I think it points out a value-for-service ideal-

How much, really, is it worth having someone put your money in a mutual fund? How much expertise does it really take? As far as I can see, if you are playing it honest, simply seeking to grow your money through solid investments at a conservative pace, you don't really need a financial guy.

And if you're trying to make big money quick- you probably deserve what you get.

Oh man, I hope and pray for a nation of self-directed traders. I could quit and live on poor attempts at market timing until I died rich. Zero-sum games are more fun when the numbers on either side of the T account are larger.

@ADismalScience: Self-directed investor =/ market-timing home-traders. I'm the former and I put my money in low-cost index funds over the long-term and don't play individual stocks.

A planner that charges a flat rate is a good idea, much like an annual checkup. Particularly if it teaches you the value of patience, diversification and no-load indexes.
Hiring some smooth-talking schmoe to "beat the market" is a fool's game, however.

Besides, isn't that what Jim Cramer is for? He'll make everyone rich, I tell you. RICH!!

Now if we can find an NPR station that plays "On Point" and "To the Point" back-to-back, I can be thoroughly confused.

are do people keep calling them the smartest guys in the room? anyone with 3 semesters of college and a basic understand of math and reading can do what these idiots did. It doesn't take a genius to follow in their steps, it just takes someone who doesn't give a damn for his fellow human beings.

I hate people on an individual level equally, but I'm not of the mind to just FUBAR large swaths of them for my own private gain...

@savvy9999: that should be 99%, not 995

@savvy9999: oh and good luck with the show.

I was already a self investor. Financial planners charge too much, do too little, and from my coworkers' experience, manage portfolios poorly. I'm wondering if a county of self investors would make the market more prone to wild, baseless swings or less.

My 401(k) plan leaves me with about zero options. Actually, maybe a choice of 9 funds like:

AMERICAN EUROPACIFIC GR
AMERICAN GROWTH FD OF AMER
BLACKROCK EQ DIVIDEND
BLACKROCK S&P500 INDEX
COLUMBIA MID CAP VALUE FUND
DAVIS NY VENTURE FD
DWS DREMAN SMALL CAP VALUE
OPPENHEIMER MAIN STREET
VAN KAMPEN MID CAP GROWTH

This doesn't give me... basically... any options.
So if I wanted to, for example, divest myself of all oil stocks for ethical reasons, or real estate stocks (as I asked in 2006 when I sold my house because I saw the bubble coming clear as day), I could not and cannot.

But hey, this system sure beats Social Security because I "can do what I want" with my money.

Go privitization! I'm putting all my money in Goldman because Jim Cramer told me to, and Rush Limbaugh said I should be mad at Obama for leading a witchhunt against AIG.

@Ben Popken:

Then I can broadly short institutional products favored by you, because your investments create upside bias AND publicly disclose your positions and cashflow on a regular basis. Mutual funds - and their inability to short due to their passive "long term" approach - are sitting ducks.

Wow. Warren Olney is a radio god. Enjoy. You've finally made it.

In having my MBA I have just been doing my own investing, though with my retirement accounts I have to invest in funds. Even then just putting in diverse funds works well. I do at least as good as the people managing the funds, usually better, and I don't have to pay myself big percentages to do it. Look up Scott Adams "Dilbert Principal"...it literally has a one page summary of everything you need to know for basic investing, and it's pretty much spot on. Kind of makes you wonder what you pay the fund manager for?

@Trai_Dep:

I strongly disagree. I think the future of investing now that EMH and CAPM-derivative stochastic models have been wholly discredited is active management.

@stevejust:

So wait - you argued that you don't have enough options as an investor, and that's a critique of 401(k) models? Bush tried to reform social security to offer more investment options and got raked. I'd suggest having your cash in hand given Washington's shaky track record with taxpayer funds.

For me personally, I've simply stopped being in the stock market altogether (at least with my personal trading account-- can't do much w/ my 401ks). I'm creating my own small (very small) hedge fund that's investing in solid, physical objects: coins, art, antiques, real estate, etc.

Liquidated and closed down my Ameritrade and Schwab accts at the end of last year. I simply don't trust 'the market', or anyone remotely connected to it, any more. Company reports are worthless, fund prospectuses are worthless, 995 of CEOs and boards have proven themselves untrustworthy and shortsighted, and as far as I can tell, rating companies are still in bed with those whom they are charged with rating.

So to answer your question, Ben -- until any of that changes, I'm out of being an active/self or passive (listen to advice) trader entirely.

More self-directed, for sure. Before I had a 401k with a sizable chunk of money and paid attention to the "just leave it alone and in 30 years it'll be a huge chunk of money" advice. I put it in index funds, put in as much as I could afford to, took advantage of matching, and ignored the statements when they came.

After the market problems I've realized I can't just follow that course. I'm not going to hit retirement and suddenly be rich off my 401k, even though I started investing 10 years ago and have at least 30 years before retirement. If I'm going to build any sort of wealth in my life I need to be actively involved and have a plan.

That has me investing more right now -- seeking out companies that interest me, learning about them, learning how to evaluate them, and then buying their shares. Has the market reached a bottom? I don't know. But I do know some stocks are terribly undervalued right now.

@ADismalScience: Well, let me spell it out for you.

1) I think Social Security is a good idea. I think people sometimes make bad investments, and/or sometimes people find themselves retiring in a down market. SS as a backstop solves both of those problems. I am 100% anti-privatizing social security.

But no one should think Social Security alone will be enough to live a happy retirement.

2) I am mocking the fact that my 401(k), which in theory should be me directing my money, doesn't let me make many decisions at all. Not everyone's 401(k) sucks that bad, but mine does.

