Dr. Doom
165 RepliesJump to last post
If you don't know what to do in a negative trending market, then I cannot help you. But I will give it a shot anyways. If equities are in a negative trend, maybe you could cut back the equity exposure. Maybe you could institute risk management, maybe with a stop loss, or buying puts. Maybe you could add income to the portfolio by selling calls. Just a thought.
Getthere, or what ever your name is today, there is an entire realm of knowledge known as you don’t know what you don’t know. As I read your posts regarding investing I realize that much of what i write and what put has written lies within that realm. You truely don’t get it.
I will say this: Years ago in a land not so far away a bunch of guys in suits got together and decided to embrace a new way of doing business. Now, like most upper mangement types they didn't embrace the new-new thing because it was the best thing for their clients, they embraced it because it was best for them. That is their history as well as their legacy. They never did anything because it was best for the clients. That new-new thing was the wrap fee business. Investment advisory for a fee. The suits built an entire investment complex around it to sell it the public. They legitimized it with charts,graphs, and ratios. They invented terms like efficient frontier to impress the soxs off the disbelieving. Told the client base we are no longer brokers because we no longer stand between you and the transaction. Because we sit on the same side of the table we are advisors. And to Put's point, they even printed new business cards for everyone with the new title "Advisor." And the public bought into hook line and sinker. But in the end it is what it is, another money making scheme from wall street. Those of us old enough to have been around while this transition was taking place know this and hold wrap fee business in it's proper perspective. To us it's just an arrow in the quiver. Useful at times, but not the only solution. However, part of the suits plan was to raise an entirely new generation of "advisors" from pups. The plan was that this new crop of new-new advisors would only know one way to do business-wrap fee. This de-education/brain washing would be coupled with pay plans that rewarded wrap fee and discouraged any other types of business. The new-new advisors would be primarily asset gatherers trained in client service, comprehensive planning and investment strategies. In other words the suits made sure this new breed could talk the talk even though they've never walked the walk. Getthere, as you can see, your existence within the complex is that of being one small part of a larger money making scheme hand crafted by some of the smartest guys in the room, no doubt over some fine whiskey. To say that you drank the cool aid isn't quite strong enough to describe the depth of your flawed claim to the high road. The bigger issue is that, as Put has said, many investors are clamoring for money making ideas. Yet, the training of the new-new breed tells them to attack anything outside the wrap fee box regardless of it's merit. This disincents original thinking. And that is where the investing public pays a price. Every one here who has an equities heavy book could have gotten their clients off the tracks with this market had they employed a little original thinking and used some benign hedging strategies. But, hedging strategies, not in course guide of the wrap fee advisor. Instead what clients got for their 1 1/2% was the let me show you my charts and graphs and tell you about asset allocation. The shame is it cost most of them far more than 1 1/2%. And now they are offered platitudes. Right now most advisors are scratching their heads trying to figure out why their asset allocated portfolios are down 20-30-40%? They didn't know that this could happen. and yet they are charged with leading the multi year climb that will get their clients whole. Soon clients will be asking how properly allocated portfolios measured against conservative risk parameters could perform so poorly as to lose years worth of hard earned gains. I don't want to be in the room for that conversation. I won't defend putsy's personal attacks but if anyone thinks his take on the state of the industry is wrong, well, there is that bridge to no where that i could sell to you. Lest every new breed advisor think i'm against wrap fee, please understand i'm not. I just know how and where it fits. And I'm a big beleiver in the wealth generating power of long term investing. My probelm is with wrap fee investment management being sold as a be all-end all investment vehicle. If this little venture to the dark side of the investment universe has shown us one thing, it's that there is no such thing as a be all end all.Wrap fee is not the end-all be-all for sure. In fact, it can be the ‘end - all’ of your business if you think it removes the need to think critically and creatively.
I say this even though I am an avid user of some wrap-fee programs.
On a slightly different note, I cannot believe how NOW every inside wholesaler who tries to get my ear wants to talk to me about hedged equity products. Where were they 6000 Dow points ago?
As I told the newbie who called me yesterday: "Buddy, the last thing I want to do is hedge my equity exposure when I can buy into blue-chip stocks at a 40% discount from last year’s prices."
The time for hedging was 6 months ago…even 3 or 4 weeks ago. Now, IMHO, you want to keep it simple and just get as long as you can afford to be and hold on for the ride.
If equities are in a negative trend, maybe you could cut back the equity exposure. Maybe you could institute risk management, maybe with a stop loss, or buying puts. Maybe you could add income to the portfolio by selling calls. Just a thought.
