The client is happy with a 6% rate of return and the company is happy with a 100% increase in their profits.
Why don’t they offer it? Because they have no clue what the market will do over the next 10 years. If they don’t know then they shouldn’t imply that they do by making the promise of returns in the future if people hold on for some specific period of time.
- My money manager is NOT the best manager—If he was, everybody would be using him… or his minimum client size would be north of $50 million. My manager is as good and bad, as every other manager.
- I make the most money when I sell you bonds—That is why bonds are the only security where I don’t have to tell you how much I made. I do on stocks, mutual funds, money managers… heck, even if I sell your house I have to tell you my commission. But I don’t on bonds! And I make a lot!
- Past performance is no guarantee of future performance—Wall Street talks the talk but they don’t walk the walk. If they really believed this, they would throw away their mountain charts and tables showing the past performance instead of adding the necessary verbiage in small print at the bottom of the page.
- There is a reason I’ve mistitled your accounts—I did not put POD and TOD on your accounts so that when you die, the accounts stay with me through probate. That way I can make money on them when you are dead and work on your kids to keep the accounts with me.
- Actively managed accounts do not beat the index regularly enough to validate paying any fees. Simply put, you wouldn’t pay a fee to be in first class every flight if sometimes you got to be in first class but most times you didn’t.
What does the world’s greatest investor recommend to his wife, LeBron James, you and me? Warren Buffet says we should put our money into index funds. That’s what he told his heirs and LeBron to do.
- Stocks can’t make you happy—they can only make you sad. Money doesn’t make you happy; as long as you have enough to live comfortably…Connections make you happy. Getting a 30% rate of return makes you excited, but cannot make you happy. However, lack of money or losing money CAN make you UNHAPPY!
- I would prefer that you didn’t know about the Preferred list—I know you hired me to find the absolute best solution to your problems… it’s just that my company only wants you to look at solutions that make them the most money.
If we sat down with the average investor… how many of these things would they know? Do you see any leverage here? If you don’t, goodness, you might be part of the disclosure problem.
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