RIDDLE ME THIS.....

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moneyadvisor's picture
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What do these people have in common -
Jack Welch....... & any other CEO of a dominant company, during the most flush period of our countries history.
John Bachman........ (Edward Jones MP from 1980 - 2000......can you say whew, wiping your brow, as if you just missed getting pummled by a freight train)
Bill Clinton........ Dem or Rep.......you have to admitt, the only thing he had to stress about, is how to keep track of which lies he used to cover up some personal F up.
John Travolta......thanks Quinton - instead of a "pre owned" 911, I now park a small fleet of airplanes in my driveway.
Justin Timberlake, P diddy and any other no talent boy bands, or thugs....(Thanks to to the masses with $20 in their pockets)
Let's throw genius mortgage brokers in there.
And my personal fave........Hedge fund managers.
TIMING!
     

exdrone's picture
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One would have to imagine the writing was on the wall when Bachman left.  I did hear though that Hill was instrumental in negotiating the original rev sharing agreements and that is what really helped him climb as a GP.  If that's true, he got what he deserved timing aside.

skeedaddy2's picture
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Joined: 2005-09-14

Such is life, isn't it?

BigPayDay's picture
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Edward Jones has not been successful because of timing or luck. Since 1980, the date mentioned above, they have grown their offices five fold every ten year period. That isn't by chance. Take a look:

http://www.edwardjones.com/pdf/PressKitMap.pdf

BPD

______________________________________
The grass is still GREENER where you water it!

Starka's picture
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Billions of flies eat sh1t too.
That doesn't mean I want a heaping bowl full.

The Truth's picture
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People give Bachman and the current regime all the credit.  How much money did Teddy Jones leave the firm when he died? 

Cowboy93's picture
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How about Mark Cuban?!  Happened to have a great idea that worked--not luck or timing.  Selling in 1999--priceless.
Although, all the folks mentioned above did "make their own luck" to be in a position to cash in.  You could say the same things about anyone that started in the financial advice business in the early 90s....20%+/yr in any investment ('95-'99) helps you grow a business pretty quickly...

moneyadvisor's picture
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Absolutely - They made there own luck, and ....they took the ball and ran with it. I was just trying to have some fun. Being in this business between 82' - 99' Helped alot of brokers.

troll's picture
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BigPayDay wrote:Edward Jones has not been successful because of timing or luck. Since 1980, the date mentioned above, they have grown their offices five fold every ten year period. That isn't by chance. Take a look: http://www.edwardjones.com/pdf/PressKitMap.pdf BPD ______________________________________ The grass is still GREENER where you water it!
 
Got any information on the number of offices opened and closed in the US each year? All I ever see are closed Jones offices. I've never seen a closed Merrill office....

moneyadvisor's picture
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BPD -
FYI - For the majority of Bachman's 20 year tenure, business was easier to get......for a host of reasons. I really do think they have come to a point, where they need to do something diffeent. As MB said....There are a ton of vacated offices, that have housed 5-6 brokers in  a short period of time.

BrokerRecruit's picture
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Joined: 2005-04-19

I agree.  I live in a town that is a suburb (10-15 miles out) of a city with a 500k+ population base.  No one from this larger metro area really ventures into my city, which is more of a commuter town, of 25k people.  The city I live in has an average income of $30k per working adult.  Not a bunch of high net worth people.  In this city, there are 9 EDJ offices. 
Oh, I failed to mention that of that 25k people in the city, 5-8k are college students.
Is there really a need for that many offices?  I personally don't think so.

zacko's picture
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Joined: 2004-12-01

BR,
Ill bet that 2 of the nine office account for over half the revenue and the other seven are struggling.
 

