The worst [investing] advice [you have received]
- EternalOptimist
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The worst [investing] advice [you have received]
What's the worst advice you ever received from someone who supposedly was 'in the know' ?
"When nothing goes right....go left"
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Re: The worse advice
On the March 11, 2008, episode of Cramer's show Mad Money, a viewer named Peter submitted the question "Should I be worried about Bear Stearns in terms of liquidity and get my money out of there?" Cramer responded "No! No! No! Bear Stearns is not in trouble. If anything, they're more likely to be taken over. Don't move your money from Bear." On March 14, 2008, Bear Stearns stock fell 92% on news of a Fed bailout and $2/share takeover by JPMorgan
It wasn't directed at me and I wasn't listening but that ^^^^^^ was pretty bad advice from an "expert" stock picker.
It wasn't directed at me and I wasn't listening but that ^^^^^^ was pretty bad advice from an "expert" stock picker.
Re: The worst advice
A "Financial Adviser" at my credit union reviewed my investments and recommended an assortment of mutual funds. All with an 8% front load. I did not bite.
Steve |
Semper Fi
Re: The worst advice
I am speaking on behalf of my kid sister here: "At the peak of the internet boom, my big brother told me to put all my $2k of Roth IRA into the Janus Global Technology Fund. One basket. All eggs."EternalOptimist wrote:What's the worst advice you ever received from someone who supposedly was 'in the know' ?
- Porcupine
Re: The worst advice
"You don't want to get term life insurance; you need 'Permanent' insurance."
Re: The worse advice
For Seinfeld fans, follow George's lead: whatever Cramer tells you, do the opposite.BBL wrote:On the March 11, 2008, episode of Cramer's show Mad Money, a viewer named Peter submitted the question "Should I be worried about Bear Stearns in terms of liquidity and get my money out of there?" Cramer responded "No! No! No! Bear Stearns is not in trouble. If anything, they're more likely to be taken over. Don't move your money from Bear." On March 14, 2008, Bear Stearns stock fell 92% on news of a Fed bailout and $2/share takeover by JPMorgan
It wasn't directed at me and I wasn't listening but that ^^^^^^ was pretty bad advice from an "expert" stock picker.
Re: The worst advice
The firm I work for has a number to call for guidance on picking funds in our 401K. I was 45 at the time and the person from JPMorgan said I should not hold bonds becasue I'm too young and suggested I be 100% in equities. Thank God I didn't listen because even with my 60/40 AA I still had a hard time during 2008.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!
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Re: The worst advice
Years ago on "Wall street week" The "round table" of experts were picking their favorite companies. One of the picks was Worldcom.
(Lucky it was "only" 1% of my portfolio.) I don't play the losers game of chasing individual stocks anymore.
(Lucky it was "only" 1% of my portfolio.) I don't play the losers game of chasing individual stocks anymore.
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Re: The worst advice
You are a doctor. You need to invest in variable universal life insurance. This was at our morning meeting last week. I laughed at the representative and complained to administration for inviting someone in to waste my time.
Re: The worst advice
Thee worst advice was to buy cable and real estate limited partnerships(which I did) from Prudential back
In the late eighties
In the late eighties
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
- Cut-Throat
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Re: The worst advice
I visited a 'Financial Planner' for a 'Free' Cash flow analysis. His official Printout recommended an SWR of 8%, and of course investing all my money into his selected group of commission-able mutual funds.
I used his advice for Comedy only.
I used his advice for Comedy only.
- nisiprius
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Re: The worst advice
It was a long time ago... late seventies. I was new to investing... I was interested in socially responsible investing (SRI) and considering Pax World Fund, based on an ad that showed some nice rising vertical bars. (Ultimately I did invest in it, and it was your perfectly OK actively managed 1% ER balanced fund... as in "for those who like this sort of thing, this is the sort of thing they will like." I don't hold it any more, but no regrets and no complaints.)
Anyway I thought I should do a reality check, so I looked in the Yellow Pages, saw some ads for firms involved in "Alternative Investing." I thought "Alternative" meant, you know, green crunchy wholesome do-gooder stuff. So I called one of them. They said they'd research Pax and get back to me. A few days later they called back and said "We've looked into it, it's a loser, you don't want it." They invited me to come into their office for a consultation. I did.
They started showing me brochures for some kind of oil exploration companies. I don't know whether it was stocks or shares in a partnership or whatever. They were "explaining" to me something about how it worked. These companies didn't exactly produce oil, I think, they issued claims on the oil that they might be finding in the future... or something like that, and that they would make money whether or not the company actually found oil. Or not. Or something. I dunno. Even I could tell that they hadn't been listening very clearly to my statement of my interests as a client. I expressed bafflement as to why they thought this would interest me and high-tailed it out of there.
These were the years when my subscription to ComputerWorld also "came with" mailings of packages of business reply postcards, and in among the disk drives and SyncSort software were many investment deals, many of them with pictures of oil wells on them. So this was some sort of sleazy thing that was popular at the time.
I ended up going with Merrill Lynch. Everything is relative. These days, I suspect a naïve investor would be mostly like to fall into the clutches of the independent advisor whose offices just happen to be right in the bank, and... you know what? A Merrill Lynch or a bank-housed Funds-R-Us rep isn't by any means the worst thing that could happen to someone.
