Investment Thread

[Jeffrey]

I play with stocks at a very low level (just a few grand) but wanted to thank you for the CMA and CFG mentions on this thread.

My pleasure, I’m very pleased to hear you own them! I think both currently have more fuel in their tanks. However, at these levels, I really like C at ~ 70% tangible book value.

Also being in this thread is a good reminder to me that I need to meet with my financial advisor...

Absolutely, meeting with a fee based financial advisor is a very good idea for most people.

[budwom]

fee based being the ultra important key words.

[Jeffrey]

it's bad luck to celebrate one's gains I suppose...i'm mum when I'm doing well.

How superstitious are you?

[Jeffrey]

fee based being the ultra important key words.

Absolutely! IMO, a salesperson is seldom the best approach.

[budwom]

Absolutely! IMO, a salesperson is seldom the best approach.

I could go on and on about that (and have on this thread) so I'll spare everyone.

[Jeffrey]

I could go on and on about that (and have on this thread) so I'll spare everyone.

Feel free, there’s plenty of flames for both of us.

[budwom]

Feel free, there’s plenty of flames for both of us.

Bring 'em on!
I just went thru another round of this as friends of ours just sold a business they built from scratch, and they're sitting on a nice pile of cash...their previous 401(k) investments have one things in common: they provided great commissions to the "advisor" (sales guy) who sold them...

Finally got them to see a fee only advisor (of course it was good to explain what that meant and why it was good) and now they're bully on board...mission accomplished!

[elvis14]

My pleasure, I’m very pleased to hear you own them! I think both currently have more fuel in their tanks. However, at these levels, I really like C at ~ 70% tangible book value.

Absolutely, meeting with a fee based financial advisor is a very good idea for most people.

It's been a while since I've met with him and I need to see if he is fee based or not. If not, I'll start looking around.

I'll look at 'C' as well, I had some shares earlier this year and sold them.

[Jeffrey]

It's been a while since I've met with him and I need to see if he is fee based or not. If not, I'll start looking around.

I'll look at 'C' as well, I had some shares earlier this year and sold them.

Citi’s problems have problems, but I’m not buying WFC should be closer to tangible book value (~ 81% vs. ~ 70%).

One things for sure, a great CEO is worth a lot more than they’re paid! For example, Dimon currently has JPM at ~ 187% of tangible book.

To be clear, tangible book is just one of many bank ratios one should analyze. I like using it, and other ratios, for relative comparisons.

[Jeffrey]

Bring 'em on!
I just went thru another round of this as friends of ours just sold a business they built from scratch, and they're sitting on a nice pile of cash...their previous 401(k) investments have one things in common: they provided great commissions to the "advisor" (sales guy) who sold them...

Finally got them to see a fee only advisor (of course it was good to explain what that meant and why it was good) and now they're bully on board...mission accomplished!

Clearly, you’re a great friend, Bud!

It’s a real shame most people end up working almost 100,000 hours for money but don’t spend 100 hours learning about money!

Years ago I made a deal with my money, it has to work as hard for me as I work for it.

[budwom]

How superstitious are you?

I find crowing about any investment success I may have is like crowing about Duke leading a hoop game by 10 points with ten minutes left...extreme caution is advised.

[duke79]

fee based being the ultra important key words.

Yea, but there is some controversy in the financial planning industry about what exactly constitutes "fee based" (and I'm a (mostly) "fee based" certified financial planner and investment advisor). There are many RIA's and CFP's out there who describe themselves as "exclusively" "fee based" (i.e., they claim that they don't sell any products (life insurance, mutual funds, annuities, etc.) on a "commission" basis. However, the vast majority (99% or greater) of these "fee based" advisors make their money by gathering "AUM" (assets under management) and then charging you an annual fee (usually in the range of 1.00 % - but it may be higher or lower, depending on the amount of investable (sic) assets that you have and other factors. There is an investment advisor in my community who charges ALL of his client 2% per year to manage their money for them, no matter the size of their portfolio. For example, if you have $2 million of financial assets to be managed, the fee-based investment advisor or financial planner may charge you $20,000 EVERY year (based on a 1% fee) to manage those investments for you (and the fee amount will go up if the assets under management increase). IMHO, this is the biggest financial rip-off in the history of mankind (because the dirty little secret is that the investment advisor rarely, if ever, is doing $20,000 worth of work for you each year and I have seen numerous examples where the investment advisor has cost the client huge amounts of money by making, frankly, stupid investment decisions (wrong portfolio allocations, being too conservative or too aggressive, owning the wrong stocks or bonds, etc).

