This is an appropriate time to retell something that happened a few weeks ago. I met with a financial adviser to go over my affairs to align them with Australia and US law.
As is probably no surprise, I currently hold no stocks whatsoever. I am heavy cash, property, etc. Not that I am happy with those assets either, but in the end 100 acres of land does not suddenly become 50 acres of land. And $100 in cash tends to become $50 in cash over a medium time frame (barring bank collapse).
The conversation included these snippets:
Adviser: “You really need to diversify more. Stocks are the best long-term investment. Here, have a look at these charts showing long-term growth”.
Me: “Fuck that. Stocks are fucked and are gonna collapse.”
Adviser: “No they are not. The world-economy is strong. The US is growing and their unemployment is down, and their economy is booming!”
Me: “Fuck that. You have no idea. If the US economy is so strong, why are real wages down, why is the participation rate down, and why are the numbers of people on welfare benefits booming?”
Adviser: “Ummm, what is participation rate?”
Me: “You are joking, right? You need to educate yourself about what is happening in the world. Plus, you need to understand that Europe and China are hanging by threads, as is the US. What do you think will happen to US/Australian stocks if Italy, Spain, or France goes the way of Greece?”
Adviser: “But Spain is booming again! They have really rebounded! Plus, Australia and US stocks are not tied to Europe, and any fall in Europe will not affect the US or Australia!”
Me: “Where do I start? First, you know Spain’s unemployment rate is around 25%. Does that sound like it is booming? Does an unemployment rate of almost 50% for young people sound like it is booming?”
Adviser: “That is not right. That cannot be right. Can it?”
Me: “Again, you really need to find out what is going on in the world. If you think that a huge collapse in Europe will not flow through to the US and Australia, you have no idea about the interconnected global economy. And we have not even discussed the debacle that is China. China is a basket case and its stock market is hanging by a thread. That will have a huge impact on the US and Australian stock market.”
Adviser: “Umm, I do not think it will.”
Seriously, you cannot make this shit up. This guy is a senior partner in a very large accounting/financial advice firm. He charges hundreds of dollars an hour for his “advice”. He has decades of experience. And he is totally clueless. If I had followed his advice those few weeks ago, I would be down seven figures today, and he would have collected his fees no matter what. That these folks can go about selling “advice” should be a crime.
You can imagine how I left it with him – don’t call me, I will call you. Hope he is holding his breath. But I am intending to email him and tell him “I told you so.”
Buyer beware as always prevails. I have since sought advice from someone who is not aligned with selling anything and who does not receive commissions. I need structure/tax advice, and knowledge of any low-risk, capital preserving investments that pop up, but anyone advocating I buy stocks gets shown the door.
What I do not need is someone telling me the sun is shining when I know it is in fact night time.
“What is the participation rate?”
Hahahaha, what a dipshit, thanks for the early morning laugh!
BTFD!
All is well!
I have two different companies I work with.
One advised a month ago to move heavy cash, #2 was like the exchange above.
A couple of weeks ago I advised company #2 to move to cash, it was a bit of a struggle. I’m no big fish at all but I did have the VP of operations call twice to let me know he personally wants to take over my account with his “team” that has put together a comprehensive plan, and he will work for 50% of his normal fee.
I think he smells a departure, I know he smells a departure.
Great post! Right for the gizzards.
Hard to believe there are people so disconnected from reality isn’t it? /Markets/ are one thing and /humanity/ is a different thing.
We cashed out nearly everything two years ago. Very modest mind you, but at least those fuckers on Wall St. aren’t going to be buying new shoes on my dime.
I’ve known plenty of people who went through the Great Depression, and plenty more from the war after it. Cash and food are king, investments are shit.
Idiot savants and evil swindlers are running this world now. You’d be insane to believe anything they said.
We get this woman in once a year to go over our 401k plan. I got interested in doom porn just in time to avoid the last crash and I wanted to move my funds to all cash but she kept trying to talk me out of it. I made the change and avoided the 40% haircut everybody got. She still doesn’t have a clue. It’s amazing how disconnected these “professionals” are. Their salary doesn’t depend on them being right.
I love those studies where people throw darts at stocks or have chimps picking stocks that show either of those methods as being superior to almost any named professional.
I’m with Stanley.
The truth of the markets explained in 22 seconds:
“He charges hundreds of dollars an hour for his “advice”.” ———–Llpoh
Surely, you did NOT pay him “hundreds of dollars” for his bullshit!!??
Anyway, Ms Freud’s son is a stockbroker. We have somewhat similar conversations often. I say “similar” because I usually leave the room after about 2-3 minutes. Really.
I would love to see just ONE of the so-called financial experts step up and admit they haven’t a freaking clue about what anyone should do in this crazy economic mess. Something like this
Financial guru: I’m here this morning to admit I’m an idiot and anyone who took my advice this last year is fucked. Um, oops.
