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Tilted Financial Question....

Discussion in 'General Discussions' started by Japchae, Dec 15, 2011.

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  1. greywolf

    greywolf Slightly Tilted

    Noodle... late to the conversation, but you've gotten lots of good advice here. The only thing I will offer (again) is that as someone soon moving into the (hopefully) gainfully employed stage of life, read The Wealthy Barber by David Chilton. An older book now, it is still not dated in that it is eminently readable, and has the basics for a plan for a solid financial future.

    I will suggest that you need to "connect" with a financial advisor, and it sounds like you have. Being comfortable with your advisor is a key factor. Do think long term... and make small steps, within your own comfort range for risk. Time is actually your greatest ally. Do not worry about the current downturn in the markets. I will probably lose money on mutual funds this year, the first time in 11 years (the Canadian markets have much better fundamentals than the US had over that period). Over that period, my average return on a moderate-risk portfolio has been 14%+. That's with this year's loss.

    Many (most) people have perfected the art of buying high and selling low. Beyond my advice on The Wealthy Barber I would simply say to you that at your age, you can outwait the market. The best time to buy is when everyone else is selling... and the WORST time to divest is almost always when everyone else is.
     
    greywolf, Dec 30, 2011
    #21
  2. Lindy

    Lindy Moderator Staff Member

    Location:
    Nebraska
    The first time I read this I thought you were mis-understanding noodle's post. Reading it again, you may be right. "He's got a great plan..." just raises suspicions. Variable Annuities (by whatever clever name the marketers come up with) are rarely a good idea. Noodle, find out what the surrender charges are(from the company, not the IRS penalties) if you want to bail early.
    Credit unions are better than a lot of financial entities, but they (and their salesmen) can still have their own agendas. Which may not match yours.

    "When others are fearful, be greedy. When others are greedy, be fearful." I think that's from Warren Buffett.

    Lindy
    The Wealthy Barber is on my list.
     
    Lindy, Jan 1, 2012
    #22
  3. Baraka_Guru

    Baraka_Guru Möderätor Staff Member

    Location:
    Toronto
    Most of the finance authors I work with are either expert portfolio guardians (aggressive risk mitigators) or contrarian investors.

    The contrarians do and say things that would convince many that they're insane. Yet if you actually examine their methods, they actually make the most sense. Many of the them tend to lose money a bit more than the average loss compared to the market (and some lose pretty hardcore at times); however, they make gains more often than not, and when they make gains, they're in the stratosphere. If you look at their long-term returns, they're unbelievable.

    What do contrarians do when the market hits the shitter and everyone's selling?

    They go bargain hunting.

    What do contrarians do when their waiter, their mechanic, and their kid's piano teacher are giving them "hot" investment tips?

    They sell, and sell fast.
     
    Baraka_Guru, Jan 1, 2012
    #23
  4. dodger01

    dodger01 Getting Tilted

    Actually I sell investment products.... And variable annuities can be a good idea. The issue is being lead to believe it is something different. Multiple investment options and a $35 annual fee....... It's an annuity. That being said, an annuity(a good one) will have returns comparable to mutual funds but more guarantees built in. A 25 yr old buying an annuity with 100% of retirement assets....should never be approved by the broker/dealer. A 55 yr old looking for guaranteed retirement income, a different story.
     
    dodger01, Jan 1, 2012
    #24
  5. fflowley

    fflowley Don't just do something, stand there!

    You haven't met most of the contrarians, because they are broke or pursuing other careers. There's a total skew of the population that you work with.
    The Market Can Remain Irrational Longer Than You Can Remain Solvent

    (Believed to be a quote from Keynes but not really).
     
    fflowley, Jan 2, 2012
    #25
  6. Baraka_Guru

    Baraka_Guru Möderätor Staff Member

    Location:
    Toronto
    Fly-by-night contrarians don't write books on what they do after fifteen or twenty years of doing it successfully. It's likely because there is no such thing.