Anyway I thought I should do a reality check, so I looked in the Yellow Pages, saw some ads for firms involved in "Alternative Investing." I thought "Alternative" meant, you know, green crunchy wholesome do-gooder stuff. So I called one of them. They said they'd research Pax and get back to me. A few days later they called back and said "We've looked into it, it's a loser, you don't want it." They invited me to come into their office for a consultation. I did.
They started showing me brochures for some kind of oil exploration companies. I don't know whether it was stocks or shares in a partnership or whatever. They were "explaining" to me something about how it worked. These companies didn't exactly produce oil, I think, they issued claims on the oil that they might be finding in the future... or something like that, and that they would make money whether or not the company actually found oil. Or not. Or something. I dunno. Even I could tell that they hadn't been listening very clearly to my statement of my interests as a client. I expressed bafflement as to why they thought this would interest me and high-tailed it out of there.
These were the years when my subscription to ComputerWorld also "came with" mailings of packages of business reply postcards, and in among the disk drives and SyncSort software were many investment deals, many of them with pictures of oil wells on them. So this was some sort of sleazy thing that was popular at the time.
I ended up going with Merrill Lynch. Everything is relative. These days, I suspect a naïve investor would be mostly like to fall into the clutches of the independent advisor whose offices just happen to be right in the bank, and... you know what? A Merrill Lynch or a bank-housed Funds-R-Us rep isn't by any means the worst thing that could happen to someone.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
- Clark & Addison
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Re: The worst advice
My worst advice was just before I started teaching. The teacher that was retiring and whose job I was taking over set me up with a financial advisor who got me to open a Roth IRA inside a variable annuity. My 403b is also in a variable annuity, but that's only because all three of the poor options my employer allows us to contribute to are annuities. The Roth has since changed to Vanguard, but there is still money sitting in the other Roth waiting on the surrender charge to expire.
Re: The worst [investing] advice [you have received]
Back when I did not know a thing about investing and had my assets managed by a financial advisor I followed his advise and sold off a fund during the last week of February, 2009 because of a "feeling" he had. Of course we all know that the next week was the market bottom. I don't recall when the money went back into the market (it eventually did, perhaps June, and into a balanced fund that was way to conservative for my age). I consider it a life lesson and am thankful that I found this forum last year.
R
R
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Re: The worst [investing] advice [you have received]
Purchasing life insurance that had an investment vehicle component - variable life insurance and actually thinking for a "brief" moment that the illustration would become reality. After matching actual performance (net of fees) to the illustration I quickly came to the realization I'd been sold a bill of goods. Fortunately, I made out okay was able to get back nearly all principal after mutual company went public and gave me shares. Now, I hold the shares (odd-lot) to their dismay and complaining of the extra cost of mailings to shareholders with less than 100 shares. I then invested that recovered principal in a bunch of index funds with the name Vanguard and have since more than doubled the money.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: The worst advice
I got similar advice from (then) USPA-IRA (now First Command), an "investment advisor" company that targets military people. This was just as I was beginning to invest. I signed up for a "contractual plan" that was front-end loaded and had relatively high fees. Fortunately it was a decent fund with Fidelity so it made money for me as I stuck with the 10 year plan of a couple of hundred a month.Sbashore wrote:A "Financial Adviser" at my credit union reviewed my investments and recommended an assortment of mutual funds. All with an 8% front load. I did not bite.
The advice was bad because it made it seem that the commission and fees didn't really matter. If the fund had performed as it did but without the drag of commissions/fees, I would have done a helluva lot better. On the upside, it got me in the habit of regular investing using dollar cost averaging. So a few years later when I could afford to set aside more per month, I did it via no-load funds. I hadn't discovered Vanguard and indexes at that point; it took me a while longer to come around to that view of the world.
Bottom line: bad advice but a good learning experience.
Friar1610 |
50-ish/50-ish - a satisficer, not a maximizer
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Re: The worst [investing] advice [you have received]
A very close friend tried to get me to invest in something he had invested $300K in, which supposedly would pay a huge return in a short time. I told him it sounded like a Ponzi scheme to me, and he assured me that he personally knew the guy who ran the operation and that he was a very successful and well-connected businessman. I declined. Three weeks later, the very successful and well-connected businessman was arrested by the FBI for operating a Ponzi scheme. He had gotten somewhere betwee $50M and $100M bucks from his friends and his friends' friends. My buddy lost the entire $300K. When it comes to investment advice, I listen only to myself.
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Re: The worst [investing] advice [you have received]
Back when I was working for the Federal government the spouse of some distant co-worker organized some sort of free investment seminar for us younger workers to attend.
Turned out it was an Edward Jones (or similar) investment adviser who tried to talk us into abandoning our Federal TSP savings plan and investing IRA money directly with him so that we could access higher performing tech funds that weren't available in the TSP. This would have been right before the 2000 tech bubble crash.
At the time I was somewhat annoyed by the limited investment options within the TSP but knew enough not to pay commission for mutual funds I could buy myself commission free. Glad I kept everything in the TSP though.
Turned out it was an Edward Jones (or similar) investment adviser who tried to talk us into abandoning our Federal TSP savings plan and investing IRA money directly with him so that we could access higher performing tech funds that weren't available in the TSP. This would have been right before the 2000 tech bubble crash.