Malcolm's picture
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Joined: 2004-12-02

Then the new IRs are told to go out and knock on the doors around their office that have been knocked on many times before.  Often times they uproot their lifes to start out in an office in a situation like the above.  It's a sad thing because they are almost always doomed to failure and the vets in the area know that.  Yet Jones keeps craming them in with out any thought to what they do to these peoples lifes.  After five years of nonstop work they may be making 70k a year if they are lucky enough to make it, which the vast majority in these areas are not.

exdrone's picture
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BigPayDay wrote:Edward Jones has not been successful because of timing or luck. Since 1980, the date mentioned above, they have grown their offices five fold every ten year period. That isn't by chance. Take a look: http://www.edwardjones.com/pdf/PressKitMap.pdf BPD ______________________________________ The grass is still GREENER where you water it!
These references to the Jones website are priceless.  You know there are a lot more McDonald's restaurants than there were 20yrs ago too,  that doesn't mean the food is healthy and the employees are rich....It's the shareholders and franchisees who make all the money.  At Jones that would be the GP's and the....Oh wait, the GP's again
BECAUSE YOU DON"T OWN YOUR BRANCH!!!!!!

BrokerRecruit's picture
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Joined: 2005-04-19

There is one guy out there that does fairly well (average I would estimate).  I would love to invest with him, but...I want a stronger platform.

BigPayDay's picture
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Joined: 2005-01-10

BrokerReject,

That's what my clients care about... strong PLATFORMS.

BPD

exdrone's picture
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It's probably something you should care about on their behalf.

BigPayDay's picture
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Ex,

So what's your favorite Platform?

BPD

troll's picture
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BigPayDay wrote:BrokerReject, That's what my clients care about... strong PLATFORMS. BPD
You don't even know what a PLATFORM is because YOU ONLY HAVE ONE!  Touchdown bonds and A-Shares galore!
Do y'all still carry touchdown bonds in your inventory?

troll's picture
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Starka wrote:
Billions of flies eat sh1t too.
That doesn't mean I want a heaping bowl full.

Great Line! 

exdrone's picture
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BigPayDay wrote:Ex, So what's your favorite Platform? BPD
Don't have a favorite.  But the idea of a fund research dept that follows both load and no load products, as well as a fee based platform that can hold etf's, and individual equities works for me. I also like being able to offer all of he funds from the fund families I learned so well while at Jones.  The fact I can do this while keeping fixed income and cash in a traditional brokerage acct without a fee attached solves most of my problems.

zacko's picture
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BPD,
You should have quit this argument when you were only a little behind.
I'm not sure how long you have been in this business--but realizing that there are many other platforms available to service clients than A shares and 25 year CMO's in a commission account is a baby step.  The giant leap comes when you make the move to indy realizing you have been selling yourself, your clients, and your family short all these years by remaining with a firm that claims to be many things that they are not. 
I can assure that it's such an eye opening experience (going indy) that many ex-EJ people feel passionate enough about on this forum to share information with those who remain at Jones.   Some might say bitterness...but realizing you have been duped and the naysayers were indeed correct creates a moderate degree of resentment.  Gratitude would be far more appropriate than your current attitude.  I know I am thankful to those who were helpful to me. 
 

BrokerRecruit's picture
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Let's see here, BigJA (figure it out, oh creative one) - I want to know that I have more options at my fingertips if I would like to pursue something.  Oh, and I'm a younger guy and don't have $500k yet to put in your fee-based platform.  So...I would like to go to someone else that can put my money in something that serves ME better.  Not a cookie cutter piece of crap platform (you started the mudslinging, so I'll apparently continue it) that doesn't serve ME, as the client. 
Are you that much of a joke to realize that EVERYONE is not best-served by the "best sales force" in the history of the galaxy? 
Tell me this, BPD - can you place a naked straddle for clients, or futures?  There are, believe it or not, clients that would like to invest in these.  Not as many as C-shares, but there are some.

