Screaming! Hollering! Gyrations!
BUY! BUY! BUY! Is this the bottom? What are you buying now?
That's all you hear on CNBC-TV, from brokers and so-called financial planners. The right question is, "What should I sell now?"
Brokers are not taught to protect clients money. Money the customer worked hard to accumulate slowly Is disappearing. The poor (and getting poorer) investor is listening to the chorus singing, "the market always comes back", "you have good quality stocks so just hold on to them", "you don't have a loss until you sell" and "you can't time the market", These refrains and many others are told to keep the unknowledgeable investor from selling. Once that money goes into a money market fund the brokerage company no longer makes any money on that account.
Even without generating commissions the brokers skim about 1% every year. Doesn't sound like much, does it? Think about the hundreds of millions of dollars in all those accounts. Even worse are the mutual funds that skim about 2% every year.
In the current bear market that is going to go on for several more years (yes, I said years, remember 2000-2003) investors are going to lose several Trillion dollars. (Yes, that's a T.)
There will be rallies to draw in the last few bucks of Joe Sixpack. When looking back to the 2000 fiasco there were rallies, but ultimately the S&P lost 40% and the NASDAQ lost 78%.
Can that happen again? No one knows for sure, but the trend now (and 'now' is what counts) is down with a capital "D".
Investors have been taught to buy, but the big secret on Wall Street is knowing when to sell. Brokers and financial planners are not taught exit strategies.
To prove this the investor can call his broker or expert financial planner to ask this simple question: "What is your exit strategy?" Have him explain iot in full - if he has one - and then have him send you a letter outlining it completely. This will be your only proof when you go to arbitration to get back your money he has lost..
If the investor can't get it he has two choices: 1. Stay with him and lose your money or 2. find a new broker. Some mutual funds are worse as they will not give any help at all and in fact many have redemption fees of 1% or 2% that are charged when the customer wants to get out or even transfer to the money market within a fund family.
Whatever fantasy your financial "expert" comes up with don't believe it. Don't buy anything until this bear market has run its course.
