1) Wall Street Intelligentsia
Wall Street spends billions on marketing every year. It's message: trust us. That trust of course comes with a high cost
. Commissions for products, management fees for services to go with a pompous attitude - "knowing" what markets will do in the future. Usually the sales pitch includes putting your trust (money) with a group of Ivory Tower investment managers attempting to predict the future
in your behalf.
2) Forecasts or Darts?
The Wall Street Journal ran a contest for years comparing portfolio manager's "best picks" versus monkeys throwing at a dart board. The conclusion - no discernible difference
in returns. The question you must then ask: Why pay these smart guys so much for doing so little?
The truth is that while smart - they DO NOT have a crystal ball - and don't know more than the aggregate millions of buyers and sellers. IE: The marketplace has more information than a couple smart guys. Investors get the returns of the asset classes they are exposed to over time.
3) Markets - NOT Committees
Question: What is the right price? Whether it's bread, butter or stocks the answer will always be the clearing price set by self-interested buyers and sellers in a free market.
The ivory tower intelligentsia - the "best and brightest
" of Wall Street cannot compete with markets consisting of millions of self-interested parties at setting prices. Especially when they charge a hefty fee
! Neither central planners nor mutual fund investment committees do a better job at pricing bread or stocks than the marketplace.
|Where should you put your trust? Free Markets!!