Major stock crash imminent

I don't think the other guy was saying the full service banks don't have their place, he was only saying that for the purpose of managing a client's financial assets, an investor can do as well by investing in no-load index funds. The underwriting, etc., were not part of the discussion. Clearly not the domain of discount brokerages, Vanguard, etc.

Many of the young users of this site might benefit from that advice and would be wasting their limited resources paying a full service broker. Really, it's best to learn when you have less at stake.

high net worth wrote:

I don't think the other guy was saying the full service banks don't have their place, he was only saying that for the purpose of managing a client's financial assets, an investor can do as well by investing in no-load index funds. The underwriting, etc., were not part of the discussion. Clearly not the domain of discount brokerages, Vanguard, etc.

Many of the young users of this site might benefit from that advice and would be wasting their limited resources paying a full service broker. Really, it's best to learn when you have less at stake.

Every NYSE investment firm is slightly different from each other. I do not want to keep debating what full service firms can do for their clients versus some cost differences at discount brokerage firms. Less than $100,000, a full service firm likely may not be the best fit for a potential client. Full service firms, even with no load funds and discount brokerages out there still need to maintain retail clients. If full service firms do not maintain retail business, investment banking/underwriting would be too much of a risk. Think about all the investment analysts investment banks need to maintain. After full service firms make private corporations public, Standard & Poor's can sit back, watch and wait. Their indices are cheap to construct because they just watch and wait. S&P can wait to see which publicly traded corporations do well. There are no indices without large investment banks doing the heavy lifting. S&P indices are only reliable to a certain degree because analysts at the hated big banks are reviewing the corporations in a detailed manner. I look at fans of discount brokerages and indices the way I look at a T&F team. The 5000m/10000m guys do not respect the 400m guys, but the distance guys are happy when the 4x400m team wins and the track & field team wins.

No argument here. Understood that underwriters and the Merril Lynch's of this world perform roles without which there would be no publicly traded companies. The arguement was about need for full service brokers and their role with small investors. No doubt some of these with sufficient assets could use the help and they will pay for those services.

What i don't understand is my experience with one of these is that all the funds they offered had steep front end loads or back-end loads, and they were in the 5% to 6% range. I guess that is how the broker makes their commission, and they have to get paid somehow. But damn, that sure isn't going to be me paying that commission. Not when a just as good alternative can be had for no commission elsewhere. Getting the right mix of fixed investment vehicles, equities, tax sheltered investments, etc. - that's good to get right, for sure. But the way the broker gets compensated just looks real bad when you open up a portfolio of load bearing funds that are mediocre and are performing below the no-load index funds or other commonly available no-load funds.

Look, there’s absolutely no doubt that passive investing is better than active investing. The fees that full service brokers and other financial planner types charge is a huge drag on the rate of return and ultimately the overall gains. Anyone who tells you differently is a liar.

bumper car

Buff it wrote:

Look, there’s absolutely no doubt that passive investing is better than active investing. The fees that full service brokers and other financial planner types charge is a huge drag on the rate of return and ultimately the overall gains. Anyone who tells you differently is a liar.

Have you ever been inside a full service firm? Some have all the answers while the stand on the outside looking inside. Do you believe every client at full service firms are fools while all the intelligent people deal with a toll free number at Vanguard? Go inside and talk to a full service advisor.

If you had invested $1000 in the Dow 30, in the summer of 1987, on the very day the market peaked--8 weeks before Black Friday where the market lost 40 percent-i.e. the very worst moment to invest for the period between 1980 and 2000.......

Today you would have about $10,000 dollars.

Time heals all wounds.

Buy and hold always works until it does not work. If a person bought $1000 into US markets summer, 1929 by 1954, said person would have had $1000. Oh, dividends, add those. Back then full service firms did not mess around. I am sure account maintenance fees would have canceled out the dividends in that era.

1929 to 1954 wrote:

Buy and hold always works until it does not work. If a person bought $1000 into US markets summer, 1929 by 1954, said person would have had $1000. Oh, dividends, add those. Back then full service firms did not mess around. I am sure account maintenance fees would have canceled out the dividends in that era.

What don't you understand about buy and hold? LOL. That doesn't mean buy and sell at the bottom of a downturn, now does it? Let me help you. That would be contrary to the "hold" part. After all, it is "buy and hold" we are talking about.

Does that help?

And if the investor you reference did actually buy and hold (as the poster suggests), that initial investment would be worth more than 7 times it's initial investment today.

Now go ahead and tell me about how some investors tend to sell at the worst times.... (yawn).

Margin Calls. Many investors have no choice but to liquidate at the bottom. Even those with fully paid for securities or commodities sell at the bottom. We all have a certain investment pain tolerance. Once that pain threshold is crossed, all humans sell.

Margin calls? No one gets a margin call unless they borrowed the money in the first place. Are you kidding me?!

You obviously will concoct any unlikely scenario to support the possiblity that you are right, but in so doing, it only reveals how weak your views are.

You are weak. You discredit the basic notion of an honest exchange of ideas. Great wealth would be squandered in your hands. Buy and hold requires resolve and commitment that are beyond the attainment of fickle and unsound individuals like yourself.