Player's picture
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Joined: 2004-12-08

BigPayDay.........you did it again.......you got nailed
Wake-up !  There is another world out there
HAPPY THANKSGIVING

BigPayDay's picture
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zacko wrote: BPD,
You should have quit this argument when you were only a little behind.
I'm not sure how long you have been in this business--but realizing that there are many other platforms available to service clients than A shares and 25 year CMO's in a commission account is a baby step.  The giant leap comes when you make the move to indy realizing you have been selling yourself, your clients, and your family short all these years by remaining with a firm that claims to be many things that they are not. 
I can assure that it's such an eye opening experience (going indy) that many ex-EJ people feel passionate enough about on this forum to share information with those who remain at Jones.   Some might say bitterness...but realizing you have been duped and the naysayers were indeed correct creates a moderate degree of resentment.  Gratitude would be far more appropriate than your current attitude.  I know I am thankful to those who were helpful to me. 
 

Zacko,

If you are doing so well then why in the world are you spending $2,000 monthly in advertising and Marketing costs? Seems to me if you spent a little less time on this board and a little more time asking your best clients for referrals (i.e. "cloning" your best clients) you wouldn't need to spend $24,000 a year on marketing and advertising.

BPD

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BigPayDay This is more your color
TOP 10 REASONS MY CLIENTS ARE GLAD I LEFT EDWARD JONES:
10. My clients also like the FACT my FIRM wasn't hit for 75 million in fines and facing close to 1 Billion in CA settlement.........
  9. FEE BASED BUSINESS (NO I WON'T EDUCATE YOU ON WHY IT'S BETTER THAN A SHARES) MY CLIENTS LOVE IT
  8. WHEN MY CLIENTS COME IN IT IS FOR SERVICE, NOT SELLING THEM THE "FLAVOR" OF THE MONTH LIKE YOU STILL DO...........DO THEY STILL HAVE THOSE SATURDAY PROMOTIONS, LIKE SELLING A "STOCK" or  'BOND" or A PARTICULAR "MUTUAL FUND"  OH, YEA BFD, THAT'S REALLY TAKEN CARE OF YOUR CLIENT ISN'T IT? Do you think they don't know it?
   7. BY THE WAY MY CLIENTS DO READ THE "WSJ" SO THEY ARE VERY PLEASED I LEFT..........They relate to the articles.
    6.  The don't have a newbie that Edward Jones put in my old Office, that's still wet behind the ears
   5.  They really love our customer statements, it really smokes Edward Jones statements
   4.  They love our financial plan, that is reinforced every quarter when we have our review
    3. They love that we don't bug them with unnecessary crap that is mailed in their Quarterly statement.
     2. They LOVE NOT PAYING HIGH COMMISSIONS........
     1. THEY LOVE THE FACT THERE IS MORE THAN ON IR IN OUR OFFICE, AND ALL OF OUR STAFF IS LICENSED SO THEY DON'T HAVE TO CALL SOME DIM WIT IN ST. LOUIS TO GET AN ANSWER...... 
 HAPPY THANKSGIVING

zacko's picture
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BPD,
A shot at me?  Ok--I'll respond.  24k is nothing out of 600k net before office overhead.  It's less than 5% dude.  I'll be honest as I always have been since day one...I am thinking of reducing the advertsing even more.  I'm sure it has some intangible value, but I am doing it because I can afford it.  Name recognition has helped me over the years and my advertising is centered around that.  However, most of the business I recieve is referral based and I feel has little to do with advertsing.  I will say that far too many noob brokers think advertising is the ticket to success.  IT IS NOT.  In fact, I feel advertsing is probably the worst return on your money you can get in this business.  If one ad in the paper runs you $200 and is only there for one day....it may or may not be worthwhile.  You could buy ten CPA's lunch for $200 and would have a much bigger impact in my view.
Truth is on advertsing is that to obtain sucess, you have to stick with it over a period of time and it should NEVER be the cornerstone of building your business. 
And, as far as posting on this forum--I seem to have the time.  I mean no harm towards Jones or you--but only to provide some facts to those who have been kept in the dark--just as I was.

