Learn to Invest Money: Do Large Investment Firms Have Your Best Interests at Heart?
Are you currently being courted by a large investment firm that tells you they are the best investment firm in the business and shows you numerous tables and statistics to prove it? If you think that big investment firms’ objectives are vastly different than a Toys R Us or a Nike store, than this article is a must read for you.
Instead of going through a point by point checklist that exposes big investment firms’ true interests, I’ll reveal their motives through an anecdotal recollection of an interview I had, five or six years ago, with a nationally recognized investment firm in the U.S. that had over $20 billion of assets under management. During the course of my interview, I gave my interviewer answers that he did not want to hear. For example, he thought that by asking me where the Dow Jones Industrial index was that day, that he was testing my knowledge of investing. I answered, “I don’t know and I don’t care because it’s irrelevant.” When he expressed shock at my answer (even though Warren Buffet would tell you exactly the same thing), I asked him, “Can you tell me where the London Stock Exchange is trading at today? Can you tell me where the SET at Thailand closed yesterday? Can you tell me where the TSX in Canada is currently at?” Needless to say, he had no clue.
I asked him those questions to make my point that I was disappointed in the fact that someone from a highly advertised “creative, out-of-the-box” thinking big investment firm would ask me such “inside-the-box” kind of questions that were bogged down in statistics and other things that would never help a single soul discover a phenomenal stock opportunity. His interview questions conjured up memories of other useless things I had learned during my career from two Fortune 500 American investment firms, such as how to uncover companies that had just laid off tons of workers so I could call on their HR departments and see if anyone was advising their employees about what they should do about their 401 (k) plans. His questions reminded me of these same sales-focused sales tactics because that is what statistical mumbo jumbo knowledge is intended for. It is intended to impress potential or current clients about how knowledgeable you are regarding the stock market while teaching you nothing about how to uncover great stocks.
Unsurprisingly, my answers did not please him, so he continued to pepper me with further useless questions. “Do you think the market is a bull or bear market?” he asked next.
“In what country?” I responded.
It was not an attempt to be smart with him, but since I had always been interested in buying foreign stocks, I wanted more clarification of the question. He didn’t answer, stunned that I would even need to ask that question. “The U.S, where else?” he replied. “Well it doesn’t really matter to me, because I look for stock opportunities globally,” I responded. “So to me it’s too narrow of a focus just to consider the U.S. market. And besides, if you’re implying through your question, do I think we should be in or out of the U.S. market, again, the answer is in the market regardless of whether it’s a bear or bull market. We can make money either way. If it’s a bear, then we’ll buy put options on some stocks and still make money. On other stocks, if we buy into the right stocks in the right industry, we should still make money, even in a bear market. Or look for opportunities overseas where markets may be booming.” This response received the same frown as did my first response.
Needless to say, the questions never got any better, and I did not receive a second interview. But to be honest, most investment firms would not have hired me with those answers. However, that interview taught me an important lesson. It taught me that as long I had one foot still firmly implanted in an investment career, I never wanted to work for a large investment house again. After having been through similar interviews at Wall Street firms in prior years, I knew that big firms could never teach me anything besides how to sell stock portfolios to ultra-wealthy individuals, but not how to manage their money efficiently. It also taught me that almost all large investment firms, especially the ones with billions of dollars under management, will never maximize the potential of their client’s stock portfolios.
So what’s the moral of this story?
Learn to invest in the stock market yourself or find a creative financial consultant if you ever want to maximize the full potential of your stock portfolio. Before I started to have real success with my own portfolio, earning four times the returns of the S&P 500, I had to unlearn virtually everything that had been taught to me by nationally recognized investment houses. This is so important I’ll repeat it again. I had to unlearn virtually everything that had been taught to me by nationally recognized investment houses. I formulate my own ideas, my own strategies, and utilized creativity to uncover stock opportunities instead.
Huge investment firms are mired in their ways as sales organizations, and have worked harder in their transformation to become better sales organizations rather than better stock return maximizers. The sooner you recognize this, the sooner your stock portfolio will start earning better returns instead of mirroring what the S&P 500 does every year.
© 2006 Global Market Opportunities
About the author:
This article may be freely reprinted on another website as long as it is not modified, changed, or altered and as long as the below author byline is included along with the active hyperlink exactly as is.
J. Shin Kim is the founder of Global Market Opportunities. He has over thirteen years of experience in finance and private wealth management with two Fortune 500 companies. To learn more about how to identify small and micro cap stocks that consistently and significantly beat the market indices, click the following link, Learn to Invest Money and Achieve Financial Freedom
