Economics Questions

Re: Need some serious and thoughtful advice

John James — Mon, 30 Apr 2012 01:01:45 GMT

Ancap89:
By the way, how the heck do I quote stuff on the forum? I keep trying different things and it never works.

Check out the Welcome link in this thread.

Re: Need some serious and thoughtful advice

Ancap89 — Mon, 30 Apr 2012 01:00:09 GMT

By the way, how the heck do I quote stuff on the forum? I keep trying different things and it never works.

Re: Need some serious and thoughtful advice

Ancap89 — Mon, 30 Apr 2012 00:59:11 GMT

JJ, I think his response to this (which I too find strange) is that "academic research has shown" that gold is not a good hedge against inflation. What research this is I do not know. I need to pester him to give me the actual studies.

Re: Need some serious and thoughtful advice

Caley McKibbin — Mon, 30 Apr 2012 00:43:06 GMT

I took some courses for a "Sales Consultant" position with IG years ago. What you are describing sounds essentially the same. I didn't end up going through with it because I was too conflicted, not only about the portfolio management, also because the regulations are obviously designed to neuter the consultant and protect the big banks' sleezy services.

Re: Need some serious and thoughtful advice

John James — Mon, 30 Apr 2012 00:06:26 GMT

Ancap89:
He said that he would be willing to sit down with me and go into it in depth, and I told him to give me two weeks to present the best case I possibly can as to why people should at least have some amount of gold within their portfolio.

For the record, I find it incredibly odd that you would have to do this. It's virtually standard proceedure that everyone should have at least 2%-5% (all the way up to 10%, depending on the advisor) of precious metal in their portfolio "as a hedge against inflation", as they usually put it. I've never heard of anyone who argued against this, let alone needed a presentation to be sold on the idea.

Extremely odd indeed.

Re: Need some serious and thoughtful advice

Ancap89 — Sun, 29 Apr 2012 23:07:59 GMT

@Clayton

"But, personally, I'd rather jump off a skyscraper without a parachute than go into a workaday career as a financial advisor/wealth manager for its own sake."

Why? (In more detail)

"The work looks to me like a combination of the worst aspects of used car sales and accounting."

How? + I'm sorry that you feel that way.

Also, I just got off the phone with my friend, who happened to have called me, and I told him about my reservations. He said that he would be willing to sit down with me and go into it in depth, and I told him to give me two weeks to present the best case I possibly can as to why people should at least have some amount of gold within their portfolio. I think that I might just start a new thread in order to get as much advice/resources/guidance/literature as possible that I can cram into a presentation within 2 weeks.

Re: Need some serious and thoughtful advice

Clayton — Sun, 29 Apr 2012 21:23:55 GMT

Am I reading you correctly that you think I should go ahead and take the opportunity in order to gain experience, knowledge, reputation, etc., so that then I can go out on my own and acually pursue what I believe to be a better path

I'm not in a position to tell you that one way or the other. It seems to me that before you'll be in a position to put out your own shingle and fly solo, you'll need to have enough experience in the business to at least be able to offer detailed, specific criticisms of it. I'm mostly waving my hands and criticizing the system on a conceptual level but a money-paying client would never be satisfied with that. They want specifics and in order to have specifics, I think you'll have to work for someone else for a while. If you think that financial advising ala Peter Schiff is something you eventually want to do, then this could be a stepping-stone to that. But, personally, I'd rather jump off a skyscraper without a parachute than go into a workaday career as a financial advisor/wealth manager for its own sake. The work looks to me like a combination of the worst aspects of used car sales and accounting.

Clayton -

Re: Need some serious and thoughtful advice

Ancap89 — Sun, 29 Apr 2012 20:49:26 GMT

@Clayton:

There is one simple question that makes this obvious: "Do I stand to lose as much as my clients if I make a mistake in the advice that I give them?"

Well, ideally a wealth manager who actually had the freedom to choose what to tell his clients would also be investing in the same stuff that he is advising them to invest in. I am speaking in ideals of course, since this is not the situation which I may have to confront.

