What's a regular guy to do?

[hoodoo]

Hi,

This thread may be a bit out of the ordinary for the usual discourse here but I'm finding that I'm in need of some good old fashioned advice.

Over the years, I've manged my investments - straight through the internet bubble I generally followed the traditional dollar cost averaging, portfolio balancing, buy-and-hold strategy professed by so many. It's been ok but not great.

Over the last couple of years, I've become a voracious reader of information regarding economics, society, and politics and just recently finished America's Bubble Economy. Based on this, I find myself in a position where I want to dramatically change my investment strategy but now find that my finances are complex enough that I don't know if I have the capacity to handle things myself. Yes, I can buy ETF's for gold but what do I do with my current but crummy 401k, my kids 529 plans invested in "lifecycle" funds of funds, etc???

I've looked into some local financial planners but they didn't seem to offer anything different from what I'm already doing myself. The banner ads that I've followed from iTulip seem to be directed toward the "high net worth" individual. I'm not worthless but certainly not high net worth.

I'll gladly pay for good advice but what I'd like is to walk into an office and see iTulip on a web browser and start the conversation from there. Is it possible for a regular guy to find someone like this.

I know that this question doesn't really fit the general tone of the discussions here so I would be happy to entertain your thoughts by email - I'm just not sure where else to turn right now.

Thanks all,

Cory

[Finster]

Re: What's a regular guy to do?

Hi,

This thread may be a bit out of the ordinary for the usual discourse here but I'm finding that I'm in need of some good old fashioned advice.

Over the years, I've manged my investments - straight through the internet bubble I generally followed the traditional dollar cost averaging, portfolio balancing, buy-and-hold strategy professed by so many. It's been ok but not great.

Over the last couple of years, I've become a voracious reader of information regarding economics, society, and politics and just recently finished America's Bubble Economy. Based on this, I find myself in a position where I want to dramatically change my investment strategy but now find that my finances are complex enough that I don't know if I have the capacity to handle things myself. Yes, I can buy ETF's for gold but what do I do with my current but crummy 401k, my kids 529 plans invested in "lifecycle" funds of funds, etc???

I've looked into some local financial planners but they didn't seem to offer anything different from what I'm already doing myself. The banner ads that I've followed from iTulip seem to be directed toward the "high net worth" individual. I'm not worthless but certainly not high net worth.

I'll gladly pay for good advice but what I'd like is to walk into an office and see iTulip on a web browser and start the conversation from there. Is it possible for a regular guy to find someone like this.

I know that this question doesn't really fit the general tone of the discussions here so I would be happy to entertain your thoughts by email - I'm just not sure where else to turn right now.

Thanks all,

Cory

Sometimes you'd think Congress must be run by the tax accountant's lobby, huh? All the alphabet soup of acronyms and plans and programs generated basically by tax legislation makes my eyes glaze over, too.

The situation is further complicated by the fact that many retail financial professionals are in the business of selling financial products. Insurance, annuities, investments, that kind of thing. What you buy often has more to to with what will make them money than you. And it sounds like you have recognized that while we can talk about investments until the cows come home, there is a whole 'nother world of investment structures and formalisms that don't get much attention. You are up against much more than just what assets to invest in and ho much.

You are right to want to simplify your financial picture, Cory. The easier it is for you to understand - without becoming a full time accountant yourself - the better your decision making is going to be. Personally I've gone to great lengths to try to structure my investments simply enough that I can readily picture everything in my mind's eye all at once and consider issues in full context.

One thing you might try is to check with a pro that is "fee only". That is, you pay for his time directly (indirectly is the only alternative, none of it is free!), ensuring that his motivations aren't complicated by interests other than yours. Tell him you want to simply things. The reason for getting such help has nothing to do with investing per se, but things like tax issues and whatnot (e.g., you usually can't or don't want to just close a 401(k) and withdraw your money). When friends and relatives ask me questions about things having to do with tax, accounting, or insurance aspects of investing - the legal aspects of structuring investments - I encourage them to see an accountant or fee-only financial planner. Just not my bailiwick.

An alternative might be to get comfortable enough with the investment accounts you have, and carefully sift through them to look for any redundancies and things you could live without. Meanwhile, you could examine the options available within the accounts you have for opportunites to make the adjustments in your investment mix you want. It might be something as simple as having just one "outside" account that you can add to, withdraw from, and have a wide array of investments in, at your discretion without having to worry about gobbledegook like minimum deferred distribution requirements. For example, if you have a 401(k) that is satisfactory except for the lack of, say, a gold fund or emerging market options, you could open up a brokerage account and use it just for those investments that are readily available in your restricted accounts. You may not readily be able to move money between it and your restricted accounts, but it will allow you to make adjustments in your mix that you couldn't otherwise. This is something like what I do and have suggested to others faced with similar issues. Just at least occasionally tote it all up together on a spreadsheet or elsewhere and make sure your overall asset class exposure is what you want it to be.

