SingleDudeTravel on brokers and precious metals
I ran across another blog that caught my attention with his unique writing style and hilarious stories, so I asked the blogger to write up something for my site, here’s a guest post from Boris – from SingleDudeTravel.com:
I’ve been writing about finance, investing and the abysmal economic situation in the US and Greece a lot lately. It was rather a-propos that this morning I received a mail from a good buddy in China asking me for some advice on what to do with his retirement. Last time I visited him, his idiot broker had him in some absolutely absurd investments that were going nowhere. I told him to tell his broker to put him in precious metals, commodities, commodity producing stocks and energy stocks that pay dividends – preferably in Canada, Australia or Norway (these are resource rich countries less likely to collapse their currencies as quickly as the rest, if at all). Yesterday, he checked out his investments and they have gone nowhere. As gold is hitting all time nominal highs this asshat broker somehow found some obscure precious metal fund that is actually flat. I feel like it almost takes skill to lose money in this market at least in a nominal sense. The real trick is to beat inflation, but this fool delivered -.22% returns even after we clued his dumbass into where the action is. He totally missed the boat on silver! About the time my buddy opened his account was when silver made its run from bouncing around in the high teens to nearly $50 an ounce in just 8 short months.
But I digress, what I really want to get to is that this moron sent him a mail today at 12:02 telling him to just be patient, that the markets and economy are looking really strong. A bunch of typical broker double talk about why he completely failed to show any returns whatsoever in the last year. The note he ended on was that now is a time to buy, not to sell and that my buddy should keep his contributions steady if not increase them. The kicker, at 12:09 he sent him another e-mail asking for permission to liquidate a few of these investments he just put him in a couple of months ago. He thinks that he should be in cash (EUR!!!!) for “safety”. Did this asshole not get the memo about Greece!?! The EUR is safer than gold? Really? Gold may be a bumpy ride but it sure is shit is better than the EUR.
The bottom line here is that the vast majority brokers are not on your team. They make money whether you win or lose. Unless they are also screwing you for a management fee, the main way that brokers make money is when you buy or sell. They earn a commission on every transaction. It doesn’t matter if you are making money or not, they still get their cut. Brokers are not incentivized to put you in the best investments and keep your money there long term – brokers are incentivized to make lots of transactions.
There has never been a better time to take your investments into your own hands. You can trade from your laptop. I got an account with an eastern European branch of a Danish bank that let’s me trade on almost every exchange in the world! The commissions are low. This is definitely a time where you can just set your investments and forget it. Until the leaders of the Western world start becoming fiscally responsible, precious metals and other commodities have nowhere to go but up. Just buy that shit, sit back and relax. Like I said before, until the President of the United States comes out and admits bankruptcy you have nothing to worry about but the goddamn exchanges themselves collapsing. That’s why you should take physical delivery of any gold investments you make. You are running out of time to make your moves. The dollar is dropping like a stone.
Good luck to all.