[quote=exdrone] [quote=The Answer]

Malcolm,

… You are setting yourself up for disaster and much liability should the market correct again like it did back in '00 - '02.

[/quote]

Do you know what an investment policy statement is? Personally, I can admit that I didn’t until I left the greatest salesforce. Look it up and it might answer some of concerns about liability in a discretionary account.

[quote=The Answer]

Malcolm,

The last thing I want to do is manage discretionary accounts all day. Besides, can I really do it better than American Funds or any other good institutional or seperate account manager? You are setting yourself up for disaster and much liability should the market correct again like it did back in '00 - '02.

You say your life is less stressfull doing business this way. I don't see how.

TA 

You said "I spend nearly all my time managing my positions..." This is what you pay an assistant to do. You do not understand this business.

[/quote]

Perhaps sir it is YOU who do not understand this business......

Broke Joe,



So O 'Mighty One explain to us this business we are in.



BPD

[quote=BigPayDay]Broke Joe,

So O 'Mighty One explain to us this business we are in.

BPD[/quote]

I am far from broke, sir. ;-)

If you have a process, managing discretionary money is  no more stressful than nondiscretionary business with clients.  In fact, I've often found it is less stressful because it puts me in a more professional and consultative role with the client instead of a salesman.  It also often makes it much easier for me to make rational clear-headed decisions about the client's best interest, rather than dealing with their irrational swings between fear and greed at market extremes, and obsession with fads and short term news items.

For what it's worth, by the way, most of the time liability is not measured by actual performance(or lack thereof) but rather whether the manager/advisor was PRUDENT in his investment decisions(or reccomendations) and whether or not he/she followed a logical process.  Not the outcome of that process.

Not as hard to beat or at least match many of these separate account managers as you might think.....considering that most of them never beat the relevant benchmarks anyway.  While I have a decent book of business, I manage far less than they.  I don't have to worry much about moving the market when I act to purchase a stock, bond, convert, or closed end fund.  They do.  In fact, most of them can't purchase CEF's because there's not enough liquidity.  Any decent sized fund will end up taking days or weeks to unwind a stock position when they're concerned that things are deteriorating, or else they have to risk moving the stock.  Even if they're careful and patient, the street could get wind that they've got a lot for sale and that can hurt them on a price basis.  I don't have to worry about that...I want out I can get out in hours or even minutes.

Most big money managers tend to cluster around the main stocks in their benchmark indices....that's because they're compensated by how they perform 'relative' to the index.  My clients don't care about 'relative' outperformance.....they care about bottom line absolute performance with a reasonable amount of risk.  That's what I've found most people care about, to be honest.  So anyway-when these big money managers are out there buying the top 10 stocks in the S&P 500(or whatever index they hold) how are they actually going to generate true alpha?  True excess returns.

Never mind the fact that the culture in most big money management shops on the street is such that nobody really sticks their neck out.  Risk is good, properly embraced and managed, as that is what allows one to earn excess returns.  One doesn't generally make real money on the street by conforming to the conventional wisdom of the moment.

Money management at many of the big shops these days is like left handed pitchers in major league baseball.  Bastions of mediocrity clad in expensive suits.  But that's a topic for another post.

As you've said yourself in other posts, BPD, there are numerous ways in this business to skin the proverbial cat.  That, sir, is one of the things that makes this business great.  Also, as you've commented, what it's really about is acheiving one's successs by making a truly meaningful impact on the lives of one's clients...by helping them reach their goals.

So anyway, I'm rambling by this point.....but that's my take on the world.  It may not work for everyone, but it works for me.

As a brief postscript-I'm not suggesting that mutual funds or professional money manangers stink.  There are some good ones out there, too.  Just that they aren't the end-all and be-all that some of the young pups think.  They have their negative points as well as positive aspects.

As another one of our regulars sez....just my 2 cents...

[quote=BigPayDay]Broke Joe,

So O 'Mighty One explain to us this business we are in.

BPD[/quote]

Oh and by the way....I outperformed the markets and most fund managers and SMA managers by pretty wide margins during the 00-02 market correction.....because I was as concerned about managing risk as I was about chasing returns, because I was willing to question what many others believed to be absolute truth.....and I had a discpline that I stuck to.....

