Stocks - The Best Buys 2

[Madman]

Originally Posted by Slava

Never mind the fact that advisors provide all kinds of other services for their clients

Wait, have you been holding back on me then???

[Slava]

Originally Posted by Madman

Wait, have you been holding back on me then???

Probably not the place for this, but let me know what you want done?

[Enoch Root]

Originally Posted by Slava

I’m obviously biased, but those ads are doing a huge disservice to people. It implies that they’re performing miracles with their funds, and frankly the performance is questionable at best. Never mind the fact that advisors provide all kinds of other services for their clients, 5% for their aggressive model through November 30 for 2020 seems incredibly disappointing.

In fact, I would argue that portfolio construction is maybe even one of the lesser services, in the sense that it is relatively straight-forward.

Tax planning, wealth planning, and estate planning can have much greater impacts, either positively or negatively, especially as your net worth rises.

One good tax planning decision/strategy, once realized, can easily pay for 10 years' worth of fees.

But I suppose it's cool to be able to say "you're not still with mom and dad's guy are you?"

[Cecil Terwilliger]

Just the basic idea behind those commercials is funny.

Would you like to go deal with a CFP over at a wealth firm or private banking who helped make your parents wealthy retirees? Or would you rather invest according to some generic robo portfolio that is unproven and has commercials so bad it makes me question whether anyone should be investing with such a Mickey Mouse company?


Sounds like a tough choice. Only difference is your parents guy won’t touch you with a 10 foot pole because you have $2k to your name and his accounts start at a quarter mil. So if mom and dad’s guy is even willing to give you the time a day because of the relationship they started, you should count your lucky stars you’re gonna get some decent advice.

[Table 5]

Personally, I have half of my assets being managed by "mom and dad's guy", and half of them I manage myself through discount brokers like QT/IB (not robo portfolios though). They generally invest in things that are boring and conservative, while I try to invest in things that are more topical and have higher risk/reward. They are the turtle and I am the hare. My investments generally tend to outperform their's quite a bit, but are of course much more speculative. People always say to diversity, and I believe that also applies to who manages your money. I don't trust anyone 100%... especially myself (I have pretty good macro instincts, but are more reactionary and have poor technical/analytical skills).

I do think it is good for people to self-manage at least part of their portfolio. When you educate yourself about money and are more involved, you definitely feel more empowered about your future. Especially these days, when that future is murkier than ever.

[Dan02]

I think the point of that commercial is they're trying to break that whole thought pattern Cecil.

Passive index funds have been shown to outperform most portfolio managers over the short term and almost all of them over the long term. Why? Because of fees. Long term their fees take away more return then their expertise can add.

[Cecil Terwilliger]

Except 99% of people don’t educate themselves and chase a quick buck. There’s a reason I see a dentist for my teeth and a mechanic for my car.

Is it good if I understand dental health and car mechanics? Sure. But I don’t do my own root canals. It’d be idiotic.

The other things prey on is people chasing a quick buck. People who think getting rich is easy and they can take shortcuts. It is way, way more important how a person budgets, saves, manages their money etc. And that’s what questrade doesn’t teach. And they don’t want to. They make more money the more you trade. They want people who are chasing the get rich quick stock.

Someone who signs up for an account, sets up a PAC to their RSP/TSFA and invests in a few solid ETFs/stocks and holds long terms makes questrade little money compared to the people who think they’re the next Gordon gecko.

[Cecil Terwilliger]

Originally Posted by Dan02

I think the point of that commercial is they're trying to break that whole thought pattern Cecil.

Passive index funds have been shown to outperform most portfolio managers over the short term and almost all of them over the long term. Why? Because of fees. Long term their fees take away more return then their expertise can add.

They’re breaking the thought pattern by misleading ignorant investors not by educating people. It is a whole company who’ve made it clear they want to prey on the ignorant, money obsessed, FOMO, get rich quick segment of the investing world.

Nobody who already knows investing is watching those commercials going “wow, I didn’t know that”.

What’s weirder is questrade has a good platform but seem ok with going after the lowest common denominator of investor. When really they should be able to get by on their own merit. But I guess that wasn’t profitable enough for them. They need the people who will churn their portfolios chasing a quick buck.

[Table 5]

Originally Posted by Cecil Terwilliger

Except 99% of people don’t educate themselves and chase a quick buck. There’s a reason I see a dentist for my teeth and a mechanic for my car.

Is it good if I understand dental health and car mechanics? Sure. But I don’t do my own root canals. It’d be idiotic.

The other things prey on is people chasing a quick buck. People who think getting rich is easy and they can take shortcuts. It is way, way more important how a person budgets, saves, manages their money etc. And that’s what questrade doesn’t teach. And they don’t want to. They make more money the more you trade. They want people who are chasing the get rich quick stock.

Someone who signs up for an account, sets up a PAC to their RSP/TSFA and invests in a few solid ETFs/stocks and holds long terms makes questrade little money compared to the people who think they’re the next Gordon gecko.