And I'm not even necessarily saying people should have more or less fredom to find other investment options in their 401(k)s. I'm just saying that mine doesn't give me options.

3) I max out my 401(k) contributions every year. But I also paid about $80,000 in taxes to the feds and state, so I do everything I can to minimize my tax burden, even when my 401(k) lost more money last year than I paid into it.

That $15k a year does not represent my entire nest egg for retirement.

@savvy9999: And because the vast majority of people think just like you do, I am buying up more stock than ever FOR THE LONG TERM. I could lose half my money in the next year, but over the next 20 years I'll be proven right. People are pissed and panicking right now; the market is being driven down on redemptions and not true value.

@savvy9999: I can see ending all future investments if you really truly can't take it anymore, but why would you pull out your money when you have already lost so much? You might as well wait it out and see what happens. I'm with johnfrombrooklyn. I'm buying stock with what is left after my 401(k) and emergency savings. Maybe I'm wrong and will lose even more, but let me know how those coins work out for you.

@savvy9999: Personally, I think your response is a little extreme. Seems a little like throwing the baby out with the bathwater. Sure, there are some corrupt companies, and we're in a tough time in the market. But, what's the percentage of bad companies compared to the entire market?

Regarding investing--for money that you don't need for more than, say, 3-5 years, I still say you can't beat the market. Sure, things are pretty bad right now. But, I expect the marketing in the long run to still go up. Over 100 years of history has show this to be the case, I don't expect that to change anytime soon. You just have to be smart; find good companies with solid businesses that are undervalued at the moment, and invest money you don't need soon. Or invest in an index.

Also, if you choose to be out of the market, you might miss a huge opportunity when things finally do go back up. Consider the following:

1932 - Loss of 20%. Gain next year +76%
1937 - Loss of 34%. Gain next year +18%
1974 - Loss of 18%. Gain next year +39%
2002 - Loss of 19%. Gain next year +30%
(Stats from [www.fool.com])

I would agree that now is (possibly) a terrible time to do short-term investing, but for mid and long term, most data shows that the Stock Market outperforms all other asset classes over the long-term.

In response to the article, I personally have made a massive shift to personal investing. I don't have a money manager, but feel like I've been able to make some pretty good decisions on my own.

@stevejust: Like with most well-intentioned government programs, Social Security sounds like a good idea. Unfortunately, it's run by people more greedy and selfish than bank CEOs supposedly are - Washington politicians. Social Security is the biggest ponzi scheme ever perpetrated on the American people. Rob the young to pay the old, while simultaneously scraping some off the top for pork projects... There will be NO money left in SS when I retire.

@stevejust:

Right, right.

I just thought it was incongruous that you complained about a lack of invetsment choices and then stated that you were against privatizing social security. I'm not criticizing your strategy or anything, but that doesn't seem to pass the logic test. "Privatizing" social security is a debate dominated by buzzwords and useless screaming, so we should probably skip it. And the way Bush was trying to do it was unsurprisingly stupid.

I think it just comes to accepting a basic principle of the market:

- It isn't about "revenues" or "profits"
- It isn't about "business models"
- It isn't about "management teams"

At the end of the day, the ultimate reality of the market is that you're playing a very elaborate, choreographed version of "Over/Under".

You're betting on whether the next guy to come around the corner is going to want to have some electronic-bits that are in your name transferred to his name, and whether or not he's willing to pay more to have those bits than you did.

Now, certainly there are some who play what I've come to think of as "the emotional game" in the market. They're the ones who fall into the sucker-trap of thinking about the business strategies, etc. And to some extent, an investor has to consider those people as part of the "guys who come walking around the corner next", so their emotional attachment (or detachment) comes into play in your gambling. But at the end of the day, you are still only betting on how the next guy is going to act, not on the corporations themselves.

"Will the US become a nation of online traders?"

I never trusted anyone on Wall Street with my money and have been a full time daytrader/swingtrader for the past four years.
If one wants to learn how to trade their own money, I highly suggest opening a "practice account"

Talk to your broker (I'm with Scottrade) and let him show you the basics of placing orders, looking at charts,etc.
Watch MSNBC or similar in the morning to see whats going on in the pre-market futures and what happened in the rest of the world while you were sleeping. Also, read, read, read business news.

Once you do this for a while and get comfortable it will give you great pleasure to know that you truly are in charge of your own money.

@Blueskylaw:

I wouldn't recommend this practice to the public, generally. The tools available/understandable to a layman are dwarfed by the average analytical suite available to most money managers and advisors. There is an information advantage to using a full-service advisor. Besides, the value in investment advisors is that they can do those things for you. That's sort of the point, for a lot of people. Particularly HNW guys.

@savvy9999: congratulations, you picked the absolute worst time to leave the market!

@savvy9999: regarding your investment in "coins, art, antiques, etc." -- be very careful. Depending on how your investment in collectibles is structured, you could incur a significant additional tax liability. My own experience in this area is limited to a Self-Directed IRA (investing in bullion coins), but I'd recommend getting an extra opinion from a qualified financial adviser before getting too deeply involved in collectible investing.

Good luck to you, though.

@RandomHookup: Only once I convince our local station to go back-to-back with the Faith Middleton Show and Speaking of Faith.

the thing I always kind of worry about with respect to any form of investing, is that unless you treat your investments as a full-on second job, you end up running the risk that no matter how well you pick your investments, arbitrary market forces will beggar you at the drop of a hat. To make matters worse, you can't even just deposit your money in bank accounts, because inflation will make you poorer since it is always higher than the interest rate that you get.
How is a person to get retirement security without pouring so much time into the investments that it is virtually a second job?

@savvy9999: [en.wikipedia.org]
and
[en.wikipedia.org]

That's all I have to say.