Rich people are hoarding cash, and wealth managers are getting frustrated

Not joking.

 

You claim to be the expert, but you contradict yourself. I agree with the notion that it is impossible to predict the stock market, and, thus, time it. Yet, then you bring in the concept of high valuations. Selling stock because of high valuations is the same as market timing, and, thus, not the smart thing to do knowing that one cannot predict the market. Why? Who knows if high valuations do not persist for another 10 years? 20 years? If you sell now because of high valuations, you may miss time in the market. Remember the old saying: Time in the market beats timing the market. What consideration of high valuations is good for is to curb expectations of forward returns.

Second, so far I have liked discussions with you. However, you got to stop telling everyone that they are uninformed. If you don't, then you shouldn't wonder if other posters stop engaging you. So far, you have not really shown us that you are, in fact, the expert. You throw around your job experience (limited, because you are young) as an appeal to authority, and put in some good-sounding lingo. Yet, except for telling people how things don't work, you haven't told us HOW they work. Thus, except for taking your word for it, nobody can really judge your expertise.

 

What product do you produce that makes money? How does that product actually help the economy, instead of skimming returns off of investors to pay for your money management? Are you actually making money or gambling in the market? These are honest questions, my guess is that you are investing other people's money as an investment banker?

Myself, I stay away from money managers as far as possible. Most of my investments are in Vanguard index funds. Low cost, and capturing the average return of the market. Thank you, Jack Bogle, for making this possible for the average investor.

 

To put it bluntly investment brokers are just leeches.

Furthermore there are very few ordinary people with spare sufficient time on their hands to effectively manage an investment portfolio.

So that is why it just makes sense to stick with a prudent average return of the market investment fund rather than trying to compete with the Wall Street Casino shysters who are far more interested in their commissions than your long term goals.

 

I agree. For the average guy, however, your friendly Edward Jones financial adviser is more dangerous. They'll happily move your investments around for commission, while pretending they are doing it for you, so you can beat the average market return. Because who wants to be average (that's the sales pitch, and I've heard it before). Unfortunately, investors don't realize that they are more likely to make below average returns, while giving the difference to the financial adviser. If you NEED to have a financial adviser (there ARE scenarios when it is necessary), have one that is paid by the hour, not by % of portfolio and front loads.

 

Who are you talking about/to?

 

Why are we in long overdue for a recession? Just because you feel like the economy should be having a recession, doesn't mean that it will happen. You do realize this, correct?

I think the financial sector will be okay.

 

I'm not an investment banker nor a money manager. When someone tells you they're involved in Investment Banking (IB), they're saying they're involved in either Equity/Debt Capital Markets, or Mergers and Acquisitions. Investment Banks raise capital for clients; that's all. I'm not involved in Investment Banking; I'm involved in securities lending strategies (strats, as we call it), which mostly focuses on developing derivative/equity pricing models, trading algorithms, and supporting client with quantitative research.

As for how this helps clients? Our economy is significantly advance and very complicated and need assistance operating their businesses efficiently. Perhaps they have cash flows generated in foreign currency and need help managing exchange rate risk. Perhaps they have lots of debt tied to LIBOR and are concerned with interest rate risk. Maybe some portfolio managers are looking to enter a market with a lack of liquidity.

There are lots of services that Investment Banks do. There is a general lack of understanding of IB operations.

Maybe you might not need a money manager, but there are lots of reasons why someone would. One of which involves being a more cost-effective approach if you plan on actively trading.

Another involves access to markets which would generally be out of reach for the average retail investors (forwards, fixed income, etc.).

 

Ah, I learned something new. Never thought about the securities lending concept before. In a nutshell, I assume, it means that mutual funds lend stocks to traders for the purpose of shorting. So, doesn't that mean my mutual fund company lends out my investments to traders who basically bet against my investments? How is that beneficial to me? Or, if it is, maybe it is because most of the traders who borrow stocks for shorting lose on the gamble? In any case, I also didn't know that VTSAX, of which I own quite a bit, has $95 million in securities lent. I guess it is only a small percentage of the total fund, but covers some of the expenses, providing for some of the low ER.

As for actively trading, that's not for me. I leave that to the people who want to lose money.