Inflation and Idiots
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I don’t exactly, but I do have faith in some managers over others because of what they have done through different market cycles. Yes, I used the word faith, because going forward that is all we really have. If I don’t think a manager can do it I use an index. Joe the plumber doesn’t need to beat the market by 10% each year, he just needs long term market returns with some guidance so he doesn’t chop himself up.
Joe the plumber just needs to pay his taxes.
I’ll tell you what Ron, I’m worried about you and this reliance on mediocrity - it’s downright un-American! A little socialistic!
If you don't think it is different, then maybe you should take the time and explain why things are the same. I would love to hear your economic explanation.Everytime something unusual happens in the market the cry is “this time is different.” It isn’t even a market thing, it is a cultural thing. People want results, now. They don’t want to be patient, they don’t want to put effort in, they just want easy money, easy returns, easy weight loss. You can take your ab roller and your jenny craig and it may or may not work, daily exercise and a balanced diet will and always has. You can take your hedge funds and your Jim Cramers and all that crap, it may work and it may not. Taking ownership stake in quality companies while sticking to diversification, asset allocation, and rebalancing always has.
Let’s be honest, you aren’t worried about me a bit ! You wouldn’t even know it if I get hit by a car on my way to lunch. (Driver will probably be a client in Class A Founding Funds that I picked up at Jones 2 years ago) I don’t think helping Joe the Plumber or Issac IT or Samantha the Stripper navigate their way through all of the financial trash that is out there and get to a comfortable retirement is being mediocre. Sure, at this stage, my business is mediocre, in 5 more years I don’t think it will be. If it is they will find me in the bank break room hanging from my own shoelace.
Sad for others who are not giving the same to their clients. Or at least something more.What is sad about it for you ? You are exactly where a business wants to be. You are offering a unique service, at a low cost, that nobody else is offering.
I don't. I don't have the time or knowledge or research power to be out kicking the tires of enough companies to give any type of individual stock recommendations and this is exactly what I tell my clients. That is why I hire asset managers to do it for me. [/quote] With all due respect .... My GOD! You call yourself a broker??? Dude that's so f-ing lame. Go get a book called fundamental analysis for Dummies and a stock screener. If you truly believe this you are doomed to pathetic mediocrity along with your clients. Are you trying to manage money or be an overdressed peddler?[quote=Moraen]Define a “quality company” Ron.
Oh its that easy. Buy a book and a stock screener and start peddling stocks. Give me a break. If I could buy and sell stocks at accurate prices I would do it for myself. I try to give you a compliment and you become Mr. Tough guy, you arrogant prick.
"Stockbrokers" died long ago. Very few guys are analyzing stock valuations and buying and selling on a discretionary basis for clients accounts. Most are building financial advisory practices and charging a wrap fee on the assets.Sorry Ron, I tried to delete the post it wont let me, it’s not worth the trouble.
I have no doubt you do what you think is best.Obviously, you think what I do is a joke. I just don’t know why we have to go around and around about the same sh*t every post.
Ron, it sounds like you are running into people who don’t want to own stocks, and not people who don’t understand inflation.
I’ve never met anyone over the age of 60 who didn’t understand inflation. They see gas going up in price, they see their meds getting expensive, they understand inflation.
I do meet lots of people who don’t want to own stocks. But that’s OK – you can get where you want to go without stocks, as a client or an adviser.
I don’t think people can get where they want to go without at least a small percentage in stocks. If they understand inflation, but they don’t want to own stocks, they aren’t really seeing the forest through the trees. Yes, everyone will admit they have experienced price increases on basic goods their entire life, but they rather lose money to inflation “safely” (CD’s, Bonds)then by watching their account values go up and down. (equities)
They will be able to survive their own retirement because of the physical dollars they have, but when they leave 500k behind for the college of 10 grandkids equities could have paid for all 10, but the 30 yrs of CD investments will only pay for 3. Oops.I know lots of financially successful people who own zero stocks, except the shares in their own business. Your theory is severly flawed, Ron. Your problem is you can’t make money unless you bamboozle someone into owning some crap mutual fund.
Exactly. When you save a crapton of your income as opposed to spending it, you don't need to take on risk to outpace inflation. But Ron doesn't get paid on savings accounts, so he screams bloody murder when someone uses a strategy that will only net 2-3%.Michael Moore has his millions in a savings account.
Exactly. When you save a crapton of your income as opposed to spending it, you don't need to take on risk to outpace inflation. But Ron doesn't get paid on savings accounts, so he screams bloody murder when someone uses a strategy that will only net 2-3%.[/quote] LOL. I don't care how much you have or how much you save. Each dollar in circulation is worth less each and every year. Now does that matter to Bill Gates, no because he has so many dollars. But you can't tell me that all the money you will ever need in a 1% savings account doesn't lose purchasing power over time whether you need the funds or not. I am not talking about financial success. Anyone with a lot of money is financially successful, that doesn't mean they are investing properly. Also, how exactly are people netting 3% on savings accounts ? You have FDIC insured accounts with no surrender paying over 4.5% ?[quote=Moraen]Michael Moore has his millions in a savings account.
Michael Moore and Bill Gates are far more the exception than the rule. When we work with our clients, our job is to get them to their goals the most effective and efficient way possible. Lets say we have two clients: Client A and Client B. They're both 30 years old and their goal is to get to a million dollars by the time they hit 60 years old to fund their retirement; this is their only goal in life.
Client A, using equities and other asset classes will require about $995/month at a 6% rate of return to get to a million dollars at 60. Client B will require $1716/month at a 3% rate of return to get to a million dollars at 60. Now, not saying Client B scenario is not possible but let's say that they both do that and both hit their goals at the same time. Who actually comes out ahead? Client A does because he had $721 more a month for other stuff like insurance and standard of living stuff, like healthier food and gym dues, so that when he is 60 years old, he doesn't drop dead because he's out of shape and obese. Or he had $721 more a month to just have fun and enjoy life. We can argue which one is more riskier but I didn't say 10% rate of return, I kept it really conservative at 6%. To say that one can get to their goals without equities or very little is ridiculous. Even amongst this mess that happened, guys like Nick Murray will still swear by equities all day long. Just my 2 cents . . .Exactly. When you save a crapton of your income as opposed to spending it, you don't need to take on risk to outpace inflation. But Ron doesn't get paid on savings accounts, so he screams bloody murder when someone uses a strategy that will only net 2-3%.[/quote] LOL. I don't care how much you have or how much you save. Each dollar in circulation is worth less each and every year. Now does that matter to Bill Gates, no because he has so many dollars. But you can't tell me that all the money you will ever need in a 1% savings account doesn't lose purchasing power over time whether you need the funds or not. I am not talking about financial success. Anyone with a lot of money is financially successful, that doesn't mean they are investing properly. Also, how exactly are people netting 3% on savings accounts ? You have FDIC insured accounts with no surrender paying over 4.5% ? [/quote] Nope. They're not FDIC-insured, but they're backed by much better-run institutions than FDIC. But, I've got liquid, safe accounts that net 3% minimum that are creditor-protected, tax-deferred, self-complete in the event of disability, bypass probate, and pay a multiple of what's in the account at death tax-free. By the way, how are those equity positions doing these days versus inflation? What kind of rate of return will you need on them next year to get them back to where they were 3 years ago? You know, when they were supposedly outpacing inflation?[quote=deekay][quote=Moraen]Michael Moore has his millions in a savings account.
Doesn’t matter because I don’t put people in equities when they have a three year time horizon.