reply to post by irishchic
As an investment advisor I could have been that guy you spent 3 hours with (I'm not). Depending on your individual circumstance, I probably would
have told you all the same things. it all depends on what you hired your advisor/broker to do for you.
Are you investing to make money today or to reach certain long-term goals in the future, like retirement, education, etc?
If you are investing to make money over the short term and to flip and flop, then this guy obviously isn't for you. For one, he should have sold
treasuries when short term rates went basically to zero. At that point there was very little room to the upside. If he put you into treasuries at that
point then the guy should be shot. If he did it at your insistance then that is just proof that your trading is reactionary and emotional which is the
absolute wrong way to go.
However, if you are investing for the long run, then he is most likely doing what he thinks is right for you. Just because it is not working right now
doesn't mean that in the end you won't be better off. Most people have any where from a 20 to a 60 year time frame for each dollar they invest. If
you are 35 (you look younger if that is you) then you will most likely be buiding your account for the next 25-30 years and then spending that money
during your 20-25 years of retirement. So we are talking about your funds being invested for a period of 55 years from here.
The truth is most people cannot handle making market calls over a period of 55 years. Normally if they try, there will be some point where it becaomes
an absolute disaster and at that point they give up investing all together and turn to annuities and cd's. The very few are able to maintain success
over long periods of time. Note all the hedge funds that have closed down. Many of these guys were the best at one time at what they do. Now the
emotion of short term returns has basically ruined their business.
On the other hand you have the folks who are invested in a particular allocation which is only changed as a result of life events or the approaching
of retirement. The theory here is that if you take a broadly diversified portfolio, keep feeding it through good and bad, that over long periods of
time you will achieve your goals (and you always have). If this is how your account was to be managed then your broker/advisor is telling you the
right things. You need to stay the course.
This fall is not the first in our markets history. Every 10 years or so events happen that make people lose all confidence in the markets. Those who
bail at those times usually soon regret it. Even those who bailed at the bottom in 2002-2003 would have been better off staying the course than most
other alternatives. And this is after experiencing a 55% decline in the overall markets over the last few years. I have the figures to back it up, but
they are based on particular investments which I am not suppose to post here. But basically a diversified mutual fund portfolio allocated evenly
between large caps, small caps, international mutual funds of both the value and growth disciplines has a higher return than most all asset classes
during that time.
While in the face of current events a buy and hold portfolio looks pretty stupid, as it always does when the market is in a down trand, the truth of
the matter is that such a portfolio is more likely to meet your future needs then a frequent trading strategy. The reason is emotion. Look no further
than this thread for proof of that. Emotion makes people do the wrong things. How many people sold and went to treasuries near the market bottom? Or
stopped making their monthly contributions to their equity funds. Emotion makes you do all the wrong things and then eventually give up. Many CD
buyers are failed traders. They have given up much for their lack of faith.
So basically don't crucify your advisor/broker if he makes some wrong decisions. If you are asking for short term results from a long term portfolio
then you are kidding yourself. No one really knows what is going to happen. Anyone in the past who sticks to their guns with a diversified portfolio
has eventually been greatly rewarded. I don't expect that it will turn out any different this time. although many people willcommit financial suicide
by trying to be smarter tahn the markets.