At the time I was somewhat annoyed by the limited investment options within the TSP but knew enough not to pay commission for mutual funds I could buy myself commission free. Glad I kept everything in the TSP though.
Re: The worst [investing] advice [you have received]
In 1985, my broker convinced me to buy this newfangled thing called a "real estate limited partnership". Eventually, I was able to sell my $2000 investment for $16 on the secondary market.
In 1999, a co-worker, at a 401K investment seminar, tried to convince me that the stock market could certainly continue to gain 15%/year, and that bonds were for losers, and that I'd be an idiot for not implementing a 100% stock allocation. Fortunately, I ignored him.
(I got a lot smarter between 1985 and 1999.)
In 1999, a co-worker, at a 401K investment seminar, tried to convince me that the stock market could certainly continue to gain 15%/year, and that bonds were for losers, and that I'd be an idiot for not implementing a 100% stock allocation. Fortunately, I ignored him.
(I got a lot smarter between 1985 and 1999.)
Re: The worst [investing] advice [you have received]
My biggest mistake was getting out of the stock market in the mid 1990's. I took the bad advise of Ken and Daria Dolan who had a TV show on finance. They said the market was way overpriced when the Dow was at 4,000. A few years later I got back in when the Dow was at 8,000.
Re: The worst [investing] advice [you have received]
It is ironic, isn't it? Took me about the same amount of time - though I started in the late 90s, which is definitely worse than starting in 1985!Tom_T wrote:In 1985, my broker convinced me to buy this newfangled thing called a "real estate limited partnership". Eventually, I was able to sell my $2000 investment for $16 on the secondary market.
In 1999, a co-worker, at a 401K investment seminar, tried to convince me that the stock market could certainly continue to gain 15%/year, and that bonds were for losers, and that I'd be an idiot for not implementing a 100% stock allocation. Fortunately, I ignored him.
(I got a lot smarter between 1985 and 1999.)
- Porcupine
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Re: The worst [investing] advice [you have received]
That sounds like someone I knew who mortgaged is paid-off home to invest with a guy he knew, claiming his money would double in six months. Well, the short story was the guy running the partnership was arrested by the FBI for running a ponzi scheme and the fellow who mortgaged his home couldn't pay back the mortgage with his small retiree pension, he's now living in the basement of a relatives home.ResNullius wrote:A very close friend tried to get me to invest in something he had invested $300K in, which supposedly would pay a huge return in a short time. I told him it sounded like a Ponzi scheme to me, and he assured me that he personally knew the guy who ran the operation and that he was a very successful and well-connected businessman. I declined. Three weeks later, the very successful and well-connected businessman was arrested by the FBI for operating a Ponzi scheme. He had gotten somewhere betwee $50M and $100M bucks from his friends and his friends' friends. My buddy lost the entire $300K. When it comes to investment advice, I listen only to myself.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Re: The worst advice
This is the second worst investing advice I got which also prompted my very first post here in the forum asking about whether I should terminate my whole life or just stick with it since I already paid premiums for my first year (which pretty much went to my sales agent). Needless to say, I surrendered the policy and just considered the $900+ premiums as tuition fee or stupid tax as one Boglehead suggested.jsl11 wrote:"You don't want to get term life insurance; you need 'Permanent' insurance."
The worst investment advice I got was from my uncle who advised me to get into penny stocks. (Worst idea ever) He likes to play in the stock market and showed me that he invested in a tech startup ITMTF where it's main product was a Real-Time chat translator software/app. He said he was already following the stock when it was around $0.10 and then bought into it when it went up to $0.80. The stocks kept going up and even went up to $2.00+ per share. That's a lot of money to be made I thought! (This was more than 2 years ago, I'm young, very new to investing and was stupid ) So I followed his advice and invested like $900 at around the $1.00+ range. As expected, the stock went downhill and never recovered. It's now worth $0.14 per share. I recently just sold my shares and I'm just thinking of using it as a tax loss incentive. I think I lost more than $900+ since I had to pay for transaction fees etc (bought it through TDAmeritrade).
Yup. Big learning experience. Never happening again
- HardKnocker
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Re: The worst [investing] advice [you have received]
A broker advised me in the early 1980s to buy Ensearch.
“Gold gets dug out of the ground, then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility.”--Warren Buffett
- bogleblitz
- Posts: 506
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Re: The worst [investing] advice [you have received]
My wife heard from a friend to buy faz/fas and make quick fast money. He said these stocks are for short term, 1 week. Don't hold it for long.
faz = Direxion Daily Financial Bear 3X Shares
fas = Direxion Daily Financial Bull 3X Shares
Not doing any research, We ended up buying $3000 worth of faz (bear) in 2009 and lost most of my money. I still don't understand what those stocks do but I'm sticking to the 3 fund portfolio from now on.
faz = Direxion Daily Financial Bear 3X Shares
fas = Direxion Daily Financial Bull 3X Shares
Not doing any research, We ended up buying $3000 worth of faz (bear) in 2009 and lost most of my money. I still don't understand what those stocks do but I'm sticking to the 3 fund portfolio from now on.
Re: The worst [investing] advice [you have received]
Three examples, the worst advice at the top, the most frequent giver of bad advice being my father, at the bottom:
(1) In 2007 my fiancee and I went shopping for a financial adviser to help us with our debts and financial structures. Four of the five advisers instead came up with plans to take out 6 figure margin loans and buy into aggressive mutual funds. Hands up who thinks that would have been a good idea now?
