Financial Freedom SG

Was watching the shenanigans that the Bear Stearns people were up to just now on Bloomberg. This guy was playing bridge while his company was collapsing around him.

Who does he blame when his firm went bankrupt? Market forces and loss of confidence.

When the going was good and profits was rolling in, you bet that they will say it is because of them, the leaders that the firm is doing well. Then clamor for higher pay and million dollar salaries for themselves.

If the company that you invested in has a leader like that, quick to claim credit when things are well and blame everything and everyone else when it isn’t, would you trust that person?

The Media?

I have also read books that advised readers to mute the financial news channel when watching it so that you are not affected too much by their opinions and views about where the market is heading. I found a bit hilarious and I did found it funny that every time the market moves either up or down, they have to come up with reasons to why it went that way.

So the market went down because they are fighting in Greece? Why can’t it be because of the inane comments made by the ex-Bear Stearns executives? Or because BP took a hell of a long time to clean up the mess they caused? I mean do you seriously sell your shares because people are fighting in Bangkok?

The Broker?

Once, I believe that the broker’s recommendations should be taken seriously. I even bought into such a company on the strength of the broker report on the company.  After a while, I started laughing when I saw some of them. Especially last year and the end of 2007 when it was filled with ‘sell’ recommendations with valuation becoming dirt cheap.

Also, even if the recommendation proves to be astute and well researched, very soon, more people will come to know about it. By the time you finally get to know it, the prices you are able to buy at is likely to have become expensive.

Or if your financial advisor turned out to be one of those who sold you the Lehman minibonds or one from a firm like Goldman Sachs which sold investors a product that the product manager wouldn’t buy himself in a million years and the company took a short position in too.

If you are still not convinced, there is a title of a book called “Where are the customer’s yachts?”

Or Yourself?

I read a thread on ChannelNews Asia about a guy lamenting that he had lost a lot of money on stocks over the past 10 years. He had bought a lot of China counters which ended up with financial troubles. Mirrored it with the CLOB saga which older investors experienced, and anyone can see that the investing landscape is not for the faint hearted or for someone with no idea what he or she is doing.

A useful quote to remember is this:

“We have met the enemy and he is us”

So what do you end up with after this exercise? Believe no one, not even yourself at times.

You place your belief in your retirement plan, your regular savings, a well diversified investment portfolio and take up adequate insurance protection (thanks of La Papillion for reminder for the protection part).

Sources:

1. Cayne Blames Market Forces for 2008 Collapse of Bear Stearns: http://www.bloomberg.com/apps/news?pid=20601109&sid=alC3tjVvlBuk&pos=10