Is It Panic If My Broker Tells Me to Get Out?

[brewer12345]

And now I'm hearing all this talk about how this time is different, and the rules are now changing...

There is an old saw that is trite, but perhaps worth remembering:

"The four most expensive words are 'this time its different.'"

 

[ziggy29]

There is an old saw that is trite, but perhaps worth remembering:

"The four most expensive words are 'this time its different.'"

Even a broken clock is right twice a day so you never know for sure, but just the same, the track record of this mentality is not one that I find inspiring.

 

[FinanceDude]

Hummm, interesting... Our FA called yesterday and left a message on our answering machine. After three months of silence he would like us to call him back "ASAP" all of the sudden. I wonder what he wants (could it have anything to do with the fact that the porfolio he manages on our behalf lost 15% since last year?). I'll know more in one hour...

Would you rather he didn't call?

 

[Abreutime]

OUTSTANDING! The last time I heard "new paradigm" talk was in 1999. This is the best news I've heard in a long time = the bottom can't be too far into the future.

Pretty much what I'm thinking.

 

[DayDreaming]

There is an old saw that is trite, but perhaps worth remembering:

"The four most expensive words are 'this time its different.'"

Those who have been watching the market and knowing what they're doing for a long time have probably seen this all before. (Ups and downs, boom and bust, optimism and doom and gloom...) For someone like me, who just started paying attention to the market this year, I wish I had the benefit for your hindsight!!! But like I said, I still think it's best for me to stick to my current plan (and keep my fingers crossed).

 

[CitricAcid]

Even a broken clock is right twice a day so you never know for sure, but just the same, the track record of this mentality is not one that I find inspiring.

A broken clock, however, is the only clock that is ever EXACTLY right.

 

[LOL!]

In the book "A Fool and His Money" john rothschild writes about going into a broker's office. Basically, the broker echoed whatever sentiment the client communicated.

If the client said, "I think CDs are where to be now", then the broker would say, "Yes, I agree. Let's get you into some conservative Treasuries now."

If the client said, "I think it's best to buy low now that the market has dropped 14% this year", then the broker would say, "Yep, that's a good plan. My clients make money doing that all the time."

My point is that you have to be very careful in that not only do you hear what you want to hear, but that folks who are selling you something will tell you what you are predisposed to believe.

I can easily imagine a strategy session at Fidelity that went something like this:

"Now that index funds are down, let's go capture some market share from Vanguard."

"Yep, folks are worried. We can get them to switch easily by praying on their fears."

 

[FIREd]

Would you rather he didn't call?

Yes I would rather he stopped calling to propose changing my AA based on the latest Ameriprise guidelines. I suspect that's why he in such a hurry to talk to me this morning. We'll see what he is selling today...

 

[FinanceDude]

Yes I would rather he stopped calling to propose changing my AA based on the latest Ameriprise guidelines. I suspect that's why he in such a hurry to talk to me this morning. We'll see what he is selling today...

Ameriprise...........sorry to hear that............

 

[brewer12345]

Ugh, Ameriprise. Unofficial slogan: "Things other than the cream rise to the top, too."

 

[Marquette]

Would you rather he didn't call?

I'll pay you to not call me

 

[Helena]

This is why I divested myself of stocks before I retired last year.

 

[Notmuchlonger]

This is why I divested myself of stocks before I retired last year.

Good call if you got enough money to do that. Or you plan on having a short retirement

 

[cute fuzzy bunny]

Or a long one where your moneys buying power has lost 30% of its value after 20 years.

 

[FIREd]

Ameriprise...........sorry to hear that............

I am sorry too. We got an Ameriprise FA in 2001, at a time when we had no clue about investing and too lazy to learn. Right away he locked us in annuities (which sounded pretty good at the beginning!), so we are waiting 2011 for the surrender period to end and cash out. The rest of the money he was managing was transferred to VG a few years ago and I am now managing that money.

I'll pay you to not call me

I thought I already did pay him to not call me! That's how it feels most of the time anyways!

Anyways, today he is pushing for a much larger cash allocation (30-40%) so that we can pick up some bargains when the bottoms drops out...

 

[ziggy29]

This is why I divested myself of stocks before I retired last year.

Guess your crystal ball works. Can I borrow it?

 

[Mysto]

Citric Acid, yup, I would have no difficulty sitting tight and waiting for the rebound----except for the last two words of your post! Two decades! I'd be 75! That's what scares me---that it could take two decades. Here I was investing in stocks to deal with inflation and grow my principal, not erode it and/or then have it be stagnant.

It seems like y'all feel it is appropriate to hold....but isn't it also appropriate to re-evaluate your holdings once or twice a year? And to make changes? I understand that the US economy is always experiencing outside forces and challenges.....and always has been. But is it possible that the changes and conditions that are currently impacting the market are more significant, pervasive, and longer-lasting than any we have previously seen...and that US stocks are unlikely to recover, let alone increase?

This broker couldn't even see 6 months into the future and you trust a call of 20 years?