"Maybe" is not a strategy. I think we agree that selling calls can add income. One of my points is, pretty dangerous strategy to give up on buy and hold if the market is flat lining. Sure, you want to protect an overweighting in positions with stop orders, and so on. As if anyone here had the foresight to know that equities would be on a ten-year flat line trend, or what will happen in the next ten years. If you are adding real value with your options strategies, great. The point of the link I added above is the show the fallacy of Putz's attack and ideas, and the weakness of the Bond Guy post. On the one hand, we are broadly attacked (as comprehensive personal financial planners who manage retail portfolios) for not using options, and on the other it is pretty obvious from the record that even specialized, professional portfolio managers have at best wildly results from transactional trading. How does the "average" old-school wirehouse trader fare for his clients? Probably not as well as he thinks, or recalls from his past. One question, are you really adding value with your strategies? Putz attacked many advisors as being stupid, unsophisticated, or even greedy or unprofessional for not using options strategies. Bond guy threw his considerable weight and prestige behind Putz's theory with some anecdotal support, I would not even call it anecdotal evidence, more like being nostalgic about the "good old days", when clients and even many advisors respected the wirehouses, it seems like years, not months, that things have changed in that regard. The irony is that guys like Putz think they are smart, and all we are really talking about here is a basic level of financial and economic education. If you want to talk about Warren Buffet buying and controlling entire businesses with a "holding period of forever", compared with our own attempts to add value through portfolio diversification, that is a different story. Putz should consider investing in some basic investment planning education. To my larger point about the demise of the wirehouse options trader, or the guy cold calling with a hot stock or options tip, again, the economic market reality is playing itself out - if you are really one of the guys who is consistly beating the market (be honest, don't compare your blended portfolios to the S&P) - great. If you are an "average" portfolio manager, like most of us, you better be looking at costs for both your clients and your own business model. options are speculative, and don't belong in a long term plan. Ezmoney's statement stands true, so far from the discussion presented here.Bond Guy, I was writing while you posted, so the above is not a response, but thanks, I’ll read your post carefully. No point in attacking my credibility on the name (W9), I resigned for a lost password, I joined,what, two weeks ago?
All right, I read your post above.
Bond Guy, from what I can see, you are a little behind the times, maybe reactionary. This de-education/brain washing would be coupled with pay plans that rewarded wrap fee and discouraged any other types of business. The new-new advisors would be primarily asset gatherers trained in client service, comprehensive planning and investment strategies. Maybe a bunch of execs at your wire house got together to see how they could survive and compete with RIAs. As you know, broker-dealers are fighting for survival. Anyway you're wrong, the "wealth management" wirehouse model has been desperately seeking "sophisticated" and unique proprietary products to pitch, with little success gauged by the recent meltdown of certain securitized debt. Might be an economic reason for the trend to cut out the middle man. I gave a specific link to an article about transactional trading, and if you want to prove how you are adding superior value through your trading, great. If you are beating the markets great, you're in the minority. Otherwise, you can just BS your way to retirement. I don't have much to prove here, except, for you new guys who sold an A share as buy and hold, or whatever, sticks to your guns unless these guys can offer some proof that their transaction trading claims are true, and would work for you.Greetings from the last stop on my road trip. Tomorrow I'll be home and unable to contribute, debate, or anything else. That freedom of speech thing doesn't hold when you make the newbies feel nervous, or the lazy types such as Getthere feel exposed.
All of the posts today are interesting--note that Getthere keeps coming back with the lazy guy's approach. Buy and holdl.
It's easy to explain, and easy to blame the client for having agreed to it when everything turns to doo doo.
Mr. Client, it's not my fault. You agreed to the buy and hold approach so that I didn't have to actually advise you on anything.
Put, thanks for showing up and putting some life back into this board. And thanks for making us question who we really are.
Come back and visit again.Getthere, reactionary? Coming from a guy who has been goaded over the last two days by someone with the name Provacative that’s rich!
Behind the times? Little reading comprehension problem on your part here. Before your time would aptly describe my prior post. The biz has morphed into what it is today - Wealth management. What i was descrbing was the biz model you use when it was in it's infancy. I did that to show you that it was created for no other reason than to provide a revenue stream to the provider. The entire wrap fee complex, AKA wealth management exists for no other reason. Is it better for the clients? Only yours , not ours.Greetings from the last stop on my road trip. Tomorrow I'll be home and unable to contribute, debate, or anything else. That freedom of speech thing doesn't hold when you make the newbies feel nervous, or the lazy types such as Getthere feel exposed.