I don't need to know the ins and outs of fixing cars, but at least knowing the basics of how a car works allows me to make a more informed decision about which mechanic I will take it to, or prevents me from getting screwed when I go to one.

It doesn't mean you go all in and invest 100% our your life savings chasing a TSLA. But I do think it's healthy for people to have some involvement, even just to be able to be more informed. Especially these days, when the money printers are on overdrive. It's funny that people don't want to educate themselves about something that has so much impact on their, and their family's, future. They'll invest countless hours into analyzing sports stats, or scrolling through needless social media posts, but won't spend an hour a week maintaining their financial health.

[Slava]

The other consideration is that portfolio management matters. It’s great that one time someone piled into an asset and made money. That’s not proper management though, and professionals don’t construct portfolios that way for good reason. It’s a lot more than just blindly allocating money to a company because you “have a good feeling about this one”. That’s the kind of thing people can do with their own money, but professionals just can’t even consider. We’re bound by a fiduciary duty, which means we must act in our clients best interests (this is a higher standard than what most financial advisors are held to, which is a whole other discussion).

It’s also great that “anyone can do this” during a bull market. But that’s not the test either. As Buffett said years ago, “everyone’s a genius during a bull market.” So sure, you can follow the hot trend and hope that it never ends and maybe you’ll perform incredibly well. Maybe Tesla will be worth $6 trillion a year from (which about what it would be worth if it repeats last year’s performance). I couldn’t say for sure. When we have a bear market though, the value of professional management and professional portfolio construction is evident.

I also debate whether the passive mandates actually outperform. I still contend that there’s no such thing as passive in the first place. It’s lovely to suggest, but in practice it doesn’t happen. If you’re a Canadian and invest passively, does that mean buying the TSX and just enjoying the ride? As soon as you decide otherwise, you have all kinds of active decision making that enters. How much do you apportion to the various geographical considerations, are you hedging the currency? And is that currency decision ongoing indefinitely or does that need to be monitored or adjusted? Are you using any fixed income or alternative investments? Then you need to assign percentages and monitor all this in case things change (which they always do). To me, that’s the tip of the iceberg. Those decisions and the information and analysis that goes into them is not just a quick yes/no answer. It’s quite literally people’s life savings that’s in question, so it’s rather important!

But I get it. Portfolio management, like being a sports GM, is subject to the scrutiny of a lot of Monday morning quarterbacks. We see all the crazy trade proposals in the FOI forum and of course with perfect hindsight we know that we should’ve drafted one guy over another. It’s a whole other ballgame (I’d imagine), when you’re standing at the podium and the consensus first pick is Alexandre Daigle and you’re about to make it.

[Cecil Terwilliger]

Originally Posted by Table 5

I don't need to know the ins and outs of fixing cars, but at least knowing the basics of how a car works allows me to make a more informed decision about which mechanic I will take it to, or prevents me from getting screwed when I go to one.

It doesn't mean you go all in and invest 100% our your life savings chasing a TSLA. But I do think it's healthy for people to have some involvement, even just to be able to be more informed. Especially these days, when the money printers are on overdrive. It's funny that people don't want to educate themselves about something that has so much impact on their, and their family's, future. They'll invest countless hours into analyzing sports stats, or scrolling through needless social media posts, but won't spend an hour a week maintaining their financial health.

I know. That’s what I said. You’re very clearly referring to the small group of people I referred to who do get educated. The people who know the questrade ads are BS and don’t fall for the FOMO. What does that have to do with questrade running stupid predatory ads?

[flamesfever]

Originally Posted by Slava

The other consideration is that portfolio management matters. It’s great that one time someone piled into an asset and made money. That’s not proper management though, and professionals don’t construct portfolios that way for good reason. It’s a lot more than just blindly allocating money to a company because you “have a good feeling about this one”. That’s the kind of thing people can do with their own money, but professionals just can’t even consider. We’re bound by a fiduciary duty, which means we must act in our clients best interests (this is a higher standard than what most financial advisors are held to, which is a whole other discussion).

It’s also great that “anyone can do this” during a bull market. But that’s not the test either. As Buffett said years ago, “everyone’s a genius during a bull market.” So sure, you can follow the hot trend and hope that it never ends and maybe you’ll perform incredibly well. Maybe Tesla will be worth $6 trillion a year from (which about what it would be worth if it repeats last year’s performance). I couldn’t say for sure. When we have a bear market though, the value of professional management and professional portfolio construction is evident.

I also debate whether the passive mandates actually outperform. I still contend that there’s no such thing as passive in the first place. It’s lovely to suggest, but in practice it doesn’t happen. If you’re a Canadian and invest passively, does that mean buying the TSX and just enjoying the ride? As soon as you decide otherwise, you have all kinds of active decision making that enters. How much do you apportion to the various geographical considerations, are you hedging the currency? And is that currency decision ongoing indefinitely or does that need to be monitored or adjusted? Are you using any fixed income or alternative investments? Then you need to assign percentages and monitor all this in case things change (which they always do). To me, that’s the tip of the iceberg. Those decisions and the information and analysis that goes into them is not just a quick yes/no answer. It’s quite literally people’s life savings that’s in question, so it’s rather important!