There are also some (a very small number) of financial planners (myself included) who charge their clients on an hourly basis (like a lawyer or accountant or even your plumber) for the work that they do on your behalf. These planners do not sell products on commission AND they do not charge for AUM. Admittedly, it is MUCH harder as a financial planner to make large amounts of money running your practice this way BUT I think the client usually ends up better off and saves a LOT of money by not overpaying an investment advisor ("fee based", allegedly) every year to make stupid investment decisions for them.

[budwom]

Yea, but there is some controversy in the financial planning industry about what exactly constitutes "fee based" (and I'm a (mostly) "fee based" certified financial planner and investment advisor). There are many RIA's and CFP's out there who describe themselves as "exclusively" "fee based" (i.e., they claim that they don't sell any products (life insurance, mutual funds, annuities, etc.) on a "commission" basis. However, the vast majority (99% or greater) of these "fee based" advisors make their money by gathering "AUM" (assets under management) and then charging you an annual fee (usually in the range of 1.00 % - but it may be higher or lower, depending on the amount of investable (sic) assets that you have and other factors. There is an investment advisor in my community who charges ALL of his client 2% per year to manage their money for them, no matter the size of their portfolio. For example, if you have $2 million of financial assets to be managed, the fee-based investment advisor or financial planner may charge you $20,000 EVERY year (based on a 1% fee) to manage those investments for you (and the fee amount will go up if the assets under management increase). IMHO, this is the biggest financial rip-off in the history of mankind (because the dirty little secret is that the investment advisor rarely, if ever, is doing $20,000 worth of work for you each year and I have seen numerous examples where the investment advisor has cost the client huge amounts of money by making, frankly, stupid investment decisions (wrong portfolio allocations, being too conservative or too aggressive, owning the wrong stocks or bonds, etc).

There are also some (a very small number) of financial planners (myself included) who charge their clients on an hourly basis (like a lawyer or accountant or even your plumber) for the work that they do on your behalf. These planners do not sell products on commission AND they do not charge for AUM. Admittedly, it is MUCH harder as a financial planner to make large amounts of money running your practice this way BUT I think the client usually ends up better off and saves a LOT of money by not overpaying an investment advisor ("fee based", allegedly) every year to make stupid investment decisions for them.

I agree completely! Yes, one has to read the fine print carefully to determine who really IS fee based and who isn't...your last paragraph sums it up nicely...several of the "fee based" advisors my friends found really did want a management fee each year, they had to look around a fair bit to find a good advisor who genuinely was fee based only, no AUM percentage charge...

[Jeffrey]

Yea, but there is some controversy in the financial planning industry about what exactly constitutes "fee based" (and I'm a (mostly) "fee based" certified financial planner and investment advisor). There are many RIA's and CFP's out there who describe themselves as "exclusively" "fee based" (i.e., they claim that they don't sell any products (life insurance, mutual funds, annuities, etc.) on a "commission" basis. However, the vast majority (99% or greater) of these "fee based" advisors make their money by gathering "AUM" (assets under management) and then charging you an annual fee (usually in the range of 1.00 % - but it may be higher or lower, depending on the amount of investable (sic) assets that you have and other factors. There is an investment advisor in my community who charges ALL of his client 2% per year to manage their money for them, no matter the size of their portfolio. For example, if you have $2 million of financial assets to be managed, the fee-based investment advisor or financial planner may charge you $20,000 EVERY year (based on a 1% fee) to manage those investments for you (and the fee amount will go up if the assets under management increase). IMHO, this is the biggest financial rip-off in the history of mankind (because the dirty little secret is that the investment advisor rarely, if ever, is doing $20,000 worth of work for you each year and I have seen numerous examples where the investment advisor has cost the client huge amounts of money by making, frankly, stupid investment decisions (wrong portfolio allocations, being too conservative or too aggressive, owning the wrong stocks or bonds, etc).

There are also some (a very small number) of financial planners (myself included) who charge their clients on an hourly basis (like a lawyer or accountant or even your plumber) for the work that they do on your behalf. These planners do not sell products on commission AND they do not charge for AUM. Admittedly, it is MUCH harder as a financial planner to make large amounts of money running your practice this way BUT I think the client usually ends up better off and saves a LOT of money by not overpaying an investment advisor ("fee based", allegedly) every year to make stupid investment decisions for them.

Strongly agree!

I have many friends, and acquaintances, who make millions a year from AUM. Their strength is sales, not finance. Some call me for personal financial advice. My wife finds it very entertaining.

[JasonEvans]

Just wanted to note that I have a financial planner who charges us a fee based on assets under management and we adore her. Her advice is very solid and the service is incredible. It does not matter what seemingly minor thing I might have to deal with, she and her team step up immediately and take care of it. I recently found an old stock certificate in my father's papers. It was worth 1 share of MSFT, not exactly a windfall, and yet one of our financial planner's assistants spent hours working the system to redeem the certificate and get the share transferred into the proper account. I kept on telling them, "don't worry about it, it is not worth very much," and they just plowed ahead doing the work because taking care of my assets is their priority. These folks are the best!

