Did you think your money was safe? Did your financial advisor let you down?
Over the last twelve months, most people have lost a lot of money, all the while following their traditional advisor’s traditional advice. In light of what has happened, I urge you to re-examine the value proposition and business model of the large broker-dealer, and get ready to try something new.
Problem #1 - The big broker-dealer model is broken. To stay employed, advisors today have to sign up more and more clients generally offering firm-recommended products and generic solutions. This is a problem because no one can honestly manage hundreds of clients and thousands of positions. Advisors do not have ample time to effectively study the market, cold call, and manage your money.
Whether you are in mutual funds, separate accounts, or alternative investments your money is typically out-sourced to Wall Street firms that manage massive funds that only know how to do one thing - buy and hold. Their objective is to get your money and keep your money so they get paid fees year after year severely compromising your returns, leaving you exposed even when the market is going down.
Problem #2 - Value proposition - One way advisors compete for your business is to charge lower fees which just means he has to go out and find even more clients (spending less time on your account). Everyone knows that if you are paying less, you are getting less, and, with big firm overhead (advertising, retreats, and CEO pay), you are lucky even to get a third of the service that you are paying for.
Bigger is not better, just as cheaper is not better. The bottom line is really all that matters, and if you have lost money on what was a rather obvious call, then you might consider at least getting additional help. You need to strategy and an advisor that responds to changes in the market. Staying in too long, not taking profits, and averaging in is bad management.
Problem #3 - Bad Assumptions. Long-term investing, whether you follow a growth or a value strategy, is based on the assumption that company information is reliable and that markets are orderly and trending upward. Right now, this is not happening - there is no trust, there is no reliable information, and there is no upward trend. There won't be on for several years!
Making matters worse, the fundamental analysis that your broker and fund managers used to keep you in the market was giving them bad signals - ratios got better and better...all the way down! As if they had a crystal ball, they invested based on what should or could have happened, or what they hoped would happen, not what was happening.
In this environment, fundamental analysis does not and will not work!
Place Capital Management LLC has a completely different approach
Please call for demonstration - come join our group!
Charles Masterson, President
Place Capital Management LLC 3131 West Alabama, Suite 308 Houston, Texas 77098
