If we're being paranoid here, let me ask you this? How do you know that your broker really purchased and is holding all those shares of individual company stock you think you own? Have you ever seen the stock certificates? Me neither.
It takes a certain amount of trust for a modern economic system to function. If you don't have that, you might as well stock up on ammunition and canned goods.
well, thats exactly what Bernie did, didn't he.
I think the sweet spot is to develop the habit of constantly asking yourself, how am I being conned.
One thing I am certain, at any time, smarter people than you or I are probing for ways to steal/skim in small or large ways, legally or illegally.
They lie awake thinking thinking thinking.
Owning stock direct cuts out a whole layer of such potential crooks. Then you are left with only worrying about the thieves that run the corporations.
Thats part of what I like about real estate or direct lending, and being able to drive over and look at your money....check land registry records.
Of course, then your primary worry is your own incompetence, but you make mistakes and learn.
This reminds me of the story...
"A father tells his son to climb to the third step of a stairway and jump. Says "I will catch you". The son says he is scared. The father says, dont' worry, I will catch you. Then the son jumps. The father steps out of the way, letting the son fall. He crys, and asks, why didn't you catch me! The father replies "to teach you an important lesson...Never trust anyone".
This may sound dark and cynical, or you may think I am unhappy. Not so.
My money, my wifes money, my mothers money, my (smart) brother in laws money is all in government guaranteed fixed income, low LTV private lending or in properties we expect to personally use indefinitely, mortgage free.
The financial crisis was merely an opportunity for us to pick up some florida vacation property cheap, with great scepticism.
Another relative left his kids education fund (from granddad) in the market in spite of me speaking to him with as strong words as I dared last summer. I think the one daughter is now looking at community college instead of university.