BigPayDay's picture
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Zacko,

My thoughts exactly except for the last paragraph.

BPD

Malcolm's picture
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The thing I like the best after leaving Jones is the ability to build a fee based business any way I want.  I manage most all my accounts myself with discretionary authority.  I left Jones knowing very little about managing stocks and now I have become quite good at it and  my business has grown faster than I ever could have imagined. 
My days are so different now.  I spend nearly all my time managing my positions and reviewing accounts which are almost all fee based.  I feel very grateful for this opportunity to run my business the way I want to that I never would have had at Jones.  Now I work hard but my life is so much less stresful because I have a fee based business that is better than a fairly average guy like me could have ever have imagined.     
I am set up on the mates plateform to do multiple trades in all my accounts at once.  Everything is top notch and I feel better than ever about what I am doing and the service I bring to the table for my clients. 
BPD-If your are successful at EDJ just imagine what you could do being indy or at a wire house with all the tools you can dream of and some you probably don't even know exist.  Just my thoughts.
Happy Thanksgiving!  

The Answer's picture
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Malcolm,
The last thing I want to do is manage discretionary accounts all day. Besides, can I really do it better than American Funds or any other good institutional or seperate account manager? You are setting yourself up for disaster and much liability should the market correct again like it did back in '00 - '02.
You say your life is less stressfull doing business this way. I don't see how.
TA 
You said "I spend nearly all my time managing my positions..." This is what you pay an assistant to do. You do not understand this business.
 

zacko's picture
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Answer,
Many large clients have fee based discretionary accounts with their advisors.  We have a few on the books--and they are far easier to manage as you don't have to call the client every time you place a trade.  Most of the time I will anyway just to provide good service.
To compare any of that to American Funds shows your experience level in the business.

csmelnix's picture
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Play a game here:  For arguments sake let's just say Jones and LPL and RJFS are equal in terms of what they provide.  Why would you as an advisor want to affiliate with a b/d that keeps $.60 of every dollar YOU earn v having absolute ownership?  Why would you allow some entity that doesn't know your business from Adam control your margins for you?  Why would you be content with limits v more open architecture?  Why would you choose a firm that forces you to have 2000 plus clients in order to grow and stay profitable?
Even if you believe Jones' way of A share only, etc.. is the right thing for all of your clients, why would you do it under their umbrella given the questions I mentioned above?

Malcolm's picture
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Answer. 
If using American Funds works for you that's great.  First of all I really love managing portfolios myself.  Maybe our clients are a bit different.  My minimum account size I will take is now $250,000 and on average a new client has a net worth of a few million dollars.  Average new account household this year is around $600,000.
My clients want special attention and at least for me this is a way to provide it.  I will put myself up against your American funds anyday and the funny thing is, I like down markets.  That is when I can really provide value added service.  I can do a lot in these accounts that you can't with your American funds.  For example I may buy foreign governmen bonds, I may short stocks, I may add hedge fund positions.  I also have a guy who has been a commodites trader for 23 years in my office who I sub that part of the accounts out to to manage when appropriate.  It's a different thing than what you are selling.
I didn't want to be a salesman with the simplist business I wanted to be a guy who managed portolios for rich people with a great annuitized business.  This sounds hokey but I want to be proud of what I do and I guess being a salesman with the most simple business around pumping mutual funds to the masses didn't make me feel like I was doing I could be proud of. 
If it works for you though then hey more power to you. You can make a lot of money with your business model.        

Malcolm's picture
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Sorry for all the type-o's. 

