mathjax

Tuesday, January 5, 2016

Anyone can invest in the stock market themselves and profit without advisers.

I know people like to think when it comes to things they don't understand: hire an expert and let them handle it. But if you want to make a profit from investments, hiring an adviser is a cost that you really should think twice about before you start.

The fact is, as Merrill Lynch himself said in one of his books, that a person in some sector of the economy knows more about those conditions than a neophyte reading newspapers and prospecti. And that's exactly what a financial advisor is when it comes to any other sector of the economy.

I have been investing since I was 21. I am an engineer by training. I watched the daily business report on PBS.  But my step dad did a lot of investing and I watched. He also was not a financial person; he was a doctor. So he learned it as well.


Here is a graph from one of my retirement savings accounts. This one has only been open since my divorce about late 2010. In that time, the money I invested has grown by 44%.  Or an annualized return of around 7%.  My investments are the green line.  Frankly, the S&P line is total bunk because the S&P dumps bad stocks and adds others retroactively to the index over time so that doesn't represent the same basket of stocks and in my mind those indexes are fiction made to be propaganda so you think analysts are good at their job.


I've never used an advisor and most of it was made investing in Canadian banks.  I learned about the structure of the banking sector and exploited it.  You see, for my American colleagues, it is against the law in Canada for new banks to be incorporated- so there will never be a banking boom or bust. The six major banks we have are all there will be. And they are equally forbidden to merge and reduce the competition. Canadian banks are run very well and they can exploit steep loans to resource sector companies that have proved profitable over the long run.   All Canadian banks are profitable and we Canadians are too polite to protest the bank fees.  Also, the Canadian government maintains sane regulations on banks so these ones don't experiment unto collapse. Also, they are moving away from public bail-outs so they are forced to maintain reserves.

So if you want to make money investing there is a way you can do it without a middle man. Even the trades are done by computer now so that's more true than it has been.