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Wall Street Patsy; Part II July 10, 2008

Posted by shaferfinancial in Uncategorized.
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Let me ask you a question?  If you had to recommend someplace to put someones money, and your choices were an investment that data demonstrated the average person got a return of less than 5%, and the best you could hope for was around 8% or the other choice was an investment that has returned 21% over the last 43 years and 18% over the last 10 years, which would you advise?

Now, let’s add in the final point.  The first investment meant you could make a good living and the second meant you would not make a living advising.  Which would you advise now?

There you have the essentials of the investment game.  Advise mutual funds and make a living or advise Berkshire Hathaway and be out of the business.  So is anyone surprised that advisors push the mutual funds over the proven better performer?  Is anyone surprised that Wall Street devises all sorts of propaganda to convince folks of the prudence of mutual fund investing?  I mean in what world can a financial advisor suggests an inferior investment with higher risk to folks who NEED maximum return to have a shot at a decent retirement?

When I talk to groups I ask folks to raise their hand if they own mutual funds.  Then I ask them to raise their hand if they own Berkshire Hathaway.  Do you know the results?  I bet you do, few raise there hands on the second question and most raise their hands on the first. 

So the question to you, who is Wall Street’s Patsy?  Who has gotten solid financial advice? Who has gotten advice that enriches the advisor and their bosses at the cost of the consumer?  I understand speculation, but how do you bet your retirement on a proven loser, when there is a proven winner out there?

Ready to leave the herd yet?




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