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Old 02-25-2014, 10:17 AM   #41
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I had UBS come look at my investments. He came to my office three times from an hour away wearing a nice suit.

He said that my main problem was I was averse to fees.(problem?)

He wanted to sell all my holdings without asking me about taxes I might owe. (?)

At the time I had a MF for the s & p 500 that had an expense ratio of .5%, his recommendation was to buy a whopping 40% of my portfolio in s&p 500 MF with an expense ratio of 1.5% (not including his 1%).

I asked why would I want to pay more and his answer was maybe his 500 MF emulated the index closer....

I showed him the door.
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Old 02-25-2014, 10:26 AM   #42
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how do you protect yourself from the actions of the lemmings throwing themselves off the cliff when the volatility got to be too much for them?
I protected myself in the last down turn by keeping to my Asset Allocation and not panicking. I bought more stock index funds when they were low and have reaped the rewards as the market has climbed. I also buffer my stock index funds with bond index funds. And I keep a few years cash in the bank so I don't have to sell low. In other words, I do what most of us here do.
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Old 02-25-2014, 10:30 AM   #43
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I think it was Carl Sagan(*) who said "Extraordinary claims require extraordinary evidence.". Now, maybe your claim doesn't quite reach the level of 'extraordinary', but the data says it is at least a rare thing, maybe even an outlier (even an overall positive approach may not beat the benchmarks every time). And of course you don't need to provide any 'evidence' if you don't want - but if you really want to engage in a serious discussion, then people here are going to want some data to understand those claims. Some of those questions were about the benchmark, performance net of fees, etc.
Well stated ERD50. Having a discussion about a subject where a member posts a position that is controversial to the general mindset of the forum (and virtually every investment book I've ever read) is great, as long as it is presented logically with appropriate facts to support the position. If InParadise chooses to present these facts, I'm sure it will generate a very intelligent discussion.
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Old 02-25-2014, 10:32 AM   #44
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Just one study re: index investing picked somewhat at random, out of hundreds. Study: Only 24% of Active Mutual Fund Managers Outperform the Market Index | NerdWallet Investing
Excellent point Midpack, and I'll add one thought. If you were to take the 24% that did outperform the index, and then layer on 1.5% in advisor fees, I suspect the 24% would quickly approach a number very close to zero.
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Old 02-25-2014, 10:32 AM   #45
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Just a thought. In every group we have some outliers. We have one who invests almost exclusively in annuities and CD's. So why not a person who has found a good FA?

But....

If I line up 256 people, give them a fair coin and tell them to flip heads 8 times in a row, one of them will probably succeed. That doesn't mean that I should try to make a living as a gambler flipping heads 8 times in a row.

So I congratulate anybody who has found a system/FA/chant that really does produce financial success. But, I can't earn it back, so I will stay with what works for me.
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Old 02-25-2014, 10:42 AM   #46
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I really don't understand the seemingly automatic correlation between wanting to discuss a topic and it being viewed as trying to dissuade someone from their own POV. The only horse I have in this race is pursuit of a good discussion that leads to the possibility of learning new things. What people choose to do with their own money is up to them. Who knows, maybe down the road when things get less hectic I may decide I have the time to go back to managing our funds. After all, what is the point of being on a discussion board if you don't have an open mind?
Personally my responses to you come from the fact that you have been asked which benchmarks your FA was using and what your top holdings are. In both cases you have avoided answering and responded with this:

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I get zero benefit from trying to convince you guys, and have zero desire to do so. After all, I know how hard I was to convince and that is way more work than I care to do.
It seems quite obvious you are the one who is not actually willing to engage in the discussion. You have ignored and diverted the discussion away from those very obvious core questions at every turn. Perhaps you should consider why you are doing this.

The other topic that you actually seem to want to discuss is index vs managed fund. I believe the first index fund was the Vanguard Index Trust starting in 1975. Research on Index vs Managed fund goes back at least that far.

I started paying attention about 30 years ago while taking finance classes in college. I watched FA's argue that index funds had to earn less than active funds because there was no human making decisions. That hasn't panned out over the last thirty years according to actual published return data that takes fees into account. I saw FA's argue that index funds were less tax efficient than managed funds. Turns out index funds are usually more tax efficient because they trade less frequently.