Right, you won't be able to log in here and substantiate your attack on modern day planning and risk and investment management professionals, whether they be affiliated with Jones or independent RIA. Come back after you get your CFP or some of your own clients, old Putz! James Bond, I think it's your pal Putz and maybe Bond Guy who are trying to beat the market, or at least try to play the investment return game on their own court. Ice, I dont know you or your background , but I find it odd that your firm would allow someone as inexperienced as you to run your own accounts on a discretionary basis. BS'er. Like you say, you don't know Jack about Ice.Put, thanks for showing up and putting some life back into this board. And thanks for making us question who we really are.
Come back and visit again. I think it's great that he got some conversation going, the unsubstantiated personal attacks on (newer) advisor practices could be damaging to advisor morale and their clients. I feel like I've seen a new side of Bond Guy, too. This is a great business and I'm sure we're all here for vigorous discussion. Money talks.How is advisor morale damaged by somebody suggesting that sucking 100 to 200 basis points out of an account that is losing money, by calling it an advisory fee, is actually simple fraud?
If you don't look in the mirror every day and ask yourself if you're really an advisor as opposed to a leech you're a sociopath.Was just rereading some Nick Murray the other night:
“You can care deeply about markets, or you can care deeply about people. But I sincerely believe that nobody on earth can ever do both. And if, perchance, somebody can, I’m betting it isn’t you.”
If, Putz, this is you, send me your business card, resume and letters of recommendation, and I’ll think about hiring you on as a separate account manager.
Until then, keep the opinions coming, but just know where you stand.
Who are we kidding? This guy Put had a little success with a day trade and he’s so removed from the reality of the industry that he thinks there are still sales contests. Are there people in the industry that don’t really have the skills required to help clients? Of course. Is Put’s daytrading options strategy something that makes sense for a professional dealing with real clients and real money? Of course not.
[quote=Getthere]
If equities are in a negative trend, maybe you could cut back the equity exposure. Maybe you could institute risk management, maybe with a stop loss, or buying puts. Maybe you could add income to the portfolio by selling calls. Just a thought.
"Maybe" Sarcasm must escape you not a strategy. I think we agree that selling calls can add income. One of my points is, pretty dangerous strategy to give up on buy and hold if the market is flat lining. Sure, you want to protect an overweighting in positions with stop orders, and so on. As if anyone here had the foresight to know that equities would be on a ten-year flat line trend, or what will happen in the next ten years. If you are adding real value with your options strategies, great. The point of the link I added above is the show the fallacy of Putz's attack and ideas, and the weakness of the Bond Guy post. On the one hand, we are broadly attacked (as comprehensive personal financial planners who manage retail portfolios) for not using options, and on the other it is pretty obvious from the record that even specialized, professional portfolio managers have at best wildly results from transactional trading. How does the "average" old-school wirehouse trader fare for his clients? Probably not as well as he thinks, or recalls from his past. One question, are you really adding value with your strategies? Putz attacked many advisors as being stupid, unsophisticated, or even greedy or unprofessional for not using options strategies. Bond guy threw his considerable weight and prestige behind Putz's theory with some anecdotal support, I would not even call it anecdotal evidence, more like being nostalgic about the "good old days", when clients and even many advisors respected the wirehouses, it seems like years, not months, that things have changed in that regard. The irony is that guys like Putz think they are smart, and all we are really talking about here is a basic level of financial and economic education. If you want to talk about Warren Buffet buying and controlling entire businesses with a "holding period of forever", compared with our own attempts to add value through portfolio diversification, that is a different story. Putz should consider investing in some basic investment planning education. To my larger point about the demise of the wirehouse options trader, or the guy cold calling with a hot stock or options tip, again, the economic market reality is playing itself out - if you are really one of the guys who is consistly beating the market (be honest, don't compare your blended portfolios to the S&P) - great. If you are an "average" portfolio manager, like most of us, you better be looking at costs for both your clients and your own business model. options are speculative, and don't belong in a long term plan. Only a person who does not understand options would say this. Options can be used for speculation, AS ARE EQUITIES, however options can be used for risk management also. Ezmoney's statement stands true, so far from the discussion presented here. [/quote]Put doesn’t believe in 12b-1 fees so he wouldn’t mind not having them assessed in any type of market.
I also have a thought to ponder.
Worrying about making appropriate withdrawals in a down market would
not be a problem if you were conversant in bear market strategies.
Don’t you suspect that your clients figure that you are good for advice beyond, “Buy and hold, it will come back someday.”