Have any of you guys given somebody a stock pick and tried to act smart especially if they know you’ve been in finance and possibly doing the CFA thing so they act on it and it totally kicks you in the nuts. Happened with my step dad - I had a couple good trades last year then I gave him 2 awful trades and both lost like 40% in value. Now he won’t trust anything I saw pertaining to the economy. I’ve stopped giving any stock recommendations and now if I make some claim he’ll just assume its wrong. I’d like to hear any funny stories about giving some bad picks. Its one of those things thats just a really humbling experience. By the way the one stock I gave him was NCI - Navigant consulting which I told him to buy around $20 due to credit detrioration and them capitalizing on it but due to the terrible management the thing went to around $15 when I finally just sucked it up and told him to get out. Now its at $18 go figure. The other one is too embarrassing to bring up.
dont give stock picks to family
“Dad, it’s spelled E-N-R-O-N, it can’t go wrong, these guys are on fire! Let’s ride this baby to the top! Don’t worry, take out a second mortgage and let’s get rich!”
I feel the opposite…the more I study (CFA or other material), I feel I know less about everything I already know. Not only avoid giving stock picks, avoid providing finanical advice to ANY family member…you will never WIN.
Agreed. I’ll help family members and close friends with asset allocation (usually to passive indexes I might add) and answer questions pertaining to securities, strategies etc. but I will never give the impression that I like or dislike something. If they loose money they’ll blame me and it will create friction. If they make money they will get greedy and want more, and likely eventually loose back all their gains. Three things one should never talk give advice about with family: Politics, Religion and Money
I don’t consider myself a stock picker; I’m more into trying to get countries and sectors and industries right and do tactical asset allocation. Sometimes I might think about pair trades in industries I know a little better, but the attention required per basis point obtained doesn’t make it a sensible approach for family members who are usually just trying to figure out if they should sell their MSFT shares or buy APPL.
I’ll take the risks in my PA. With very few exceptions to I give individual names to friends/family. For my parents, I just take a look at what their advisor tells them and give them my take on how I think he is doing.
Yeah I mean when you talk with your family about your area or friends its undoubtedly going to have people asking questions about economy and stocks and I’ve learned after a few mistakes to point out pros and cons for each and let them make the final decision. Its a lot about helping them not hurt themselves rather than just giving them advice. I mean its not like you can just totally avoid it and say no comment if somebody asks you, I mean it is your industry. But it is fun if you have great conviction for a stock to tell somebody how it can fit into their portfolio and watch that baby go. Its definitely a risk/return trade off but as long as you’re not “overconfident” to borrow a page from the level 3 studies I think you can manage it.
^ that’s fine if they ask about a stock give the catalyst that could drive the stock price, and the potential risks to the name, Or give general impression of industry/economy not necessary ur opinions just what some of the big trends/drivers are. I just dont believe in the home run hitter stock pick for friends and family. When I tell my PMs that this is my highest conviction pick they understand the risks, family members outside the industry usually dont
Giving stock picks to your family is not a smart idea, IMO. In all honesty, you may have a slightly overinflated ego if you’re giving stock pics to anyone on a regular basis.
That’s a good point. I think I’ve added much more value in pointing out (and hopefully avoiding) potential mistakes than in making any particularly good individual calls. Most of the time I also just listen to what their advisor is saying and letting them know if I agree with it and why. The hardest point I’ve had to make is to let some senior friends of mine know that it’s not a bad idea to have a small portion of their portfolio in equities (provided that existing income needs are already met), despite the fact that they were ripped apart in the dot-com bubble. People either get it or don’t, and the only time when I might push harder if they don’t get it is if they are planning to leave a substantial sum to their children, in which case, what they tend to forget is that the appropriate investment time horizon is their children’s lifespan, not their own (again, this assumes that the risk of outliving their assets has been managed appropriately).
If you can’t feed it to your family how can you feed it to yourself? Then again, you have to know yourself & your confidence & competence etc.
buddha Wrote: ------------------------------------------------------- > When I tell my PMs > that this is my highest conviction pick they > understand the risks, family members outside the > industry usually dont Excellent point…most people don’t think securities in terms of E® and its standard deviation.
who said, “the average investor has no buisness buying individual stocks”? I tell my people to buy mutual funds and diversify. If they ask my opinion about something specific, I will explain that there is no such thing as a free lunch and give them the facts. “Just the facts jack” GenY
who said, “the average investor has no buisness buying individual stocks”? I tell my people to buy mutual funds and diversify. If they ask my opinion about something specific, I will explain that there is no such thing as a free lunch and give them the facts. “Just the facts jack” GenY
I’ve given two stock tips to my parents. One has been flat, although it pays a nice dividend (they still own it). The other was a 5 bagger (they sold it, has been flat since). Never again, though. Even if these are small 1-5% positions, I’d rather them stick to mutual funds and ETFs.
virginCFAhooker Wrote: ------------------------------------------------------- > If you can’t feed it to your family how can you > feed it to yourself? > Because I – and many others on this board – can digest the inherent risks involved with owning individual stocks, and because I understand risk / return relationships. People with no financial background generally can’t, and don’t. They’re likely to panic (and blame you) when you don’t bat 1.000 I just give friends financial planning level advice – invest in your 401K; make d**n sure you max out your employer’s contribution; spread your money across several mutual funds.
I focus on diversification, and general ideas about the economy. I would never give a family member a specific stock pick, the risk/reward is just not worth it. If they ask about a specific stock, I generally try and stick to facts about the company (if I know anything) without actually giving my opinion on if I would buy it or not.
- Cat Fanciers’ Association is the best name ever on AF 2) I agree that giving tips to family is a dangerous route. I even think it’s a bad idea to get into money-management arrangements with family. To the extent that I give advice I want it to be someone that I don’t know at all and to the extent I solicit advice I want it to be from someone I don’t care about.
I used to give people I knew stock advice or pass along advice from articles in print and on the web. Then I saw some morons just follow my advice like that. So now I have learned to not give advice on anything, especially stocks. I do however give people financial advise or to go back and look at a situation in depth. For instances messages I got recently from people I know. “I just paid off all my student debt”. Should I borrow “$X” from the bank buy 2 cundos and flip them over 24 months, “I mean the cundo market in Toronto only goes up right dude?”. The theory of oppurtunity cost and PV should be thaught in pre-school.