Bill Fakkland's picture
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You're right, Malcolm. What "rich" guy wouldn't rather have a former shoe- salesman/ Jones broker making all those important decisions? Those American Funds managers are just a bunch of over-educated dimwits. Economics PhD from Harvard or London? No match for Malcolm's Diploma in Farm Implement maintenance from DickWeed School of Technology. I have to admit, if it were my millions, and of course I will never have millions as a Jones guy (oh wait..I have a million, my bad)..I would galdly hand it over to Malcolm the magnificent and his new best friend, the 23 year commodity /futures trader guy. And the kicker is this..Malcolm can fix your  tractor too!

troll's picture
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Bill Fakkland wrote:
You're right, Malcolm. What "rich" guy wouldn't rather have a former shoe- salesman/ Jones broker making all those important decisions? Those American Funds managers are just a bunch of over-educated dimwits. Economics PhD from Harvard or London? No match for Malcolm's Diploma in Farm Implement maintenance from DickWeed School of Technology. I have to admit, if it were my millions, and of course I will never have millions as a Jones guy (oh wait..I have a million, my bad)..I would galdly hand it over to Malcolm the magnificent and his new best friend, the 23 year commodity /futures trader guy. And the kicker is this..Malcolm can fix your  tractor too!

 
ROFLMAO, a guy in a strip-mall office with 1970s technology, who's not much more than part of a sales force for a mutual fund family is trying to play "mine's bigger than yours".....

Bill Fakkland's picture
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Hey Mikedickhead, our technology is clearly 1980's. Strip malls give us easy access to Chinese food. And as anyone on this board knows..mine IS bigger than yours. I know this because people who are successful don't use ROFLMAO like a true moron. Why don't you and Player have a ROFLMAO-emoticon-bold type-capital letters one on one? Maybe after you're done you can pick up my order of Kung Pow..and skip the plastic forks, I have set from a fund company. You can take the areshole out of the Jones office and put him in an Indy backwater, but the arsehole still remains. It's amazing how smart you doorknobs get one day after leaving Jones.

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Bill,
You have so clearly bought more into the hype than I could have envisioned.  No one ever questioned the academic acheivements or even the management expertise of American Funds. 
If that's the best you can do...then run with it.  But, truth is--it's the ONLY thing you can do.  Maybe now you have Franklin and a fund or two within the other families that are usable--but really--your only real option is selling A share front load funds while placing most of the business within one or two families due to breakpoint issues. 
Being able to offer any share class with the same payout (90%) as well as offer fee based programs along with a much better bond inventory is what sets me and many others apart from you.  It's a fact that is indisputable.  Spouting the company line instead of having an original thought only makes you look even more inexperienced than you appear to be. 
I'm glad you have your million...and so do I.  Incidentally, I got mine 20 years younger than you did.

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The Answer wrote:
Malcolm,
... You are setting yourself up for disaster and much liability should the market correct again like it did back in '00 - '02.

Do you know what an investment policy statement is?  Personally, I can admit that I didn't until I left the greatest salesforce.  Look it up and it might answer some of concerns about liability in a discretionary account.

exdrone's picture
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Bill Fakkland wrote:
You're right, Malcolm. What "rich" guy wouldn't rather have a former shoe- salesman/ Jones broker making all those important decisions?
BF,
Do you really consider yourself the equivalent of a shoe salesman.  Money isn't the only reason to go independent. Self respect is another.  At least Malcolm can put "former" in front of his shoe salesman title.  You could too with a little effort.
Explore your options at www.joinlpl.com or www.advisorchoice.com .

BigPayDay's picture
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exdrone wrote: The Answer wrote:
Malcolm,
... You are setting yourself up for disaster and much liability should the market correct again like it did back in '00 - '02.

Do you know what an investment policy statement is?  Personally, I can admit that I didn't until I left the greatest salesforce.  Look it up and it might answer some of concerns about liability in a discretionary account.

Ex,

So are you saying because a client's account has an IPS that the advisor has no liability if the account underperforms?

Highly unlikely.

What say you?