Lesson Learned #1: Most advisers don't know what they're doing any more than I do. Cost: Free
(2) The fifth adviser was listening and was actually genuinely useful to us at that stage, though too expensive in the long run. Once we became debt free he was asking for 4% just to invest in SPDRs and the like.
Lesson Learned #2: Advisers are in it for themselves. It would be near impossible to make money with those overheads and he should know that which makes him overly optimistic if not outright unethical. We had good incomes for the first time and I suspect most of his "High Net Worth" clients couldn't be bothered looking at his fee schedule in detail. Cost: About $2000 over the course of the relationship.
As an aside my sister-in-law is currently in training to become an adviser at a pretty big firm. I've also always considered her a slightly more mobile vegetable, somewhere between a brussel sprout and a carrot in IQ. If your adviser can't figure out how to take a bus and has never paid for a car, gas, food or rent, how good can their advice be?
(3) My father, successful accountant and wealthiest person I knew, recommended I plow $3000 of my first year's (2001) salary into an small cap growth technology company doing E-payments. Lost nearly the whole damn thing (>90%) within 3 years. Another $10K went into a blue chip that's gone nowhere over the last 10 years. Seems he gets all his advice from a newsletter that later lead him to losing 7 figures in 2008. He's 66 and still messing around with a nearly 100% stocks portfolio as far as I can tell. As late as 60 he was still advising me to stay well away from bonds.
Lesson Learned #3: Turns out "financial professionals" aren't just naturally good at investing. Accountants should just stick to accounting advice. Cost $3000 + opportunity cost.
Lesson Learned #4: Ignore advice from your family/friends. Even if they're richer than you (or seem to be) - it might just be dumb luck.
Other advice he's given but that has been ignored (I heed #4 now): buying into some timeshare off the plan in an expensive wine growing region, loading up with 300K of debt to buy a first home at 23 to take advantage of tax breaks and buying into some construction project/ponzi scheme that cost my grandmother & mother ~$50K each.
(1) In 2007 my fiancee and I went shopping for a financial adviser to help us with our debts and financial structures. Four of the five advisers instead came up with plans to take out 6 figure margin loans and buy into aggressive mutual funds. Hands up who thinks that would have been a good idea now?
Lesson Learned #1: Most advisers don't know what they're doing any more than I do. Cost: Free
(2) The fifth adviser was listening and was actually genuinely useful to us at that stage, though too expensive in the long run. Once we became debt free he was asking for 4% just to invest in SPDRs and the like.
Lesson Learned #2: Advisers are in it for themselves. It would be near impossible to make money with those overheads and he should know that which makes him overly optimistic if not outright unethical. We had good incomes for the first time and I suspect most of his "High Net Worth" clients couldn't be bothered looking at his fee schedule in detail. Cost: About $2000 over the course of the relationship.
As an aside my sister-in-law is currently in training to become an adviser at a pretty big firm. I've also always considered her a slightly more mobile vegetable, somewhere between a brussel sprout and a carrot in IQ. If your adviser can't figure out how to take a bus and has never paid for a car, gas, food or rent, how good can their advice be?
(3) My father, successful accountant and wealthiest person I knew, recommended I plow $3000 of my first year's (2001) salary into an small cap growth technology company doing E-payments. Lost nearly the whole damn thing (>90%) within 3 years. Another $10K went into a blue chip that's gone nowhere over the last 10 years. Seems he gets all his advice from a newsletter that later lead him to losing 7 figures in 2008. He's 66 and still messing around with a nearly 100% stocks portfolio as far as I can tell. As late as 60 he was still advising me to stay well away from bonds.
Lesson Learned #3: Turns out "financial professionals" aren't just naturally good at investing. Accountants should just stick to accounting advice. Cost $3000 + opportunity cost.
Lesson Learned #4: Ignore advice from your family/friends. Even if they're richer than you (or seem to be) - it might just be dumb luck.
Other advice he's given but that has been ignored (I heed #4 now): buying into some timeshare off the plan in an expensive wine growing region, loading up with 300K of debt to buy a first home at 23 to take advantage of tax breaks and buying into some construction project/ponzi scheme that cost my grandmother & mother ~$50K each.
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Re: The worst [investing] advice [you have received]
I invested in Twentieth Century Gift Trust. It was a hot performing fund that required you to lock up your money therefore allowing the manager to show his "brilliance" without the threat of redemptions. It will be a couple of years before I can liquidate but it has badly trailed an index fund. No doubt the manager and firm were
well paid. I was not.
well paid. I was not.
Last edited by wesleymouch on Tue Jan 22, 2013 9:58 pm, edited 1 time in total.
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Re: The worst [investing] advice [you have received]
I'm beginning think nobody does. Just look at the Fed.BrianOB wrote:?
Lesson Learned #1: Most advisers don't know what they're doing any more than I do.
At least when you take charge of your own investments, you can't blame anyone.
Re: The worst [investing] advice [you have received]
Ultra Short Bond Funds ... very very safe investments and high returns. Safe haven.
Oops --- held mortgage backed securities.
Oops --- held mortgage backed securities.
