Independent Investor Misconceptions

With a basic understanding of the investment process and the proper information you can successfully manage your own portfolio. The internet is an excellent source for this type of information and the necessary resources to help guide you through the investment process and assist you in implementing your investment strategy.

You need to take personal responsibility for your own financial freedom.

The investing deck is fundamentally stacked against you as an independent investor.

  • Stock brokers work for commissions and financial advisors and planners want fees… all at your expense. Whether you profit or not is not their primary goal.
  • Wall Street firms blatantly compromise their retail clients’s (independent investor) interests while courting publicly traded companies for investment banking business.
  • The national media is more interested in satisfying their advertisers and subscribers than providing independent, objective investment advice.

In What Wall Street Doesn’t Want You to Know, Larry Swedroe says “Wall Street does not have the best interests of investors at heart. Wall Street wants to keep the independent investor in the dark about both the academic evidence on how markets really work and the dismal track record of the vast majority of active managers.”

Also, William Berstein writes in The Four Pillars of Investing, “Stockbrokers service their clients in the same way Bonnie and Clyde serviced banks.”

You may find these judgments harsh, but there is a basic contradiction of interests here. As an independent investor, you want to earn the highest net returns. Your advisor has a slightly different agenda. He wants you to earn the highest return net of his fees. That’s an important difference.

Also, keep in mind:

  • Most stockbrokers are better salespeople than investment advisors.
  • Virtually everyone on Wall Street – naturally – wants to earn as high an income as possible; unfortunately,
  • That can only be achieved by converting a significant percentage of client assets into their assets.

That’s how the investment business works.

This would be perfectly fair if most investment advisors earned higher returns than you could achieve as an independent investor.. But, this is hardly the case.

INVESTOR BEWARE!

Once an independent investor wakes up to the simple fact that many of the financial professionals that they are relying on for investment advice are nothing more than self-serving parties whose overriding interest is separating them from their money… then they can take matters into their own hands and really start to accumulate wealth.

The solution is two fold:

(1) Investment newsletters are the best source of unbiased investment information?

  • They give advice freely and no one who relies on it has to wonder whether the real motive is to earn fees or commissions or “capture your assets”.
  • These financial newsletters can be written without a compliance officer scrutinizing or “watering down” their words.
  • And probably most important, readers don’t have to worry about the objectivity of their analysis since they are free of any compromising business relationships.

(2) Once you have impartial, objective investment information you need online trading services, preferably an online discount broker. It’s not how much you earn as an independent investor from trading stock online, but rather how much you keep after expenses.

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