Wow llpoh, I hope you don’t pick your doctors without some research. Did you find out what this “advisor’s” track record was before setting up an appointment?
Sounds like his financial education comes from MSNBC and Jim Cramer.
Are you using this guy as a contrary indicator?
Everyone believes the dogmas that underlie their profession, from doctors & economists to priests & cops.
How could it be otherwise?
It’s hilarious; us stock futures are up 5% on news China moved to prop up stocks…while shanghai plunged ANOTHER 7% on the same news.
We live in an ocean of ignorance. Always have, always will.
I have similar disagreements with some of our older staff members here at work.
Most Gen-Xers believe me after their first few google searches parrot me.
The millenials take my word as gospel for the most part, I’m right far more often than I’m wrong.
The boomers though? They need to believe the story. Their entire work mindset has hinged on retiring comfortably at 58-65 and living comfortably the rest of their lives off of solid investments and a strong pension. Facing that collapse, they get quite vocal about things.
On topic: Nicely done LLPOH, the guy was just reading from Marketwatch/Bloomberg and hitting the high notes.
He’ll be back soon to say he told you so. ThThe Fed is going to let stocks tank? Really?
Wip, do you really think any of this is new? That the same “bright minds” didn’t do all these things in 1929 and 1930? Or any time before that?
Do you REALLY think the microprocessor has changed anything MORE than the harnessing of electricity, or of steam?
Cycles in such things are completely independent of technology, and beliefs arise to satisfy the cycle, not the other way around.
If this were not so, we’d still be speaking Greek.
I don’t get your point. Did you have one?
All I’m saying is no one knows up or down except the wizard of oz.
“The Fed is going to let stocks tank? Really?”
Did you NOT intend to suggest that the Fed can and will manipulate the tape higher? This is the essence of the “Don’t Fight The Fed” mantra.
I was pointing out that the Fed is not omnipotent.
No one knows for sure, but the trend is your friend. The (weekly) trend is currently DOWN.
Lipoh , I volunteer to be your financial advisor from now on . Hide you cash under your house. That’s what I did.I put cash and silver coins under my mom’s house . I buried it.
I usually charge 50 bucks for this kind of information .Well you know where to find me if you need some more advice.
bb
What’s your address? I have a present to send you.
@LLPOH, good for you!
I did the very same thing with a couple of financial advisor bimbos in mid-2007. I told them I thought the whole thing was a house of cards destined for collapse. And it did start to collapse just a year later.
Some day there may be a some reason to buy stocks – like when the markets drop another 60-70% from here. Then we might be approaching honest valuations for equities. But I wouldn’t touch stocks now with a 20 foot pole, let alone a 10 foot pole.
Alternative Working Headline: “Me! Me! Me! LLPOH Strokes His Own Ego With Story Of How Smart He Is When Dealing With Clueless Salespeople”
LLPOH, why do you even still have a financial advisor? They are just salespeople – they don’t actually know anything.
Well, that rally petered out. DJIA is down 200 after being up, what? 400?
We’ll see if “they” can get another (tomorrow) and try to make it stick.
Sooner or later, there will be a rally that lasts for more than a few hours. The trick will be to see if that one fails and leads to a crash.
Well, I’m not sure. I kinda doubt he was clueless. I would think he was just giving you his spill to see if you bought it. Maybe he didn’t really know, which is crazy.
Just this past Friday evening, a friend of mine was giving me a bad time for not having any stocks, because he said his portfolio had doubled since 2008. Which might have made sense if he was a young person who first got into the markets in 2008, but that isn’t the case! I was like, dude, your portfolio got cut in half during the last big crash, so it would HAVE to have doubled just for you to recover what you lost the LAST time. Essentially you have had all these years at a zero return because it took you the last seven years just to recover your losses.
And then he said something that really made me think – he said that even with that in mind, overall his balance just keeps going up. Which is only true because HE KEEPS PUTTING MONEY INTO IT, but then I realized that most people don’t understand that. I started keeping balanced financial statements for myself since I was in my 20s. So I knew how much money I was contributing myself, how much my employers were matching, and how much the balance changed each month in those accounts because of gains and losses.
I got started at a bad time, because I picked a bad year to be born. I started investing in my first 401K in the late 90s, just in time to build a balance for three years and see most of it wiped out after the dotcom bubble. A few more years went by and I started to get ahead, but then it all got wiped out again in 2008. At the bottom, I had not only lost all gains and losses but all company matches as well.