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Re: The worst [investing] advice [you have received]
In 2004-2006, tons of people telling me I need to buy a house in Southern California, especially because of the "tax deduction" and "throwing money away on rent." People thought I was nuts for continuing to rent instead of buying a home. I specifically didn't buy because I couldn't understand how persons with modest incomes were carrying $600,000+ stucco boxes, plus HOA fees and taxes, and had no idea how they could afford it. Meanwhile I continued to invest in stocks and bonds.
Within five years, a meaningful percentage of these "buy now!" advocates had either lost their homes to foreclosure, or declared bankruptcy.
Within five years, a meaningful percentage of these "buy now!" advocates had either lost their homes to foreclosure, or declared bankruptcy.
Re: The worst advice
Usually, it's worth eating these surrender charges, because the money has already been lost, just not deducted from your account. If the surrender charge is 8% and declines by 1% per year, but the expenses are an extra 1.5% per year, you cannot get at the money without losing at least 8%, so you might as well get out now (or at least at the next anniversary).Clark & Addison wrote:My worst advice was just before I started teaching. The teacher that was retiring and whose job I was taking over set me up with a financial advisor who got me to open a Roth IRA inside a variable annuity. My 403b is also in a variable annuity, but that's only because all three of the poor options my employer allows us to contribute to are annuities. The Roth has since changed to Vanguard, but there is still money sitting in the other Roth waiting on the surrender charge to expire.
Similarly, if your 403(b) has surrender charges, you should still roll the whole thing to an IRA or new employer's plan when you have the opportunity.
Re: The worst advice
I had a similar experience. I made a large deposit at a bank, and the bank gave me a free appointment with a financial counselor. The counselor mixed good advice (60% US stock, 20% foreign stock, 20% bonds at age 29), self-interested advice (the foreign stock should be in Templeton Growth), and provably wrong advice (I should invest in C shares; I could see that C shares were guaranteed to cost me more than A shares if I held the fund for eight years, and the fund was recommended as a long-term investment).Sbashore wrote:A "Financial Adviser" at my credit union reviewed my investments and recommended an assortment of mutual funds. All with an 8% front load. I did not bite.
Re: The worst [investing] advice [you have received]
A co-worker advised me to invest more of my 401k in the company stock, since it's done better than the S&P 500 in the past. However, she does not participate in the ESPP even though the company gives a 15% discount.
Re: The worst [investing] advice [you have received]
Back in the day, the annual Savings Bond drive was held at the company with coffee and doughnuts served. Sign up via payroll deduction, 6% interest and they will be mailed to your house. I signed up for a $200 bond every payroll period. When the rate was reduced to 4%, the drive was no longer an annual event, people stopped purchasing and started to cash them in. After all, there was money to be made in stocks. I kept buying and was ridiculed by the "professionals". I was told, " 4% ain't squat, get into aggressive growth stock funds". Anyone remember 20th Century Ultra? Well, I still kept buying the bonds. They will be maturing soon; I refer to them as my short-term government bond fund paying 4%.
"..the cavalry ain't comin' kid, you're on your own..."
Re: The worst [investing] advice [you have received]
It's interesting to graph a 50% portfolio of FAS and FAZ.bogleblitz wrote:My wife heard from a friend to buy faz/fas and make quick fast money. He said these stocks are for short term, 1 week. Don't hold it for long.
faz = Direxion Daily Financial Bear 3X Shares
fas = Direxion Daily Financial Bull 3X Shares
Not doing any research, We ended up buying $3000 worth of faz (bear) in 2009 and lost most of my money. I still don't understand what those stocks do but I'm sticking to the 3 fund portfolio from now on.
I have no idea how it came out (slightly) positive. I would have expected a smooth negative slope corresponding to the expense ratio.
- interplanetjanet
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Re: The worst [investing] advice [you have received]
I ran into exactly the same thing in northern California. One of my coworkers bought a $700k townhome way out in the suburbs of the SF Bay Area and when I expressed some degree of incredulity, he made this offhand comment: "well, it's not like prices are going to go *down*!".DualIncomeNoDebt wrote:In 2004-2006, tons of people telling me I need to buy a house in Southern California, especially because of the "tax deduction" and "throwing money away on rent." People thought I was nuts for continuing to rent instead of buying a home. I specifically didn't buy because I couldn't understand how persons with modest incomes were carrying $600,000+ stucco boxes, plus HOA fees and taxes, and had no idea how they could afford it. Meanwhile I continued to invest in stocks and bonds.
This was my shoeshine boy moment. I told myself that the bottom was going to fall out within the next year, and it did.
I'm still a renter. I'm hoping to buy next year if prices are reasonable, my plan to have enough down (with plenty of cushion) isn't derailed, and rates are still good. If one of those three things doesn't work out, I'll hold off - I'd rather take a few years to make one really good decision than to plunge in when things are less than ideal. I'm living in an area I'd be pretty happy to retire in and intend on living in what I buy for a long time.
Re: The worst [investing] advice [you have received]
I think I just discovered a gem:
http://seekingalpha.com/article/1124141 ... the-market
* November 1 through April 30, invest 100% in a mid-cap ETF at 3x leverage
* May 1 through October 30, invest 100% in PIMCO's junk bond fund (no leverage)
This portfolio has done spectacularly for the past 17 years and is thus guaranteed to outperform in the future... right?
http://seekingalpha.com/article/1124141 ... the-market
* November 1 through April 30, invest 100% in a mid-cap ETF at 3x leverage
* May 1 through October 30, invest 100% in PIMCO's junk bond fund (no leverage)
This portfolio has done spectacularly for the past 17 years and is thus guaranteed to outperform in the future... right?