Personally, I do not believe index funds are a total solution to everything. I believe index funds are best when applied to broad markets like the entire US market. Narrow focused sector index funds would require you (or an FA) to manage them. Or at least to hang on for a wild coaster ride if they are not being managed.

I do primarily invest in index funds today. 70% of my invested net worth is in index funds, the rest is in actively managed funds and cash.

The only fund managers I can name, that beat the indexes for more than 5 consecutive years once fees are factored in are Warren Buffett and Peter Lynch. When Peter Lynch turned over management of the Magellan fund it had become too big to manage, and today it's a typical fund that under performs both the S&P 500 and the Large Cap Growth Stock benchmark that Fidelity tracks it against. It also has an expense ratio that is 10 times higher than the expense ratio of my S&P 500 index fund. (0.51 vs 0.05). Today Magellan has a high 70% turnover rate. Like an aging rock star, it's day has long past. The investing landscape is littered with other aging rock stars. We can discuss any you would care to name.
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Old 02-25-2014, 10:43 AM   #47
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There are good financial advisors, as there also are investors needing professional help. If that is the case, more power to the investor. Calling people "lemmings" because they invest in index funds, however, isn't helpful and invites responses of similar ilk. Perhaps if we avoid characterizing one another a more useful discussion will result.
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Old 02-25-2014, 10:53 AM   #48
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Perhaps if we avoid characterizing one another a more useful discussion will result.
How soon you forget where you are:

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I'm checking out of here for a better place,... Didn't realize these are the lumpen slums of cyberspace.
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Old 02-25-2014, 11:01 AM   #49
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Our FA beats benchmark every time.
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Volume? He only does business by word of mouth. We are in our third year with him after friends recommended him. It's nice not to have to deal with investments anymore.
These remarks raised the hairs on the back of my neck. They are startlingly like things that people said when they "invested" with Bernie Madoff, as reported in "No One Would Listen" by Harry Markopolos, the analyst who sounded the alarm on Madoff years before the Ponzi scheme collapsed.

Sorry if this sounds like an inappropriate comparison to your FA, but that book make me paranoid about financial "advisors" whose returns are better than everyone else's, and who only accept money from the chosen few.
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Old 02-25-2014, 11:40 AM   #50
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We reviewed our investments, our investment strategy, the people we dealt with, and the management fees that we paid (including rooting out some of the hidden fees) four years ago prior to retiring.

It took six months to find a fee for service wealth management firm and advisor that we were happy with and who had the right level of expertise that we desired. I am happy to let this firm manage the portfolio. We pay just under 1 percent. Our four year returns have been very good given that we repositioned the portfolio for retirement.
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Old 02-25-2014, 11:41 AM   #51
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There are good financial advisors, as there also are investors needing professional help. If that is the case, more power to the investor. Calling people "lemmings" because they invest in index funds, however, isn't helpful and invites responses of similar ilk. Perhaps if we avoid characterizing one another a more useful discussion will result.

My investing needs are simple, I am indexer also, so my need for a financial advisor is nil. However, I have several friends that would benefit greatly in having one especially in the total personal finance arena. If FA would take the responsibility of beating the crap out of them every time they strayed from the plan, then my friends total balance sheets would benefit greatly from having one.
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Old 02-25-2014, 11:43 AM   #52
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These remarks raised the hairs on the back of my neck. They are startlingly like things that people said when they "invested" with Bernie Madoff, as reported in "No One Would Listen" by Harry Markopolos, the analyst who sounded the alarm on Madoff years before the Ponzi scheme collapsed.

Sorry if this sounds like an inappropriate comparison to your FA, but that book make me paranoid about financial "advisors" whose returns are better than everyone else's, and who only accept money from the chosen few.
+1 those parts of his post made me think of Madoff as well. Scary.
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Old 02-25-2014, 11:43 AM   #53
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Volume? He only does business by word of mouth. We are in our third year with him after friends recommended him. It's nice not to have to deal with investments anymore. He's also with UBS, getting volume access to the top funds that way, as opposed to being an independent. Was wonderful in dealing with transfer of assets when Dad died, and will guide our kids when we pass. They have free accounts with him too.

I drank the TMF cool aide for quite some time, and indeed it was worth my while, but frankly if they try to say you should do it without a FA, these days it tends to be about steering you towards a for fee subscription of their own.
I may be the forum's 2nd most conservative investor. And this jumped out at me, too.

