What do u say when asked for Investment Advice?

Aeliodon- you should monitor peoples behavior when you tell them something that comes true- the vast majority will run the other way.

And if you come across people looking for a guru, they'll be telling you what to say about the Markets in no time.

So either way you're screwed- so focus on your own personal development as a trader.
 
I always say that I can't give an investment advice without knowing the person's situation in detail as it would be unprudent of me to do so. By the time I finish the sentence most people lose interest as what they are really looking for is to get a tip on how to make a quick buck rather than a genuine investment advice.
 
Quote from psytrade:

So either way you're screwed- so focus on your own personal development as a trader.
More...

exactly... ppl just like talk, or babble on... rarely do they take your advice anyway... so youre wasting time and energy.


Quote from Hook N. Sinker:

I tell people that I lose about 80 % of the time. They almost always lose interest.
More...

lol, this is so true...
 
Tell them that you are giving money away and ask them if they want $50 right away or $100 in 5 days.

After they answer, say something happened and you changed your mind and you are willing to give them $50 next month or $100 in 2 months.

Then, after you notice the contradiction in their answers, tell them to forget about investing.

Hyperbolic discounting
 
Folks that know what I do for a living always ask how I am doing with my trading, cause I know what the next question will be, I look towards the ground and mumble "things could be better".
And all the while I am thinking this jamoke is going to want me to teach him and I rather stick bamboo shoots in my fingers. It is one thing to help other traders out through the Internet, it is another with someone camped out sitting right next to you.

With the economy turning worse every week, more and more people will take their last few thousand and "play the market", so I have become less available to want to "chat" with those who I know who can't afford to "try it".

Playing it low key is the safest way in bad times, and times will get much worse.
 
The kind of people I know, all started their 401k's when the market was going up. Over the years they began to think that they were a bunch of financial genius's, never doing any homework and bragging about all the money that they made.

Now, the only question that I ever get from them is, "How long will it be before I get my money back".

My answer is, "Probably never".
 
Quote from aeliodon:

If you were a lawyer, people you know would ask u your legal advice. If you were a doctor, people you know would ask for medical advice. But you are a trader so what do you say when asked for investment advice?

In the past I've generally said:

1 Stay away from stocks - buy index ETF funds. Indexing is the only viable long term strategy.
2 Don't buy now - things will likely get a lot worse.
3 Don't panic sell now, you'll likely regret it in a few years.


I got tons of questions from people whether they should buy C at $5, and GE at $18, BAC, etc. I always told people to stay away from individual stocks and I feel good about that. But I wish I had told everyone to sell everything at Dow 11k cause once it broke 10k it just crashed from there.

So now here are my new talking points:

1 Don't pick individual stocks. Stick with an index ETFs. Indexing is the only viable long term strategy.

2 Move more into bonds as you get older.

3 Look at the CAPE ratio to determine whether you want to invest above or below fair value. And the market can remain above or below fair value for decades.
More...

I say that I look at extremely short term phenomenon, and that I really dont have an opinion on the longer term, I dont study it.

For very close relatives, I simply ask 'Is the index above, or below the 20 month moving average?'
 
I tell them first, noone can predict the future, if I could, I'd be a billionare in a few weeks.

Depending on who it is, I might discuss some of my investments and my reasoning for such but I aways warn about risks. I told my dentist how much money I made on a stock once without thinking about it. My dentist subsequently bought that same stock which I had just sold at it's peak. He of course lost money on the ride back down. He also started to charge me more and push more dental work because he figured I had some money.

Right now I'll tell people, gold is about the only thing that can't go to a zero value. Cash or stocks can go to nothing a lot easier than gold can.

I always say, never put more money into anything than you're willing or able to lose. Say about 25% maximum into any single equity or currency.
 
Aeliodon,

It’s not rude to tell them to ask their financial consultant. What is rude is to tell them don’t pick individual stocks and only ETFs. You don’t know their whole financial picture so what you are telling them may do more harm than good to feed your ego. Don’t try to help someone just to give yourself an ego a boost. If they listen are you also going to be around to tell them when to do something different? When you tell your buddy or someone you don’t know that well to do something and then a month later you run into them and they find out you are doing exactly the opposite now they aren’t going to be happy and you may lose a good friend, acquaintance or business associate. They won’t understand or want to hear that you have been in 5 different scenarios since you last spoke.

It’s a slippery slope I guess is my point. Yes, everyone is responsible for himself or herself but most don’t have a clue what is going on in the markets and think because you are in the business (that they don’t really understand) that they might blindly follow what you say. Now if its a really good friend who I talk business and investing with anyway, they are going to know that what I am doing now may change in a hour and understand this.

Ess1096 has the best advice I have seen on this. Saying “I’m a trader, not an investor. That gives me the right to change my opinion at any given moment.” I will remember that one.

You are better off being vague. If I remember correctly, Jesse Livermore when asked for advice would only say something like “Well, it’s a bull market you know or It’s a bear market you know.”

As others have said, people don’t really want to know and they could have Warren Buffet or Steve Cohen giving them clues as to what they should do. Only a couple in a hundred would probably listen.

Good trading

BM
 
You must log in or register to reply here.
Back
Top