Re: The worst [investing] advice [you have received]
In 1997, a recommendation made by Full service Merill Lynch broker, I bought stocks like Oracle,Sun Micro systems (I made money) and World com, some other dot.com company ( I lost money). Also bought type B class regional bank mutual fund and ML global allocation fund. Net result after many sleepless nights my total portfolio was down by 20% in 2002. After reading Four Pillars of investing book was a life changing event and moved my assets to Vanguard and became firm Boglehead follower since 2005-06
Re: The worst [investing] advice [you have received]
I started out with American Funds. My financial adviser told me the 5.75% front end load was pretty standard and the 0.80% expense ratios were some of the lowest in the industry. And he was right, when comparing the two sets of funds he sold: American Funds and Franklin Templeton.
He then had me roll my old 401k into a Trad IRA with him for the "freedom and flexibility" to choose my own investments, even though I had great 401k options I could have rolled the funds into. It's now blatantly obvious he was looking for the 5.75% payday he would get from my rollover.
It's amazing how he urged me to invest more so I could get above a $25,000 balance and lower my front end load to 5%. He told me this would help my returns dramatically over the long run, yet he never mentioned how beneficial a no-load fund would be. I was blown away when I found out those even existed.
Luckily, I was a fairly quick learner and switched out of American Funds into Vanguard by the age of 25. I estimate all this only cost me about $1300. I hope those were the worst financial decisions I ever made.
He then had me roll my old 401k into a Trad IRA with him for the "freedom and flexibility" to choose my own investments, even though I had great 401k options I could have rolled the funds into. It's now blatantly obvious he was looking for the 5.75% payday he would get from my rollover.
It's amazing how he urged me to invest more so I could get above a $25,000 balance and lower my front end load to 5%. He told me this would help my returns dramatically over the long run, yet he never mentioned how beneficial a no-load fund would be. I was blown away when I found out those even existed.
Luckily, I was a fairly quick learner and switched out of American Funds into Vanguard by the age of 25. I estimate all this only cost me about $1300. I hope those were the worst financial decisions I ever made.
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- Joined: Sat Jan 19, 2013 12:55 am
Re: The worst [investing] advice [you have received]
Sold a condo in mid 1999 & had about 25K proceeds (some gain but I also paid down the principal because interest was 7%).
Talked to a friend's financial advisor (former pastor) at American Express & paid him $350 for his advice. He recommended all front-loaded funds. Index funds were never mentioned. Although I tried to research choices, I didn't really understand investing & bought several frontloaded funds. Of the choices he gave me, I tried to look at performance over time (didn't have understanding to do more than that.
He also later advised me to invest in 2 stocks that never did well. About $1500 lost.
I DCA-ed into the funds in early 2000. Of course, went through the early 2000s slump, but held on because of the front-loaded fees (in a way, they worked in my favor). Lost some $, used some for graduate school & living expenses, & eventually, something my dad said in passing made me look into index funds & move the little that remained over to Vanguard. But, I learned a lesson that I won't forget, although I only recently disccovered this website, where I'm learning a whole lot more. Unfortunately, my 403b through TIAACREF has high fees; today I sent a letter asking my employer to consider adding Vanguard funds to our options. I'm not sure of my chances, but I did point out in my letter that there is now good research showing that over time, index funds beat almost all actively managed funds (which is what most of my choices currently involve).
Talked to a friend's financial advisor (former pastor) at American Express & paid him $350 for his advice. He recommended all front-loaded funds. Index funds were never mentioned. Although I tried to research choices, I didn't really understand investing & bought several frontloaded funds. Of the choices he gave me, I tried to look at performance over time (didn't have understanding to do more than that.
He also later advised me to invest in 2 stocks that never did well. About $1500 lost.
I DCA-ed into the funds in early 2000. Of course, went through the early 2000s slump, but held on because of the front-loaded fees (in a way, they worked in my favor). Lost some $, used some for graduate school & living expenses, & eventually, something my dad said in passing made me look into index funds & move the little that remained over to Vanguard. But, I learned a lesson that I won't forget, although I only recently disccovered this website, where I'm learning a whole lot more. Unfortunately, my 403b through TIAACREF has high fees; today I sent a letter asking my employer to consider adding Vanguard funds to our options. I'm not sure of my chances, but I did point out in my letter that there is now good research showing that over time, index funds beat almost all actively managed funds (which is what most of my choices currently involve).
- zaboomafoozarg
- Posts: 2431
- Joined: Sun Jun 12, 2011 12:34 pm
Re: The worst [investing] advice [you have received]
Wow.SSSS wrote:I think I just discovered a gem:
http://seekingalpha.com/article/1124141 ... the-market
* November 1 through April 30, invest 100% in a mid-cap ETF at 3x leverage
* May 1 through October 30, invest 100% in PIMCO's junk bond fund (no leverage)
This portfolio has done spectacularly for the past 17 years and is thus guaranteed to outperform in the future... right?
