Do you ever have something you already knew reinforced to you with all subtlety of a whack across the back of the head with a Louisville Slugger? I had such an experience last evening when I was perusing the pre-loaded chart library in the new V12 of TC2000. One of the charts is 100-year chart of the Dow. Interesting, but it’s only thirty stocks. So I changed it to the S&P500. Almost immediately the bile started rising in my throat:
I cannot think of a clearer chart to cram down the throat of the next luckless financial advisor who tries to tell you that “You’re in it for the long haul.” Essentially, if your entry was poor, you could have made no money, or next to no money for the last 10-15 years. Maybe you got the dividends. Well done. On the other hand, could you have made money? Maybe quite a lot of it? You bet, but it would have required a more active style of investment management than buy and pray.
As you know, I am a bit jaundiced after my experience with a wealth manager (sic) who cheerfully watched my portfolio halve in value in the 2008 debacle while congratulating himself that he was beating the benchmarks. I had asked about stops, been told the manager used them….it never happened. At the time I wondered I wondered if my advisors even knew what a stop was. I concluded they didn’t. Now I’m convinced of it. Did you know that what you need to know about stops to pass the FINRA Series 7 (Registered Rep) exam can basically be achieved by learning three simple mnemonics?
Having been shown several “Don’t worry. Be happy. You’re in this for the long haul” letters that friends have received from financial advisors in the last few weeks I have become even further twisted around the axle. The long haul? More like the Bataan Death March. Buy and hold may have been a very viable strategy if we go back twenty, thirty and even forty years. But it hasn’t been for quite a while.
At a recent business mixer I struck up conversation with another upmarket advisor who in a sneeringly condescending way proceeded to patronize me about my “market timing”. I will almost guarantee you that my self-managed portfolios are in way better shape than her clients’ portfolios are after the last couple of months. What was particularly telling was that one of her friends and clients later told me that her advisory function was basically confined to charging a wrap fee and packing the money off to a national mutual fund firm to do whatever it is they do in a canned portfolio.
Take home: A lot of financial advisors and wealth managers you will encounter are primarily salespeople who I wouldn’t trust to park my car, let alone manage my money. You can get a canned briefing on your portfolios or investments but if you ask any deeper questions, do you get a blank look? You know, dumb looks come free? Or do you get offered another product that might suit you better? I seriously question if many of these folk have more than First Grade understanding of what they’re selling you, let alone help you actively manage it.
Now, I will acknowledge that my polemic is not intended to tar all advisors with the same brush. There are some really smart, diligent and hard-working folk out there. You just have to root them out and differentiate them from the other lackluster mob.
In closing, if you needed any more cheering up, let me show you the NASDAQ chart if you still linger around the buy and hold fairy tale. Put all your money in the OTC market back in 2000? You’re still not whole: