Why would you stay with such a company?
Why would you stay with such a company?
It is not the company it is individuals. And if you think low cost index funds and robo advisors are doing you a favor, think again.
Ghost of Igloi wrote:
It is not the company it is individuals. And if you think low cost index funds and robo advisors are doing you a favor, think again.
Low cost index funds beat 70- to 80% of actively managed funds.
Ghost of Igloi wrote:
agip,
My clients reflect my personality and cohort. Tend to want to hold on to what they have. Idaho is far more diverse than some realize. I have more than a handful that do not like Trump at all. A couple have short positions that are as much an anti-Trump bet as one based on valuations. When I explain to clients the process of QE, or the unsustainable tax policy they can see the vulnerability. Carry that conversation to politics, regardless of your side, most see how this country is divided while larger issues are kicked down the road.
There is so much growth in our Treasure Valley that you have a lot of hot money: real estate, services, restaurants, brew pubs, wineries, etc. My daughter was working on a case where a person starts a distillery equipment making business. Had no idea what they were doing. Sold a bunch of copper tubes, and vats that didn’t work. Also, contractors throwing up buildings that have varying degrees of shoddy work. There are a lot of attorneys making contract work for real estate or various business ventures. Ten years ago it was the bankruptcy attorneys.
In regards to our business, I have been through two severe bear markets. I remember the financial advisors with the ashen faces splashing water on their faces in the restroom. Going home with stomach aches. Not wanting to answer the phone. Or the biggest advisor at our branch in 1999 put clients on margin, bought a bunch of tech stocks. This guy has his name on the company ticker screen on Times Square. This advisor was so big and arrogant that most were afraid of him. The bust came, the lawsuits came, and the advisor was fired, and the branch manager reassigned.
In 2010 I had some bonus/differed income company stock by the time I was vested it expired worthless. The entity the firm bought during the financial crisis had FAs that came over with company stock that was worth ten of thousands, in 401k or deferred compensation now worth pennies. I was at a company conference in Denver in September of 2008. The Friday before Lehman went under. People were in shock, zombies walking. A month later I flew out to Los Angeles to help my mother move. The car rental company took me to another firm because their GM product had been confiscated by the lenders. We forget where we were a decade ago.
This bubble is more similar to the Tech Bubble than the Housing Bubble. Fast money, accounting gimmicks, and one class of society living the high life at the expense of others. Interestingly though some of my wealthiest clients see the inequality and the inevitability of a rebalance.
Igy
good stuff.
I started in this part of the business in 2008-9 so I've never had to deal with meeting clients who have had large drawdowns. That will be a rough time. To be honest, I did not handle the Christmas 2018 bear market very well - I called everyone, but it took a big toll on me, mentally.
I'm always a touch conservative with portfolios tho...if a client has a solid safe bond portfolio that should help buffer the losses...and all of my clients do have that.
We shall see.
agip,
I had a client in 2008 who was down 6%! This is a person had been with me for over 15 years. He was really pissed he was down 6% while others were down magnitudes of more, and was considering asking for another advisor. Yesterday I called him to sell a 8% of an equity ETF position we bought back in 2010. We have been selling periodically to fund his RMD. Client says “you said to sell some last time we talked.” Me: “I am saying you need to think about it. I would, but I am not pushing you to do anything. Think about it.” Naturally with the market up there is reluctance to sell. This guy is very wealthy and subject to large IRA distributions. He sold. We banked it for future distributions. We did the same selling bonds six months ago.
When I started in 1996 I heard the story of an advisor in our office that was caught in the 1987 crash and aftermath. I later inherited some of his clients. He was so distraught with guilt he killed himself. If you were have a hard time in December, I can tell you, that was nothing. That said, you were not alone, we had some wide eyes in our office. Lately it is more yucking it up and all has been forgotten.
Igy
Ghost of Igloi wrote:
It is not the company it is individuals. And if you think low cost index funds and robo advisors are doing you a favor, think again.
You wrote that you had company stock that ended up being worthless. Sounds like maybe you’re the one who needs a different advisor.
Kleindienst wrote:]You wrote that you had company stock that ended up being worthless. Sounds like maybe you’re the one who needs a different advisor.
I imagine anyone on this thread with any amount of life experience has wound up holding worthless stock. Nothing ventured, nothing gained...