- hoppy08520
- Posts: 2193
- Joined: Sat Feb 18, 2012 10:36 am
Re: The worst [investing] advice [you have received]
I love these threads!
Worst advice I received and followed:
The investment advisor for my 401(k), with whom I opened my Roth IRA around 2006, suggested I choose this incredible fund from an investment genuius named Bill Miller who had beaten the market for he last 15 years. Legg Mason Value Trust. Fortunately I only plowed a few thousand dollars into that sinking fund before I saw the light.
The bright side is that the bitterness I felt from this losing bet helped motivate me to eventually arrive at Bogledom.
Worst advice I received and ignored:
Company 401(k) brokers: "You should roll your Thrift Savings Plan into the 401(k). I mean, the TSP only has five funds."
Lessons learned: even professional, credentialed financial advisors are idiots and they will advise you against your own interests to take our money. Picking Legg Mason Value Trust at its peak was just a bad pick. But encouraging you to abandon your TSP to hand over your assets to a 401(k) plan charging 30 times more, so he can get a cut, is almost criminal. Thank goodness I ignored them.
Worst advice I received and followed:
The investment advisor for my 401(k), with whom I opened my Roth IRA around 2006, suggested I choose this incredible fund from an investment genuius named Bill Miller who had beaten the market for he last 15 years. Legg Mason Value Trust. Fortunately I only plowed a few thousand dollars into that sinking fund before I saw the light.
The bright side is that the bitterness I felt from this losing bet helped motivate me to eventually arrive at Bogledom.
Worst advice I received and ignored:
Company 401(k) brokers: "You should roll your Thrift Savings Plan into the 401(k). I mean, the TSP only has five funds."
Lessons learned: even professional, credentialed financial advisors are idiots and they will advise you against your own interests to take our money. Picking Legg Mason Value Trust at its peak was just a bad pick. But encouraging you to abandon your TSP to hand over your assets to a 401(k) plan charging 30 times more, so he can get a cut, is almost criminal. Thank goodness I ignored them.
Re: The worst [investing] advice [you have received]
Just recently a fellow noticed I was watching Bloomberg at our gym and walked up and asked, "you in the market" and I nodded. He said he worked for a financial company and said he was going to blow my mind with a great investment. Ok, I thought, here's a guy who doesn't know me, yet he thinks he's going to blow my mind. So I bit, ok, lay it on me. He said you've got to come down to my office so I can show you. Really, I said, why can't you blow my mind right here? Because I want to sit down with you, so my boss and I can explain the details, he quipped. Sorry mate, I don't have time, but thanks anyway. I was hounded from then on, even in the sauna. He said he would make it easy on me and they would come to me and added that he was putting his kids through college with this super investment and I shouldn't miss out on it.
So I said, ok meet me here tomorrow, thinking this should be amusing. So we sat down and they started drawing diagrams, showing how I could make money in an up market, but not lose money in a down market. Guaranteed!! Two hours of drawings and scare tactics about what would I do if another '08-09 event took place. I told them I was prepared for a four year market crash and had enough cash to pay all my bills for that time. I swear I could see their mouths begin to water as they mentally tallied the amount of money they could get out of me.
When I asked for a prospectus, they gave me a brochure that didn't have any concrete information on it. I eventually grew tired and told them it looked like a complicated insurance product and I didn't fully understand it. They asked for my email and said they would send me easy to understand details about the investment. Here it is and boy was my mind blown: http://www.youtube.com/watch?v=BS3B2Ins ... r_embedded
Not. I talked to friend who has worked for this type of company in the past and he told me there was an 8% commission paid to the seller of these types of "investments" and that there are hidden fees and surrender penalties involved.
So I said, ok meet me here tomorrow, thinking this should be amusing. So we sat down and they started drawing diagrams, showing how I could make money in an up market, but not lose money in a down market. Guaranteed!! Two hours of drawings and scare tactics about what would I do if another '08-09 event took place. I told them I was prepared for a four year market crash and had enough cash to pay all my bills for that time. I swear I could see their mouths begin to water as they mentally tallied the amount of money they could get out of me.
When I asked for a prospectus, they gave me a brochure that didn't have any concrete information on it. I eventually grew tired and told them it looked like a complicated insurance product and I didn't fully understand it. They asked for my email and said they would send me easy to understand details about the investment. Here it is and boy was my mind blown: http://www.youtube.com/watch?v=BS3B2Ins ... r_embedded
Not. I talked to friend who has worked for this type of company in the past and he told me there was an 8% commission paid to the seller of these types of "investments" and that there are hidden fees and surrender penalties involved.
"The stock market is a giant distraction from the business of investing." - Jack Bogle
Re: The worst [investing] advice [you have received]
Maybe my imagination... but something about this story... feels a little bit...EyeYield wrote:Just recently a fellow noticed I was watching Bloomberg at our gym and walked up and asked, "you in the market" and I nodded. He said he worked for a financial company and said he was going to blow my mind with a great investment. Ok, I thought, here's a guy who doesn't know me, yet he thinks he's going to blow my mind. So I bit, ok, lay it on me. He said you've got to come down to my office so I can show you. Really, I said, why can't you blow my mind right here? Because I want to sit down with you, so my boss and I can explain the details, he quipped. Sorry mate, I don't have time, but thanks anyway. I was hounded from then on, even in the sauna. He said he would make it easy on me and they would come to me and added that he was putting his kids through college with this super investment and I shouldn't miss out on it.
