Wall Street professionals are not your friends

Harry Newton writes a great column every day and I half-agree with something he wrote yesterday about Wall Street:

Wall Street is a product sale machine. It sells you whatever it can sell and make a commission on. It does so without any regard for the long-term riskiness of what it's selling or its appropriateness for you. Hence the obligation to figure what they're selling you is 100% yours. When in doubt -- i.e. when you simply don't understand or have any concerns about the downside -- your job is to say NO.

Please print out the above paragraph. Laminate it and read it every time you speak to your broker or financial adviser.

But, he has a mistake in there that needs to be corrected... delete the language "When in doubt -- i.e. when you simply don't understand or have any concerns about the downside --." And in fact delete the sentence "Hence the obligation to figure what they're selling you is 100% yours." It is a complete waste of your time to evaluate anything that Wall Street is actively "selling" you. As Nancy Reagan advised with drugs, "Just say No!", and that is what sensible investors are obligated to do with Wall Street. Just say no to anything that Wall Street is ever "selling" to retail investors. The short advice should be that if Wall Street is selling, do not buy. Broker? Financial adviser? If you still have a full-service "broker" or "financial adviser", then that in itself is a matter of concern. Fire them immediately and move your money and investments to a discount broker or several discount brokers. I like Fidelity and happen to use Muriel Siebert as well. Your only "obligation" is to have the discipline to refrain from asking them for "advice." Sure, your so-called "broker" or "financial adviser" can get you access to so-called "research" and maybe to IPO's, but these days that "research" is complete crap and even discount brokers have better access to IPO's.

The bottom line is that there is no longer any need to "speak" to any "broker" or any "financial adviser." In the old Wall Street parlance (I love this stuff!): If a broker or financial adviser calls, hang up on him! So, the quoted section from above can be correctly rewritten as:

Wall Street is a product sale machine. It sells you whatever it can sell and make a commission on. It does so without any regard for the long-term riskiness of what it's selling or its appropriateness for you. Your job is to say NO. Do not listen to a word of whatever they have to say. Just say NO! And if they will not give you the opportunity to say NO, simply hang up on them. And if you are too polite [and a wimp] to sternly say NO, simply say "There seems to be a problem with the connection... you are breaking up... [loudly] HELLO?! HELLO?!... I still can't hear you... could you call back later?" and then hang up. Then take advantage of caller ID.

Please print out the above paragraph. Laminate it and read it every time any broker or financial adviser calls and asks to "speak" (i.e., sell) to you. They are not your friends. They are not here to "help" you.

So, now, I would like Harry to please inform us why he is still talking to any full-service broker/financial adviser. Or to flip that over, what argument he has to offer to convince us that we should get a full-service broker/financial adviser at this time. Besides, we have... him to offer us investment insight! What other advice do we need? Answer: a good accountant who is always there to tell you the tax consequences of a transaction and to simply ask "Are you SURE you really want to do this?"

I was chatting with a couple of Wall Street professionals a couple of days ago and it is simply mind-numbing how little they really have to offer us, compared to, say, a simple Internet Web page.

Investors should be thinking about Wall Street the way tourists should think of... West Beruit. So many of these "professionals" really are the economic equivalent of terrorists, gangs, thugs, parasites, and the (negative) analogies go on and on.

I have "words" to say about simple banks as well, but at least they are not actively going around and engaging in the economic equivalent of mugging people. Unless, of course, you are behind on a payment...

-- Jack Krupansky