I've written many times about my belief that access to information about capital markets is evolving. There will be less reliance on brokers, salesmen and separate account managers as people will rely on new investment products, consultation with professionals and (dare I say it?) investment blogs.
I also think that part of the equation here was the mess created by the 'net bubble. Sell side firms could not be trusted to give good forward looking analysis or operate ethically. Wining that trust back will be a tall order.
One nugget of anecdotal evidence, I think, is the type of traffic I get at this site and the traffic that I'm sure other bloggers get as well. I get traffic from just about every big media outlet, investment firm and university you've ever heard of (although I have never had a visit from my alma mater's domain, San Diego State University).
I have friends on the sell side and I can tell you that they are interested in other content outlets in addition to their firms own research. Although no one has said as much, I think this is because clients and prospects are still skeptical of sell side research.
I think this ties into a long held belief that to help you form your opinions you take a little from here and a little from there and weave together your own approach. All bloggers, pundits, analysts and the like have strengths and weaknesses. Sort these out and you have a good chance of reasonable success.
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3 comments:
One effect of the change in speed, depth and cost of information distribution is a widening gap between investment pros and individual investors. It will make less and less sense for Jane Doe to own individual stocks, unless she has enough money to afford a portfolio manager.
In order to invest directly in the stockmarket you now have to keep up with such a flow of information that you can only do so as a full time professional.
Luca and I have gone back and forth with this before. He is a sharp guy (and is a volunteer firefighter too) and I'm not going to be able to change his mind.
That being said I'm note sure why Luca feels zero individual names is best for individuals. I often write about making use of multiple tools. If you believe along the same lines as Luca and have a mostly ETF/CEF portfolio that is fine, but I think most folks that have made that far can keep tabs on a half dozen stocks, as integrated into a properly diversified portfolio.
Roger,
I am with you. I believe that amateur investors like myself can develop winning portfolios but it is true that they need to have some understanding of basic tools to help them develop that strategy. I probably spend far too much time on my small portfolio, but I enjoy the process. I rely on professionals for management of my retirement assets but keep a small account to manage myself using my own techniques.
The hardest thing to do in investing is to take one's emotion out of the decision-making process. You cannot get too enthusiastic about a bull market nor too pessimistic about a bear correction. It is my belief that your actions should be determined by the price moves of the stocks you own and stocks you are considering to purchase. This prepares the investor to deal with all sorts of market events.
Thanks again for your fine blogging!
Bob
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