Straight
Talk from Al Jacobs
ADVICE
FROM THE INVESTMENT EXPERTS
Earlier
this afternoon, while browsing the Internet, I read a market briefing by reportedly
knowledgeable financial advisors describing what investors can do to “shore up
some ballast for your portfolio.” Included in the advice was the recommendation
to “make sure you own ‘safe’ bonds – like treasury debt, which is considered a safe
haven in times of trouble – rather than reaching for low-quality but
high-yielding corporate bonds.” A little further into the article was the
suggestion you consider “adding commodities to your portfolio as inflation
risks rise.” Although many other opportunities were included, those two seemed
to be worth a closer look.
A
trip to Google reveals what treasury securities yield. One-Year Treasuries now pay
2.01%; Two-Year, 2.25%; Five-Year, 2.65%; Ten-Year, 2.88%. I can calculate how
long it will take you to double your money in each instance, but it won’t
provide you with much insight, inasmuch as you’ll most likely be aged and
senile long before then.
As
for commodities, these pretty well fit into the same category as options. They
require an intimate knowledge and sophistication possessed by few persons, and
contain an element of risk to challenge the seasoned speculator. Perhaps Mr.
Thorne, of Kiss Me Kate fame,
cornered corn, but most such gamblers end up in the crib.
Let
me provide you with a few thoughts. Financial advisors – certified or otherwise
– are not in the investment business. Their remuneration is unrelated to an
ability to astutely select and recommend securities, and their prosperity is in
no way tied to the investment success of their clients. Their sole function is
marketing. If they can entice a client to part with money for which they
receive a commission or a repetitive override, they’re a winner. If they can’t,
they need another job. By contrast, I’m in the investment business. If the
assets I acquire, oversee and dispose of do not consistently show a profit, I
lose money. My associates – not clients, but rather old friends – are in the
boat with me. We prosper together equally or take a beating together, again
equally. It’s obviously my intent to select and manage my investments as
effectively as I can.
A
final thought: Don’t expect to receive much worthwhile advice from securities
analysts or reputed investment experts. If they really knew anything, they
probably wouldn’t tell you anyway.
Al Jacobs, a professional investor for nearly a half-
century, issues weekly
financial articles in which he
shares his financial
knowledge and experience.
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