While we pay her firm a large fee every year, we are not at all hesitant about doing so as we have developed a great deal of trust in her advice.

[duke79]

Just wanted to note that I have a financial planner who charges us a fee based on assets under management and we adore her. Her advice is very solid and the service is incredible. It does not matter what seemingly minor thing I might have to deal with, she and her team step up immediately and take care of it. I recently found an old stock certificate in my father's papers. It was worth 1 share of MSFT, not exactly a windfall, and yet one of our financial planner's assistants spent hours working the system to redeem the certificate and get the share transferred into the proper account. I kept on telling them, "don't worry about it, it is not worth very much," and they just plowed ahead doing the work because taking care of my assets is their priority. These folks are the best!

While we pay her firm a large fee every year, we are not at all hesitant about doing so as we have developed a great deal of trust in her advice.

Yea, Jason, I should have noted one caveat to my posting above about fee-based planners who charge clients on an "AUM" basis. There is no doubt, that for SOME people, this is NOT necessarily a bad model to use, IF you need a lot of "hand holding" from your advisor (like in your case) AND you trust your advisor and the advice that they give you is good. Certainly, in that case, it MAY be worthwhile to pay your advisor an annual fee (based on the size of the assets managed); furthermore, there may be some advisors who can out perform the broad markets on a consistent basis (although very, very, very few, in my experience) and there again it may worth it to pay them the 1% or so fee every year.

[budwom]

Yea, Jason, I should have noted one caveat to my posting above about fee-based planners who charge clients on an "AUM" basis. There is no doubt, that for SOME people, this is NOT necessarily a bad model to use, IF you need a lot of "hand holding" from your advisor (like in your case) AND you trust your advisor and the advice that they give you is good. Certainly, in that case, it MAY be worthwhile to pay your advisor an annual fee (based on the size of the assets managed); furthermore, there may be some advisors who can out perform the broad markets on a consistent basis (although very, very, very few, in my experience) and there again it may worth it to pay them the 1% or so fee every year.

Yes, and it should also be noted that a rising stock market (which we've had for about a decade) tends to make clients happy and hence they don't focus on the cut the advisor is taking (via annual fee plus invisible commissions).

[construe]

When the market first tanked in March, there was a lot of discussion about which stocks seemed oversold and would recover. Kudos to all of you who were brave enough to take the plunge then, as the market's V recovery has really made such buys seem prescient! (Alas, I'm still sitting on a large pile of cash, as I kept waiting for the 2nd, 3rd, 4th etc, shoe to drop...)

My question now is, given the positive signs we've gotten from Pfizer et al, which stocks/industries do folks think might rebound should we actually start to get the virus under control this spring? (I know there's still a lot of ifs there...but that's part of the risk / reward pas de deux.)

Off the top of my head, it would seem the passenger airlines should get a boost from folks feeling safer to travel again. (I believe it was Jeffrey who suggested a cargo air company a while back?) I know airline stocks can often be fool's gold, but I'm thinking solely of a recovery bump here, not necessarily anything too long term.

Other travel related companies might be Uber or Lyft (but both of them already got a huge recent lift (ha ha) due to some rulings about their employees, so is there more room to run there?). I don't think Airbnb is publicly traded yet, is it?

Any other ideas?...or should I be disabused of my naivete?...

[JNort]

When the market first tanked in March, there was a lot of discussion about which stocks seemed oversold and would recover. Kudos to all of you who were brave enough to take the plunge then, as the market's V recovery has really made such buys seem prescient! (Alas, I'm still sitting on a large pile of cash, as I kept waiting for the 2nd, 3rd, 4th etc, shoe to drop...)

My question now is, given the positive signs we've gotten from Pfizer et al, which stocks/industries do folks think might rebound should we actually start to get the virus under control this spring? (I know there's still a lot of ifs there...but that's part of the risk / reward pas de deux.)

Off the top of my head, it would seem the passenger airlines should get a boost from folks feeling safer to travel again. (I believe it was Jeffrey who suggested a cargo air company a while back?) I know airline stocks can often be fool's gold, but I'm thinking solely of a recovery bump here, not necessarily anything too long term.

Other travel related companies might be Uber or Lyft (but both of them already got a huge recent lift (ha ha) due to some rulings about their employees, so is there more room to run there?). I don't think Airbnb is publicly traded yet, is it?

Any other ideas?...or should I be disabused of my naivete?...

Banks?

[budwom]

From the Way Back Machine, I just heard an ad on NPR for Merrill Lynch Pierce Fenner and Smith...have not heard them refer to themselves that way for a very very long time...