I read an interview with a Utility Fund manager earlier this week. The interviewer pointed out that rising rate cycles have historically not been good for the group. The manager spun a this time is different answer. I thought about that for a moment. I always hear fund managers say why now is a good time for their area of the market.
To me, this stresses the need for investors to empower themselves by avoiding open ended mutual funds and conflicted salesmen. Before you think that I'm schilling for separate account management, I'm not. I share every aspect of my thought process here, but I don't try to talk up the names I own. There are plenty of other sites where insight is shared too. Seek out a few good sites and keep things simple and you'll get to where you need to be.
The other thing that can help investors that don't want to use a separate account manager is to learn market history. I believe that history tends to repeat, although there are no absolutes. By learning history you can learn more about how the market works. For example, I wrote yesterday about the inverted British yield curve. The last time their curve inverted their equity market did poorly. Another example is that this is the wrong time in the stock market cycle for companies larger than $100 billion to lead the market, in fact most of those big companies have lagged.
There are no absolutes, but these things will put the odds in your favor. Trust me these are not the types of things that the guy at the local Edward Jones office is thinking about.
One last point is about CNBC and other TV channels. A lot of people say negative things about the content, including me sometimes. But it is a tool. I rely on TV for news and to hear what I can about the process other people use. It easy to cast stones but every outlet has some value.
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2 comments:
Roger:
I don't watch the television money shows, but one thing that frustrated me with a lot of the mainstream is there is a consistent message, buy stock, buy something.
I see people using what should be trusted sources walking away with little sense of risk or graspable patterns.
I am happy enough to concede that every source is useful with the proper analytical framework. I will also note that getting to "facts" is lacking in many areas. For example many people will talk about the budget with no idea of what goes into various categories, which makes solving problems easy since one just suggesting eliminating what one doesn't need which are assumed to be lots and lots of money. So for example people in the Republican states don't know on balance they get a surplus of federal money while Democratic states tend to pay out much more than they get.
The sresult of all this is skewed economic "realities." In investment this means no "exit strategies," often no real recognition of risk even when historically common drops in price could be a disaster. I've picked up enough to believe that an intelligent person can get some strategic sense of the situation, but I see it lacking in many who take the "mainstream" path of getting information. I don't think it's simply the desire to read only what they want to see, though that's a part which is why a necessary part of the mix is a bunch of sour old pessimists who sound like they know what they're talking about.
The point you made that if one purchases economic advice that it should be separate from the salespeople is so obvious that one wonders how the other approaches continue to exist.
- David Bennett
David,
Good stuff. Your are right there are a lot of gaps from all information outlets and not enough people realize that.
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