So then, no, I didn’t sell at the bottom. I waited until it went back up enough for me to have recovered my company matches and THEN got out. But at that point I was sitting on about 15 years of investing and had no gains to show for it. If you have ten million dollars and half of your wealth gets wiped out, you still have five million dollars left over and can enjoy a First World standard of living for the rest of your life without ever having to worry about finding a job. (Which is precisely what I would do if I had that much money – cash it and enjoy life until I keeled over without ever working another day.)
But I think TPC is on to something – there are people who are subject to the sunk cost fallacy. It’s a terrible flaw of logic that keeps people in bad marriages, bad relationships, and bad investments. They’ve sunk so much into it already, they NEED to believe it will work out, as though their need for it to work out would somehow make it do so. And I admit, I felt pretty stupid for having listened to those people for all those years, telling me the stock market would go up 10% every year and my home would never lose value, so I should throw every last spare nickel into my 401K and not worry about paying off my mortgage. I would do a lot of things differently if I had them to do over. But I ate some crow and started doing things differently. That’s going to be hard for older people.
There was much more to it than what I posted. Including : Adviser: “We are doing great – everyone is up the last five years!” Me: “Uh-huh. A fucking chimpanzee is up the last five years. Last time I looked he was in the top 25%”. Adviser: blink. Blink.
To answer a couple questions:
– of course I did not pay him
– I need advice not re investments but re structure, taxes, etc. that shit is complex and ever changing.
Rise up – do not be a dolt. Every adviser has a sterling five year record at the moment.
Llpoh lets talk China, Bitch
Llpoh, if your financial “advisor” (oh it gripes me to call them advisors or planners – they are SALESPEOPLE and nothing else!) can at least give you good advice about taxes, then that is something. Back when I had a “financial planner” (cough cough, hairball in the throat) he wouldn’t even give tax advice – said I had to go to a tax professional for that.
Financial advisors make great money for themselves through legalized grift. Mine was such a sleazeball, I found out (because a friend of mine knows him socially) that he slept with a hooker and came home and gave his wife – the mother of his two children – a STD. Here’s a guy who makes money ripping off old people! Sleazy bastard. It felt good to fire his ass and withdraw ALL of my money. And he doesn’t even buy his own book. He doesn’t stick his own money into that crap – he buys rental properties. So that should tell you something, too.
Pirate Jo – I am with you. This asshat immediately was recommend a whole slew of things that would give him trailing commissions. He would have made tens of thousands a year on me, AND i would have lost my shirt.
I have since located a couple advisers that are totally independent. THE GET no commissions or trailing fees, and kick any such back to the client. They charge a high hourly rate, but at least I know they have no motive to sell me anything. I still do not entirely trust their advice, and the reality is I already know what the best structures will be. But I need it confirmed.
“They get” it should have been above.
Well Llpoh I hope your move to Australia is going well. I’m moving a mile and a half away and it’s already driving me batty. It will be worth it in the end – I would just rather spend my time doing something other than moving, that’s all.
Damnit Lipoh , you don’t need no more advisors when you got me.!!!!!!
If any of these “financial planners” were worth a shit they’d be eager to show you their own personal portfolio, warts and all. It should be required actually. Their paycheck should be based on a percentage of how well their advice performs but then we wouldn’t have an army of financial planners to fleece the masses.
My former boss in the concrete biz had a son that took 5 years to graduate with a 4 year degree in business. His first job out of college was as a manager for a rental car agency. Within a few years he and a friend (roughly the same age) opened their own financial planning and investment firm. His partner previously worked as an insurance agent and in 2011 was fined by the State Insurance Commissioner for “failing to disclose”. WTF qualifies these to yahoos to advise anyone on investments? Five years to finish a four year degree? They’re still wet behind the ears in the ways of the world yet people trust them with their money.
I_S, my parents’ financial advisor from Edward Jones has a degree in history and used to do concrete work. If you ask me, concrete work is a much more noble profession.
I always forget to ask – what is “LLPOH” an acronym for? BC-LR to all
Life, Liberty, Pursuit of Happiness.
I had to ask too. 🙂
If the stock market was anything other than fiction, you should be able to pick stocks more often than not through diligent research. Even if it took you lots of effort. But this is not the case. The price is not tied to profits, performance of the company. You can read every blog, guru website, pour over Value Line, annual reports, visit your former landscaper turned financial advisor — no amount of research results in anything more than a 50/50 bet. The only things that matter are inside information, HFT algorithms, tons of leverage, the ability to short: precisely all the things we little people do not have. What a coincidence! The stock market is, and always has been, a rich man’s shell game. Bugsy Siegel might as well have invented it.
Cash heavy. Always. But I need tax advice.
No damage thus far to my IRA. Roth IRA different story. Small account with nothing but stocks. Big losses there. Have to cash out 20k+ this year due to age.
Should I cash out the Roth stock losses? Yes or no because of ….. Important issue: can I take the losses as a capital gains deduction? Thank you for your $100/hr free tax advice.