But I get it. Portfolio management, like being a sports GM, is subject to the scrutiny of a lot of Monday morning quarterbacks. We see all the crazy trade proposals in the FOI forum and of course with perfect hindsight we know that we should’ve drafted one guy over another. It’s a whole other ballgame (I’d imagine), when you’re standing at the podium and the consensus first pick is Alexandre Daigle and you’re about to make it.

I agree, and I think finding the right advisor is the key to success, whether it be at a bank or otherwise.

I think some of the important factors for an investee and investor to know and understand are:

1. Risk tolerance.

2. Age and stage in life e.g. number of years from retirement

3. Degree of expertise, and ability to invest

4. Physical and mental health, and life expectancy

5. Marital status, dependents, and stability of relationship

6. Financial needs to sustain a certain lifestyle

7. Potential inheritance

8. Etc.

[Johnny199r]

Some advisors absolutely can add value. Some advisors pile clients into funds with high MER with DSC kickbacks and are terrible human beings only looking after themselves.

There's no denying that if someone feels comfortable with a couch potato portfolio or putting their assets into a Mawer balanced fund, they can find significant savings as a DIY investor over their lifetime. Not everyone has that knowledge or comfort, though.

[Enoch Root]

Originally Posted by Johnny199r

Some advisors absolutely can add value. Some advisors pile clients into funds with high MER with DSC kickbacks and are terrible human beings only looking after themselves.

There's no denying that if someone feels comfortable with a couch potato portfolio or putting their assets into a Mawer balanced fund, they can find significant savings as a DIY investor over their lifetime. Not everyone has that knowledge or comfort, though.

Yes, there are terrible advisors (as there are terrible anything). But there is a lot more to wealth management than buying a Mawer balanced fund and go play golf.

[flamesfever]

I'm curious to know, if one is looking for a good financial advisor at a bank, what questions should you be asking him or her?

[Cecil Terwilliger]

Originally Posted by flamesfever

I'm curious to know, if one is looking for a good financial advisor at a bank, what questions should you be asking him or her?

How do you get paid? Are you a CFP? How long have you been with this FI? How long have you been a CFP?

If at any point when they answer those questions, they mention the ROR their clients got or give you a shady non-answer on compensation, run.


Edit: it matters a lot what they ask/talk about too. If they only seemed concerned about your account balance and signing the transfer form, it’s a bad sign. A good planner should be able to clearly explain their expertise and they should want to know about you and your goals. Their promises should be realistic. They should never promise you returns or some grand unrealistic lifestyle if you aren’t putting in the work.

It’d be like a personal trainer telling you 100% of their clients lost weight and kept it off with zero effort. If it doesn’t involve a plan, one where the onus is on you to save, then they’re lying. The advisor can only help your money work harder. They can’t make it appear out of thin air.

[Enoch Root]

Originally Posted by flamesfever

I'm curious to know, if one is looking for a good financial advisor at a bank, what questions should you be asking him or her?

I am curious why you are looking for a good financial advisor at a bank. I would suggest a wealth management firm with a good reputation of providing what you need.

[flamesfever]

Originally Posted by Enoch Root

I am curious why you are looking for a good financial advisor at a bank. I would suggest a wealth management firm with a good reputation of providing what you need.

I am looking for a friend that needs help. He already deals with a Canadian bank, and I have always considered the Canadian banks as the safest place to keep money. Also back in the 60s I experienced having money in a brokerage firm that went bankrupt, and it took several years to get a good portion of it back.

[Cecil Terwilliger]

When you’re at a high enough level the difference between banks and wealth management firms is a myth. There’s no advantage to using a private advisor.

It’s the advisor who has a good reputation. There are good firms with crappy advisors everywhere.


If we’re talking someone who is just starting investing then yeah low level bankers at the big five suck but that’s more a reflection of buying power than it is of banks. It’s like saying you shouldn’t buy a Toyota because Ferrari dealerships have better customer service. Well duh but they aren’t exactly after the same clientele.

[Enoch Root]

Originally Posted by flamesfever

I am looking for a friend that needs help. He already deals with a Canadian bank, and I have always considered the Canadian banks as the safest place to keep money. Also back in the 60s I experienced having money in a brokerage firm that went bankrupt, and it took several years to get a good portion of it back.

Not sure what your past experience with the broker is about, but your concern is completely unfounded.

All assets, at any financial institution (well, any real one, which isn't difficult to determine) are held in custodial accounts. Custodial accounts are segregated and insured. Bank accounts are insured for $100,000 per account. Custodial accounts are insured for $1,000,000 per account.

There is no such thing as zero risk, but there is no difference whatsoever between a bank and any other licensed institution, with respect to the safety of your assets.