GenY Wrote: ------------------------------------------------------- > who said, “the average investor has no buisness > buying individual stocks”? The more I learn about investing, the more I agree with this statement.
If I tried giving advice, no-one in my family would listen. My bro asked me if he should buy stock (or try) in Google when it listed. I said “no, I don’t know how to value Google.” The view I was expressing was actually that you shouldn’t buy something you can’t put a price on. Now my bro thinks I am an idiot and there is no point explaining either a) the above or b) that a good fund manager gets 55% of his decisions right.
Yeah I understand all the arguments but I definitely get caught in the moment sometimes. You know you get together with a bunch of buddies from college they’re all in different industries so they think you’re the stock guru being a Portfolio Manager so you wanna throw out a little knowledge and the exchange happens something like this: -My Buddies “Cat’s a Portfolio Manager and really smart in finance he knows all about stocks and stuff, he knows all about the markets, give us a stock pick” -Me “Well guys you know I really recommend developing an Asset Allocation to meet your long term goals and sticking with that for the next 20+ years occasionally re-balancing to meet your evoloving risk tolerance” -My buddies “What? Lame.” I understand not telling people to go all out on a stock but its still fun to toss out a couple names you’ve been buying yourself. I mean some are going to do well, some won’t. I just wanted a couple funny experiences. My girlfriend on the otherhand knows nothing about finance and when she was asking for advice for a IRA allocation I just bought all ETFs and made a solid asset allocation but that was early last year and the market has tanked so even though she’s well diversified she’s still down a decent amount. I love how now she’s always asking me things like “Why are you losing me money, you don’t know this stuff as much as you think you do.” Classic.
Next to pro sports, I can’t think of any industry as performance oriented. Explain it to them this way: Does Pujols bat 2-4 with a homerun every night, I don’t think so. But over the long run (a season in his case) he is a consistent .300-.325+ hitter with well over 100 RBI and usually 40+ HR
I get a lot of friends asking me what they should invest in for their 401(k)'s. I just tell them to pick one of the Retirement Date Fund options and pump as much as they can afford into it.
My financial advice is universally centered around these questions: – are you in debt? – what% of your gross income do you save? – is that savings in a tax-advantaged account? – are you taking advantage of all matching funds availible? – are you paying a higher mortgage rate (etc) than necessary due to your credit score? – do you ever pay unneccessary fees (i.e. bounced check) to financial institutions? – what % of your savings is in equity? – what fees do you pay to the people managing your funds (i.e. are you in index funds?) If the person can give a good answer to all of these questions, they are in good shape for retirement.
What if the person seeking the advice is one of your clients? Say you’re a full service broker, or a financial planner.
joemontana Wrote: ------------------------------------------------------- spread your > money across several mutual funds. And if N is the number of choices of MF in the 401K…the proper number of fund you need to own is: [(N^7)/(N-1)]*(N!*(e^(N-1))
Maybe you should become a better stock picker… 
Whenever I tell someone to buy a stock they don’t seem to do it, then I point out how it is up well over a hundred dollars from when I told them to do it over dinner and they shut up real quick and say stuff like I just do what my broker says, I don’t really know what I’m invested it… People want fantastic returns but they don’t want to take any risk or responsibility. I rarely buy or sell anything, but when I do, I seem to do a lot better than average, a lot better than people others seem to deal with on the retail side. But I want to work in research, it takes me a long time to find another stock I feel confident enough to put my money into. Also people hold their losers too long, something I was guilty of myself in the past and don’t sell their winners when they are up because they get greedy. If I get up 50% or 100% I sell at least half my holdings then I sit cash heavy for months sometimes until I find another attractive investment. People lack patience too. They want to make 100% return in like six months every time, but if you’re making over 10% on your entire portfolio you’re beating the average…
Make yourself money and pay your dad’s mortgage or car payment for a few months here and there… My parents say they eventually want me to manage their money and after I learn the biz I’ll prob do that but it will be pretty conservative. Other than that, I’m not touching any other family member’s assets or offering suggestions. I have had family members at my college graduation party asking me for financial advice…what they should invest in, etc. It pisses me off…I’m not a f*cking financial advisor and just b/c my major was Finance doesn’t mean I’m a good person to give investment advice. Since your major was Chemistry do you see me asking you to cook up drugs in your kitchen to get rid of my cold???
Last week I ran into a friend of mine that I haven’t seen since we went on a family camping trip back on the Labor Day weekend. I guess we had put the wives and kids to bed and were up having some “pops”, must have been lots of “pops” because I do not remember this. First, I’m not a trader, I work in Treasury. He was asking me about the economy and was worried about his stocks. He knows I hate talking this stuff outside work. He’s a former professional athlete and he hates talking hockey, so he knows how I feel about it. Now he should be well aware of my sarcastic tendencies as we used to hang out alot, but not so much now that we are both very busy. Anyways, I guess I blurted out something to the effect that if I had anything in stocks I’d clear those positions out and throw it all into gold. All of it. The economy is going to crap. The end of the world is near. I think gold was just shy of $700. So I ran into the guy the other day and he’s all over me, thanks for the advice…I’m making a killing…when do I sell…blah blah blah. I’m like, what the hell are you talking about. He tells me what I said that night, and when he got back from camping he had proceeded to tell his broker to sell a large portion of his stock holdings (about $300K) and purchase gold. He got some flack from the guy, something about diversification and it doesn’t fit your risk profile…hehehe…he told the guy to do it or someone else would be. So the guy is up about $125K in six months on some drunken idiots advice…guess who bought the beers and got a bit of a lecture to boot. Where the hell is my commission 