The Inside Advantage on Wall Street

                       

Do Wall Streeters have an advantage that smaller investors don’t?

I frequently discuss “inside players,” those in the financial community who may have an advantage of “being there” on the inside. And how any disadvantage of being an investor “on the outside” can be avoided.

                   

                       

The inside players often make the bulk of their earnings from fees, plus the important fact they can arrange deals and contracts; not because they are smarter or more astute investors.

                       

Just one example of ineptness: Wall Street pros are notoriously poor market timers. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Too Many Financial Experts

                                       

I have often reported how easy it is to become a financial guru. Look at the vast number of available books by purported  experts, questionable analysts and costly advisers.

Keep this in mind whenever you get gratuitous advice, or see or hear a financial ad, giving one salesmen’s opinion for investing.

                       

Sometimes advice may be in the form of a public relations release. Or you get a suggestion about how to find the next hot stock, or how to outwit inflation with often risky alternatives.

                       

You must also overlook the conflicts of interest if the commentators, who rely on advertising, face a decision about criticizing would-be or current sponsors.

                       

Too much advice from gurus are thus tainted (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Trading Securities by Headlines

                       

It’s almost impossible to know after a trading day’s closing, the moods and sentiments that really drove that day’s market.

                       

Short of a major calamity or an important market- impacting event, the media does not know. But it’s ready with headline answers, as if a market crystal ball has somehow telegraphed secrets to them.

                       

It’s a shame their crystal ball doesn’t provide accurate information in advance, not aftter market closing.(See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole atTwitter.)

                   

Picking Winners With Adviser Certification?

                       

Added to all its uses of arcane terms and jargon and acronyms that confuse most of the public, Wall Street inside players, and its analysts and advisers, have to show you how truly bright they are at picking winners.

                       

So they have come up with certification initials they post after their names. The initials sound impressive but many are not as difficult to get as you may think. In fact, many are looked at askance by regulatory authorities.

                       

But they help market advisory services. And they impose investor inferiority. The fear of not quite being up to the task of competing with “smarter” investors. 

                      

A test is needed to get some certifications. But who says that passing a test of routine questions makes someone a true expert at financial matters?

                       

It does help someone understand the arcane terms and jargon and acronyms. The latter  mean nothing for tipping investment odds in your favor. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Different Varieties of Investment Advisers

                       

Advisers come in different guises. They may call themselves a variety of comforting names; wealth advisers is one. They may be independent practitioners, or members of a special department set up by a conventional stock brokerage or investment banking firm or commercial bank.

                       

They may be  specializing in the sale of life

insurance and annuity products. To round out their sales portfolio, they may even sell mutual funds on the side.

                       

They make their earnings from sales commissions from what they sell you or from fees on your assets they manage.

                       

But they are selling something and therefore, their advice may not be truly independent. Aside from all that, they can be costly. (See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Thrift Savings Plans

                       

The Thrift Savings Plan or TSP, administered by the Federal Retirement Thrift Investment Board, was created for U.S. civil service employees and uniformed members of armed services. Under the TSP program, individuals can make contributions to retirement savings

                       

The TSP is a part of the Federal Employees Retirement System, or FERS. Others include the FERS annuity and Social Security.

                       

It’s designed to closely resemble what’s available in the private sector, with tax deferred contributions to 401ks. It is also open to employees covered under the older Civil Service Retirement System or CSRS.

                       

There are five funds; all can be selected in varying amounts, including a diversified mix in the S&P 500; also a mixture of corporate and treasury bonds.(See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)

Global Investments

                       

The financial media will often discuss investing at least some of your funds overseas. But what actually is global diversification of investments?

                       

Many large American companies are doing business overseas. So investing in the S&P 500 will give you a measure of global diversification.

                       

If you do buy overseas investments to broaden this strategic step, there are emerging or developing, as well as developed countries in which to participate. Using indexed funds or exchange traded funds (ETFs), you can invest around the globe with varying regional emphasis.

                       

Use indexed funds which are not hedged against currency value changes. This also helps diversify against inflation in the U.S. and acts as a currency hedge.(See the Earl J. Weinreb NewsHole® comments and @BusinesNewshole at Twitter.)