Financial advisors

Professional financial advisors are so pathetically useless that I can glance at the news, come to an intuitive judgment, and dispense better financial advice than they can.

I’m barely exaggerating. Someone I know, on my advice, bought a sizable quantity of Boeing stock last March after it crashed, and look how much it’s rebounded already, let alone how much further it will increase once Covid is fully under control. If I’d had any money to spare, I would’ve bought some shares too. Now I just hope I can persuade him to repay me with a plate of tendies. Imagine how much passive income some old rich guy could’ve made if he’d hired me as his money manager.

It’s amazing how, even in our era of ruthlessly exploitative and data-driven capitalism, human irrationality is still the predominant force in economics. Not one money manager in history has ever consistently beaten the S&P 500.

I should also mention that financial management companies do their level best to convince people that they need to hire a professional to handle their investments for them, although the best investing option for most people is to put excess money in some super-low-fee index fund or retirement account. This is doubly exploitative because the concept of trusting a professional instead of doing something yourself is integral to modern society, e.g., in healthcare, where “being your own doctor,” as homeopaths suggest, will only cure terminal stupidity by killing you.

9 thoughts on “Financial advisors

  1. dexter1728 says:

    Yeah trading/investing is actually not that hard. It baffles me how many people leave their money in bank account accumulating 1% interest per year.

    Also, I’ve been looking at the crypto market lately and there are some pretty easy patterns to spot pertaining to market cycles. With this knowledge it’s easy to make thousands.

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      1. dexter1728 says:

        Fair enough. We can mathematize that, though – it basically means that you think that for whatever you expect the return to be for a unit of time, the standard deviation is quite large. Seems that you care a lot about risk so maybe index funds are a better bet. However, the expected return (based on previous years) is so large, that the risk is worth it imo. We are in a bull market though so it’s even riskier to invest now as we are well above the ‘fair value’. Take a look at the Sharpe Ratio for analysis of return vs risk.

        But I guess if confidence in the fundamentals is vital for you and you have none in crypto, then the decision is straightforward.

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  2. Teffec P. says:

    Financial advisers of HNWIs are essentially account managers. Their goal is to build rapports with clients via golf, politics, and locker room talk. A lot of busy professionals just prefer to delegate management of their investments to like-minded people who are competent enough to pass the Series 7.

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    1. Ganzir says:

      That’s the thing. Rich people aren’t necessarily more rational than the rest of us, except for whatever little advantage they get on average from the moderate correlation between IQ and wealth.

      I’m convinced that, if I had twenty times the financial acuity of Warren Buffett, there would still be no hedge fund willing to make me a top executive, simply because I wouldn’t seem “credible” to upper-class sensibilities.

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      1. Teffec P. says:

        People (even the very intelligent) usually operate on fear and greed instead of rationality. Understand that and you can make it in the investment biz. Credentials and substance are important, but so are networking and presentation. With a mind like yours, just don’t be cagey, impolite, or autistic and you can ingratiate yourself with the upper class.

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      2. Ganzir says:

        I have zero interest in becoming upper class or becoming a professional investor. All I care about is managing my money wisely enough that I can continue to purchase tendies on a regular basis.

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      3. Teffec P. says:

        I didn’t think you necessarily did. You just seem indignant saying you wouldn’t be accepted or recognized for your genius. I assume you’re in STEM.

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