Every day I meet with potential clients and I when I ask them what they did for a living they never say, “I was a professional gambler!” Having worked as a broker for the first 20 years of my career, it’s my opinion that placing your money at risk of loss in the market is not investing but gambling. I am no longer licensed to advise anyone to buy, sell or hold their positions in risk assets. My job as an insurance agent is to minimize the risk of loss in my client’s estates. In 1997 I advised all my clients to move their money out of the markets into guaranteed insurance-based assets. Since that time, they have suffered no market losses!
If you have ever taken a trip to Las Vegas, the first thing you hear when arriving at the terminal is the sound of the slot machines and the roar of “it’s a winner.” This is done to make you believe the everyone is a winner and to entice you to place bets. Upon arriving at the Casino your room is comped, and alcohol is free. You might notice that there are no clocks or windows and few balconies. You are greeted by flashing lights and overwhelming noise to create an atmosphere of excitement. Again, this is done for the purpose of
separating you from your money. Most people who visit the Casinos walk out losers.
Wall Street is much like to gambling establishments, the Brokerage firm is the (Casino), the broker is the (dealer) and you the investor are the (gambler). You place your bet on stocks, bonds, mutual funds or variable annuities hoping to win a jackpot. Like the Casino the brokerage firms and brokers win either way via fees on your accounts. If the markets go up or down, the house always wins.
Just this past week I met with a gentleman who lost $70,000.00 in his brokerage account in just one day due to market volatility. He told me that he did not make that in an entire year when working. When he called his advisor, he was told “Don’t worry we are in this for the long run.” Who is we, the broker didn’t lose any money! The client told him that he’s 75 years old and doesn’t have a long run left. I asked the gentlemen how much more he could afford and wanted to lose, and the answer was none. He called the broker back and liquidated his account. Brokers are trained just like I was to keep your money at risk by telling you things like “It’s only a paper loss” or “The markets always recover”. They like me have no idea what the markets are going to do from one day to the next and will have their talking points ready to combat your concerns.
You can’t even go to the bank today to cash a check without someone asking you “Do you want to meet with our financial advisor?” Before you say yes you better read the disclaimers on the signs outside.