BPD

troll's picture
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The Answer wrote:
Malcolm,
The last thing I want to do is manage discretionary accounts all day. Besides, can I really do it better than American Funds or any other good institutional or seperate account manager? You are setting yourself up for disaster and much liability should the market correct again like it did back in '00 - '02.
You say your life is less stressfull doing business this way. I don't see how.
TA 
You said "I spend nearly all my time managing my positions..." This is what you pay an assistant to do. You do not understand this business.
 

Perhaps sir it is YOU who do not understand this business......

BigPayDay's picture
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Broke Joe,

So O 'Mighty One explain to us this business we are in.

BPD

troll's picture
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BigPayDay wrote:Broke Joe, So O 'Mighty One explain to us this business we are in. BPD
I am far from broke, sir. ;-)
If you have a process, managing discretionary money is  no more stressful than nondiscretionary business with clients.  In fact, I've often found it is less stressful because it puts me in a more professional and consultative role with the client instead of a salesman.  It also often makes it much easier for me to make rational clear-headed decisions about the client's best interest, rather than dealing with their irrational swings between fear and greed at market extremes, and obsession with fads and short term news items.
For what it's worth, by the way, most of the time liability is not measured by actual performance(or lack thereof) but rather whether the manager/advisor was PRUDENT in his investment decisions(or reccomendations) and whether or not he/she followed a logical process.  Not the outcome of that process.
Not as hard to beat or at least match many of these separate account managers as you might think.....considering that most of them never beat the relevant benchmarks anyway.  While I have a decent book of business, I manage far less than they.  I don't have to worry much about moving the market when I act to purchase a stock, bond, convert, or closed end fund.  They do.  In fact, most of them can't purchase CEF's because there's not enough liquidity.  Any decent sized fund will end up taking days or weeks to unwind a stock position when they're concerned that things are deteriorating, or else they have to risk moving the stock.  Even if they're careful and patient, the street could get wind that they've got a lot for sale and that can hurt them on a price basis.  I don't have to worry about that...I want out I can get out in hours or even minutes.
Most big money managers tend to cluster around the main stocks in their benchmark indices....that's because they're compensated by how they perform 'relative' to the index.  My clients don't care about 'relative' outperformance.....they care about bottom line absolute performance with a reasonable amount of risk.  That's what I've found most people care about, to be honest.  So anyway-when these big money managers are out there buying the top 10 stocks in the S&P 500(or whatever index they hold) how are they actually going to generate true alpha?  True excess returns.
Never mind the fact that the culture in most big money management shops on the street is such that nobody really sticks their neck out.  Risk is good, properly embraced and managed, as that is what allows one to earn excess returns.  One doesn't generally make real money on the street by conforming to the conventional wisdom of the moment.
Money management at many of the big shops these days is like left handed pitchers in major league baseball.  Bastions of mediocrity clad in expensive suits.  But that's a topic for another post.
As you've said yourself in other posts, BPD, there are numerous ways in this business to skin the proverbial cat.  That, sir, is one of the things that makes this business great.  Also, as you've commented, what it's really about is acheiving one's successs by making a truly meaningful impact on the lives of one's clients...by helping them reach their goals.
So anyway, I'm rambling by this point.....but that's my take on the world.  It may not work for everyone, but it works for me.
As a brief postscript-I'm not suggesting that mutual funds or professional money manangers stink.  There are some good ones out there, too.  Just that they aren't the end-all and be-all that some of the young pups think.  They have their negative points as well as positive aspects.
As another one of our regulars sez....just my 2 cents...

troll's picture
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BigPayDay wrote:Broke Joe, So O 'Mighty One explain to us this business we are in. BPD
Oh and by the way....I outperformed the markets and most fund managers and SMA managers by pretty wide margins during the 00-02 market correction.....because I was as concerned about managing risk as I was about chasing returns, because I was willing to question what many others believed to be absolute truth.....and I had a discpline that I stuck to.....

