Re: Believe
Watchdog
11/21/2011 8:09:08 PM
Most investors are optimists. And, they don't like negative information, for example the amount of financial risk they are exposed to. They drink the kool aid because they want to believe what they are being told by less scrupulous advisors.
Don't think for a minute that Wall Street has not figured this out. It has had decades to refine its sales tactics.
Re: Believe
Watchdog
11/21/2011 8:05:55 PM
Virtually all financial advisors tell investors what they want to hear. For example, high returns for low risk.
This strategy works because very few investors will commit the time it takes to sort through the sales claims and review information that really matters: credentials, ethics, business practices, and services.
Re: Believe
Watchdog
11/21/2011 8:03:36 PM
I agree. There is groupthink and there is the club that operates various Wall Street companies. They share ideas, research, and business ventures. It is no wonder they all get in trouble at the same time. You have to play to be part of the club.
Re: Where are all the customer's yachts?
Watchdog
11/21/2011 8:01:23 PM
Very few investors know convicted criminals can obtain securities licenses as long as their crimes are not securities related.
How about an axe murderer who studied financial planning in prison.
Why does Wall Street have such low standards for advisors? It is a reflection of the sales culture that dominates the industry. Anyone who can sell is acceptable. They do not have to know anything about investing - hence no yachts.
Re: Where are all the customer's yachts?
Watchdog
11/21/2011 7:58:16 PM
Stockbrokers are sales reps. They are not legitimate financial advisors.
I think most investors would be better off if they have competent, ethical advisors.
If you select another advisor make sure he or she is an RIA or IAR, an acknowledged financial fiduciary, and is compensated with fees.
None of the above applies to stockbrokers.
Re: Research Smea-search
Watchdog
11/21/2011 7:55:05 PM
My post is the tip of the proverbial iceberg. All of the wirehouses have major conflicts of interest. Unfortunately, they make more money doing what is best for their companies versus their clients.
This problem will not go away until you see some Wall Street executives go to jail. But that won't happen either. The execs make millions and their companies pay fines without admitting guilt.
Great list @Jack but you forgot sham research! This can take the form of economic outlooks where a firm is saying one thing publicly and doing quite another for its own account (see Housing Crisis) or company research where a firm is touting a company in which it already has a huge position.
Re: Nervous
Phoenix
11/19/2011 11:52:53 AM
I feel the same way. When you actually look at all the pros and cons in detail it looks like there are a lot of negative aspects we need to consider. I'm so glad that IU is there for us to get an unbiased opinion on the market.
You're suggesting we should all ask our brokers if they have a criminal record? If the truth happens to be 'yes', don't expect to hear an honest answer to the question! So, maybe we need to run back-ground checks on all the full-service brokers?
My solution is to avoid full-service brokers. Do my own research with sites like IU. This way, I'm ahead 1% or more just by avoiding the full-service brokerage fees.
Early in my investing life, before I choose this path, I did work wtih a full-service broker. Even as a rookie investor, my experience showed that I could get better net returns, than he delivered for me. Not that I'm so good, it was more that the fees, when I looked into it, were egregious.
Ernest Hemingway said there was a big difference between writing and the publishing industry. Likewise, there is a huge difference between investing and the Wall Street industry. There is a reason that Warren Buffett is in Nebraska -- the key to success is a long-term strategy and ignoring the groupthink in Wall Street, which focuses on the short-term.
The blogs and comments posted on Investor Uprising do not reflect the views of Investor Uprising, PRNewswire, or its sponsors. Investor Uprising, PRNewswire, and its sponsors do not assume responsibility for any comments, claims, or opinions made by authors and bloggers. They are no substitute for your own research and should not be relied upon for trading or any other purpose.
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