Personally I had Nortel shares before the height of the dot com bubble until after it burst. Also Royal Oak Mines, a gold miner that cratered some long time ago. And I’m still holding onto shares in a penny stock mining company that I could sell but the value is less than the cost of the trade, and I can’t bear the indignity. :-)
Also, I used to play ball hockey with a guy who was employee #13 for JDS Fitel, which became JDS Uniphase. At the height of the dot com bubble he was a paper gazillionaire, sitting on a bunch of priceless stock options. Luckily for him he exercised some of the options to get cash to buy a big house. When the house of cards collapsed and the options were useful only as toilet paper, he had to sell the house because he couldn’t afford the taxes and upkeep. $hit happens...
the idiot wrote:
Kleindienst wrote:]You wrote that you had company stock that ended up being worthless. Sounds like maybe you’re the one who needs a different advisor.
I imagine anyone on this thread with any amount of life experience has wound up holding worthless stock. Nothing ventured, nothing gained...
Personally I had Nortel shares before the height of the dot com bubble until after it burst. Also Royal Oak Mines, a gold miner that cratered some long time ago. And I’m still holding onto shares in a penny stock mining company that I could sell but the value is less than the cost of the trade, and I can’t bear the indignity. :-)
True. But it sounds like these stocks were part of his compensation package from his employer.
Kleindienst wrote:True. But it sounds like these stocks were part of his compensation package from his employer.
I’m curious if you are imagining his particular employer did any worse during that downturn than other typical similar firms? I really don’t understand some of the inane and immature chirping in this thread. I know, it’s the internet and it’s a message board, so all bets are off. But I don’t imagine if your real name were known you’d be making the same comments.
the idiot wrote:
Kleindienst wrote:True. But it sounds like these stocks were part of his compensation package from his employer.
I’m curious if you are imagining his particular employer did any worse during that downturn than other typical similar firms? I really don’t understand some of the inane and immature chirping in this thread. I know, it’s the internet and it’s a message board, so all bets are off. But I don’t imagine if your real name were known you’d be making the same comments.
one vote here for whoever loves to anonymously insult people on this thread...to disappear and do something else with your anger issues.
Kleindienst wrote:
the idiot wrote:
I imagine anyone on this thread with any amount of life experience has wound up holding worthless stock. Nothing ventured, nothing gained...
Personally I had Nortel shares before the height of the dot com bubble until after it burst. Also Royal Oak Mines, a gold miner that cratered some long time ago. And I’m still holding onto shares in a penny stock mining company that I could sell but the value is less than the cost of the trade, and I can’t bear the indignity. :-)
True. But it sounds like these stocks were part of his compensation package from his employer.
That was stock based compensation that can’t be sold until vested. You evidently don’t know how this works.
JDSU = Just Don’t Sell Us
the idiot wrote:
Also, I used to play ball hockey with a guy who was employee #13 for JDS Fitel, which became JDS Uniphase. At the height of the dot com bubble he was a paper gazillionaire, sitting on a bunch of priceless stock options. Luckily for him he exercised some of the options to get cash to buy a big house. When the house of cards collapsed and the options were useful only as toilet paper, he had to sell the house because he couldn’t afford the taxes and upkeep. $hit happens...
While this sounds like a dire outcome, doesn't the guy still pocket the value of the house when it was sold? I would think that is still quite a bit and he made out well, perhaps not as well as he might have, but certainly quite well.
I heard similar stories from a friend who is the husband of an ex-Microsoft employee who said that some vested employees sold their stock options to receive a very large windfall back in the late 90's. The vested shares are converted to common shares in so doing. But when the shares dropped precipitously in 2000, the value of the shares were worth less that what they owed in taxes, and they had to sell at a big loss to pay those taxes, thereby wiping out what they made or even losing money. That was the gist of what i was told, though i may have it slightly wrong in that i'm not well versed in how stock options work.
My favorite dot com crash story is second hand but I think it's true...a woman went tech crazy, buying all the hot dot coms, made a bloody fortune, and then cashed out in time. Paid the tax and bought long term treasuries with the balance, since she had enough money now.
But of course instead of being conservative...she made a bloody fortune riding the bond bull market for years and years. Just a complete, massive, total market timing success.
I really want it to be true.
I believe there is quite a bit of high end West Coast real estate finance by stock portfolio loan accounts. These loans are secured by the value of concentrated stock position that function no different than margin accounts. There were big liquidations in January 2018 and Q4 2018 that were rescued by a change in market direction. Margin calls function in an accelerated manner where the leverage gets magnified on the downside. Markets go down much faster than they go up.
Ghost of Igloi wrote:
Kleindienst wrote:
True. But it sounds like these stocks were part of his compensation package from his employer.
That was stock based compensation that can’t be sold until vested. You evidently don’t know how this works.
JDSU = Just Don’t Sell Us
I understand how it works. My point is that you reportedly work for a financial services company that compensated you with what turned out to be worthless stock. Doesn’t that say something about the company?
No, you still don’t understand troll. Go get a life turd.
What is a “life turd”?