- neurosphere
- Posts: 5205
- Joined: Sun Jan 17, 2010 12:55 pm
Re: The worst [investing] advice [you have received]
When I was JUST starting to invest, I found the Motley Fool. At that time, they simultaneously were touting index funds (yea!) but also various backtested variations of the "dogs of the dow" and they came up with an approach called the "Foolish Four". I jumped in with both feet. Oops. I leaned my lesson early, with very little skin in the game. "EARN TWELVE PERCENT ANNUALLY!" uh, right.
Slow and steady wins the race.
NS
Slow and steady wins the race.
NS
Re: The worst [investing] advice [you have received]
Was that you? Sorry, but that's the way I feel.SSSS wrote: Maybe my imagination... but something about this story... feels a little bit...
"The stock market is a giant distraction from the business of investing." - Jack Bogle
Re: The worst [investing] advice [you have received]
That $10,000 annuity bought from an insurance agent in the early 90s.
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- Posts: 138
- Joined: Wed Dec 03, 2008 5:57 pm
Re: The worst [investing] advice [you have received]
In the 1980's tax shelter investing was rather common. Some guy at work recommended an accountant who
could set me up with a great tax shelter so I could avoid thousands in taxes. The accountant wanted me to
invest in vintage films with stars such as Jerry Lewis classics so I could take advantage of 10 or more times depreciation
without risk. It did not matter if the film rights were probably worthless ; it was simply a tax write -off . Many people
in those days tried these schemes ; later they had IRS problems due to abuse of depreciation statues. Thank goodness
I did not follow the accountant's advice ; I was dumb , but even back then I knew not to invest in Jerry Lewis.
S-G
could set me up with a great tax shelter so I could avoid thousands in taxes. The accountant wanted me to
invest in vintage films with stars such as Jerry Lewis classics so I could take advantage of 10 or more times depreciation
without risk. It did not matter if the film rights were probably worthless ; it was simply a tax write -off . Many people
in those days tried these schemes ; later they had IRS problems due to abuse of depreciation statues. Thank goodness
I did not follow the accountant's advice ; I was dumb , but even back then I knew not to invest in Jerry Lewis.
S-G
Re: The worst [investing] advice [you have received]
Actually the PHIYX junk bond fund they recommend is leveraged, so your quote is incorrect. Though the article conveniently forgets to mention that.SSSS wrote:I think I just discovered a gem:
http://seekingalpha.com/article/1124141 ... the-market
* November 1 through April 30, invest 100% in a mid-cap ETF at 3x leverage
* May 1 through October 30, invest 100% in PIMCO's junk bond fund (no leverage)
This portfolio has done spectacularly for the past 17 years and is thus guaranteed to outperform in the future... right?
Oh, and the portfolio didn't do "spectacularly well" in 2008 .
Quote : "That year, the S&P500 (SPY) was down 40.3%, while this strategy was down 41.4%"
I guess there is a reason why I have yet to click "sign in" on the homepage of seeking alpha.
Re: The worst [investing] advice [you have received]
Long ago when I had been out of college for only a couple years, I got a cold call from a dinky little 2-person brokerage in town pitching some stock (can't even remember what it was now). I had been very interested in the markets even as a teenager and while I had never actually invested (didn't have any money before) I certainly felt as though I knew quite a bit for someone who didn't work in the business. In the summer I would sometimes take the bus downtown to meet my grandmother for lunch, and if I was early I would go to the nearby broker's office and sit there with a bunch of retired people watching the ticker go by and listening to them talk about the market. There weren't any other 15 year olds doing that.
But that cold call just pumped my ego. I grew up poor where nobody I knew ever invested in the market. And I could actually be a real investor now! I am a desirable customer! And with a lucky break, starting out with a hot tip! So I bit and forked over most of the $3,000 I had saved. And of course, the stock tanked. I bailed out with $50 left. There was no home internet then and this stock wasn't in the newspaper listings, so it was difficult to monitor how things were doing. Shortly thereafter, the broker and the head of the dinky brokerage had their securities licenses revoked for shenanigans.
As painful as that was at the time, it was actually fortunate. It humbled me and made me commit to do serious research before diving back into the investment world, and things have gone decently well since then. Had that not happened early, I might have blown a lot more money when jumping in to the market.
In the collectibles market, making that early money-losing mistake is called "paying tuition", and that's what this incident was for me.
But that cold call just pumped my ego. I grew up poor where nobody I knew ever invested in the market. And I could actually be a real investor now! I am a desirable customer! And with a lucky break, starting out with a hot tip! So I bit and forked over most of the $3,000 I had saved. And of course, the stock tanked. I bailed out with $50 left. There was no home internet then and this stock wasn't in the newspaper listings, so it was difficult to monitor how things were doing. Shortly thereafter, the broker and the head of the dinky brokerage had their securities licenses revoked for shenanigans.
As painful as that was at the time, it was actually fortunate. It humbled me and made me commit to do serious research before diving back into the investment world, and things have gone decently well since then. Had that not happened early, I might have blown a lot more money when jumping in to the market.
In the collectibles market, making that early money-losing mistake is called "paying tuition", and that's what this incident was for me.