    Of course I don't work with most contrarians. I don't work with most writers either. There's a reason for that. Most aren't very good.

    The good contrarians tend to have a strong sense of value in the companies they invest in. The ones I work with will usually meet management in person before investing a cent. Even if things look good on the books, if they get a bad vibe from management, they will often just walk away.

    These guys aren't day traders. Most of them are value investors with carefully crafted buy-and-sell thresholds.
     
    Baraka_Guru, Jan 2, 2012
    #26
  7. fflowley

    fflowley Don't just do something, stand there!

    Baraka, I think we are talking about different things.
    You're talking about deep value equity investors (I think. )
    To me that's different from contrarianism for the sake of being different or opposite.
     
    fflowley, Jan 2, 2012
    #27
  8. Baraka_Guru

    Baraka_Guru Möderätor Staff Member

    Location:
    Toronto
    Well, "contrarian" is a rather umbrella term. When I use it regarding investing, I'm talking about investors who essentially exploit the price-vs.-value discrepancies generated by the herd mentality.

    When the herd runs away from something, these guys run toward it to see how they can take advantage of the situation. When the herd stampedes toward something, these guys find a way to cut and run before the damage is done.

    I think pretty much every one of the contrarian writers I've worked with were, essentially, value investors. What made them contrarian is the fact that they usually do the opposite of what the average retail investor would do. These guys are disciplined. They operate on parameters they set up before they even make investments. These thresholds tell them when to buy, when to sell, when to hold. These guys don't panic and don't get greedy. They follow their numbers.

    So, no, when I speak of contrarians, I don't speak of being different or opposite just for the sake of it. They depend on the herd to buy during price run-ups so that they can sell at a profit. They depend on the herd to sell off during price drops so that they can find bargains.

    There are perfectly good reasons why guys like Buffett post average returns double that of the S&P. Much of that has to do with really knowing what you're investing in. Much of that also happens to be attributable to market panic and greed.
     
    Baraka_Guru, Jan 2, 2012
    #28
  9. Japchae

    Japchae Very Tilted

    Well, Lindy, I guess I should clarify a bit.... We reviewed my knowledge of the market, what my goals are, what I'm interested and not interested in and WE have a great plan that I feel very comfortable with. Both times that I've met with him, I've done my research afterwards and while in the second meeting, I actually looked up one of the stocks he was thinking about investing a small amount with and I pointed out several of my concerns and he agreed that that was not the direction I would go in. Instead I researched several of his suggestions, picked two I felt comfortable with, based on performance, new products and research happening within the companies (one of which I am very educated on anyway) and looked into the dividends. The biggest things we're looking at at the moment are dividends and performance over 5 - 10 - 15 years. I didn't even open my statements from my 403b (when I was with VALIC) for almost 18 months, left everything alone while everyone else was panicking, and that account rebounded better than the majority of my coworkers'. When it was all said and done, most of my coworkers that followed the broker-of-the-moment's advice were still down 12% (one lost $60k that she still hadn't recovered when I talked to her in September). I was up 2%. I had done my research and was comfortable with the markets where I had my money.

    The $35 fee per year is from the credit union only. It does not go directly to the investment company that contracts my broker. It's their fee for providing the service. I'm getting invested in an A plan, where a 4-5 %ish fee (based on whatever the rate is when the check comes in) comes off the top in the beginning. After that there are no other additional fees for my plan (IRS not withstanding) regardless of when I pull the money out. I had a B plan (step fees) with VALIC, but that one is just kinda sitting at the moment, it's only got ~$2k in it and I'll deal with it soon enough. The C plans take 1.5% fees every year based on how much money is in your account at the end of the year, plus management fees. I'm quite comfortable with the discussions that I have and when he gets repetitive with something that I already know or that he's told me, I remind him of my knowledge and we move forward. and I do a lot of research.
    I like research. It makes me happy.
     
    Japchae, Jan 2, 2012
    #29
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