"perhaps you might also think about how it can serve as a stepping-stone to a more long-term situation where you're operating your own wealth-management/financial advisor business (think Schiff/Euro-Pacific). Specifically, there is clearly a deficiency of "no-nonsense" wealth managers who have the courage to tell their clients "You have to manage your own wealth and here's why! I'm a wealth-manager and I'm telling you this!""

Am I reading you correctly that you think I should go ahead and take the opportunity in order to gain experience, knowledge, reputation, etc., so that then I can go out on my own and acually pursue what I believe to be a better path?

Re: Need some serious and thoughtful advice

DanielMuff — Sun, 29 Apr 2012 20:11:25 GMT

T. Cross:

[...] has a plan for their kid's college, has a plan for retirement, has good insurance [...]

Is all that you would do is make sure that there is plan, or would you also devise the plan? I ask this because how would you decide where to put that money that is being set aside for the child's college education and for retirement? Would you do what's "safe" and put the money into saving bonds; if so, then how is this any different that being a fund manager who is also figuring out what is saf and what isn't?

The investments are part of this process, but do not consume it. This firm's outlook on investment is more of a wealth preservation/protection/slow growth plan than some sort of fund managing/beat the market/find the next best thing approach.

I suppose that this would be your reponse to one of my questions above; however, as Clayton pointed out, "wealth management is what it is to act at all!"

Re: Need some serious and thoughtful advice

Joseph E. Dorner — Sun, 29 Apr 2012 20:04:00 GMT

Re: Need some serious and thoughtful advice

Clayton — Sun, 29 Apr 2012 19:44:21 GMT

@TCross: It is my view that the modern idea of hiring someone to "manage your wealth for you" is mistaken at root. I'm not saying it's wrong to be a wealth manager - if someone is willing to pay you to do that and that's what you want to do, go right on ahead. My point is more theoretical - wealth management is what it is to act at all! I recommend you read at least the first 150 pages of Mises's Human Action, it's very accessible, quick and well worth your time. Decision-making is not something that can be "outsourced". There is one simple question that makes this obvious: "Do I stand to lose as much as my clients if I make a mistake in the advice that I give them?"

I've given you my reservations about the stock market and you feel confident that you're not stepping into it naively, which is good. Given that you have this opportunity and you're interested in taking it, perhaps you might also think about how it can serve as a stepping-stone to a more long-term situation where you're operating your own wealth-management/financial advisor business (think Schiff/Euro-Pacific). Specifically, there is clearly a deficiency of "no-nonsense" wealth managers who have the courage to tell their clients "You have to manage your own wealth and here's why! I'm a wealth-manager and I'm telling you this!"

I can envision a strong market demand for financial advisors who help their clients see through the layers and layers of bullshit out there about the true nature of money, government finance and regulation, stocks and bonds, the banks, the financial industry, etc. If you can act as a consultant and teach people how to manage their own money as if they were a hedge fund manager, I think you could potentially earn a lot of money. As far as I can tell, the market is wide open. How many Peter Schiffs are there?

And on the Wall Street movie, I'm glad you've watched it. The point is that Gekko is a man who isn't afraid to get his hands dirty and prudently breaks the rules wherever it suits his purposes. The sterile, civilized picture of Wall Street painted by your local financial advisor couldn't be further from reality. The only right way to think about your wealth is the way Gekko thinks about it - as a mafia empire. Even if you're not interested in expanding into others' turf, you still have to protect your own turf, whether you like it or not. Teaching others to think this way about their wealth would be invaluable to them - the financial mafia Dons are soaking the entire civilized world to the tune of trillions of dollars per year. If you can help your clients escape the global financial pillaging, I'm quite sure they would be willing to pay you for it.

I'd read and watch everything I can get my hands on by Doug Casey, Robert Wenzel, Marc Faber, Peter Schiff, Jim Rogers, James Grant, Hugh Hendry and many others. Faber's my favorite - I could envision him as a financial advisor to Michael Corleone or Tony Soprano. I want to be Marc Faber when I grow up.

Clayton -

Re: Need some serious and thoughtful advice

Ancap89 — Sun, 29 Apr 2012 18:56:33 GMT

"None taken. I'd rather you feel insulted than go broke."

Not insulted. Just disappointed that you didn't really give me an answer to my initial question. This is a choice that will be life changing for me, and I want to hear from you. All of the details of wealth management can be debated later.