[BK]

Re: What's a regular guy to do?

There are non-traditional advisors/money managers out there - check out www.financialsense.com - many of the writers are money managers - you'll find that there are advisors out there who want your business.
Fee Only - I was unable to find any fee only Advisors who didn't follow the traditional Modern Portfolio Approach to investing. I think its nearly impossible to make a decent living being a fee only Advisor- Because I couldn't find one doesn't mean they aren't out there.

[hoodoo]

Re: What's a regular guy to do?

We'll see if the thread progresses any further but perhaps it is a matter of taking responsibility for things myself but trying to gather some professional advice where I can.

After reading America's Bubble Economy I eagerly headed to my computer to follow some of the links to start working through the nuts and bolts of building a plan myself. Alas, none of the referenced web links work....

I submit that we need a "Motley Fool" website for the contrarian crowd.


Croy

[BK]

Re: What's a regular guy to do - Why I sought out a professional

I sought out a professional to eliminate my emotions when managing our finances. I'm married so I need to involve my spouse in the decision making and she was involved in the selection of a Money Manager. My family can't afford for me to make a error because of my emotion. There is a big chance the professional may make an error (but, I'll bet its smaller than me making a error).

I realize that if I could manage the same performance as the Professional then I am giving away 1.5 -2 % per year - I'm OK with that - and we still manage about a third of our money independently.

Remember, there is nothing wrong than having a Professional Money Manager manage a portion of your assets and managing a portion yourself. As my understanding of markets improve - perhaps I'll chose to manage a larger percentage of our assets as time goes on.

[Jim Nickerson]

Re: What's a regular guy to do?

We'll see if the thread progresses any further but perhaps it is a matter of taking responsibility for things myself but trying to gather some professional advice where I can.

After reading America's Bubble Economy I eagerly headed to my computer to follow some of the links to start working through the nuts and bolts of building a plan myself. Alas, none of the referenced web links work....

I submit that we need a "Motley Fool" website for the contrarian crowd.


Croy

Email a list on the bad links to EJ and see what he can do.

I have a dictum: you cannot trust anyone else with you money, and if you cannot trust yourself you are in deep doodoo, hoodoo.

Despite continuing to learn mainly here at iTulip just how ignorant I am, I still think the dictum is valid, and at least if things fail, one knows who to blame.

[BK]

Re: What's a regular guy to do - Trust

Jim,

What is it that President Ronald Reagan said "Trust, but Berify"

You've got to trust someone to survive in this world - has been tough for me to accept.

People do better in Groups. If you use a Money Manager you must pay attention to how they are investing your Money - have standards in mind and pull the plug if the Manager isn't living up to your expectations.

When you buy a Mining stock, or a Bear Mutual Fund, or place money in a Bank you are trusting some one to manage your money.
Its important to constantll verify that the people you've trusted with your Money are trust worthy?

Just my view - its taken me a long time to realize that I can't go it alone.

[Jim Nickerson]

Re: What's a regular guy to do - Trust

Jim,

What is it that President Ronald Reagan said "Trust, but Berify"

You've got to trust someone to survive in this world - has been tough for me to accept.

People do better in Groups. If you use a Money Manager you must pay attention to how they are investing your Money - have standards in mind and pull the plug if the Manager isn't living up to your expectations.

When you buy a Mining stock, or a Bear Mutual Fund, or place money in a Bank you are trusting some one to manage your money.
Its important to constantll verify that the people you've trusted with your Money are trust worthy?

Just my view - its taken me a long time to realize that I can't go it alone.

I guess everyone knows" Life is a bitch, and then you die." There has been no time since high school for me when life was not hard, sometimes less so than others, but never have things been a "slamdunk."

Probably around the '87 crash, I took my pension plan in a professional corporation away from Merrill Lynch and started looking after it myself. I did not know diddle. Watching Wall Street Week with Rukeyser one Saturday night, he interviewed a guy, Dan Sullivan, who then and still publishes a newlestter, The Chartist. As I think I correctly remember, it came out that Sullivan believed, as perhaps William O'Neil, the way to play the market is to isolate high momentum stocks early in a market move and hopefully sell them at a higher price. What struck me in the interview was the point that Sullivan did not necessarily care about what the company did, who ran it, or much of anything, he made his trades based purely on momentum and technical behavior. I subscribed off and on to The Chartist, and in fact Sullivan pays attention to a lot more things that pure momemtum (though that is important) and charts. Nevertheless, the notion of not paying attention to the fundamentals of stocks stuck with me, and the result is I still know little about fundamental analysis of a stock.

