russell excerpt: it's the crop we farmed it out to, i'm just a broker.
June 14, 2002 -- Yesterday I visited my dentist to have my teeth cleaned. My dentist, who reads Dow Theory Letters, told his very intelligent new hygienist that I write a market report. I talked to the hygienist, and the young lady told me that she had just "invested" all her money, $50,000, with a brokerage firm. I asked her what they did with her money. She said they had invested it in a number of mutual funds. She wanted to know what I thought.
I told her that this was a bear market, and that I thought they did the wrong thing. The hygienist was upset, even frightened. She told me that she was investing for the "long term," and that this was her retirement money. I told her to hang on to her day job, because if she was planning to retire based on her mutual funds, she could be in for a disappointment.
What's happening is that innocent people give their money to brokers, and these brokers immediately slap the money into mutual funds, often mutual funds with high loads that are managed by the firm that the brokers work for.
Then when the mutual funds decline, the broker tells the customer, "Well, the fund was managed by our experts. I just don't understand what happened." And, of course, the broker is off the hook, because he wasn't managing the account. It's not his fault if the fund heads south and the poor client is "killed."
It's disgusting, and I've seen this process occur over and over. Brokers sit on their hands while these damn funds drop 20%, 30%, 40% and more. The broker collects the commissions and takes no responsibility when the client loses his or her money.
Well, I got that off my mind. |
