Most days I’m on my soapbox about the lousy advice the so many “financial advisors” give their clients. But I’ve decided to do something different today. Maybe it’s the end of the filibuster proof democratic majority that has me in a good mood (Be sure to check out my article on Ending Government Overreach here). Maybe it’s the warmer weather this week after spending last week in Michigan. Whatever it is, I want to say thank you to all of those other financial advisors whose advice I find, well…questionable, no that’s not it, uhm… worthless, no, not that either…

Even bad investment advice has some redeeming value. A man I know owned and then sold his company for millions of dollars in the go-go days. Since that time he has been on a quest for the ideal investment and writes about his experiences. Yesterday, he had identified an expert who said that “now is the time to buy bonds”. Seems foolish to me because government interest rates are at zero, there is concern about inflation, and the way to stop inflation will be to increase interest rates. When this happens, it’s very bad for bonds. But I listened to the advice anyway and…

I looked at the bonds in our portfolios and discovered that the bonds I have maturing in the next five years are priced significantly above maturity value – I bought them at a discount to maturity value before the crash – so we’ve been receiving interest all along.

Thinking it through like this:

I bought them at a discount then, And today in the face of short term maturity and rising interest rates, 
I can sell them at a premium (a premium which will disappear as they approach the maturity date).

So I did – sell them. See, even bad advice has redeeming value. So thank you very much Mr. so and so for your advice to buy bonds.

I’d also like to thank all of the “advisors” who counseled their people to buy stock on margin in 2005 through 2008. This advice proved very profitable, because all of those folks who had to sell their stock when prices fell, pushed stocks even further down in November 2008 and March 2009 and with cash we were able to buy great companies at ridiculously low prices in those months and the ones in between. You’d be amazed at what they have done since!

And finally, I would like to thank all the “advisors” who recommend asset allocation to their clients. Every time you sell a sector of stocks, we benefit because we are able to buy plum companies in unpopular sectors for a fraction of what the company is worth. You’d be surprised how this turbo charges investment returns with far less risk.

OK. So perhaps sarcasm isn’t your thing – most of time it isn’t mine either. But like a doctor whose reputation is harmed by the snake oil salesman, I don’t like it when investors are harmed because some “advisor” tells them dumb stuff. Every once in a while blowing off a little steam in this way, well, what the heck!