Dear Bill F.

What planet do you live on you uninformed condescending little pea brain?   I don't know you or the other guy who manages his clients money himself but let me tell you a few things. First of all you need to get some training from some successful brokes because you obviously have not been around any big producers and you are obviously a small to medium sized producer.

For you to get on here and compare mutual funds to investments that are managed on a discretionary basis by an educated advisor is beyond belief.   When you critisize people who do this you critisize me.  Normally i like to sit back and read this site occasionally because ignorant people like you are good for amusement when I am bored. 

But I cant let you get away with your post on this string. You need to apoligize for being so stupid and then you need to go get some training so you understand what goes into the efforts that brokers put into managing discretionary accounts and the great benefits it affords clients.   

Do you have one high net client on your little itty book of business? I doubt it.  Go hang your head in shame now and go look for someone who is successful to give you some help.  Tell them a broker who is much more successful and knowledgeable then you sent you in for remedial training.    American funds...what a joke.  daa but he has a Phd...good god. 

Joe Da Money Manager,



Wow, you are quite the investment guru. Do you buy your research on Stocks, Bonds etc or do you do it on your own?



BPD

[quote=BigPayDay]Joe Da Money Manager,

Wow, you are quite the investment guru. Do you buy your research on Stocks, Bonds etc or do you do it on your own?

BPD[/quote]

I am no guru.....merely a student of the markets.  Every year I learn how little I really know.  In this business, pride definitely goeth before the fall.

I buy my research mostly through my firm.  I also buy research from an outside technical research firm.  I don't do any of my own reasearch, as I just don't have time and there's already plenty of good stuff out there.

But-even when you use someone else's research, you still need to learn to think for yourself.  That's where most people go wrong.

JDB,



What’s your sell discilpine?



BPD

[quote=BigPayDay]JDB,

What's your sell discilpine?

BPD[/quote]

LOL....best thing I ever did about 4-5 yrs ago was to learn to take losses, and in all honesty I'm still refining that, and always working to get better at sticking with that discipline.  It is clearly one of my weak points, although I think I'm better than many at it.

I use technical analysis.  When I'm considering buying a stock, I(with rare exception) have to like the chart as much as I like the fundamentals.  Once I find a stock that looks attractive on both counts, I then start looking at an entry price....considering both support/resistance on the chart and as well whether or not it is overbought on a near term basis(has it run up a lot lately?).  Generally what I try to do is identify a support level(preferably major support level, not just a double bottom) and then set my buy target within 10-12% of the support level.  Then, if the stock is above my target buy price, I'll put it on my watch list and see if I can pick it up on a pull back or if chart developments build in a higher support level that I can work from for a stop loss.  If not, if it runs away from me, that's ok because I have plenty of others to look at.

Most often when a stock is overextended it will come right back down if you're a little patient and realistic with your buy point.  You can afford to do this if you're doing discretionary fee based management.  It's a lot harder to do on a nondicretionary commission basis....I know I've tried both.  (As an aside, though, it might help you close sales on a presentation because once clients/prospects learn that you have a system, they also know that when you say NOW is the time and NOW is the price, you MEAN it.  But in real life that hasn't worked for me so far.)

So, once I own the stock I sell it if 1.) It hits my stop loss, which I eventually move up behind the stock if the idea starts moving my way. 2.) If my fundamental reasons for liking the stock and expecting growth start to deteriorate, 3.) if the stock becomes overvalued on a fundamental basis, or highly overbought on a technical basis, I'll at least take some partial profits off the table.

So, that's my long-winded answer.  Frankly I find selling to be much harder to get right than buying.  Like I said, man, I'm no guru, just a humble student looking to get a little better every day!

JDB,



And you do this same analysis with every position in your entire book? Do you sleep, eat, spend time with your family, breath…?



You seem like a nice genuine guy. I just wouldn’t want to run my business that way.



BPD

[quote=BigPayDay]JDB,

And you do this same analysis with every position in your entire book? Do you sleep, eat, spend time with your family, breath.........?

You seem like a nice genuine guy. I just wouldn't want to run my business that way.

