Is Anything Free??

The Wall Street bullies continue their assault on investors. They say you can trade with us for free. Or use our robo advisor and save money.

We have seen the commercials of the past during sporting events, as well as other highly viewed shows the baby that picks his own investments.

Obviously these commercials are trying to convey the idea that you can trade your own account and make money for a low trading fee.

Even a baby can do it. These commercials play on your emotions.

There are commercials that show how much money you can save by doing it yourself.

Do you bargain shop for medical care? If not, then why would you bargain shop for your financial future? Low cost does not always get you where you want to go.

Even though you may be trading for free. Brokerage firms know that most people will trade excessively, making the brokerage firm more money. At the same time the investor will lose.

Of course there are examples of some making huge profits. These examples are few and far between.

As an example there are people who win the lottery but for most it is a losing proposition.  Or look at any casino parking lot. It is filled with people looking to strike it rich. Some will but the vast majority will lose.

And the longer you play the greater the risk of loss.

Wire houses and discount on-line brokerage firms WANT you to believe you can manage your own money.  That keeps you speculating and makes them RICH.

Even the most intelligent investor with the best intentions and lots of time is likely to ultimately fail because of emotions, instincts, and propaganda.

These brokerage firms make money on every trade regardless of whether you the investor make money. In fact most lose. If you are investing for a specific long term goal you need to know two numbers.

You need to know the expected return and the expected volatility (risk) of your portfolio. If you do not know these two numbers you are speculating with your money.

The most important component of successful investing is controlling your emotions and most people cannot do this on their own. This is where a good advisor adds value, developing a prudent portfolio for your situation and keeping you disciplined to that strategy.

Remember there will be times when others have a better solution for the short term. Jumping from one strategy to another does not work. Except the brokerage firms win regardless.

To succeed in investing for the long term you must own equities….globally diversify…….rebalance.

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