Well Rounded Investor

My journey of becoming financial independence by 35 years old

Story like this really steer me away from financial advisors

Owen Li, the founder of Canarsie Capital in New York, said Tuesday he had lost all but $200,000 of the firm’s capital—down from the roughly $100 million it ran as of late March. He bet clients money in options. So I guess if you turn your money over to one of these people, you think they can make a lot of money, or a lot more than you can because it’s their job, it’s their bread and mortar. But in reality, very few people can beat the s&p 500 so why fight against it? Paying high fees and risk losing everything?

Whatever you decide, invest on your own, go with an advisor, or invest in a hedge fund. These are the core question you or your advisor should be able to answer. I’ll include my answers with the question.

How do you manage risk?
I diversify. The money that I don’t need, or can afford to miss will go in 401k, Roth IRA so I can take principle out without penalty, always have cash on hand.

How much leverage do you use? What are the limits?
I’ll go with the standard mortgage requirement.
Debt to income ratio of 43%

Right now I’m a little bit above that. It would allows me to assess to see if I can afford another property on leverage.

What parameters are in place to supersede a portfolio manager’s decisions?
I don’t use one. But if I do use an advisor. I’ll go with a low risk index fund to cut to the chase.

Do you have a general counsel for insider information?
We shouldn’t have insider information. It’s illegal. But apparently Mark Cuban says it’s hard to regulate China insider trading. It’s part of the communist regime and the whole corrupted system works.

Is there an investment board? How does a position get into the portfolio?
I’m just going to research one company at a time. There are some criteria that I’d look at like PE, cash on hand, book value, market trend, long term prospect, etc. No approval necessary, it’s nice to make your own decision.

What quantitative measures of risk do you look at?
Here is an article about the QM of Risk


3 comments on “Story like this really steer me away from financial advisors

  1. William
    January 23, 2015

    Hi. With money.. I never trust anyone else claiming to be better with investing. If I invest I look at the company, see their record and fundamentals.
    The internet is full of information of all the company’s stocks nowadays.

    Ok ok 1 things is correct. People can use vanguard indexes if they dont have the time to commit on investing. People can start even with putting in that $50 a month which can grow immensely with the compounding effect.

    Just my note on this

    Liked by 1 person

    • Vivianne
      January 23, 2015

      Hi thanks for stopping by.
      Nice point on index fund. In my 401k fund, I actually abuy 70% S&P 500. Don’t need to manage, the fee is 0.07% very small compare to 1% for some other fund that heavily traded.

      Yeah, a couple months ago I went to my bank, and the banker told me that I’m “qualified” to have a financial advisor. She made it sounded like I’ve own something. Turned out these guys want me to sign over all the buying power to them. If I sell some fund early, I’d have to take a 1.5% penalty. I walked out of there and my head spinned. Anyhow, they might have some analysts that know something more about a company. But I guess, if we go with the dividend route, it doesn’t matter what the entry point, over 20-30 years, it’s a nice even 5-10% rise.


  2. Thrifty Comfort
    February 29, 2016

    There are very good points in this article. One can not leave everything to an advisor. I think one still needs to understand the investments recommended by an advisor. And be able to assess the competence of the adviser together with his attitude to risk.
    As for financial advisers employed by banks. I get the idea they are there to sell you products of the bank. I think of them not as investment advisers but as salesmen.


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