BPD[/quote]

I understand.  Yes I have time with my family.  There's other days that I think I'm really doing this the hard way.  But I love this stuff, and I believe I add value.

I do it for the positions I recommend.  Clients are on their own if they insist on buying something I don't recommend, or holding on to something I suggest they sell.  That frees up some time.

Hey Zacko,

I've been wanting to ask you: What's the "Westport" and why don't you want to stay there anymore?

BigPayDay did you read this?

TOP 10 REASONS MY CLIENTS ARE GLAD I LEFT EDWARD JONES:

10. My clients also like the FACT my FIRM wasn't hit for 75 million in fines and facing close to 1 Billion in CA settlement.........

  9. FEE BASED BUSINESS (NO I WON'T EDUCATE YOU ON WHY IT'S BETTER THAN A SHARES) MY CLIENTS LOVE IT

  8. WHEN MY CLIENTS COME IN IT IS FOR SERVICE, NOT SELLING THEM THE "FLAVOR" OF THE MONTH LIKE YOU STILL DO...........DO THEY STILL HAVE THOSE SATURDAY PROMOTIONS, LIKE SELLING A "STOCK" or  'BOND" or A PARTICULAR "MUTUAL FUND"  OH, YEA BFD, THAT'S REALLY TAKEN CARE OF YOUR CLIENT ISN'T IT? Do you think they don't know it?

   7. BY THE WAY MY CLIENTS DO READ THE "WSJ" SO THEY ARE VERY PLEASED I LEFT..........They relate to the articles.

    6.  The don't have a newbie that Edward Jones put in my old Office, that's still wet behind the ears to churn and burn their accounts, in the name of diversification trip

   5.  They really love our customer statements, it really smokes Edward Jones statements, is in color........

   4.  They love our financial plan, that is reinforced every quarter when we have our review every quarter

    3. They love that we don't bug them with unnecessary crap that is mailed in their Quarterly statement.

     2. They LOVE NOT PAYING HIGH COMMISSIONS........

     1. THEY LOVE THE FACT THERE IS MORE THAN ON IR IN OUR OFFICE, AND ALL OF OUR STAFF IS LICENSED SO THEY DON'T HAVE TO CALL SOME DIM WITJERK OFF IN ST. LOUIS TO GET AN ANSWER...... 

 MERRY CHRISTMAS.....

Pfft.  1 Billion in Ca. <--Not going to happen.  I'll bet you a dollar right now that the case never sees light of court and the 'settlement' if any is less than 10 million dollars.  Care to put up your dollar, Player? 

It is awfully hard to say that people are 'damaged' by a mutual fund when only 1-2% of those 'damaged' even take advantage of a free trip out of the fund.

I'll bet you were taken care of by the home office exactly like you deserved if you called them 'dim wit jerk offs' while you were there...I always laugh when I hear arrogant people like this because they want to call the home offices of their places names right up to the point where they need a favor... I think we can tell who the jerk off is here.

proudlp,

Now now put your compact and lipstick away (or at least give it back to your wife)

[quote=proudlp]

Pfft.  1 Billion in Ca. <--Not going to happen.  I'll bet you a dollar right now that the case never sees light of court and the 'settlement' if any is less than 10 million dollars.  Care to put up your dollar, Player?  (1) Jones lawyers tried to get the case thrown out just last week and the CA Judge said "NO"  (2) The case is about Full Discloser violations, and Jones clearly violated CA State Law, that could be a fine of up to 25K per infraction, do the numbers of trades in CA (3) Actually just an apology will be just fine, either you give one to me or I will give one to you! (On this Posting) a dollar means nothing, but it will be more than 10 million in fines and penalties imposed by CA Attorney General against Edward Jones Investments let the games begin.........

It is awfully hard to say that people are 'damaged' by a mutual fund when only 1-2% of those 'damaged' even take advantage of a free trip out of the fund.  The Question is Full Disclosure of fees, not the amount of fees, there is a difference.  CA Law requires Full Disclosure and has for years that is the problem for Jones. Notice Edward Jones now does Fully Disclose Fees, why do you think they made that change? 