Greenhills's picture
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Dear Bill F.
What planet do you live on you uninformed condescending little pea brain?   I don't know you or the other guy who manages his clients money himself but let me tell you a few things. First of all you need to get some training from some successful brokes because you obviously have not been around any big producers and you are obviously a small to medium sized producer.
For you to get on here and compare mutual funds to investments that are managed on a discretionary basis by an educated advisor is beyond belief.   When you critisize people who do this you critisize me.  Normally i like to sit back and read this site occasionally because ignorant people like you are good for amusement when I am bored. 
But I cant let you get away with your post on this string. You need to apoligize for being so stupid and then you need to go get some training so you understand what goes into the efforts that brokers put into managing discretionary accounts and the great benefits it affords clients.   
Do you have one high net client on your little itty book of business? I doubt it.  Go hang your head in shame now and go look for someone who is successful to give you some help.  Tell them a broker who is much more successful and knowledgeable then you sent you in for remedial training.    American funds...what a joke.  daa but he has a Phd...good god. 

BigPayDay's picture
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Joe Da Money Manager,

Wow, you are quite the investment guru. Do you buy your research on Stocks, Bonds etc or do you do it on your own?

BPD

troll's picture
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BigPayDay wrote:Joe Da Money Manager, Wow, you are quite the investment guru. Do you buy your research on Stocks, Bonds etc or do you do it on your own? BPD
I am no guru.....merely a student of the markets.  Every year I learn how little I really know.  In this business, pride definitely goeth before the fall.
I buy my research mostly through my firm.  I also buy research from an outside technical research firm.  I don't do any of my own reasearch, as I just don't have time and there's already plenty of good stuff out there.
But-even when you use someone else's research, you still need to learn to think for yourself.  That's where most people go wrong.

BigPayDay's picture
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JDB,

What's your sell discilpine?

BPD

troll's picture
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BigPayDay wrote:JDB, What's your sell discilpine? BPD
LOL....best thing I ever did about 4-5 yrs ago was to learn to take losses, and in all honesty I'm still refining that, and always working to get better at sticking with that discipline.  It is clearly one of my weak points, although I think I'm better than many at it.
I use technical analysis.  When I'm considering buying a stock, I(with rare exception) have to like the chart as much as I like the fundamentals.  Once I find a stock that looks attractive on both counts, I then start looking at an entry price....considering both support/resistance on the chart and as well whether or not it is overbought on a near term basis(has it run up a lot lately?).  Generally what I try to do is identify a support level(preferably major support level, not just a double bottom) and then set my buy target within 10-12% of the support level.  Then, if the stock is above my target buy price, I'll put it on my watch list and see if I can pick it up on a pull back or if chart developments build in a higher support level that I can work from for a stop loss.  If not, if it runs away from me, that's ok because I have plenty of others to look at.
Most often when a stock is overextended it will come right back down if you're a little patient and realistic with your buy point.  You can afford to do this if you're doing discretionary fee based management.  It's a lot harder to do on a nondicretionary commission basis....I know I've tried both.  (As an aside, though, it might help you close sales on a presentation because once clients/prospects learn that you have a system, they also know that when you say NOW is the time and NOW is the price, you MEAN it.  But in real life that hasn't worked for me so far.)
So, once I own the stock I sell it if 1.) It hits my stop loss, which I eventually move up behind the stock if the idea starts moving my way. 2.) If my fundamental reasons for liking the stock and expecting growth start to deteriorate, 3.) if the stock becomes overvalued on a fundamental basis, or highly overbought on a technical basis, I'll at least take some partial profits off the table.
So, that's my long-winded answer.  Frankly I find selling to be much harder to get right than buying.  Like I said, man, I'm no guru, just a humble student looking to get a little better every day!

BigPayDay's picture
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Joined: 2005-01-10

JDB,

And you do this same analysis with every position in your entire book? Do you sleep, eat, spend time with your family, breath.........?

You seem like a nice genuine guy. I just wouldn't want to run my business that way.

BPD

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