I'm shocked by how many investment analysts declare themselves smart. Really smart. Clearly, smarter than everyone else. When this is presented to me, it hurts my ears like nails on a chalk board. CNBC presenters extol their own excellence and carry themselves with confidence as they present their view on a financial topic. This, when their life record on financial topics is dismally low. Why would anyone watch them other than for entertainment? The other day, Morgan Stanley just noticed Tesla has a SuperCharger network. I'm not kidding. They cited it as a competitive advantage and noted 13,000 charging points. This caused them to change their rating to "outperform". How is it that Morgan Stanley considers themselves sufficiently competent to comment on matters affecting Tesla? They shouldn't. The Morgan Stanley analysis of Tesla should read, "This is way over our head. Our VCR is flashing '12:00'. Your thoughts are better than ours, when it comes to Tesla. If I type on this keyboard, does it come out on the Internet? I have to pee, can you finish this stock analysis? Why did you tell me not to click 'publish' on this?" This ego factor isn't just limited to the investment and financial industries. We see this all over. Whatever industry you work in, you've seen high priced resource contracted in to take on projects deemed either too difficult or too important for in-house staff. It's not unusual for these expensive contractors to turn out to be complete idiots. We've all seen it. Ego and intellect are not directly related. I suspect that everyone following this forum, just as everyone in the financial industry, has above average intellect. Most people think they are at the top. The reality is, it doesn't matter much. It's just as well, in my case, because my intellect is not extreme or anything close. I certainly don't suspect I'm at the top of this forum. I'm merely above average. The leverage I have over my portfolio is that I read a lot, study hard, and put a lot of time and energy into it. Someone at my intellect level would stand a good chance of out performing Stephen Hawking. Extreme intellect is simply not required. As per Benjamin Graham and lots of other smart people, temperament is far more important than intellect to the investor. I encourage long term investors to invest yourself confidence, ignore those who declare themselves smarter than you, try to avoid the toxic affect of ego, and think independently. It isn't all that difficult to go grow wealth and become financially independent. All it takes is a good intellect and a world class temperament. If I can do it, you can too.
We were at a dinner party Sunday evening and an acquaintance mentioned she lost quite a bit of money in a managed portfolio, last year. Apparently, she paid a $3000 flat fee. I think she has done very well and I imagine she is still in decent shape as she nears retirement. In February, she met with her adviser (after several adviser side re-schedules) to direct him to peel some money out. She was going to try a simple index fund with a portion of her money. According to her, the adviser told her she isn't smart enough to manage her money. Bottom line, she still hasn't liberated any of her money. I recommended that she send her demand in writing and then work on growing a backbone. I also gave her the name of my attorney. Another friend tells me they are doing amazing with their adviser. He keeps recommending that I get his help but he hasn't given me any details. I'm sure not every investment adviser is bad but it's pretty rare to hear of one with a five year average that is as good as market returns. It seems like I keep hearing the same story again and again. People think it's hard so they find someone who wears a nice suit and tells them how smart they are. These folks may or may not be smarter than individual investors but they don't have the same motivations as someone struggling to generate a retirement nest egg.