I read Markopolos's book and a few others on Madoff and this was one of the classic warning signs.

I hope your guy and his results are all on the up and up and you stay happy with him and end up solidly wealthy. But little old me, and my tiny nest egg wouldn't go there.
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Old 02-25-2014, 11:48 AM   #54
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I read this yesterday, some guy named Buffet said this:

'He’s said individual investors may be better off avoiding his approach to picking stocks, instead purchasing a fund that holds every company in the Standard & Poor’s 500 Index.'

http://business.financialpost.com/20...-shareholders/

Seems he's done pretty well, and his advice costs me the time to read it.


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Old 02-25-2014, 11:50 AM   #55
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Old 02-25-2014, 12:07 PM   #56
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I read this yesterday, some guy named Buffet said this:

'He’s said individual investors may be better off avoiding his approach to picking stocks, instead purchasing a fund that holds every company in the Standard & Poor’s 500 Index.'

Warren Buffett reveals 5 rules for investing in annual letter to shareholders | Financial Post

Seems he's done pretty well, and his advice costs me the time to read it.


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Index investing appears to be premised on efficient market hypothesis and random walks through financial markets, but Buffet's experiences and those of others, as he has written nearly 30 years ago, stand in stark contrast to other data showing that managed funds do not statistically outperform index funds. No one has rebutted this: The Superinvestors of Graham-and-Doddsville - Wikipedia, the free encyclopedia

Perhaps these special managers are just special. But you know, statistics are only good for the averages.
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Old 02-25-2014, 12:10 PM   #57
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Are you going to give us his/her name so we can get in on the action... If not, what's the purpose of your post #3?
LOL. You are kidding right? I happen to like my FA. Post #3 has already been discussed.

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But newbies do come here to learn, so if you're going to make a claim they're naturally going to want to believe, maybe give them any basis to support it.
Or maybe mentioning it in brief will trigger an idea for their own due diligence. I have no desire to beat my head against a brick wall.

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The subsequent quote above suggests you don't understand the fundamentals of passive investing which include the discipline to avoid panic selling/market timing.
Red quote has already been discussed in length.
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Old 02-25-2014, 12:16 PM   #58
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Having a discussion about a subject where a member posts a position that is controversial to the general mindset of the forum (and virtually every investment book I've ever read) is great, as long as it is presented logically with appropriate facts to support the position. If InParadise chooses to present these facts, I'm sure it will generate a very intelligent discussion.
Heh. InParadise has decided that the pain and the effort of this exercise is not balanced by enough reward.
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Old 02-25-2014, 12:23 PM   #59
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I think a smart guy could beat the market net of fees. But it scares me to give my money to him.

Average returns will work just fine in my situation.
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Old 02-25-2014, 12:56 PM   #60
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This tone of this thread has gotten me thinking about a a few human traits.

In engineering we used to get ahead of the argument game by designing tests, finding failures, creating possible solutions, testing them, analyzing results, and then repeating as necessary. It was usually (sometimes) straightforward to find out if we were right or not, and we found that test results trumped opinion every time. Then we just went got on with it. Winning was being correct because it was better for the system to work than not!

However sales is not the same as engineering. Winning is convincing the customer that you offer something superior and getting them to give you money for it. As an consultant I found myself having to do both. Selling myself to get jobs, and then actually making something work. The two thought processes were so diametrically opposite that I found it took me some time, weeks, to switch my mind completely from one to the other, and weeks again to switch back.

Once one has put a lot of time and thought into something, and finally made a decision, it is psychologically very taxing and sometimes impossible to take in new information, especially if it fundamentally opposes your hard thought out decision.

It is helpful if we can learn from the experience of others but sometimes we really can only learn from our own experiences. I know I had to, I trusted smart people who wrote books showing how they were right and others wrong, people in expensive suits who apparently spent a lot of money, people smarter than the markets, etc. We look for these parent figures. It takes a long time to find that they are not there.

I know in my early years I used to study tricks on how to "win" an argument, only later finding that in real life winning the argument usually meant you lost something more important.

Creepy but good link for what a "good" FA should do.
3 Ways to Convince Anyone of Anything - wikiHow
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