The Unconventional Conventional Part XXVIII
What I find unbelievable at times is that no matter what logic you present to help people make sense of financial affairs, they will still do what they have been “trained” to do and not act on the new logical information as presented. Become a shareholder of the banks I suggest when I write my blog and share in the profits, and yet, it seems to fall upon deaf ears. There are still way too many people that favour deposits (lending) over shares (owning) as the best way to invest. Why is this? If we all became shareholders of the financial institutions, we could really show the banks who is in charge. If we all just got together on this, big business and government would know that the ninety-nine percent intend to create meaningful change that favours the ninety-nine percent not the one percent.
It has been said before that people should not be afraid of their government (or big business) and that government (and big business) should really be afraid of the people. As I mentioned before, whether it concerns government or corporations, change can only be affected if we ALL use our power to use the one vote that we equally share. Let’s affect change by taking back our power now!
Over the last few weeks I have been writing about the banks and how they make profits for example. And yet, as the deposits continue to flow into saving and chequing accounts, there has been no significant increase in the sale of bank shares. The funny part, the banks are getting ready to take over as market leaders once again leaving behind all of those that for the last decade have blindly followed into the hard asset cycle. The hard asset cycle is coming to
an end. The clues are visibly clear.
Why just this morning I was reading about a small/medium cap equity fund that has been earning 14% for the last five years, a star performer when compared to the 1.3% median return for funds in a similar category. I can just sense the excitement where advisors and clients alike buy into past performance when it has been made perfectly clear that past performance is no guarantee of future results.
What bothers me the most about this is that it is usually the advisor that brings these things to their clients’ attention and then the clients, in most cases blindly follow the advisor’s advice. It all comes to conclude that advisors want to give their clients a hope of achieving financial independence by showing past prices that reflect the returns everyone really wants to get. But at what price? Before you go buying into past performance demand that your advisor show you portfolios or stocks of excellent businesses that are lower in their price and past performance records than portfolios or individual shares that reflect the last five years winners.
Remember, buy low, sell high. Not buy high and sell low. That is Rule Number One.
Copyright 2013 Richard Kiernicki. All rights reserved.
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