Your freeloading pal,
SSS
I got out of the stock market at the end of 2007 2 days before the crash . The writing was on the wall ,to anybody researching financials. After the TARP bailouts, I paid even closer attention and I absolutely refuse to participate in a market that was manipulated by a CENTRAL BANK. TARP was reported as a 1.5 trillion dollar bailout. I did the math back then and came to 23 trillion . The federal reserve , not part of the federal govt and not a reserve, actually admitted to creating 16.7 trillion dollars out of thin air, approximately 6 months ago they reported that . I still say its 23 trillion . and counting . So I moved all in to assets that cannot be counterfeited out of thin air .
Altho I do not have many assets , I prefer to keep what little I do have as far away from the fucking money changers as I can .
Hey, bb, where the fuck were you when I needed your advice?
I didn’t get out of the market but I ran out of my 401K cash so I couldn’t get back in.
I’m proud to say, I have been here after that time and I haven’t lost a cent since.
SSS – I think you have to offset the capital losses against a gain. Otherwise it just sits there waiting to be offset. I personally would not be holding stock at the moment. But I am totally risk averse.
That took me 1 minute to type. Donate the $2 to the Admin.
Gains and losses within a Roth IRA have no tax implications. You aren’t taxed on gains and can’t deduct losses.
If you had losses outside an IRA you could deduct $3,000 directly against current income. You can offset capital gains with no limitation.
I think the financial advisor’s advice is appropriate for someone my age (45). Maybe llpoh is already retired. I have another 15 years of $1000 a month into my 403 account. Where the hell am I going to put it? I think I’ll stick to Vanguard stock index funds, but I’d like to hear some other ideas.
Re: Brazil66 but I’d like to hear some other ideas.
Chinese stocks. Judging by what is happening now, the Chinese government is going to force-feed their markets money until something good comes out the other end.
Shit, another leak . . .
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/Not actually serious about you putting money there.
Well, Admin is not just a pretty face.
That is why I need some advice. Tax law is not my specialty for certain.
Brazil – you pay your money, you take your chances. At your age, it may be worth taking risk. But stocks are high risk for sure.
LLPOH, you used it correctly but you got it wrong: You pays your money and you takes your chance(s).
Prov. You must resign yourself to taking risks.; Everything costs something,
but paying for something does not guarantee that you will get it.
It is a very much simpler than what is being presented here. It is really a question of why participate in a system whose foundation is fraud, whose modus operandi is corruption, whose dynamic is naked violence and whose outcome is rigged? Why? Do you think you can beat it? Do you think the slimy shills hawking grand stories of fabulous retirement income might just possibly be on to the truth?
I was lucky. I gambled big in a 3X levered silver ETF that was in a Roth account. I rode it up, when it was about 8% off the highs I said, that’s it for me. Taking all those capital gains and giving the high sign to the IRS was better than making the money. That was my 24% down payment on my condo.
Now, not one fucking cent in any “market” on Planet Earth. Anyone who can’t clearly see we are well into the Great Unwinding of all the lies and incompetencies of the past 60 years isn’t trying very hard.
It’s over. There will not be a Great American Dream of golden retirements. If you live a normal lifespan, are not shot dead by the federal government or murdered by mobs, we will consider ourselves lucky to still be able to find something to sustain ourselves with.
We are at an historic watershed. The truly SMART MONEY is buying what they will need for the next 10 or 15 years as the rate of return on decent durable goods is going to beat whatever you think your “investments” are going to return in that same time frame.
Use the $ while its mystique is still worth trading for real, necessary and lasting tangibles. Forget, forever, the promise of financialization. It is the 21st Century equivalent of blood letting. Looking back, people will shake their heads that anyone was so incredibly stupid as to believe one word of what it’s become.
Belle, The market has been described as ‘roiling’ before and that fits because the value is calculated by reading the foam at the surface, once you skim that off, you see the real worth is much less. Not everybody can collect what they suppose they have; just the few who ‘realize’ – that is to say – cash in their paper.
“What is the participation rate?” Well in California, Arizona, Nevada and Washington it is very low.
I think they call it a drought. It doesn’t rain much in parts of Australia, either.
Homer – It does not need to rain very much. Whatever comes down, I catch. Even in a pretty severe drought, I will catch more than enough to survive and thrive, where I am.
Average rainfall is around 2 feet a year where I am. Even at 1/4 that, I have enough catchment to be fine. Plus I have had a series of dams built to catch any run of, and will catch perhaps a million gallons a year at normal rainfalls.
The people that are screwed are in big shitties, ie. California, on their 500 square yard plots. I do not have that problem. Or any power problems, sewage problems, etc.
BTW – I assume your comment re “participation” rate, not precipitation rate, was a joke.