With Enron and all the others similar companies over probably the entire history of the stock market, it has become my opinion that not only those who run companies while often being paid obscene compensation, but probably most people associated with the financial service industry, i.e. brokers, banks, financial planners, corporations, mutual funds, you name it, are most interested in deriving their own compensation first, and secondly what comes down to the investor. They cook the books, lie, cheat, conive to get their own wealth insured and everything else be damned.

I believe the more people with which one has to deal in trying to manage one's wealth the greater the skimming of whatever might be the profits or, if none, your capital. Now if you do not know anything about anything associated with investing, there may be no other option except to rely upon others as BK suggests he has come to think. But I still maintain one cannot trust others when it comes to my money, and if you must tacity "trust" in them by buying a stock, a fund, whatever, you should do as little of it as possible. The alternative is to find and spend the time to improve your own abilities so that you can achieve the least level of reliance upon others who are out to get your money, or as much of it as possbile. I could have done much more to improve my own knowledge, but I still am making it. There are some people I "know" on this board who have developed incredible levels of knowledge about investing, ecomonics, banking, and finance who seem to have no basic education in these disciplines.

I would not recommend that anyone try to get to whatever point it is in my knowledge and level of understanding of markets, but I do recommend that people should do as much as possible to gather some understanding of investing that seems to work well for them as individuals, and I can just about guarantee you it will be a learning experience involving mistakes--but that is life and why it is a bitch. Somethings that keeps one in the "ballgame" are being young, having a good job, saving as much as you can, paying as little interest as you can on consumption items, and spending the time to learn your own method of how you will invest. I think if you are about to retire, you are alreay whipped. If you are under thirty, you have everything in your favor. Cut off CNBC and spend that time on studying, that is perhaps the best thing I have done in past 5-6 years. I never watch it. All my thoughts about this presume you are a "regular" person who is not educated in finance, etc., which I expect is the majority of humans.

The way I invest, which now is totally in ETF's and mutual funds, moves me about as far away as I see possible right now from actual individual companies and whatever behavior they engage, though in a real sense I am surely still exposed to people at all levels who are mainly looking after themselves first. In my own instance if there were anyone with whom I dealt directly with my attempts at investing, I would flat out say, I do not trust them, and I did not have that attitude at all when I began. Look around at all the mutual funds that do not beat their benchmarks. I believe one can hold one's own relying upon oneself and the information that so readily exists today. Don't be greedy, develop a method, and learn from your mistakes.

See the thread Finster opened today for another example about who is not looking after your interests.

[BK]

Re: What's a regular guy to do?

Jim,

I appreciated your thoughtful response. I probably agree with you more than I disagree.
The level of corruption is scary - I burdened with being overly honest and handicaps me when dealing with others in our society.

I hope to be managing more and more of my money as time goes on and my ability/knowledge/comfort with making small errors increases.

For ME- finding some one to help manage seemed like a the way to go because my wife and I weren't getting the job done.

I hope that in ten years I'll look back and think this was an excellent decision.

We'll see...

[Jim Nickerson]

Re: What's a regular guy to do?

Jim,

I appreciated your thoughtful response. I probably agree with you more than I disagree.
The level of corruption is scary - I burdened with being overly honest and handicaps me when dealing with others in our society.

I hope to be managing more and more of my money as time goes on and my ability/knowledge/comfort with making small errors increases.

For ME- finding some one to help manage seemed like a the way to go because my wife and I weren't getting the job done.

I hope that in ten years I'll look back and think this was an excellent decision.

We'll see...

BK,

There is no such thing as being overly honest in my opinion if you believe in such as "self-image." The problem as I experienced from having been reared by two parents (who in many ways lacked other traits) whom I never saw do a dishonest thing is that it led to a lot of disappointments when assuming others were honest. I still am inclined to trust people, but the less one does, the less the disappointment for me. When you throw in your money and it involves trusting anyone, always be careful. I know people who trust their broker because they "know" him personally, but I think it is mainly a ruse to trust such people.

[jk]

"opm"

"opm" = other people's money

managing opm is not like managing your own money. most money managers [e.g. mutual fund managers] worry about "career risk," and get judged on relative performance. if the s&p goes down 10% and they only go down 8%, that's great. of course, you're out 8% but they beat their benchmark! [assuming an s&p benchmark] you can't eat relative performance. think in terms of absolute performance.

your most important decisions are asset allocation, i.e. how you divide your investments among various asset classes: domestic equity, foreign equity, bonds, precious metals, other commodities, etc.

the most valuable book i ever read in learning about investments was a book written by harry browne in the 1970's called "inflation proofing your investments." he's written others with the same ideas: it's all about asset allocations and understanding how assets perform under different economic scenarios, and then positioning for those scenarios depending on your assessment of the relative probabilities of those scenarios becoming real, analyzing how each investment would react.