I'll bet you were taken care of by the home office exactly like you deserved if you called them 'dim wit jerk offs' while you were there...I always laugh when I hear arrogant people like this because they want to call the home offices of their places names right up to the point where they need a favor... I think we can tell who the jerk off is here.  Name calling just shows how much Kool Aid you've been drinking.  My point was we have licensed STAFF (Jones does not allow that), and more than one licensed IR in our office (Jones does not allow that on a permanent basis) and we don't have to call a wannabee broker in STL, like Jones IR's do. 

Anyone that is an HONEST IR has to admit the last thing they want is for one of their clients to call someone at STL to complete a trade for them, I remember how many times they screwed-up, I always had one of my local IR's cover for me and I covered for them to do trades and take care of my client locally, don't you?

[/quote]

proudlp, wow that's class and it's just your wifes color.......Let's try having a civil debate not slamming, why can't we all just get along..........

Angry proudlp, slow down....check out my answers above notice I am not throwing slams, but actually answering your questions..........how refreshing, you might try it?

I will apologize if proven wrong, but I think the math is on my side on this one.  Jones is not a huge California presence...hardly any Californians thought they were so badly informed that they took money out of the advised accounts.  Jones disclosed what CA says they didn't...it just wasn't in big bright beautiful letters on the store's front sign.  Now, I'll admit California is unusual in their world view, but I just honestly can't see this settling for any more than 1/10th of the NASD fine. 

As for my language, I do apologize...I was mad.  I have a relative that you accuse of being a 'dim witted jerk off' and it peeves me.  He chose his career for lots of reasons and isn't a broker because he doesn't want to be one...not because he is somehow less of a human or brain than any of us or even because he couldn't 'hack' it.  He simply doesn't care for sales but loves working there because he gets to be more of a trader than I ever get to enjoy being.  I'm the family salesman. 

I do trust the home office and have had very few problems with them.  From your post it sounds like your experience was different so I'm not going to get into a debate on which one of us got better or worse service for it.

[quote=proudlp]

I will apologize if proven wrong, but I think the math is on my side on this one.  Jones is not a huge California presence...hardly any Californians thought they were so badly informed that they took money out of the advised accounts.  Jones disclosed what CA says they didn't...it just wasn't in big bright beautiful letters on the store's front sign.  Now, I'll admit California is unusual in their world view, but I just honestly can't see this settling for any more than 1/10th of the NASD fine.  Proudlp, Maybe I didn't make myself clear to you, but I was still with Jones during the years this case covers, and I can assure you there was no FULL DISCLOSURE, in fact us IR's in most cases had no idea who was getting what, in fact I doubt if you even know today exactly how much compensation is really paid to the FIRM on the MF'S, ANNUITIES, LIFE INSURANCE, & LTC, and some STOCK offerrings.  Just remember, we were not told the TRUTH, on what was going on with the SEC either were we?  Blind faith is not always a good thing.   We will see who does the apology.   

As for my language, I do apologize...I was mad.  I have a relative that you accuse of being a 'dim witted jerk off' and it peeves me.  He chose his career for lots of reasons and isn't a broker because he doesn't want to be one...not because he is somehow less of a human or brain than any of us or even because he couldn't 'hack' it.  He simply doesn't care for sales but loves working there because he gets to be more of a trader than I ever get to enjoy being.  I'm the family salesman.  I do apologize for my remarks, they were made in General Terms and not pointed to your relative, who could be an exception to the rule, but my experience and the experience from other IR's in my old Region, does not conincide with example of your relative.  Taking your relative out of the mix, what is your opinion of those doing that work in STL, it is not a pretty picture. 

I do trust the home office and have had very few problems with them.  From your post it sounds like your experience was different so I'm not going to get into a debate on which one of us got better or worse service for it.  Yes, I trusted them, we all did, but we were lied to over and over again, about the SEC findings.  Don't be fooled, Doug Hill would not have paid 3 Million personallyand resigned unless he was going to jail for FRAUD, this is TRUE, it is a FACT, and it is DOCUMENTED.  The FIRM and the GP's would not have paid 75 Million unless they had to, would they ?   I loved the old FIRM, but the GREED TOOK OVER.........................

[/quote]

Proudlp,