I don't know what the best move is currently. I won't until the future has has become the past and then I will see that had I made a specific move I would have done better. (Of course if I had know what the lottery numbers were going to be this works even better and quicker)

Because I can't know the future, the best action for me it to have a good basic plan. A cash bucket ( I have 10 years in a CD ladder) and an AA that fits my risk/reward profile. Is it the best approach? Without knowing the future I think it is better than [-]rolling the dice[/-] trading.

Do what you feel you have to do but don't trust the broker - if he knew what the market was going to do he wouldn't be calling you he would be on his yaught.

 

[harley]

He thinks we need to decrease our mutual fundings at least 15% and get rid of the index funds, which are so heavily in the financial sector. He thinks that the only sectors that can make money are commodities and utilities. He also thinks that bond/funds, especially global, will be good (Brazil will supposedly be a major player in the new world economy) and to "overweight in cash, using cash as an asset class."

IMHO, in this paragraph you have every indication of why you shouldn't be listening to this guy.

1) He is telling you to switch your asset allocation, when the basis of good LTBH investing is setting your AA and staying the course. Occasional tweaking is OK, but not in response to current market conditions. That's called timing. Doesn't work.

2) He wants you to buy commodities now, after a huge run-up in prices. That's buying high. I'm sure when the price drops he'll decide it's the wrong place to be, and he'll call you yelling "sell, sell, sell!!"

3) International bond funds may be a good ivestment, I don't know. But they should be discussed in a regular consultation, and not chased just beause everything else is going down, or not going up.

4) Cash is an asset class, and you should have enough to last you a year or three or five, based on your original plan. The only way to increase it now (assuming you are retired) is to sell your losers, take a loss, and get the money out of the market where it might actually do you some good when the cycle changes.

I would fire this guy. Tell him to delete your phone number from his computer. Nothing wrong with Fidelity as a company, but if this guy knew anything, he'd be the one FIREd instead of out there messing up other people's finances.

Harley

 

[haha]

The difficult truth is that no one really could know what is going to happen, including me and most others on this board, For example, if Israel and Iran get going over there with nuclear warheads, things will not be good. A few days ago McCain ws quoted to the effect of "We can't let another holocaust happen". TO me at least, this doesn't sound like carefully measured speech.

The stock market tends to ignore threats like this until it doesn't.

Six months ago my Fidelity rep wanted to meet with me and his strategist cum asset allocator becasue I "Have too much cash, and too much energy." Having too much of these served me well. But now, I only wish I still had too much cash and too much evergy! That's just the way it tends to happen.

Not always but usually markets do not go straight down like they have been doing lately. If you want to lighten up, you might get a better opportunity. Or not, and that is the nub of the problem. Personally, I am not selling anything becasue I believe my investments to have been bought at considerably better than median values, so they should give good returns in dividends and eventually that will be reflected in stock prices. But even here a lot can go wrong- for example, risk free interest rates can go up-moving the whole discount rate for investments up along with it, and market values down.

One take home for me anyway is to beware of any generalizations. It is often said- even here on the board-oh, you can't have so much fixed income, inflation will kill you. Well, maybe so, but history shows that stocks will not prevent that murder, at lest over short to intermediate time frames

Ha

 

[haha]

I can easily imagine a strategy session at Fidelity that went something like this:

"Now that index funds are down, let's go capture some market share from Vanguard."

"Yep, folks are worried. We can get them to switch easily by praying on their fears."

I hope they were smart enough to refrain from writing emails or memos about this meeting! Having this get out would make even Henry Blodgett look good.

Ha

 

[bamsphd]

He thinks we need to decrease our mutual fundings at least 15% and get rid of the index funds, which are so heavily in the financial sector.

A broker advised getting out of index funds. I'm shocked, and amazed!

Ideally, stay the course, which probably means restoring your 50/50 allocation by purchasing more equity index funds. If you can not bring yourself to do that, then at least just sit tight. If you can not even bring yourself to do that, then accept the fact that you are currently temperamentally incapable of investing 50% of your assets in equities, and look into inflation-adjusted immediate annuities at the Vanguard website. They will almost certainly not do as well as someone capable of maintaining a simple 50/50 asset allocation. However, an inflation-adjusted immediate annuity through Vanguard will easily beat the sell low, buy high crowd.

 

[Helena]

Good call if you got enough money to do that. Or you plan on having a short retirement

I have zero debt... nada... even my real estate is paid off.
I have 100% company paid health and dental and a glorified
hobby [self employment from home] that brings in enough
income to cover everyday expenses. I am blessed

 

[Helena]

Guess your crystal ball works. Can I borrow it?

No crystal ball involved... just living right before God...
and using the good sense God gave me... and sometimes
a little nudging from Him was necessary!

 

[WM]

There is an old saw that is trite, but perhaps worth remembering:

"The four most expensive words are 'this time its different.'"

I agree - we were living outside of Silicon Valley during the tech run-up, and the chorus of "new economy / this time it's different" was absolutely deafening. We weren't saving enough then to care either way, but having been through that there's no way I'm buying it this time.

What I am learning from the current mess is that when we're getting ready to FIRE, we'll probably feel better with more like 5 years' withdrawals in cash, rather than 3, which is was I was planning.

 

[FinanceDude]

I'll pay you to not call me

Deal.............shall I send the paperwork??