to a department store or a supermarket, you like to buy merchandise on sale, but it doesn’t work that way in the stock market. In the stock market, people panic when stocks are going down, so they like them less when they should like them more. When prices go down, you shouldn’t panic, but it’s hard to control your emotions when you’re overextended, when you see your net worth drop in half and you worry that you won’t have enough money to pay for your kids’ college.”
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This is so so true...Same stock, different times...

...when two reporters realize they should get into the hedge-fund business, it might be somewhat late to get into the hedge-fund business.
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Yes it was a little late...

Cheers,

Dan

Tropo · 21st Apr, 2009

Yeh...I like his humour too...
My favourite one = “I took a random walk down Wall Street and got hit by a bus.”
Last time when I took a walk down the Wall Street there were no buses (hahahaaa...), but few armed cops, and few fat guys smoking half a meter long Havana cigars.

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