Financial Prejudices and Habits

                    

Many investors eventually learn that much of what they do is wrong. Example: That in-and-out timing the market works less than 5% of the time. That discipline is important, though they’re usually impulsive investors. That constant securities trading can be costly, and so on.

                       

But they do it out of habit, or whatever drives them along these psychological debacle-resulting paths. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

How Able Are Securities Analysts?

                   

I have reported financial media discussions about the recruiting and training of Wall Street securities analysts. Having graduated in my role as a senior analyst on the Street, I have a few opinions of my own.

                       

I learned how to become an analyst all by myself as my undergraduate degree was PreMed. But I attended graduate school for over three years, evenings, to see what it could further teach me, while working as a senior analyst for a major Wall Street firm.

                                           

I feel a good analyst cannot be taught by rote in a classroom, nor at a fancy Ivy League school. I have been in contact with graduate analysts of all types and backgrounds; the needed ability is ingrained. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Financial Adviser Advantage?

                

Most investors don’t need financial advisers for three reasons.

                   

First, basic investing principles are easy to master. Secondly, what to buy is simple in the age of index funds. There is no reason to attempt to buy individual securities. I have explained why in much of my past comments and books.

                       

And third, adviser fees eat too much out of investment earnings. I repeat this constantly. Adviser fees can account for as much as 20% and more of annual investor earnings.

                       

The garden variety of advisers, that is the bulk of them, are not worth the money because their expertise is run-of-the- mill.

                       

On the other hand, investors who have estate and tax questions need legal help. That has little to do with portfolio selection.(See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Ethical Short-Selling

                              

Populist politicians and the bulk of the media give the impression that short sellers are bad. And that short selling causes much of our financial problems. There are times when it does. But short selling usually has a proper function in the securities business and our economy.

                   

This is the practice of selling borrowed securities, in the hope of buying them back at lower prices in the future.

                   

Without short selling, overheated, overvalued securities would continue rising and add to dangerous bubbles, and thus prevent markets from being priced more rationally.

                   

Short selling generally keeps markets honest. Dictating when to stop or retard its use will only exaggerate market extremes. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

An Investment Information Glut

                       

The average investor is bombarded with information about the securities markets from the media and ads purporting to offer more and more data that will assure investment success.

           

Yet, all the research I have done on investment strategy and discipline and on the markets has shown that the more information an investor gets, the less essential knowledge and discipline will prevail.

           

Constant market chatter helps trading volume and Wall Street operatives, but does little for the individual investor’s accurate decision-making and bottom line. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Securities Markets Frenzies

               

Short-term, in-and-out, frenzied trading by  professionals  is what aggravates financial meltdowns. It is the segment of Wall Street that I always avoid in good times. Imagine what can happen in dangerous markets.

                       

This is precisely what aggravated the 2008/2009 market selloff, aided and abetted with mark-to-market asset evaluations and short- selling. True, erratic markets create opportunities for professional traders, particularly those I call inside players. But not the vast majority of investors. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)

Evaluating Bank Services

                  

The media has been reporting that Americans are avoiding bank account fees, in order to save on transaction fees which banks have been imposing to offset costs that have arisen, thanks to added government regulations.

                       

And, the use of newly implemented financial instruments, such as pre-paid debit cards and small loans, entail fees that often are greater than those in the past charged by banks.

                       

Another instance of the public attempt to evaluate simple dollar and cents everyday financial options. (See the Earl J. Weinreb NewsHole® comments and @BusinessNewshole at Twitter.)