"I seriously recommend you watch the movie Wall Street with Michael Douglas and Charlie Sheen. My favorite quote from the movie, "Ever wonder why fund managers can't beat the S&P 500? 'Cause they're sheep, and sheep get slaughtered." Hate him all you want, but being Gordon Gekko is the only way to actually make money on Wall Street. If you're not planning to be Gordon Gekko or (better yet) apprentice with someone who is, I recommend you find a safer way to make money."

This is wealth management I am talking about, not fund management. As much as I find that movie entertaining, it fails to serve as an accurate representation of what a wealth manager does. A wealth manager is not a hedge fund manager, nor is he someone who is trying to "beat the market" or "beat the S&P 500". A wealth manager is someone who makes sure that everything in a person's financial house is in order. That means that a wealth manager (or at least the type that I would be) looks at all of a person's net assets and then listens to that individual to figure out what his or her needs and wants are.

That means that as a wealth manager, we make sure that person such and such has the right standard of living for his or her budget and goals, has a plan for their kid's college, has a plan for retirement, has good insurance, has a will written up (if necessary), etc, etc. The investments are part of this process, but do not consume it. This firm's outlook on investment is more of a wealth preservation/protection/slow growth plan than some sort of fund managing/beat the market/find the next best thing approach.

Anyway Clayton, I would really like to know what you actually THINK about whether I should do this or not, based upon my OP. I value your opinon.

Also, you don't have to be beat the market to be a successful fund manager. They get most of their money from all of the fees related to the funds anyway, regardless of whether the fund does well or not for a particular year.

-T. Cross

Re: Need some serious and thoughtful advice

Ancap89 — Sun, 29 Apr 2012 18:42:03 GMT

And why would you suggest this?

Re: Need some serious and thoughtful advice

OldBenjaminNOMORE — Sun, 29 Apr 2012 05:45:52 GMT

I would suggest taking the job and following the firm's philosophy.

Re: Need some serious and thoughtful advice

Clayton — Sun, 29 Apr 2012 03:51:53 GMT

But to answer your comment about speculation, many (if not most or all) things in finance are technically speculation,

I gave examples of things that are not speculation, per se. Of course, this is not "speculation" in the sense of "action involving any sort of uncertainty regarding eventual outcomes" which characterizes all action.

There is a significant difference between buying something with the aim of selling it at a higher price later without performing improvements upon it (speculation) and other forms of business (production). Nothing wrong with the former, of course, but you just got to be honest about what it is.

as I'm sure you already know. Anticipating whether the financial system will collapse and whether we need to buy more gold or not is as much speculation as anything else. You are trying to anticipate future events.

Gold buying is not simply speculation because gold still has a monetary role, however indirect and subtle. So, buying gold is more like simple cash savings used to be before the Federal Reserve.

Anyhow, I should have specified. Basically the investment approach is to avoid speculating on individual companies etc. Instead the investment is speculating on the market as a whole. I'm simplifying, but for the purpose of finding an example, it would be like...Buying the S&P 500 instead of trying to pick 10 companies which you thought were the best, etc. This is an oversimplification, but you get my point. It's more of an effort to avoid really high risk, and also to damplen volatility.

Yeah, that's the zeitgeist with these SPDRs and index funds. Most new businesses fail within 3 years. Many of the businesses being traded on the market today will simply go bankrupt. The idea of "buying the market" is ridiculous. While it does provide protection from inflation, there are other, safer ways to shelter your money from inflation without having to throw it away in the world's biggest casino, the NYSE.

you kinda came off as a dick. No offense.

None taken. I'd rather you feel insulted than go broke. I'll repeat my reservations about entering the stock market. I seriously recommend you watch the movie Wall Street with Michael Douglas and Charlie Sheen. My favorite quote from the movie, "Ever wonder why fund managers can't beat the S&P 500? 'Cause they're sheep, and sheep get slaughtered." Hate him all you want, but being Gordon Gekko is the only way to actually make money on Wall Street. If you're not planning to be Gordon Gekko or (better yet) apprentice with someone who is, I recommend you find a safer way to make money.

Clayton -