THE FACE IN THE MIRROR

Today’s topic is financial advice, but before I say a word on the subject, let me inform you that I’m not—I repeat, not—a financial planner, nor have I ever been one.  And in my lifetime I’ve never hired one.  For the past half-century the investment advice I’ve relied upon comes from the face in my mirror.  Though at times the counsel proved less than astute, one thing I’ve never doubted: The face in the mirror always has my best interests at heart.

As you might guess, I’m inclined to advocate that each of us choose ourselves as financial advisor.  In reality, however, many persons cannot rely upon themselves to oversee their investments.  Whatever reasons may be given, it invariably comes down to a matter of temperament.  Supervising an investment program requires a systematic mindset, a degree of personal discipline, and orientation to detail.  Most certainly it helps to be compulsive.  Individuals lacking these traits, and who normally perform the function badly, are the logical clients for the financial professionals.  It’s from this circumstance that problems arise.

To state it bluntly, few financial advisors will serve you well.  If they’re commission-compensated, expect recommendations which generate for them the largest commissions.  For the fee-based variety, with remuneration dictated by a percentage paid on controlled assets, your counselor will normally endorse whatever results in the maximum dollar value of assets.  And don’t expect enhanced performance because your overseer is licensed, registered or certified.  These devices are mere window-dressing.  Comedian Mel Brooks most accurately described certified: “You’re a nice guy; we like you; you’re certified.”

 I’ll leave you with this final thought: Ideally, your advisor shouldn’t profit unless you do.  However, as members of the advisory trade do not operate this way, there’s usually nowhere else to go.  If you suspect the face in your mirror is not quite up to the task, your best bet is a financially astute friend or relative who provides counsel gratis, often inviting you to join in as a fellow investor.  I’ve involved myself in this fashion for many years and it works well.

 

Al Jacobs, a professional investor for nearly a half-

century, issues a monthly newsletter in which he

shares his financial knowledge and experience.

You may view it on http://www.roadwaytoprosperity.com

WHAT WE BUY - AND WHY

A person's possessions speak volumes on what that individual regards as important. The advertising industry, devoted to identifying what the citizen considers significant, manipulates the market to create those choices. With massive sums to be spent, the competition is as fierce as it is grotesque.

What brand of watch do you wear? Whether a top-of-the-line Rolex, a fashionable Cartier, a respectable Bulova, or an economy Timex, recognize that all are battery-operated, with a similar quartz movement, and none fails to keep excellent time. The day of the mechanical Swiss movement is a thing of the past.  The current models all do a better job than the "precision" pocket watch your Uncle Elmo carried as an engineer on the Lackawanna Railroad. The only justification for a high-priced model is self-image and, let's face it, the illusion of prosperity.

What can be said about wristwatches is equally true about other highly promoted products. These include magazine offerings, timeshare projects, $300 per ounce bottles of perfume, Las Vegas weekend getaways, $1,800 ballpoint pens, and the purchase of lottery tickets, to name just a few. As a rule of thumb, the more overpriced the merchandise, the more innovative its promotion. Perhaps there’s a connection, if only because moderately priced items that reflect honest value incur less sales resistance, so need not be touted with such vigor. Reflect, for a moment, on the recognizable voices and faces that make the outrageous claims. If there is a benefit to this, perhaps it’s that the association of certain marketing celebrities with a product of any sort saves you the effort of analyzing the offering; you may reject it out of hand.

In short, how you conduct your affairs as a consumer relates to what’s important in life. As a person with limited resources, but aspirations for the future, embrace thrift and discipline. As the years pass and your net worth increases, then modify your conduct accordingly, but keep in mind that these be deliberate choices. Don’t let advertising pressures or market manipulators preempt your decisions.  And as a last word, remember this: If a vendor must buy a dozen pages of advertising to say how wonderful its product is, it can’t be.